Artificial intelligence (AI) is disrupting the traditional insurance value chain according to IBM. Artificial intelligence is showing up in marketing/product development, policyholder acquisition, underwriting, policy administration/asset management and claims. Seventy-five percent of insurance executives surveyed in an Accenture study believe AI will alter or transform the insurance industry in the next few years.

MetLife, Allianz, Transamerica, QBE Insurance Group, XL Catlin, and Aetna have explored applications of artificial intelligence. This yielded some interesting results. MetLife reported that Shift Technology, an AI startup based in France, helped a European coalition of insurers analyze 13 million claims. The technology identified 3,000 new cases of potential fraud, including a large, organized crime scheme that impacted nearly all the coalition’s members. The scam siphoned millions of euros from members over the years.

If this doesn’t get your attention, maybe the use of AI by insurance startup Lemonade will. The company set a world record when it handled a claim solely by AI (no human involvement) from triage to fraud mitigation to the actual payment by wire. Lemonade’s AI approved the claim and wired payment in three seconds.

Organizing Data

Examples continue to surface for how intelligent machines are used to address critical areas of the insurance industry. All of them rest on a single foundation—data.

Data drives the insurance industry. The way data is leveraged has an incredible impact on the bottom line and customer satisfaction. Despite technological advancements available to the industry, institutions have not fully harnessed the potential of AI. In a recent Medici article, Elena Mesropyan explains the complexities of organizing data to feed intelligent machines is the main reason.

Most of data representing the digital universe is unstructured. Although unstructured documents are widely used as key inputs for core business activities, organizations face significant challenges when it comes to this form of data. These include managing the flood of unstructured data, processing it and extracting value from it as quickly as possible.

Furthermore, unstructured data is vulnerable to cyberthreats. Because organizations struggle to understand where crucial unstructured data is, how it is used and who has access to it, it can represent a big risk to the enterprise. The level of risk varies by case, but one thing is clear for unstructured data—it is difficult to apply a standard, organization-wide measure to protect it.

Predictive analytics based on organized data are essentials for insurance companies. Structured, organized data enables accurate adjustment of products and services to changing consumer habits and behaviors.

Some organizations have figured out how to address the data-structure issue and leverage it to their benefit. Structured data is the competitive advantage for 40 percent of the global systemically important financial institutions in the U.S. who use a single solution. They use a machine learning platform by Pendo Systems that transforms unstructured data into AI-ready data sets. This allows businesses to explore, discover and analyze unstructured data accumulated across wide variety of sources.

Like a number of industries, the insurance sector is in the early stage of AI application. Insurance executives see its potential. Seventy-nine percent of those surveyed by Accenture believe that AI will revolutionize the way insurers gain information from and interact with their customers. Better methods to organize and structure data will accelerate the value the industry gains from this technology.

Related article:

Insurtech Drives Insurance Innovation

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Ryan Lahti is the managing principal of OrgLeader and author of The Finesse Factor. Stay up to date on Ryan’s STEM organization tweets here: @ryanlahti

(Photo: Artificial Intelligence, Pixabay)

How is insurtech being viewed in today’s market? Pretty well if investment is an indicator. Insurtech is the form of financial technology (fintech) receiving the most investment according to Insurance Day. Investors in 2016 poured more than $1.7 billion into insurtech startups worldwide. The KPMG/CB Insights joint report, “The Pulse of Fintech,” defines insurtech as “companies creating new underwriting, claims, distribution and brokerage platforms, enhanced customer experience offerings, and software as a service to help insurers deal with legacy IT issues.” This report shows that 60 percent of VC-backed insurtech deals occurred in the U.S. during the second quarter of 2016, but the U.K. is also an important leader in the insurance space for health, auto insurance, comparison websites and data management.

If this is not enough to convince you, Accenture found that insurtech investment in the U.K. has surged three-fold in just a year. The company’s latest data revealed Britain’s insurtech investment has rocketed to more than $20.3 million as of August 31. Evidently, years of nervous inaction and indecision have been washed away by a wave of innovation and the growing knowledge that external forces will disrupt the insurance sector if the sector doesn’t take the initiative to get more current.

Founded by a combination of ex-insurance professionals frustrated by a slow-moving industry and tech-specialists with an eye for an opportunity, insurtech is tackling the industry’s most difficult issues. Peer-to-peer insurer Lemonade is making the process of buying insurance and filing claims more transparent, promising to pay claims almost immediately. A mobile app by Verifly lets you purchase drone insurance. Companies such as Trov and Back Me Up are offering greater personalization, allowing customers to just insure certain belongings rather than paying for a broad policy.

Other organizations such as Brolly are using data and artificial intelligence to improve customer service and more accurately calculate premiums. Long term contracts are also on the way out. Cuvva is providing car insurance by the hour, and Digital Risks offers subscription business insurance designed for the needs of fast-growth tech and media companies.

This dramatic growth in insurtech looks like it will continue in 2017. Entrepreneurs, investors, insurers and other players in the insurance industry will intensify their efforts to bring innovation and modernization to the sector. These developments will affect every part of the insurance industry – especially personal lines – from sales and marketing through underwriting to claims administration.

Along with this growth, there are hurdles to overcome. In the U.S., state laws and regulations will require a rethink to avoid stifling innovation. Many these laws and regulations were formulated to address the sale and administration of insurance in ways that will cease to be relevant. In the long run, insurtech developments might even create pressure for greater federalization of insurance regulation. Because the new technologies will have a greater nationwide reach, state-level regulation of insurance in the U.S. may become increasingly difficult to administer.

Hurdles are also being surmounted in Singapore, where one very significant development is taking place. Regulation that has proven to be a brake on insurtech development is set to change in 2017, with the Monetary Authority of Singapore’s introduction of its fintech regulatory sandbox. This will enable financial institutions, including insurers, as well as technology companies, to experiment with innovative financial products or services in the marketplace. This experimentation will be allowed within a well-defined space and subject to appropriate safeguards to ensure potential negative consequences are contained.

If you are one of the many customers who has been frustrated by the snail-like pace of innovation in the insurance industry over the years, the emergence of insurtech provides welcome relief. While there will be some growing pains to endure with this component of fintech, the possibilities it presents far outweigh pains encountered to realize them.

For more information, take a look at:

The Pulse of Fintech

Insurtech Is Taking Off – But Is the UK Ready to Fly?

Is Insurance Ready for Millennials?

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti

(Photo: Insurance, Pixabay)

If you drive a car, you are sharing the road with uninsured drivers. Although it is against the law in 49 states and the District of Columbia to drive without insurance, approximately one out of eight U.S. drivers do not have auto insurance according to the Insurance Research Council (IRC). In several states, more than one in five drivers do not carry coverage.

Why should you care? In 2012, the most recent year for which statistics are available, uninsured motorist claims totaled $2.6 billion, a 75 percent increase from the previous decade, according to the IRC. Those costs, largely borne by insurance companies, are passed on to insured drivers in the form of higher premiums.

States have tried a variety of ways to get motorists to buy car insurance that have produced mixed results. Some states require drivers registering their cars to show proof of insurance. In many states, uninsured drivers face stiff fines, but some of the states that have such penalties on the books often fail to enforce them. Furthermore, researchers have found that states with stiffer penalties, which can range from a maximum of $200 for a first offense in California to up to $1,500 for a first offense in New York, do not necessarily have the lowest uninsured rates.

There is no “typical” uninsured driver according to The Fiscal Times. Some don’t have car insurance because they resent the requirement—“Live Free or Die” New Hampshire is the only state that does not mandate it. Others don’t have it, because they are undocumented immigrants who lack driver’s licenses, which are needed to get insurance in many states.

Most of the uninsured, however, don’t purchase car insurance because they can’t afford it. The number of uninsured drivers peaked at 29.9 million in 2009 during the Great Recession and then dropped to 29.7 million in 2012, the last year for which data are available. Car insurance rates have risen more slowly than other expenses in recent years, but insurance ranks below necessities such as food and housing for drivers struggling to make ends meet.

Bankrate reports American drivers spend an average of $1,771 per year on full coverage car insurance, which accounts for 2.57 percent of the average person’s annual income. According to the Insurance Information Institute, a New York-based organization that tracks the insurance industry, overall expenditures for car insurance increased by 10 percent between 2010 and 2011, while food expenses increased 21 percent; housing costs increased 29 percent; public transportation costs increased 29 percent and health care costs increased 52 percent.

If you’re involved in a serious accident with an uninsured motorist, you could be at risk for substantial financial losses. For protection from losses arising from an accident with an uninsured motorist, consider purchasing uninsured motorist coverage. A handful of states require that this coverage be included in all auto insurance policies. Regardless of state requirements, you may already carry uninsured motorist coverage. So, check your policy or ask your insurance professional.

Specific options for uninsured motorist coverage vary by state and insurer. In general, there are three types of protection:

Uninsured Motorist (UM) Insurance—This is also known as Uninsured Motorist Bodily Injury (UMBI) insurance. This coverage will pay your and your passengers’ medical bills if you’re involved in an accident with an uninsured motorist who is at fault. In addition, UM insurance will reimburse you and your passengers for lost wages. UM coverage also kicks in if you are hit as a pedestrian by an uninsured driver, or if you’re the victim of a hit-and-run accident.

Uninsured Motorist Property Damage (UMPD) Coverage—While UM insurance covers injuries, it does not extend to damage to your car or property. For this, you need UMPD coverage. Be aware that UMPD may not always cover damaged property beyond your car, and this option may not be available from your insurer—it depends on what state you live in. In addition, UMPD may not cover hit-and-run accidents.

Underinsured Motorist (UIM) Protection—In some instances, an at-fault driver may have liability insurance, but the policy’s limits do not cover the full extent of damage to your vehicle. In such cases, UIM insurance will cover the shortfall.

Given that there are a sizable number of uninsured motorists on the road with you, it is worth taking the time to consider whether you have the right insurance coverage. A few minutes spent reviewing your coverage can provide you and your family with greater peace of mind.

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Ryan Lahti is the founder and managing principal of OrgLeader, helping leaders thrive in uncertainty and better manage risk. Connect with Ryan on LinkedIn.

(Photo: Car accident, Flickr)

It seems like every time you listen to or read the news there is another company dealing with a cybersecurity breach. So, how have insurance policies helped companies handle these breaches? To date, this has not been overly clear. As the Department of Homeland Security National Protection and Programs Directorate explains, traditional commercial general liability and property insurance policies typically exclude cyber risks from their terms, leading to the emergence of cybersecurity insurance as a “stand alone” line of coverage. Cybersecurity insurance is designed to mitigate losses from a variety of cyber incidents, including data breaches, business interruption, and network damage.

With cybersecurity insurance being stand-alone coverage, the market for it is expected to grow to $7.5 billion by 2020 according to PriceWaterhouseCoopers. A robust cybersecurity insurance market could help reduce the number of successful cyber attacks by a) promoting the adoption of preventative measures in return for more coverage and b) encouraging the implementation of best practices by basing premiums on an insured’s level of self-protection. Many companies forego available policies because of the perceived high cost of these policies and confusion about what they cover. Furthermore, one of the biggest reasons companies hesitate regarding cybersecurity insurance is the uncertainty that they will suffer a cyber attack due to inadequate methods for gauging the risk of attack.

As Forbes points out, this inability to effectively gauge the risk of attack is beginning to be addressed. UpGuard, a startup based in Mountain View, California, recently unveiled its Cybersecurity Threat Assessment Rating (CSTAR), the industry’s first cybersecurity preparedness score for businesses. UpGuard’s CSTAR ranking is a FICO-like score that allows businesses to measurably understand the risk of data breaches and unplanned outages due to misconfigurations and software vulnerabilities, while also offering insurance carriers a new standard by which to more effectively assess risk and compliance profiles.

According to UpGuard’s co-founders and co-CEOs, Mike Baukes and Alan Sharp-Paul, many companies skip insurance policies due to perceived high cost and uncertainty that their organizations will suffer an attack. With countless patches and fixes added onto IT infrastructure to hastily remediate breaches, companies have found themselves with less visibility into their core systems than ever before and no way to understand how at-risk they are for hacks. With CSTAR, Baukes and Sharp-Paul state that businesses are able to regain transparency and take the appropriate steps to bolster their cybersecurity. Meanwhile, insurance carriers can make smarter underwriting decisions while accelerating the availability of comprehensive and cost-effective cybersecurity insurance policies for businesses. It’s a win-win for both the insurance industry and for businesses.

“You need a foundation or a basis of understanding for what you have. I mean we like to say…you can’t secure or fix what you don’t understand. And that’s always missing. Everyone’s trying to rush to this goal of DevOps or moving to the cloud. Everyone wanted to be there but companies and vendors in particular weren’t helping businesses on the journey there,” says Sharp-Paul. “Once you have that base understanding of what you have, then that opens everything else up.”

In the world of corporate IT, applications rarely get retired. Even worse, the people that manage them move on because the life cycle of an employee remaining in a company is not that long. As a result, the institutional knowledge about these applications is lost. “Corporate memory is so short typically. They often get to this point five years down the track where they rediscover this server or this application and everyone’s too scared to touch it because they don’t know what it does. They don’t know how it works. The people with the knowledge just left with it all in their heads,” says Sharp-Paul.

From Baukes’ perspective, “It makes good business sense to quantify the risk in IT systems and report it effectively…giving people visibility, helping them get to the truth of what they’ve got, and how to configure it, and if they’re vulnerable.” With this in mind, hopefully CSTAR or something like it will be adopted sooner rather than later as an industry standard that companies and insurance carriers can use to make critical coverage and cybersecurity decisions.

Related news briefs:

Identify Theft Insurance?

Information Security in 2016

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti

(Photo: Cyber Attacks, Flickr)

What are telematic devices? Why would insurance companies and consumers care about them? According to Gartner, telematics refers to the use of wireless devices and “black box” technologies to transmit data in real time back to an organization. Often, the term is used in relation to an automobile. Insurance companies are utilizing telematic devices to monitor how an automobile is being driven as part of their usage-based insurance (UBI) policies that reward safe drivers with lower premiums. More specifically, an insurer connects the device to the computer system of the customer’s car to monitor a variety of factors, such as the speed of the car, use of seatbelts, engine temperature, and “acceleration events” (e.g., speeding up and braking).

According to an article in Insurance Journal, insurance companies are drawn to the use of telematics, because it provides detailed information on an individual’s driving style, like flooring it to beat a red light. This driver behavior can be used to set insurance pricing and improve company returns. For drivers, monitoring via telematics does present some privacy concerns, but this is offset by the opportunity for lower rates and faster response times in the event of an accident (including medical assistance and repairs).

When it comes to driver behavior, telematic devices do seem to be having an impact. Results released this month from an Insurance Research Council (IRC) study show that 56 percent of drivers have made changes in how they drive since installing a telematic device from their insurance company. Moreover, 38 percent reported making a small change while 18 percent reported making a significant change.

A substantial majority (82 percent) of those with telematics devices reported receiving information from their insurance company about their driving behavior after having a device installed. Eighty-one percent of those receiving information said they reviewed the information and 88 percent of those reviewing the information said they found the information to be helpful.

“These findings suggest that having telematics devices installed in vehicles can play a beneficial role in promoting safe driving and reducing the frequency of auto accidents and their associated costs,” said Elizabeth Sprinkel, senior vice president of the IRC. “While we can’t say with certainty that the changes drivers make are always for the better, or whether beneficial changes that are made become permanent, we can confidently say that the introduction and use of telematics technology is a move in the right direction.”

Currently, UBI makes up less than 5 percent of the market, but experts in the field believe this will change dramatically in the next several years. Roland Berger Strategy Consultants expect the UBI market share to soar to 26 percent in the U.S. and 38 percent in the U.K. by 2020. Consultancy Oliver Wyman forecasts that car insurance using driver data to set prices will grow 40 percent a year to become a $3.6 billion market by 2020. While the use of telematics that would go along with this increase might highlight privacy concerns from some, the lure of lower premiums and added safety is a powerful incentive, especially among younger drivers who are accustomed to permanent connectivity.

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti

(Photo: Teen Driver, Flickr)

Approximately $16 billion was stolen from 12.7 million U.S. consumers in 2014 according to the 2015 Identity Fraud Study released by Javelin Strategy & Research. The FTC found that identity theft was the number one type of complaint for the 15th year in a row among 30 categories of complaints. Identity theft accounted for 332,646 complaints in 2014.

These statistics get your attention and may make you think about purchasing identity theft insurance. Before you spend the money, there are some things to consider. As Bankrate.com points out, the term “insurance” may lead some consumers to believe identity theft policies will reimburse them for any funds that are stolen as a result of identity fraud, similar to the way other types of insurance make you whole after a loss.

Although identity theft policies are insurance products, they are not really the same as traditional insurance. Michael Barnett, the former executive director of the Identity Theft Protection Association suggests that identity theft policies are more like “expense reimbursement programs” than insurance.

Denis Kelly, CEO of IDCuffs.com, explains that identity theft insurance does not work like auto insurance, which would cover damage to your car and your injuries in a car crash. According to Kelly, “Identity theft insurance doesn’t pay for the costs to fix your identity or the injuries you suffered as a result of being victimized. Rather, it pays the equivalent of the cost to have your car towed and possibly the shipping costs of a new bumper.”

Experts say consumers searching for protection may find identity theft insurance falls way short of expectations. The insurance, which is commonly tacked onto existing home, auto and travelers policies, costs between $25 and $60 annually, according to the National Association of Insurance Commissioners. This figure increases if you purchase it separately.

Such policies cover expenses people might accrue while repairing their credit record, like the cost of postage, phone calls and legal bills. The chances of facing out-of-pockets costs are slim: 80 percent of the 12.6 million victims in 2012 didn’t incur any, according to Javelin Strategy & Research.

Some policies also connect victims with a case manager to help them clean up the mess. In the vast majority of identity theft cases, though, that process means a simple call to the bank. For 85 percent of victims in 2012, the identity theft they experienced involved misuse of an existing credit card or bank account. It took more than half of victims a day or less to resolve problems, according to the Bureau of Justice Statistics.

“People shouldn’t be mesmerized by the insurance that may be provided. It’s more important to look at how the service actually works and what it does for you,” says Susan Grant, director of consumer protection at the Consumer Federation of America. “Are you looking for somebody, for instance, who’s going to do everything for you if you have a problem, or are you confident that if somebody gives you advice, you’d just be able to do it yourself?”

You shouldn’t feel that you have to spend money to protect your identity. There are a number of protections you can get for free. For instance, credit experts recommend consumers set up custom alerts with their banks and credit card companies to receive emails or texts for transactions. You should also review your online statements daily and check credit reports from each of the three bureaus, Equifax, Experian and TransUnion, once every 12 months. Additionally, you can sign up for free fraud alerts, which require businesses to take extra steps to verify your identity before opening new accounts or increasing a credit limit.

For more information, see Identity Theft and How to Reduce Your Fear of Cybercrime and Protect Yourself

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Ryan Lahti is the managing principal of OrgLeader and author of The Finesse Factor: How to Build Exceptional Leaders in STEM Organizations. Stay up to date on Ryan’s STEM organization tweets here: @ryanlahti

(Photo: Privacy Is Dead, Flickr)

In less than five years, the use of drones (unmanned aerial vehicles – UAVs) could become common practice for almost 40 percent of businesses. In the next 10 years, it could be common practice for 85 percent of businesses. This information comes from a 2015 survey of corporate risk managers conducted by Munich Re.

What is the greatest risk of using drones for business purposes? The risk managers surveyed said potential issues related to “invasion of privacy” were their biggest concern followed in descending order by inadequate insurance, personal injury and property damage.

An estimated 30,000 commercial and civil drones could be circling the skies in the US by 2020, according to the Federal Aviation Administration (FAA). The Association for Unmanned Vehicle Systems International (AUVSI) estimates that between 2015 and 2025, the drone industry will create 100,000 jobs and contribute $82 billion to the US economy.

“Businesses have set their sights on new applications for drones that could speed product delivery, monitor crops or capture claims data among dozens of others uses,” said Gerry Finley, Senior Vice President, Casualty Underwriting, Munich Reinsurance America, Inc. “Drones are also attracting the attention of public entities who view these ‘flying robots’ as a way to reduce some of the dangers law enforcement officers and other responders face. In some cases, drones will become a common aspect of an organization’s operations. However, there are technical, legal, regulatory and risk management issues associated with drone use that must be addressed over time.”

Seventy-six percent of risk managers surveyed said they would invest in UAV-specific insurance coverage even if it was not required. According to Finley, “The drone insurance market is still evolving as the industry looks at ways to provide coverage for businesses that offer drone services to other entities, or for traditional industry segments that own and operate drones as an incidental part of their operations. The Insurance Services Office (ISO) has released a series of optional endorsements to address some liability issues, but the lack of credible loss information remains a critical issue for insurers as they seek out the best solutions for this emerging exposure for their clients and the public.”

For more information, see 2015 Drone Survey.

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti

(Photo: Drone 2, Flickr)

In the last few years, transportation network companies (TNC) such as Uber, Lyft and Sidecar have become very popular alternatives to taxis. This has provided the public with another convenient form of transportation, but it has created confusing challenges about liability and collision insurance coverage when drivers and their passengers are involved in accidents. In many cases, drivers feel they have to lie to their personal insurance companies. In more extreme situations, drivers are committing insurance fraud.

Drivers for TNCs are private individuals who use their own car to provide rides to customers via the smartphone app of the TNCs. Because these drivers are private individuals, the only insurance they typically have is their personal insurance. According to a recent Forbes article, drivers receive mixed messages from TNCs about the insurance that is needed. Uber and Lyft tell drivers that personal insurance will suffice, but personal insurers who are unwilling to cover commercial activity have canceled drivers’ policies if this commercial activity is discovered. Full commercial insurance can cost up to 10 times as much as a personal insurance policy making it too expensive for most drivers. Hybrid policies are not yet available on the market for these drivers who will still give millions of rides in the interim despite this insurance gap.

Uber, Lyft and personal insurance companies have slowly begun to create a compromise: The TNC’s insurance covers on-duty accidents, and personal insurance of drivers covers off-duty accidents. This agreement is based on the primary insurance taking responsibility first when more than one policy could be used. If the TNC provides the primary insurance, this should mean that the TNC agrees to pay for damages from a driver’s accident without the driver’s personal insurance having to decline the claim as a first step. Some states such as California and Colorado passed laws that go into effect in 2015 to ensure that this happens.

While insurance companies and industry associations such as the Property Casualty Insurers Association of America support this compromise and legislation, the actions of TNC companies have not yet mirrored this support. Despite TNCs knowing that the personal insurance companies are likely to cancel the drivers’ policies if they report they are in an accident while working for a ridesharing company, the TNCs still have asked the drivers to report the accident to their personal insurance companies first to see if the companies will cover the accident. To avoid the possibility of having their insurance policies cancelled, some drivers believed their only option was to tell their personal insurance companies that they were not working for a TNC at the time of an accident when in fact they were doing so. Such a misrepresentation on an insurance claim is insurance fraud.

Although the California and Colorado legislation is a starting point which could resolve some issues, it only applies to liability insurance at this point. Collision insurance is still a gray area. Hybrid insurance policies are likely to be on the market by spring, but work still needs to be done to address the collision insurance problem and to get consistency across the country so that drivers and passengers are appropriately covered.

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti

(Photo: TheTruthAbout, Flickr)

Private exchanges are similar in structure to the public exchanges of the ACA, but the private exchanges do not have a common solution template like that of the public exchanges. With the private exchanges, different insurers can offer a range of plans that take many forms whether they are low-premium/high-deductible plans or high-premium plans with greater coverage.

Some notable companies have already made the switch to a private exchange. Walgreens moved 170,000 employees to a private exchange operated by Aon Hewitt. Prior to this change, Walgreens offered two health plans to its employees. Now, Walgreens provides 25 different plans from five insurers. In addition to Walgreens, Alcoa Inc. announced this month that it will switch its retirees to a private exchange according to the Pittsburgh Tribune-Review.

Advocates of the private exchanges believe these marketplaces provide employees a greater variety of options that better fit their personal healthcare and financial needs. They argue that private exchanges limit increases in premiums, because insurers directly compete with each other. Private exchanges offer another alternative for the approximate 150 million American workers whose premiums for insurance coverage through work have increased 80% over the last 10 years based on research from the Kaiser Family Foundation.

While these advantages make private exchanges worth considering, critics of private exchanges make some important points. More specifically, critics view these marketplaces as an easy way to shift more costs to employers. Furthermore, they highlight research showing that many Americans do not understand basic insurance concepts such as deductibles, co-pays, co-insurance and out-of-pocket maximums. Consequently, these Americans are less likely to make smart decisions selecting on their own from a variety of choices on a private exchange compared to having their employer’s HR staff guide them through a more limited number of choices. Time will tell if the advocates or critics of private exchanges make a better case. For now, it makes sense to proceed with caution.

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti

In a CNNMoney article, Daniel Eckert, Wal-Mart’s senior vice-president of services talked about the ease of using the site which can retrieve information from a customer’s current policy and automatically fill in a good portion of the necessary coverage information. He emphasized, “We are always looking for ways to reduce complexity, increase transparency, and give everyday low prices to Wal-Mart shoppers.”

Auto insurance is just one part of Wal-Mart’s strategy to move into financial services. In addition to auto insurance, Wal-Mart offers money transfer via Western Union and MoneyGram, and Wal-Mart has also partnered with American Express to provide Bluebird to its customers. Bluebird is a debit and checking option that doesn’t require a monthly maintenance fee or minimum balance.

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti