How many companies do you hear say, "We are customer-centric"? Pretty much all of them, right? To be fair, I can't imagine many would ever come out and say they are NOT customer-centric. But I rarely believe the claim of being customer-centric. What I think most companies mean is that they are product-centric first, then and only then customer-centric. That is: What’s in our kit bag that we can sell to you? We as the consumer end up with multiple product (centric) offerings and do the orchestration and administration ourselves. This is the way it’s always been. The average consumer has between 12 and 17 individual insurance products. Think about it: home, motor, pet, life, gadget, protection, health... the list goes on. Then add up the number of people per household. What happens when you have four adults (two parents, two kids): Is that 40 policies? For grudge purchases like insurance, that's a whole load of grudge! Another way to validate this product-centricity -- when you call your insurer and the rep asks you for your policy number before your name! If we innovate and design products in silos, we create great individual products -- but do we miss the big picture? We create a fragmented and poor end-to-end experience for customers, leaving them to do all the hard work. We may as well buy products from multiple providers (which in most cases we do). There are very few composite carriers that have got this right (or are moving toward an integrated approach). We make the problem worse by advertising in the same silos (in the U.K., at least) on our price comparison sites and focus on how long it takes to get cover: home insurance in eight minutes, travel in three and life insurance in three. LV did a study saying we spend more time choosing our annual holiday than we do buying life insurance. That just seems mad to me! How are we meant to engage with customers or get them to fall in love with what we are offering? We need new methods! See also: So, You Want to Work With Insurtechs?   When Is Insurance NOT Insurance? I am a firm believer of falling in love with the things we want. I don’t want:

• Auto insurance - I want the ability to drive from place to place.
• Buildings insurance. I want the cover I need so that my mortgage company gives me the money to buy a house.
• Health insurance - I want the help to stay healthy and out of hospital and so on. You get the idea here.

Partly, this is the move from reactive to preventive capabilities - or at least that's what we say in the insurance circles. See here for the Great Insurtech Debate that covered some of this. I LOVE YOU To help move away from these multiple product silos, the key for me is the addition of some sort of service. Customers actually want more than the insurance product. So give them the same products, this time shielded by a services layer they actually need and engage with. This service layer would have a number of fundamental impacts, both positive and negative: Positives:

• greater customer-centricity, as the services layer does the orchestration/administration
• less burden on the customer at the product level - makes our lives more convenient and gives us time back
• higher number of products per customer for the carrier (usually an important or at least measured metric across the industry -- and ranges from 1.1 per customer to six)

Negatives

• may reduce insurance premium written despite being more profitable because of the service revenue
• may reduce transparency? Will the regulators like this?

That leaves the new model looking more like this: the service layer getting bigger, the insurance slices shrinking and all the lines blurred between the once product-centric and siloed innovation world. It also means we innovate at the customer level, not the product level. Feels like a WIN WIN WIN. So What Do These Services Look Like? There are tons of examples here that can be called up and not just in personal lines. In the same way I pay for uptime on aircraft engines, I can do the same from Hartford Steam Boiler given their IoT acquisitions, with preventive maintenance and servicing vs. buying the policy outright in the first place. Some initial examples could include: For insurers, the next question is: Do I need to own those services, or could I just partner with multiple other providers to focus on the right outcome? Think about emergency home repair in your home policy or legal cover on your motor cover. These are still at a product level but not owned by the insurer themselves. The key question is - What did the customer come out to buy in the first place? Step out a level and start to aggregate the thinking at the customer (need), level not the (individual) product level. One of my favorite examples is Peugeot's Just Add Fuel. It plays to many things for me -- from mobility as a service to brilliant orchestration of the end-to-end things you need to drive: servicing, tax, roadside assistance, tires and, of course, insurance. Super-convenient and hassle-free! I call the Peugeot approach embedded and invisible insurance. Many folks don't like this term or general principle, asking what happens to all the spending on identity, brand and direct marketing. Will regulators like the approach -- is it transparent enough? The winner will be the most efficient manufacturer. A great example of this is CoverGenius, which is integrating to the commerce level, not making the customer do the swivel chair integration! Hear from Mitch Doust, too, on the InsurTech Insider podcast here on what they are up to and how they enable embedded insurance experiences for their customers. See also: Predicting the Future of Insurtech   A great example from another industry on removing barriers for customers comes from Match.com. Any single parents wanting to go on a date get up to three hours babysitting free of charge. Now, I’m not single, but finding a babysitter is nearly impossible where we live. Beyond Insurance So let's assume for one minute that the top half of my customer circle is filled with tens of insurance products that we all have. Now expand to look at the services we engage with on a regular basis and are likely to love as little as insurance. I quickly arrive at utilities and banking, with many lessons and observations that I think can be worked through for insurers, too. Utilities It’s fair to say we love these (read: care as little) as much as we do insurance. It’s pretty much a commodity product with some big legacy incumbents and some startups. Sound familiar? The startups have some unique and interesting propositions, be it great user experience (Bulb is my favorite), 100% renewable energy or something else. There are price comparison sites helping you find the best/cheapest option based on your usage and preferences. But just like insurance, there is a level of inertia that limits people from switching energy providers. That said, there are a number of things going on here that may, just may, have material impacts for how we engage insurers. Specifically, automatic provider switching! There’s been a whole host of firms pop up and offer this service. In the U.K., we have Labrador, Flipper, WeFlip and now AutoSergi from the price comparison website giants themselves, plus many others. With Flipper, you pay a monthly subscription of just £2.50 to automatically flip to lower-cost providers, but it's free until you have made savings. In the U.S.. you have BillShark, and this is just the tip of the iceberg. The Guardian ran a piece late last year on how we can help people change providers for the best deal, in some cases saving £1,500 per year. There are easily 10-plus players in this space now, although not without challenge. I recall Flipper has been to the brink and back, and, just this month, it's reported that Labrador has gone bust (here). Challenges aside, take the idea of auto switching to insurance? Would most of us actually care if our journey out was insured to a different provider to the journey back, or house insured with provider X one month and a different one the next? The Final Ingredient in the Cake: Banking As much as I love all of the new Neo Banks and challenger capabilities such as Starling, Monzo, Yolt, Emma and hundreds of others, my life seems to take place on my credit card. While I have moved to a Neo Bank (and properly moved, shutting down my old account), it does pretty much what I had before. Yes, maybe with a shinier interface. Yes, in a more engaging way. But I have my money in, and then bills out. It's not that complicated. What sets my bank apart is the Market Place, which enables access to insurance through a number of providers, as well as many other services and utilities to make use of the open banking and transactional data. Another New Bank, Monzo, which could be valued at $2 billion if the latest rumored raise is correct, has an iconic following for its Hot Coral card. The more than 1.5 million customers give Monzo an opportunity to service this customer base with more than just banking. In a recent blog, Monzo talked about services that could be added: bill switching, clearer fair insurance and much more. With All These Ingredients, How Do We Make Cake? Many all-in-one services already exist. One of my favorites is Onedox, which wraps all of the above into a single service and has a website and app that allow you to add:

• household bills, including broadband, media, phone, streaming services
• other stuff, like when my mortgage is due, my TV license, my local council tax and much more
• having all the bills (pdfs) downloaded to one place without me having to log in anywhere else

I can add multiple providers, I get one-click energy switching and a neat app to store all this stuff in one place, rather than log into my separate providers and accounts. See also: 3 Insurtech Trends Accelerating in 2019   Keep going. Add insurance providers (below) and soon insight through open banking. See here for the vision on that particular one. I find Onedox super helpful and already notice behavior changes, in that I don't need to go to any of the other providers. Youtility is another that was recently featured in the national press. So, who will own the customer of the future? We want our time back. Period. For insurers, this means that we can no longer offer something people can't fall in love with, or want last in the chain of thoughts. We have to find ways to blur the lines. Why can't insurers take the front foot on this one, creating and orchestrating partnerships that add value? Summary I have a few key questions that keep coming up again and again:

• When is insurance not insurance? Will we focus on the service, not the underlying cover?
• Who will own the customer of the future? Is it the utility, bank or insurance company?
• What other industries have done a great job at orchestrating their own and other services into a single, convenient marketplace or offering?
• How does the U.K. market differ from Central Europe, the U.S. or Asia?
• Is there a combined service you would subscribe to if offered?

I can summarize this story in five points:

1. Value-added services blur the lines between product silos, changing the premium and profit mix for carriers.
2. Insurance can become embedded and invisible in the underlying service.
3. As services move beyond insurance only, there are plenty of ingredients, but we eat cake!
4. Watch out for open banking and utility switching -- if they win the race, where does that leave us?
5. The change is happening already.

Ultimately, there is no point serving customers all the individual ingredients and saying, go make it yourself. They really just want cake! As always, would love your thoughts, builds, challenges on this.

Until recently, the typical insurance customer was a baby boomer or Gen Xer, but that is changing. As these two generations mature, millennials – those born between 1981 and 1996 – are rising to take their place. This emergence of a new consumer cohort comes just at the right time for insurers. The free flow of capital and technology has created a Darwinian Economy where survival depends on an insurer’s ability to adapt. Insurers have been feeling the squeeze as deal volume declines and renewals shrink. Regulatory barriers and the push to modernize the customer experience only add to the pressure. In this fierce battle for market share, millennials present a new source of growth. Millennial businesses, homes and families need insurance. In fact, millennials already account for 16% of vehicle insurance spending, 12% of health insurance spending and 6.9% of personal and life insurance. Those numbers will grow as millennials enter their peak earning years. As more millennials are ready to purchase insurance products, what will they be looking for, and how can insurers capture their share of the millennial wallet? Shaped by the Great Recession To better understand millennials, consider the economic climate in which they were raised. Millennials grew up as the tech bubble burst and the Great Recession hit. Along the way, they amassed huge student loan debts. When they graduated, finding good secure employment was difficult. The Federal Reserve Bank has summed up millennials’ economic position compared with prior generations. They have lower real incomes than earlier generations did at a similar age, fewer assets and a greater debt load. While millennials may appear to be a poor target for insurers today, their fortunes will change over the next 10 years. According to Deloitte, total U.S. wealth is expected to balloon to $120 trillion by 2030. As the Silent Generation and baby boomer share shrinks from more than 80% to just over half, millennials will see a fourfold share increase. How can insurers prepare to serve this new market? Millennials are frugal and savvy shoppers. They do their research before buying. Insurance for this generation needs to be transparent and economical. Provide plenty of information on your website, and consider pay-as-you-go, usage-based insurance. See also: Millennials Demand Modern Experience   Millennials at Work Millennials have been tagged as lazy and entitled but are more likely just misunderstood. They have a better work ethic than they are given credit for and are more financially aware than prior generations. As children of the tech boom and the Great Recession, they value entrepreneurship and the need to prepare for disaster. These experiences, above others, will drive their future insurance preferences. In the small business world, millennials may be the most insurance-needy generation ever. Morgan Stanley and the Boston Consulting Group (BCG) estimate that, by 2020, millennials and Gen Xers will collectively own more than 60% of U.S small businesses, up from 38% in 2016. Millennials are emerging as a new source of growth for small business insurers. What will attract millennial business owners to an insurer? Start with a digital customer experience. Morgan Stanley and BCG project digitally underwritten insurance will grow from $4 billion to $33 billion by 2020. They say, “going digital may be expensive and painful at first, but in the long run it will save time, cut costs and allow insurers to better tap the dynamic and growing opportunities in the small-business market.” Millennials also value simplicity. Morgan Stanley suggests making “products less complex, with easier-to-understand terms and a less cumbersome claims process.” The Tech-Native Generation Millennials are the generation of instantaneous chat, purchase and socialize. From research to communicating, they are fundamentally different than their generational predecessors. Texting and smartphones are second nature. For insurers, this means traditional channels may not be enough to engage millennials. They are online consumers and are more likely than any prior generation to purchase through a connected device. A recent study found that 85% of millennials own a smartphone, and 53% prefer to use it to shop online. The mobile experience you provide is critical. One study found that perceived mobile usefulness and ease-of-use influence shopping attitude and purchase intent among millennials. A final factor to consider is transparency. Millennials are savvy shoppers and will expect to understand a product before they buy. In a study from Label Insight, transparency ranks at the top of customer loyalty factors for millennials, with 78% valuing it. See also: 3 Reasons Millennials Should Join Industry   Explain coverages visually and complement your online experience with easy access to agents for complex questions. Concluding Thoughts Millennials are the first tech-native generation. They grew up accustomed to online transactions and instant response. They expect all the services they use to act this way. They are frugal, smart shoppers and very brand loyal when they establish a preference. Responsiveness, transparency and economy are essential if you wish to address this market. Offer products that are easy to understand, priced fairly and sold digitally, and you will capture your fair share of this new growth opportunity. Excerpted, with permission, from “The Insurer’s Millennial Playbook.” Request a copy of the complete e-book at https://www.instec-corp.com/millennial-insurance-form.

In 2016, California teen Amanda Clark was on the phone when her Chevrolet Trailblazer rolled three times, landing on its roof. According to the Sacramento Bee, Clark wrote: “I hate the thought of dying without my family knowing how I felt about them.” Yet one year later, Clark was in a second auto accident. She was driving while on the phone again and lost control of her car. Cellphone records showed that she was texting. She was found unresponsive at the scene and died the next day. These stories of distracted driving are becoming more common among U.S. drivers, sadly. Drivers continue to pick up their cellphones—for social media reasons, nonetheless—while behind the wheel, removing their attention from what’s happening around them to focus on a five-inch screen. As April’s Distracted Driving Awareness Month arrives, DriversEd.com has released new survey data in its 2019 Distracted Driving and Social Media Report. The most alarming findings: 55% of surveyed participants admit to checking social media while behind the wheel, and 25% said they’ve even recorded a video while behind the wheel. “There’s no way around it: The data is startling. I wish I could say the solution is as simple as parents talking to their teen drivers about the dangers of distracted driving. But parents are also the ones checking their Facebook, watching YouTube videos and recording Instagram videos,” said Laura Adams, safety and education analyst at DriversEd.com. “We are in an ever-growing distracted driving crisis, and the consequences are deadly. “For many drivers, health and safety take a backseat to their likes and shares,” Adams added. See also: 5 Steps to Understand Distracted Driving   Why is this problem still so prevalent? Part of the problem actually has to do with hearing those scary statistics: We don’t really believe they apply to us. It’s a phenomenon that cognitive scientist Tali Sharot named The Optimism Bias. Basically, when people think about their own futures, they tend to overestimate the likelihood that good things will happen and underestimate the likelihood of bad things. In the context of driving, that means we overestimate our own capabilities. In fact, one study showed that 93% of U.S. drivers think that they’re in the top 50% of safe drivers. Thus, drivers also underestimate their likelihood of being in a car accident. This would explain why so many drivers will agree that texting while driving is bad but admit to doing it anyway: We know it’s dangerous in general, but we don’t quite grasp how much of a risk it is to ourselves specifically. Take it from a teen… Grace Keller, a former DriversEd.com student and guest teen contributor, suggested drivers keep their belongings, including cellphones, in other parts of the car to avoid distracted driving behavior. “I usually throw my backpack in the back seat with my phone and all my other potential distractions in it, so that I don’t even become tempted. Though I admit it can be difficult — I mean, we’re all living in a very high-tech society where we feel the need to constantly be plugged into our social media, group-chats, etc., but whatever it is you need to look at or check up on can wait,” she stated. How you can help The National Safety Council is asking the public to use these life-saving measures to help curb the growing rates of distracted driving–related injuries and fatalities:

1. Commit to putting your #phonedown. Stow your cellphone in your purse, backpack or trunk to keep it out of reach. If it’s needed for GPS use, switch to “auto mode” to turn off notifications and calls.
2. Stay engaged in teens’ driving habits. Parents should lead by example by putting their phones down. Head to “Parents: Tools to help your teen resist using their phones,” on DriversEd.com for more parent-focused information.
3. Practice defensive driving. Buckle up and keep in-car distractions (passengers, music, etc.) at a minimum to focus on the road ahead. Be sure to get enough sleep to avoid fatigue and drive attentively.
4. Recognize the dangers of drugged driving. From prescription opioids to alcohol to marijuana use, learn how each one impairs your ability to drive safely. Visit www.stopeverydaykillers.org to learn more.
5. Fix recalls immediately. See if your vehicle is currently under recall by visiting www.checktoprotect.org.
6. Ask lawmakers and state leaders to protect travelers on state roadways. The National Safety Council’s State of Safety report shows which states have the strongest and weakest traffic safety laws.

See also: Distracted Driving — an Infographic   The 2019 Distracted Driving and Social Media Report was conducted by DriversEd.com as a follow-up to its more broadly focused 2018 Distracted Driving in America Report and zeroes in on risky behind-the-wheel social media behavior: feed checking, video watching and video recording, providing insight on the current state—and dangers—of distracted driving and social media use. The survey was conducted online using Survey Monkey. One thousand, twenty-nine participants were polled, spanning across the U.S., with the U.S. driving population represented by the 943 respondents who, before completing the survey, answered that they have a driver’s license. Of those 943 respondents, 522 answered that, while behind the wheel, they have checked social media while either at a red light, at a stop sign, stuck in traffic or moving on the road. Those 522 respondents represent drivers who admit to checking social media while driving. The demographics of those polled represented a broad range of household income, geographic location, age and gender. The article was originally published on DriversEd.com.

On Nov. 20, 2018, Insurance Journal reported an article suggesting auto insurance premiums will decrease by $25 billion by 2025. To put that in perspective, that is approximately 5% of all U.S. P&C premiums. Think you've seen a soft market before? Just wait. The article continued to state that new coverage lines will more than make up the difference, according to the report author, Accenture. It proposed that businesses in particular will buy $81 billion more in other lines. This means woe for the personal lines carriers and agents who have achieved far more personal lines premium growth in the last 10 years than commercial (an average annual rate increase of approximately 3.3% vs. -.1%, 2005-2017, inclusive). The authors argue that driverless cars will make the roads safer but increase the need for product liability. I am not sure about this because it has been reported that some manufacturers are planning to forego product liability insurance on their driverless cars. Maybe they had a change of mind or the authors are providing insights missing from press releases the Securities and Exchange Commission might want to review. Or maybe the manufacturers' contracts will place all liability on their vendors or others (like the owners who do not read their software agreements). The authors suggest consumers, companies and governments will quickly buy much more cyber coverage. They probably do need to quickly buy more, but, with as many as 3,000 cyber forms floating around in the U.S. alone (according to a recent Rand Corp. study), what cyber is actually being purchased? The Rand study is important to understanding future cyber purchases because, as it suggests, some of the forms may not be intended to pay claims, some companies' actuarial models may be shots in the dark and clearly some companies' forms indicate they really do not know what they are doing (at least this is my impression of Rand Corp.'s conclusion). These are big issues that put into doubt what the cyber insurance market really even is, and what happens with the inevitable shakeout? If some companies do not really know what they are insuring (reading some companies' forms suggest they really do not know what they are insuring) and are taking shots in the dark on pricing (and reserving maybe?), there may be a problem of stronger and smarter companies not achieving adequate market share until the shakeout occurs. See also: Cybersecurity for the Insurance Industry   Add to this confusion the fact that explaining cyber insurance, and explaining exactly what the different cyber forms are insuring, is very difficult. Agents need to try doing this to understand that increased cyber sales are not magically going to happen. Beware the agent who pretends that all cyber forms are the same or that, just because an insured has purchased a cyber policy, they now have "cyber" coverage. The insured may think it has much broader coverage than the carrier interprets (which will be interesting for those companies less sure of what they are even insuring; see the Mondelez v. Zurich suit for a great example). Also, after asking dozens and dozens of agents what they are even insuring when they sell a cyber policy, I'm often met with blank stares or statements that they do not understand cyber so they don't sell cyber. Product liability sales may increase. Product liability has been one of the most volatile major lines of P&C insurance over the last 20-plus years, so any prediction specific to this line seems problematic. Since 1996, NPW specific to product liability per A.M. Best (author's calculation) has only increased 35%. Private passenger auto has increased 106%. In the last 10 years, NPW has actually declined 11%. I am not suggesting these results are rational, because the combined ratio for product liability is an abysmal 129% over the last 10 years. Its worst combined ratio was 159% in 2011, and its best was 84% in 2006. The volatility is absurd and does not really correlate well with NPW growth. This combination of volatility and lack of charging more premium for really horrible combined ratios makes predicting this line's future problematic. I hope experts' predictions are correct regarding other lines taking up the slack. Even if correct, though, personal lines agents and personal lines carriers are going to suffer if they do not begin writing commercial. Small commercial will be hurt, too, because small commercial will lose the auto, clients seem reluctant to buy quality cyber coverage and they do not usually need product liability. The winners, if the study's authors' predictions are correct, will be carriers and agents/brokers writing large, complex commercial accounts. If the authors are wrong about companies and consumers purchasing a lot more insurance but of a different line, then the entire industry suffers mightily. Another article in the same edition published a report from Minnesota’s Department of Labor that the state's workplace injury and illness rate decreased in 2017 to its lowest rate since the state first began measuring it. I suspect Minnesota's results are similar to other states. The significant advances in safety and the reduced need for employees to work in more dangerous environments relative to total employment support the probability that workplaces should be safer than ever, even in a booming economy. The workplace will become even safer, with more modular construction, better safety devices and monitoring and continuing emphasis on safety. A safer environment means less rate in this line, too. See also: Leveraging AI in Commercial Insurance   Maybe the industry needs to offer more law school scholarships to future plaintiff attorneys to take up the slack. Otherwise, most signs point strongly to the devaluation of insurance. Insurance is more important in a risky world than a safer world. Maybe insurance companies will get desperate and begin insuring previously unthinkable, uninsurable perils and fill the gap that way. Whatever happens, though, insurance sales are going to change significantly. The industry is at an inflection point for carriers and distributors both. This is not a point of despair, but it is a time that requires true strategic thinking and planning to identify the opportunities that exist and to plan for those opportunities, without getting too far ahead and losing what one already has. This is hard work. It requires quite a balance, which is why dedicated strategic planning is truly required. You can find the article originally published here.

Security cameras in a company cafeteria recently captured a brazen attempt to fake a workers’ compensation injury. The video shows that the man dumped a cup of ice onto the floor, disposed of the cup and then lay down on the floor as though he slipped on the ice. Prosecutors have charged the man with insurance fraud and theft by deception.

In this case, the fraud was well-documented. But most employers do not have cameras in their lunch rooms or other areas of their work places. It can be very difficult to prove someone has faked an injury in the workplace without cameras catching the person in the act.

But the consequences of undetected workers’ compensation fraud are enormous. Fraud is a costly financial burden to employers and taxpayers, and it interferes with providing benefits to the vast majority of injured workers with legitimate claims.

See also: Workers’ Comp Issues to Watch in 2019  

If an employer suspects an employee has attempted to create a fake injury or fraudulent claim, there are several steps to follow up on right away:

• Identify and interview any witnesses to the injury.
• Check to see if there was anything unusual in the area where the injury occurred (items on the floor, wet floor, torn carpet)? If the injured worker is alleging he tripped on something, secure the evidence and take pictures of the site.
• Determine if there was anything unusual about the injured worker prior to the injury (limping, favoring any body parts, etc.)? An abnormality could indicate an attempt to reframe an existing non-occupational injury as a workers’ compensation claim.
• Check to see if the employee ise on social media and review for any physical activities.
• Obtain an Insurance Services Office claims report to see if the injured worker has a history of claims.
• Take several statements from the injured worker – look for conflicting information.
• Assign surveillance to determine if the injured worker is participating in activities inconsistent with the reported injury or has taken alternative employment during the disability.

Faked injuries may also be an indication of fraud perpetrated by dishonest medical providers or attorneys who operate “claims mills.” These fraud schemes recruit workers to submit fraudulent claims, can generate millions of dollars of undeserved benefits and affect employer loss experience, resulting in higher workers’ compensation premiums. It’s important that claimants understand that their participation in reporting fraudulent claims exposes them to prosecution and severe penalties.

Below are several "red flags" that could be indications of a faked workers’ compensation injury:

• There are no witnesses to the injury. Was it unusual that the employee would be alone or out of place at the time of the injury?
• Injury occurs at the end of the day on a Friday or on a Monday morning. The worker may have sustained a non-occupational injury over the weekend.
• The employee changes the story about what happened. The statement to a treating doctor is different from what the person reported to the emergency room or put on the initial report of injury.
• The worker has a history of previous claims. Someone who has received significant workers’ compensation payments previously may try to go to the same well again.
• There’s a delay reporting the injury. If a worker reports an injury months after it allegedly occurred, it could indicate the possibility the claimant was recruited by a claims mill.
• The worker is disgruntled, on disciplinary action or involved in a labor dispute. Employees may use a workers’ compensation claim to retaliate against their employer, or delay termination.
• The worker (or a medical provider) refuses certain diagnostic tests or imaging. Avoidance of examinations that could confirm the existence of the reported injury is a key fraud indicator.
• The injured worker has significant financial problems. The claimant may be trying to find a way to gain additional funds through a fraudulent claim.
• The injured worker is hard to reach during the disability. A worker who does not return phone calls or emails could be avoiding requests for additional information or could be employed elsewhere.
• The worker refuses modified-duty work or other return-to-work protocols. It could be an attempt to prolong the disability and could be a tactic of unscrupulous medical providers to get additional money.

See also: The State of Workers’ Compensation  

Employers who suspect a faked occupational injury or other workers’ compensation fraud or abuse should seek assistance from their insurer or claims administrator. Potentially fraudulent claims are referred to the Special Investigation Unit (SIU), and cases with enough evidence are sent to the district attorney for prosecution.

In the last 20 years, the insurance industry has rapidly become one of the most data-driven and complex industries in our global economy. With the advent of wearable technologies, improved data-collecting capabilities and the increasing dominance of behavioral economic theories, insurance companies are inundated with data. Used well, these large sums of data can greatly benefit insurance companies and consumers. Returns on policies will increase, along with efficiency, while risk and overall costs will decrease. However, using all this data well is extremely difficult and requires years of work and expertise. Through my more than 25 years of actuarial and statistical modeling experience, I have seen insurance companies use data well, increasing their profitability in the process. Big data can be a significant asset for insurance companies over the next 100 years, or it could bog down the industry, exacerbating issues that are currently affecting companies across the globe. All this really depends on how the insurance market adapts to and uses big data today, in the early stages of this big data era. See also: Understanding New Generations of Data   My current focus is the application of behavioral psychologies to build predictive models to maximize the effectiveness of insurance technologies in the design of new products. Insurance is becoming mediated more and more by mobile, wearable and artificial intelligence (AI) technologies. As generations become more connected through media technologies, leveraging media psychology, actuarial science and data science will be vital to the predictive future of insurance. This is particularly true with regards to attracting new, younger customers to life insurance and other insurance products. Young people are demanding a customer experience centered on quick and easy app-driven solutions over traditional, slower, life insurance models. There is great potential for the long-term care industry to benefit from innovative technologies that leverage big data, machine learning and artificial intelligence. For example, home care can be improved through the use of robotics and interactive telehealth technologies to mediate the interaction between patients and medical professionals in real time, improving patient outcomes. Wearable technology to monitor biometrics, other than steps, in real time can instantaneously inform of a pending health event requiring medical attention. Big data and computing power are exploding at factorial rates, enabling algorithms to search for significant correlations in seconds rather than months, and the difference has proven to be life-saving. However, it is critical to understand how these algorithms work to prevent abuses of consumer protections. The GIS advanced regulator training will equip regulators with a conceptual understanding of the machine learning algorithms leveraging big data being used to develop consumer insurance rates. They will learn how to test the appropriateness, power and validity of these statistical modeling tools against the data companies that are using it to build pricing algorithms and fuel AI algorithms. Regulators will also receive training in how to interrogate data for completeness and how to identify hidden biases that may unfairly discriminate against consumers. This training will also engage regulators in discussions of the ethical use of big data, machine learning and AI in preparation for a future where insurance is nearly 100% mediated by technology. See also: Healthcare Data: The Art and the Science Companies will have to become good digital citizens and work with regulators to ensure an industry that fosters innovations beneficial to consumers without compromising legal standards and the ethical treatment of all consumers. A future of insurance mediated by big data, predictive algorithms and AI will have great benefits for the human experience. The industry and regulators through cooperative efforts can ensure this promising future for consumers. I will be moderating the "Can Big Data Save Long-Term Care" breakout panel on Wednesday, April 24, and am organizing and leading the big data and advanced modeling training on April 22-23 and April 25-26 at the 2019 Global Insurance Symposium in Des Moines. To register to attend GIS please go to: https://globalinsurancesymposium.com/register/

The workplace is evolving, to the point that many people have no actual "place" from which to work. Some do their jobs remotely, while others work from locations such as their cars, if they are part of the gig economy. While we often think about technology and automation as driving influences for the future of work, people are a critical part of the equation. The workers’ compensation industry will be an exciting place to be, as long as we can meet the challenges of attracting and retaining top talent and responding to evolving work cultures. An esteemed panel of workers’ compensation thought leaders were on hand to help us address these issues during our most recent Out Front Ideas with Kimberly and Mark webinar:

• Lisa Corless, president and CEO of Accident Fund Group
• Artemis Emslie, founder, AGM Holdings, former CEO, myMtrixx
• Faith Mason, corporate manager, workers’ compensation, at Comcast NBC Universal
• Marijo Storment, CEO of Paradigm Complex Care Solutions

Talent Attraction and Retention The workers’ compensation industry is facing high turnover as aging baby boomers set their sights on retirement. Finding people to replace them can be a challenge, especially in our industry, which younger people may view as behind the times. Savvier companies are overcoming this challenge by focusing on technology — not to replace people but to attract those who have spent their lives using it. The "human touch" will always be needed in workers’ compensation to meet the needs of customers, especially cognitive skills. But many repetitive tasks can now be performed through automation, artificial intelligence (AI) and robotics. Successful integration of these newer technologies into our workflows depends on a strong human partnership. Accident Fund Group has addressed the issue by making "People First" one of its strategic pillars. The company strongly promotes a work/life balance and uses this to reach out to younger talent. The company works with colleges and high schools in communities throughout the country to let these students know about the many opportunities. For example, the company shares the ways it uses robots and AI. It has also conducted hackathons around Alexa and other digital assistants. These innovations attract these younger people to our industry, where they later learn of the many areas in which they can work. Reaching out to students is also a good way to attract more nurses, who have become increasingly important in managing workers’ compensation claims but who are in high demand throughout the economy. One speaker said that there will be more jobs for registered nurses as of 2022 than any other profession in the U.S. Many nursing school graduates are not even aware of the opportunities in workers’ compensation. Companies are working with colleges to add courses on case management. Retaining nurses is also vital. The job of a case manager has become more difficult over the years due to the increased severity of claims, privacy and security measures, and the wide variety of service-level agreements. See also: Workers’ Comp Issues to Watch in 2019   Paradigm strives to provide a fun, supportive working environment. Making its workers feel valued through mentoring programs and high-performing support groups is key. The company actually has found that, by treating employees well, they become a primary source of referrals for new workers. A high value on soft skills has changed the way many companies seek talent. Rather than looking for people who have experience in the industry, companies may seek those who are empathetic and highly communicative. As one speaker told us, you can train an adjuster to be proficient in adjudicating a claim, but it is harder to teach soft skills. Training and Development Bringing new hires into an organization with the intent of retaining them for many years involves much more than just training them on certain tasks. It includes integrating them into the culture of the organization so that they truly feel engaged in it. Some refer to this idea as organizational health, meaning the connection and communication felt among workers and their colleagues. Ideally, employees should have their personal and professional goals aligned with the corporate strategy to allow both the employee and the organization to grow and evolve. The process of truly engaging workers begins the first day of employment. Employees need to understand the purpose of the organization and how their contributions fit into the big picture. They need to understand, not only what the expectations of them are, but what they can expect from the organization. That attitude fosters transparency and communication – two very important aspects of a thriving company. One way to develop future leaders is by allowing employees to grow and expand professionally and personally. Sedgwick, for example, has a program where employees can nominate themselves into a leadership program. Those accepted spend one year training in many parts of the organization. They work with mentors and sponsors and receive career coaching. They are exposed to many areas and products so that they are not pegged as specialists focused on only a single area. Part of the training helps them further develop those important soft skills. At the end of the year, they work on some of the company’s largest, complex programs. Workers who deal with customers throughout the day do very well with resilience training. No matter how intrinsically strong someone is, getting yelled at for eight hours a day can take a toll. Companies that want to help their customer service professionals stay with the organization spend resources helping them to better deal with negative experiences. Employee Experience and Engagement Making employees feel supported and engaged with the organization not only helps retain them, it also is important if they become injured. Injured workers who are fully engaged in their recovery and the return-to-work process experience better outcomes and reduced costs for their employers/payers. Using an advocacy-based care model keeps that employee connected and on the right track for a swift recovery. Comcast NBC Universal, for example, has a program that ensures injured workers are supported from the beginning all the way through the recovery – even if their workers’ compensation claim is denied. The company provides resources to assess the worker’s condition and, if it is a mental-mental claim, for example, determines if it is compensable. If it is not, the company sends the employee to short-term disability and provides notice to the vendor to make the process seamless. The idea is for the employee to feel cared for and not experience a major disruption. Comcast NBC Universal calls the approach the "happy path." Making remote workers feel engaged and connected can be a challenge. Paradigm seeks ways to establish constant connections among employees. Through mentoring, highly engaged small groups, an internal newsletter and other programs, the company finds ways to bring workers into the company fold, even if they are not physically together. There is even a software platform where workers can give one another accolades and celebrate birthdays. One aspect of helping employees feel engaged is to ensure they feel safe; that is, safe to make suggestions and provide input that may not be exactly what the "suits" want to hear. Our speakers told us that allowing and encouraging honest feedback helps both the worker and the organization as a whole. Employees can draw attention to processes and tools that may not be working as well as they could. That allows change and evolution to occur. Artemis Emslie related a program that allowed the organization as a whole to set goals and have individuals and teams come up with strategies to affect the goals. Workers, she said, often come up with ideas of one or two things to do differently that will help the company realize its goals. See also: Culture Side of Digital Transformation   Culture We often hear about the culture of an organization. Our speakers described it as something you can feel when you walk into a company. An open, positive culture is one where people are engaged with one another, obviously happy to be there and focused on the customer.. The general feeling is one of an accepting environment. One way to ensure a company’s culture continues to be positive is by focusing on diversity and inclusion. More than an initiative, they are a mindset, a way of thinking and behaving. Studies have repeatedly shown that this mindset results in growth and innovation. While both diversity and inclusion are necessary to improve a company’s culture, they are not the same. Diversity refers to the differences in people – not only gender and race but sexual orientation, a disability, ADHD, diversity of thought – anything that makes one person different from another. The term ”inclusion” refers to creating a safe environment where every person feels honored and appreciated. Some companies foster inclusion by inviting diverse groups of people to meetings, such as high-ranking personnel along with lower-level employees. Each person’s opinions are encouraged and supported. If everyone in a meeting likes a particular idea, the lone person who does not should feel safe to express his or her thoughts without fear. The idea of work/life balance is one aspect of culture that sometimes causes confusion. As Emslie explained, it does not necessarily mean every single day has the exact balance of work and personal activities. Instead, it can be viewed holistically. Ultimately, it means having priorities straight and taking care of both adequately. For more information on this important subject, you can view information from a recent Future of Work event produced by the Alliance of Women in Workers’ Compensation, held adjacent to the 2019 Workers’ Compensation Research Institute’s Annual Conference in Phoenix. Information about the Alliance and notices of its coming events can be found here.

As the insurance industry continues to evolve in response to disruption, it’s imperative that insurers embrace innovation to achieve growth and market leadership. The capacity to innovate drives the business models of tomorrow, as well as the investor perceptions of today. Already, ratings agency AM Best has announced plans to score and assess carriers based on their ability to innovate. To truly drive innovation and stay relevant in today’s rapidly changing world, insurance leaders cannot afford to overlook the power of diversity and inclusiveness (D&I) in thinking, experiences, ideas, backgrounds and abilities. Studies show that diverse teams outperform homogeneous teams when led inclusively and that firms deliver better financial results when they have women on their corporate boards and in the C-suite. So, in today’s Transformative Age, why is it taking so long for women to belong equally? To foster an environment for the industry’s future leaders to thrive, it takes effort, backed by accountability and active participation from everyone — not just women. We’ve outlined three ways to build the next generation of women leaders in insurance: 1. Improve recruitment and hiring Today’s college graduates are surrounded by diversity, and they expect to enter workplaces that embody those same values. For the insurance industry to attract new employees who have the creative, technology and customer skills needed to build the insurance workplace of the future, insurance companies must demonstrate their commitment to diversity, as manifested throughout the formal recruitment process, as well as leveraging personal relationships. Insurers should consider how to recruit more women with backgrounds in science, technology, engineering and mathematics (STEM). While actuaries have always needed mathematics and statistics, just about every aspect of insurance is being transformed by digital technologies, artificial intelligence (AI) and other computing-intensive business processes. It is also important that insurers recruit liberal arts majors for areas like underwriting. These graduates possess the necessary skills for sales, relationship management and creation of business solutions. The ability to reason and philosophize will be even more critical in the digital age, as more repetitive tasks shift to AI. See also: Survival Guide for Women in Insurtech   At the same time, insurance companies must drive accountability for D&I initiatives by removing unconscious biases from the recruitment process, recruiting balanced teams and hiring women from diverse backgrounds, skill sets and experiences. A way to enact this is to ensure there are diverse slates of both interviewers and interviewees, as well as holding leadership teams accountable for their team’s D&I profiles. 2. Sponsor and mentor women to support career progression and improve retention Mentors provide advice and counseling throughout one’s career, while sponsors are on-the-job allies who state the case for one’s promotion or participation on a high-profile project. Women joining the insurance field need both mentors and sponsors — and both roles need to be embraced by men and women. Employees may be able to find mentors and sponsors through their own networking efforts, but organizations should also foster connections through team-building workshops and other methods. Executives should be held accountable for their strong commitment to D&I by measuring results, such as the retention levels and career achievements for women and other underrepresented groups within their spheres of influence. Only through metrics-based accountability will D&I achieve a sustainable impact. 3. Clear away barriers preventing the ascent of women executives While progress has been made, women are still severely underrepresented in insurance leadership roles. Although women represent more than half of the insurance workforce, they hold fewer than one-fifth of board seats and only about one-tenth of insider officer positions and top officer positions such as CEO, COO and CFO. Based on this evidence, we can see that the pipeline for women executive talent is being artificially blocked. In response, insurance companies need to work for greater diversity in succession planning and to prepare women for these kinds of roles. To ensure that women can rise on their merits and in accordance with the requirements of the job, succession planning has three key areas for improvement:

• Preference. Counteract the bias for search teams to promote people who look just like them.
• Tradition. Break the pattern of hiring leaders with the same background and profile as previous leaders.
• Requirements. Promote and appoint leaders based on the specific skill sets of what the leadership role requires for the success of the company.

As top executives support and prepare the right individuals for the right roles, more women will rise to the occasion to join the leadership ranks with more opportunities, as well as the knowledge that they are welcome. See also: The Right Way to Tackle Gender Bias   D&I is critical for driving innovation and a competitive advantage for insurers in today’s transformative age. By welcoming a wider range of skills and viewpoints, D&I represents an essential component of the evolving business model in insurance. As part of their broader D&I initiatives, insurance companies must take steps to improve gender parity. Starting from the top, business leaders throughout the insurance organization should be held accountable for recruiting and hiring women, sponsoring and mentoring women, retaining and promoting women and clearing away obstacles to leadership roles. Yet D&I is not just a matter for top executives. We all have to ask ourselves: “Who am I mentoring? Who am I sponsoring? Who am I pulling up?” Answers to those questions will become increasingly important for the success of individuals, teams and organizations throughout the insurance ecosystem. By thinking, challenging and engaging differently, we can build a better working world where women belong as much as men do. What actions will you take to make sure that #SheBelongs? The views reflected in this article are those of the authors and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.

After attending the OnRamp conference in Minneapolis last week, I come away more optimistic about innovation in insurance than I've been in some time. 

That feeling began with the keynote panel I moderated with Allianz Life CEO Walter White and Securian Financial CEO Chris Hilger, who laid out a compelling vision. Rather than thinking about using technology to automate jobs or cut expenses, they see ways to make their financial advisers better, more-informed coaches. They also envision extending the benefits of the advice to those many who otherwise couldn't afford financial counsel, because the high cost structure makes fees prohibitive. (At ITL, we use the word "centaur" to describe employees who, like the mythical creatures, have combined with machines to be more powerful than people alone would be.)

A later panel laid out a new vision of segmentation. While the traditional focus has been on defining segments for marketing purposes, panelists recommended using the techniques to categorize people for different customer experiences. At the moment, companies strain to win customers by demonstrating great understanding of their situations and needs, then do one of two things: 1) dump them into a generic onboarding process that immediately undercuts any claims of trust; or 2) strive (and fail) to deliver a unique experience for each person. Sophisticated segmentation of customers could deliver considerable personalization of the customer journey at a reasonable cost. 

(ITL CEO Wayne Allen contributes a related thought from the Sitkins Network conference where he spoke last week. He said the suggestion was to move away from thinking about customer-centricity and toward empathy. In other words, don't just make the customer the center of your efforts; do everything you can to put yourself in that customer's shoes and understand what he or she feels, then do what the customer—not the company—needs.) 

Still another OnRamp panelist described an opportunity with micro businesses—ones that range from a sole proprietor up to four employees. While many have seen potential in small and medium-sized businesses, I hadn't yet heard such a clear argument for products and services that can be provided digitally, at low cost, with little friction, while fitting in with personal financial services that the buyer wants and may already receive.

The array of clever ideas behind some startups also struck me. For instance, while I've been hearing about telematics in cars for decades, I'd never thought about motorcycles until Marina Mann introduced herself and her company, EatSleepRide. She has tracked 20 million kilometers of motorcycle rides and is rolling out services that not only rate the risk of the rider but offer real-time advice to the rider about signs of fatigue, dangers that may lie ahead, etc. 

There was even a startup, Owl Cam, that may let me resolve a pet peeve that has been bugging me for the, oh, 45 years I've been driving. 

The background: I often offer a running commentary about other drivers, a habit I picked up from my father and, sorry to say, seem to have passed on to my daughters. I get especially annoyed when someone tailgates me in the left lane even though traffic in front of me means I have nowhere to go—these geniuses seem to think they can push safe drivers out of the way by creating dangerous situations—but I'll also complain if someone cuts me off, if someone seems to think he's playing Fast and Furious, etc. I've always wanted some way to document the crazy driving to help get idiots off the road (and, yeah, vent my spleen a bit) but never had the means. Until now.

Owl Cam sets up a two-way camera on the dashboard that captures both the interior and the road. The main purposes are to record a thief, a vandal or a car that hits yours while you're not in it, and to help resolve claims quickly if you're in an accident. But the feature that I covet is the one that lets you keep the past 10 seconds from the forward-facing camera by just saying, "Hey, presto." Now, if the police set up some way for concerned citizens to share video, and if Owl Cam figures out some way to capture the license plates of those tailgaters, we'll be in business. 

This insurance innovation thing may have a future!

Cheers,

Paul Carroll
Editor in Chief

Technology is bringing change to nearly every part of our lives. Platforms like Amazon have created expectations among consumers that they shouldn’t have to send the same information to multiple parties across different methods – digital and mobile technology should make the process seamless and should be personalized. And, companies like Starbucks have innovated their business processes through a Left Shift (see Figure 1 below), creating more choice and loyalty, better cycle time and ability to know more about their customers through their digital engagements. For our industry this personalization, convenience and level of service have become expected by consumers, regardless of who they are insured with, what vehicle they drive and what the characteristics of their accident were. Through new capabilities such as self-service claims, the consumer no longer waits days for an estimator to take photos; the extent of damage is knowable at first notice of loss (FNOL), and vehicle damage photos facilitate speedier decisions to be made about the claim (see Figure 2). Customer retention is a huge benefit gained from improving digital channel experiences, yet there are additional benefits that help insurance carriers with their loss adjustment expenses (see Figure 3). For example, the J.D. Power 2017 Auto Insurance Study found that customers who set up an account online with their insurer are two times as likely to submit incident photos through an app and receive digital updates and three times more likely to report first notice of loss online. However, the overall percent of customers willing to report their first notice of loss is low, with 9% in J.D. Power’s 2017 survey growing only to 11% in their 2018 survey. But the same survey data also showed 65% of customers received digital status updates for an auto claim, and 42% submitted their own photos. See also: Transforming Claims for the Digital Era   Virtual auto claims handling via integrated smartphone technology has emerged as a key competency that consumers not only want and expect, but the technology also removes significant cost from the claims process by “…essentially eliminating the first half of the work. [The insurer doesn’t] have to get the car to the human or the human to the car.” Analysis of vehicle appraisals generated annually shows a shift among insurance carriers and their customers to new and different methods of vehicle inspection such as virtual or photo inspections and away from insurance staff appraisers inspecting the vehicle in the field or in a drive-in facility (see Figure 4). A comparison of claim cycle times reveals the number of days from the last estimate assignment to the date the initial estimate of record is completed is lowest for those appraisals with a photo estimate method of inspection, and photo inspections have the highest percent of appraisals where the last estimate assignment to date of estimate complete is less than or equal to 12 hours (see Figure 5). The streamlined appraisal process also sets the stage for a streamlined repair process – where within the same app the customer can view the estimate of record produced from the vehicle photos, then choose a repair facility to fix the vehicle and even schedule the appointment with that shop. Photo estimating coupled with online claims communication and scheduling saves consumers time they may traditionally have spent driving around to multiple shops to get estimates or waiting for an insurance adjuster to show up at their home or work, ultimately ending up with a paper copy of the estimate and maybe a check, only to then have to decide where to get the car repaired and schedule the repair. With online shop scheduling available as a "next step," the customer can select the repairer based on proximity, DRP program participation, on-line reviews, customer referrals or availability of OE certification, essentially enabling the overall experience to occur on a single platform in a personalized manner – not too different from what consumers experience on Amazon today. Insurance companies and repairers that adopt a single platform can enable consumers to efficiently process their claim, schedule the repair and ultimately deliver an experience more in-line with modern expectations. Self-service claims and repair scheduling capabilities via digital devices are just two examples of how our industry is using technology to "shift-left" – providing customers with enhanced self-service capabilities via technology that ensures the same or better customer service and engagement. See also: Survival of the Fittest in the Digital Age   Technology such as mobile, AI and IOT will increasingly play a key role in a company’s ability to quickly assess and respond to consumer feedback and other information on market conditions. Knowing which technologies to use and knowing how to use them to cater the claims and vehicle repair experience to each distinct customer will lead to higher customer satisfaction, retention and growth.