Most insurance businesses realize that there are benefits offered by upgrading legacy systems and becoming more “tech-forward.” However, not all insurance businesses are prepared to make the leap. Here are four qualities your insurance business needs if you want to succeed in leveraging what insurtech has to offer. 1. Customer-Centricity Customers are at the center of every business, and insurance is no exception. Being consumed with your customers to the point that you fully understand and anticipate their expectations will make leveraging insurtech a much more seamless process. Many insurtech solutions are designed to assist with customer interactions and bilateral communications. Some are even leveraging artificial intelligence to enable more personalized, more scalable coverage solutions. Despite the allure of insurtech, it doesn’t deliver a set-it-and-forget-it solution. It can’t. If your insurance business is not in touch with your customer base to begin with, you’ll have trouble discerning where the use of automation and insight technologies makes sense and where it doesn’t. Moving to a customer-centric approach begins with realizing that there is no “average” customer. Customers have different behaviors and preferences, and, by truly understanding them, you’ll be able to overcome the false appeal of a one-size-fits-all approach and successfully, that is intelligently, implement insurtech within your business. It’s critical that you have a firm grasp of your customers' transactional preferences. In what situations do they expect and prefer to have frictionless, humanless interactions? In what situations do they expect and prefer to have someone to work with? The answers to those questions will differ considerably depending on the customer. Without the answers, even the best AI or automation tools will have a limited or even negative effect on your overall business. A profound knowledge of your customers and their preferences is fundamental to knowing where and when to intelligently apply and effectively leverage insurtech. At the end of the day, “insurtech” is a portmanteau of “insurance” and “technology.” It's about adding new technology to the world of insurance, not about replacing the insurance world with the technology world. As such, it’s important that you use technology in a way that complements your operations. When it comes to insurtech, for best results you should be using it while drawing on the wealth of insurance world knowledge and experience you’ve acquired. That’s especially true when it comes to insurtech applications that interface with or pertain to your customers. See also: How to Collaborate With Insurtechs   2. Holistic Analytical Approach to Data Being adept at critical or analytical thinking goes a long way when leveraging insurtech. Many insurtech solutions revolve around the same basic idea: Improve data capture, automate the information collection process and apply it everywhere. That means that if you’re investing in insurtech, you’re probably already drowning in data or will be soon. Data is great, make no mistake. But data without context or — worse — data that’s analyzed and interpreted without discipline or scientific understanding can be harmful. Misinterpreting your data, looking in the wrong places for insights or letting the data collect dust because of uncertainty as to how it should be tackled are common problems. Acting confidently on bad data interpretations can be particularly destructive. It’s imperative, therefore, that you’re able to intelligently interpret and action your data. It’s important that you approach the data generated from insurtech solutions holistically. A holistic approach to data is one that avoids reverse-causal conclusions, understands and satisfies the demands of statistical significance, accounts for sampling errors and examines patterns with a broad perspective. Key to this is employing properly trained professionals where necessary, assuming a longitudinal point of view and being hypervigilant about duly contextualizing all data sets. For example, consider a new insurance agent who brings in five new applications worth a total of $50,000. Is this agent suddenly a top producer? Perhaps, but it’s important to look at data over time to see how renewals and persistency pan out. If the agent cannot retain business, then new applications and new business do not necessarily mean increased long-term (and in some cases even short-term) profit. Another example might be a client who has recently purchased several insurance policies following a marketing campaign. Did the client buy because of the campaign, or was he already in the market for insurance and would have purchased anyway? In both cases, it’s easy to confuse correlation with causation. 3. Swift Action The insurance business is notoriously slow to change existing processes and procedures. For example, the prevalent agency model for insurance policy sales and management in the U.S. hasn’t changed much since the 1970s. In fact, it has been criticized since that time in academic literature for being outmoded and a costly way to sell insurance to the general public. Today’s insurance businesses need to act quicker. Acting swiftly and intelligently will drive down costs, improve profitability and better set you up to leverage insurtech. Many insurtech applications rapidly collect and deliver data; however, your insurance business needs to be able to act swiftly on that data to capitalize on it before it goes stale. For example, a client who just opened a business needs liability insurance now, not a month from now. Having that data at your fingertips is wonderful… so long as you act on it. Having a quick-twitch motor and a matching mentality is crucial to fully leveraging insurtech. You need to be always on and always ready to act if you expect to succeed in this age of disruption. Aside from hiring the right people — fit for sudden and decisive action — and properly training them how to act and with what triggers, one way to ensure swift action is by automating clerical activities. Time-consuming tasks such as manually filling out forms, document drafting, scanning, faxing and playing signature tag with customers are all examples of activities that needlessly take up too much precious time in insurance businesses. Turning to intelligent management systems that automate these tedious processes will cut out a lot of the red tape and remove some of the most common barriers to acting more swiftly. This should free your time and that of your employees to focus on bigger picture activities, such as leveraging insurtech to its fullest potential and making your business thrive. 4. Open-Mindedness One of the hardest things for insurance businesses to do is break out of the mold they’re cast in. They suffer from a frame of reference fallacy, wherein they cannot see beyond the strictures of their immediate environment and their own experiences. Not looking (or thinking) “outside the box” makes the industry vulnerable to disruptive business models. Lemonade, for example, disrupted the insurance industry by offering homeowners and renters insurance coverage powered by artificial intelligence and behavioral economics. By doing away with brokers and unnecessarily long and bureaucratic procedures, they’re able to offer an instant digital alternative to traditional insurance purchasing. They were only able to do this, of course, because so many in their industry failed to see how new technology, new consumer expectations, and a new business normal pertained to insurance. Most companies lack the vision to connect even obvious dots if they’ve never before been connected. Don’t be most companies! See also: Is the Insurtech Movement Maturing?   Being open-minded and willing to try alternative methods is a must for leveraging insurtech. When you don’t acknowledge your limited frame of reference as a vision block and make a concerted effort to overcome it, you can be unnecessarily boxing yourself in and handcuffing your growth potential. If you're afraid of jeopardizing what's already working, you won’t be able to successfully leverage new insurtech tools and techniques. The question of course is whether “working” is a relative or absolute term. If your current approach is producing 2% growth, that’s great, but how do you know that an augmented approach wouldn’t produce 20% growth? What’s more, the insurance industry is increasingly moving toward a digital model. So much so that soon just keeping up with the times will require you to remain open-minded to radical change. According to a report from Accenture, for example, 47% of surveyed respondents would rather have more online interactions with their insurance companies and 49% have already purchased a policy online with 41% of respondents purchased on a mobile device. The business is changing, and if you don’t change right along with it you’ll likely go the way of the dodo bird. The digital trend is so strong that one major American insurance company estimated that roughly 40% of future business will come from the web, with much of that business coming from mobile. Conclusion Now, more than ever, the insurance industry needs to leverage insurtech. Disruptive startups will continue to set the pace in the insurance industry until older companies manage to learn new tricks as they look to more intelligently leverage digital technologies. Being open-minded, acting swiftly, taking a holistic approach to data and gaining an in-depth understanding of your customers is critical to being able to leverage insurtech successfully. Make it a point to adopt these four qualities and give your insurance business the best chance to grow.

At the WCRI Annual Issues & Research Conference, Dr. Richard Victor, former CEO of WCRI and currently a senior fellow with Sedgwick Institute, discussed his views of workers’ compensation in the future.

The workers’ compensation system was a compromise between labor and business designed to provide no-fault benefits in an environment that gave exclusive remedy protections to employers. Over the years, there have been ebbs and flows to the system in an effort to maintain balance. There is a constant struggle to balance benefits to workers with the costs of the system paid by employers. In the past, when the workers’ compensation system got out of balance, it was due to actions from those within the system. That is something the system could correct with regulatory change. However, right now, there are things happening outside of the workers’ compensation system that could significantly affect it and cause a rethinking of the grand bargain.

Emerging labor shortages

Retiring baby boomers will cause labor shortages in healthcare and the insurance industry, which will delay claims and medical care. This will ultimately increase claims costs.

See also: The State of Workers’ Compensation  

In addition, a stronger economy is ultimately going to lead to a severe labor shortage. When you pair the aging workforce and people retiring with a growing job market, you end up with not enough qualified applicants to fill the positions. Employers have to relax their hiring standards. This leads to unqualified applicants being hired. These people will likely have higher accident rates.

Changes in the non-occupational health system

As workers see their out-of-pocket health insurance costs rise, it becomes more attractive to try to shift illness and injury episodes into the workers’ compensation system. Richard feels that this shifting will result in a 25% increase in workers’ compensation claims by 2030. With soft tissue injuries, it would be very easy for the worker to indicate the injury happened at work instead of at home. Disproving that would be very challenging for employers. Higher deductibles will greatly encourage workers to look for these cost-shifting possibilities.

Millions of workers losing health insurance

The number of uninsured workers is expected to decrease significantly as elements of the Affordable Care Act are repealed or weakened. These uninsured workers are also highly encouraged to shift their treatment into the workers’ compensation system. Richard estimates a 15% increase in workers’ compensation claims due to this.

Aging workforce

The injury rates for the older workers is higher than for younger workers. As the U.S. workforce ages, we will see higher injury rates across the employee population.

Federal immigration policies and practices

Limiting the flow of immigrants into the U.S. at a time there is a labor shortage will only compound the problem. The only way to grow our workforce to keep up with the demand is with immigrants. All of the growth in the labor force going forward is projected to come from immigrants. Roughly 15% of all healthcare workers in the U.S. are foreign-born. If we discourage immigration into this country, Richard feels it could cause a labor shortage in the healthcare industry. It does not even take a change in policy to see a change in immigration flow. After the Brexit vote there was a significant reduction in European nurses registering to work in the U.K. This is even though there had yet to be a policy change in the country.

See also: Healthcare Reform’s Effects on Workers’ Compensation

Conclusions

Taking all of the outside factors into consideration, Richard estimates a 55% increase in the number of workers’ compensation claims by the year 2030. When you add in medical inflation the costs of the workers’ compensation system could triple by 2030 with no change in indemnity benefit levels. With this significant increase in costs, there will be questions about the continued viability of workers’ compensation.

What is the solution? Are there viable options to traditional workers’ compensation? ERISA-style plans like the opt out in Texas have been widely criticized for providing inadequate protections for injured workers. Union carveout plans only apply to a very small sector of the workforce. Could we see workers’ compensation claims organizations become accountable to both employers and workers, with employees having the ability to choose which claims organization they want to use?

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. 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 rely 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: New Regulations for 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 that digital 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 noted that “technology like ours lets insurers offer customers new solutions such as dynamic pricing, automated claims and even help to prevent claims from happening.” Lethenborg says there is “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 new 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 emerge 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: A Road Map for Health Insurance   Ian 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, companies can bring digital solutions and opportunities - and health insurers can also feel great about them.

As the world becomes more connected -- with billions of sensors, connected machines, totally digital processes, trillion terabyte of new data and strict regulations on data privacy -- cyber risk appears as a bigger threat on the digital transformation journey of insurance companies. Cyber risk was always there, and companies managed it without detailed policies or billion dollar covers. But, the situation is changing dramatically. In our century, managing cyber risk is a full-time job and requires big budgets. Gross written premium in 2017 for cyber risk policies was nearly $3.1 billion, and it is expected to reach $14 billion just in five years. Insurance professionals expect rapid growth because cyber risk is now threatening not just financial statements but also the existence of companies from every business. Managing cyber risk seems still like maiden soil. There are covers for business interruption, reputation loss and possible physical damages, but it is obvious that there is a lack of clear understanding about how much cyber risk policy owners have. Cyber risk management is still in the very early stage: I don’t know what I don’t know! See also: Urgent Need on ‘Silent’ Cyber Risks   As a result of new capital regimes and strict regulations, like GDPR, Solvency II and MiFID II, there is a remarkable increase in sales and acquisition activities among companies from every sector, and cyber risk appears as a new key indicator during M&A due diligence processes, as well. Four or five years ago, cybersecurity due diligence consisted of asking few questions in a short phone call. Now, cyber risk management can lead to the termination of an M&A deal in a few days or a sharp reduction in price. So, insurers appear as due diligence partners. As all we know, the acquisition of Yahoo was radically changed right after Verizon Communications learned about how 3 billion Yahoo accounts were stolen. When Home Depot was preparing an offer for the Company Store, Home Depot discovered that e-mail and payment card information for as many as 56 million customers was stolen. Cyber risk is climbing to the top of CEOs' nightmares, and insurtech is a trigger -- it is also the best tool for managing cyber risk.

Distracted driving is having a tremendous impact on insurance rates. Distracted driving is the leading cause of accidents Increasing technology has seen the development of user-friendly mobile devices that have been the leading agents of distractions when it comes to driving. Distracted drivers have always existed. However, their number drastically increased with the invention of new applications for smartphones. Distracted driving has been found to be an increasing problem especially among the youth. More accidents equate to higher policy premiums Studies show that a distracted driver is 23 times more likely to cause an accident while using a cell phone. The Boston Globe reports that policy providers in Massachusetts received approval to raise rates by as much as 5% in 2017. See also: Distracted Driving: a Job for Insurtech?   Insurance costs rise drastically Many campaigns have been launched countrywide in a bid to sensitize drivers on how to keep their mind on the road and hands on the wheel. However, overconfidence and lack of focus has seen more drivers lose their lives due to distracted driving -- 52% of road accidents had significant phone distraction before the accident, according to Cambridge Mobile Telematics. Everyone should take part in curbing distractions while driving to help moderate insurance rates. Strict actions should be taken on those violating traffic rules. It is also important to report any road or accident-related cases to a car accident attorney.

Insurance companies, like many other businesses, are extremely concerned – and rightly so – about cyberattacks that could result in the theft of the personal information of customers and employees. To protect themselves against data breaches and other threats, they companies are implementing physical and network security controls that include both the latest technology-based solutions and security awareness training for employees, who are all too often the weak link. But while these security measures are certainly necessary, they are not enough, because insurance companies also face a second type of risk: the risk that criminals who have gained access to customer information from other sources will use it to hijack accounts. Most account takeovers occur via social engineering, where fraudsters use hacked customer data they have purchased on the dark web or information they have gleaned from social media to impersonate legitimate customers and trick call agents into making account changes. To prevent this type of fraud, insurers need more robust customer authentication processes. Many insurance companies continue to rely on so-called knowledge-based authentication (KBA) to grant access to accounts, meaning that customers verify their identity by demonstrating knowledge of personal information such as their account number, date of birth, mother’s maiden name and so on. But any business that protects financial assets by authenticating customers in this way is vulnerable to fraud because, thanks to data breaches, criminals have easy access to that information. And the rise of social media means that even the answers to common challenge questions (for example, “What was the name of your first pet?” or “Where did you attend elementary school?”), are often readily available to skilled and patient fraudsters. See also: Draining the Swamp of Insurance Fraud   The proliferation of customer information on the dark web and on social media means that insurance companies need to rethink how much, if at all, they will rely on customers’ knowledge of personal information to verify their identities. Because criminals have such easy access to customer data, insurers need to implement more reliable ways to identify their customers, whether the contact is via the web, a mobile app or phone. So how can insurance companies make sure that a person logging in to change account details or calling customer service to initiate a claim is a legitimate customer? Multifactor authentication is a best practice that adds an extra layer of security to the identity verification process. This approach requires that knowledge (something the user knows, such as a Social Security number or account number) be combined with inherence (something the user is, such as a voice print or retina scan) or ownership (something the user has, such as a trusted phone or a driver’s license). ATM access is a good example of a type of transaction requiring multifactor authentication: Bank customers must use both a physical debit card and a PIN. For increased security, insurers should apply this same principle to their customer authentication processes. Apps and websites, for instance, should not grant account access based simply on user IDs and passwords – both pieces of information that can be hacked. A wide variety of more secure authentication methods are available, and many of them, such as dynamic PIN code generators and one-time password lists, are not particularly costly or complicated to implement. Compared with online access, the phone channel continues to lag when it comes to security. Identity interrogation is still the dominant means of authentication used by customer call centers, and this obviously poses a significant risk in the age of increasingly sophisticated fraudsters who are adept at social engineering. Fortunately, new tools are emerging that make reliable multifactor authentication possible. One approach is to use the caller’s phone as a physical ownership-based authentication token. With this method, a network forensics system analyzes the phone call within the global telephone network and verifies that the customer is calling the call center from his or her personal phone. The process is virtually invisible to callers (it requires no action or enrollment) and allows callers to be automatically authenticated before their calls are even answered. With this technology, the only way a fraudster could spoof a call would be to physically steal and unlock the customer’s mobile phone or break into the home to use a landline. These are not easy tasks to accomplish. Multifactor authentication can also use biometrics – voice prints, specifically, in the case of phone calls. Voice-biometric systems compare a caller’s voice with a previously enrolled recording of the account holder’s to make an authentication decision. Biometric voice authentication will be one of the ways callers are authenticated in the future, but today there remain several sizable roadblocks to widespread adoption. Most notably, it is a lengthy task for contact centers to gain the permission and initial recording from their entire base of members. Remaining stagnant and continuing use of single-factor authentication based on KBA may seem simpler in the moment, but the risks – not only losses to fraud, but also potential penalties from regulators and lawsuits from affected customers – greatly outweigh the short-term discomforts associated with technology change, which will ultimately bring with it reduced costs and complexity. See also: Global Trend Map No. 11: Fraud   Consumers are living more and more of their lives online, and they clearly value the convenience and connectedness of the digital world. However, the steady stream of headlines about data breaches in every industry, as well as social media companies’ improper handling of personal information, is rapidly eroding trust. Many consumers have little confidence that their information will not be hacked and fall into the hands of criminals. If insurance companies wish to retain customer trust, they must take information security seriously and implement multifactor authentication. The good news is that many of the new authentication technologies are not only more accurate than identity interrogation but also result in a better immediate customer experience. Customers who call their insurance company are often already stressed, and they just want to resolve their problem without having to jump through hoops. Reducing reliance on identity interrogation also reduces operating costs as agents can spend more time helping customers instead of grilling them about their identity. Selecting the right authentication technology can thus be a win-win that results in more satisfied customers and decreased costs.

In the digital era of innovative products and services, insurtech technologies are bringing great opportunities to the insurance sector and accelerating the industry’s transformation. Advances in AI and data science are leading insurers toward the effective use of machine learning, data modeling and predictive analytics to improve back-end processes and streamlining and automation of the front-end experience for both consumers and insurance companies. Here are five ways that insurance companies are applying AI and data to the industry: 1. Front-end sales, underwriting and policy service Customers are acquiring insurance policies much faster and easier with the help of automated processes. These technologies differ depending on the systems that employ them and the people they serve. Integration gateways relying on data and AI are creating new customer experiences. See also: Seriously? Artificial Intelligence?   2. Back-end claim services AI, IoT, predictive analytics and data modeling let insurers refocus claims so that it is easier to file, submit, adjust and reimburse claims. This means customers have their claims settled in an expedited manner. Patterns of fraud are detected, learned from and shared via modeling and the AI that combs them for key information. 3. Business intelligence and big data Smartphones, telematics and sensors from wearables and connected homes provide a wealth of new data. In a connected world, insurers can generate insights from both external and sensor-based data sources. How this data is collected, stored and used will determine whether insurers will build or lose trust with customers. Take necessary measures to harden networks so that the threat of cybercrime is reduced. 4. Customer experience Insurance companies need to offer their services in a way that encourages loyalty, customer retention and loss mitigation. This can be made possible by making policy acquisition easier and keeping policyholders engaged. It’s now common for insurers to monitor driving, health and home behavior through mobile apps and wearables. In exchange for the data, carriers offer lower or customized premiums to customers whose score reflects reduced risk. 5. Customized insurance Carriers offer insurance packages and plans based on a matrix of factors. This requires their agents to possess extensive knowledge about products as well as their new and prospective clients. Through machine learning, millions of data patterns can be analyzed to identify the most appropriate customized plan or product for a particular customer. It can even be offered to them via AI. Data modeling and artificial intelligence are advancing rapidly. They are laying the foundation of an industry equipped to quickly take clients from prospect to policyholder with minimal touch points and reduced risk. See also: Motto for Success: ‘Me, Free, Easy’   Where exactly these technologies will lead us next is anyone’s guess, but carriers have begun to realize the benefits. A historically slow-to-move, conservative industry is now more nimble, innovative and tech-savvy than ever before. Transformation is here!

Workers’ compensation was designed to reduce litigation by trading out the employee’s right to sue his or her employer for negligence in exchange for limited guarantee of care and compensation. This exclusive remedy “bargain” was the justification for why the system was created a little more than 100 years ago. If we look at intent and where we are today, it’s a failure (albeit a fixable one).

Currently, the workers’ comp system is thought of as one of the more litigious marketplaces for insurance and healthcare. It doesn’t reduce litigation; it simply changes (and in some cases streamlines) the fight. We need to wake up and say ENOUGH! It’s time to dedicate resources on several fronts to get back to the original intent of this system.

Impact Analysis

In 2014, California Workers’ Compensation Institute released a study that provided a strong scientific approach to quantifying impact. The study showed that, if an injured party hired a lawyer, the associated costs went up on average by $40,000 for permanent disability payments and $25,000 in terms of temporary total disability benefits — even if the case never went to court. That is staggering!

Prior to this study, there was a general understanding that the system was not functioning as intended, but, when the hard numbers were presented in a very defensible analysis, it was truly shocking. More importantly, the study demonstrated that the injured worker doesn’t benefit from a litigious fight, either. It isn’t good for anyone (except maybe the lawyers) when things devolve to the point where attorneys become involved with a claim.

See also: 2018 Workers’ Comp Issues to Watch  

To determine whether things have improved since the release of the CWCI study, and if so by how much, I am involved with a new study. If the initial findings hold up, I can assure you that the situation has not gotten better. It’s far more likely that it’s only gotten worse. Doing a bit more digging on the impact of litigation on claims costs, we examined data culled from multiple claims companies. Several points stood out from the early informal analysis, most notably that, across all claims, on average:

• The overall time to resolve claims increased by nearly 10x when an attorney was involved.
• The amount spent in temporary disability payments was approximately 4.5x greater when an injured worker was represented by an attorney.
• The number of workdays employees missed more than doubled when lawyers were engaged.

These numbers are considerable and don’t even focus on the out-of-pocket costs of the attorney’s fees, direct litigation costs or the impact the additional friction causes in claims overhead costs. One of the more provocative initial findings shows that, when carriers distinguish between claims that are litigated and claims that are just represented and haven’t escalated to litigation, there is little difference in outcomes. If anything, initial figures suggest the worst outcomes are more likely in the claims that are represented but not litigated (carriers have different criteria for these categories, so it’s not a conclusive finding).

It is clear that, once the injured worker decides he or she needs to get an attorney, the horse is already out of the barn. We have to get IN FRONT of this event — and not just react to it. The future health of the workers’ comp industry depends on this.

See also: States of Confusion: Workers Comp Extraterritorial Issues 

There are lots of opinions on where to go from here. But real solutions are on the table. Before we examine all of this, however, it’s important to understand why injured workers hire attorneys to begin with. (Hint: It’s rarely because they are looking to score a massive payout). In my next article, I will dive into these reasons and how to remedy them so that we can return the workers’ comp system to its original intent.

As first published in WorkCompWire.

When you combine the ability to collect workplace data with evolving data analytics and machine learning, you can improve productivity, worker safety and fraudulent and exaggerated claim rates. During a session at the RIMS 2018 annual conference, Eric Martinez, founder and CEO of Modjoul, and Lance Ewing, EVP of global risk management and client services at Cotton Holdings, led a dynamic discussion around wearables and how they can and will create change for your organization. Why should companies start using wearables? For an individual, it can point to issues for correction. Groups of employees can compare with known thresholds, or set thresholds for improvement in areas of concern. For an organization, wearables change the way an organization is managed. The benefits of wearables are working with individual outliers, validation of application and new data for further understanding. Working with individual outliers, for example, in automotive telematics, the worst 5% of drivers represent 15% to 20% of losses. Validation of application can verify applications and information provided with new data for further understanding activity (bends, steps, twists, driving), training (aggressive driving events, near misses, bad bends), fatigue (duration of physical activity), fitness (height-to-waist ratio) and even environment (temperature, heat index, humidity). See also: Where Are the New Wearables Heading?   Workplace wearables create data and insights for companies and employees to achieve their highest performance. The wearable device captures payloads, then sends payloads to the cloud for computing and finally displays data on a dashboard. The criteria for a wearable are sensors (detect location, motion, environment and biometric data), processor (determines how fast data is sent to the radio and runs firmware code), data storage (provides short-term firmware and allows for inconsistent radio signal), radio (three basic types of radio: WIFI, Bluetooth and GSM) and data storage (allows ease of use for charging). These wearables are for finding the locations of injuries or potential injuries. Why are wearables the new hot topic for workers’ compensation?

• Wearables can be put in place to improve productivity and safety.
• 70 million-plus blue collar/labor workers in America.
• Typically don’t have access to their cell phones while on the job, making it harder to inform supervisors in real time when injuries occur.
• Employee turnover is high, requiring a solution that can easily transfer between users.
• Hazardous environments, increasing the probability for injuries.
• Due to the spread-out nature of work, employee reporting is hard to track.
• Occupational injuries and illnesses cost $250 billion a year.
• Injured workers require an average of eight days away from work to recuperate.
• Lost productivity ($183 billion) far outweighs the cost of medical expense ($67 billion).
• Worker productivity has continued to be abysmal.
• Productivity growth is the weakest it has been since the early 1980s — only 0.8% a year over the last half a decade, compared with 2.3% on average from 1947 to 2007.

These wearables can keep workers safe and productive. Wearables modify work procedures and can improve work activities based on data conveying a certain activity is potentially hazardous or inefficient. Telematics can provide near-real-time feedback of employees' motion, location and environment, and real-time clock timestamps all activities, including start, break and end of day. Fraud detection can record employee incidents to verify when accidents occur, and the potential severity and time reporting verification ensures employees are working in reported time. Wearables can identify near-miss events and identify locations/processes/poor technique that result in near misses to implement solutions before an accident can occur. Wearables also track employee performance and drill into data to provide work insights that empower employees to achieve their highest performance. See also: Wearable Technology: Benefits for Insurers   Lastly, some privacy concerns to consider are that there no biometric screening data is captured. Only captured data has a business purpose. WiFi credentials are encrypted inside device and when transmitting to the cloud and device can be logically turned off based on shift times. The time of wearables is now!

In a videoconference hosted by Indian start-up website Inc42, I gave Indian entrepreneurs some advice that startled them. I said that instead of trying to invent things, they should copy and steal all the ideas they can from China, Silicon Valley and the rest of the world. A billion Indians coming online through inexpensive smartphones offer Indian entrepreneurs an opportunity to build a digital infrastructure that will transform the country. The best way of getting started on that is not to reinvent the wheel but to learn from the successes and failures of others. Before Japan, Korea and China began to innovate, they were called copycat nations; their electronics and consumer products were knockoffs from the West. Silicon Valley succeeds because it excels in sharing ideas and building on the work of others. As Steve Jobs said in 1994, “Picasso had a saying, ‘Good artists copy, great artists steal,’ and we have you know always been shameless about stealing great ideas.” Almost every Apple product has features that were first developed by others; rarely do its technologies wholly originate within the company. Mark Zuckerberg also built Facebook by taking pages from MySpace and Friendster, and he continues to copy products. Facebook Places is a replica of Foursquare; Messenger video imitates Skype; Facebook Stories is a clone of Snapchat; and Facebook Live combines the best features of Meerkat and Periscope. This is another one of Silicon Valley’s other secrets: If stealing doesn’t work, then buy the company. See also: Time to Rethink Silicon Valley? By the way, they don’t call this copying or stealing; it is “knowledge sharing.” Silicon Valley has very high rates of job-hopping, and top engineers rarely work at any one company for more than three years; they routinely join their competitors or start their own companies. As long as engineers don’t steal computer code or designs, they can build on the work they did before. Valley firms understand that collaborating and competing at the same time leads to success. This is even reflected in California’s unusual laws, which bar noncompetition agreements. In most places, entrepreneurs hesitate to tell others what they are doing. Yet in Silicon Valley, entrepreneurs know that when they share an idea, they get important feedback. Both sides learn by exchanging ideas and developing new ones. So when you walk into a coffee shop in Palo Alto, those you ask will not hesitate to tell you their product-development plans. Neither companies nor countries can succeed, however, merely by copying. They must move very fast and keep improving themselves and adapting to changing markets and technologies. See also: 3 Technology Trends Worth Watching   Apple became the most valuable company in the world because it didn’t hesitate to cannibalize its own technologies. Steve Jobs didn’t worry that the iPad would hurt the sales of its laptops or that the music player in the iPhone would eliminate the need to buy an iPod. The company moved forward quickly as competitors copied its designs. Technology is now moving faster than ever and becoming affordable to all. Advances in artificial intelligence, computing, networks and sensors are making it possible to build new trillion-dollar industries and destroy old ones. The new technologies that once only the West had access to are now available everywhere. As the world’s entrepreneurs learn from one another, they will find opportunities to solve the problems of not only their own countries but the world. And we will all benefit in a big way from this.