Over the past two decades, there has been a dramatic increase in the use of opioids in workers’ compensation. Opioids are being prescribed for many conditions for which they were not originally intended. Efforts have begun across the U.S. to create opioid treatment guidelines, change medical practice patterns and curb the opioid epidemic. While much has been written recently about the unintended consequences of opioid use, such as how they increase pain sensitivity and level of disability and can lead to addiction, there is little information available about the perspectives of the key players in workers’ compensation on the opioid issue. Mark Pew, a prominent managed care organization’s spokesman, has said, “Using opioids as a crutch really is the wrong thing. What you need to be focusing on is coping with it and managing it like the vast majority of humanity does with chronic pain or just the fact of getting old.” But what do the injured workers, physicians and claims adjusters say? I conducted confidential interviews with members of each of these groups to get the perspectives of those who so far have had less of a voice in the debate. Physicians Physicians must balance their desire to control their patients’ pain against the known drawbacks of opioids. One physician told me, “When I was in medical school 20 years ago, we were told that we were undertreating pain. Pain was named 'the fifth vital sign' (along with blood pressure, heart rate, respiratory rate and temperature), and we were trained to ask patients about their level of pain on a 10-point scale at every visit. At that time, very little was known about the dangers of long-term opioid use. Now, patients with any kind of pain have come to expect to get that narcotics prescription when they see the doctor.” See also: How to Attack the Opioid Crisis   Interestingly, in response to the current opioid crisis, delegates at the 2016 annual meeting of the American Medical Association passed a resolution recommending that pain be removed as the fifth vital sign in professional medical standards. Critics, many of them pain management specialists, say the move “will make it even more difficult for pain sufferers to have their pain properly diagnosed and treated.” However, a 2006 study in the Journal of General Internal Medicine concluded that “routinely measuring pain by the fifth vital sign did not increase the quality of pain management.” Another physician, a medical director at an insurance carrier, said, “When I see the second opioid prescription come through the system, I start reserving for detox.” She meant the second opioid prescription is an indication to her that there is a high likelihood the injured worker is going to become addicted to the opioids. Claims Adjusters Claims adjusters have a unique perspective on the direction a workers’ comp claim takes. They usually speak with both the injured worker and the provider and can influence the process to a certain extent. One claims adjuster said, “I’ve been watching the whole opioid crisis unfold for the last 10 years. We see the opioid prescriptions coming through, and we know that many of them are not indicated by the patient’s condition, but we have limited options for preventing problems. It would be nice if we could identify the providers with good prescribing patterns and direct injured workers to those providers.” Another claims adjuster told me, “In states with drug formularies, where opioids require prior approval, we are seeing much less opioid use on new claims. Our biggest problems are the older claims where the injured workers have been taking opioids for long periods of time. Then we start to see the prescribing of additional drugs just to treat the side effects of the opioids. The worker is already addicted, is not even getting adequate pain relief anymore, and the claim just goes on and on.” This claims adjuster thought the best approach to the opioid problem would be to have a claims management system that alerted managers every time a new claim had an opioid prescribed. That way, “we could immediately contact the physician and make sure there was an understanding of the opioid treatment guidelines and a plan in place, right from the start, for weaning the injured worker off the drugs at the appropriate time.” Injured Workers In the current climate of awareness about the risks and dangers of opioids, injured workers are often caught in the middle. They must balance their desire for pain control against their growing concerns about side effects and long-term adverse effects. One injured worker said, “I know I’m getting less pain relief than I used to from the pills, but I’m reluctant to tell my physician because I’m afraid of having to deal with my pain on my own. I’d rather suffer with the side effects I’m accustomed to than risk being in constant pain again.” Another injured worker told me, “I went from eight pills a day to being totally opioid-free, but it took two stints in rehab and a whole lot of willpower. It’s a seductive thought, to place your trust regarding pain relief in a pill, but it’s not a long-term solution. The pills have too many disadvantages. Sooner or later you have to get off the pills and take control of your pain using other methods.” This injured worker has achieved an acceptable level of pain relief using over-the-counter medication and by practicing mindfulness. A third injured worker reported, “I’ve been on opioids for two years now. My doctor keeps refilling the prescription, so I keep taking the pills. I have a lot of side effects, but it’s worth it to keep my pain under control. I don’t want to make any changes in my regimen and risk being in pain again. I find the negative publicity about opioids very scary. I guess someday I’ll quit them, but just not right now.” In conclusion, injured workers, providers and claims adjusters are all seeking the right way to deal with pain. Injured workers in pain need pain relief, but they also need non-pharmacologic pain management techniques. Most treatment guidelines in workers’ compensation now recommend opioids only for acute, post-surgical pain relief for three to seven days, ideally. They are not recommended for chronic, musculoskeletal pain, e.g., for pain lasting longer than three months. Providers must take responsibility for engaging their injured workers in an active pain-management process. It doesn’t have to be a formal program; it can be an agreement between doctor and patient. Doctors have to be ready for this responsibility if they prescribe opioids; it’s poor practice — and violates the physician’s imperative to “do no harm” — to prescribe something addictive if you are not able to assist the injured worker with the weaning process. See also: Opioids: A Stumbling Block to WC Outcomes   For their part, injured workers must accept the necessity of being actively involved in their pain management and buy into not taking pills long-term that are going to result in more harm than good. They should demand that their prescribing physician discuss the medication plan with them, what the adverse effects are and what the weaning process will be like. Finally, claims adjusters have the responsibility to be on the lookout for opioid prescriptions and to make sure that providers are prescribing them within guidelines. There are technological solutions for this. The best approach to the opioid crisis is a team approach: providers, claims adjusters and injured workers working together to avoid opioid dependence and maximize recovery, restoration of function and lasting relief from pain.

The journey, over time, of the insurance managing general agent (MGA) is an interesting one. In their original manifestation in the late 1800s/early 1900s, MGAs were a way for East Coast insurers to get their products west, without having to commit their own resources – clearly a valuable business model. As insurers either established their own offices on the West Coast, or entire new insurers were “born” there, the role of the MGA changed. When I started in the insurance world as an underwriter – a very long time ago – the insurer I worked for considered MGAs to be kind of like used car salesmen. As large networks of independent agents and brokers emerged across the nation, MGAs lost their business value. However, as risk has evolved in complexity, the role of the MGA has once again evolved. See also: When Insurers and Insurtech Collide   Today, many MGAs possess deep technical skills for both sales and service, frequently in complex lines of business. A recent SMA survey of agents/brokers/MGAs showed that 57% percent of MGA respondents were in specialty lines of business and another 17% in middle market commercial lines. MGAs provide critical capabilities to other agents and brokers who would not otherwise be able to serve a customer with unique needs. From an insurer perspective, MGAs are a source of high-quality, well-underwritten customers. Our research topic from which the above data points were derived was agency connectivity. We surveyed insurers as well as agents. From a business driver and technology perspective, MGAs presented themselves differently than multi-line agents and brokers. For example, for MGAs, the #1 business driver for investing in connectivity technology was profitability. For multi-line agents, the business driver was customer retention. As another example, 44% of MGAs thought portals were either a strategic solution or a must-have solution. 58% of multi-line agents believe that portals are either strategic or must-have. In general, the survey found that MGAs were less focused on technology than the multi-line agents were. MGAs were more focused on hard-core business issues. The reduced focus on technology on the part of MGAs may make sense to some. MGAs are, more often than not, focused on the complex commercial lines of business. Technology isn’t as important in commercial lines. However, the critical point, relative to technology, is that MGAs are once again evolving. At the InsureTech Connect conference held in Las Vegas this past October, a good number of those in attendance were MGAs. Interestingly, many were there because they had developed technology that solved a business problem. They were at InsureTech Connect to see if anyone else was interested in that technology. There is definitely change afoot. MGAs are interested in hard-core business problems, but they are also seeing that technology can help solve those problems. The other evident trend at InsureTech Connect, and one that is continuing to evolve as SMA tracks more than 600 insurtech organizations, is that MGAs are undoubtedly focusing on emerging opportunities. Cyber risk and micro-insurance are but two examples of where MGAs are once again pushing new boundaries, much as they did in the late 1800s. See also: 7 Symbiotic Ties With Insurtechs   The line between on-line agents and brokers, enablers (those technology providers that bring technology to a distribution challenge but do not actually produce insurance business), and, yes, digital MGAs is blurring in the insurtech world. It is very hard to tell who is who, and what is what. This should be a call to action for all MGAs. MGAs come from a legacy of innovation! The business and technical value of MGAs in today’s world of hyper-complex risk is undeniable and needs to remain crystal clear. However, that should not be an excuse for sitting on the technology sidelines and doing things the same old way. Because MGAs know their customer base so well, and because they  understand the business challenges and risk parameters more thoroughly than most, looking for ways to bring technology to bear on business outcomes could be of very high impact. New, digital MGAs are appearing, but stalwart MGAs have an amazing opportunity to reinvent themselves once again in the digital world. Everyone needs to get in the game!

The insurance industry has had it tough. We are in the business of protection, but in truth a big portion of our time is spent dealing with fear, anguish, death, destruction and tragedy. You hear from your consumers once when they pay for insurance, and the next time you hear from them is when something bad happens. But does it have to be all doom and gloom? That is a question that I’m constantly asking myself. How do we take an industry that is built off pain and turn it into pleasure? In other words, how do we get people wanting to buy and not having to sell? On my last major project -- in fact, no, two months before I created this project -- I was sitting in a cafe and looking for the next cool app to download, thinking to myself: Apple has done a fabulous job of taking a boring piece of machinery and flipping it into a sexy, useful piece of technology that is a vital part of my day-to-day life. It is my calendar, map, photography, diary, communicator, financial planner and a lot more. I can’t even walk the dog without my iPhone. How did they do that? Every new item, accessory, upgrade, model and news blurb, I’m watching and wanting the next new thing. It’s the wanting that baffles me. See also: A Closer Look at the Future of Insurance   I believe that the insurance industry has an opportunity like no other to make a difference in every aspect of our lives and at the same time the challenge to do so successfully. I was looking for a breakthrough that could get insurance into the day-to-day life of our consumers. I knew it had to be a combination of social behavior and technology that was economically viable but also a call to adventure that people could not ignore; most of all, it had to be fun and create a wanting. So I began my research and decided the breakthrough had to be an app. But what sort of an app? There are so many silly, gimmicky apps out there that get lost on my phone and never get used. Through my research and connections I found a startup led by data scientists who were initially monitoring potholes on Boston roads and had built an app that could monitor driving behavior. Perfect! This is what I was looking for; people drive everyday, and they are emotionally connected with their cars. Now the question was: How do we get people to want to download the app and be monitored for driving? I mean, who would do that? What’s the incentive? How will we generate revenue? This led to several hours of brainstorming and strategy discussions, but the main question was: How do we create the wanting without having to sell? It struck me: What if we create a competition that was built off recognition and rewards good behavior? We were really onto something here. This could be huge; safe-driving campaigns could be turned into beautiful marketing messages that people would be proud to be a part of. The intel and data we collected was so rich that it could change the way we did business. My vision was that the app would bring people together around the dinner table, engaging in friendly banter. It had to be a competition that was fun. Voila! Singapore’s Best Driver Challenge was born. For the very first time in my career, I saw light at the end of the tunnel. This is a small breakthrough in the grand scheme of things, but it challenges the industry to step up and pay attention to innovation as the cornerstone of change for the better. The moral of the story is that an industry that is dominated by negative energy and very little contact with its consumers can be flipped into something fun, interesting and meaningful.

With more than 70,000 expected U.S. retirees in 2017, the insurance industry faces an imminent talent crisis. Industry leaders have been eagerly searching for ways to recruit and attract young talent to replace the outgoing staff, but, due to poor industry perception, it remains an uphill battle.

The Insurance Careers Movement began as a grassroots, industry-wide initiative to combat the coming talent shortage and the ill-fated perception of the industry. We endeavor to empower young professionals who already work in insurance to share their feedback and experiences, educating their peers and students about the vast career opportunities available to them. As a part of the annual Insurance Careers Month each February, we conducted interviews with more than 30 millennials from a wide range of insurance carriers and agencies about their thoughts on the industry.

Contrary to the general perception outsiders have of insurance, findings from the interviews revealed that many younger workers view insurance as a dynamic field with significant opportunities for growth and development of personal relationships with customers and coworkers. In fact, their responses largely resemble the theme of the movement, referring to insurance as, “the career trifecta,” to emphasize the idea that pursuing a profession in insurance is stable, rewarding and limitless.

Here are the three recurring themes mentioned across all the interviews:

1.It’s Stable

In many of the interviews, one of the distinct benefits of working in insurance is the extensive career options, and the flexibility to try different sections of companies. A recent graduate can begin with underwriting, then branch into marketing, risk management or any other career path she wishes to pursue.

See also: 10 Commandments for Young Professionals  

The insurance industry holds a long, rich history and is in nearly every part of the world. Therefore, there is a vast number of opportunities available in many areas of the field, adding to the stability factor. Ashley Jenkins, controller at Pioneer State Mutual Insurance, said, “Insurance companies are very stable compared with many other industries. As an example, my current insurance employer and prior insurance employer did not have to lay off any employees during the major financial crises in 2008 and 2011.” Additionally, according to the National Insurance Brokers Association, the median salaries in insurance are all well above the national average at around $30,000 a year. With more than 75,000 jobs opening up due to retirement, members of younger generations are being afforded regular growth opportunities, promoting a stable career path that doesn’t exist in many fields; today’s young employee tends to change jobs four times before they’re age 32.

2.It’s Rewarding

Although many jobs require employees to sit in cubicles, a career in insurance allows people to interact and cultivate relationships with other customers and coworkers. Koory Esquibel, TRAC risk analyst at Marsh, said, “One of my favorite parts about this industry, and the reason why it is so easy to recommend to students and new graduates, is the ability to form so many strong relationships with colleagues and business partners.” This is a pivotal time in insurance where improved employee and customer interaction is happening at all points of the workflow. Between mobile technologies to better interact with customers and analytics to improve speeds of underwriting and claims processes, the industry has never prioritized innovation so aggressively.

According to the survey conducted as a part of the Insurance Careers Movement, more than 92% of millennials working in insurance said that they are proud to work within the industry and want to promote the benefits and opportunities it provides. Their answers also revealed that millennials are already putting efforts into recruiting their peers, as 73% of respondents said that they have tried to convince at least one of their friends to choose a career in the risk management and insurance industry.

3.It’s Limitless

With the wave of digital innovation looming and new regulations and product offerings being created daily, the insurance industry is more dynamic than ever before. Employees at all levels, regardless of their areas of focus, are challenged to come up with creative solutions to tackle emerging problems. Yasmin Ahmed at Marsh said that she was “drawn to work in insurance because of the career mobility and succession planning.  Seasoned insurance professionals plan to retire within the next five years, providing more career advancement for young people.”

In fact, according to the Jacobson Group and Ward Group Insurance Labor Outlook Study, the insurance industry has added 100,000 new jobs in the past five years, and 66% of insurers expect to increase staff this year. The number of opportunities and intellectual challenge are perfect for millennials as, according to the My Path survey, new graduates are more interested in career advancement possibilities (25%) and learning opportunities (20%) when considering a job than older generations. Therefore, young professionals consider development within their careers more important than salary or benefits.

While the industry remained largely stagnant for years, the technological disruption is closing the experience gap and opening important roles for those interested in data science careers combined with creativity. In fact, Accenture’s fintech report found that investments in insurtech more than tripled from $800 million in 2014 to more than $2.6 billion in 2015. In addition to the heavy focus and investments in IT, startups like Lemonade are joining the industry with new technology-based business models. The entrance of startups has already brought recent changes as it motivated insurance giants to expand their focus. Some of the world’s largest insurers, such as Aviva, Axa and XL Catlin, announced their efforts to establish in-house venture capital funds and stated that they will be dedicating more than $1 billion investments in startups to spearhead digital transformation. This focus on new technology also creates more opportunities for the younger generation, as they can make contributions to their team regardless of the job titles.

See also: Can We Disrupt Ourselves?  

Most say that millennials are known for job-hopping. However, according to a recent Census study, once they’re satisfied, most will stay at the place of employment for three to six years. The bottom line is that carriers must not blame the generation for their lack of interest in insurance and instead work on raising awareness about the value the industry offers. Right now, a lack of talent is one of the biggest challenges for innovation growth. Insurers will have to make concerted efforts to follow through the recruitment process and provide robust training program to attract and retain young professionals. Through recognizing the underlying cause of the crisis and making an industry-wide endeavor, the insurance industry will be able to grow as a whole and successfully combat the talent shortage.

According to Gallup’s long-running Honesty and Ethics in Professions survey, trust in journalists over the last 40 years has seen a steady decline and is now at an all-time low. Part of the reason is the wide variety of sources available to journalists and the speed with which people are clamoring for news. Back when there were only three primary networks and a limited number of major newspapers, seasoned reporters seemed to keep a tighter rein on journalism’s criteria and standards. Insurance executives are suffering from many of the same issues when trying to rely on their data and analytics. They may frequently ask themselves, “Where am I getting my news about my business?” and “Can I trust what I’m being told?” Data within the organization can be coming from anywhere inside or outside the company. Analytics can be practiced by those who may be reaching across departmental boundaries. Methods may contain errors. Reporting can be suspect. Decisions may be hastily made based on “fake news.” No industry is immune. Google Flu Trends (2008-2013) was supposed to predict flu outbreaks better than the Centers for Disease Control and Prevention (CDC) using a geographic picture of search terms loosely related to the flu. Somehow, though, the algorithms consistently overrated correlations and over-predicted outbreaks. After several years of poor results, teams from Northeastern University, the University of Houston and Harvard concluded that one of Google’s primary issues was opaque methodology, making it “dangerous to rely on.” See also: Innovation Won’t Work Without This   Here are four actions that insurers can take to close data and analytic gaps and create an environment where news reflects reality and is able to be trusted. Watermarks One simple recommendation is to watermark views of data as certified. Certified sources, certified views and certified analyses could carry a mark that would only be allowed if a series of steps had been taken to maintain source and process purity. This Good Housekeeping Seal of Approval will provide your organization’s information consumers with the confidence that they are looking at real news. Of course, the important part in this process is not the mark itself, but developing the methods for certifying. Attribution Attributing information that is used in an ad hoc way to the data source also allows other team members to trust that the source is vetted and that the information presented will be verifiable. In any research project, it is common to add data citations, just as one would add a footnote in an article or paper. Attributions add one other important layer of security to data and analytics — historical reference. If a team member leaves or is assigned to another project, someone attempting to duplicate the analysis a year from now will know where to look for an updated data set. It is also more likely that the results from decisions made on the data are many months or years away. If those results are less than optimal, teams may wish to examine documented data sources and analytic processes. Governance Organizationally focusing on the benefits of good data hygiene and creating a culture of data quality will increase your organization’s data quality and improve trust levels for information. Governance is the core of safe data usability. Poor practices and fake news arise most easily from a loosely governed data organization. The concepts of governance should be communicated throughout the organization so that those who have been practicing data analytics without oversight can “come in from out of the cold” and allow their practices to be verified. But governance teams should always act less like data police and more like best practice facilitators. The goal is to enable the organization to make the best decisions in a timely manner, not to promote rigidity at the cost of opportunity. See also: Are You Still Selling Newspapers?   Constant Listening Finally, when data teams constantly have their ear to the ground and are continuously aligning the information that is available with the needs of the consumers of that information, then best practices will happen naturally. This awareness not only ensures that fake news is kept to a minimum but also ensures that new, less reliable reports and views are not cropping up with the excuse that necessity is the mother of invention. It also means that data teams will have their eyes open to new sources with which to assist the business. When data teams and business users are frequently helping each other to attain the best results, a crucial bond is formed where everyone is unified behind the visualization of timely, transparent, usable insights. Data stewards will have confidence that their news is real. Business users will have confidence to act upon it.

The new Congress and the Trump administration need to act soon if they want to address the projected 2023 exhaustion of the Social Security Disability Insurance (SSDI) trust fund and protect hard-working Americans. Every year, millions of Americans lose their jobs due to injuries or illnesses, but policymakers can take concrete steps to maintain these workers’ incomes and reduce spending for their SSDI, Medicare and other public benefits. The first and most critical step is to empower states and the private sector to test promising approaches for helping ill or injured workers stay in the labor force. Otherwise, policymakers will be faced with either cutting disability benefits for workers who need them or diverting revenue from the trust fund that is intended to pay for the same workers’ retirement benefits. Policymakers chose the latter course in 2015, when the SSDI trust fund was projected to dry up within a year. But that option will be even less attractive in 2023 because the retirement trust fund is on a trajectory for exhaustion in 2035. The nature of the opportunity Research shows that a large but unknown portion of the more than two million workers who leave their jobs each year for medical reasons could continue to work if they received timely, evidence-based support. Yet many workers with work-threatening conditions fall through the cracks in a fragmented support system and enter SSDI instead. See also: What Trump Means for Health System   The private sector already has the tools to help more of these workers stay in the labor force, but the tools aren’t targeted to those most likely to enter SSDI—those in relatively low-skill jobs with limited education. Many employers of skilled workers provide job retention services along with short-term disability and health insurance. Workers’ compensation is available to most workers if their injury or illness is due to work, but the degree to which they receive job-retention services varies. Some states’ vocational rehabilitation agencies also provide job retention services, but their size and scope is very limited. The fact that some job-retention services are already available reflects the substantial benefits of these services to workers, employers and state governments. It is clear, however, that the provision of services is suboptimal because of misaligned financial incentives and institutional constraints. Most notably, financial incentives created by federal programs work against job retention rather than for it: Federal support for ill or injured workers is almost entirely reserved for those who leave the labor force and enter SSDI. After a further 24 months, SSDI entrants also enter Medicare, and many with sufficiently low incomes receive Supplemental Security Income, Medicaid and various in-kind benefits. Furthermore, there is a sharp drop in the federal taxes collected from workers who stop working and enter SSDI. Keeping these workers on the job and out of SSDI could save the federal government billions. The potential gains of investing in job retention far exceed the costs—which is why policymakers now have the chance to help hard-working Americans as well as reduce the size of the federal deficit. The need for immediate action To build on what we’ve learned thus far, federal policymakers must provide states and the private sector with opportunities to test various ways to help Americans whose livelihoods are threatened by medical conditions. Implementing a new policy based on our current limited knowledge could harm, rather than help, many workers, or it could result in new costs to federal and state governments that exceed the savings to public programs. For instance, policies that excessively push workers to pursue work when they are in dire need of SSDI and Medicare would harm their well-being. Likewise, policies that spend significant resources on services and supports that do not at least pay for themselves through reductions in program expenditures will increase government spending. Instead, policymakers should plan to scale up, replicate and improve test systems that work and stop supporting those that do not. Over the past few years, we and others have identified many opportunities to test such systems. For example, the three states with public short-term disability insurance programs—California, New Jersey and Rhode Island—could pilot-test case coordination and behavioral interventions to help their claimants stay at work. Other states could test similar approaches for their own employees, and accountable care organizations could test the use of job retention as a quality metric. (On Feb. 23, Mathematica Policy Research’s Center for Studying Disability Policy is hosting a live webinar, “The Promise of State Initiatives to Prevent Long-Term Disability,” to discuss these and other state-level initiatives that can help workers keep their economic independence and save billions of taxpayer dollars.) See also: A Closer Look at the Future of Insurance Such tests are not likely to occur, however, unless federal policymakers lead the way. They could do that by (1) making the testing of promising systems a national priority, (2) establishing an interagency office to lead the effort, (3) providing modest funding to gain the participation of states and the private sector and (4) supporting learning via rigorous evaluation. Rarely do policymakers have an opportunity to both help American workers and reduce entitlement expenditures. Such an opportunity presents itself today, but the window is closing on our chance to address these issues and preserve the SSDI trust fund.

Headlines about the insurtech disruption are split between issues like improvement to the customer experience and how traditional carriers expect to be affected. The situation is reminiscent of the days when Wal-Mart announced that a store was coming to a small town, and local retailers began screaming that the sky was falling. We keep a close eye on insurtech at WeGoLook because, as a leader in the gig economy, we find natural partnerships abundant between our on-demand workforce and innovative insurtech services. According to PwC Global, many insurance carriers see the potential downside to ignoring insurtech:

• 48% of insurers fear that as much as 20% of their business could be lost to insurtech startups within the next five years;
• Annual investment in insurtech startups has increased fivefold over the past three years, with total funding reaching $3.4 billion since 2010; and
• More than two-thirds of insurance companies say they have taken concrete steps to address the challenges and opportunities presented by insurtech.

Will incumbent carriers accept the anticipated losses or will they fight to retain market share? See also: Be Afraid of These 4 Startups   The Standard Market’s Reaction Traditional insurers have begun to throw a lot of money at the insurtech situation. Many of them have significant venture capital funds. These steps are not necessarily being taken to compete with the startups that are expected to capture the 20% but to retain control over methods of distribution. Even though insurtech startups appear to be better than incumbents at creating products and distribution systems, many still rely on their insurance partnership with standard carriers for underwriting and claims administration. New pay-per-use companies such as Metromile and Simplesurance, which are not regulated insurers, sell policies that are underwritten by established insurers. A Threat to Distribution Insurtech startups will take a significant bite out of the traditional insurance distribution system. Startups and incumbents will be forced into partnerships because both are vital to delivering products. Insurers are certainly not blind to the opportunities that have become available as a result of technology that will allow them to learn more about the consumer experience and how the consumer behaves. We've already seen carriers such as MetLife and Aviva found and support startup incubators. And even WeGoLook was recently acquired by Crawford & Co. And this is a good thing! If incumbent insurers can embrace and adapt to the innovation, creativity and agility of the startups, the insurance industry will be better positioned to meet the needs of the consumer. The newly created partnerships are destined to make significant progress in solving the problems of the new economy and bring consumer-centric innovative products to the marketplace. The New Competition Partners Some of the startups that have already succeeded in taking a bite out of the traditional distribution system: Oscar Founded in 2012 with $750 million in venture capital, and one of the first to establish its presence, Oscar was created as a result of the Affordable Care Act. Oscar relies on technology and data so it can improve the healthcare it offers to customers. With annual revenue of $200 million, the company is currently valued at $3 billion. See also: Top 10 Insurtech Trends for 2017   Trov Also founded in 2012, Trov is a U.S. startup funded with $46 million. The company was established to sell insurance by the piece. The company will provide insurance on a per-item basis and offer policies on a term selected by the consumer. Although founded in the U.S., the company first marketed its innovative product in Australia and targeted millennials. Like most other startups, the company partnered with a traditional insurer to handle the underwriting. PolicyGenius PolicyGenius is banking on consumers’ preference to have all their insurance products in one place and online. The company was founded in 2014 with $21 million in capital and has partnered with major traditional players such as Axa, Transamerica and MassMutual. As a virtual online insurance broker, PolicyGenius intends to make a dent in the insurance distribution system through satisfying the preferences of the consumer. Metromile San Francisco-based Metromile has created disruption in the auto insurance market by offering pay-per-mile auto insurance. Through the use of an innovative app working in concert with the Metromile Pulse plug-in, consumers who use their vehicle on a limited basis will obtain significant savings on auto insurance. The company offers a full customer service team and 24/7 claims service. All policies are underwritten via its partnership with National General Insurance Company (formerly GMAC). Lemonade After promising to reinvent the insurance industry, Lemonade offers home and renters insurance by using bots instead of brokers. After testing the product in New York, the company launched nationwide in 2017. As licenses are approved on a state-by-state basis, the Lemonade footprint will continue to grow. Unlike traditional insurers, Lemonade charges a flat-fee commission and then gives back unclaimed money to charitable causes that policyholders care about. See also: Why I’m Betting on Lemonade   Lemonade is a perfect example of how insurtech startups are revolutionizing the insurance industry. But There's Hope Although the threat of losing market share is demonstrated by the success of many of the insurtech startups, it’s important to recognize that a relationship can manifest that benefits both traditional insurers and the innovative startup. New business for one startup doesn't necessarily mean a loss for another. Also, traditional insurers are already positioned to raise the additional capital needed to compete with the startups — if they choose to do so. So, will the 20% market loss actually be realized? If we play our cards right, probably not.

I am sure we are all familiar with the Intel slogan, “Intel inside.” This has been a very powerful tagline and one that has helped Intel become the dominant PC chip supplier. (I know I was very influenced by the slogan and very rarely bought a non-Intel PC as a consequence.) But I believe that this slogan will be rapidly replaced by “AI inside” because I believe we are almost at the point when ALL future apps will include elements of AI. I also believe there is a very good chance that Amazon's Alexa might become the de facto automatic speech recognition platform that will sit in front of (outside) every single app in the future.  (My rationale is here.) Why do I say this? First, you need to recognize that AI is not one singular, all-embracing technology. Rather, it is a set of technologies that hope to emulate the way a human interprets and acts upon information — albeit at the speed of light and (we hope) without error, on a 24/7 basis. As such, AI includes technologies such as natural language (voice) processing (NLP), semantic analysis and cognitive processing. Second, these technologies have become pervasive. The CEO of IBM recently announced at Davos that Watson (a supercomputer and a collection of AI APIs) is now having a (positive) impact on the lives of some billion people (about 1/7th of the world's  population). I don’t know how many Echo and Dot units have been sold by Amazon (it must be tens of millions, at least) but each unit gives you access to Alexa, which uses both voice recognition and processing. See also: 10 Questions That Reveal AI’s Limits   Third — and most important — you don’t need to have a degree in AI (any more) to deploy AI. AI was notionally conceived by Alan Turing in 1936 (but, in one sense, you can trace the origins of AI all the way back to Archimedes!). I was taught elements of AI at university in the early 1970s, but I didn’t have a chance to develop an AI app until the mid-1990s when I was a consultant for the Nationwide Building Society. We had just finished a ground-breaking piece of work that involved the development and deployment of the world’s first touch-screen-driven, customer self-service system. This system was a huge success on all measures, so the client I was working for at the time asked me: “How far can you take this idea? Could you, for example, develop a system that’s as good as — or even better than — our best sales person?” Without knowing it at the time, he was asking me to develop our first AI system. Fortunately for me (because I am certainly not an AI expert), Accenture had just hired an authority on the subject. He was swiftly assigned to my project team, and we stepped once more into the unknown world of innovation. We started by gathering a team of the client’s top sales people. We then sat them down with our AI expert, who had been carefully briefed on the rules governing the sale of regulated products. We also called in the services of a user experience designer to obtain a better understanding of people’s risk appetites and option requirements. Last, but certainly not least, we asked a group of customers to help us develop the system that would be designed for their stand-alone use. The result blew everyone away. It even won the support of the U.K. Financial Services Authority (FSA), which agreed to assess the system for compliance. The FSA tested and analyzed every aspect of the new application — and then signed off. It was the first time the FSA had ever approved a sales platform that removed the need for a sales person. Remember, this happened in the early '90s — long before Java, Windows 95 and the first PlayStation were launched. Our system is a tribute to a client who not only had the vision to see the possibilities but also had the courage to take on the challenge — as well as the very real risk of failure. However, there is a sad but rather revealing postscript to this story. What happened to this ground-breaking system? Well, it was lauded, feted and widely acclaimed — and then quietly shelved. The building society decided to focus on building its Systems of Record (SoR) rather than its Systems of Engagement (SoE). And, sad to say, that was not an uncommon fate back then. Real innovation is often too radical for most risk-averse management to stomach. Sometimes it takes time to build an appetite for the truly ground-breaking. And maybe — just maybe — 20 years later, that time has come. There was another problem: I only had one AI programmer at my disposal, and there weren’t that many more in the U.K. at the time. Given this, it would have taken a considerable amount of time to build an industrial-strength application that could have been put into the hands of any customer. But now we don’t have that problem. One of the firms we at Clustre represent is an AI consultancy that is AI-technology-agnostic. It conceives, designs and builds AI-driven customer and employee apps that use a variety of AI technologies — as appropriate. It was recently asked by a loyalty card operator to show how AI could be used to allow a card holder to get an answer to a query without talking to a human or having to scour through FAQs (which I think are generally pretty useless). The firm created a web-based chat bot that used Watson to help recognize and understand the question and used another product to drive the Q&A process and, ultimately, answer the question. So clever is the bot that it can easily handle misspellings and allow the questions to be phrased in a variety of ways and still operate properly. I would hazard a guess that this tool could handle at least 50% of all customer queries (the rest would be handed off to a human to resolve). That’s a lot fewer calls that need to be routed through to a human. See also: Why 2017 Is the Year of the Bot   So, you may ask, how many days did it take our AI consultancy to design and build this AI-driven chat bot? Just five. Five days to design and build a tool that could potentially reduce call center volumes by around 50%!!! AI has truly arrived, and everyone should be looking at how you are going to deploy it NOW!

The vastness of the opioid crisis is all around us:

• 259 million opioid prescriptions are made every year.
• 91 Americans die every day of opioid overdose.
• Workplace costs of prescription opioid use are more than $25 billion, driven by lost earnings from premature death, reduced compensation or lost employment and healthcare costs.

It’s time to take action. See also: Opioids: A Stumbling Block to WC Outcomes   As with any large-scale, complex phenomenon, there is no silver bullet. But a framework from the Johns Hopkins Bloomberg School of Public Health suggests three areas where we should focus our efforts: preventing new cases of opioid addiction, identifying opioid-addicted individuals early and ensuring access to effective opioid addiction treatment. We believe these areas must be attacked from a variety of clinical and operational angles. From the clinical side, the emphasis has to be largely around better clinical training and urinary drug testing (UDT). A generation of doctors has been raised based on a curriculum emphasizing the need to manage pain aggressively. Retraining physicians on best practices is needed to reinforce safe opioid prescribing patterns. Research from Utah has shown that physician education on recommended opioid prescribing practices was associated with improved prescription patterns, including 60% to 80% fewer prescriptions for long-acting opioids for acute pain. When an opioid is prescribed, the use of UDT is a cost-effective way to monitor treatment compliance and drug misuse. To address from the operational side, we need evidence-based opioid prescription guidelines in place and systems to track opioid prescriptions and adherence to guidelines. Further, we must ensure access to effective opioid addiction treatment. Many health organizations and state health systems are aggressively adopting pain treatment guidelines that clearly lay out when opioids should and should not be used. And the preliminary results of implementing these guidelines are promising. For example, the introduction of opioid prescribing guidelines in the Washington state workers’ compensation system was associated with a decline in opioid prescriptions, the average morphine equivalent doses prescribed and the number of opioid-related deaths. Prescription drug monitoring programs (PDMP) allow for health systems to analyze opioid prescribing data to find potentially inappropriate prescribing behavior and illegal activity. For example, using its PDMP, New York City found that 1% of prescribers wrote 31% of the opioid prescriptions. While prevention of initial opioid exposure is important, the treatment of opioid addiction is an important safety net when prevention fails. Pharmacotherapies including methadone, buprenorphine and naltrexone are options for routine care of opioid dependence, but they are still in the early stages of the adoption cycle. See also: Potential Key to Tackling Opioid Issues   The foundation to address the clinical and operational approaches to opioid epidemic is two-fold:

1. A strong system to determine what’s acceptable through well-defined, evidence-based guidelines; and
2. A system to use these guidelines and trigger the right actions through processes and technology.

The next article will address the nature of these two systems.

If you feel like insurance is changing faster every day, you’re not alone. According to our most recent research, published in 2017 Insurance Technology Priorities and Spending, 37% of insurers reported that the pace of change is keeping them up at night. Insurers find themselves facing two very different challenges: the accelerating pace of change and the need to transform and modernize their business. Our industry stands at their intersection, and these two imperatives can seem very much at odds. We are driven to become highly responsive to market opportunities, personalized to customers’ evolving needs and in sync with the changing insurance ecosystem as well as the technology landscape that supports it. The flexibility necessary to take on these new roles is a challenge to any insurer’s organization — and their infrastructure must be aligned to meet these business needs. See also: 3 Reasons Insurance Is Changed Forever   Of course, this is much easier said than done. The sheer scale of core modernization projects can be daunting, but legacy systems simply cannot provide the adaptability that insurers need to thrive in this new environment. Today, insurers are well aware of this quandary. In SMA’s annual research on IT strategic initiatives, core systems have always been a high priority for insurers. This year, however, the picture has changed. In our research on IT priorities and spending, we found that the No. 1 business project for all lines of business — personal, commercial, life, you name it — is policy administration systems. We have been tracking this data for years, and policy admin has never been insurers’ top priority. Much of the focus this year is on the enhancement of the current systems in place, rather than on full replacement. This finding could either be a good sign or reflect one of the fundamental challenges of our industry. If these policy admin projects are focused on implementing new coverages, products and services and on adapting to the digital needs that require access to transaction capabilities — and in a time frame that meets the business needs — then there is great alignment with the greater direction of the industry. But if the effort is mired in multiyear implementations of modern systems or the struggle to enhance the systems to meet today’s standards, then there is an issue that needs to be addressed. Can the whole insurance ecosystem embrace fast implementations, the flexibility to change products on the fly as new opportunities arise and accessible integrations as well as APIs to be able to leverage advancing technologies? That will require a new mindset for both insurers and solution providers. Insurers must rethink their approaches to core projects to meet the needs of the pace of change and the shifting market. Solution providers must ensure that their solutions support the speed at which insurers need to move. See also: How to Lead Change in an Organization   Share your core modernization experiences with us by participating in our latest research study on the state of the insurers’ core environments. Reflect on how you and your company are contributing to a more responsive industry, regardless of your role in the insurance ecosystem. What can you do to adapt to this new norm? We all have to accept this new world order as quickly as we can — the clock is ticking.