It would not be an overstatement to say that the insurance industry is built on data. For decades, insurers have harnessed data and analytics to drive risk analysis decisions, and perhaps no other segment has done that better than personal lines. In particular, data has transformed underwriting, and new research paints a picture of how insurers plan to continue leveraging data's power to accelerate underwriting transformation.

SMA's new eBook, "Personal Lines Underwriting Transformation: The New Age of Data," shows that 96% of insurer executives see personal lines underwriting undergoing significant changes within five years – remarkable given the shifts that have already occurred in the segment. Data will drive much of the transformation ahead, and insurers are being strategic about where they focus time and investments. According to the eBook, 76% of insurers are implementing data pre-fill, and 64% are in the same stage with data/analytics scoring. Nine in 10 insurers also have active plans in data augmentation.

Transformational technologies will also be critical in advancing personal lines underwriting, with 81% of insurers saying they are pushing transformation forward. Digital data generated by the Internet of Things, telematics/autonomous vehicles, aerial imagery, wearables and other sources can produce new insights into risks. As a result, insurers can achieve better precision in risk evaluation and pricing, particularly when accessing these new data sources with the help of AI.

Data will continue to be the cornerstone of transformation and remains mandatory to pursue change within personal lines underwriting. But the focus should not be on one area – insurers must balance multiple initiatives and solutions that work harmoniously together to successfully move their underwriting departments into a new age.

Learn more about the current state of underwriting transformation and the path forward for the personal lines segment by reading SMA's new eBook, "Personal Lines Underwriting Transformation: The New Age of Data."

In the full realm of digital retail, where even groceries can be ordered and delivered online, Trader Joe’s stands out as a unique business. There is no web ordering, no shipping, no delivery and no plans to change to be like other grocery stores.

Someone who has not visited Trader Joe’s might wonder, “How can they buck the trend when Walmart, Whole Foods and Target are fully committed to multi-channel order and delivery?”

Trader Joe’s, however, has an intangible, powerful formula for loyalty. I should know, as it is where I go for very specific things, and I love their seasonal items — like all their pumpkin stuff last fall! They have many products you can’t get anywhere else in the friendliest retail environment on earth. They also have some seriously friendly people, who all seem to be genuinely interested in each person who comes into the store. Somehow, the culture has crossed nearly all 500-plus stores. No matter which one you walk into, your experience is likely to be the same. A person who loves their job will make you feel glad you walked in.

Insurers (fortunately or unfortunately) can’t afford to skip the digital experience. They must meet prospects and customers at the points of most-likely contact. They must pursue multi-channel experiences with every service they can muster.

However, even though digital-ready insurers can’t act like Trader Joe’s employees, the idea of friendliness isn’t that far off the mark. Can insurance processes and next-level technologies place the "friendly" back into "customer-friendly"? Can they replicate the caring and welcoming feeling by turning their data and frameworks into tools for knowing customers? Anticipating their needs?  Can insurers create touchpoints that have always been a hallmark of the traditional agent or agency?

And, can the customer experience transformation be designed to improve loyalty, retention, customer lifetime value and Net Promoter Scores?

See also: Customer Segmentation Is Key

Catching up to customer expectations with consistency

Technology says a lot about a company. Does an insurer want its customers to do the work of the business? Does it want to facilitate every customer interaction possible? Does it want to meet somewhere in the middle on the bridge to service — looking conciliatory and offering some excellent services but leaving other experiences and products back in the 2010s? This is what has happened most recently in P&C, where many insurers have made quoting and buying easier. In many cases, first notice of loss (FNOL) has been made easier. But we still have areas of difficulty, such as digital payments and dealing with complex claims scenarios such as cat events or other large losses. 

The great news is that insurers largely know that they must improve their customer-facing systems, no matter what. In a Majesco-sponsored customer experience report developed by SMA, many gaps were highlighted between the desire for customer experience transformation and fully realizing the vision of “Customer 360.”

“SMA research indicates that 94% of commercial lines carriers and 100% of personal lines carriers have a strategic initiative to improve the customer experience. Personal lines are further along in the journey, but they are still in early stages relative to other industries. Small commercial lines has a great amount of new customer-centered activity. 72% of carriers serving the small commercial market are in the strategy or initial activity phases of their customer-focused initiatives, signaling great opportunity to differentiate.”

The imperative wouldn’t be so strong had it not been for the pandemic. The pandemic accelerated the need for change. It widened the gap between customer needs and expectations, and insurer capabilities. Suddenly, insurers were faced with a population that was increasingly loyal to convenience. Changing customer demographics and the temporary avoidance of bricks and mortar relationships fast-forwarded the digital mandate. Insurers were faced with double-digit changes in customer service preferences. Research firms, such as Gartner, were putting numbers to the theories, such as 44% of millennials preferring no human interaction.

The difficulty was not so much in the acceleration of change but in the inconsistent application of digital. Insurers weren’t prepared to transform all aspects of service at once. The situation seemed (and still may seem) monumental. Insurers need to plan for a unified digital experience across all interactions in the value chain. This may require internal transformation. It may require reaching out of the organization into new ecosystems that will enable a broader customer experience. The strategy and methods will vary by insurer, but the end results should be an organization that is infinitely friendlier and far more ready for the future of insurance.

The 360-degree view of the customer. Which hurdles stand in the way?

When does a transaction officially become a great experience? It may be the moment when a customer completes a specific transaction like payment, is able to do a different one like update authorized drivers on a policy and then also gets a copy of their insurance card digitally. They realize that it was easier than normal, they did not need to go to different portals or apps to do each one, as it accomplished what they needed holistically with no hassle. In today’s world, customers want us to make their lives easier, and in doing so we become customer-friendly.  

With that notion in mind, insurers must think in terms of a 360-degree view of the customer. A true 360-degree experience will allow customers to address all of their needs in one location (across multiple channels). Rather than having different apps, portals or user interfaces for separate functions, such as quoting/sales, billing, payments, claims and policy service, the customer should be able to access all of them, plus value-added services, from a single customer engagement platform.

The idea of the 360-degree view has been around for many years, but the typical insurance customer experience is still transactional and hasn’t reached the full 360-degree potential. When looking at the common insurance system structure, it’s easy to see why only the surface has been scratched.

Figure 1: Challenges Faced by Insurers for Customer 360

The SMA Customer Experience report identifies six technology-oriented challenges that insurers must overcome before they can deliver on the Customer 360 experience:

• Digital Transformation
• Data
• System Integration
• Ecosystem Integration
• System Design
• Aggregation and Mediation

See also: How to Unlock a 'Customer 360' View

Technology Hurdles Related to the Digital Experience

It’s easy to provide a list of hurdles but much more difficult to grasp each one in the context of the full system and its need for transformation. Let’s look briefly at the hurdles and touch on their vital relationship to providing an excellent customer experience.

Digital Transformation

Core systems are vital. Though they may be supplemented with new, cloud-based core systems or have cloud supplemental systems appended to the insurance system framework, they need real work and updates to extend their value into the digital realm. Often, these systems are so complex that planning around them is a major hurdle.

Data Transformation

Customer-oriented data is a major insurance challenge. Insurers traditionally hold a wealth of data, but its integration into the transaction workflow isn’t easy. Its ability to be used in real time is a hurdle. The application of analytics on the data holds great promise but hasn’t yet reached its full potential. Insurers that have strong capabilities to capture, define, route, organize and manage data on behalf of their customers are well-positioned to move toward the Customer 360 vision.

System Integration

Insurance systems are engines of connection. They must facilitate flow, provide data security and standardize and clean information where appropriate — and they are best when they integrate easily. Modern system architecture contains features like application programming interfaces (APIs), microservices, cloud-deployment capabilities and other methods for easing common integration burdens. Customer service is at a great disadvantage when it has to contend with system silos. Transformative integrations can improve everything from the back end to the front end.

Ecosystem Integration

The new customer experience represents not only improved transactions but a new set of customers! Ecosystem integration will expand the insurance product space into embedded insurance and new channels opened by new partners. How partner-friendly and ecosystem-friendly are yesterday’s insurance frameworks? Tomorrow’s growth will be hampered by a lack of ecosystem readiness. Insurers need to prepare to give great service, not only to their direct customers but to their partners’ customers, as well.

System Design

Nearly any perspective on monolithic systems will give you an understanding of their weaknesses. They are tremendously functional, but their architectures aren’t built for flexibility or speed. Component-based architectures, including a microservices approach to building and assembling capabilities results in a more flexible, adaptable system. Modern component designs are better-suited to enable faster speed to market for new products, adding partners, adding channels and incorporating today’s advanced technologies.

Aggregation and Mediation

How does it all work together? The consistent customer experience will be tied together in clean, uniform methods for data and communication orchestration. This may be an exercise undertaken for better customer understanding, but in reality all business users will benefit from the effort. Reporting will become easier. Product development will improve. Every area that depends on data will enjoy a renewed ability to view, understand and analyze the business.

Every effort tied to the customer should end with efficiency across the entire enterprise. This is where the promise of the insurance culture can pay off. As insurers get excited about the possibilities for customer experience transformation, they will be paving the way for their own user experience to improve dramatically. The satisfaction on the inside will be shown through the experience on the outside.

Electric vehicles just might be the next ticking time bomb threatening to blow up the loss ratios of incumbent insurers. Today, their overall impact on premiums and loss ratios is masked because EVs are a small slice of the overall pie, representing only about 6% of new vehicles sold in the U.S. in 2021. But, with this number doubling every year for the past three years, we could be seeing the beginning of an exponential adoption curve. With government incentives piling up, consumer demand growing and global production capacity increasing – it seems to be a matter of when, not if, for EVs. But recent industry research points to significantly higher collision repair costs for EVs, when compared with gas vehicles.     

EVs will continue to have a growing impact on those who do not understand and plan for the insurance implications. Look at California, where insurers are already having a difficult time achieving price adequacy. It just so happens to be the largest auto insurance market in the U.S., and it has the highest concentration of EVs in the U.S.

The impact of EVs today can be felt across many different areas of the insurance value chains – EVs change the nature of the risk in ways that actuaries do not fully understand yet. Their performance capabilities are unmatched, they weigh more, they produce more data, they have more advanced driver assistance features, their drivelines are less complex but contain more expensive parts, they are made in smaller production runs often by small startup companies, they have features that haven’t existed in vehicles before, there aren’t enough parts or qualified labor to maintain or fix them…the list of issues goes on and on. 

See also: Auto Claims and Collision Repair: The Great Reset

The typical actuarial approach to address the current severity trends through incremental pricing activities might help mitigate losses in the near term but may not be sustainable over the long run. Ignoring this segment by underwriting them out will jeopardize future growth opportunities for the incumbents.    

For those who do understand the EV opportunity, it represents a chance to capture a potentially profitable slice of the pie and create sources of value in the future. But profitable EV insurance may require a totally different approach, starting with the initial risk selection and ending with a seamless claims fulfilment process. It could involve engaging owners in new ways through new channels that build brand loyalty over time and, most importantly, create more safer drivers and fewer auto accidents. Embedded usage-based insurance offered by the OEMs is one way to capture this opportunity.  

What would it look like if OEMs were able to capture the best 20% to 30% of risks in the market? Because EVs create more data than their gas counterparts, OEMs are well positioned to use this data to more accurately identify safe drivers – potentially even starting with the initial test drive. They can offer branded insurance at the time of sale as a way to lower the overall cost of ownership and build loyalty. It doesn’t end at the dealership - OEMs will have continuing access to data about how the vehicle is being used that can accurately identify better risks. For those customers who do not opt in at the time of sale, or for the growing market of used EVs entering the used car market, OEMs will have exclusive access and control of an interesting new distribution channel – the infotainment systems built into the cars - in addition to creating a hyper-personalized insurance offer that can be sent through traditional channels. 

OEMs may have a lower-cost distribution channel and an efficient way to capture the most profitable new customers. And the key thing about this model – it repels the bad risks. Just look through the Reddit forums that are filled with aggressive drivers who appreciate the fact that Tesla doesn’t share their safety score with their insurer. It is an interesting new dynamic where some OEMs know more about the driving risks than the companies that insure them.   

When it comes to usage-based insurance, EV OEMs may have the secret ingredient to enable a more attractive value proposition for the customer. Rather than having your every move tracked via location services on a smartphone app, or being scored every time you accelerate or brake harshly, imagine your insurance was priced based on the kilowatt-hour of electricity used? The drivers who choose to drive aggressively in Ludacris mode will use more electricity and have higher premiums. The drivers who minimize their electricity usage and drive in Eco mode will be earning lower premiums.

OEM insurance might also help address another major problem that EV manufacturers are facing. The cost to build EVs is significantly more per vehicle than the cost to build a gas version. This issue has been largely hidden by the fact that EV manufacturers have focused on building more expensive, higher-margin luxury models. But for widespread adoption to occur, manufacturers will need to begin building more affordable models that appeal to more of the U.S. population. That means they will need to search out other revenue opportunities to make up the difference. Rather than creating monthly subscription fees to use their heated seats, insurance premiums could become a way to drive recurring annual revenue.

With the advanced safety features and driverless technologies that exist in most of the EVs on the market, manufacturers will be required to cover the risks of failure among these systems. Insuring the driver along with the on-board technology is an obvious next step, especially as the risk from the driver is mitigated through use of the technology. There would be fewer liability disputes to figure out whether the driver, or the car, was at fault after an accident. This change should result in fewer subrogation suits and therefore lower operating costs. In addition, as these features continue to improve and have a meaningful impact on reducing accidents, the OEM insurers would be best-positioned to benefit from the savings. 

The final piece of the puzzle is integrating the supply chain after an accident. An important assumption is that additional services like insurance will help to create more loyal customers, who would be more willing to have their cars repaired at OEM shops – as customer choice after an accident will always be important. Starting with immediate notification of an accident through real-time access to car sensor data, OEMs can streamline the process from the outset. The car could be towed to the right shop, and loaner vehicles could be dispatched directly to the accident scene. Having direct access to on-board cameras and other telemetry data would enable the OEM to instantly determine fault and avoid a prolonged and costly investigation, further reducing operating costs and allowing them to capitalize on subrogation or contributory negligence opportunities that are often missed today.     

OEMs will have the power to control severity after an accident, far more than any incumbent insurer ever dreamed of. The appraisal process as we currently know it may not need to exist. With OEMs having their own networks of dealerships and repair shops, and mechanics and body workers on their payrolls, there will be fewer incentives to inflate the cost of repairs. OEMs can ensure their parts inventories are funneled to their insured vehicles to further shorten repair times and reduce costs. 

When the OEMs have incentives to make a vehicle that is less expensive to repair after an accident, we could see an endless amount of innovations in the way vehicles are designed and built -- not just moving expensive sensors from behind the front bumper covers but creating entirely new approaches such as snap-on body panels and easily swappable motors, battery packs or even entire chassis.

Cars are designed to attract a certain type of buyer. The future might involve designing cars that are not only safer and easier to repair but that are ultimately more attractive to lower-risk drivers. When the OEMs use their data to create a more sophisticated understanding of the ideal insurance customer, they can better design vehicles to attract just those customers. This could create a cycle of efficiencies and savings that would be very valuable in the grand scheme of auto insurance.

Bottom line is that as EVs emerge and become a larger part of the fleet, we may need to rethink the current insurance model. We are already seeing some interesting moves emerging that address certain parts of this equation. Will these be effective at driving the change needed to support the growing challenges? Or will an entirely new type of insurance model be required?

Medical costs make up the biggest portion of workers' comp expenses, and while medical inflation in WC has remained moderate for the past decade, the recent spike in consumer prices—8.3% over the previous 12 months—has elevated concerns.

A Tale of Two Factors

When it comes to medical claim changes, price and utilization are the two driving forces.

In a detailed analysis, “Inflation and Workers Compensation Medical Costs—Overall Medical," NCCI looked at changes in paid medical costs compared with various price indexes, including the Consumer Price Index (CPI) and the Producer Price Index (PPI). The NCCI determined that the price index most closely reflecting medical cost distributions in WC is the Personal Health Care (PHC) index—a mix of CPI and PPI. Prices for medical services in WC are subject to inflationary trends, but such trends are tempered to some extent by changes in fee schedules and contractual agreements with service providers, among other factors.

Two other key observations: 

• While drug costs are declining, physician costs are up slightly, and facility costs are rising in the WC system
• Facility services have been the main contributor to changes in WC medical costs across regions—most prominently in the Southeast

By the Numbers

Between 2012 and 2019, WC paid costs increased at a relatively stable 1.5% annually. 2020 reflected the exceptional drop in new WC claims due to the COVID-19 pandemic. In 2021, paid medical costs per claim rose 2%. 

NCCI observed that, in 2021, WC medical costs in the Northeast and Southeast each increased by an estimated 3%, while the West rose by 2% and the Midwest by 1%. Every region except the Midwest had a slightly larger increase in 2021 WC medical costs relative to those observed between 2012 and 2019.

The countrywide distribution indicates approximately 80% of WC medical costs are for physician and facility services—drugs and all other services make up the remainder. While drugs paid in a calendar year may seem, the figure is based on payments made directly to service providers at the bill line level. As such, the distribution does not reflect payments to settle future medical benefits, which typically include a significant amount for prescription drugs.

See also: How Digital Health, Insurtech Are Adapting

The Bottom Line

As medical costs continue to grow at a relatively moderate rate, it’s worth keeping an eye on as it relates to the WC industry. As of September, NCCI estimates the CPI for medical services and commodities, net of health insurance retained earnings, is at 3.6%, and the PPI for healthcare services is at 2.4%. So far, medical cost containment measures such as fee schedules and changes in utilization practices have helped mitigate the impact of medical inflation.

In the next three installments of the inflation and workers' comp series, NCCI will delve into the different types of medical services—physicians, facilities and prescription drugs.

Over the past few years, insurers reexamined their strategies amid new demands and increasingly digital customer interactions, with underwriting departments, in particular, experiencing waves of changes. Now, new research shows the results of insurers’ efforts in transforming their underwriting businesses, and the small commercial segment is entering a new phase of automation.

SMA’s recently published eBook, “Small Commercial Lines Underwriting Transformation: The Next Level of Automation,” reveals that a small group of insurers have moved their underwriting plans past the modernization of policy admin systems to deploy transformational technologies and innovative underwriting tools. This group likely acknowledged the struggles with transformation during the pandemic and spent the past two years strategizing around innovative initiatives. However, more than half of insurers remain in earlier phases of digital transformation and are not investing heavily in transformational technologies and advanced automation tools.

The initiatives at the top of insurers’ agendas in 2022 include those involving data and analytics, such as pre-fill and scoring, which are being piloted or implemented at nearly all small commercial lines insurance companies. Eighty-nine percent of insurers are also planning or applying automated workflow technologies to their small business operations.

When considering how insurers are leveraging new tech and data, paired with the 83% of executives who expect big changes to small commercial underwriting within the next five years, all signs point to continued momentum toward increased automation in the segment. But now is the time for insurers to create their future road map and evaluate the new tech solutions and data-sourcing options in the underwriting space.

Drivers are, without a doubt, a fleet’s greatest asset. Because of that, ensuring their health and safety is of primary importance. At the same time, organizations must take into account that the behavior and performance of their drivers has an enormous impact on both corporate reputation and profitability. With more and more drivers on the road, there are naturally more risks associated with driving fleets. To better understand how to create a safe environment for drivers, it’s important to understand in what ways fleet drivers might be putting themselves – or others – at risk.

Dangers on the road

50 million people are injured each year due to traffic violations. These are just in reference to basic laws: following speed limits, adhering to a safe following distance, yielding to pedestrians and stopping at red lights, to name a few. Here are some sobering statistics:

• The leading cause of death in the U.S for ages one to 54 is road crashes.
• At least 20% of crashes are caused by drivers who have driver fatigue or fall asleep at the wheel.
• More than 50% of the 5 million yearly crashes in the U.S. are caused by aggressive drivers (with speeding being the most prevalent). Additionally, drivers between the ages of 19 and 39 are significantly more likely to engage in aggressive behaviors.
• Rear-ending is the most frequent type of crash (about 29%).
• Each year, about 2 million drivers who are in car accidents end up with permanent injuries.

These are just a handful of the things that can occur on the road, but one thing is clear: There will always be risks involved with driving. Within the fleet industry, it’s important to note that the most common cause of crashes is distracted driving. In fact, distracted driving injured more than 420,000 drivers and killed 3,142 people in 2020 alone, according to the National Highway Traffic Safety Administration (NHTSA).

It's not uncommon for someone stopped at a red light to quickly glance at their phone, but if it holds their attention and the light turns green, someone behind them may become impatient and honk, causing the driver to hit the gas without even looking around. Or perhaps a driver is running late to a job site and sends a text to their manager while driving and runs a red light. Either of these circumstances – and more – could wind up in a collision.

One report that included 3,411 responses from fleet safety professionals within an array of job functions, industries and fleet sizes, found that more than a third of accidents reported within a year showed the fleet driver at fault. When crashes occur, there will almost assuredly be costly repairs to vehicles, which can reduce the number of vehicles on a road. Crashes can also bring lawsuits, medical expenses, raised insurance costs and the risk of damaged reputation to an organization.

See also: How Geospatial Data Lowers Traffic Risk

Finding a solution

We know these are critical issues that must be addressed, but how? Nearly half of the fleet safety professionals from the previously mentioned study reported that planning, where safety is concerned, is not an issue, but executing it was a primary pain point in achieving safety goals. However, more than half of those who use telematics/GPS tracking reported that the technology is very effective in helping improve safety within a fleet. 

A telematics tool like a dash camera can detect a number of things, including hard acceleration, driver drowsiness, speed limit violations, following distance, seatbelt compliance and traffic light and stop sign violations, to name a few. Each second is analyzed for safety via artificial intelligence to recognize risky driving behaviors – and without any human intervention needed. AI can send alerts or provide coaching when drivers exceed any threshold that’s been set for a variety of behaviors. This provides drivers the opportunity to improve their habits on the road.

Should there be an incident, a dash camera can detect it in real time. This gives managers the ability to quickly determine who was at fault with video capture and then perform intelligent automated reporting for increased visibility across a fleet. Essentially, dash cameras can do all the heavy lifting when it comes to any review, evaluation and storage of footage.

When fleet managers deploy their drivers, they must protect not only the drivers but other drivers and pedestrians on the road, as well. Telematic tools like dash cameras empower organizations to recognize and correct dangerous behaviors. They are an invaluable asset that will create efficiency and safety, as well as reduce downtime and costs associated with unsafe driving habits, giving managers a way to confidently safeguard employees, a company’s reputation and the bottom line.

As a trained occupational therapist working in industrial wellness, I spent many years trying to prevent hand and upper extremity injuries in manufacturing and logistics centers. That meant more job site analyses, ergonomics studies and functional capacity evaluations than I can count.

In other words, I’ve spent a lot of time analyzing how human beings move through work environments and how they affect  our bodies. 

While we’ve certainly made significant progress in the way we engineer workplaces to mitigate injury, the rate of musculoskeletal disorders (MSDs) remains high. So does the economic impact on businesses. According to the U.S. Bureau of Labor and Statistics, MSDs are the single largest category of workplace injuries and are responsible for nearly 30% of all workers’ compensation costs. Injuries resulting from repetitive tasks (like hand-intensive work) cost U.S. businesses more than $2 billion per year.

Here’s the good news: Advanced technology is providing businesses the unprecedented ability to identify harmful movements and prevent MSD injuries. Wearable devices paired with artificial intelligence hold the potential to significantly reduce workers' comp costs for businesses and the insurance providers that protect them. 

MSD injuries cost employers serious money

The median nerve begins in the neck as a group of disparate roots that form together to travel down the upper arm, across the elbow, and into the forearm. As the nerve moves through the wrist en route to the hand, it passes through a narrow gap between bone and ligament known as the carpal tunnel. 

When the wrist is held in a compressed state for extended periods, the tissue surrounding the flexor tendons can swell, narrowing the carpal tunnel and putting pressure on the median nerve. The resulting reduction in blood supply and lymphatic flow can cause micro-tears, tingling, pain, weakness in the hand and, if left untreated, permanent nerve damage.

OSHA calculates that by the time a worker has had surgery and rehab to redress carpal tunnel syndrome, their employer has paid nearly $65,000 in direct and indirect costs—and that’s on the conservative side (price tags closer to $100,000 are common). Spread across a workforce of hundreds of people performing similar movements, these issues can quickly become a significant financial liability. 

Carpal tunnel is far from the only concern. Cubital tunnel, radial tunnel, medial and lateral epicondylitis, thoracic outlet syndrome and many other injuries plague people who perform the repetitive physical motions common on manufacturing and logistics floors.

Technology allows businesses to get proactive

How can businesses prevent these harmful repetitive motions? One solution is wearable devices that provide real-time feedback and coaching to prevent risky movements before they cause injury. Tech-enabled hand wraps and gloves can assist the safety team in measuring, identifying and recording the frequency and directions of movements in the hand, back and shoulder. If an individual is frequently working with excessive movements in one specific direction or working at the extreme end range of motion, that becomes visible.

AI software can then assist by deploying a pre-programmed haptic or biofeedback cue. One example of a haptic is a gentle buzz that can notify an employee any time they move their hands outside a neutral, thumbs-up position. Maintaining a safer position can alleviate a lot of the maladies described above.  

Other haptics, such as a reminder for workers to take a break and do a microstretch, can be employed as well. Examining the data allows safety teams to make the most accurate decision on which haptic makes the most sense for different workers.  

A leading logistics and warehousing company using this technology recently observed through the data that a large subset of workers performed 70% of their hand motions in two specific directions and at the extreme end range of motion for those recorded excessive movements. These unbalanced and excessive movements corresponded with recent diagnoses of DeQuervain’s Tenosynovitis, a painful wrist condition often caused by repetitive movements in a specific direction. 

Equipped with these findings, the employer conducted targeted training among the riskiest quartile of employees most prone to these unbalanced movements. The company instructed them on proper biomechanics and ergonomics, encouraging them to work in a neutral hand position. Back on the floor, the training was reinforced with haptic feedback: Any worker whose hand deviated beyond 30 degrees of the mid-range of motion point in each direction received a real-time vibration cue from the connected gloves to return to the neutral hand position.

By encouraging neutral hand position, the business saw a 38% reduction in risky movements.

See also: Why Cloud Platforms Are Critical

Workplace safety tech takes the guesswork out of injury prevention

Wearable devices and AI can’t replace on-site safety teams or clinical professionals trained in diagnosing and preventing injuries. But they can serve as essential tools and adjuncts to treatment in an ever-expanding technological toolbox. The safety professional is provided with more functional data that can be used to design, develop and implement objective programs and targeted coaching. And because this technology is typically expensed through an IT or facility operations monthly budget, it does not compete with health professional services. 

This technology extends the safety team’s visibility to the entire workforce and ensures that vulnerable employees aren’t lost in the shuffle. It cuts down on paperwork and improves response time. It allows businesses to become more proactive, which ultimately means fewer injuries. 

And the benefits don’t stop there.

It’s not hard to envision insurance companies offering premium reductions for businesses that ask their workers to wear connected devices: Show us your people are moving in a more biomechanically responsible way, and we’ll drop your rates. Compliant businesses could show the quantifiable results of stretch programs and ergonomic instruction. 

I can also see insurers from a workers' comp company having therapists use wearables as a tool during functional capacity evaluations, work conditioning services and PT/OT evaluations and treatment. This would provide objective and detailed insight into how effectively an individual is following their return-to-work plan and help with compliance of the home exercise program recommendations. If range of motion can be measured more functionally and precisely to better evaluate progress, employees could get back on the floor more quickly and safely.

Ultimately, this technology takes the guesswork out of injury prevention and recovery. It provides objective data that makes decision making cleaner. And the ROI benefit is significant: The system essentially pays for itself after preventing just one or two MSD injuries. (Remember that $65,000 price tag for carpal tunnel?)

For businesses looking to mitigate risk of injury to their workforce—and the costs that come along with it—investing in safety technology is no longer a luxury. It’s a necessity

It’s becoming increasingly common for insurance companies to offer discounts in exchange for agreeing to share some personal information, usually through high-tech monitoring. This information, about a driver’s habits behind the wheel or potential threats to a house, is valuable to insurers because it gives clearer insights into potential risk.

But an annual survey from Policygenius about technology and insurance shows that most consumers value their privacy more than savings. More than six in 10 people said that they would not install data-sharing devices — including apps, doorbell and dashboard cameras or sensors in their homes — for any discount amount.

Diving more deeply into the Policygenius findings:

• 68% of Americans would not install an app that collects driving behavior or location data for any insurance discount amount, up from 58% last year.
• 68% of Americans would not install a live dashboard camera for any insurance discount amount.
• 65% of Americans would not install smart-home devices (doorbell cameras, water sensors, thermostats) that collect personal data for any insurance discount amount.
• 77% of Americans would not install a smart doorbell camera that shares facial recognition data with third parties for any insurance discount amount, compared with 67% last year.

Some people indicated they could be persuaded to share personal information with their insurance companies as long as they were guaranteed a big discount. 

Depending on the type of data-sharing device and whether it’s for a home or car, between 67% and 74% of people who say they would install these devices would only do so for a discount that reduced their insurance premiums by at least half.

Still, even with promises of large discounts, the majority of people aren’t interested in sacrificing their privacy to save money.

Year over year, more Americans choose privacy over insurance discounts

When we compared the results with last year’s Home & Auto Insurance Technology Survey, we found that fewer drivers, homeowners, and renters say they would exchange privacy for discounted rates.

Last year, 58% to 67% of people (depending on the data-sharing device we asked about) said that no discount was worth sharing more data with their insurance companies. This year, 68% to 77% of consumers say they’re against giving their insurers access to more information for lower rates.

And fewer people said they would install a device that monitored their homes or driving habits even if it meant they could reduce their insurance premiums by half. Last year, 24% to 32% of people said that they would be open to this for a large discount; this year that range shrunk to 16% to 24% (depending on the device).

See also: Raising the Bar on Data Privacy

More than two thirds of people say that no discount is worth using dashcams and data-tracking apps

For the most part, drivers just aren’t interested in lower car insurance if it means downloading and using apps or installing dashboard cameras to monitor their driving habits.

Sixty-eight percent of people say that no discount is worth installing a usage-based app that tracks their driving behaviors and location. The same percentage of people say that they wouldn’t install a dashcam that recorded them while they drove.

Drivers are even cooler toward this tech than they were last year. In last year’s survey, 58% of drivers said that no discount was worth using an app that kept track of their driving habits, and 60% said they would decline to install a dashcam.

Not even the promise of large savings can convince many drivers to share their data. We asked whether drivers would be more open to downloading a driver-tracking app or dashcam if it meant their premiums would be reduced by half. Just 24% would install a camera, while only 22% of people would use a tracking app.

Most people wouldn't trade discounts for having data-collecting tech in their homes

Most Americans don’t want discounts in exchange for data-collecting tech in their homes, either. Sixty-five percent of people don’t think that any discount is worth installing a smart-home device, like a doorbell camera, water sensor or thermostat in their homes that would share data with their home insurance company.

Even fewer people would take a discount on their home insurance if it meant installing a smart doorbell camera with facial recognition capabilities that shared the data it collected. More than three-quarters (77%) of people would not install this type of camera in their homes for any size discount.

As with usage-based auto insurance and dash cams, most homeowners and renters aren’t persuaded by large discounts if it means giving up their privacy. Only 24% of people would get smart-home devices even if it reduced their premiums by half. Facial recognition-capable doorbells are the least popular among consumers: Just 16% said they would install this tech for cheaper home or renters insurance.

Overall, survey respondents indicated they were less likely to install any of this tech in their homes than a year ago. In 2021, 43% of those surveyed said they would install smart-home devices that collect personal data for a discount; this year, only 35% would. Facial recognition doorbells already weren’t very popular in last year’s survey — only one-third said installing one would be worth a discount. This year, that share dropped to just 23%.

For years now, Siri, Alexa and Google Home have been portrayed as just the beginning of a pathway to virtual assistants that will give each of us a J.A.R.V.I.S., the voice-activated software used by Iron Man to handle, well, just about everything. 

But the wave of layoffs happening at Amazon's Echo unit tells a different story.

That story will govern for the foreseeable future, and insurers should heed it as they consider how to incorporate natural language processing technologies into their operations. While many futurists have claimed that voice is such a natural means of communication that it will soon take over all customer/corporate interactions, Amazon's experience proves otherwise. 

Here's the core of the issue for Amazon and for any insurer implementing natural language processing technologies: I love my Echo and use it all the time, but I've never bought anything with it and am unlikely to ever do so. 

I set a lot of timers, ask every day or two about the temperature outdoors and maintain a running list for grocery shopping. Other than that, I seem to ask for people's ages -- if I want to see how long I'm going to have to watch my Tottenham Hotspurs suffer at the hands (feet?) of Liverpool forward Mo Salah, I might call out for his age, for instance.

But that's about it. Amazon has tried to entice me to do all kinds of things, including buying items on my shopping list via Amazon Prime. That should be the easiest extension for Alexa, but I've never even been tempted, because of the fundamental limitations of a voice interface. 

The limitations for Alexa, and all such voice interfaces, boil down to two insurmountable ones: trust and complexity.

Quite simply, I don't trust my Echo to act on my behalf. I expect Alexa to act on behalf of Amazon, its creator and manager. So, I wouldn't just tell Alexa to order cat food, even if it knew the brand I wanted. I assume Amazon would steer me toward a product or size or flavor that maximized its profit. 

And the trust problem becomes greater as the complexity of the purchase does. Who would ever say, "Alexa, get me a plane ticket to Chicago next Thursday, and a rental car, too"? Certainly, no one would ever buy an insurance policy via a voice interface, or even renew a policy, I imagine. 

The complexity problem figures in here, too. If I'm flying to Chicago, I can call up a host of options via Expedia on my computer screen and quickly sort through them based on a combination of convenience, price and favored airline, but that selection would take forever via voice -- "Remind me, Alexa, what the price was for that United flight at 6:45 a.m." Yes, software agents will eventually become sophisticated enough that they'll have a good handle on my preferences, but we're a long way from the day when a voice interface can let you sort through complexity nearly as efficiently as a visual one.

Voice interfaces can still do great things. Who gets lost these days, when you can say to your phone, "Hey, Siri, get me driving directions to XYZ"? In insurance, voice interfaces can remove a lot of drudgery and expense by having automated systems answer simple queries from customers, such as about when a payment is due or when a policy renews. Natural language processing used in chatbots and conversational AI allows for even more complex interactions via text, such as initiating a claim. 

But the trust and complexity issues will limit voice interfaces for the foreseeable future. 

You can't say Amazon didn't try. The Echo began in 2014 as an idea from then-CEO Jeff Bezos and got all the attention that the pet project of a billionaire founder can receive. The New York Times reported that the Echo had sustained $5 billion of losses by 2018, and spending only accelerated from there. Business Insider reports that the division that includes Echo will lose $10 billion just this year.

You can see where the money went, too. The technology is as slick as can be. 

The business case just isn't there yet, and it won't be any time soon.

Cheers,

Paul  

Where we stand dictates our view, right?

For 15 years, my view was the inside of large corporations, first as a consultant and later as an executive. But after five years as an entrepreneur, my line of sight back at the cliffs of corporate life reveals some new contours. Now, I can pick out some of the barriers to innovation in large companies that I unfortunately (and gleefully) participated in in the past.

“Big company thinking” is usually pejorative, but that’s really not fair. Institutions persist because they work, however imperfectly, unfairly and inefficiently at times. Big companies drive a huge portion of the economy. And they have a lot going for them that startups don’t – cash on the balance sheet, both depth and breadth of expertise, established distribution, stable go-to-market processes, cash on the balance sheet (you get my point). I sure do miss the infrastructure and support of a corporate job some days.

And it's not that big companies can't be innovative - we can all think of life-changing products built by the Fortune 100. It's just that scale bogs down agility almost without anyone noticing. These three patterns are especially pervasive: Spinning Plates Syndrome, the Department of No and Zombie Resurrection.

Spinning Plates Syndrome

One of the most terrifying moments as a new startup founder was staring at a blank document on my screen and realizing that absolutely nothing about Surround was going to exist unless my cofounder Jay or I (and later our team) willed it into being. Without repeated acts of creation, a startup literally does not exist.

The relative safety of corporate life all too easily conceals that foundational truth. The only things that will ever exist, other than the natural world, are things some human somewhere willed into being by doing productive work.

You remember back to high school physics? Work requires both force and movement. If it’s just force, it’s not work, it’s just…force. Same in the office. If you’re lots of force, but nothing is moving, that’s just effort, not work. And in large organizations, there’s a tendency to measure and reward effort, not progress. Keeping the plates spinning is super visible, and sure looks cool, but at the end of the day you put the plates down and you’re exactly where you started.

What does progress require? The courage to do something that’s possibly wrong, and an organization that doesn't punish mistakes. It takes courage to figure out how to do something that’s not been done before and show the results to others. Courage is a fragile bird, and the hand slapping in many corporate environments prevents that courage from taking flight.

What’s just effort without progress? Steering committee meetings. Projects that are so big that the overhead to deliver is a significant portion of the time spent. Status meetings. Detailed meeting minutes. Some of this is necessary, but spinning the plates is a distraction from the real work. No steering committee has ever had an engine.

What to do if you’re stuck in this loop? Look carefully at what you and the managers in your organization look for as proof of work. Is it fancy PowerPoint decks? Or is it a signed contract, a draft landing page, a delivered feature?

You get what you ask for.

See also: When You Have Too Many Good Innovation Ideas

The Department of No

Startups are relatively permission-free – everyone builds, everyone contributes and the projects are small enough that it’s usually easy enough to figure out what you’re supposed to be doing next. Asking a manager or coworker whether you’re permitted to make a change might well get you laughed out of a lot startups. Nobody has time for that.

However, corporate jobs often mean living in a permission-bound world. There’s serious downside to being caught doing something without permission (aka no plausible deniability) and relatively little upside.

The direct result is the Department of No.

Who often gets rewarded? The people who save the corporation from infamy and failure by bravely crushing everyone else’s ideas? Or the people who sometimes break things, carefully and in limited ways? The former is the Department of No. If you have a Department of No, you probably don’t have much innovation.

Big companies can do it well, though.

I worked at Progressive Insurance early in my career. Glenn Renwick was the CEO back then, and every month there was an all hands get together in the cafeteria in the Cleveland headquarters. They’d have a cake for all of that month’s birthdays (you know, the good kind, the sheet cakes with the swirly frosting and sprinkles). Glenn would speak for bit, and he’d share Progressive’s wins for the month.

Then he’d do something interesting. He’d list the failures, as well. Pilots that didn’t work, product launches that failed, advertising campaigns that fell flat. Sounds horrible, right?

Well, no.

He was calling out the good failures. The ones where someone had taken the initiative to come up with an idea, made a data-backed case for trying it, implemented it well, measured it, then shut it down and reported it. Glenn called out the names of the people involved, explained we were able learn from their work and led a round of applause.

Pretty darn powerful statement that failure is a learning opportunity for an organization, no?

Does your organization do cake-and-fails? You should.

Resurrecting Zombies

Technical debt is one thing you get to start a company without. I can’t even begin to describe how freeing that is. (In fact: nah nah nah nah nah. Ok, enough gloating). There’s more than technical debt in large organizations, though – there’s also historical debt.

You know the person in your department who knows everything that ever happened? Like that deal in 1973 that led your company to acquire Below Sea Level Homeowners Insurance Inc.? And the fee you’ve charged those homeowners for the doodad you send them every year? The 12 remaining customers who are expecting their doodads? And the person in your department who knows this and continually explains That It Is Crucial To Send The Doodads Because We Have Always Done It?

Well, the history of where a company has been is important. It's like Chesterton’s fence – if you come upon a fence, and it doesn’t make any sense where it is…pause for a moment. Someone put a lot of effort into putting it there for some reason. Best to understand why before you choose to tear it down, no? That being said, there are plenty of fences that should go. They create a clear path for innovation. But tearing down those fences takes courage, too, because those decisions may to be unpopular with both long-tenured staff and some customers. That doesn't make them the wrong decisions.

You cannot grow toward the future without letting go of at least some of the past. Startups have no past; big corporations do, and therefore need to decide what to hold on to, and what to let go.

Don't resurrect zombies, Kill off the zombies.

See also: Innovation: Top Down/Bottom Up

A Final Thought

People everywhere are full of ideas. It’s why we stood up on two legs and built grand civilizations. Willing innovation into being doesn’t usually require more ideas… it requires systematically clearing a path for those ideas to take flight. That means rewarding actual work, reducing the impact of naysayers and saying no to work your organization has outgrown. That’s saying yes to innovation.