Many years ago, when I watched "Biloxi Blues," the Neil Simon play about a young draftee suffering through basic training in Biloxi, Mississippi, I laughed hard at the way actor Matthew Broderick whined the line, "Man, it's hot. It's like Africa hot. Tarzan couldn't take this kind of hot."

I'm not laughing now. I can't swear that Tarzan couldn't take the "kind of hot" we're experiencing in California, but I'm certainly struggling. The high temperatures in the Central Valley have exceeded 110 for several days now and are expected to be between 100 and 110 for as far as the eye can see on weather forecasts. Even in the Lake Tahoe area, where I've spent many a pleasant summer, temperatures are so high and wood so dry that four fires have produced the Reno, Nev., weather station's first report of fire tornados -- the fires literally produced tornados of flame and laid waste to tens of thousands of acres.

What's next? Sharknados? And what, if anything, can we do?

Well, there certainly doesn't seem to be a break coming any time soon, and not just in California. While I whine about highs of maybe 113 in Northern California and the rolling brownouts and blackouts, Death Valley recorded 130 degrees down south, thought to be the world's highest temperature since 1931, and forecasts are for the heat wave to be unrelenting. Meanwhile, in Iowa, a derecho -- a wide line of fast-moving storms characterized by winds that can reach hurricane force, by tornados and by heavy rains -- devastated 12.4 million acres of soybeans and corn early last week. A city council member in Cedar Rapids, Iowa, said trees are piled six to 10 feet high along streets -- "It's like driving through a tunnel of green." The East Coast is facing its 11th named tropical storm so far this year, forming in the Atlantic, even though the 11th storm usually isn't named until well into October. (Storms are named when they reach a certain threat level.)

While the U.S. gets most of the focus just now, Siberia has had a crazy heat wave of its own. A town named Verkhoyansk just recorded a temperature of 100 degrees. That may not seem that extreme, but the town is in the Arctic Circle. It was previously known for tying the lowest temperature on record, at minus-90.

You can decide for yourself just how severe climate change will be and how quickly it will occur, but trend lines on heat certainly suggest to me that this won't be the last summer when I complain about Tarzan-level heat and when my friends on the East Coast have to batten down the hatches in the face of a string of hurricanes.

The only thing I know to suggest is to prepare. We had authors predicting a bad hurricane season last spring, such as in this article from May 10. We've also published extensively on better ways to understand wildfire risk, including in a three-part series whose first piece, dated July 6. The articles describe what seems to be a promising way to correlate various risks, even when the areas involved are not near each other.

I'd love to be able to offer ways to head off the sort of devastation that, say, Iowans are facing, but I don't imagine it'd do much good for me to tell the sun not to shine and the winds not to blow. So, better preparation is about all we can do for now.

The sorts of improvements in modeling described in those articles on hurricanes and wildfires can help. So can better sensors. Tiny, inexpensive weather stations dotting the countryside might pick up the signs of a derecho or other major storm faster than we can now.

Technology is also starting to help us react faster once tragedy strikes. Reports from the devastation in Iowa came in quickly, thanks to aerial surveys by drones, so recovery can started promptly. Parametric insurance policies or provisions written into standard policies can make a certain percentage of a claim available almost immediately, helping the insured get back on his or her feet faster.

There are even the beginnings of hope on prevention. Strings of small satellites that various companies are launching will monitor the Earth in real time and spot blazes when they are far smaller than most are when identified now. But that's mostly theory at this point. It'll take some time to implement.

This will be a slog. We'll do our best to keep you updated on promising developments and hope you'll pass along any ideas you have.

In the meantime, stay cool, stay dry and stay away from those fire tornados.

Paul

P.S. Here are the six articles I'd like to highlight from the past week:

COVID: Chance to Rethink Workers Comp

As insurers worry that the pandemic is depressing premiums, here is a way to rethink workers' comp -- plus two entirely new product ideas.

Why COVID-19 Must Accelerate Change

According to a survey, insurers are 50% behind consumer demand for service via online chat and 25% behind on service via website.

COVID-19 Sparks Revolution in Claims

The pandemic has pushed workers' comp toward telehealth, which is revolutionizing the claims process in four key ways.

5 Hurdles to Insurtech Success

Here are five things that stand between insurtechs and success -- but, please note, your mileage may vary.

Watch for This 1 Word on Customer Needs

Use this simple technique to uncover customer needs, drive innovation in customer experience and keep your business ahead of the curve.

An Inconvenient Sales Truth

It is no longer enough to show up with a fancy spreadsheet, promises of better service and a capabilities presentation.

Some of the most brilliant insights about your customers’ unmet needs can be found right under your “no’s.”

That’s a key lesson to be learned from companies that excel in customer experience (CX), a hallmark of which is that they’re really good at understanding the people they serve. Not just basic demographic details and personal preferences (though they're important). These companies also possess keen insight into their customers’ needs, wants and aspirations.

That insight helps drive smart, customer-centric innovation, which enables these firms to regularly deploy small improvements in the customer experience, as well as bigger, game-changing advancements. They have a skill that is particularly valuable during disruptive periods (such as recessions and pandemics), when customer needs are quickly evolving.

Many of these growth-fueling innovations are triggered when companies uncover unmet customer needs, which is essentially the holy grail of market research. Figure out how to address a customer need that others have yet to identify, and you’ll be in a market-leading position.

Organizations collectively spend tens of billions of dollars each year on market research, much of it focused on revealing overt and latent customer needs. While such investments can be valuable, they deserve to be supplemented with other intelligence-gathering techniques, some of which are decidedly low-cost.

One such example is an approach that your organization can employ any day of the week. All it involves is listening for one simple word whenever you, or anyone on your team, is interacting with prospects and customers. That word is “no.”

When someone in your organization has to utter the word “no” in response to a customer request (or uses any similar, more diplomatic term), it’s a signal that the customer might have a legitimate need that your business cannot currently satisfy.

Imagine all the questions that your sales representatives, service staff, billing specialists or any other employee fields where they have to tell the customer “no.”

Can your product do [x]? Can I fill out those forms electronically? Can I schedule an appointment online? Do you offer contactless pick-up and return? Can I switch to a different payment schedule? Can I control that device with my phone? Does it come in a smaller size? Is there a way I can track this order? Can you text me when the technician is on his way? Is there a trial so I can test out your service before buying?

At a lot of companies, customer questions that can’t be answered in the affirmative basically turn into “shoulder shrug” moments. Employees say “no” to the customer, resign themselves to being somewhat unhelpful and then move on to the next inquiry.

But imagine if employees took careful note of every time they had to say “no” to the customer, every time they had to acknowledge that they (or the product they were selling/servicing) couldn’t accommodate the customer’s need.

And then imagine that employees had a regular forum where those “stories of no” could be shared with management, where themes could be spotted, where unmet customer needs could be identified and where remedial innovation could be spurred.

See also: COVID: Agents’ Chance to Rethink Insurance

In practice, this could be as simple as a supervisor periodically asking staff at the end of the day to describe situations where they had to say “no” to a customer. Or it could be more sophisticated, with employees actually recording that information in a centralized database that management then reviews.

The point is that with every no, there’s a chance to dive a bit deeper – to not just deliver the customer experience, but to improve it. To not just help one customer, but all customers. To question the status quo, and re-imagine how the experience could be wholly redesigned, or even just tweaked, to better accommodate an apparent customer need.

Instill the discipline in your organization to take this extra step, and over time it will help reveal unmet customer needs that can drive meaningful CX improvements and innovations. All without the expense of a big market research project.

It can be quite a challenge to create and maintain a competitively differentiated customer experience. To make that endeavor a little easier, however, just remember to “follow your no’s.”

This article can originally be found here.

When I closed my agency offices at the beginning of the coronavirus pandemic, right away my independent agency team (now working remotely) got an influx of calls, emails and texts from clients about their coverages and concerns related to the lockdown. The team also began to contact customers with group emails through our agency management system as well as one-on-one phone calls, emails and texts.

The first call I got was from the owner of a private day care center in Texas asking what coverage would pay for the center’s loss of income. After quickly reviewing the policy coverages and exclusions, I was able to explain how business interruption coverage would and would not apply in light of a pandemic. I was able to refer my client to the exclusions on the policy forms.

Sounds routine. But it would never have been possible without the education and experience I’ve had over the 43 years of my insurance career. I never sought education specifically to help my agency survive a pandemic, that’s for sure! But I’ve always wanted to educate myself as much as possible on product knowledge, sales, customer service and agency management to be prepared for whatever happens.

This crisis is proof positive of the value of professional education. Knowledge matters. It can only be acquired by experience and education — nothing else. And the lockdown shows, every day, how flexibility is so vital. The business “reflexes” that came out during coronavirus are only possible through “reps” during not-quite-so-hectic times. 

I feel like 43 years in the industry prepared me to thrive during the crisis — and also helped me better position my agency for the future. 

Learn From What Just Happened

This year has shown us that things can change in a hurry. We as insurance professionals are responsible for helping people adapt, respond and recover. 

Even though I had a lot of industry experience going into the pandemic, I soon realized I had to apply what I know in new ways — and keep learning. That’s my biggest takeaway for the future: How can I best blend my experience “B.C.” (before crisis) with what happened “D.C.” (during crisis) so my agency is better off “A.D.” (after disruption)? My safety and comfort depend on getting this right, as do my family, my agency team and my clients.

Help Is a Two-Way Street

My agency is centered in the small town of White House, Tenn., with about 18,000 population. You might expect it’s an ultra-local business with little interest in serving customers outside our geographic area. Not so. 

In fact, once the first rush of pandemic client communications was under our belt, my agency team started fielding queries from the customers of other agencies that weren’t answering their calls. We obliged, but it left me wondering why agency owners would let their customers and their business flounder.

See also: Step 1 to Your After-COVID Future

During the health crisis, some areas have fared poorly while others have had no shortages of supplies, masks and so on. People in one area look to those in another for help.

The same is true for insurance knowledge. Insurance professionals must step up no matter where help is needed. It’s not good enough to hunker down and hope the trouble passes over your agency’s neighborhood. A crisis is a growth opportunity, one where the most knowledgeable, responsive and flexible insurance professionals win the day.

Using Technology to Serve the Customer and Ourselves

Much is said about how technology has changed the industry. I’ve seen my share of changes, some of which were hard.

Technology by itself should not be the driver of change. Leaders’ attention to customer experience and customer value must be the driver. And these kinds of changes are just starting.

As an example, I believe that insurance professionals should be prepared to use whatever communication channel a client or prospect prefers. Our experience throughout the pandemic has confirmed that text messaging is only going to grow in importance for customers. Other communication channels may ebb and flow.

Technology also enables independent agencies to close or reduce office space in favor of remote work over the long term, not just through this crisis. Tools like video calls have been a key part of that transition, but I’m keenly interested of how the entrepreneurial spirit and ingenuity in the insurance industry and technology sector will give us even more impressive tools in one, five or 10 years.

Long-Term Rewards of Sales Training

The pandemic has highlighted the value of sales training for client retention at my firm. I’m gratified that my team’s education — from numerous industry groups, including carriers as well as AIMS Society, an educational organization led by agent volunteers — is carrying us through the pandemic.

Case in point: As the effects of the pandemic hit home with our clients, we realized again that empathy, listening and understanding aren’t just nice words. They’re valuable business skills. AIMS Society courses for the Certified Professional Insurance Agent (CPIA) designation include the topic, “how to deliver the bad news.” That comes to the forefront in response to our clients’ questions, when our team was able to provide deep product knowledge while also delivering bad news in sensitive and helpful ways. 

Think of it this way: If a doctor didn't keep updating her knowledge, how would she know how to treat a new symptom? It should be the same for us as agency owners: Prepare for the future through education.

Sales education teaches us what type of salesperson we are. It also teaches us how to determine the individual personalities and work styles of our prospects and clients and the best ways to reach them. I can’t remain in my own comfort zone and work only with people like me (“huggy, huggy people," I call us, "who love to be with people and talk”). My delivery of information should be tailored for the individual client.

Continuing Education, the Underused Resource

There’s a whole realm of valuable education available to the IA channel. But it’s underused. As agency owners, we strive to run better businesses. Everything from human resources to legal to managing people to systems is dynamic. So why aren’t we business owners taking optimum advantage of education? 

Here are the big mountains I need to climb as an agency owner. What are yours?

• Never miss the chance to use change to create new sales opportunities. Education will be the biggest contributor to my future understanding.
• Be able to identify threats. Leaders need to understand and evaluate coming threats and assess how others are adapting.
• Minimize disruption and manage a crisis. There’s nothing that bothers me more than disruption or crisis on the HR side, including employee turnover, so I need better preparation.
• Manage employees effectively. When my agency switched to remote work, team interactions changed in ways I didn’t expect. For example, I realized that face-to-face video meetings had to allow time for some of the casual conversations and catch-up that happened in the office. I’m curious, again, as to what new and emerging opportunities we’ll be able to find.

See also: COVID-19: The Long Slog Ahead

The Critical Question

Will we as independent agents use all our experience (no matter how difficult) going forward? Will we push ourselves to keep our education current and learn to adapt to our customers’ and prospects’ changing needs? If we do, we’ll find a payoff in future situations.

Or are we going to try to forget that this business crisis brought on by the pandemic happened? Hoping it doesn’t happen again isn’t a strategy. Use all you’ve learned, in the past and in the present.

While the COVID-19 pandemic and the ensuing economic downturn have prompted consumers to curb their spending, consumers are increasingly mindful of risk and therefore more inclined to purchase insurance. 

A recent survey conducted by Lightico and Sapiens found that a fifth of consumers are exploring purchasing new auto, home and life insurance products amid the pandemic. Those directly affected by the coronavirus – meaning they or someone they knew tested positive – were even more likely to be considering more spending on insurance products. These consumers were 2.3 times as likely to plan on spending more on property and life insurance and 1.8 times as likely to say they would spend more on healthcare and health insurance.

Given that nearly half of consumers in the survey reported that their incomes had plunged by at least 20% since the pandemic started, those figures are remarkable – but for insurers to truly meet the needs of these consumers and stand out from the competition, they must deliver streamlined digital experiences, powered by strong core systems.

Here’s what today’s consumers expect from insurers, and what insurers can do to provide the quality digital journeys that customers crave:

See also: Strategic Planning in the COVID-19 Era

Living in a Digital World

Long before the novel coronavirus outbreak began, consumers were living in a world digitally transformed. Thanks to innovations in e-commerce, content streaming, mobility and beyond, people now enjoy rapid access to consumer goods, groceries, movies, music, car services and much more, all available at their fingertips. 

After months of widespread remote work, millions more now have first-hand experience with a virtually overnight shift in workflows, collaboration and company culture, enabled by innovations in cloud computing, information technology and business software. 

Not surprisingly, 68% of consumers surveyed in the Lightico-Sapiens study indicated that they expect businesses, including insurers, to enhance their capabilities for serving customers remotely. When it comes to purchasing new products and policies, today’s consumers have little patience for analog practices: Three in five consumers surveyed said that they now have less patience for filling out and sending paperwork, and 51% had already e-signed documents within the previous month. 

What Insurers and Carriers Should Do

How satisfied are consumers with insurers’ track record of meeting their expectations for seamless digital experiences? In key areas, insurers are falling well short. According to the survey, insurers are 50% behind consumer demand for online chat servicing and 25% behind demand for website servicing.

The takeaway? While it’s vital for insurers to digitize their business processes and strengthen their core systems, these steps alone won’t suffice to meet the market’s needs. Ramping up online communication capabilities is an absolute must, and insurers can boost the effectiveness of that outreach by getting smart about data.

Robust customer data collection – supported by efficient core systems – yields critical insights for understanding customer behavior, diversifying product offerings and unlocking revenue opportunities. This is especially important amid the pandemic, with the public set to continue practicing some degree of social distancing for the foreseeable future and predictions that COVID-19 will permanently alter consumer behavior. 

Accenture consultancy points to much greater use of digital commerce as one of the most consequential of these changes. While face-to-face sales and customer interactions aren’t going the way of the dinosaurs, insurers seeking to thrive in this new normal must make room for a more prominent role for AI-powered chatbots, personalization and cloud-powered services. Each of these is only possible with a granular understanding of how customers behave, what they want and how insurers can make their offerings meet customers’ needs and expectations.

Necessity, the pandemic has harshly reminded the world, is the mother of invention. For insurers, the crisis has driven home the reality that innovation is a fundamental matter of survival. Through creative partnerships, investments in technology and a commitment to improving customer service, insurers and carriers will propel lasting industry changes and position themselves to meet evolving consumer demands.

Workers' compensation pre-COVID was an extremely competitive market and now, as we’re in the midst of COVID, continues to be a highly competitive line of business. With declining payrolls, insurers are looking for ways to differentiate and retain their existing book of business while finding ways to attract and grow new business.

Well, I have an idea for you. It’s an entirely new product for workers' compensation.

You may be asking: How can that be? Workers' compensation is defined by law, right? It’s a state-mandated program consisting of payments required to be made to an employee who is injured or disabled in connection with work. The coverage is mandated by law, the benefits are defined by law and the rates are determined by law. So how can you create a new workers' compensation product?

Well, what if you redefined the product? What if instead of saying, “Our goal is to provide employers with the means to meet their legally mandated requirements,” you instead said, “Our goal is to help the citizens of our state(s) recover when an employee is injured”? That change in wording suddenly opens up a wide variety of other benefits that could be provided. You can think of it as two new endorsements that wrap around the traditional workers' compensation coverage.

The first endorsement is what you can think of as Employee Plus. Similar to accident insurance, which wraps around a traditional health policy and provides additional benefits for a fee, Employee Plus could provide additional benefits for a fee – for the kinds of expenses that employee incur when injured. For example:

• Transportation expenses for family members trying to get to the hospital or to the pharmacy to pick up a prescription or for the injured worker to get to physical therapy visits.
• Childcare reimbursement for family members who are at the hospital with their injured family member and are unable to care for children.
• Costs for food delivery for family members who no longer have time to prepare meals. Even just a few meals could help.
• Housekeeping, gardening or laundry services that may be needed when a family member is either injured and unable to perform these tasks themselves or are spending their time caring for the injured family member.
• Family therapy – to deal with the aftermath of the injury.
• Spousal retraining – for those who now have to go back to work or find new ways of generating more income as the employee is injured.
• Remodeling expenses for a home – if the injured worker is severely disabled and can no longer easily navigate through a home. Ramps, wider doors and remodeled showers can all be key to allowing an injured worker to stay in their home.
• College scholarships for the children of injured workers

You get it: the kinds of out-of-pocket costs that only occur if someone is injured. There’s probably a zillion other options that could be provided – or an insurer could choose a subset of these to provide. These benefits would be small fixed limits and may be triggered by the level of injury. A permanent total injury might trigger a $10,000 scholarship where a temporary partial would not. The employer could choose to offer one or more of these and could choose the limit it wants to provide injured employees. What a great employee benefit an employer could offer to attract or retain employees.

Similar to Employee Plus, an insurer could launch Employer Plus, to cover the kinds of additional expenses an employer incurs when an employee is injured. Examples might be:

• Public relations support should the accident hit the news and create a reputation risk.
• Therapy for employees who witnessed the accident.
• Costs for equipment needed if a job needs to be redesigned to accommodate the worker.
• Staff augmentation reimbursement to cover the salary of a temporary replacement worker.
• Head hunter fees – to cover the costs of finding a permanent replacement.

There are likely a number of additional options that could be provided on a fixed limits basis and triggered by the severity of the injury. Today, workers' compensation provides no recovery solutions for the employer - it only covers the injured workers. But put yourself in the place of the employer or the injured worker, identify all the hidden costs and irritants -- and, voila, you've found a new product.

See also: Big Changes Coming for Workers’ Comp

Our work on customer experience shows that while many insurers are focused on making the process fast and easy, customers also expect help recovering from their losses -beyond a simple check. And while some insurers provide some of these services outside of the contract when they feel it is warranted, there is no reason that you couldn’t explicitly offer these coverages and generate a little revenue while demonstrating that you truly care about their recovery.

Hoping this idea triggers some insurers to consider new ways of differentiating themselves in a highly regulated product line. And feel free to reach out if you want to brainstorm on this some more!

This blog entry has been reprinted with permission from Celent.

If agencies can't do a better job of explaining their value, better marketers will convince consumers they are more ethical than you.

A recent press release from an insurtech caught my attention and ire. What first caught my eye was how the startup measured success in coverage placed, i.e., total policy limits rather than premiums or commissions, to make themselves look successful. For people who don't know the difference, it was impressive that a 12-person startup agency could place $2 billion in coverage in four years! The average 12-person agency only has $1.2 million to $1.6 million in revenue. This insurtech is outperforming the average agency by 1,430 times!

$2 billion in coverage at $1 million in liability only is just 2,000 policies. Assuming there is some auto and comp and whatever else in there, let's say 1.5 policies per customer; that is only 1,333 customers; or, in other words, they basically wrote one account per day over four years. Those kinds of policies average around $500 commission each, which may be generous but I'll use that figure. That amounts to $667,000 in revenue. Divide that by 12 people, and the result is $55,000 revenue per person.

Insurtech is supposed to be about scale. The definition of scale, in all directness, is doing more with fewer people. Scale is nothing else. $55,000 in revenue per person is not scale.

What next caught my attention was their statement that the traditional insurance model provides agents incentives to sell customers policies they don't need or contain inflated coverage limits. I'd really like to see solid proof that this regularly occurs. I don't know the captive agent world well, so maybe it happens there, but I doubt it. I know the independent agency world extremely well, and I have rarely seen this happen.

The system actually works the opposite of their statement. In the traditional agency model, for many complex and intertwined reasons, agents actually have more incentive to sell clients less coverage than they need even though they are threatened with E&O suits for doing so! I have seen a large number of agents sued for not selling adequate limits or the right coverages. In the COVID-19 world, has anyone seen an agent sued for selling too much business income insurance?

For 25 years, I have been cajoling, arguing, demanding, yelling and screaming at agents to use coverage checklists, and yet agents are no more likely to use coverage checklists today than 25 years ago. (I'm a failure!) It has been proven over and over in E&O studies that using coverage checklists to ensure clients are offered adequate coverages is the best solution for both clients and agents!

I have only seen one suit brought in the independent agency world for selling too much insurance, and the suit was aimed at the carrier because it was the carrier's practices, not the agencies' practices, that allegedly resulted in excessive and unnecessary limits. I've never even heard of an agent being sued for selling clients too much insurance.

This insurtech advised that their model works because they make up the difference with finance fees. Their story sounds great to a large proportion of consumers. Consumers do not know how much insurance they need because no agent has ever educated them on how much insurance they need. I teach a lot of insurance classes and have conducted a lot of E&O audits; few people ever discuss the importance of drop down UM coverage on an umbrella policy (in fact, many agents and customer services representatives don't even talk about the importance of an umbrella policy). Selling unnecessary coverage is really, I mean really, really hard when most agents do not even offer necessary coverage. I was with a retired family member who had paid off his mortgage and wanted to drop his homeowners' insurance. I explained he would lose his liability coverage. This is an extremely smart person and yet not one single agent in 40 years had ever explained the importance of liability coverage to him!

Professional agents will lose if they don't educate their clients as to why they need more coverage. They will lose to agents who actually advise those same clients, who do not have enough insurance, that their incumbent agent has actually sold them too much coverage! Pay for what you need, they say, but the consumer has no idea what they need!

See also: 4 Post-COVID-19 Trends for Insurers

A huge proportion of producers exacerbate this problem when their client asks, "How much liability should I purchase?" The producer frequently answers, "As much as you can afford." What is the difference between this "professional" advice and insurtechs' advertising, "Buy as much as you can afford." It's the same advice! The correct response is to help your customer figure out what they can afford to lose and then recommend that they buy an appropriate limit.

The insurtech's press release articulates so much of what I see as wrong and unfair in this industry. Yet, the failure of agents to educate their clients and offer the right coverages and their own lack of knowledge about coverages has opened the door wide for this kind of upside-down and sideways marketing pitch to actually make sense to consumers. A low down payment with significant finance fees has been a successful business model for a long, long time.

One other possibly dubious claim is that insureds will still save 35% because carriers are willing to reduce their price because the insurtech agent is so efficient. This claim may be true in some instances because reducing acquisition cost is a huge goal for carriers today. However, a 35% savings? Let's do the math on this:

The industry average loss ratio has been 61% over the last five years. The average profit margin is around 10%, including investment income. Independent agents are paid an average of around 13%, including comp. So, no matter what an agent does, the most carriers can save is 13% by eliminating agency compensation. An argument may exist relative to some additional savings relative to frictional costs, but not enough. The carriers' average total expense ratio is around 28% excluding LAE. If I remove the commission of 13%, that only leaves 15%. A 35% reduction in expenses is impossible.

Additionally, using a 61% loss ratio, and if the rate is 35% less, the loss ratio would be 96%, all else being equal. Even if all commissions are eliminated, the loss ratio is still 83%. An 83% loss ratio is not sustainable.

Now, maybe the quoted 35% savings is meant to mirror other disingenuous price saving advertising such as, "The average customer who switched saved $350!" That is an entirely pointless but quite effective ploy. Let's say 1,000 people shopped that carrier's site, and 990 stayed with their existing carrier. The remaining 10 saved an average of $350. The people who did not switch may have saved an average of $350 by not switching, so they did not switch! Only counting one side of a ledger is illegal in finance, and perhaps advertising rules should be revised along the same lines. Either way, advertising that carriers are offering lower rates when it is just a math gimmick is mixing and matching in a manner that is highly questionable.

A true 35% savings from the same carrier requires special filings by that carrier or the use of a special purpose PUP company with previously filed deviated rates. That is an awful lot of work for a startup agency that has so little commission they announce sales in total policy limits.

See also: 10 Tips for Moving Online in COVID World

Always check the math on claims like this startup's. More importantly, sell the right coverages, educate your clients on how much coverage they actually need and show them you won't sell coverages they do not need. Don't let firms like this insurtech beat you.

You can find this article originally published here.

We like to joke that we started an insurtech because we wanted to make money as slowly as possible. It’s an exceedingly painful joke.

We were asked recently to discuss issues that insurtech companies face. We came up with five things that stand between insurtechs and success. Here they are, but, please note, your mileage may differ.

1) The math – All insurtechs have one super-challenging math equation to overcome –

Risk = Bad

Insurtech = Risk

Therefore, Insurtech = Bad

Insurtechs are busy trying to make themselves more inventive. Which only makes them riskier. As this equation shows us, that’s a bad thing. Much more attention needs to be paid to how insurtechs can de-risk themselves and make it easier for insurance professionals to rely on them.

2) Insurtechs are talking revolution to an industry that makes evolution look fast. Most insurtechs believe that they are going to revolutionize the insurance industry. Unfortunately for the revolutionizing insurtech, insurance has been around for 300 years without them and can probably be around for another 300 years without them. Insurance is an incremental improvement industry. It’s evolution over revolution.

3) Insurtechs don’t understand who they’re selling to. If you’ve never been to an insurtech pitch-fest, it’s filled with T-shirt and torn jeans entrepreneurs pitching to suit-and-tie-wearing insurance executives. We’re not saying that the insurtechs should be wearing suits, but a nice pair of pants and a coat wouldn’t hurt you. And we’re not even broaching the subject of industry knowledge here.

See also: Insurtechs Are Specializing  

4) Insurance companies are slow. When an insurance company talks about doing something this year, the earth will revolve three times around the sun before that something happens. They’re called insurance-years. They’re like dog-years but in reverse. Insurtechs have to plan for their first real sale being three years away, not three months. Blaming carriers for their slow sales cycles means you haven’t prepared properly.

5) Even the best mousetrap will not cause insurers to beat a path to your door. Insurance companies and the law of large numbers work together very well to make money. It’s very hard to break through the status quo, even with the latest and greatest whatever-it-is. Insurance employees aren’t normally rewarded for taking chances on something unproven. This lack of urgency to do something different can kill your insurtech.

Success IS possible in insurtech! Between new data, new processes and interesting technologies, insurtechs ARE winning. By understanding some of the hurdles you’ll face before achieving success, you might be able to shave some time off one of the most daunting sales challenges ever invented – selling to the insurance industry. Good luck, and we’ll see you in the marketplace!

This article was originally published on HazardHub.

When discussing acquisition strategy with producers, I’ll often hear them say, “Yeah, we compete on price, but we retain on service.”

The fact they even make this statement is a sign they know price alone isn’t enough. Yet, they don’t take the time to build a sales process that takes the decision away from price alone.

Price is always a factor; however, in most instances in this industry it is the level playing ground. With precious few exceptions, brokers have access to the same carriers, same plan designs and same prices. By admittedly competing on price, brokers/advisers never give themselves a fair shot at earning new business. This is why close ratios and new business volumes in most instances are way too low.

At least when it comes to fully insured plans, isn’t getting quotes one of the most basic tasks a broker does? By “basic,” I don’t necessarily mean it’s easy, but being able to get quotes and negotiate the renewal is, undoubtedly, a minimum expectation that business owners have of their adviser.

In baseball, the tie goes to the runner. The “runner” in our game is the incumbent broker who will almost always win the spreadsheet game.

You retain on what?

Now, let’s talk about the “we retain on service” declaration. Once again, isn’t this just another minimum expectation a business owner has of an adviser? Don’t they expect you to fix problems, advocate on their behalf and respond quickly?

Now, put both of these back together. If a business owner was working with an adviser who wasn’t able to handle the renewal effectively or who didn’t provide good service, what do you think the owner would do?

No doubt, the owner would fire the adviser in a heartbeat. The owner would fire the adviser because he wasn't even meeting the minimum expectations.

Service PLUS

Some try to use a capabilities presentation as a tie-breaker. They accumulate a long list of “value-added services” (we prefer to call them non-insurance solutions) and drone on and on about all the extra stuff they provide their clients.

See also: Will COVID-19 Spur Life Insurance Sales?

Guess what? In today’s benefits’ world, that list of stuff is now part of the minimum expectations. If you don’t have the tools, don’t even bother showing up for the job.

Sure, you will occasionally win with the spreadsheet when going against a way-too-traditional broker. You may even catch the incumbent asleep at the service wheel and pick up an account that way from time to time. And, just maybe, you were an early adopter for that very solution an employer wants but hasn’t yet been offered. It does happen, just not often enough.

Don’t find a false sense of security from those occasional wins.

The universe insists on balance

Here’s the reality of client attraction and retention. You will lose every account the same way you won it. This happens because you train clients on how to buy based on the way you sell to them in the first place.

The most hypocritical of all are “spreadsheeters,” who are offended when a client asks other brokers to quote at renewal. Who do you think taught them that?!

Advisers whose value proposition is limited to the price of the insurance product and fixing stuff when it breaks are effectively saying, “Hire me because I can meet the minimum expectations better than your current guy/gal.”

A subtle but profound shift

We’ve already agreed, price is important. However, what is way more important than the price on the spreadsheet is an adviser’s ability to put together an overall cost control strategy. THIS is what should be discussed during the sales process. The spreadsheet is simply a lagging indicator (yes, I know underwriters are predicting future claims) of what has already happened. You should be competing based on your ability to develop a strategy that will help moving forward.

We also agree the non-insurance solutions in your capabilities binder are essential. However, just scrolling through the list of what you have to offer leaves you sounding like every other broker.

It’s time to dig into those solutions the way they were intended to be used. After all, you invested in them because they solve real problems faced by clients. Put yourself in the seat of that buyer. Do you think the buyer is more interested in listening to your we-have-it-too list of resources or in the list of problems they are struggling with that they need to solve? No-brainer, right?!

See also: Crisis Mitigation Beyond COVID-19

Don’t be lazy

This isn’t some profound insight, I know. However, most of your competitors are taking the lazy route to new business. Genuinely solving an expanding list of problems takes work. It is no longer enough to show up with a fancy spreadsheet, promises of better service and a capabilities presentation.

Make yourself the painfully obvious choice. Your new business acquisition strategy must be built on proving you can continually deliver better results than anyone else. When this is the way you acquire new business, when it’s the client experience you provide, you will find yourself losing fewer and fewer clients.

You can find this article originally published here.

While coronavirus news is often bleak and sometimes downright depressing, there may be a silver lining for claims management. The global pandemic has pushed the importance of virtual care and claims management technology to the forefront. It has ignited a fire in the workers’ compensation industry, inspiring companies to find ways to quickly identify and safely treat cases, while minimizing the spread of the virus. 

COVID-19 has revealed the importance of a claims management process that is transparent, data-driven and accessible to all stakeholders. From expanded telehealth options to the newest technology in claims management, including integrated platforms and patient-focused tools, the workers’ compensation industry is evolving. 

The future of claims management and virtual care leverages innovative technologies and artificial intelligence, and it is catching fire across the industry. Here are some examples of the revolutionary trends in claims management:

#1. Telehealth is HOT

While telehealth was introduced for workers’ compensation cases about six years ago, the journey to adoption has been slow and bumpy as employers and injured workers were hesitant to make the virtual leap. Before the pandemic, only 8% of Americans had ever used telemedicine, but that changed almost overnight with some medical providers reporting up to 95% of post-COVID-19 patient visits now being conducted virtually.  

Telehealth allows injured workers to quickly connect to providers via telephonic evaluations and video visits. Injured workers can be seen much faster, especially those who may be remote, at a distance from existing medical facilities, or working during off hours. 

Since its introduction, telehealth has significantly improved workers’ compensation management and the care of injured workers. According to CorVel, a national provider of risk management solutions that was among the first to launch telehealth services in workers’ compensation, data measuring the impact of telehealth programs over a five-year period showed:

• Treatment wait times have been reduced from an average of two hours to 10 minutes
• Treatment costs have been reduced anywhere from $100 to $850 per visit, depending on the specialty, with improved quality of care
• The number of unnecessary medication prescriptions has been reduced by nearly 50%
• Patient satisfaction rates have improved from 3.65 to 4.8 on a scale of 1 to 5

See also: COVID: Agents’ Chance to Rethink Insurance

#2. As COVID-19 Rages, Telehealth Expands to Create End-to-End Solutions

As private insurers and public health programs, including Medicare and Medicaid, are now providing reimbursement for remote office visits, at-home patient monitoring and physician-to-physician consults, it is clear that telehealth is here to stay. However, COVID-19 has forced us to move past traditional telehealth to address the full episode of care—from beginning to end. 

Expanded virtual care solutions provide the ability to engage the injured worker, treat the injury or illness and manage care remotely, minimizing the risk for all parties involved. From initial injury or exposure to return to work, virtual services are playing a role to ease the process for claims management professionals, employees and payers and the injured worker:

• From the first moment of an injury or exposure, communication is critical, especially in the midst of a pandemic. Virtual 24/7 nurse triage is being used more than ever to connect injured workers with a registered nurse for immediate medical evaluation and care direction. Companies have also implemented special hotlines for employers and employees who present with COVID-19 symptoms or who need additional information. 
• After being screened by a triage nurse, telehealth connects injured workers with a provider through a virtual visit via a computer or smart device. The virtual visit facilitates more immediate care for remote workers or those who are required to shelter in place. Patients who need testing are directed to a provider who manages the process to minimize the potential for infection and the possible spread of the disease. Follow-up protocols are being put in place for infected patients, making sure they get support and education throughout the incubation period. Remote care and communication ease this process and keep employees and providers safe.
• Injured workers’ with more complex care or continuing needs can also benefit from virtual services, including rehabilitation by telehealth, video medical visits, home delivery of prescriptions and durable medical equipment and coordination of any diagnostic testing to aid a rapid return to work and minimize exposure to the virus. 
• When it’s time to return to work, virtual services help companies perform employee assessment screenings and provide education to promote a safe workspace based on CDC guidelines. 

#3. Connecting the Dots: Integrated Claims Management and Artificial Intelligence

While telehealth has made major strides during the pandemic, it is the combination of big data, artificial intelligence and telehealth that is now delivering new improvements in care and claims management. An integrated platform with the ability to manage the full episode of care through one system simplifies workflows, allowing claims professionals more time to focus on the injured worker, while delivering patient-centered engagement, and prompt, open communication for all stakeholders

The application of artificial intelligence combined with big data can catch potential flags and danger signals much faster than a busy claims professional reading reams of text and reports. Leveraging big data and artificial intelligence overcomes the hurdle of significant delays before relevant data is identified, analyzed and acted upon. By quickly analyzing multiple data streams to identify specific patterns and flag potential snags, AI-driven analytics can provide an early warning system that gives claims handlers, case managers, and medical providers actionable information to speed up and smooth out the claims resolution process and ensure that the patient gets the best care, reducing the likelihood of complications, friction and a costly and drawn-out claim.

Instead of spending hours reading through notes and documents to get a picture of the injured worker’s progress, a direct communication alerts stakeholders to a development in the injured workers’ condition that needs immediate attention. 

For case managers and claims adjusters, the ability to automatically identify problems that would have required hours of searching for in notes and files is a huge boon to their efficiency and job satisfaction. Now, they can focus on problem-solving for the injured worker versus being consumed by data and paperwork. 

• One example of how prescriptive analytics is being used is to evaluate the morphine equivalency of a patient’s medications to detect emerging problems. When a certain threshold is reached, the claims professional receives an automated notice in real time, allowing for immediate intervention to find safer options for pain management. Pairing this will telehealth allows us to offer a biopsychosocial solution for care management versus just the bio-medical model.  

#4 Technology With Heart

To improve case management even further, companies are finding ways to put the thought process of nurses and claims experts at the center of technology. This unique case management codification is changing how claims are managed and improving the claims management process for nurses, claims management professionals, employers and the injured workers. 

Traditional case management reporting has been notorious for voluminous documentation outlining the status and activity of the case manager, requiring the reader to dedicate hours of reading only to try to decipher the significant details and navigate through the medical jargon and abbreviation contained within the report. The value of case management was measured more on words per page versus actual interventions and outcomes.

New codification, leveraging the nurses' thought process, gives claims professionals the information needed to act quickly without the lengthy process of reading through extensive notes and documentation. It identifies risk and flags potential snags, providing an early warning system that provides actionable information to speed up and smooth out the claims resolution process and ensure that the patient gets the best care. Instead of spending hours reading through notes and documents to get a picture of the injured worker’s progress, claims managers can get direct communication alerting them to a development in the injured workers’ condition that needs immediate attention.

• For example, codification can alert the claim administrator of pain that is preventing the injured employee from returning to work. The platform immediately notifies the claim administrator when an injured worker is expected to recover but is experiencing decreased function due to pain. Actions are recommended based on data entered by the nurse case manager. This allows the claims administrator to promptly address potential issues that may impede restoration of  the injured worker’s comfort and function. The prompt response can help the employee heal and get back to work as quickly as possible. 

This innovative technology reduces disability duration, improves return-to-work and stay-at-work outcomes and lowers claims costs like never before. In fact, cases referred less than 30 days from date of injury result in 30% higher savings on average, and litigation rates are decreased about 50% when cases are referred to case management within the first 7 to 30 days.

See also: The Case for Paying COVID BII Claims  

What’s Next?

COVID-19 is a reminder that behind every claim is an incredibly valuable worker who needs attention from the first moment an incident occurs. With innovative integrated technologies, we have the ability to keep workers safe and provide exceptional care by leveraging virtual tools and enabling end-to-end care. As telehealth has risen to the forefront during this crisis because of its ability to provide the best care possible at any time and from any location, it is also inspiring several other advancements that will enhance patient care, including:

• Patient specificity, matching patients with the “right provider,” is on the rise and already being implemented to provide Spanish-speaking workers with a Spanish-speaking nurse and provider. At CorVel, this patient specificity matching is already happening for 85% of Spanish-speaking injured workers. In the future, telehealth will allow us to analyze the specific needs of a patient and then match that patient with the right provider for the case. 
• Second opinions via telehealth allow us to confer with some of the top specialists in the country, who have no financial interest in the outcome, in order for the patient to make the best care decisions. Anyone who has been through a surgery has seen that the shared decision making on the risk-reward of the procedure is handed to you on a clip board as you are about to be wheeled into the OR. Having an expert second opinion will help guide treatment decisions and put the patient’s mind at ease.
• As telehealth is expanding to specialists so are the peripheral devices designed to support care in this medium. A great example is the use of Tyto-care, which connects to a smart phone to allow pediatrics to see inside the patient’s ear or throat remotely. As demand for telehealth increases, we can expect to see more FDA-approved devices available to support virtual care.   

Telehealth will remain a critical tool for managing workers’ compensation cases even after COVID-19 because of its ability to reduce costs, improve satisfaction, and keep workers safe. This combination of virtual services to manage care remotely, patient-centered engagement and prompt, open communication for all stakeholders is changing the way claims are managed and is the future of claims management.