Over the past 25 years, the workers’ comp industry has collected vast amounts of data, and organizations within the industry have easy access to this valuable asset. Their challenge now is to profit from it. Experts say medical costs now amount to 60% of claim costs in workers’ comp. If true, organizations should be charging ahead to find ways to optimize medical loss management and monetize their data for profit. See also: Intelligent WC Medical Management   The first step toward monetizing medical data is to integrate it from disparate data silos. All bill review, claims system, pharmacy (PBM) and other relevant data should be integrated at the claim level to gain a full picture of individual claims. Once integrated, predictive analytics methodologies can be applied to convert the data to usable information. You need to analyze historic data using predictive analytics to discover conditions that are cost drivers or cost accelerators. What conditions or combinations initiate or perpetuate high-cost situations? Where are the gaps in timing in operational flow? What actions encourage positive or negative claim resolution? And the information must be made actionable. Predictive analytics has determined the comorbidity of diabetes adds complexity and cost to claims, so an alert can be generated, and key Information conveyed to appropriate persons. Based on predictive analytics, the probable ultimate medical costs for the claim are portrayed for the claims rep along with other key information regarding the claim in question. The claims rep adjusts medical reserves accordingly and moves on. Time is saved, and accuracy is optimized. At the same time, the predictive analytics-informed system automatically notifies the nurse case manager based on the organization’s referral protocol. The claims rep is informed of the referral but is not required to take action. Similar claim information is presented to the nurse case manager for quick review, thereby integrating and coordinating claims and nurse case management initiatives. Data is made intelligent and can be monetized through predictive analytics combined with a timely information delivery system. Searching for decision-support information takes time and is inefficient. Manually entering data is time-consuming, annoying and often inaccurate. On the other hand, intelligent information delivered appropriately is monetized as claim stakeholders make informed decisions quickly, effortlessly and accurately without need for data gathering and data entry. Projected probable ultimate claim cost with comprehensive supportive information displayed for claims reps does not require data search or data entry. Even less-experienced adjusters are accurate and efficient. Accuracy and efficiency is optimized, productivity is increased and profitability follows. Moreover, early intervention through timely alerts allows for action before further damage is incurred. Medical loss management is also monetized by the ability to objectively measure claim cost savings. Having projected the ultimate medical costs for a claim, quantifiable cost savings are available at claim closure due to coordinated medical management initiatives. Monetization is realized through client satisfaction, customer loyalty and client retention. Moreover, the story is proof of value serving the organization’s strategic competitive advantage. See also: Proof of Value for Medical Management   Organizations that monetize their data have greater returns, including return on investment. The intelligent medical management system is monetized internally and externally, thereby paying for itself. Such statements are familiar as sales platitudes, but with intelligent medical management, positive results are objectively measured. Savings are greater than the cost.

We’ve been driving cars for 125 years. We have been talking on telephones for 100 years. We’ve only combined these two activities, to any great degree, in the last 10 to 15 years. Motor vehicle crashes are the No. 1 cause of accidental death in the U.S. Crashes are the leading cause of all death, accidental or otherwise, for everyone between the ages of five and 35. Those between the ages of 15 and 20 are more likely to die in a car crash than the next three leading causes of death combined – homicide, suicide and cancer. According to the National Highway Traffic Safety Administration (NHTSA), the critical reason for 94% of crashes is driver error, as opposed to vehicle- or environment-related reasons. Recognition and decision errors, which include driver distraction, represent 74% of driver error. Alarmingly, after decades of decline, total fatalities from vehicle crashes and fatalities per million miles driven have been increasing for the past two years. There is a new threat on our nation’s highways, and it’s distracted driving. Drivers have always been at risk of distraction, but today, because of the rapid adoption of mobile communications technology, drivers are now distracted in ways we never dreamed possible 20 years ago. See also: Distracted Driving: a Job for Insurtech?   An Important Issue for Employers and the Insurance Industry Cell phone use while driving has become an important safety and liability issue for all employers. Those who expect employees to use cell phones while driving as part of their business must recognize that doing so exposes their employees to a preventable crash risk and employers to costly liability. Consider a situation in which an employer knew a behavior in some area of its operations exposed employees to a much greater risk of injury. Would employers still expect, or even encourage, that behavior? That is precisely what happens when an employer permits or encourages employee cell phone use while driving. With the intense publicity surrounding cell phone distracted driving in recent years, it would be difficult for employers to argue that they’re not aware of the dangers. Employers are responsible for ensuring employees adhere to applicable federal agency regulations and federal, state and municipal laws. However, what is often not understood is that these regulations and laws are a minimum standard and, in many cases, are not be enough to keep people safe. Employers should establish policies about cell phone use and driving that exceed existing laws. Safety policies and systems in many companies are designed to reduce significant risks and protect employees. Companies whose leaders are committed to safety excellence know that their safety systems and policies often exceed OSHA requirements or applicable laws, because regulations and laws often prescribe minimum standards, not best-in-class safety. Designing safety policies that only comply with federal rules, regulations or state laws often leaves employees vulnerable to injury and companies exposed to liability and financial costs. Cell phone use while driving is, in this way, no different than many other occupational safety issues. No Impact on Business Operations Contrary to what one might think, companies that have implemented total bans on mobile device use while driving have overwhelmingly reported no negative impact on productivity, customer service or other business operations. In two studies conducted by the National Safety Council, 90% of companies with policies reported no impact on productivity. Of the 10% that reported a change, nine out of 10 claimed productivity actually increased. Only 1% thought productivity had decreased. All Distractions Are Not the Same Drivers who use their cell phones while driving expose themselves to a significant safety risk that affects both them and those with whom they share the road. Cell phone distraction involves all three types of driver distraction: visual, manual and cognitive. Distracted driving crashes are the result of two factors; 1) the risk of the activity, and 2) the prevalence of that risk. Most people, including lawmakers and some researchers, only focus on risk and ignore risk exposure. In evaluating what causes crashes, both are equally important. We typically have little concern for a risk to which we are seldom exposed, but we have great concern for a risk to which we are continuously exposed, as in the case of cell phone distracted driving. It is risk exposure that makes cell phone use while driving such a dangerous activity. NHTSA has stated (based on its annual NOPUS study) that more than 10% of all drivers are using their cell phones at any given time. No other distracting behavior or risk comes close to that level of exposure. It is risk exposure that makes cell phones the most dangerous distraction, by far, that drivers face on a continuing basis. The Human Brain Does Not Truly Multi-Task The field of cognitive neuroscience has studied human attention for more than 80 years. These scientists will tell you there is no such thing as true “multi-tasking.” When we are reading a book or magazine article and the phones rings, we naturally stop reading, answer the phone and have a conversation. Most of us would never consider continuing to read as we talk on the phone. That is because the human brain does not multi-task, it toggle tasks. It switches back and forth between two tasks, never engaged in both at precisely the same time. We know that if we try to read and talk on the phone, we are not doing either task well, so we rarely try to do both at the same time. Yet, most of us think it is perfectly fine to talk on the phone and drive a vehicle. If we make a mistake reading a book, we can re-read a paragraph. If we make a mistake driving a vehicle, it can damage our lives or someone else’s. Hands-Free is Not the Answer As traffic safety professionals pursue a culture change around cell phone use while driving, It will be much easier to convince drivers to switch to hands-free rather than to stop using phones altogether while driving. Unfortunately, there is no evidence that hands-free phone use reduces distraction or crashes. More than 30 research studies have found that hands-free devices offer no safety benefit, because they do not reduce the cognitive distraction of the phone conversation. All major U.S. traffic safety organizations, including the National Safety Council (NSC) and the National Transportation Safety Board (NTSB), have made public statements, after reviewing research, that hands-free is not safer than hand-held phone use. See also: Don’t Be Distracted by Driverless Cars   NSC and NTSB In January 2009, based on input from many of its 10,000 plus business members, NSC called for a total ban on cell phone driving. In December 2011, the NTSB issued the recommendation that all states enact complete bans of all portable electronic devices for all drivers — including banning the use of hands-free devices. This follows its total ban recommendation for commercial drivers in October 2011. NTSB recommendations are based on their investigations of serious and fatal crashes that found driver or operator cell phone use was a factor in the crashes. Conclusion The rapid advancement of mobile communications technology has enabled drivers to engage in all kinds activities while driving a vehicle that have nothing to do with driving. As long as crashes are killing and seriously injuring so many people, and as long as driver error is the overwhelming leading cause of crashes, does it make sense to allow, and even encourage, the driver to engage in phone calls, Facebook updates, voice based texting and other activities that have nothing to do with the already dangerous task of driving? The auto and consumer electronics industries have claimed that “eyes on the road and hands on the wheel” are the only critical requirements for distraction free driving. They seem to believe the mind is not required to safely operate a vehicle. This contradicts years of science and, most importantly, common sense. It is time that we focus first and exclusively on the task of driving, for our safety and for the safety of everyone with whom we share the road. It is also time for the Insurance Industry to take the lead on this issue by implementing total ban policies for their employees and encouraging their insureds to drive cell phone free.

The Social Network of Things is here! In a complex landscape of old and new, cars and networks are being built to be self-aware, adaptable and communicative with one another and humans in real time. We live in extraordinary times where there is transformative experience with three kinds of cars — some fully automated, others with simple systems for accident avoidance/traffic routing and still others that account for today’s average car. Appliances and sensors in smart homes are network-connected with seamless integration and intelligent collaboration between devices and analytics that puts homeowners in control, making them co-creators of customized experiences. See also: Infrastructure: Risks and Opportunities   From managing chronic diseases at one end of the spectrum to preventing disease at the other, the social network of things is revolutionizing healthcare, too. A person’s data is continuously being gathered and used to diagnose illness and to align the best providers and treatments as quickly as possible. Devices in the predictive realm have the potential to detect the onset of a wide range of health risks, such as high blood pressure and early signs of delirium. See also: What Gets Missed in Risk Management   As insurers, we are paymasters in the business of protection. Not only do we have a vested interest in mitigating loss, but we also have a huge responsibility to support and incorporate prevention and early intervention techniques to provide real value to our consumers. With devices that are highly networked and predict, negotiate and have an impact on outcomes, we find ourselves at the brink of redefining the underlying concept of insurance — from one of pooling risk to sublimating risk altogether.

We are continuing our two-part series on where leaders should focus for growth in a changing world that is full of new technology. This post builds on Part One, which covered major trends, the need for customer insight and what is required to manage your data effectively. Our attention turns again to your customers — but this time also considering the issue of their irrational behavioral biases. How should this human trait influence your plans or focus for growth? With irrational customers, what should you do? With the Financial Conduct Authority (FCA) focused on behavioral economics (BE) and expecting providers to take it into account, the days of assuming customers will act rationally are numbered. I’m sure most of you have at least heard of BE. The success of popular books on the subject — from the easy to read “Nudge” to the slightly more challenging “Thinking Fast and Slow” — have ensured that there has been plenty of media coverage and social media debate on the implications and appropriateness for policy and action. See also: How to Take a Bold Approach to Growth   As with many academic disciplines, different experts use slightly different nomenclature to order the different irrational behavior or biases observed. However, for financial services clients, a good place to start is the list of 10 biases published by the FCA. My own experience in helping clients test communications or design marketing to take irrational biases into account suggests this list covers the bases. Do you test your communications? Of course, the focus of FCA regulatory action is ensuring the customers receive positive outcomes through products and services suitable for their needs. Unfortunately, some agencies offer to help businesses understand and act to protect customers from BE biases by seeking to “rubbish” traditional research or the role of customer insight teams. This is so misguided. Most successful BE projects require well-designed research, as well as behavioral analysis, data capture and database marketing skills in experimental design. In other words, it is probably your existing customer insight team that is in best place to take such work forward. Given that most firms focus first on ensuring their communications could not be accused of manipulating biases, two biases (in particular) are worth considering:

• Framing, salience and limited attention: Is the bias such that different decisions are made if information is presented/structured differently (as sommeliers know well).
• Present bias: Is the present over-valued compared with the future (i.e., I would accept a smaller payout now, compared with delayed gratification with better return).

Still, other biases matter and occur from time to time. For a fuller list, see this previous post summarizing all 10 biases. Conclusion There are many different and exciting innovations happening, including the use of blockchain, robotics, virtual reality and machine learning. But, having seen those innovators who go on to thrive and those who do not, I am making the case to focus on people — not technology. Developing a strong customer insight capability that is supported by well-managed data and is used to guide all interactions with customers is a sustainable route to growth. However, to achieve both customer loyalty and the approval of regulators, you will also need to consider irrational customers. We are practically in a “seller beware” market, so, to truly protect your business, make sure you know (better than your competitors) how to help your customers achieve positive outcomes. Oh, and learn how to tell them what you know in their language. See also: Does Your Culture Embrace Innovation?   Such a human-centered-design approach to business is not easy, but it is fulfilling. Focus on understanding and serving your customer better. When you have a compelling story to tell, you will also be able to mobilize one of your biggest weapons. That, of course, is all the people who work in your business. To modify the oft-quoted line by President Bill Clinton about what matters most: “It’s the people, stupid.”

The growing use of smartphone apps and wearable devices to generate personal health and lifestyle data poses a dilemma for privacy. While individuals have much to gain using apps to help them manage health concerns, the privacy of the data itself may be at risk. Consumer-grade devices that link across internet networks are rather vulnerable to hacking. The levels of security that can be tolerated by users fall short of enterprise networks. The portability of wearables and smart devices, carelessness with passwords and lack of encryption mean confidential data is much more at risk of being stolen. See also: 5 Apps That May Transform Healthcare   Apps use a program interface (API) to access sensors in devices themselves -- GPS, messages, even the camera -- and to collect data. Many apps combine data to draw conclusions (accurate or otherwise) about the user’s health. Some insurers are already using activity data from fitness trackers to enhance products. It seems likely the trend will continue as apps become more sophisticated and hardware develops broader appeal. U.S. federal and state laws require published policies concerning the use, disclosure and safeguarding of personal data by mobile apps. Health data are subject to special restrictions. In addition to imposing restrictions on sale and disclosure on all personal data on apps, EU data protection directives and national laws have more restrictions for health data; for example, explicit consent requirements. Apps must comply with all applicable legal requirements for processing health data and personal data more generally, including consent requirements of various levels of specificity and explicitness for different types of uses and disclosures of different types of personal data. It may not occur to most users of a fitness app that their personal data will be disclosed to the device manufacturers, which may sell it to third-party advertisers or share it with data aggregators. The terms and conditions of apps are not always read, or the developer is based beyond national legal boundaries. The relatively short life cycle of many apps could also mean personal data may end up lost as the apps become defunct. A survey by the Global Privacy Enforcement Network found that, in 85% of the 1,200 apps reviewed, the owners failed to clearly explain how they were collecting, using and disclosing personal information. EMEI (unique serial) numbers of smartphones make identification of individuals simple, and many app users mistakenly believe their information stays private. See also: Wearable Tech Raises Privacy Concerns   I have previously written about how wearables and apps that use smartphones as a hub can play an important role in life and health insurance (see my slideshare: The Growing Impact of Wearables on Digital Health and Insurance). Research in the U.K. shows half the population now monitors their health problems this way, and 95% of doctors see more patients bringing their own data to appointments. The trend is expected to continue -- more than 140 million wearables are expected to be sold in 2020, up from around 70 million in 2014. Underwriters and claims assessors will process increasing levels of digital health data in their day-to-day work. However, if patients cannot believe the health data they store in apps is private, they may resist calls from clinicians to use them. It’s important to address concerns over data privacy or failures to protect individual’s sensitive information, so patients’ resistance does not stall this innovation. © Reproduced with the permission of General Reinsurance AG, 2017.

Nature has taught us that climate and environment dictate ecology. When the right set of conditions come along, nature presents the opportunity for something unique to appear and take root in the world. Consider the platypus, a semiaquatic egg-laying, duck-billed mammal with the tail of a beaver. Its mere existence defied all conventional scientific wisdom concerning mammals when it was discovered in the 18th century. Yet, the platypus was a perfect adaptation for its climate and environment, where it had quietly thrived for thousands of years. Thanks to a confluence of circumstances back in the 1970s, the insurance industry experienced its own change in climate and environment: a hard insurance market characterized by higher costs and limited availability of coverages. Governmental agencies were hit particularly hard by the loss of available insurance markets. As insurance options shrunk, so did the public services that relied on them, forcing public entities to reconsider their risk management strategies to survive and evolve. The Darwinian outcome was something that looked and felt familiar in the world of insurance risk, but on closer inspection is found to be quite inimitable, and perfectly adapted to the new climate and environment. This was the dawn of the public risk-sharing pools. See also: How to Build ‘Cities of the Future’   Since that time, public risk-sharing pools (aka joint power authorities, or JPAs, and joint insurance funds, or JIFs) have been growing in their breadth and scope of operations. As a full-fledged risk management community unto themselves, these groups operate in unorthodox ways, combining multi-peril commercial lines insurance options for constituents across a variety of public entities, such as police, fire, transportation, city, special districts, county and state agencies. The variety and types of public risk pools are as numerous as are their distinctions in risk-sharing approaches, lines of coverage, underwriting methodologies and types of risks. This national network of public risk-sharing pools has emerged to create a unique ecosystem all their own. Today, more than 85% of the 87,000-plus government entities in the U.S. belong to a public risk-sharing pool. By their nature, this unusual self-insurance arrangement is under scrutiny by regulatory bodies, and, while they are not known to become insolvent, JPAs face constant actuarial challenges tied to pricing risk accurately and efficiently for their public entity members. This underserved group of non-policy insurers is challenged with budget pressures, legislative initiatives, staffing issues, changes in elected or appointed leadership and outdated systems that restrict efficiency of operations. Consequently, the average JPA struggles to deal with the layers of complexities inherent in the make-up of their particular realm. While many public risk pools labor to keep up with an ever-changing world of risk and politics, others are finding ease and opportunity in their operation by embracing new technologies and new methods of managing risk that work within the limited resource environment of their world. Public risk pools, such as Golden State Risk Management Authority (GSRMA), Beta Fund, the Montana Association of Counties (MACo) and the Texas Political Subdivision Joint Self-Insured Insurance Fund, are recognized leaders in their respective domains. They all have figured out the secret of how to deliver value to their individual members while working within their limitations. One clue to their success becomes apparent when talking with them. They all seem to share a growth-mindset, meaning that they tend to focus on the possibilities rather than the obstacles. Phrases like, “We can't,” “I wish I could,” “I don't have the resources,” or “It's never be done before” don’t tend to show up in their conversations. The people in these organizations are forward thinkers, innovators and early adopters of new ideas. For example, GSRMA, which has more than 258 member public agencies, such as cemetery districts, special districts (water, sewer and lighting), fire and school districts, counties and cities throughout the California, offers a full line of programs to cover the many exposures of its public entity members. During the Great Recession of the late 2000s, GSRMA recognized the need to create an internal infrastructure that can withstand the uncertainty of national or global events and protect its membership. As a result, GSRMA became an early adopter of cloud-based technology that was agile, robust in its enterprise offerings and easy on the budget. Not only did the investment in technology give them a workforce multiplier, it also gave them a process accelerator that saved them thousands of labor hours in the completion of seasonal and annual work-tasks. And because GSRMA retains a large amount of risk, it requires the ability to scale, underwrite with precision and respond quickly to members’ varied requirements. Equally important, like many JPAs, GSRMA must focus on budgeting/funding, so affordable technology that supports staff in all these endeavors is the highest priority for their executive team. It’s no mystery that GSRMA is experiencing success and has been “Accredited with Excellence” through the California Association of Joint Powers Authorities. See also: How to Outfox Our Brains About Risk   Against the backdrop of an uncertain economic climate, while living in the most political of environments, I believe the continuing success of public risk-sharing pools will largely be determined by their leadership’s mindset to embrace change, cultivate a smart staff and add supportive technology that serves that staff. Like GSRMA, MACo, Beta Fund and the Texas Political Subdivision, those with a future-proof plan will thrive in this complex climate and environment. Operating a public risk pool is no easy job by a long shot, and we should all take the time to thank them for their service.

A few weeks ago, I spoke to about 20 professionals attending a program about their future and the future of their organizations. I talked about tomorrow. They were more worried about today. I wanted to venture into tomorrow and look back to today. They just wanted to get through today. I discussed purpose: Why? They were more concerned about strategies and tactics: How? My metaphor was a blueprint. They wanted a to-do list. I was thinking effective (doing the right things). Their concern was efficient (doing things right). Leadership was my target. Management was their aim. I quoted Stephen Covey on leadership, “Begin with the end in mind,” because leaders focus on the horizon, a vision for the future. They were thinking management (“Begin with the beginning in mind"), because managers stare down at their desk, facing their challenges du jour and being constantly interrupted with issues about operations and people. THE MISTAKES WERE MINE! Not theirs. I misread my audience. I was there to discuss change management, to talk about solving problem and capitalizing on opportunities as we move from today through tomorrows. (Note the “s” on "tomorrows." You face a tomorrow every day – one at a time.) See also: The Entrepreneur as Leader and Manager   I should have realized that, as John Kotter put it, "management is still not leadership." He said: “In fact, management is a set of well-known processes, like planning, budgeting, structuring jobs, staffing jobs, measuring performance and problem-solving, which help an organization to predictably do what it knows how to do well. Management helps you to produce products and services as you have promised, of consistent quality, on budget, day after day, week after week. In organizations of any size and complexity, this is an enormously difficult task. We constantly underestimate how complex this task really is, especially if we are not in senior management jobs. So, management is crucial — but it's not leadership." He added: "Leadership is entirely different. It is associated with taking an organization into the future, finding opportunities that are coming at it faster and faster and successfully exploiting those opportunities. Leadership is about vision, about people buying in, about empowerment and, most of all, about producing useful change. Leadership is not about attributes; it's about behavior. And in an ever-faster-moving world, leadership is increasingly needed from more and more people, no matter where they are in a hierarchy. The notion that a few extraordinary people at the top can provide all the leadership needed today is ridiculous, and it's a recipe for failure.” Don’t repeat the mistakes I made with my audience. Be sure you know and understand the questions (both those being asked and those folks are afraid to ask) before you provide answers. Then make sure the answers you provide are correct and understood by the audience you serve. Communication is the negotiating of meaning. If the audience is not “catching” what you are “pitching” it might be well intended and thought provoking or ego or noise or a hope and a prayer but it is NOT COMMUNICATION! See also: The Need for Agile, Collaborative Leaders   As George Bernard Shaw stated so correctly, “The problem with communication is the illusion that it has occurred.” Are you providing the right answer to the right questions? If not, start again!

The word “digital” is most commonly associated with front-office transformation – client-facing activities, often in the service of acquiring business. This is for good reason, of course. Driven by their experience in other industries such as retail and banking, customers are demanding digital capabilities from their insurers, as well. Customers – individuals and companies both – expect that everything from access to information, to the ability to bind a policy, to initiating and managing a claim, to paying the bill should be easy to do and available digitally. Our consumer and SMB research reinforces this, indicating that net promoter scores (NPS) can swing 60-70 points when the entire journey is easy. With that in mind, I’m continuing on my promised theme of looking at all of the steps in the value chain to explore digital transformation across the customer journey. This month, I’ll take a look at billing and payments, an area that, at first glance, might not be an obvious choice for digital reinvention. But it is a great way to engage with customers, optimize a process that is often manual and present additional selling opportunities, as well. Not coincidentally, we also have a recently published thought leadership paper, The New (Digital) Face of Billing: Defining Multi-Line Insurance Billing Excellence, that takes a deeper look into digital billing. Thinking Beyond Transactions In my previous posts, I have talked about the need for a service mentality instead of the siloed, transaction-focused approach insurers have traditionally taken since the automation of business processes 50-plus years ago. To drive value from digital investments, insurers need to expand their thinking beyond transaction processing. Any interaction should be taken as an opportunity to develop and enhance the relationship with the customer, not as simply a means to an end. In other words, billing is not just about getting the premium paid, although that must be done efficiently and effectively. Billing is one of the rare opportunities insurers have to interact with their customers in a relatively benign situation (as opposed to the stressful, often contentious interactions associated with claims), and it must be embraced as such. See also: 4 Rules for Digital Transformation   This does not just mean cross- and up-sell, although that can be an element. Customers will be wary of this, particularly if done in a clunky way, particularly when offering a product that does not match the customer’s unique needs. The overall approach must expand from a basic indemnity mentality to one of service – and the billing approach must evolve beyond simply accepting a customer’s premium. It’s important to keep in mind that the customer engagement mentality is needed across all customer types – from individuals, to businesses, to agents, to third parties and other partners. The Customer Journey Digital transformation must always begin with mapping the customer journey. Identifying key touchpoints and “moments of truth” in billing is the first step to mapping interactions and defining the required capabilities. Journey mapping allows you to consider how to roll out capabilities incrementally, giving you the chance to experiment with different services for unique groups and to quickly see what works and what does not. Understanding your customers and their needs is key. Not every customer will benefit from an in-depth engagement at the time of billing. Some customers may be only interested in a hands-off billing experience, with, for example, a credit card being charged automatically on a monthly basis. Building an automated, paperless process for these customers is likely the right approach, while spending time and effort on building a deeper relationship may not result in a strong ROI. But even these customers can benefit from clear, natural-language explanations of such things as changes in their premium or renewal options. Other customers may benefit from a deeper interaction. The moment of truth for these users can be providing opportunities for them to lower their premium through product bundling or identification of local risk factors that they may be able to address. Although lowering premium payment may seem at first glance to be a negative, the improvement in customer engagement and satisfaction – with associated Net Promoter Score (NPS) – will more than pay for the difference. Still others may be interested in an interactive experience that doesn’t require them to speak with a human. AI and chatbots are becoming increasingly sophisticated in providing a human-like experience in a mobile setting, which can be a powerful way to prevent relatively costly calls into the call center as well as provide an engaging way to interact with customers. But only by taking the time to understand your customers through journey mapping will you be able to make the right investment decisions. And don’t just rely on your own experience – you need an outside-in perspective to do it right. End-to-End Journey The customer journey for billing does not end at billing. Billing is an enterprise process – it touches on many different parts of the business. For the advanced capabilities I’m highlighting to work, it may require a wider transformation to take place first. A 360-degree view of the customer – all of the policies, correspondences, claims, etc. – is needed to offer bundling options. Customer analytics will provide cross-sell options. Core system replacement may be needed to offer paperless processing. These are just a few examples. This is another reason why mapping the customer journey is key – it allows you to see where the process breakdowns and bottlenecks exist that need to be addressed to create an engaging customer experience. Our research shows that all generations (including the younger “digital natives”) use a variety of touchpoints for questions and service requests when it comes to billing. This is important to map in your customer journeys and important to build into your operating model – the people, processes and technology around billing that make it work. People may still want to pick up the phone and ask why their premium went up (our studies show at least 30% of calls are billing-related). But by providing clear information to customers around the billing process you can prevent a certain amount of those calls from coming through in the first place. Do It Right Billing is an opportunity to engage customers, but an occasional one at best. It is of primary importance to know how customers want to be billed and how they want to pay (electronically, with a paper check, via bank transfer, etc.) and how they will want to interact if they have a question or concern (self-service, call center, etc.). But the most fundamental need is to make sure the bills themselves are accurate. Cross-sell or risk management exposed through the billing process will not have much effect if the client is double-billed or if the payment was not correctly recorded. As Novarica sums up succinctly in a recent report The New Normal for P/C Insurers: 100 Data, Digital, and Core Capabilities, “errors can be costly.” And those errors are not only costly in the sense of having more people call into your call center, but also making it far less likely that those customers will become advocates. See also: 5 Cs of Transformation in Insurance   Mind the Gap In our thought leadership from earlier this year, Insurance in the Digital Age: Transforming from the Outside In, we mentioned the growing gap between customer expectation for digital services and the ability of insurers to provide them. Billing is a moment of truth for customers and a real engagement opportunity for insurers. While this makes it an excellent place to get started with your overall digital transformation, it is important to remember that you need to look at the end-to-end process as billing flows through many systems and data stores. This should not dissuade you from tackling billing, but don’t be surprised if there are some basic things that need to be done with the underlying technology (including considering retirement of old, inflexible core billing systems) and processes. It may seem intimidating, but the benefits in terms of longer-term cost savings, efficiency and customer engagement will be worth the effort … while bringing billing into the digital age.

Here is our second monthly list of "Six Startups to Watch," drawn from the more than 1,000 insurtechs we're now tracking at our Innovator's Edge site. They tackle some of the biggest issues facing insurers, and, while we all know that most startups fail, are unusually well-positioned for success, we believe. In the interests of variety, to make sure we expose you to an intriguing variety of startups, we don't repeat any of those we put on last month's list. 

Without further ado, we suggest you keep a close eye on:

Windward. The short description of this Tel Aviv company is: telematics for ships. There is a lot of ocean out there, and a lot of traffic on it, but there isn't always great information about what goes where. Sometimes, that is by design—ships will turn off their GPS trackers as they pass troubled areas, becoming what are known as "ghost ships." Well, if a ship registered in Iran goes dark as it spends a few days off the coast of Libya, then heads to a major population center such as London, an insurer might want to know that. It certainly would like to be sure that all relevant authorities can track any suspicious activity in this day and age. So, Windward pulls together a moment-by-moment history for each vessel that operates at sea, for use in insurance and a number of other industries.

In many ways, I've been waiting for Windward for a decade, since I met Mike Mullen at a conference where we both were speaking. Mullen was the chief naval officer for the United States at that point, soon to be appointed to the first of two terms as chairman of the Joint Chiefs of Staff, and we spent some time talking about a vision he had for a "1,000-ship navy." The U.S. has the world's biggest navy but doesn't come close to 1,000 ships—about 275 are in service—so Mullen was really talking about ways to coordinate the activities of most of the world's navies, to tackle problems like Somali pirates. More broadly, he was envisioning the sort of detailed mapping of ocean traffic that Windward is attempting. I wish it smooth sailing.

Ladder Life. The company has rethought life insurance from the ground up, to make the process simple and quick, to cut fees, etc.—basically to tackle all the problems that have made life insurance sales languish. It recently launched in its first market: California.

RiskGenius. The company uses artificial intelligence to analyze policies. It can spot coverage gaps, identify wording that has resulted in litigation and generally help insurers and brokers to find the best policy language to protect their interests.

Infinilytics. It provides analytics for handling claims, with two major benefits. Infinilytics fast tracks valid claims, removing frustration for customers during the process that insurers refer to as "the moment of truth." The analytics also spot questionable claims for more investigation.   

ViewSpection. This is a DIY digital inspection app that property owners can use to generate a complete tour as they apply for insurance, or that an agent can use. The app immediately gives underwriters the details they need, which removes the cost for an inspection and speeds the process, removing a frustration for the customer. (Yes, there is a theme here.)

RiskAdvisor. It provides a comprehensive risk profiling tool that brokers and insurers can use with corporate clients and prospects. The tool draws from a library of many thousands of possible questions to generate a list of risk issues, including enterprise risks, that are relevant to a company of that size, in that industry, in that geography, etc. 

I hope you find these insurtechs as intriguing as I do. If you are an insurance provider interested in what makes these companies worth noting, you should join Innovator's Edge for an in-depth look at these and other startups. We'll share more next month, from our ever-growing list.

Several of our startups to watch will be on hand at next week's Global Insurance Symposium in Des Moines, Iowa, along with my ITL colleagues Dave Dias and Paul Winston. If you are able to attend, you can learn first-hand about their innovations.

Cheers,

Paul Carroll,
Editor-in-Chief 

When it comes to healthcare reform, it’s all about the math. The First Element: Trump and Winning President Trump hates to lose. He’s about winning until we’re all sick of winning. (His words, not mine.) The American Health Care Act, Republicans' attempt to replace the Affordable Care Act, also known as Obamacare, failed. Support was so scarce that Speaker of the House Paul Ryan and the president didn’t even bring it to a floor vote in March. The press said Trump lost. Given his vocal support and strong lobbying for the bill, this assessment was accurate, but one the president cannot, and, apparently will not, accept. He sent his team to try to salvage the bill before the April recess. They failed. Which was a bit surprising given that Trump seems more focused on passing a bill – any bill – than on the substance of legislation. This is the first number in our healthcare reform equation: Trump wants to win and doesn’t care how. The Second Element: Divided Republicans It takes a simple majority to pass a bill out of the House. With 434 current members (the elevation of Jim Price to Secretary of Health and Human Services leaves one seat vacant), 218 votes are required to pass legislation. There are currently 246 Republicans in Congress. Having already shut Democrats out of the process, Trump needs all but 28 members of the GOP caucus to pass a bill; a 29^th Republican “no ” vote, and the bill fails. There are about 40 members of the House Freedom Caucus, a group of the chamber’s most conservative lawmakers. The majority of the caucus united in opposition to the AHCA. In March, Trump blamed them for the bill's defeat. In April, he sent his emissaries to get their votes. The Freedom Caucus demanded elimination of some of the ACA’s most popular provisions as the price of their support. These provisions prevent carriers from excluding coverage for pre-existing conditions and require health plans to include certain essential benefits, like maternity coverage. The White House reportedly considered acquiescing to these demands. The problem, however, was that accepting the Freedom Caucus' demands resulted in (relatively) moderate GOP members abandoning the AHCA. Gaining conservatives votes doesn’t help if the cost is an equal number of moderate votes. There may be a path to pass the AHCA solely relying on solely on Republican votes, but, given the divide between conservative and mainstream Republicans, it’s hard to find it. Which provides the second number for our equation: Republicans can’t pass healthcare reform on their own. See also: The Math of Healthcare Reform   The Third Element: Democrats Want Repair Democrats believe the ACA has been good for America, especially for those who, but for the ACA, would have no healthcare coverage. Most liberal Democrats think the ACA doesn’t go far enough. They won’t be satisfied with anything less than a single-payer system. Many Democrats, however, think the ACA is generally fine, but in need of critical tweaking to keep it working. Some liberals will hold out for their dream of “Medicare for All,” but even many in their ranks will take a repaired ACA over a broken system or what Republicans are offering. Which is why Democrats united against the Republican plan. Not that it mattered. Republicans never sought Democratic votes for the ACA. Democrats want to fix the ACA. That’s the third and final number in our healthcare reform equation. The Math of Healthcare Reform Compromise If Trump wants to win, he needs to move beyond a purely Republican formulation. Otherwise, as shown above, the math doesn’t work. Republicans need the larger numbers that Democrats provide to pass healthcare reform legislation. How does this math work? Let’s say a healthcare reform package reaches the floor of the House that attracts 164 Republicans – just two-thirds of their caucus. However, it gains support from 54 Democrats – only one-third of their caucus. The bill moves on to the Senate. In short, it’s easier to find 218 votes among 434 members than from among 246. This path makes the challenge before the president straightforward, if difficult: find a legislative package that attracts enough Democratic votes to offset the Republican votes it loses. In the old days (before Washington because hyperpartisan), pragmatists from both parties would meet and hammer out a compromise. That’s what’s needed now. Significantly, there’s plenty of common ground to be found. There are ACA taxes that neither Republicans and Democrats like. Eliminate them. The Shared Responsibility Payments that penalize Americans for going without coverage are universally acknowledged to be ineffective. Fix it. Both Democrats and many Republican want to keep the ACA’s Medicaid expansion. Preserve it. The path to a compromise won’t be easy, but the equation is simple addition: Trump wants to win and doesn’t care how PLUS Republicans can’t pass healthcare reform on their own PLUS Democrats’ want to fix the ACA. The result: compromise. See also: Stigma’s Huge Role in Mental Health Care   Political Cover The biggest obstacle to achieving healthcare reform is not the math, it’s the politics. Incumbents in both parties dread being “primaried” – Republicans fear being challenged from the right, Democrats from the left. This is not paranoia. The extremes of both parties will seek vengeance on their less pure teammates. Party leaders and the administration will need to give these members extensive cover in terms of messaging, campaign money and resources to beat back these attacks. Or they will need to convince the public that failing to achieve healthcare reform is a worse outcome than the compromise. This is where Trump proves he deserves to win. He must demonstrate his self-proclaimed negotiating prowess and his proven marketing acumen to create a political environment where compromise on healthcare reform doesn’t doom incumbents. In other words, for Trump to win he needs to make sure that members of Congress win, too.  Otherwise, he loses. That’s politics—and math. For curated articles on healthcare reform, check out the Alan Katz Health Care Reform Magazine on Flipboard.