For a small business owner, offering competitive employee benefits is a crucial way to attract and retain strong talent. Whether you currently provide them and are planning next year’s renewal, or you are thinking of offering them for the first time, here are five things you should consider before your employees enter the open enrollment period for next year on Nov. 1: Small Businesses Don't Have to Wait While your employees won't be able to enroll in health insurance plans until November comes along, small business owners don't have to wait at all to secure health insurance for their employees. The sooner you act, the better, to guarantee that you and your employees are protected. According to recent studies, healthier employees are happier employees and, as a result, will contribute to a more productive workplace. A more positive and constructive work environment is better for you, your employees and your business as a whole. Health Literacy Is Important Whether you’ve provided health insurance to your employees before, or you’re looking into doing so for the first time, it is always worthwhile to prioritize health insurance literacy. There is a host of terminology and acronyms, not to mention rules and regulations that can be overwhelming to wrap your head around. The internet is full of relevant information, ranging from articles to explainer videos, that should have you up to speed in no time. Having a good understanding of insurance concepts such as essential health benefits, employer contributions, out-of-pocket maximums, coinsurance, provider networks, co-pays, premiums and deductibles is a necessary step to being better-equipped to view and compare health plan options side-by-side. A thorough familiarization with health insurance practices and terms will allow you to make the most knowledgeable decisions for your employees and your business. Offering Health Insurance Increases Employee Retention Employees want to feel like their health is a priority and are more likely to join a company and stay for longer if their healthcare needs are being met. A current survey shows that 56% of Americans whose employers were sponsoring their healthcare considered whether or not they were happy with their benefits to be a significant factor in choosing to stay with a particular job. The Employee Benefit Research Institute released a survey in 2016 that showed a powerful connection between decent workplace health benefits and overall employee happiness and team spirit. 59% of employees who were pleased with their benefits were also pleased with their jobs. And only 8% of employees who were dissatisfied with their benefits were satisfied with their jobs. Alleviate Health Insurance Costs High insurance costs can be an obstacle for small business owners. A new survey suggests that 53% of American small business owners stress over the costs of providing healthcare to their employees. The 2017 eHealth report reveals that nearly 80% of small business owners are concerned about health insurance costs, and 62% would consider a 15% increase in premiums to make small group health insurance impossible to afford. However, there are resources in place to help reduce these costs. One helpful way to cut down on health insurance costs is to take advantage of potential tax breaks available to small business owners. All of the financial contributions that employers make to their employees' premiums are tax-deductible, and employees’ financial contributions are made pre-tax, which will decrease a small business’ payroll taxes. Additionally, if your small business consists of fewer than 25 employees, you may be eligible for tax credits if the average yearly income for your employees is below $53,000. For small business owners, the biggest driver on insurance cost will be the type of plan chosen in addition to the average age of your employees. Your employees’ health is not a factor. Use Digital Resources You don't have to be an insurance industry expert to shop for medical plans. There are resources and tools available that make buying medical plans as easy as purchasing a plane ticket or buying a pair of shoes online. Insurance is a very complex industry that can easily be simplified with the use of the advanced technology and design of online marketplaces. These platforms are great tools for small business owners to compare prices and benefits of different plans side-by-side. Be confident while shopping for insurance because all of the information is laid out on the table. Technological solutions such as digital marketplaces serve as useful tools to modernize the insurance shopping process and ensure that you and your team are covered without going over your budget.

During Aon’s Analytics Insights Conference, we focused on the variety of analytics software and solutions touching our industry. The conference was themed: "blending old and new: data and analytics in the modern era." It will come as no surprise that terms such as blockchain, AI and machine learning might appear to be the holy grail of our industry. But there are other keys to making good data-driven decisions. Blackjack happens to be the perfect Petri dish to remind ourselves about making better decisions. Data is easy to get, and systems never change. At this year’s conference, Jeffrey Ma, former VP of analytics and data science at Twitter and kingpin of the famous MIT blackjack team, shared his thoughts on the future of some of the new capabilities in analytics, arguing that “the biggest misconception is that AI is like magic and solves everything. In reality, it’s only going to be as good as the problems you point out and the data set that’s available to you.” Tracy Hatlestad, chief operating officer - analytics within Aon’s reinsurance solutions business, sat down with Jeffrey to find out more. Q:  In an industry like insurance where success with data and analytics is a clear differentiator, what are a few key things you think people need to remember about making data-driven decisions? A: Quite a few things come to mind, but here are some that seem pertinent to the crowd today. The first is omission bias, or the idea of favoring inaction over action. In blackjack, there’s static math that helps override these biases that is harder to discern in insurance, but the logic still applies. The second is the fallacy of the gut result, or the idea that you can be a better predictor than science or math. The third, and potentially the most dangerous for  the financial industry, is the idea of right decision vs. right outcome. In blackjack, an incorrect decision can still lead to one-off wins, and, in those scenarios, undue credence can be given to those decisions or decision makers in the future. See also: 3-Step Approach to Big Data Analytics   Q: You talked about three levels of analytics – data, analysis and implementation. What are a few keys to success with those levels? With level one A: It’s imperative to remember that data is the building block for any analytical framework and any advantage that you can create. The adage, "garbage in, garbage out," still applies. In many industries, there are a number of barriers that stand in the way of quality data, such as:

• Data curation problems, often driven by legacy systems
• Lack of commitment to data quality
• Input by non-analytics professionals
• The gathering of data well in advance of the ability to use it for strategic advantage

With level two I really think of it more like science than analysis. The real skill is the ability to hypothesize. In fact, this has led me to hire people with advanced skillsets in economics, social sciences and physics. Simple data science is a commodity, and companies should be looking for people with the ability to ask questions, not just look for big patterns in data. With level three This is when you get to implementation. It separates successful companies from the rest. You’re moving into experimentation and always measuring the impact to see the outcome. It’s important to remember that you need the buy-in from everyone – sales, marketing, underwriting, etc. Without that, the ability to implement data-driven decisions gets lost. But when you find successes, you have the ability to operationalize those results with machine learning or artificial intelligence. Q: Building on your comments about artificial intelligence, what’s a misconception about the power of artificial intelligence or machine learning? A: The biggest misconception is that it’s magic and solves everything. In reality, machine learning or artificial intelligence is only going to be as good as the problems you point out and the data set that’s available. Artificial intelligence does not have the ability to explore outside the dataset. It can learn from that dataset, but, if it is not given the right questions or a skewed set of data, you can easily become misinformed. Q:  That makes sense, and yet it still seems like something people might overlook. Are there other mistakes you see companies making in the artificial intelligence space? A: Lately, I’ve heard a few companies talk about separating data science from machine learning and artificial intelligence. They believe that data science is closer to the data and analytics field or business applications while machine learning is more around computers and programming, infrastructure, etc. The reality is they need to act in concert because the data scientists are going to be the ones who come up with the heuristics that help inform an artificial intelligence or machine learning model. The best case is when business leaders are working collaboratively with data scientists to develop a hypothesis that can be tested. Without that, you’re not going to get the best return on your investment in terms of your talent and what they are doing. Q:  What advice would you give senior leaders in insurance on implementing artificial intelligence or machine learning into their organization? A: In any evolving field, it’s important to remember that the candidates that might have the best outcome can come from diverse backgrounds. There isn’t a typical hire when finding the best resources in these fields. Unlike long-time industry practitioners who can help you solve problems and create solutions with current methods, there’s going to be people who see the problem differently and really understand the possibilities. It’s also important for leaders to recognize that these people are likely some of the smartest in the building, but they need the business context to end up with the right results. You can’t treat them like the back-office number crunchers. See also: Predictive Analytics: Now You See It….   Q:  We touched on it a bit earlier, but let’s get back to why insurance is more difficult than blackjack? A: There are a lot of things in this world that will test your belief in analytics. Belief in analytics for blackjack is a little easier because it’s already solved and understood. The rules and data don’t change, and there are known outcomes. I talked about a situation where I lost $100,000 through mathematically correct decisions, and it would be hard to stick with the decisions if you did not fully understand the game. That’s even more difficult when you introduce additional variability and unconditional probabilities in areas like insurance where data is not stationary. In these cases, when you have negative results in a short-term sample, it can be even harder to trust the process or model. The fascinating thing is that, because it’s more difficult, there are many more opportunities to differentiate and win on a bigger scale.

A new measure of fitness and health, called Personal Activity Intelligence (PAI), has important implications for both life insurers and their policyholders. It’s now possible to predict, using new technology, the chances that consumers of all ages will develop heart disease. Even better, if the data from the new technology shows improvement, there is also an opportunity to reduce the potential health risk. Digital technology applications offer life insurers the chance to engage customers with personalized health data that is both easy to provide and simple to understand. And, of course, this is a win for life insurers, too – customers with personalized health data receive more value from the relationship. After all, enabling healthier, longer lives means a longer lifetime value to the benefit of the policyholder and the insurer. The secret to personalized health data There is a secret to this personalized health data, and it is based on cardiorespiratory fitness (CRF). CRF is one of the best predictors of health and mortality, with a direct correlation between cardiorespiratory fitness and lifestyle diseases. Until now, CRF has been the missing link to quantify the level of physical activity required to reduce the risk of lifestyle diseases. In England, healthcare costs related to physical inactivity are five times more than smoking, and in the U.S. $117 billion health care expenditures per year were associated with inadequate levels of physical activity. Health data analytic companies, such as PAI Health, offer solutions to make CRF data accessible and relevant to insurers and consumers alike. Customers’ activity levels and CRF data are tracked using a personalized baseline risk assessment. Dynamic, real-time risk monitoring improves customer engagement and reduces risk. Insurers are therefore able to determine the level of risk and understand the health profile for individual customers. Shifting the conversation from payer to partner Think of how providers currently handle the customer relationship. Once a customer purchases an insurance policy, the communications typically become almost entirely transaction-based, focused on renewals and claims. What if an insurer had access to data insights that assess customers’ health and risk levels dynamically over time? This now opens the door to a personalized health dialogue. See also: Making Life Insurance Personal   One of the largest life insurance companies saw this opportunity when it just entered into an agreement to provide its policyholders with wearable digital devices and gain their customers’ health and fitness data. The insurer will offer rate discounts and other incentives to its policyholders, creating a conversation between the company and its customers about fitness and health. By using CRF metrics and personalized health data, software tools present complicated data in a comprehensible format for the first time. Here is exactly why tracking this valuable CRF data is not only the best approach for insurers, but also is extremely important in the future of health:

1. It takes the guesswork out of health: Innovations in biometric algorithms help make big data simple enough for anyone to understand. The data that comes from these algorithms is also personalized for anyone of any health level. It offers the chance to meet people where they are, in a more open and understanding environment, to get them started on the path to a longer, healthier life.
2. It’s educational and accessible: For most customers, the idea of changing their lifestyle can be daunting. CRF metrics can be a conversation starter opening the door to educational content that naturally supports the transition to a healthier lifestyle, making the entire process less intimidating for customers. What’s more – it’s extremely accessible and convenient, because all a customer needs to do is take a minute out of the day and get started via smartphone.
3. It’s universal and trusted: Health isn’t one size fits all, but the beauty in CRF metrics such as the Personalized Activity Intelligence (PAI) is that they work for customers at any health level and with whatever type of exercise they prefer. And what many customers don’t realize is that they are becoming healthier through daily habits, such as mowing the lawn, washing the car or doing housework. By using an activity metric underpinned by CRF, you are providing customers with data that is trusted by the AHA, NHS and sports science experts as a proven measure of health.
4. It fits real life: CRF activity metrics take a holistic look at improving activity, rather than looking day by day. This means if a customer misses a day or needs a break, it isn’t the end of the world. The activity prescription provided to the person readjusts and the risk models update, so the person can stay motivated on the journey to his or her best self. Improving CRF is a physiological adaptation that requires continual work, which is exactly what the data molds to.
5. It doubles as a measure of health: As an insurer, it’s important to know the health levels of individual customers. A simple score tells the insurer and its customers exactly where they are, to achieve optimal health. The information might be incorporated into rates and underwriting.

The time is now to start engaging customers in a dialogue using personalized health metrics that can lower risk and costs, while adding more to the relationship. See also: This Is Not Your Father’s Life Insurance   Through this data, insurers and policyholders alike have a new opportunity to advance the way we monitor and act on health, to help customers enjoy happier, longer lives.

It’s nice having a vacation home to escape to, especially when the summer rolls around. But because you probably spend more time at your primary home, keeping bad guys away from your cabin in the woods or your beachfront property can be tricky. Read on to learn more about steps you can take to protect your second home.

Bulk up security

According to recent statistics, about 30% of household burglaries in the U.S. happen when a thief enters a home through an unlocked door or window. Installing deadbolt locks and burglar alarms are some of the best ways to prevent theft. Buying a system that lets you monitor what’s happening is another way to keep people from breaking into your vacation home.

You can install cameras that send real-time video footage straight to your smartphone or tablet. We recommend putting one camera outdoors and another one in a strategic spot inside of your home. You can monitor the feeds yourself or opt for someone else to do it. Cameras can potentially keep burglars from attempting to enter your home.

You may also want to consider buying other smart devices, like leak detectors, smart lights and locks that can be controlled remotely no matter where you are.

Make connections in the community

Your vacation home may be a place you visit occasionally. But it’s important to make friends with your neighbors. If you find someone who lives in the community throughout the year, you could rely on them for information. If something happens to your vacation home, that person could be your point of contact.

Close-knit communities like to look out for each other and you don’t want to feel like you’re the odd one out. You might be surprised. A trusted friend or observant neighbor may know a lot about what happens when you’re not around. Let the person know when you’ll be in town and, more importantly, when you’ll be away. The person can keep an eye out for strange activity. Give the person your phone number and a spare set of keys so he or she can act quickly if something goes wrong.

See also: Smart Home = Smart Insurer! 

In some areas around the country, you can also register for a house check. A police officer or registered volunteer can walk around the perimeter of your vacation home when you’re not in the area. Just keep in mind that, in some places, house checks can only be done for a period of up to 30 days per calendar year.

Bonus tip: You’ll also want to make your home look lived-in, even if you’re only there a few times a year. Thieves often look for easy targets like a home that’s unoccupied for weeks throughout the year.

Make sure you have enough insurance

If you plan to rent your vacation home to others, you may want to meet with an insurance professional. There are different risks associated with having a second home, and your standard homeowners policy may not cover damages that occur when someone is renting your home.

According to the Insurance Information Institute, you may need to purchase additional coverage. Letting family members or other guests spend a day or two in your vacation home may not be a big deal. But you should consider getting a business policy if you plan to regularly rent your home for a week or more at a time. For long-term rentals (meaning that someone is spending time in your vacation home for six months or more), you’ll need a landlord or rental dwelling policy.

Landlord policies cover physical damage to the structure of a second home, personal property and liability if someone gets hurt. In most cases, landlord policies also provide financial support if you can’t rent your property or make money while it’s being repaired after a covered loss. Just note that landlord policies generally cost about 25% more than the typical homeowners policy.

See also: When It’s Better to Build In-House 

Before you go

Protecting your vacation home is important. Because you aren’t around as often, it’s best to buy security cameras, ask others to check up on your home and make sure you have enough insurance coverage. Before you leave the premises, double-check and make sure you’ve locked up all of your valuables. You don’t want to wait until it’s too late to make an effort to keep your second home safe.

While speaking this week at a PwC conference for members of the board of directors of financial services companies, I heard quite a bit of buzz about the likelihood of a wave of M&A for insurance companies and about an intriguing maneuver that could let insurers free up capital. Following the principle of Scott Van Pelt, who begins each broadcast on ESPN with "the best thing I saw today," I figured I should share.

The feeling about the need for consolidation was so strong that one person asked whether an insurer might hit the roughly 20% market share that Allianz has in Germany, getting so big that federal regulators would need to assert themselves and sideline the states.

The assumptions about consolidation began with the understanding that other industries tend to coalesce around a few giants, while there are thousands of players in the insurance industry, but the thinking went much further. There was a lot of talk about new FASB regulations that will tend to reward size.

In addition, if you believe, as I do, that every industry becomes a technology business over time, you have to assume that the insurance industry will show more of the winner-takes-all characteristics of the technology world, where there is one Google, one Apple, one Facebook and one Amazon. Once someone gets a digital platform right, it costs nothing to add more partners and customers, so competitors fall by the wayside, and many are more than happy to sell.

Even short of buying and selling companies, a PwC partner laid out an approach called Insurance Business Transfer (IBT) that is about to take effect in Oklahoma and that she thinks could spread across the country. The basic idea, which draws from a law in the U.K., is to transfer runoff business into a new entity and free up capital. Courts need to approve the transfer, but, crucially, approval from individual policy holders is not required. The law takes effect Nov. 1, and, if it withstands the inevitable legal challenges, could allow considerable restructuring even short of M&A. A much more limited form of the IBT approach exists in Connecticut, and a more modest form of the Connecticut law has been around in Pennsylvania since at least the 1990s. 

Thanks to PwC for including me. It's always nice to find an excuse to get back to New York. 

Have a great week. 

Paul Carroll
Editor-in-Chief 

How can insurers meet increased customer expectations at a lower cost? AI-powered care delivers on a future vision of customer service with an opportunity for savings of 30% by, for example, driving customers to digital experiences. In this post, I will explore how to apply AI using an intelligent customer engagement (ICE) framework.

How can your insurance company increase its artificial intelligence quotient (AIQ) with a balanced innovation strategy? In this blog series, I’m exploring the myriad ways in which AI adds value to financial services in general and the insurance value chain in particular. In my previous post, I defined the term AIQ and revealed and discussed three key ingredients to building a strong AIQ: technology, data and people. In this post, I’ll take a close look at one of the key areas in the insurance value chain—sales and distribution—and explain how AI-related technologies can add value to this function. But first, I want to reiterate the value of AI and why it’s important to transform your business into an AI business. Why a strong AIQ is vital for your business—and why you need a strategy first. Most of what’s written about AI relates to cost-cutting and job losses, but as we saw with the example given with regard to the health industry in the previous post, AI is a much more optimistic story. Its greatest benefits are not only efficiency and productivity but innovation, improved customer and employee experiences and the development of new sources of value and growth, especially when they augment human capabilities. However, to gain these benefits and to identify relevant use cases, it is necessary to develop a cross-enterprise AI strategy that clarifies the strategic goals: the whys, the hows and the whats of the business model leveraging our “AI strategic approach,” as outlined below. See also: 3 Steps to Demystify Artificial Intelligence   Once the strategic goals have been clarified, the potential use cases for AI can be identified and prioritized according to the impact and estimated implementation effort they have on supporting the achievement of these goals (such as enhanced operational efficiency or improved customer experience) along the insurance value chain: How can insurers use AI in sales and distribution? As mentioned in my previous post, there are numerous use cases of AI that can be applied along the insurance value chain. In this post, we focus on AI in marketing, sales and distribution, including:

• Enabling intelligent customer engagement
• Workload balancing/lead allocation for agents
• Machine learning insights to support customer segmentation
• Automated data extraction from PDF reports and comparison against various policy combinations
• Automated demand analysis and generation of new product offerings
• Intelligent reporting and visualization
• Customer personality and tone analysis
• Automated creation of targeted marketing materials and promotions
• Enablement of intelligent self-service product research for customers
• Automated product recommendations and natural language question answering

When it comes to deciding which AI to employ, insurers need to focus on the things that AI and humans do best together. When AI is combined with human ingenuity across the enterprise, it can help solve complex challenges, develop new products and break into and create new markets. Data analytics for better customer engagement In sales and distribution, insurers can use data analytics to improve customer engagement. Virtual assistance (VA) Accenture’s virtual adviser Cathy (Cognitive Agent to Help You) is a self-learning virtual agent that responds to customer queries by extracting information from a back-end database. Cathy is always learning more as it consumes human-agent interactions and stores knowledge on its database, enabling it to make automated product recommendations based on customer profiles. If a more complex customer request arises, Cathy seamlessly transfers the request to a human agent. Machine learning Insurers can boost their sales and distribution by using machine learning to analyze customer personality and tone. Machine learning makes selling (and buying) insurance easier than ever—virtual agent Amelia, for example, can give customers a motor insurance quote immediately, without the need to speak to a human being. What are the benefits of AI for sales and distribution in insurance? When humans and machines work together, they create the opportunity for growth and innovation. Within insurance sales and distribution, AI-related technologies can help to enable:

• Increased lead generation — data analytics helps insurers identify and reach potential customers. The insight derived from data analytics can drive and constantly improve the sales team’s effectiveness at generating leads.
• Efficient leverage for cross- and up-selling — AI such as data analytics and VA gives insurers invaluable knowledge about their customers, making it easier to convince them to buy a comparable higher-end product (up-selling) or a product that is related to the ones they already have (cross-selling).
• Increased service quality — self-learning virtual advisers like Cathy interact with customers and absorb information about their needs. This valuable feedback drives personalization of products and improves the quality of services.

Use case: intelligent customer engagement (ICE) With intelligent customer engagement, insurers can strategically deflect issues that need to be addressed from human agents to machine chatbots. They can predict why customers are calling and approach them effectively. Humans now take on the new role of knowledge engineer: They take over where the AI ends and curate the knowledge corpus over time. See also: Are Insurers Ready for Voice Search?   In our future vision for insurance, AI-powered care gives insurers the opportunity to save 30% of their customer service costs by:

• Driving customers to digital experiences;
• Providing conversational interactions that increase digital adoption and containment;
• Leveraging AI to automate and deliver consistency across channels.

Insurers are looking to better connect with their customers and to strengthen relationships with experiences that delight them—while reducing the cost to serve. Technology enables them to do this by, among others, shifting the mix of customer contacts: It’s time to put your AIQ to work When you combine human ingenuity with AI—such as data analytics, virtual assistance and machine learning—to improve the sales and distribution function, you will see results improving. AI presents the opportunity for business transformation by enabling intelligent processes in the value chain and intelligent products and services in the market. Success will depend on how well your organization can harness the combined power of technology, data and people. In my next post, I’ll look at how you can use AI to augment underwriting and service management. Get in touch to find out how you can boost your company’s sales and distribution function, as well as others within the insurance value chain, or download our report on How to boost your AIQ.

The commercial insurance industry is in an early and exciting stage of adopting artificial intelligence. With widespread acceptance, AI is set to provide a large source of value and a key driver of competitive advantage. However, there is confusion about what it means and how it will affect the bottom line. Certainly, futuristic perspectives of AI — with human-like robots — have been instigated by Hollywood films. However, to push the dialogue into meaningful territory and truly consider how AI can benefit insurance, we must first remove the shroud of mystery that exists around it. What Is AI? Simply put, AI is an intelligent computer program that strives to work much like a human does. As such, it’s usually defined by two main characteristics: 1. Ability to interact in a natural, human-like way. AI solutions (as opposed to traditional software solutions) strive to interact with users in ways similar to what humans do. One new and increasingly popular mode of interaction is through voice commands. A user might ask Alexa to turn on the lights in a room or instruct Siri to call “mom.” The same technology can be used to transcribe conversations with claimants and perceive the sentiment therein. Free text is another form of interaction, where users don’t need to provide precise data to get a system to react. For instance, claim notes entered by adjusters have been traditionally difficult to process, yet they are a gold mine of insights for AI-based systems. Images serve as another source of input. An AI system could use a picture of a car after a collision to assess the level of damage much faster and easier. 2. Aptitude to learn. Whereas traditional software has to be highly defined and programmed, an AI solution can be given a few parameters and learn on its own. AI is still quite far from being able to think as efficiently as human beings do, but these learning machines are improving by leaps and bounds every day. Increasingly sophisticated capabilities are important because data is ever-changing and noisy, particularly in commercial insurance data. With interactive and learning faculties, AI is evolving to exhibit the “smarts” we need to improve profitability in insurance. Executives should consider how and where to deploy AI to maximize the financial upside. It’s important for executives to realize that AI is fundamentally very different from the typical business intelligence (BI) approaches of the past. The BI infrastructure (i.e., data warehouses, reports) that most organizations have is a great foundation, but it does not have the agility and self-learning capabilities offered in the new wave of AI-based solutions. See also: Leveraging AI in Commercial Insurance   Why Does It Matter? The reason insurers are taking the time to consider AI investments is that these systems are increasingly showing the potential to dramatically improve their bottom line. There’s little doubt in a CEO’s mind that AI will redefine the competitive landscape in the years to come. Those with a strategic approach will thrive. Here are a few examples of how AI is being applied to enhance profitability: Identifying the best doctors to provide care to injured workers. In workers’ compensation, selecting the right doctor — particularly on a complex claim like a spinal injury — can have a dramatic impact on claims costs and outcomes. AI can analyze and rank providers into tiers based on a variety of performance measures, such as claims duration, medical expenses and return-to-work results, better than ever before. A low-ranked physician can potentially drive claims costs five to 10 times higher than a high-ranked doctor. The cost differential speaks to the quality of the provider and the treatment approach used. High-ranked doctors typically take a holistic approach to care. They consider all aspects of the injured worker’s health that affect recovery, including comorbidities such as high blood pressure or diabetes. These doctors are usually aggressive in getting injured workers the care they need to recover and return to work. Many have a long history in the occupational health setting, so they understand that being able to return an employee to work — even in a modified capacity — can play a key role in the healing process. Low-ranked doctors, on the other hand, often inexplicably drive up the number of office visits. They may unnecessarily prescribe opioids and other drugs. In essence, AI detects a trend of over-treatment rather than a focus on getting injured workers back on the job. The insurance industry previously relied on a traditional statistical approach to select physicians, but those models required a significant number of claims per doctor to yield a meaningful assessment. Today, AI can assess a doctor with just a few claims as it can delve deeper, using unstructured data such as notes and descriptions. AI is highly efficient in its analysis. Improving litigation trends. AI can also help to reduce litigation costs significantly. This is an expense that affects all lines of insurance, but in workers’ compensation litigation rates are particularly high, and in many cases they are unnecessary. So, attacking this trend can be a significant source of savings. AI can identify early on which claimants are likely to seek legal representation. By employing communication and management on these cases, insurers can avoid litigation. When attorneys must be involved, AI can help identify the best lawyer to represent the case, similar to its ability to determine the best physician. It makes attorney recommendations based on many factors, including type of case, jurisdiction and judge. AI can also indicate whether it’s best to settle and, if so, for what amount. See also: 3 Steps to Demystify Artificial Intelligence   Avoiding costly, unnecessary surgical procedures. AI can also help to identify claims that may be on a treatment track to surgery. By detecting this risk early, case managers can seek a better approach to care and possibly avoid the need for such an expensive, invasive procedure. This would yield savings, while also avoiding other potential medical complications that could be costly and, ultimately, affect quality of life for the injured worker. Aggressively managing auto claims with a potential to explode. Other lines of insurance also have a burning need for AI. For example, due to competitive pressures driving down premiums, auto insurers are experiencing tight profit margins, and AI can help hold down costs. One way is by identifying claims with a high likelihood of exploding in terms of expenses. This might be due to a number of factors, including the type of injury and vehicle damage. By having this early warning, examiners can pay closer attention to these cases and aggressively manage them in the hopes of having them stay on track. As first published in Digital Insurance.

We live on a seismically active planet, something most of us know all too well living here in California. Although seismic events can strike with little or no warning, major tremors are often separated by years or even decades. This infrequency and unpredictability can lull us into complacency, or even lead to a false sense that there is really nothing we can do to prepare ourselves for the movement of the earth beneath us. We certainly have no control over these immense forces or the time and place they are unleashed. What we can control is how well we minimize the hazards that cause most of the injuries in an earthquake and how effectively we prepare for the aftermath of a disaster. This year marks the 10th anniversary of The Great California ShakeOut, taking place on Oct.18, 2018 at 10:18am. On this date and time, millions of people in California and around the world will participate in earthquake drills and other events to both raise awareness and enhance our readiness. The safety of everyone in our schools, healthcare facilities, community resources, workplaces and homes depends on all of us doing our part to prepare for the next inevitable earthquake. Hazard Reduction For most of us, the first line of defense in earthquake preparedness lies in reducing the potential hazards present in the areas in which we live and work. Building codes and retrofitting have gone a long way toward making our structures less vulnerable to earthquake damage. But the greatest likelihood of injury comes from non-structural hazards, including furnishings and equipment, electrical and mechanical fixtures and architectural features such as suspended ceilings, partitions, cabinets and shelves. In general, non-structural components and building contents become hazards when they slide, break, fall or tip over during an earthquake. See also: A Troubling Gap in Earthquake Coverage   Securing non-structural components and building contents improves safety and security during an earthquake emergency by:

• Reducing the potential for fatalities and injuries.
• Helping to maintain safe and clear exit ways for evacuation and for emergency responders to access the building.
• Reducing the potential for chemical spills, fires and gas leaks.

Potential injuries can also be reduced significantly by completing these quick action items:

• Store heavy items on mid to lower shelves (below the height of adults and children).
• Do not store heavy items or full boxes on tall furniture.
• Secure hanging plants or hanging displays with closed hook hangers.
• Attach tall, heavy furniture to wall studs.
• Place tall file cabinets and shelving (over four feet) in low-occupancy areas (such as a closet).
• Secure desktop equipment and displays that could fall and injure occupants.

When the Shaking Stops When you are confident that the shaking has stopped, employ extreme caution in leaving buildings and structures. Keep in mind that there may be things that have been shaken nearly loose but still hanging on and could potentially fall on you. If you know where your utility shutoff locations are and are authorized to do so, turn off gas, electrical and water supplies to help prevent further risk of injury or damage. Be Ready for the Days After Following a major earthquake, utilities and communications can be interrupted, transportation may be blocked and emergency services could be potentially stretched to their limits. Some people could be completely on their own for several days afterward. Maintaining essential supplies in a “Go-Bag” to last for a minimum of three days, including water, food, flashlights and batteries, first aid supplies, clothing and means of shelter and warmth, will help you weather the immediate aftermath. A hand-cranked emergency radio provides an important source of official information for recovery, risks of secondary disasters such as fire, flood or gas leaks. Many of these radios also provide a way to charge a cell phone. You also need to be ready for aftershocks, which can be just as strong – sometimes stronger – than the initial earthquake. Stay clear of damaged structures, electrical lines or anything else that could fall in your vicinity. Don’t allow emergency supplies and equipment to become a danger if the shaking starts again. Because each aftershock may increase the possibility of gas leaks, fires should be avoided. Keep a supply of food that doesn’t require cooking and water that doesn’t need boiling. See also: 5 Tips for Avoiding Personal Injury Claims   Resilient communities and families learn the lessons from every prior earthquake – recent or distant – to have the best chance of surviving the next disaster uninjured and quickly on the way to recovery.

The insurance industry is facing seismic and unprecedented shifts on multiple dimensions. From increasing client expectations to new emerging risks, from the emergence of robo-underwriters to the ever-present question regarding the role of traditional channels, insurance carriers have multiple fronts on which to re-think, re-look and address innovation challenges and opportunities. The culture of the insurance sector is changing. The momentum to engage, identify new frontiers of competitive differentiation and execute outcomes has clearly started. As a case in point, Insuretech Connect, the largest insurtech conference had 1,200 participants in 2016, 3,800 in October 2017 and 6,000-plus this year. At events like this, you can feel the incredible energy of insurance professionals, regulators and startups. Insurance organizations are full of insurance professionals with incredible skills and commitment to always go the extra mile. Driven by an entrepreneurial spirit, they seek to reinvent the way things are done and have in many cases always been done. A few trailblazers have challenged their organization’s formal rules and forced habits and have pushed bottom-up innovations within their organizations. Yet other committed insurance folks have been involved in top-down programs that have been created by their companies to capture and execute the next frontier of innovation. We find that, unfortunately, large segments of the workforce do not engage with the innovation process of their employer. We often find that some of the best concepts, opportunities and solutions find the exit sign faster than they find traction within the boundaries of their firm. In some cases, people push for their innovations as side agendas, often driving them as secret agendas where their energies and attention are spent. In other cases, people simply decide that it’s better to pursue the art of the possible outside of the firm. We believe that this is a pity and a waste of positive energies for the existing incumbents. Carriers should embark on building a foundation that creates the conditions and enables mechanisms for promoting the culture of innovation and channeling this energy in a productive direction for the company. We have worked in and with large and international organizations and know well how these complex elephants live and how difficult it is to set formal processes able to promote virtuous circles and orchestrate innovation as a “living, breathing and relevant” process. This issue is big and complex, and there is no magic wand to solve it. We would like to start a discussion on how this issue can be addressed in the insurance sector. The problem as mentioned has many different angles. We decided to start by addressing one aspect of the current state—the silos. Traditional silos are one of the of the killers of insurance innovation. We recently came across situations that speak volumes to the need to consider foundational investment in integration capabilities. We present three myths that often prevent even forward-looking carriers from pursuing well-intentioned innovation strategies. Getting underwriters, risk engineers, marketers, product developers, actuaries, claim handlers and technology folks to break out of traditional silos will need to be a critical first step before any innovation investment or program is considered. See also: How to Get Fit for Innovation   The Myth of the Innovation Mirror A top performer in a line of business at a well-recognized carrier was promoted and placed in the company's innovation group. This leader was a recognized expert in his functional domain and was often sought out for insights on both legacy issues and emerging trends. During a recent meeting, we asked him for his opinions on the issues being faced by a key stakeholder and partner group within the same firm on a business line that, while different, was really close to his business line. Much to our surprise, this leader said, "I have never thought of their business line. I don’t know." We left the meeting with a surprising realization that there are probably many other top performers who excel in their chosen disciplines within well-defined boundaries, yet do not seek to expand the vistas of their exposure or to apply their knowledge to related domains. Their organizations have correctly encouraged their growth and specialization in one domain but have probably never facilitated exchanges between business lines or forced them to go out they comfort zone. We call this the "Myth of the Innovation Mirror," where the images we focus on are constrained by one's own areas of expertise. The Myth of the Signal Catcher A leading U.S. carrier saw the departure of one of its top line leaders. This individual had spent decades building a robust P&L, operating team and client relationships. He had been recognized for his thought leadership and for building teams that pushed the boundaries of what's feasible and valuable for their clients, but he was not directly involved in the innovation program of the company. This company boasted of a well-funded and successful enterprise-wide innovation program, championed by the CEO and supported by divisional leaders. The irony of this departure was that the executive left to pursue an independent entrepreneurial venture because he believed that his ideas and the innovative value proposition would not be implemented by the firm. Despite having a robust and well-managed innovation program, the firm failed to catch the signal that one of their very own was both willing and able and highly motivated to create a future-forward product today. There could be many reasons for this specific departure but we believe that it probably happened because this leader was not formally affiliated with the innovation program. There was no mechanism to watch, catch and act on the weak signals that this leader was sending out, weeks and months ahead of his departure. We believe that this myth of the signal catcher is a serious risk that carriers have to consider and address. Simply creating and operating an innovation program is not adequate and sufficient. Creating the ability and the mechanics to watch, interpret and catch the weak signals coming out of individual and or team efforts is as important if not more important than simply being a scouter of startups, or an inventor of ideas and concepts or an evangelist of the innovations. The Myth of Action Finally, we address the "Myth of Action." A global insurance carrier has innovation centers across key markets. A formalized program exists where leaders and staff resources spend dedicated time getting together and converting their individual ideas and interests to collective outcomes. Some of these centers represent centers of excellence in different domains. In this scenario, we found that an innovation team in one part of the world—while working on a new topic for them—was almost devoid of access to similar concepts and work that had already been pursued halfway around the world. As carriers with a global footprint address innovation outcomes, it will be critical to ensure that action is not mistaken for outcomes. Bridging the distance within and between different centers of innovation is crucial to ensure that the teams do not end up becoming innovation silos unto themselves. The "Myth of Action" arises when innovation champions or leaders assume that presence and permanence are sufficient. We are perfectly aware of the local specificities that make the possibility of simply copying-and-pasting an insurance solution coming from another country a utopian idea. But many ideas can inspire location-specific variations and be tailored to the local needs. While presence across regions and permanence from a mandate perspective are key, we believe that it is more critical to ensure that physically far-removed teams get structured and unstructured opportunities to be exposed to work that peer groups are driving at non-local locations. Researchers have found that proximity is a key driver of organizational effectiveness. Solving for this “distance bridging” will be critical. Simple tactics like designing intentional cross-location collaboration will ensure that exchange of ideas in large and complex organizations can transcend distances. So how can you attack these myths head on and build or mature your innovation practice? We recommend that innovation efforts identify three distinct but connected archetypes for roles/resources working with an innovation focus. We propose the trifecta of Observer, Interpreter and Storyteller. Think of these as hats or lenses, rather than roles or restrictions. Observers are designated to be non-judgmental observers of actions, outcomes and opportunities. With two leading questions of “What do I see?” and “Where do I see?”, Observers play a key role in taking a non-action view and in scouting even where you don’t expect to find anything. Interpreters are driven by two different questions. While the Observer has simply made her observations known, the Interpreter asks, “Why do I see what I see?” and “What does this mean?” These questions are designed to help the Observers dive deeper into the observations they are presented with, but also to rationalize the knowledge and ideas identified. While there might be a temptation to go broad and expand the scope of one's assessment, we believe that focusing on depth and asking increasingly fine-grained questions is more beneficial. Storytellers are the final actors in an innovation practice. We humans are wired for storytelling. From time immemorial, our ancestors have passed on down through generations many a story of heroes, victors and vanquished. We recommend that the Storytellers play their part in the modern version of "tell me a story," and spread the word about the insights that the Interpreters have distilled. The storytellers have to evangelize, inspire and motivate the organization in the adoption of innovation. See also: Key Trends in Innovation (Part 6)   Taken together, the Observer, Interpreter and Storyteller create the much needed and often missing enterprise-scale integration that helps make innovation efforts successful. These archetypes can be introduced and embedded into almost any current innovation program. Their integrated activities will contribute to channel the positive energy in a productive direction for your company. Think of these as calibrations you can do to any currently defined innovation operation, resource or delivery model. Done right and executed consistently, these three roles can help address the three myths, and the risk of innovation teams not living up to the promise of what they can truly deliver. In many ways, the IoT Insurance Observatory (spearheaded by one of the authors of this article) has applied this trifecta of lenses with an extremely narrow scope—the usage of sensors within the insurance sector—targeted at the open market (opposite to the internal focus of the discussion above). This think tank is, first of all, constantly observing and scouting the usage of sensors in different insurance business lines around the globe. Second, it is interpreting best practices and pitfalls for the members, so providing them the most globally relevant IoT insurance knowledge. Last but not least, it has as a core deliverable the storytelling of this knowledge through workshops dedicated one-to-one to each of the organizations that are members. In this way, the Observatory has aggregated almost 50 organizations between North America and Europe and is promoting IoT adoption in the insurance sector. **** We believe carriers can employ these three tactics/rules to mitigate the risks of the three myths. These tactics are part of the solution for the big and complex problem of how to promote virtuous circles and orchestrate innovation. Join our discussion to find additional solutions to catalyze all the positive innovation energy is emerging in the insurance sector. The article was written by Matteo Carbone and Sri Nagarajan.

Healthcare is being transformed by advances in artificial intelligence, virtual reality, machine learning, sensors and other innovative technologies. Practically everybody has a smartphone, making it easier than ever to gather data and consent to third-party access. Unique data insights mean providers can offer people products and services tailored to them individually. For insurers, digital technology offers new ways to manage risk that relies less on face-to-face and traditional clinical assessment; this is why there is so much interest in understanding how innovation might work. Selected comments from four key players in the digital health ecosystem make clear the appeal of putting two and two together. Thomas Lethenborg at Monsenso, a mobile platform for mental health, said, “Digital technology helps an individual move from reactive behavior to being more proactive - and this changes the paradigm in particular with engagement.” It’s a view shared by David Forster of Thrive, a digital interventions app for mental health: “Data drives our understanding of what works best for the individual.” According to Forster, the success of digital technology in clinical settings points to real opportunities in insurance: “It makes it possible to provide policyholders help with illness prevention, early detection and assistance on a personal level.” Ian Prangley, of exercise rehabilitation service TrackActive, continued the theme when he said, “For insurers, digital solutions can drive connectedness, engagement and customer satisfaction while enabling people to self-manage their health. Harnessing data insights and implementing artificial intelligence (AI) is key to achieving this.” See also: Why to Digitize Disability Claims   A comment by Danny Dressler of AIMO, an ecosystem integrating intelligent motion analysis into musculoskeletal care, added further confirmation: “As more and better data is gathered and processed safely, AI offers the most promise to take care of people's health, and fix issues in both healthcare and the life and health insurance sectors.” By using digital means, insurers can create scalable, automated, speedy ways of supporting people when they need help the most. Proponents argue it offers better health outcomes for policyholders that will reduce the costs associated with long disability claims - a win-win for both insurers and consumers. Dressler also said that “technology like ours lets insurers offer customers new solutions such as dynamic pricing and automated claims and even help to prevent claims from happening.” Lethenborg says it represents “an opportunity to ensure the data collected gives holistic insights and analytics that we can use to intervene more rapidly, when help is needed.” But it’s crucial the highest levels of privacy and data protection are guaranteed and operators are in full compliance with regulations. An imperfect balance of privacy with innovation is a deal-breaker for consumers. Forster is clear how delicate this balance is: “We recognize our responsibility to safeguard users’ data, but at the same time information technology empowers people to make choices and participate actively in managing their own health - it puts them in the driving seat for the first time.” For digital solutions to be convincing, research and scientific evidence are needed, but with newly made services, long-term experience is scarce, and a leap of faith is required. Dressler spoke for all in saying, “We maintain strong links to scientific institutions because the general technologies underpinning our solutions emerges from scientific thesis...[This means] we only implement new features or functions after a rigorous validation process, especially because we are asking people to trust us with their health and well-being.” Dealing with high volumes of data is not without risk, particularly when it’s shared with third parties. See also: Digital Innovation in Life Insurance   Prangley has pointed to recent concerns over how sensitive data is being used to highlight the challenges faced, “The key is to anonymize and protect data, and have customers consent to sharing it on the understanding it will be used solely to improve their health.” This insight is driven home by Lethenborg, who said, “Transparency about how the data will be used is essential to building trust.” Digitization has already brought new products and services that have had positive medical and scientific impact. As Prangley said, “Technology has connected people and changed how we relate to each other. There [are] arguments for and against this of course, but in the context of health and wellbeing we believe it’s a great thing.” With mental health and musculoskeletal problems as the leading causes of disability claims in every market, these companies can bring digital solutions and opportunities - and health insurers can also feel great about them.