Flooding is a global issue made worse continuously by climate change. Even areas that are seeing increased droughts caused by rising temperatures can see more flood risk because of reduced ground permeability.

Urbanization exacerbates the problem because the vast amounts of concrete used for roads, parking lots and developments greatly reduce permeable surface area, putting drainage infrastructure under significant strain.

Flooding is one of the most difficult natural disasters when it comes to making damage predictions, and damages are typically very high. Global flood losses reached $20 billion in 2021.

With just one inch of floodwater potentially causing up to $25,000 in damage, flood damages are generally not included in homeowners' insurance plans. Unfortunately, rather than an increase in the number of specialized flood insurance policies, there has been a 9% decline in FEMA policies over the last year from 5 million. This is due to an increase in the cost of insurance premiums for the millions living in potential flood zones, despite FEMA providing what was previously considered the low-cost alternative. 

With such significant opt-out rates for FEMA insurance policies, insurance companies are faced with a large number of uninsured potential customers, but they must be able to calculate risk accurately so that some properties can have reduced premiums.

An effective approach is to use AI to extract high-definition 3D property data from aerial imagery.

In the last decade, AI has become vital in the insurance sector. AI models are becoming increasingly effective in analyzing and processing insurance claims, especially in the case of natural catastrophes. 3D modeling of high-resolution aerial imagery gives the insurer rich and accurate data at scale. Visual data can accelerate the process of inspection, underwriting and claims, while simultaneously helping with risk prediction and preparedness. In some cases, due to the speed of automated analysis, it may be possible to identify risks and pre-emptively warn property owners so damage can be avoided entirely.

See also: Top Causes of Business Insurance Loss

Many insurers are using aerial imagery to support the underwriting process, especially when determining the condition of the roof, scanning for any potentially hazardous debris nearby or measuring the elevation of the ground around the property. In this way, they become more efficient, trim costs and are more able to offer affordable flood premiums.

Finding individual images of a specific property and analyzing them in person takes time and can limit the number of properties that can accurately be insured with up-to-date information. Therefore, implementing AI recognition with aerial imagery can significantly reduce the time required to create insurance products and vastly increase the number of properties that can be surveyed. With computer vision and machine learning, insurers can identify risk factors in all the images across a database and automatically categorize properties by their risk level. This is particularly useful given the high number of properties that are insured and reinsured for flood insurance. 

With AI taking the industry by storm, new aerial imaging capabilities are constantly being developed in the P&C space, meaning predicting and preventing loss is more accessible than ever. By using 3D property intelligence derived from aerial imagery, insurers can obtain more data points for more commercial and residential properties nationwide – for example by pinpointing impermeable urban areas in flood risk zones. Considering the complexity of the underwriting process, any company that still relies solely on governmental property records instead of using AI-derived property databases is significantly increasing the risk of using outdated information and making incorrect risk management decisions. From a cost-saving and a risk-averse perspective, using AI-derived  databases of aerial imagery is one of the best options for insurance companies to stay strong in high-risk markets like flood.

With the steeply increasing environmental pressures, insurers need to better protect their customers, improve business performance and differentiate by adding value beyond product. With the industry experiencing a rapid digital transformation, innovation is now cherished by insurers. Climate change may be outside the industry's control, but failure to respond to climate challenges and subsequent catastrophes like flooding is partly a result of the current insurance model. The solution is clear: The insurance industry needs to keep pace with the digitization of other industries. Additionally, insurance providers should take full advantage of the technologies that enable them to pinpoint complex risks, reducing the number of causalities and inevitably strengthening business performance.

The costs of long-term care (LTC) have skyrocketed in recent years, leaving much of the aging population unprepared to fund care or age at home. The average annual cost of a semi-private nursing home room is now over $93,000, and home health aides are upward of $50,000. When planning for retirement and aging, in general, it’s critical to expect the unexpected and factor in these costs or ways around it, like LTC insurance. 

When we think about aging at home, most people think about their kids being around to help or acting as caregivers. Except now, those kids aren’t having kids – 56% of Americans aged 18 to 49 don’t want to have children. As a result, as these generations age, there will be fewer caregiver options. It’s estimated that 50% of older adults will need long-term care at some point in their lives, yet only 7% of adults over 50 have an LTC policy. By investing in LTC insurance at a younger age, people have security available - no matter what level of support they may have as they age. That being said, finding an accessible insurance solution is not always easy.

Insurance is complex, and LTC insurance is no exception. Many pre-existing conditions like anxiety can disqualify people from consideration even if a person is otherwise healthy, so it’s important to look into programs that can help those individuals qualify for coverage down the road via preventative care. We have far more knowledge today about the significance of wellness as we age – knowledge that can paint a more accurate picture of the state of someone’s overall health beyond just one pre-existing condition.

For example, we now know that hearing loss can affect the chances of a person suffering from dementia later in life. We also better understand the importance of mobility, nutrition and cognition support as we age. What deems a person healthy and “low risk” has changed on the clinical side, but we have yet to find a way to properly incorporate that new information into insurance policies.

See also: We Need to Care for the Caregivers

On the carrier side, there is a wealth of unused data on aging populations that would make LTC coverage less risky and expensive to provide. Too often, the aging population is treated as a monolith; insurers don't look at the needs of different aging cohorts. The needs of a 90-year-old person in 2022 are vastly different from the needs of a 70-year-old, and the risk signals are, too. This perspective has contributed to a cycle that has made LTC extremely undesirable for carriers; there is not enough information about the populations being insured, so every policy issued has more risk than it needs to. 

Traditional risk signals such as death of a spouse and change of address combined with supplementary data like a person’s level of familial support, ability to use grocery or meal delivery services, access to online banking and more would help insurers better understand true risk. Having that holistic, 360-degree picture of health is important, especially as we age; those factors are often highly predictive of the likelihood someone will file a claim and the general success they would have aging in place. Giving carriers better insight into the changing needs of their policyholders means everyone wins. 

Aging has become financially unsustainable for all parties; life expectancy is getting higher, but care is getting more expensive. In an industry where everyone is currently losing, there’s a clear need for solutions that get to the root of the problem. Prioritizing wellness and properly using data offer myriad benefits for individuals and insurance providers. With the right tools, more people can enjoy the benefits of healthy aging.

It’s rumored that Facebook has approximately 52,000 data points for every user. That’s 52,000 different pieces of information that can be used to completely customize the user experience, from serving the right types of content to showing advertisements for products they’re most likely to buy. This data allows for a positive outcome for all stakeholders. The good news is, insurance companies don’t need nearly that many data points to benefit from the power of data.

The insurance industry is in the midst of a digital revolution. Words like "data" and "insurtech" seem to arise at every turn, but many of these solutions are complex and expensive to implement, leading to low adoption rates and huge missed opportunities for insurance companies. Unless you understand the benefits of data, these barriers don’t seem worth the battle to overcome.

While insurtech solutions can streamline insurance sales and claim management, they can also provide vast amounts of data that insurers can leverage in countless ways: to improve the customer experience, build brand loyalty and decrease loss adjustment expenses, to name a few.

Improving the customer experience

Imagine receiving a personalized message from your insurance company before an impending catastrophe advising you of the event, the best evacuation routes, where gasoline will be readily available and what the projected severity of damage to your property is? That would probably be something you’d tell your friends and neighbors about.

Policyholders want to feel like their insurance provider has their best interests in mind. While insurance refers to the contractual agreement of indemnification upon loss, the word "insurance" also refers to a means of guaranteeing protection and safety. 

With insurtech becoming more advanced by the day, there are solutions that can predict where damage will occur and how severe it will be with great accuracy. Insurers can partner with these insurtech firms to provide their policyholders with peace of mind before the storm and ensure their claim is handled successfully afterward.

See also: Underwriting Enters a New Age of Data

Building brand loyalty

Gone are the days of a birthday postcard from your dentist; you most likely get a nice ‘happy birthday’ email now. But did you ever consider that your birthday is a data point being leveraged by companies to improve your customer experience, increase conversion rates and promote brand loyalty?

While it may seem trivial, those small efforts go a long way toward building brand loyalty in consumers, and considering that 65% of consumers have cut ties with a brand after one bad customer experience, brand loyalty is extremely important. (SOURCE: Digiday)

Decreasing loss adjustment expense

Verisk found that P&C insurers experienced a 10% increase in loss adjustment expense (LAE) in the first quarter of 2022 alone. There are a lot of moving parts and stakeholders involved in the servicing of an insurance claim, and insurers are always working to keep loss adjustment expenses down. 

Unfortunately, that can be at a detriment to the policyholder at times. By collecting and leveraging the right data, insurers can reduce their LAE and increase their customer experience.

See also: Data-Driven Transformation

The future of insurance claims

Using geospatial technology and historical claim data, claim servicing firms can predict desk adjustments with high accuracy, reducing LAE and increasing speed to indemnification.

Some firms are benchmarking parametric insurance and looking to leverage data to instantly remit payments to policyholders who experience a loss and, depending on the surety of the data, before the loss even occurs under traditional insurance contract. By knowing where the catastrophe will occur and how severe the damage will be, insurance providers can help their customers start to rebuild faster than ever.

Not only do these technologies predict events, they can also learn from past storms and provide data that can be leveraged to provide accurate peril coverage to policyholders.

By looking at historical data, insurers can identify the location and frequency of perils such as tornado, hail and flood and review existing policies to ensure that their customers have the appropriate coverage before they experience a loss.

Data doesn’t have to be complex. Something as simple as the policyholder’s first name or birthday can be an extremely useful data point that insurers can leverage to increase conversions and build brand loyalty. In fact, personalization of the subject line in emails can yield an open rate of up to 50% (the average being less than 18%). 

Qualitative data is often overlooked by both insurance and insurtech companies alike, as it is more difficult to measure and interpret. But it can be just as valuable as quantitative data and sometimes even more so. A customer satisfaction survey sent after a claim can help insurers identify opportunities for improvement, find weak spots in their claim workflow and even spotlight exceptional employee behavior. This can be a great starting point for insurers looking to start using the power of data.

Contingent business interruption (CBI) claims reached a new level over the past year, with the number of claims far in excess of recent years. The sharp increase exemplified the growing interdependence and complexity of corporate supply chains, which were hit by a combination of pandemic-related disruptions, extreme weather and, more recently, Russia’s invasion of Ukraine. The automotive industry alone saw several CBI events during this period.

In February 2021, the Texas Big Freeze in the U.S. caused massive disruption to infrastructure, with many companies forced into temporary shutdowns by widespread power outages. Record freezing temperatures caused by Winter Storm Uri had cascading effects on companies and services reliant on power, including water, transport and medical services. The event is estimated to have caused economic losses up to $155 billion, while Uri caused $15 billion in insured losses nationwide.

Less than a month later, a fire at a semiconductor plant in Japan added to the growing global shortage of microprocessors, sending a ripple effect through global supply chains, hitting production in the automotive and electronics industries. The automotive sector was again hit with supply chain problems from the conflict in Ukraine, with the country being an important supplier of parts.

Opaque and complex exposures

Global supply chains have created opaque and complex exposures in recent years, with many companies having been reliant on a small number of key suppliers for materials, parts and services. The connectivity of supply chains results in more CBI exposures and can have a substantial impact on various industries, sometimes in excess of $1 billion.

Fires, natural catastrophes, cyber-attacks and conflicts have added to existing strains on supply chains caused by the COVID-19 pandemic, with shutdowns at manufacturing plants and ports in China, delays to shipping and labor shortages. The Texas Big Freeze, in particular, led to a number of large CBI claims that AGCS was involved with, as companies took several months to ramp up production following initial power outages.

The number of claims from this event and the large loss in the semiconductor manufacturing sector more than tripled the number of CBI claims in the previous three years – overall CBI claims have increased in number year-on-year for the past five years.

The corporate world is now so connected and complex, businesses rely on each other for goods, services and infrastructure. Underwriters need to understand accumulations of exposures within corporate distribution and value chains, as well as the impact of disruption and actions taken to mitigate them.

See also: Top Causes of Business Insurance Loss

Average BI claim value rising

Costs associated with the impact of business interruption (BI) following the aftermath of a loss event can significantly add to the final bill from any incident. The average BI property insurance claim now totals in excess of €3.8 million based on analysis of 2,379 relevant insurance industry claims notified between Jan. 1, 2017 and Dec. 31, 2021. This is compared with €3.1 million over a previous five-year analysis period ending in 2017.

For large claims (>€5 million), the average property insurance claim that includes a BI component is more than double that of the average property damage claim. Many expect property and BI claims to become even more expensive in the future given the consequences of recent sharp increases in inflation around the world. The rising cost of rebuilds, repairs and labor, together with potential shortages of materials and longer delivery times and waiting periods, could all further inflate BI values.

On Nov. 1, CMS (the federal Centers for Medicare and Medicaid Services) released its heavily anticipated 2023 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule, after receipt of extensive public comment received by the agency in response to its draft proposal, which was issued back in July.  Although the final rule will become effective on Jan. 1, the agency will continue to receive public comment on the finalized draft for 60 days following its Nov. 1 publication date.  A detailed fact sheet is available from CMS for review. The entire 1,764-page finalized rule text (with instructions for providing public comment) is also available for review. 

Although many of the provisions contained in the November Final Rule mimic the proposals outlined in the July Proposed Rule, there are several significant modifications. The following sections provide an overview of some of the more salient provisions, as well as discuss their potential impacts on the workers’ compensation sector.

Outpatient Hospitals Will Receive a Net 3.8% Overall Rate Increase 

In the July Proposed Rule, CMS indicated its intention to put forth a proposed overall rate increase of 2.7%, reflecting a 3.1% projected hospital market basket percentage increase, reduced by a 0.4 percentage point productivity adjustment. The final rule outlines a much steeper overall increase rate of 3.8%, reflecting a projected hospital market basket percentage increase of 4.1%, reduced by 0.3 percentage point for the productivity adjustment. With workers’ compensation systems in 18 states at least partially relying on Medicare/CMS for reimbursement rates, coupled with an additional four states plus the District of Columbia (as of March 4, 2021) that essentially rely solely on Medicare as a basis for reimbursement, this 3.8% net overall increase will be felt in the workers’ compensation sector. However, considering that the U.S. overall inflation rate stood at 8.2% for the 12 months ending September 2022, it is unsurprising that the American Hospital Association (AHA) referred to the 3.8% overall increase as “insufficient given the extraordinary cost pressures hospitals face.”

A New Facility Type of 'Rural Emergency Hospitals' Will Be Established 

The 2023 Final Rule will now designate “Rural Emergency Hospitals” (REHs) as a new provider type for eligible critical access hospitals and small rural hospitals. The payment model was originally introduced conceptually in 2021 in the Consolidated Appropriations Act. The OPPS 2023 Final Rule solidified the proposed payment model, covered services, conditions of participation and quality measurements for REHs. Creation of the provider type was designed to help Critical Access Hospitals (CAHs) and small rural hospitals to avoid closures and preserve care access in underserved and rural areas. Details on the new REH provider type can be viewed in the CMS REH fact sheet. 

See also: The Key to Cutting Workers' Comp Costs

Facility-to-Outpatient Behavioral Health Services Will Continue Indefinitely 

On Oct. 13, the U.S. Department of Health & Human Services (HHS) opted to extend the Public Health Emergency (PHE) that has been in place since Jan. 31, 2020, for an additional (and widely anticipated, FINAL) 90-day period, to Jan. 11, 2023. Since the onset of the pandemic, several emergency public policies have been in place, including several provisions expanding the availability of telehealth services. One PHE provision, relevant to outpatient facilities, provides Medicare reimbursement coverage for behavioral health services furnished from an outpatient facility to beneficiaries in their homes.   

On March 15, President Biden signed the $1.5 trillion Omnibus Spending Bill, which contained a provision that extends the PHE telehealth flexibilities to 151 days (approximately five months) after the expiration of the PHE. With the current looming PHE expiration date of Jan. 11, that would mean that all PHE-related telehealth provisions (including the outpatient clinician-to-home-based-patient extension), would suddenly end on June 11, reverting back to Medicare’s original, 2019 restrictive rules for the delivery of healthcare by telemedicine. Telemedicine advocates have referred to this sudden expiration as the “telehealth cliff.”

Telehealth Cliff Timeline

In an attempt to mitigate the “telehealth cliff,” the OPPS 2023 Final Rule contains language that extends the coverage for outpatient facility-to-home-based beneficiaries indefinitely for behavioral health services, with a few important restrictions. First, the facility must have seen the beneficiary in person sometime in the six months preceding the telemedicine behavioral health visit (for new behavioral health relationships). Secondly, there must be an in-person service without the use of communications technology within 12 months of each behavioral health service furnished remotely by hospital clinical staff (for continuing behavioral health relationships). An exception is built in for situations where both the outpatient clinician and the beneficiary agree that the benefits of an in-person visit are outweighed by the risks.  

Furthermore, the rule clarifies that if a clinical relationship existed between the beneficiary and the outpatient facility at the time the PHE ends, only the 12-month, "continuing" in-person requirement applies, and not the six-month “new” restriction. Finally, the rule addresses audio-only services, permitting their use “…where the beneficiary is unable to use, does not wish to use, or does not have access to two-way, audio/video technology.” The audio-only flexibility has been included to help “…advance equity, since many rural and underserved communities lack stable access to broadband services, making two-way, audio/visual communication difficult.”

From a workers’ compensation perspective, states that have strictly adopted Medicare payment policies will theoretically apply these same restrictions to behavioral health telehealth services furnished to injured workers. Careful coordination between providers and injured workers will be necessary to document consent to waive in-person visits, as well as agreements to use audio-only visits, to help facilitate reimbursement.

See also: Will Medical Inflation Hit Workers' Comp?

Prior Authorization Required for Facet Joint Interventions 

Of particular interest to workers’ compensation stakeholders is a new requirement in the OPPS 2023 Final Rule for facet joint interventions to require specific pre-authorization to be reimbursable. In recent years, HHS and CMS have sought to endorse non-opioid-based treatment regimens for chronic and acute pain management. An HHS report released in December 2020 noted, “Given concerns regarding opioids, non-opioid pharmacologic and non-pharmacologic therapies hold promise and have become increasingly accepted as first-line therapies…[and] interventional approaches [are] an important nonpharmacologic option. Data indicates that interventional procedures are frequently used in this population (~5 million procedures annually in Medicare fee-for-service).”

The 2023 Final OPPS Rule has adopted an entirely new service category to encompass these interventional pain management services, named the “Facet Joint Interventions Service Category.” Facet joint injections, medial branch blocks and facet joint nerve destruction procedures are all covered by the new service category. The decision by CMS to require prior authorization for services has been driven by an explosive growth in the number of services billed in this category. For example, a 47% growth rate overall was observed for facet joint interventions from 2012 to 2021, reflecting a 4% average annual increase, contrasted with a 0.6% annual increase observed in overall outpatient services. As outlined in the Final Rule, “for the facet joint injection and medial branch block services… [CMS] observed an increase of 27% between 2012 and 2021, reflecting a 2.5% average annual increase. For the nerve destruction services…we observed an increase in volume of 102% between 2012 and 2021, which was an average annual increase of 7%. Both the facet joint injections/medial branch block Current Procedural Terminology (CPT) codes and nerve destruction CPT codes, with 2.5 and 7 percent annual increases, respectively, demonstrated higher average annual increases in claim submissions between 2012 and 2021 than the 0.6 percent annual increase for all Outpatient Department (OPD) services over the same time period.” 

Unfortunately, along with the explosive growth in appropriate use and billing of these procedures, a sharp uptick in fraudulent usage and billing has also been observed. The OPPS Final Rule cited several HHS Office of Inspector General (OIG) reports finding “questionable billing practices, improper Medicare payments and questionable utilization of facet joint interventions.” OIG noted that the improper payments occurred because of inadequate oversight on the part of CMS for these procedures. For example, in March 2022, the Department of Justice reported on a $250 million healthcare fraud scheme that took place from 2007 to 2018 involving physicians from multiple states who allegedly subjected their patients to medically unnecessary facet joint injections to obtain illegal prescriptions for opioids. The physicians required the patients to receive facet joint injections due to their high reimbursement rates [from CMS].  

In the July 2023 OPPS Proposed Rule, CMS indicated that it would begin requiring pre-authorization for all services in the Facet Joint Interventions Category for dates of service beginning March 1, 2023. After receipt of significant public comment, in the final rule, the pre-authorization requirement start date was moved back to July 1, 2023.  

As with the telemedicine policies outlined above, states that strictly adopt Medicare payment policies for workers’ compensation may now enforce pre-authorization requirements for facet joint intervention procedures. Use of procedures in this category is not uncommon in the workers’ compensation space, although medical opinions as to their efficacy vary.  

2023 Changes to the Inpatient-Only List; ASC Covered Procedure List 

The OPPS “Inpatient-Only List” (IPO) is a list of procedures that CMS has determined are only appropriately performed in an inpatient setting (and will not be reimbursable if performed in an outpatient setting). When CMS resumed use of the inpatient-only list after a brief hiatus in 2021, the agency decided to reevaluate procedures on an annual basis to determine which CPTs, if any, could appropriately be performed in an outpatient setting, using the following criteria:

1. Most outpatient departments are equipped to provide the services to the Medicare population. 
2. The simplest procedure described by the code may be performed in most outpatient departments. 
3. The procedure is related to codes that we have already removed from the IPO list. 
4. A determination is made that the procedure is being performed in numerous hospitals on an outpatient basis. 
5. A determination is made that the procedure can be appropriately and safely performed in an ASC and is on the list of approved ASC procedures or has been proposed by us for addition to the ASC list.

CMS does not require that a proposed procedure meet all five criteria to qualify for removal – in fact, meeting only one of the criteria may suffice. However, the greater the number of criteria met, the greater the chance that CMS will consider the CPT appropriate for removal.

In the 2023 OPPS Proposed Rule, CMS had originally identified 10 CPTs for consideration for removal from the IPO List (16036, 22632, 21141, 21142, 21143, 21194, 21196, 21347, 21366 and 21422). The majority of these codes were maxillofacial orthopedic procedures (which may have applicability to workers’ compensation).  

After additional consideration and receipt of public comment, CMS settled on the following in the 2023 Final Rule:

CPT 16036 (relating to local treatment of burns) was originally characterized as an “add on” code (used with another primary procedure 16035, which was removed from the IPO in 2007) and was originally proposed to be moved to a status code of “N” (bundled/not separately payable). On reflection, CMS decided NOT to move it off the IPO.

Similarly, CPT 22632 (relating to additional interspace treatments in a spinal fusion) was also characterized as an “add on” code (usually billed with 22630, removed from the IPO in 2021) and was originally proposed to be moved to a status code of “N." CMS finalized that recommendation.

By contrast, all of the originally proposed maxillofacial procedures have been finalized for removal from the IPO list (CPT codes 21141, 21142, 21143, 21194, 21196, 21347, 21366 and 21422). All these have been moved to Status Indicator “J1,” which indicates that they are reimbursable in an outpatient setting. From a workers’ compensation perspective, these codes are not commonly seen but are occasionally used. All of them are listed under the heading of “Orthopedics” in the general category of “Repair, Revision and Reconstruction,” except the latter three, which are in the “Fracture and/or Dislocation” subcategory.

Two additional changes were made in the OPPS 2023 Final Rule that were not included in the July Proposed Rule: 

1. CPT code 47550 (Endoscopy) has been moved to status indicator “N” for 2023 after receipt of public comment that it is a typical add-on code to a code in the range of CPT 47553 through 47541, all of which have already been removed from the IPO.
2. CPT code 21255 (an additional maxillofacial code) was moved to status indicator “J1” after receipt of public comment and is now payable in an outpatient setting.

Lastly, as medicine advances, the American Medical Association (AMA) continues to propose additional CPT codes to describe emerging technologies. Eight such new codes will be added to the IPO effective Jan. 1, 2023 (CPT codes 15778, 22860, 49596, 49616, 49617, 49618, 49621 and 49622).  

With respect to the ASCs, CMS originally proposed to add only one procedure to the ASC Covered Procedures list in its July 2023 OPPS Proposed Rule – CPT 38531. However, after receipt of significant public comment, where 64 different procedures had been submitted by various commentators for consideration to be added to the list, CMS settled on adding four additional CPTs to the list (19307, 37193, 38531 and 43774) from the OPPS Final Rule. None of the codes are commonly used in workers’ compensation. 

A bright spot for small business insurers: Customer trust is on the rise.

Fifty percent of small business owners trust their carriers more than they did pre-pandemic. That number jumps to 80% when the business owner has filed a claim. One big driver: accelerated claims payments, which have helped business owners quickly recoup lost revenue in a stressed economy.

Speed is the new normal. To maintain insureds’ trust, carriers need tools that can create long-term efficiencies, from writing policies to handling claims.

One highly effective tool that many carriers aren’t using? App-free video software, which can remotely evaluate risk, assess damage, triage claims and prevent fraud.

Here, I’ll dive into three use cases to show how video tech can help speed the underwriting and claims processes.

1. Use App-Free Video Tech to Handle Property Inspections

Property inspections – key for brick-and-mortar businesses – are an important part of the underwriting process. But they’re also a major time suck.

Typically, inspectors have to spend time traveling from site to site to work through their daily queue. If an inspector gets stuck in traffic, that can affect the time they have to complete each job. Add up multiple delays, and inspections might be bumped to the following day.

For insureds, these delays aren’t just inconvenient – they can extend the time it takes to receive an accurate premium. Carriers need efficient inspections to start each customer relationship on the right foot.

With app-free video tech, inspectors can thoroughly inspect properties without losing time in traffic. Here’s what a remote inspection looks like:

1. The inspector video-calls the insured via an SMS link – no app download needed.
2. The insured uses their smartphone camera to show the inspector areas of interest, like their industrial kitchen or HVAC system.
3. The inspector guides the insured through the inspection checklist, using screen capture and augmented reality features to take photographs and circle problem areas.
4. The insured can ask questions throughout (e.g., “How should I correct this trip hazard,” or “Which security system would you recommend?”), and the inspector can look up answers in real time.

Remote property inspections allow carriers to quickly evaluate risk, adjust pricing and recommend upgrades. The result: a faster underwriting process that leaves insureds satisfied.

See also: 5 Keys to Transforming Underwriting

2. Use Remote Video Tools to Triage and Assess Claims

When business owners file a claim, it can take several days for an on-site adjuster to arrive – and even months if the loss is disaster-related. But many businesses can’t afford to wait. They might need an inspection to reopen, especially if operating from another location isn’t feasible. And the longer they wait, the more money they lose.

One reason for slow response time, of course, is the sheer volume of claims in each adjuster’s queue. With up to 100 new claims a month, adjusters need the right tools to reduce backlog.

Again, app-free video software can help.

For example, let’s say an adjuster has a few properties in today’s queue: a couple of storm-damaged storefronts and a fully burnt-out restaurant. With remote video tech, the adjuster can video-call each business owner to get a quick look at the damage.

If the storm damage seems relatively mild – say, a few loose shingles or cracked windows – then the adjuster can inspect each storefront on the spot. They can use the time they save to thoroughly inspect the burnt-out restaurant (a possible arson) in person.

When adjusters remotely assess damage, they can gauge inspection needs without unnecessary travel time. This way, fewer jobs pile up in the queue – and insureds get a faster claims resolution.

3. Use Reporting and Analytics Software to Prevent Fraud

Insurance fraud costs nonlife insurance carriers over $40 billion each year. That’s why most carriers invest a lot of time in fraud prevention.

The good news? With tech like automated red flags and predictive modeling, it’s easier than ever to prevent fraud. But there’s room to increase efficiency. Just 35% of carriers use photo analytics software – a valuable fraud prevention tool during the underwriting and claims process.

To more efficiently mitigate your fraud risk, I recommend using a remote inspection platform that enables photo reporting and analytics.

After conducting a virtual inspection, inspectors and adjusters should be able to download an editable report that includes:

• Photos of the insured property. These can verify the extent of property damage or identify features that confer premium discounts (e.g., a smart security system).
• Geotags. Standard location metadata is relatively easy to overwrite. Geotags can independently prove an insured property’s location via linked map coordinates.
• Software integrations. This makes it easier to run photos through image recognition software and upload inspection information to your policy management system.

With the right reporting and analytics tools, carriers can use video-based insights to cover their bases and avoid fraud.

See also: Why Underwriters Don’t Underwrite Much

Go Digital to Stay Competitive

These days, more carriers than ever are adopting digital tools to boost efficiencies and better serve insureds. That’s especially true for small business insurers. Tech has proven key to insuring customers and driving profit at scale.

But there’s a lot of work to do. Worldwide, fewer than 25% of carriers have fully digitized the value chain. And there’s a growing revenue gap between all-digital giants and industry laggards.

Video-first inspections can help close that gap. With another tool in their digital toolkit, small business insurers can boost customer retention and preserve their revenue generation. They can even reduce their carbon emissions, thanks to fewer in-person inspections. The overall impact: a step toward staying competitive in an increasingly digital space.

When you're in a tough spot - personally or professionally - and not sure of where to go or what to do, you need to look within at your fear.

And then you need to use it as fuel to realize your goals.

Most of us experience fear as being friction, getting in the way of making clear-headed decisions or even taking action. Let's face it: Big change can be intimidating, and there are no guarantees that it will be successful. But if you use that fear as fuel, using it to motivate you to check out every factor that could go wrong and mitigate that negative potential, your odds of succeeding skyrocket.

Every client we've ever gotten involved with was in a crisis because of fear -  fear of change, fear of failure, fear of spending too much. In those cases, fear was preventing them from finding their own solutions. Those solutions were there for the taking the whole time, but the fear was so overpowering for management that they were afraid to make a move. They were even afraid to try to identify a move.

Flee the deadly comfort zone

As we head into what many economists and business owners think will be a turbulent 2023, riding into it with high inflation and worried about a possible recession, fear will be palpable. But rather than let fear paralyze your decision-making, let it fuel that process. If you are a growth-oriented business leader, it starts with accepting fear as part of the territory. As I told a group in a speaking engagement, If you get up in the morning and you're not afraid of anything, you need to be doing something else. In that case you're not doing what you want to do in life. You're just coasting, staying in your comfort zone.

Comfort is worse than fear because it's insidious. The more comfortable you get, the harder it is to do the things you really want to do. I don't believe there's a steady state; you're either succeeding or failing. There is no middle. If you're not growing, you're falling behind. Transformation truly never ends. You should always be looking at how to continue to move your business forward and how to adapt to your customers' needs.

But after comfort, fear is the next biggest problem for many businesses. Fear stops companies from moving forward and can ultimately finish them.

The worst decision is no decision

When I say fear is fuel, the objective is to bring fear down to a level you can manage and use to your advantage.

Because fear is an emotion, many business leaders don't apply a logical process to understanding it. Some people are better at managing it and building systems that allow them to operate within that realm, without limiting their progress.

One of the first things to understand is you will never get rid of fear. But what you can do is build controls and actions that remediate the effect of the fear.

The idea behind fear as fuel is, as human beings, we're designed to survive, but we also have an optimism bias psychologically. So that combination of a biased optimism and a fear mechanism sometimes tells us, "You're a little too optimistic, and you need to step back." For example, if you bring fear to the physical world and pretend it's a wall, when most people see that wall, they turn and walk away from it because they assume that they should just walk away.

In my opinion, all the hesitation in decision-making over the years has been based on fear and not understanding and managing the fear. And that pattern creates a downward spiral. Once you get caught in that, you don't make the next decision, or the next one, or the next one. Eventually you're not making decisions anymore, and your business is failing.

At the end of the day, decisions have to keep coming. Leaders at a company need to ask themselves, "What decisions do we need to make over the next year or two to achieve certain goals?" You build a culture of forward-thinking and decision-making. Analyze that wall standing in your way. Understand why it's there and what elements are creating it.

See also: Data-Driven Transformation

Let fear liberate, not debilitate

The bigger that wall is, the more you care about the outcome that's on the other side. The more you care about something, the more your fear reflex will strengthen. And the higher up you are in an organization and the more responsibility you have, the stronger those fears are that will impede your progress.

But you can let fear liberate you and navigate around obstacles by reducing the effect of your fear response. Fear will tell you essentially that there's something you're not thinking of or paying attention to and that there's something you need to address. You should use your fear to indicate where you should be going and to give you input into your planning.

Don't look at fear as something you should ignore, or allow it to automatically shift your path. You should look at it as a beacon, an element of information essentially.

When you stop thinking about fear as something that is designed to prevent you from making progress, then you can start making decisions. Then you can start looking at planning in a more honest and intentional way. Let fear be your fuel to keep your company moving forward.

Personal lines insurance rarely sticks with the status quo for long – think of the wealth of changes that have occurred in the past two years. Societal forces, such as the pandemic and inflation, paired with continuing changes across the industry, are pressing insurers to reevaluate their business priorities, strategies and investments, including their channel expansion plans for 2023 and beyond. 

A new research report from SMA reveals that 85% of personal lines insurers are developing or deploying channel expansion strategies. Surveyed executives in the segment also shared their perspectives about channel partnerships, anticipated distribution changes and their distribution channel expansion plans, disclosing some key insights: 

• Consolidation is top of mind: Unsurprisingly, most executives see M&A activity in the agent and broker space as the most significant influence of distribution change over the next few years.   

• Insurtech partnerships remain vital: Insurers continue to team up with insurtechs for personal lines distribution, with more than 40% stating they have two to five insurtech partnerships in place today.  

• Direct business will increase: Personal lines insurers pioneered the direct-to-consumer business model many years ago. While the approach is widespread, nearly half of insurers indicate they have plans to increase direct via call centers, web or mobile.  

See also: What Future Will We Choose?

The research also makes it clear how vital independent agents and brokers are for personal lines distribution, especially when working with customers with complex or unique risks. Insurers must look at ways of strengthening and growing those partnerships, including providing the necessary capabilities for agents and brokers to succeed. 

Given how quickly the landscape is evolving, we will likely have a very different channel environment in five years than the one we have today. But by evaluating strategies and proactively pursuing right-fit channel partnerships, personal lines insurers can tap into new opportunities and fortify against future potential challenges.    

For more information on personal lines distribution expansion strategies, see our recent research report, "Channel Strategies for P&C Personal Lines: Plans for 2023 and Beyond." This report is part of SMA's research series based on surveys and interviews of insurers, agencies, brokers, MGAs and others in the distribution channel, including insights from ReSource Pro's large footprint of distribution clients. 

With a heavy focus on maximizing production and profits during the holiday season (after all, kids need the latest and greatest in toys!), health and safety considerations often become an afterthought.

Unfortunately, this time of year frequently sees an increase in the number of workplace injuries, likely a result of added responsibilities, stress, tighter deadlines and a decreased workforce.

Extended working hours have been associated with a 37% increased risk of injury, and The National Safety Council estimates that 13% of workplace injuries are attributed to fatigue.

Safe operations should be a top priority for all businesses, and a central part of an effective operations ecosystem. In the worst of cases, there can be severe workplace accidents -- most of which could be avoided with proper safety measures and training.

To make sure organizations are prepared for the busy season ahead and beyond, here are Evotix's top tips for creating a safe workplace.

Revise your safety training program

Training is an integral part of any business, and implementing safety training in the workplace is a key driver of business success. Safety training ensures that operations are continuously strengthened, staff are engaged and productivity remains high among employees.

While conducting training regularly throughout the year is important, providing extra training sessions before holidays is paramount to running a strong and smooth operation. During this time, many organizations augment existing workforces with contract workers or seasonal staff, so before the holiday season begins, refresh your training programs and make sure your staff is up to speed on the latest safety protocols.

A consideration should be toolbox talks, a short five- to 15-minute presentation to the workforce that focuses on a single aspect of health and safety. Often created by safety managers, these talks are delivered by managers on the shop floor. Another suggestion is to attach QR codes to machines where employees can scan the code and be sent to a short training video. While training has already taken place, this short video provides reminders about how to use the equipment, what PPE should be worn, considerations to make before starting the equipment, etc.

Prepare for staff shortages

Inevitably, the holiday season marks a time when people are traveling, spending time with family and friends and looking forward to a well-deserved break. One of the main components of maintaining a safe and smooth working environment is ensuring you are properly staffed.

Ahead of the holiday season, confirm schedules and determine what areas of your business will need the most focus. If you can, hire seasonal workers to ensure employees aren't overworked, fatigued and more susceptible to workplace accidents. If you are unable to hire extra staff, explore training current employees in areas of the business that may be busier during the holiday.

Use EHS tools to prevent injuries

If you aren't already, ensure your safety protocols are up to date by using EHS health and safety software to prevent workplace accidents. Having these solutions in place allows you and your employees to have a comprehensive view of health and safety across the entire organization, in near real time and on demand.

Using these software solutions can also allow businesses to draw insights from reporting and anticipate any problems before they arise, ahead of the busier season. Keeping track of any incidents helps organization leaders learn from the data and prevent recurrences and empower a safer workplace. And, these tools often provide great training resources.

Ultimately, safety should be the first priority for any company. The better the safety measures are in an organization, the smoother operations run and the more effective they will be in supplying customers and generating profits. In turn, a safer workplace also makes for happier employees, improved productivity and, most importantly, fewer workplace accidents.

See also: The Key to Cutting Workers' Comp Costs

Make health and safety your guiding principle

Acting on all of these top tips will greatly improve the safety of your company workplace, but it's still important to pose the question: Is safety engrained in the fabric of your business? Does it start at the top and make its way down to the floor level?

While businesses often include characteristics such as honesty, ambition and integrity in their core beliefs and guiding principles, health and safety aren't typically outlined values. But the reality is, health and safety should be key values, if not the guiding ones because they mean you are putting the well-being of your employees at the forefront of your business.

For organizations, this is the time to ask if your business is doing all it can to care for employees and make any operational improvements. After all, when properly executed, effective health and safety practices can bring significant business value.

Following many decades where globalization ruled, as corporations searched for the lowest labor costs and ever greater efficiency, the tide appears to have turned. I believe that corporations will be reversing their globalization efforts for at least the next decade and likely far longer. 

Shocks to the global supply chain from the pandemic and the Russian invasion of Ukraine, plus heightened threats that China will invade Taiwan, have made companies realize that, in their search for efficiencies, they have been picking up nickels in front of steamrollers -- just ask Germany about its decision years ago to build pipelines and rely on Russia for more than half its natural gas only to now have it cut off. Political trends emphasizing nationalism are also pushing companies to "re-shore" or at least "friendshore" their manufacturing.

The retrenchment will have profound, lasting effects on global businesses and, of course, on the companies that insure them.  

Now, we humans have short memories, and some of the worst effects of recent disruptions have dissipated. The supply chain problems have been sorted out well enough that the cost of shipping a container from China to the U.S. has dropped 90% from its peak and is back to where it was before the pandemic. Nobody is taking pictures any longer of container ships queued up for weeks while waiting to unload in Long Beach, CA. Likewise, gasoline prices in the U.S. are back to where they were before Russia invaded Ukraine. 

At the same time, there have been setbacks for the most extreme political movements toward nationalism around the world. So, there may be some tendency to return to the status quo before all the disruptions of recent years. 

But I don't think so.

As this very smart piece at The Real Economy Blog explains, there are just too many factors that will unravel globalization. It won't be a quick process, any more than globalization was quick. I still remember the aha moment I had about how global businesses had become when I read Robert Reich's landmark article in Harvard Business Review, "Who Is Us?", about how companies seen as, say, American might generate most of their revenue and profit outside the country. And that article ran in 1990. 

The implications for insurers will be profound -- though hard to detail just yet. In some ways, life will be simpler as companies move to "de-risk" their supply chains. Interest rates may also remain high as central banks try to tame inflation, and high interest rates help insurers' investment portfolios. At the same time, inflation increases claims costs -- as many property/casualty insurers, especially in auto, are seeing now.

And so on. A lot of forces will be unleashed by de-globalization, just as there were by globalization, and I don't pretend to be able to sort them all out. I'm basically just saying: Buckle in for the long haul.

Cheers,

Paul