Total drug spending is expected to hit $535 billion in the U.S. in 2018, which is almost 17% of all personal healthcare spending, according to The Wall Street Journal. In the aggregate, that’s an awful lot of money on the table. But most of us don’t live in the aggregate. The prescription drug spending we care about as individuals is what’s being talked about around our kitchen tables -- especially for the millions of Americans choosing a health plan during this open enrollment period. For those of us in this group, understanding whether and how our prescription drugs are covered, and how each element of the healthcare (and insurance) mix will contribute to our total cost of healthcare, is crucial. Selecting the wrong plan can be costly. Very costly. Health plans -- also complicated When we think about our personal healthcare expenditures, we tend to focus on out-of-pocket spending, i.e., what comes out of our wallet beyond what we pay for our monthly premiums. Understanding how much an individual will pay out-of-pocket for a prescription drug completely depends on the benefit design of the health plan. Premiums, co-pays, deductibles, co-insurance and other health expenses all play a contributing role. So where does one start, to figure out which plan to choose, based on the drugs they take? See also: 5 Apps That May Transform Healthcare   Formularies are a starting point A formulary is the list of drugs attached to a specific health plan that shows whether a drug is covered by that plan, and what tier level the drug falls into. Formularies can vary greatly. Certain drugs will be covered by a health plan’s formulary; others will not. The same drug might be covered at different tier levels for different health plans. All of this funnels into what an individual will pay for a prescription drug. If an individual takes a drug on a regular basis, it’s crucial to check the formulary connected to all health plans being considered during this open enrollment. You do not want to show up at the pharmacy, prescription in hand, and find that your drug is not covered and that you’re completely on the hook for it. Doing the extra research now can save thousands of dollars over a year. A lesson from Crestor To better understand how out-of-pocket costs for prescription drugs can vary, let’s walk through a real-life example: Crestor, which, with 21.4 million prescriptions written for it per month, is a popular branded drug that helps patients with high cholesterol. Data scientists at Vericred, a healthcare data services company, reviewed multiple health plans in the state of New York for individuals under the age of 65 in 2016 to see specifically what the cost range was for Crestor. Below are results for four different examples of plans that cover this drug. GoodRx estimates the cost for a 30-day supply of 20mg Crestor to be $324. New York Platinum Plan Plan details: $0 deductible, $30 co-pay for a monthly supply Total cost for Crestor for the year on this plan is $360. Total healthcare cost, including monthly premium of $740, is $9,240 New York Gold Plan Plan details: $750 deductible, $35 co-pay (deductible not required for drug co-pay) Total cost for Crestor for the year on this plan is $420. Total healthcare cost, including monthly premium of $605, is $9,420 New York Silver Plan Plan details: $2,250 deductible, $45 co-pay (co-pay applied once deductible is met) Total cost for Crestor for the year on this plan is $2,448. Total healthcare cost, including monthly premium of $473, is $8,136 New York Bronze Plan Plan details: $4,000 deductible, $35 co-pay (co-pay applied once deductible is met) Total cost for Crestor for the year on this plan is $3,888. Total healthcare cost, including monthly premium of $414, is $8,864 An individual in New York using Crestor can pay anywhere from $360 a year out-of-pocket to $3,888 a year out-of-pocket for the exact same drug. That’s a range of more than $3,500 depending on the health plan the individual selects. However, the drug cost isn’t the only consideration. If you look at the amount spent on Crestor alone, you might be inclined to select the Platinum plan with $0 deductible and a total expenditure of $360 for the year on Crestor. However, if you add in the monthly premium, and look at the full picture, it becomes apparent that the Silver plan is the best choice in this example. Even though the amount spent on Crestor is $2,448 (vs $360 on the Platinum plan), the total amount spent on healthcare for the year is $1,100 less than that of the Platinum plan. The example may be simple, but the issue is complex As noted above, this example is simplified. Oversimplified. In real life, the issue is more complex. There may be additional prescription drugs to consider and other out-of-pocket costs for co-pays and deductibles. Someone with that high-deductible plan may have an accident on New Year’s Day that takes care of their deductible for the year. Then spending on Crestor becomes nothing more than the monthly co-pay. But this example, as oversimplified as it may be, demonstrates the massive gap in spending for prescription drugs that exists among different health plans. It also demonstrates how important it is to find a plan that fits an individual’s needs. As an individual’s circumstances change, so does the math. The more conditions that need to be treated, the more office visits will be required and the more drugs will need to be taken. Every element affects the deductible and co-pay, which in the end affect the total amount spent on healthcare. See also: Not Your Mama’s Recipe for Healthcare   When it comes to picking a health plan, prescription drugs make the choice more complicated, and there’s no one simple solution. But new technology is helping to uncomplicate matters. While the healthcare industry still has a way to go before purchasing a health plan is as easy and straightforward as booking a trip on Expedia, transparency and technology are giving today’s consumers the opportunity to more easily weigh healthcare and cost decisions. Many decision support tools and health tech companies are just getting started. But, there are options out there to help individuals understand and act on their choices. GetInsured, Policy Genius and Take Command Health are excellent platforms, providing tools that help consumers find health plans that fit them uniquely. Some of these platforms even include different ways to search by doctors, prescriptions and conditions that need to be covered. The technology is only getting better – and better consumer decisions on healthcare plans are sure to follow. Consumers will have the opportunity to make truly informed choices - choices that can end up saving them thousands of dollars. Prescription drugs will remain a major part of the healthcare spending mix for the foreseeable future. What individuals need to focus on is how drug costs affect their personal bottom line. Emerging technology will help them do just that.

The Loch Ness Monster. Area 51. The grassy knoll. To the list of the world's great unsolved mysteries can be added a further conundrum -- the continued success of the insurance broker. For years, traditional brokers have labored under the Sword of Damocles that is disintermediation, be it from direct players, comparison sites or even from traditional bank-assurers. And for some parts of the market, those fears have been fully justified. In the U.K., for example, direct insurers have risen from nothing to control 41% of the personal lines market (ABI, 2015). And it has been estimated that comparison sites now account for more than a third of U.K. motor policies. This has had some inevitable consequences, with many smaller/High Street brokers giving up the ghost and a wave of (often very poorly executed) consolidation sweeping the lower end of the market, as players have turned to scale benefits to counteract dramatic falls in income. And this was before Silicon Valley threatened to unleash a tsunami of further disruption onto the industry’s shores. And yet the broker survives and, in the commercial lines sector in particular, prospers. As Mark Twain might have said, rumors of their demise have been much exaggerated. Why is this? Well, the cynic might argue that the archaic nature of the insurance industry itself has helped shield the market from the sort of Big Bang reform that struck the banking industry 30 years ago. Anyone remember open outcry? Wander around Lime Street today, and you will still see brokers, collars turned up against the wind, off to pitch their wares armed only with a bulging and brightly colored Manila folder wedged hopefully under one arm. Some might say that the industry's biggest single barrier to entry for new entrants is the fact that it remains so stubbornly paper-based! However, I would argue that the real reason for the broker’s survival lies in a simpler and more prosaic truth. See also: Friday Tip For Agents & Brokers: Your Best 30 Seconds   Trust. Hardly earth-shattering, I know. But in my experience those outside the industry -- and even those inside it, at times -- consistently underestimate the extent of the trust that clients place in their broker and the strength of the relationship that springs from this. In few other industries, for example, can often relatively junior individuals leave one shop for another, reasonably confident in their ability to take a couple of million dollars of brokerage across the street with them. For a product that is often said to be sold rather than bought and that has become, for the vast majority of businesses, relatively standardized, this sense of loyalty to the broker is somewhat counter-intuitive. But that is to ignore the very different psychology and motivations of the corporate buyer, who sees the value of insurance in insulating against shocks, keeping the management team out of court and "de-risking" new initiatives, unlike the consumer, for whom insurance is a grudge purchase where price is the overriding factor. Because of this corporate dynamic, brokers often occupy a privileged position at the top table, alongside a company’s accountants, bankers and lawyers. Accompany a company on a meaningful claim, and the strength of that position gets enhanced even further. And with the emergence of new risks such as cyber, and with the world today ever more complicated, unpredictable and unstable, then the need for a trusted adviser to help you protect your shareholders, employees and clients from whatever might be thrown at them and navigate the complexities of the market becomes more important than ever. Small wonder, therefore, that commercial lines brokers have proved so resilient. This, though, exposes the mystery -- the classicists among you might even say Hamartia -- that lies at the heart of the broking model. The value provided by a good broker is almost entirely in the advice she gives -- diagnosing where your risks are, identifying which risks should be transferred and which retained, designing placement strategies, helping put in place active risk prevention and mitigation strategies, getting claims paid, etc. And yet brokers are typically paid via commission for placing the risk, arguably the least value-added and most transactional part of what they do. Particularly in today’s market, where underwriters are falling over themselves to cut rates to secure market share and where, in the words of one former colleague of mine, “my twelve-year-old son could place an offshore energy policy right now.” Her words, not mine! It is the perfect illustration of someone negotiating over the price of the saddle but giving the horse away for free. The real problem with commission, of course, is the potential misalignment of interests it creates between brokers and their clients. At the most basic level, in any normal intermediary-based industry, the better deal you get for your client, the more you might expect to be paid. In the insurance industry, however, the more the client pays, the more commission the broker makes. Even stranger, it is paid for by the insurer even though the broker supposedly acts on behalf of the client. The risk of perverse incentives abounds. That's not all. Commission is also a pretty blunt way of linking effort to reward. The work involved in renewing a policy with the same insurer, for example, is a fraction of that required to set it up, and yet the same commission rate applies. Similarly, the effort required to place a $20 million policy is not hugely more than that involved in placing a $10 million one, and yet one will pay double the other. Some clients eat up huge amounts of time pursuing a contentious claim and yet will pay the same commission rate as a far more straightforward client with little claims activity. It is hard to see how this doesn’t create a cross-subsidization effect between the simpler, less demanding clients and the more complex, challenging ones, to the detriment of the former. Further complicating the picture is the fact that the economics of this tried and tested model have become increasingly challenged by the precipitous fall in the rating environment over the past few years, particularly outside the more volume-based classes. Commission is all well and good for brokers when prices are holding firm, but in a market where rates are falling 20% to 30% a year, as they have been in the aviation and energy markets, for example, brokers are suddenly faced with having to do the same, if not more, work for less money and with the prospect of worse to come. But brokers are nothing if not resourceful. Diversification has allowed some to grow their income by shifting their value proposition to providing a broader risk consultancy offering and cross-selling additional services. Consolidation and automation have taken supply out of the market and released significant efficiency savings. And, perhaps most importantly, ever more elaborate ways have been found to extract value from the market through sophisticated placement strategies, providing analytics and consulting expertise and taking on parts of the insurance value chain in return for a fee. And while brokers have rightly been very careful not to replicate the structures and practices that landed them in hot water with Eliot Spitzer not so long ago, I would speculate that, for the larger brokers at least, income generated from the market is proportionally larger than it was pre-Spitzer. While the broking community's inventiveness is to be lauded, the risk is that they start eroding the very foundations of their continued success. The more that clients feel that their broker is more concerned with selling them additional consulting or software services than worrying about their core program, the more revenues that they perceive their brokers to be pulling out of the market beyond their core commission, the more blurred the lines become between where brokers end and where insurers begin, then the more clients may start to question the value their broker is adding and whether the broker is truly acting in their best interests. See also: On-Demand Insurance: What’s at Stake   But then, perhaps clients have the market they deserve? Certainly, few apart from the largest and most sophisticated clients have agitated to move their brokers onto fee-based remuneration structures that more clearly link the actual effort involved and value created -- as they do for their other professional advisers who largely bill in terms of time and access to relative tiers of expertise. And stories abound of clients not playing fair, rewarding a cut in the premium with a proportionate fee reduction rather than rewarding their broker's efforts -- small wonder that brokers have been happy to let things lie. Perhaps these things are simply far too entrenched to change? Particularly where all parties feel happy with the relative trade-offs. But I wonder if there isn't potentially a certain mutual convenience in the broker's cost being, if not quite invisible to the client, then at least one step removed in that most never have to sign an actual check. It must almost feel like the broker's service is free.... Besides, you need to be careful what you wish for. There is an interesting read across here to the U.K. wealth management industry, where recent regulatory reforms have banned advisers from earning commissions from whichever provider they recommended to their client, to eliminate the risk of advisers placing/churning business to the highest fee payer and for earning trail commissions for little continuing effort. Instead, if clients want discretionary advice, they now have to pay their adviser an up-front fee that will typically run into the thousands of pounds and then pay further fees every time they transact. In theory, this makes sense, and the money that the providers were paying to the intermediaries by way of commission should have been handed back to client in the form of price reductions, leaving them no worse off once they had paid for advice. In practice, of course, this has created a windfall profit for the providers and left an advice gap at the heart of the British wealth management industry, because many clients have balked at the prospect of cutting a check for a couple of grand even though they were happy to pay this, and probably much more, when the adviser's costs were discretely embedded into the cost of the product. No wonder clients, brokers and insurers in the insurance industry have largely preferred to stick with the status quo. The law of unintended consequences looms large. Where does all this point, therefore, when considering the sustainability of the broking industry in the face of the changing market dynamics they are now facing? I would make a couple of suggestions. Firstly, there is probably a large swath of medium-sized commercial lines business where the economics simply do not justify the continued provision of brokerage advice and services on the same basis that this has been supplied in the past. Radically different operating models will be required, probably leveraging some of the learnings from the banking world, which has also had to evolve its service model. There is probably an opportunity for AI and robo-advice based models, such as are increasingly being seen in the wealth management world. At one level, this will favor those brokers with large retail/affinity/SME customer bases and strong brands that can leverage existing practices and infrastructure up the value chain. But it also potentially suggests a rich seam of opportunity for disruptors armed with weapons-grade analytics and innovative distribution strategies. Secondly, when it comes to larger, international companies or non-standard, more complex risks, the importance of the trusted broker relationship is not going to change. In fact, as I have argued elsewhere, the world’s greater uncertainty and volatility makes that very simple, human, trust-based relationship more important than ever. Insurers will continue to pay for this distribution -- they have no choice. And new entrants, who think that a roomful of MIT graduates and a piece of smart tech can dislodge a 20-year relationship forged in the white heat of a ugly claim, will find out the hard way how wrong they are. In this part of the market, they are far better served focusing on providing solutions to back-end operational efficiencies and supplying discrete tools and services. However, what is likely to change is what the client's trust-based relationship with the broker is built on. Being able to navigate your way around a wine list, procuring Center Court tickets at Wimbledon and being an excellent transactional broker may have been enough to win and retain business in the past but just won't cut it in the future. Clients now need a far more holistic, technical and analytically based approach to helping them understand, manage and mitigate their exposures. The placement will become a hygiene factor for most, if indeed it isn't already. The challenge for the brokerage community -- and by extension for the sustainability of trusted relationships with clients -- is whether brokers are equipped to meet their client's rapidly shifting requirements from either a capability, a tools or an organizational perspective. Many brokers simply don't have enough people with the highly technical, analytical and consultative skills that they need if they are to provide the advice that their clients are increasingly likely to require. This implies the need for a far more strategic and thoughtful approach to long-term resource planning to ensure that people with the right sort of qualifications and attributes are being attracted to the organization and the right sort of skills developed in those who are already there. Some of their people will be able to make the necessary transition to this new world; others, sadly, won't. And while this may create a short-term opportunity for some players to attract displaced talent and, with them, their loyal clients, over the longer term they are likely to end up saddled with the cost but without the income, unless they, too, can acquire or build these skills. With this change in capabilities comes a potential change in organizational design, as brokers will need to go from wearing all sorts of hats as they typically do today -- sales rep, relationship manager, program designer, placement expert, claims fixer etc. -- to acting as a sort of overall risk adviser who then brings in expertise and tools, drawn from specialized teams, as and when they are required. This, in turn, implies quite a significant cultural shift for many brokers, who often guard their client relationships jealously and are wary of exposing them to a colleague who might screw things up. I realize that for many this sounds like absolute heresy, and no doubt some players will seek to make a virtue of their brokers continuing to operate across a broad front. But to me it feels like an almost inevitable consequence of the world's increasing complexity and the impossibility of any one person having the depth or range of technical expertise needed if they are to meet their clients' evolving needs. It can surely be no coincidence that almost every single other professional services industry has evolved in this way? The real complexity is that this will be an evolutionary change, as the technical and analytical demands of clients in different classes and different parts of the world and even within the same classes and parts of the world will vary. This implies that the successful brokers will be those who can effectively operate two models in parallel, as they mirror their clients’ own evolution. This would tend to favor the larger brokers, who have both the resources and the scale to develop a more sophisticated relationship-management-based service model alongside their existing one, hire and develop people with the right skills mix and develop the analytics they need based on huge amounts of data. See also: Is It Time to End the Annual Policy?   Smaller, more niche brokers and MGAs, too, should be more able to develop their offering because of their narrower focus and ability to target their investments to their advantage. The people who may struggle are those caught somewhere in between, with all the cost of managing this transition (potentially on a global scale) but without the scale to be economic or the investment capital and data to be effective. Further consolidation of those lacking the resources or culture to embrace this new world is inevitable. One thing is for sure. If history has proved one thing it is that brokers are remarkably good at morphing their offering to reflect their clients' changing demands and dreaming up new ways to grow their income, whatever obstacles are thrown in their way. In this, I am somewhat reminded of Louis XIV’s minister of finances, Jean-Baptiste Colbert, who once described the art of taxation as being “in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing.” On that basis, the broking community might want to consider running for office!

The college labor market is looking better than ever. It is important to make sure you are staying competitive when it come to recruiting college grads. They are an important group for employers to target when hiring new employees. In this infographic, we will answer some key questions for recruiting college grads such as, where do college grads look for jobs, and what actions can you take to recruit top grads.  Follow the trends and time-tested methods listed here to find the newest top talent for your company.

Although ride sharing and home sharing are the mainstays of the sharing economy, a new field is rapidly presenting challenges and opportunities. This is the rise of car sharing. Car sharing refers to an online marketplace where travelers can connect with a community of local car owners and rent any car they want, wherever they want it. Two Types of Car Sharing 1. Fleet car sharing This is where businesses such as car2go or communauto purchase and insure a large fleet of vehicles. These may be based in one location or free-floating. There are even companies that specialize in car sharing at airports. 2. Peer-to-peer (P2P) car sharing The second type of car sharing is where individual car owners rent their personal vehicles to private individuals. They do this using a peer-to-peer company that acts as a broker and insurer. Currently, two of the largest players in the peer-to-peer car sharing industry are Turo and GetAround. See also: What to Learn From Sharing Economy   How does it work? Once car owners have registered their cars with Turo (for instance), they can use an app on their smartphone to notify potential clients that their vehicle is available for hire at a set location and for a set period. For example, the owners can drive to work in the morning and park their cars; while they are at work, a renter can pick up a car to run a few errands and then return it before the end of the workday. Turo Offers Significant Benefits Based on U.S. statistics in 2015, Turo anticipates that Canadian drivers can expect to earn approximately CAN$500 per month. Of course, individual earnings will vary depending on the value of the vehicle and how often it is available. In the U.S., one authority claims that car sharers can earn anywhere between $600 and $1000 a month, depending on the type of car. Might not get much for this: But this: Oh, baby! Turo also offers insurance packages for its participants. According to its website, Turo provides “protection against physical damage up to its actual cash value, for collision and most 'comprehensive' causes, including theft.” Turo also promises that participants will be covered by $1 million in liability insurance. The Love-Love-Love Relationship of Car Sharing Car Owners Love It This marketplace allows car owners to earn extra money to help offset the cost of owning a vehicle. And because technology has made it possible to connect people with little or no advance notice, we are seeing a growing number of car owners capitalizing on the trend and using their vehicles to generate extra income. Consumers Love It Consumers without cars also love car sharing. Whether they live locally or are traveling for business or pleasure, car-sharing is an attractive option because it’s a great alternative to typical rental companies. In some cases, it even allows people to forgo car ownership altogether because they can simply rent a vehicle whenever they need it. Pete Moraga, the spokesperson for the Insurance Information Network of California, says, “You’re seeing it primarily in college cities because it works very well for a college campus where students just need cars to do errands and not for the full day." Further, recent research found that car sharing services are now available in more than 33 countries and account for almost 5 million users. Not bad... and the growth continues. See also: The Sharing Economy and Accountability Environmentalists Love It Those who care deeply about our environment love car sharing because it means fewer vehicles on the road, less money invested in non-renewable resources and a reduction in the carbon footprint on the environment. Unique Challenges for Insurers So what does this mean for the insurance industry? A lot. Not surprisingly, car insurance companies haven’t quite fallen in love with this new world of car sharing as they are finding that it poses some interesting challenges. Here are several problems that could affect basic coverage for clients:

1. LIVERY - Will clients' personal policies cover their cars if they rent out their vehicles? Most P2P companies understand the need for commercial auto insurance, but it’s always best to confirm that the coverage is adequate.
2. WHO IS DRIVING? Vehicles that are involved in car sharing are exposed to a greater risk of accidents because they are being driven by drivers who are unfamiliar with the vehicles. Add bad weather and heavy traffic, and owners are putting their vehicles at serious risk. The concern for insurers is whether the client’s premiums are accurately reflecting the increased risk involved.
3. LIABILITY – This is one of the most significant issues for personal auto insurers. Who pays if the car is involved in an accident while participating in car-sharing? Some car-sharing companies are facing this challenge by offering primary coverage in the event of an accident; some are offering comprehensive and collision coverage; and some are even offering third-party liability coverage.
4. TRANSITION – Who is going to pay for damages if there is a dispute about when an accident happened? Did it happen when the owner was using it, or when the renter was? To help alleviate the confusion, some P2P companies are developing data recorders and phone apps to track mileage, time and who is driving the vehicle.
5. DEPRECIATION – Who will cover the cost of depreciation if a car-sharing driver wrecks a vehicle? Will it be the P2P company’s insurance plan or the car owner’s?
6. EXCLUSIONS – Most insurance policies contain exclusions that will deny coverage if a person has an accident while driving a lent or rented vehicle.

Some of these questions have simple answers, but many will not. Ron Burns, vice president at Guarantee Company of North America, said this concerning this issue, “Unless we have some changes in the actual policy wordings, there are going to be a lot of insurers who stand up and say we won’t pay for that loss.” Intact Offers Insurance to Car Sharers In response to these concerns, Turo has partnered with Intact to offer commercial auto insurance specifically for car owners who are participating in car sharing. How does it work? While the vehicle is being delivered to the renter and during the rental period, the vehicle is covered by Turo’s commercial insurance. When the vehicle is not being delivered or rented, the owner is protected as usual under her Intact personal auto insurance policy. All car owners who are planning to participate in peer-to-peer car rental through a company such as Turo MUST inform their insurance broker to ensure that their coverage is sufficient and accurate. Does Turo Insurance Replace Personal Auto Insurance? No. Car owners need to make sure that they have personal auto insurance, as well. In fact, to even list their car on the Turo marketplace, they need to investigate insurance plans with any of the following carriers:

• Intact Insurance
• Belairdirect
• Capitale General Insurance

Do Car Sharers Need Separate Insurance Plans? Yes. The Turo insurance card does not satisfy state or provincial "financial responsibility" requirements and cannot be used to register a personal vehicle. Do Insurance Providers Need to Change Their Strategy? Yes. With more car sharing startups entering the marketplace, and the relative ease with which savvy car owners can use their assets to generate income, it is clear that the sharing economy is poised for significant growth. See also: Sharing Economy: The Concept of Trust   Insurance carriers need to ask themselves some honest questions as they boldly face this new customer climate:

• How can we adequately face the new challenges in this sharing economy?
• Should we create a unique policy just for car sharers?
• Should we offer them a commercial policy, an excess policy or a base limit?
• How can we stay innovative and capture the changing marketplace?

At a minimum, insurance carriers have a responsibility to engage with and educate policy-holders on many of the issues associated with car sharing. Car sharing may not be the biggest concern in the minds of insurance carriers, but it should at least be on their radar.

In the late 1990s, in the run up to Jan. 1, 2000, insurers deployed Y2K or “electronic date recognition” exclusions into a multitude of insurance policies. The logic made sense: The Y2K date change was a known risk and something that firms should have worked to eliminate, and, if Armageddon did materialize, well, that’s not something that the insurance industry wanted to cover anyway. Sixteen years later, one would expect to find Y2K exclusions only in the Lloyds of London “Policy Wording Hall of Fame.” But no so fast. Electronic date recognition exclusions are still frequently included in a variety of insurance contracts, even though it’s doubtful that many folks have given them more than a passing glance while chuckling about the good old days. And now is the time to take a closer look. Last month, various cybersecurity response firms discovered that a new variant of the Shamoon malware was used to attack a number of firms in the Middle East. In 2012, the original version was used to successfully attack Saudi Aramco and resulted in its needing to replace tens of thousands of desktop computers. Shamoon was used shortly thereafter to attack RasGas, and, most notoriously, the malware was used against Sony Pictures in late 2014. Shamoon has caused hundreds of millions of dollars of damages. The new version, Shamoon v2, changes the target computer’s system clock to a random date in August 2012 -- according to research from FireEye, the change may be designed to make sure that a piece of software subverted for the attack hasn't had its license expire. This change raises issues under existing electronic date recognition exclusions because many are not specifically limited to Jan. 1, 2000; they instead feature an “any other date” catch all. For example, one of the standard versions reads, in part: “This Policy does not cover any loss, damage, cost, claim or expense, whether preventative, remedial or otherwise, directly or indirectly arising out of or relating to any change, alteration, or modification involving the date change to the year 2000, or any other date change, including leap year calculations, to any such computer system, hardware, program or software and/or any microchip, integrated circuit or similar device in computer equipment or non-computer equipment, whether the property of the Insured or not.” See also: Insurance Is NOT a Commodity!   By our estimation, this exclusion is written broadly enough to exclude any losses resulting from a Shamoon v2 attack, if indeed the malware’s success is predicated on the change in system dates to 2012. Given that the types of losses that Sony and Saudi Aramco suffered can be insured, firms shouldn’t be caught off guard. We advise a twofold approach: Work with your insurance broker to either modify language or consider alternative solutions; and ensure that your cybersecurity leaders are monitoring your systems for indicators of compromise, including subtle measures like clock changes.

Everywhere you look, marketers and companies are promoting the merits of “social marketing” and “social selling” for insurance producers, and there is certainly value to be derived from content marketing and from increasing brand awareness. But social marketing and social selling don’t lend themselves to insurance. There are four myths about social media that an insurance producer has to account for to reach his ideal target client and reach his sales goals. Myth #1. Social media marketing is useful in and of itself. Yes, it’s inarguable that you need to have a quality LinkedIn and Facebook presence, but that is only a “backstop activity” that allows someone to check you out after meeting you … by some other means. As one blogger recently wrote, LinkedIn is a place for “hunters and the hunted.” Most people don’t go out to a place like LinkedIn (or Facebook) to find or to shop for an insurance provider. All the carriers and brands are on those sites, shouting positioning messages and trying to get noticed, but more than 75% of LinkedIn users go to that site just once a month, or even less often. So, don’t expect that people will find you on social media and that you’ll be distinguishable. See also: 4 Marketing Lessons for Insurtechs   Myth #2. Content is king. Publishing good content makes a lot of sense as it can add authority and credibility about who you are. But throwing content alone into your social stream is like casting a big net onto the waters hoping to catch someone swimming by. When you push content out broadly to your networks and your contacts, you’re expanding your reach but are still just hoping that someone will swim into that net and want to have a further “discovery” conversation. How’s that working for you now? Myth #3. I can get noticed by being active in the social marketing stream. Don’t fool yourself. Ask the question: Who is my ideal target client, and how noisy is that person’s world? With all of the messaging coming at us all every single day, how can you expect to get enough mindshare to stimulate a response from whomever you’re targeting? We’re all inundated and have created barriers so that only those people we already trust are let in to our worlds. The walls are only going to get higher, and social marketing will become even less effective. Myth #4. Mass promotion using social marketing tactics fits my audience and will fill my sales funnel. Wait! Just stop and ask yourself: Why do people now choose you as their insurance professional? Then ask: How many leads do I get now from my social media sites? At the top of the list as to why people choose you will be reasons like trust, relationship and your proven competence. But how can a prospective new client get to learn about you and your character and competence without you focusing on building a highly engaged relationship? If I glance at your social media pages, I can do it quickly and privately. You won’t even know, and then I’ll be gone. You can’t build trust with these drive-by lookers. You need to focus first on building connections that really make the walls come down or the doors open, and no amount of mass or social marketing can make up for your investing a part of yourself into the personal relationship. You’re in a market where people and relationships matter the most, so this is where your focus should be. Mass “social” tools are actually un-social and are a poor substitute for building a true one-to-one connection. The Right Approach In my firm, Refer.com, we know how valuable a focused, personalized, relationship-marketing approach can be for insurance producers. We have seen how, in less than six weeks, a producer can gain eight to 10 new clients and can generate referred sales opportunities each and every month thereafter. We urge our clients to build their quality LinkedIn and Facebook pages and gather their great content to provide to the connections that they’re making but to focus on building highly engaged, one-on-one relationships with a small group of people. This includes clients, other professionals, connectors and influencers in your marketplace. Then, initiating a continuing, “high-touch,” personal connecting plan enabled by a sophisticated app will turn those key people into focused sources of introductions and new-client referrals. See also: How to Capture Data Using Social Media   You’ll quickly set yourself apart from others in your area who are undisciplined and unfocused while you’ve built a team of committed partners working together to help you grow. My next article will present the reasons why this approach is guaranteed to change the direction of your business and fill your prospect pipeline with high-quality opportunities. And then we’ll show you, step by step, exactly how you can easily make this work for you.

The American prescription crisis is no longer coming. It’s here. And we need to focus on how to address it. According to a study published in the Journal of the American Medical Association in August, for each person in the U.S., $858 is spent annually on prescription drugs, compared with an average of $400 per person across 19 other industrialized nations. Prescription medications now compose an estimated 17% of overall healthcare expenses. How did we get here and who is to blame: the manufacturer of the drugs or the American drug distribution channel? Both parties are pointing their fingers at one another, with the flames being fanned by the media and government. Who should the consumer believe? Unless you are living in a cave, you have heard or read about the EpiPen pricing scandal. The manufacturers’ CEO, Heather Bresch, claims that more than half of the new $608 list price is absorbed by the distribution channel. She says the huge price increases are not her company's fault and attempts to justify the increased price. Is she right, or is she trying to pin the blame elsewhere for her pricing decisions? See also: EpiPen Pricing: It’s the System, Stupid   Drug manufacturers, in general, complain that their net incomes continue to remain flat or even decline. They show their financials as evidence and complain about the ratio of the list price of their drugs vs. the realized price, a figure known as “gross-to-net.” When rebates paid by the manufacturer outpace the price increases by the same manufacturer, it is easy to understand why the figure remains flat or even declines. The pharmacy benefits manager (PBM) serves as the largest component of the manufacturers' distribution channel, charging a margin/fee as well as collecting a rebate for their services. Somehow, they have redefined the laws of nature by figuring out how to consistently convince their clients that they are saving money, while showing Wall Street steady revenue growth. The crisis is here, and as an employer you should be up at night wondering how this crisis of prescription costs affects you. The numbers don’t add up, and you are paying for the deficit.

Many P&C carriers are realizing the value of smart glasses for claims management, underwriting and training but are struggling to successfully implement the technology. Smart glasses enable features like hands-free video and streamlined documentation that improve an adjuster’s efficiency when responding to a complex claim. But, even though 81% of CIOs believe wearables will eventually enter the workplace, integrating the technology past the “science experiment” stage is a challenge for many carriers. An organizational commitment to robust connectivity and security fundamentals are sometimes daunting prerequisites to a successful wearables program, but the biggest obstacle isn’t technology-related; it’s change management. This guide provides implementation best practices built from successful deployments. These strategies illustrate a “validation-to- production” road map to scale smart glasses technology within your systems. See also: Wearable Technology: Benefits for Insurers   You will also learn which technology features provide immediate out-of-the-box value and which to defer until you’re fully scaled. Whether you are already running a validation program or doing research for future implementations, this guide covers how to overcome pitfalls, identify essential members of a project implementation team and generate return on investment (ROI) faster. Common Obstacles Surveys of carriers exploring smart glasses revealed that nearly every unsuccessful implementation came down to three factors:

• Scope Creep: People are often blinded by the “cool” factor of emerging technologies. They stop thinking in practical terms and instead specify outside-the-box features that are unrealistic or cost-prohibitive for a pilot.
• Slow Decisions: Carriers that succeed with smart glasses are the ones that test, measure, interate and move fast. You should evaluate challenges and test solutions as soon as possible rather than agonizing over options.
• Team Alignment: Successful implementation requires continuing collaboration among project management, the executive team, IT and end users, as well as any external stakeholders, such as customers, who may be affected.

The Vuzix M100, pictured above, is one of the many smart glasses capable of delivering value from day one. Visit our smart glasses comparison for more details on wearable devices from Google, Epson, Vuzix and ODG. Features Your Pilot Should Include for Rapid Value Risk-control skills are in high demand, and senior risk auditors dislike heavy travel requirements. The features listed below help major carriers use remote collaboration to reduce travel for senior risk controllers while simultaneously training new adjusters and risk control auditors.

• Video Collaboration: Simultaneous two-way video and audio allows experts to remotely assist front-line workers any time, anywhere, on-demand. Workers can broadcast live video feeds to allow the expert to “see what I see” for troubleshooting, training, supervising, inspections and more. Enterprises have paid for their wearables validation program in a single day from travel savings alone.
• Annotation: Field teams can capture images and send them to back-office experts for review. The back-office experts can then mark directly on the images, make notes and upload those annotations directly to the field teams’ smart glasses in real time.
• Documentation: Insurers in the field can save valuable time per job by using smart glasses to upload captured audio, video and images to the cloud.

Who Should Be Involved? We often joke that every major carrier has a pair of Google Glass sitting on a shelf somewhere. Someone from IT typically procured those smart glasses with the best of intentions, but simply ordering hardware without an implementation plan or assigned project roles will not generate value. Implementing a disruptive, innovative technology requires overcoming people’s inherent resistance to change. A project management team, which includes consistent and visible involvement from senior leaders and a communications plan, are the first steps to successful change management. See also: The Case for Connected Wearables   Decisions should not be made in a bubble or based on a bare minimum of heavily filtered information delivered to senior leaders via status reports. The executive team should have a keen understanding of project deadlines to provide guidance and remove roadblocks for the project management team. In our experience, a successful implementation team includes: a project manager, a technical expert, an executive leader, an end-user manager to champion the project and a customer success manager provided by the technology vendor. Rarely is technology the roadblock between idea and value. Instead, the difference between success and failure is a keen attention to a rigorous experimentation process. Having the right team in place and making sure the team understands the desired outcomes of the experiment will improve your ability to generate faster value and adoption. Wearables are not right for every company. Better to experiment with a validation program today to explore the viability of wearables before you are playing catch-up with competitors that have been using this technology for years. You can download the full white paper for free here.

Insurance is mostly sold on the basis of ignorance, not information. Innovative insurers have an opportunity to change that dynamic. Recently, I bought a small television for my bedroom. At $229 for a modest luxury, the purchase was not a life-changing event, and though I’m not entirely happy (the sound is a little tinny) the consequences of the disappointment are minor. I was able to make a wiser buying decision about that TV than about my homeowners insurance, which cost much more and for which the consequences of a bad decision could be catastrophic, if I had a major loss and bought the wrong coverage from an unreliable company. My lack of knowledge about my homeowners insurance is because insurers market ignorance -- presenting a major opportunity for innovative insurers to devise systems that enable consumers to make better buying decisions. Three factors entered into my TV buying decision: product features, price and quality. 32-inch or 40-inch screen? 1080p or 720p? Smart TV or traditional? For each of those features, how much would I have to pay? And how reliable was the TV likely to be: Samsung vs. Sony vs. LG? Online and brick-and-mortar retailers gave me all the relevant information about product and price, and Consumer Reports and other review sites told me a lot about quality. See also: Innovation — or Just Innovative Thinking?   Now think about buying homeowners insurance. Few if any legacy insurers provide a sample policy -- the full description of product features -- prior to purchase. Some will provide a summary, but the summaries tend to be sketchy at best and don’t provide an adequate basis for comparing policies between insurers. Information about company quality is mostly provided by the warm and fuzzy feeling generated by television commercials; what empirical data exist -- Consumer Reports again and state insurance department consumer complaint data -- is of limited value. There are many reasons why insurers don’t provide adequate product or quality information, but the important questions are whether insurers, particularly innovative insurers, will change this situation and, if they don’t, what else can be done in response? Some innovative insurers and intermediaries are making inroads. Lemonade, for example, promises a summary of coverage and sample policy after a customer applies but before he or she pays, and it gives some information on loss ratios, though, as a start-up, of course it has no claims history so far. Getmargo.com offers an insurance advocate to explain policy terms, something good agents always have done but something that has declined with disintermediation. If those efforts demonstrate a market for information, other companies may follow suit. But those efforts just scratch the surface. As long as personal lines insurance markets are dominated by ignorance rather than information, there needs to be another type of response that does not depend on the market: better regulation. That’s one part of the Essential Protections for Policyholders, a project of the Rutgers Center for Risk and Responsibility in cooperation with United Policyholders. For example, the Affordable Care Act requires a summary of benefits and coverage answering questions such as “What is the overall deductible?” and “Do I need a referral to see a specialist?” The same kind of form could be required for homeowners insurance and published on state insurance department websites. At the other end of the process, most states collect claims data -- the proportion of claims closed without payment, the median time to payment of a claim, and so on. Those figures also could be made publicly available as a tool for comparing the reliability of different companies. See also: The Future of Insurance Is Insurtech   Insurance is a market commodity, but there are significant failures in the market for insurance information. Innovative insurers have an opportunity here, but until they act, better non-market solutions through regulation are needed.