The group benefits market (including true group, voluntary benefits, and worksite) has experienced a great deal of change in the past few years, thanks to a variety of factors:

• A shift of responsibilities to the consumer (Affordable Care Act); a shift from defined benefit to defined contribution plans; an increase in voluntary benefits versus true group; etc.
• Increased employment.
• A competitive market for talent that demands a broader portfolio of benefits options.
• Market competition with individual life insurers and health insurers entering group benefits, along with a renewed focus on group benefits by some multi-line insurers. Uncertainty around healthcare could extend the trend.
• And more recently, insurtech—and tech in general—is forcing carriers to update systems to keep up with the Joneses.

See also: Benefits: One Size No Longer Fits All   While these trends would be enough to keep any carrier on its toes, the combination of the changes happening now means we are trying to build a house in a hurricane! Our coming research, Strategic Priorities 2017: Knowing vs. Doing, explains how a range of external trends are influencing insurer strategies and pressuring them into action. The trends affecting group benefits insurers fall broadly into two key categories:

1. Speed to market for new products, and
2. Customer engagement with improved service for brokers, employers and their employees.

Let’s take a look at what is driving the winds of change. Market Trend: Speed to Market for New Products Cloud/SaaS: A rapidly growing number of carriers across L&A, group and P&C are opting to deploy new core systems leveraging the cloud. A cloud-based, SaaS subscription model allows for the flex that a rapidly changing environment needs and is arguably more secure than traditional systems. A cloud/SaaS approach substantially reduces upfront investment, dramatically improves the ability to avoid customization and enables a focus on integration and configuration. It is also driving a host of vital business impacts, such as….

• Speed to implementation and speed to value: The combination of leveraging cloud/SaaS, a highly configurable system, and focusing on new books of business before conversion can lead to quick implementation. Historically, implementation has been measured in years, and ROI has been difficult to achieve. However, starting with a system that is immediately available for configuration and integration on day one can dramatically change ROI timelines. Carriers are increasingly taking this path.
• New products/New business first: More carriers are choosing to go to market with new products first, followed by dealing with existing products and conversion. There are many ways to approach this: Write new business only on the system to start; convert policies on renewal; close off existing blocks of business and either leave them on legacy platforms, offload them to a BPO provider, sell them to another carrier, or have a reinsurer take over administration of the block of policies. Any approach that enables a carrier to start with a clean slate improves the likelihood of a quick ROI.
• Configurability of solutions leads to configurability and agility of your business: Though the value of configurability for achieving a quick go-live was outlined previously, it’s important to note that highly configurable systems (of which there are now a few) allow insurers to make the business highly configurable … and agile. This enables insurers to take new products to market faster, and also allows more unique or niche products, plus more flexible business processes, which taken together, improve the ability to compete!
• Product bundling, unbundling, single carrier marketplace: Perhaps the greatest gust of wind has come from the direction of a demanding marketplace. Employers and brokers are asking group carriers to do new and innovative things all the time. One example of this is product bundling/white labeling to provide a full suite of products (though they often do this via benefit admin brokers/portals) or, on the opposite end of the spectrum, providing a “single carrier marketplace” of products (cafeteria plans). Once again, the same expanded options for configurability will allow carriers to flex when packaging their products.

Market Trend: Improved Customer Service, Experience and Engagement The winds of change are driven by people. As their lives change, insurers adapt. When it comes to the customer experience, group carriers are pulled in multiple directions because they are concerned with so many layers of customers. Is it possible to meet everyone’s experience expectations — the partner, the brokers, the employer’s HR team and the thousands of employees? The answer is most certainly, “Yes.” There has never been a better time technologically to capture growth through experience management. Insurers can pay attention to these four customer trends in particular.

• Portals – Broker, Employer, Employee: Increasingly, paper enrollments are becoming less common, even at the worksite. As technology becomes more pervasive, with nearly every employee having at least a smartphone, activities ranging from enrollment to claims submission are increasingly happening electronically. However, carriers need to be capable of supporting this. Having the right portal, with a responsive, mobile first design, that is built around well-thought-out journey maps, is critical, supported by a modern back-end system that supports real-time processing.
• User Experience: Millennials are now employees, employers, and home office staff, and have much, much different expectations for user experience. They’ve grown up in a world where UX has been defined by Apple, Amazon, and Google and expect that our systems are built to those standards, not that our systems are merely an improvement over legacy systems.
• Customer Engagement via Wellness/Gamification: Getting customers engaged can help improve cross-selling. This can be achieved in part with gamification and wellness solutions. Examples of this include Life.io and Human API, both of which can provide access to data from wearables. Life.io can allow participants to earn rewards, achieve goals, etc., but tied back to employee benefits. This engages customers and helps to build the brand.
• Improved Underwriting Through Technology: Underwriting, either at a group level or at an individual level for small groups, can be significantly improved using technology. Technology to improve underwriting ranges from tools such as Force Diagnostics’ rapid health exams, to cognitive analysis of census data (e.g., Watson), to leveraging analytics to better evaluate experience rating.

See also: Gig Economy: 5 Benefits of Outsourcing   These market trends, as well as others, ensure that group benefits providers will stay busy for a long time to come. Equally important, they mean that the distance between carriers that have modernized and those that haven’t will grow rapidly, and that those that haven’t will be challenged to win new customers, and could be subject to adverse selection. Modernizing has never been more important, and it has never required doing more to get there! What is certain is that group benefits providers that haven’t started on a course of change need to hoist their sails and catch the wind while it’s blowing in opportunity’s direction.

A Google search on AI yields about 2.1 billion results. It is difficult to scan the news of any industry without tripping across articles on AI and machine learning.

Philosophers wonder about how AI will change the nature of human existence. Economists worry about job loss and propose schemes like a universal basic income to compensate. Business executives contemplate how to improve their operations and improve the customer experience. Others wonder about how human beings will change with the possibility of technology-based human enhancements, the prospect of cyborgs and the potential to extend lifespans.

These topics have been explored since the concepts of AI first began to emerge. But today there is more urgency and purpose to these discussions due to the rapid advances being made across a wide variety of AI-related fields. Much of the progress is due to the convergence of machine learning and the massive computing power now available. These are important questions for humanity, but it also turns out that there are significant implications for the insurance industry, even in the short to mid-term.

A new SMA research report, AI/Machine Learning in Insurance, investigates how AI applies to insurance, what insurers are doing to leverage AI today and what activities and investments are expected from the industry over the next three years. There is, indeed, a wide variety of opportunities for insurers to leverage AI across every part of the value chain and for every line of business.

Insurers are moving forward with strategies, projects and investments, although perhaps not at the rate that is warranted by the potential benefits. Slightly more than a third of P&C and a third of L&A companies plan investments in AI-related projects over the next three years. Insurers across all lines cite underwriting as the business area with the most opportunity, while claims is also an area with great opportunities and many use cases.

See also: 3 Keys to Success for Automation  

An important development is the new wave of insurtech startups that are based on or leverage AI technologies to create capabilities for insurers. In addition, "MatureTech" players and services firms are all rushing in to participate in the AI advancements. AI is not going to change the insurance industry overnight, but it will have a steadily increasing impact on the industry in several ways. There will be more and more opportunities to improve operations by automating tasks and decision making.

AI will also play a central role in enabling connected devices to support risk mitigation schemes. In addition, AI is expected to be part of the transformation in every industry that insurance serves.

Finally, and vitally important, is that AI will reshape the customer experience, whether via chatbots that enable more self-service or recommendation engines that enhance the capabilities of insurance professionals as they interact with customers.

The word of the day is "re-accommodate." As most of us have seen by now, that's the ham-handed word that the CEO of United Airlines used to describe what employees had to do for passengers on a flight Sunday after forcibly removing a 69-year-old who refused to give up his seat at O'Hare. According to relentless social media posts and urban dictionaries, the meaning of "re-accommodate" is something like: "to knock an elderly customer unconscious and drag his bloodied body away." 

That's not a good look for United, which, as I write this, has seen its market value drop $675 million—one wag noted on Twitter that United could have paid a passenger half a billion dollars to give up a seat on the flight and still come out ahead. But I don't think we can dismiss this PR nightmare as just a United problem. I've seen lots of companies make similar mistakes over the years, and I believe insurers large and small can fall into the United trap, at a time when problems can crop up far more suddenly than ever and can be far more damaging.

If you read the two communications from United CEO Oscar Munoz, a short one to the public and a longer one to employees, you can see how he got into this mess. Basically, he's saying that United has procedures, and employees followed those procedures, so, nothing to see here. Move along.

In a classic example of management myopia, Munoz thinks the problem is that the passenger didn't go along with those procedures. The passenger just didn't understand the importance of getting a United crew seated on that flight so it could get to Louisville and operate another flight. That later flight's many passengers should take precedence over any inconvenience to a single passenger, even one who said he was a doctor with patients he wouldn't be able to see if his return trip was delayed until the following afternoon.

Yeah, sure, the passenger had paid for the flight and was sitting on the plane. Yeah, sure, United had overbooked the flight to maximize revenue. But overbooking is standard procedure, and the fine print on the ticket said United had the right to remove passengers. While Munoz acknowledged that the situation was a mess, he deflected blame to the "defiant" passenger and perhaps to the Chicago police who actually removed the passenger after being summoned by United. 

Lest you think this is just a Munoz view of the world: Former Continental Airlines CEO Gordon Bethune was interviewed shortly after video from the plane surfaced and blamed the passenger for his "immature reaction" to being ordered off the plane.

But the public ultimately decides who's right and who's wrong, and United/Munoz/Bethune will, I'm confident, find out that the public doesn't care about fine print or procedure. Individuals view situations from their individual points of view, and they are horrified at the idea that someone could be dragged off a plane after paying for a ticket and settling in to his seat. Individuals get to vote with their wallets, and social media will keep this issue in front of people for a long time. It is already having a field day with tweets such as this:

Now, I'm not suggesting that insurers will ever beat up a customer and drag him away. In any case, dealings with insurance customers just about always happen in private, so they are unlikely to produce viral videos. But, let's be honest: Insurers look at the world through their procedure manuals and are known to invoke the fine print. And every customer owns a megaphone these days, if not a printing press, so just assuring yourself that you've satisfied the letter of the law won't stop a customer from trying to raise a ruckus and won't keep others from resonating with that complaint. 

Some sort of "re-accommodation" is coming for an insurer. These days of wide open communication make it inevitable that a disagreement with a customer will eventually draw a large audience. But we can make problems far less likely if we give employees some flexibility and encourage them to use common sense—in United's case, someone just had to think, "let's not beat up a passenger in front of a bunch of cameras." When the inevitable problem comes, we can quickly minimize the impact if we just look at it through the customer's eyes and not through the lens of a procedure manual. 

Cheers,

Paul Carroll,
Editor-in-Chief 

I’ve been quite vocal about supporting only wellness done for employees and not to them…but what if there could be a “conventional” wellness program – even including screening, HRAs etc. – that both you and I could love? People manage what’s measured and what’s paid for. If employers want people to stay healthy in the long run, why not measure and pay for health in the long run? Why not give people the incentive to stay healthy during their working years, instead of giving them the incentive to pretend to participate in programs of no interest, just to make a few bucks? Or, worse, give employees the incentive to learn how to cheat on biometrics, and how to lie on health risk assessments. Attempts to create a culture of health often create a culture of resentment and deceit. Short-term incentives haven’t changed weight, as noted behavioral economist Kevin Volpp has shown. Nor have they changed true health outcomes – it is easily provable that wellness has almost literally never avoided a single risk-sensitive medical event. So-called outcomes-based programs, ironically, are more about distorting short-term outcomes than achieving long-term outcomes. They have more in common with training circus animals to do tricks in exchange for treats than they do with helping employees improve long-term health. The only thing that’s proven? Some vendors and some programs harm employees. Nor is wellness popular -- look at almost any article in almost any major lay or academic publication in the last four years. Then read almost any comment to those articles. Wellness industry leaders know that wellness has failed, and that’s why my proffered $2-million reward for demonstrating success remains unclaimed. The 401W Wellness Savings Account Why not discard all this year-to-year micromanagement? The goal of wellness isn’t to interfere in employees’ personal lives. It’s for employees to be healthy enough in the long run to avoid expensive events. So you are rewarding/penalizing them annually…but the benefit to you as the employer is way down the road -- if indeed someone who would have infarcted in the next 20 years, doesn’t. Future event avoidance is the only healthcare outcome that matters. So let’s align incentives so that everyone is focused on long term health. Instead of doling out money and otherwise micromanaging programs and micromanaging incentives, why not create a 401W Wellness Savings Account, the equivalent of a 401K for wellness? People who reach retirement without a major avoidable health event can collect their entire accumulated amount. Along the way, they can choose to participate or not in the programs your company offers. There is no money at stake for those offers, so no financial coercion. With or without your help -- totally their option -- employees need to reach the goal: no lifestyle-related events through retirement. There are a few asterisks that go with this, including but not limited to:

• The ultimate reward would be based on years of service and retirement age – each employer would have its own formula;
• Because some people are unlucky and get events despite their best efforts, participation itself would earn the reward even if someone had a heart attack or other event. Put another way, by participating, employees are insuring themselves against their own possible bad luck.
• In order to avoid the optics of only caring about employees until they retire, the reward could be partially or totally swapped for an even larger payout after retirement that would take the form of subsidies and special deals on health-related endeavors.
• It wouldn’t just be heart attacks, but it would have to be discrete avoidable events. Bypasses, spinal fusions, and COPD come to mind– would also be included. Anything that is discrete, avoidable, common and expensive could be included, but there are some complexities as you move beyond those events.

See also: There May Be a Cure for Wellness   The Wellness 401W Plan offers many advantages over traditional wellness, for both employers and employees:

• Employees can’t hate it because there’s nothing to hate. It’s truly opt-in. No annual money is at stake. They don’t lose money by not participating -- as long as they patrol their own health. And whether they succeed in patrolling their own health is determined objectively.
• Employees no longer need to share PHI, except at the end if they want to collect. At that point presumably most employees wouldn’t care, because they are no longer insured by their employer. (In any event, it would be a third party looking at the claims and reporting thumbs up to the employer.)
• No cheating. These events/procedures are very discrete. And they won’t cheat on HRAs and biometrics because there is no reason to cheat – they are only cheating themselves. If they intended to cheat, they wouldn’t participate. They would patrol their own health.
• No need to make employees get screened or get checkups every year -- or to pay for it. Rather, screening according to guidelines is fine. Screening would be available but not required and employees would be educated (most like using Quizzify) about optimal screening and checkup intervals.
• Incentives are completely aligned.
• Because a certain number of years of service would be required according to any given formula, retention is likely to increase. On balance, a company could retain and attract healthier people, since by definition they can make more money.
• Great PR is possible as well. “Wellness” and “great PR” are rarely found in the same sentence but this would be an exception.

This doesn’t even include the biggest advantages to employers. Finally, after thirty years of provably making zero impact on medical events nationwide, employer wellness programs will have a strong likelihood of being able to do just that. Employers don’t have wait to see savings, either. Savings will be close to immediate. There is no need to pay vendors to screen the stuffing out of employees. Employees can be screened –and participate in other programs – but only if they want to. You can offer guidance on USPSTF or Choosing Wisely guidelines, but you don’t have to push people into overscreening. Also whenever someone quits before their 401W vests, their 401W becomes employer savings. (There are probably no specific regulations around the finances here, like there are for pensions. The 401W is like a deferred commission for a salesperson who keeps an account – only in this case the “account” is his or her own health.) And what would a great idea be if it didn’t involve Quizzify? The explanation of this novel program to employees would benefit from a Q&A vehicle already in place. It would also educate them along the way in how to stay healthy, what they need to do to access their account, how their account would grow over time etc. Participating in Quizzify a certain number of times a year would “count” as participation in wellness, for the purposes of claiming the 401W. Further, the option of Quizzify allows employees to participate regardless of health status, with no disclosure of PHI. Sure, there are loose ends. What if someone participates some years and not others? Would 401Ws be portable? Would portability depend on whether someone quits or was fired? (Remember, there are no regulations around 401Ws now. You can make your own rules.) Would you need an exam at the end of program or is claims data enough? To start this program, a phase-in is recommended. It’s tough to take away people’s incentives, which many have come to view as part of their compensation. But as employees see their accounts growing, their excitement will grow, too – not just about the state of their 401Ws, which could reach well into the five figures by retirement, but also about the state of their own health. Of course, some employees want their money now…and as you read the FAQs, you’ll see that issue, along with many others, can be elegantly addressed. FAQs: How is this different from a health savings account? (HSA) You need to have an “official” high-deductible plan to have an HSA. HSAs can’t be tied to true health outcomes. Further, they can’t just be paid out. They are regulated in many other ways too, and consequently they don’t address the problem at hand. Even so, whatever fiduciary administers your HSA could also administer your 401W. Is this taxable to the employee when earned, like a participation incentive? No. It is contingent and deferred. It is taxed when paid out, meaning it can compound pretax. You are not constrained in how you invest it, as in a pension fund, so it can presumably compound faster. We think our millennials want their money now. Can we do that? Yes. You could let people take a haircut and get their incentive right away. This creates immediate savings for you, as the amount you would have to give right away is likely to be less than what you would be budgeting. Example: if your incentive is $400 today, your incentive in the 401W could still be $400, but if someone wants it now, they could participate, and get (for example) $200. How does this address privacy concerns? Employees are free to give up zero PHI with no penalty. They can do this either by picking the self-patrolling, self-underwriting option and do whatever they want to do on their own. Or they could “participate” by selecting Quizzify-type options requiring no disclosures. Only at the end, when they want their money, does the employer have to know (presumably through a third party). Wellness is also criticized for ageism. How does this get addressed? Depending on how the program is set up, it is likely that older employees will have more money in their kitties sooner, because they reach retirement sooner. So it’s quite the opposite: employers can design programs that are more appealing to older workers, since they are the ones who suffer by far the majority of the wellness-sensitive medical events. By contrast, under the current systems, older employees typically get charged for higher weights and blood pressure that are likely age-related rather than lifestyle-related. Is this consistent with the Employee Health and Wellness Program Code of Conduct? Yes. It is totally voluntary. Any employee can qualify without even letting the employer know what they are doing for their health, let alone divulging information. So employee dignity is totally respected. Employees are free to adhere to USPSTF guidelines and still collect. And there can’t be any lying about outcomes. While crash-dieting contests are still legal in a 401W plan, there is no reason for an employer to offer them, since they harm employees. Is the 401W consistent with clinical guidelines? There is the assumption that much or all of what an employee can “opt in” for is clinically sound. That means HRA advice and the selection and recommended frequency of screening tests must conform to guidelines. The 401W could theoretically be done without adhering to guidelines, but that just means employers will pay more, both to the vendors and then in medical claims. One reason to include Quizzify in the selection of options for a 401W is that employees are assured of at least one option conforming to the Code, to clinical guidelines, and to the standards of the Validation Institute. Is this consistent with creating a healthy environment? It is quite consistent. Employees would likely support it and take advantage of it, since they are being paid to stay healthy. Further, you will have extra money in the pot to provide it, both from spending less on screenings and the incentives that get earned but didn’t vest. You are giving the employees a stake in their own long-term health, self-underwriting as oppose to community rating, so to speak. Giving people financial responsibility for their own health creates a natural constituency to want employers to do something about it. See also: Shattering the Wellness ROI Myth   You say event avoidance is the only healthcare outcome that matters. What about non-healthcare outcomes, people feeling their best and giving their best work? There is no reason at all to assume conventional “voluntary” participation programs or outcomes-based jump-through-hoops programs will help people feel their best. By contrast, giving people a menu of offerings and the chance to opt into their own offering would certainly make people feel better than charging insurance by the pound, reporting employee weight to shareholders, collecting employee DNA, and other ideas that have been seriously proposed by the wellness industry. There is no scenario under which people would feel better being economically coerced into wellness (and we all know how employees feel about that) than being able to chart their own path to health, with or without employer guidance. What if spinal fusions and bypasses/transplants are part of the no-fly zone of invalidating events, but the person really needs one? First, remember that an employee participating in the program doesn’t lose the kitty under any circumstances other than not satisfying vesting requirements. You could also define “participating” as “using a Center of Excellence hospital” (the model pioneered by Walmart and described in Chapter 5 of Cracking Health Costs) and have that be part of the program as well. In the case of those hospitals – at least the ones in Walmart’s model – they often find the admitting diagnosis and/or the recommended operation to be respectively incorrect and unneeded/likely harmful. There could also be an appeals process for people who genuinely need one, whereby they don't lose their kitty. What if (for example) getting diabetes voids your 401W, but you got diabetes because you were on statins? As long as an employee is participating in the program, he or she is still eligible. Remember, the event disqualifier only kicks in for non-participants. And one thing employees would learn in Quizzify is that, for people who aren’t at high risk of heart attack, statins increase the chances of diabetes more than they reduce the chances of a heart attack. So presumably inappropriate statin use would decline.

The insurance industry is not the only business to struggle with understanding its data. But the sheer volume of information hitting insurers’ desktops on a daily basis means it cannot ignore the importance of acting now to embrace the latest technology to get to grips with the issue. Disruption and innovation will alter established business models indelibly. We understand this because reinsurance was itself born out of innovation. As specialist product providers and managers of biometric risk, Gen Re makes a significant contribution to the structure of today’s global reinsurance markets. We recognize that the way we go about things must fit the times. Life insurers will soon find themselves in a technologically shaped future that is customer-centric. Life insurance is not a simple transaction, which perhaps explains why so many don’t bother with it. However, if the industry makes better use of technology, it will make life insurance accessible for large numbers of people who have none or too little. The life insurance industry is generally seen as slow to initiate change or even resistant to it. More likely its well-established and successful working practices make life insurers hesitant to commit to new ways without knowing whether the new ones will be adequate and stand the test of time. Contrary to opinion, life insurers are just like any retailer, and keen for greater engagement and sustained direct relationships with their customers. It is important that insurers do adapt to changes in technology merely to avoid being left behind and to stay relevant. How we behave and interact with people must give customers easier access, greater transparency, and more integrated and flexible solutions. Customer experience and behavioral economics play a role. Among other things, this means working with modern customers’ demands for products that are geared around their preferences and how they live their lives. For example, we recognize that fitness wearables have a part to play in maintaining good health. It’s why reward-for-fitness life insurance franchises have become popular in several markets. This is a clear sign of changing times; it shows people will share with their insurer some personal data when it provides them an advantage, such as a lowered insurance premium. Personalized medical care increasingly involves self-monitoring with mobile apps in “mecosystems” that give individual patients a hand in maintaining or recovering their health. People are also encouraged to augment their electronic health records by filling the blanks between episodic doctor’s visits with digital lifestyle data from wearables and phones. See also: Wave of Change About to Hit Life Insurers   Individuals will begin to develop rich intelligence about their everyday health from data on exercise, sleep, mood, diet, heart function and more. Personal information like this is likely to prove as predictively powerful as the medical data traditionally used by insurers. The development of a parallel source of medical information means insurance companies need to change the questions they ask and where they obtain further evidence. People will begin to expect an insurer to access their data and to do something tailored specifically for them with it. Social networks will help people with mutually aligned interests and common risk factors to form peer-to-peer insurance pools. Knowledge gained from consumer genetics tests or much wider use of genomics in medicine could mean people are much better equipped to make personal decisions about their insurability. Disruption, though, won’t all happen at consumer level. To meet evolving customer demands, life insurance companies also must undertake some internal disruption. There are behind-the-scenes opportunities to harness technology in risk selection, administration and claims processes to the benefit of customers. Companies are automating repetitive administrative tasks as quickly as possible. Blockchain technology will help insurers replace processes that need repeated paper transactions. Blockchain implements trusted and secure transactions with less bureaucracy, and since it works to decentralise administration, it is likely to be integral to the business models of new entrants to the life insurance market. Life insurance is sold predominantly via an advised sale through some kind of human intermediary whereas the future may see direct-to-customer, affiliate or social media advice being driven by some kind of robotic algorithm. The adviser of the future will bring technology into their businesses and propositions. If life insurers don’t make changes that provide an enriched digital experience for people, then someone else will. Technology will simplify our transactions allowing us to embed ourselves into the lives of customers as never before to support their financial and medical health. We can predict a very different future for life insurers. It’s a future with the customer at the center, and will be shaped by behavioral science and gamification, with social and peer-to-peer networking and smart devices all playing a part. While the basics underpinning life insurance will remain in place for many years to come, how people access it, the incentives it provides and its cost will all be shaped by technology. It’s not a one-off process; waves of disruption and continuous change should be expected. See also: Do We Even Need Insurers Any Longer?   It’s a fairly obvious point to make, but there isn’t one right answer. The future is about offering choice, and multiple pathways to it exist. As originally seen in “The Future of Insurance” published by Raconteur Media on Oct. 12, 2016, in The Times. You can download the full report here. 

Safety performance can either make or break a project and help or hinder one’s future career prospects. It can both positively or negatively reflect on a company’s reputation and affect its financial health. Front-line supervisors hold the key to unlocking your company’s potential for high safety performance. Supervisors are responsible for directing the allocation of your company’s key assets of people, equipment, machinery and tools that affect the execution of projects and financial results. They are either the vital link or the missing one in a successful construction safety program. Many construction companies hold supervisors accountable for safety compliance, training, performance and results. Proper safety supervision is the byproduct of defined roles, specific responsibilities, clear expectations and measured accountabilities. Not all companies fully equip supervisors with the tools or resources needed to effectively lead safety in the field. This leads to an unnecessary, yet preventable, safety performance gap. Understanding the Safety Performance Gap The safety performance gap is the difference between what is expected versus what is accepted. In other words, the safety performance gap is the difference between what behaviors a company says it expects employees to adhere to and what behavior it actually allows to occur. Put even more bluntly, the safety performance gap is the delta between defining and driving superior performance standards and condoning and excusing less-than-target safety performance. For construction companies, the performance gap applies to other key performance areas beyond safety, including accounts receivable, contract management, IT outages, quality defects and rework and labor costs. See also: How to Understand Your Risk Landscape Closing the Gap How do company owners and senior leadership teams close the safety performance gap? Leaders can alleviate this gap by changing how safety is conceived, defined and actively communicated within the company. Is safety a core value in your company, or is it regarded as a top priority? Many construction companies say safety is a priority, and they mean it, until push comes to shove against an impending schedule or sequencing change, and safety is compromised. Safety must be conceived as a core value. Priorities shift over time and rise and fall based on perceived urgency. In contrast, values endure the test of time and withstand the changing pressures of project scope, schedule, sequence, quality and budget. When company leaders view safety as a core value, the proper commitments can be made and, more importantly, kept. This approach leads to a more proactive culture because safety is woven into every aspect of the project life cycle. Clarifying the Vision, Commitment & Mission After clarifying that safety is a core value and not just a priority, it is vitally important to provide front-line supervisors with a clear understanding of the vision, commitment and mission of the company’s safety program. This drives and reinforces alignment on safety throughout the organization. It also helps close the safety performance gap by establishing baseline expectations for performance. The following is an example of how this is done.

• Safety vision—Your company should aim to not only get employees on projects home safely at the end of the shift, but to also get employees back to work safely for their next shift. This is built on the foundation of promoting safety at work, home and at play.
• Safety commitment—Your company should be committed to protecting the safety and well-being of employees, customers, subcontractors, engineers and inspectors and the traveling public.
• Safety mission—Your company should create a culture of safety leaders who are empowered to identify and correct unsafe conditions and behaviors and who accept personal responsibility and shared accountability for safety.

Ideally, all supervisors will receive specific instruction in supervisory responsibilities and tools to help effectively implement the safety strategy. A simple way to involve supervisors in the safety strategy is to develop a series of safety objectives or special emphasis programs. These actions will help reinforce the development of a proactive safety culture. Unlocking Improved Supervisory Safety Performance Use the 10 questions below as a needs assessment or gap analysis to determine how your company can expand the level of effectiveness of safety supervision.

1. Does your company clearly communicate the expectations for safety responsibilities to supervisors?
2. Do you consider safety competencies for supervisors in your hiring decisions?
3. Does your company consider the core safety competencies for supervisors in your promotional decisions?
4. Does your company’s performance review process consider safety supervision as a performance criterion?
5. Does your company’s discretionary compensation or bonus system align with safety performance such that safe work is incentivized and poorly executed performance is not rewarded?
6. Does your company provide training to supervisors in safety skills?
7. Do your company supervisors provide job- and task-specific safety instruction to new hires?
8. Do your company supervisors lead or oversee daily safety huddles or toolbox talks for pre-task planning?
9. Do your field supervisors and front-line workers have stop-work authority to address safety challenges encountered in the field in real time?
10. Do your field supervisors and front-line workers actually exercise stop-work authority in the field to address safety challenges and determine appropriate corrective actions?

See also: Why Workers’ Comp Claims Stay So High Although this is an unscored assessment, the questions and your responses will help guide your company to leverage supervisors in your company’s safety program and processes. Too frequently, supervisors are an underutilized resource in achieving your company’s safety strategy. Supervisors who understand their role, responsibilities and expectations can be a force multiplier as your company builds a proactive safety culture. This article is the first in a six-part series about supervisory safety responsibilities, which will discuss leveraging supervisors within your company to build a stronger safety plan. Visit www.constructionbusinessowner.com/supervisory-safety to learn more.

After Opening Day of baseball season last week and the release of SMA’s new report on core systems buying trends, I realized that you could equate the progress being made in core modernization with that of a baseball game. Could it be that that we have entered the seventh inning stretch of this phase of the core modernization journey? Are we preparing to start a new game? Our latest research, published in Core Systems Purchasing Reaches the Tipping Point: What’s Hot – And What’s Not, has identified a definite slowdown in the purchase of core systems in the U.S. market. P&C insurers purchased 38% fewer new core systems in 2016 as compared with the year before. The flurry of new purchases that we saw in earlier “innings” (over the past five to seven years) is wrapping up as insurers focus on implementing those new systems, improving their existing core environments and looking ahead to understand the new requirements driven by the changing insurance market. See also: How to Transform Core Systems   The changes throughout and around insurance are pressing the industry toward a new perspective: a new ballgame. This game is just beginning and will play out over three to five years as the trends we are studying in insurtech and emerging technologies take hold. Insurers must evolve to promote the ever-expanding interaction with external data, investment in a more engaging customer experience and new product constructs shaped by the shared economy. This creates a set of capabilities from core systems that are considered the future-ready "MatureTech" solutions for the industry. Each insurer needs to assess how its products and services align to the shifting market and the advances it will have to make to respond to the new opportunities. We are witnessing changes that are substantial enough to advance the capabilities that insurers require from in their core systems. And in the world of core systems, as in the industry at large, we need to start preparing for this new game.

In my previous article, I stressed that a new commercial insurance model is about breaking down existing operations and rebuilding a collaborative and innovative model. The rebuilt model would improve operational efficiencies, control costs, create innovative products, improve customer engagement experiences and produce sustained profitability. But, if you think operational silos are challenging, I suggest you suit up and put on your protective gear because I’m about to tackle the cold reality of commercial insurance product silos! Should the market simplify risk management solutions? Duh!!! The role of a corporate risk manager is to protect the employees, clients and balance sheet of his or her company. The manager looks to the commercial insurance markets for risk management solutions but, instead, receives product responses that create a patchwork of protection. When the markets can only provide products in lieu of risk management solutions, a variety of customers' risk exposures are left uninsured -- they must now consider self-insuring or creating alternative financing vehicles, including captives. Creating risk management products and simplifying risk management solutions for corporate customers should be the goal of any commercial insurance broker or company. See also: Leveraging AI in Commercial Insurance If companies eliminated product and service silos to create a collaborative risk solutions environment, big data collection and analysis could be implemented across all existing products and customers' uninsured exposures. This collaborative environment would also minimize current big data challenges, including:

• Unstructured data identification
• Weak processes to capture and manage data
• Poor data quality and accuracy
• Unused data

By eliminating product silos, I’m not suggesting that you eliminate your product experts. On the contrary, each product expert has a vital role to play in challenging and supporting how new and existing products will function. The removal of internal product silos broadens products expertise and knowledge, thus enabling product experts to further comprehend the risks that corporate customers manage every day. You already have the clients – start implementing the tools to create risk management solutions! Currently, commercial insurance brokers and companies are better placed to respond to insurtech competition as, unlike most insurtech startups, they have a large pool of existing customers and the ability to access or create extensive risk management data. When combined with additional imported data such as ISO, ERC and AAIS, an integrated dynamic financial model (IDFM) can be easily created to capture industry, claims, exposure and risk management patterns. Capturing and codifying risk management data is absolutely crucial, as it elevates existing industry claims and exposure models. In addition to creating new risk management products, the IDFM data outcomes can also create a variety of new risk management services, thus creating additional revenues. I’m not a data scientist, but I have always been fascinated with risk identification. Many years ago (more than I care to remember!!!), I created an IDFM model with the crudest of tools. The model outcomes enabled me to create risk management products and services that customers want to buy and eliminated the “one-size-fits-all” product response embedded in the commercial insurance market. Now, by incorporating new technologies such as AI, machine learning, bots and smart sensors to improve risk management analysis, this model becomes even more dynamic! These technological additions to the IDFM model, along with the use of blockchain, enhance the model's ability to:

• Gather and store even more data elements;
• Improve decisions based on that data; and
• Provide relevant answers to improve the company’s abilities to create risk management products.

Additionally, the IDFM model enables the creation of revenue streams such as usage-based and peer-to-peer commercial insurance. These opportunities will be further examined in future articles. All geographic regions are not the same! Expand your mind and create something new! The ability to capture and codify the elements noted in the IDFM model, including the client risk management review, is particularly important for global commercial insurance companies and brokers expanding into Africa, Asia and Latin America. See also: Innovation Challenge for Commercial Lines   Risk managers in these regions continue to express their frustration with market responses as local agents, brokers and insurance companies are not expanding their product portfolios. Global companies are extremely slow in creating products that are specific for the risk management needs of these diverse local markets - instead, companies aggressively sell Europe-centric or North American-centric policies while supporting low margins. These diverse local markets would benefit from improved innovation and increased investment in technology and will be explored further in future articles. And finally …. Commercial insurance brokers and companies must stop viewing insurance through the prism of products and, instead, recognize its true potential as a service. Remember, it is all about the customer! Or, simply put, no customers, no business. Cutting renewal prices and watching margins decline every year is not a sustainable business plan for incumbents or insurtech companies. Instead, the commercial insurance market must break down and rebuild product and operational silos to create a collaborative and innovative model to improve their abilities to package complex risk management products and services. Products and services can be presented in a simpler/intuitive manner, with plain language and processes that clearly manage customer expectations and increase customer satisfaction. Breaking down existing products and operations and rebuilding a collaborative and innovative model will also improve operational efficiency, control costs, increase revenue streams and produce sustained profitability. Let's break down these barriers!

According to a PWC Global State of the Information Security Survey in 2015, the number of cybersecurity incidents has been increasing at an annual rate of 66%. Both the range and complexity of cyber threats are expanding—from ransomware to compromises of critical infrastructure. Yet, when those threats materialize, too few businesses and government entities have developed the protocols needed to escalate resources, coordinate support and respond to an attack. While the need for these strategies has spanned more than a decade, it is even more imperative now as we confront a growing array of threats. Ten years ago, Norwich University Applied Research Institutes (NUARI) launched the DECIDE Platform, with support from the Department of Homeland Security, to challenge leadership to engage across their organizations and respond to crippling cyber attacks. It is critical that the entire firm be prepared to respond in the event of a cyber breach. See also: Quest for Reliable Cyber Security   While DECIDE was initially developed to engage the financial markets and support critical infrastructure, the platform has migrated to engage leadership across continents, supporting their teams’ and individuals’ cyber preparedness. To do this, DECIDE offers a wide array of cutting-edge threat scenarios, ensuring entities can test their decision-making capabilities and enhance strategic communications. Organizations can develop comprehensive response plans that address previous vulnerabilities head-on. Simulation pays off When a cyber threat hits, there is no time to lose. Firms must have identified the gaps and needs that otherwise lead to business disaster. DECIDE offers firms the chance to simulate a particular scenario time and again to ensure they make the right decisions in the heat of the moment. However, that is not enough. DECIDE also offers evaluation tools and after-action reports for each exercise, both of which contain insights that become the core elements of a firm’s optimal response playbook. And the playbook grows over time, containing plans to deal with supply chain hardenings or ransom demands. In turn, organizations can use those plans to deal with the triad of cybersecurity threats to confidentiality, integrity and availability. Such a road map also ensures individuals across an organization understand their role in the face of an attack. From the operations and information security analysts to those in the business office, every employee must be aware of how to better counter cyber threats. No weak links Those threats also can escalate and extend beyond the contours of a particular organization. It is why each of those individuals must be at the ready to coordinate with partners and entities across sectors, seamlessly coordinating a response to mitigate the impact of an attack. DECIDE provides large-scale exercises in which to perfect that response. Consider the Quantum Dawn series, which, over three iterations, has helped the financial sector develop effective response strategies and market mechanisms. Then, there is the Critical Infrastructure Protection Exercise series, where organizations from across sectors can ensure they know how to act in the face of an escalating threat. See also: The Key to Survival in Wild West of Cyber   Beyond DECIDE, NUARI builds customized education products for military, academia and private sector firms. These courses, focused on cybersecurity and critical infrastructure, get to the core mission, ensuring organizations can build resilience across their teams and support individual preparedness against the next cyber threat. Even though both the range and complexity of cyber threats continue to expand, stakeholders across sectors can now build the toolkit and develop the protocols to effectively respond in turn. This post originally appeared on ThirdCertainty. It was written by Phil Susmann.

The insurance claims process is rapidly being transformed from analog to digital as industry economics and customer expectations demand it and as technology enables it. Not only does digitization provide impressive cost savings and satisfy the expectations of a growing number of “always connected” consumers, but it delivers a host of other benefits. Insurtech providers of many types have emerged seemingly overnight to provide a dizzying array of new technologies to support claims innovation within established carriers and enable new insurance entrants at the same time. See also: Let’s Keep ‘Digital’ in Perspective   Examples include:

• CCC Information Services, a leading U.S. information provider to the automotive, insurance and collision repair industries, is working to combine auto injury causation software with telematics expertise and overlaying casualty claims management assets to meet the needs of the rapidly transforming auto insurance claims industry.
• DropIn provides an on-demand, live video platform for more precise underwriting, speeds claim resolution, enhances damage estimate accuracy and reduces indemnity and loss adjustment expenses. Users can access streaming video and high-resolution photos captured directly by customers or via a crowdsourced independent contractor network using commonly available insurtech tools, such as smartphones and drones, to achieve insight into the complexities of auto and property damage for enhanced decision-making.
• EagleView provides aerial imagery, data analytics, property data and GIS solutions related to millions of residential and commercial properties for local and federal government agencies as well as the infrastructure, insurance, solar and construction sectors.
• Livegenic provides cloud-based, real-time patented video solutions to property and casualty insurance organizations connecting every part of the claims ecosystem. The Livegenic platform streamlines communication between in-house and external adjusters, appraisers, contractors and policyholders, provides field video loss documentation capabilities, and delivers customer self-service solutions.
• OnSource provides insurance companies with claims and underwriting photo inspections through intuitive smartphone apps and a mobile website. Policyholders and claimants use self-inspection apps, Instant Inspection’s chat website or its managed network of thousands of photo field inspectors and quality assurance analysts.
• PartsTrader, an automated repair parts bidding and procurement platform, connects thousands of collision repair shops with repair parts suppliers of all types to reduce the cost and cycle time in the $15 billion U.S. repair parts market segment. The PartsTrader platform allows repair shops to search and compare multiple suppliers at the same time and to work with suppliers competing for their business.
• Snapsheet uses proprietary technology to optimize virtual auto physical damage claims operations, giving insurance adjusters the tools they need to provide a seamless experience to their claimants.
• WeGoLook, in which Crawford recently acquired a majority interest, provides on-demand field inspection and verification services. Using its web and mobile platform the company empowers a 30,000-plus mobile workforce, known as Lookers, to collect and verify information and fulfill custom tasks for businesses and consumers alike in insurance and other verticals.

While this is all good news – and inevitable – what is at risk of being overlooked in this rush to a more efficient, streamlined claim process are the individuals who buy and use insurance services and at critical times require the reassurance and comfort of a personal touch. Auto claims are a case in point. Many claims processes, mainly those that take place in the background, are well-suited to the cold efficiency of technology, automation and digitization. But the auto claim is frequently preceded by a totally unexpected, disorienting and sometimes traumatic accident. This is the moment when the consumer most needs and depends upon the insurance carrier….and a human touch. In 2016, there were about 190 million registered passenger vehicles on the road in the U.S. More than 15 million auto accidents occurred involving 18.5 million vehicles. Stated another way, about one out of every 10 cars on the road was involved in an accident. On average, every driver can expect to experience an auto accident once every 10 years, most minor in nature but others involving serious injury or even death. Sadly, there were 40,200 traffic fatalities in 2016. We are never fully prepared, nor do we know exactly what to do when involved in a traffic accident. The experience is unfamiliar and confusing. A battery of questions immediately come to mind – how much is this going to cost me? – was this my fault? – could I have prevented it? – how will I get where I was going? – who should I notify first? – is anyone hurt, including me? And so on. Historically, a police officer would typically show up, review the scene, ask the drivers several questions, make some notes and direct the vehicles off the roadway to a safe location or if necessary call a tow truck or an emergency vehicle. Then you would need to follow an often frustrating, protracted claims and repair process; call your agent or carrier; get the car to a body shop, arrange for a rental car; make numerous calls to the shop and the adjuster to see when your car will be ready; and then reach into your pocket to pay your deductible even after paying your insurance premiums faithfully for all those years. But this scenario will soon be a thing of the past. For one thing, police in many urban markets are no longer responding to auto accident calls. Law enforcement budgets are shrinking, and police officers are busy handling higher-priority tasks such as criminal investigations. We can’t rely on the police always showing up in the future. Insurance companies are addressing some of their challenges by using new technologies to make the auto claim and repair process simpler and faster. Many carriers offer smartphone apps that include claim-reporting capabilities enabling drivers to take photos or videos of the accident damage at the scene (or later from home) and upload them to the carrier, which assesses the damage and schedules the repair, often in minutes. Some companies are paying drivers electronically on their smartphones and closing out the claim in mere hours. However, for those who believe that younger policyholders prefer technology to human contact, the recent J.D. Power 2016 U.S. Auto Claims Satisfaction Study reveals that only 7% of millennials prefer digital channels to report their claims and concludes that technology cannot fully replace humans during the claims process, even among millennials. The one missing piece is what happens immediately after an accident occurs and before your insurance company starts to process your claim. Not everyone has a smartphone, is tech-savvy enough or understands the importance of reporting the accident immediately to the insurance company. Auto accidents can be traumatic. Many people can be involved, in your vehicle and in other vehicles. Differences of opinion between drivers about the facts or what caused the accident are not unusual. Without the presence and authority of a police officer, people are left to cope with all of these issues on their own. And, because almost 80% of vehicles damaged in auto accidents are safely driveable, there’s no logical reason to have to stay at the scene once your information is exchanged with the other driver(s). See also: Do You Really Have a Digital Strategy? To address these new realities, innovative programs have emerged to bridge the gap between the accident and the claim report. One such solution is the Collision Reporting Center (CRC). These facilities provide drivers with the assistance, advice and support they need at the critical time following an accident. The CRC is a partnership between local police departments and privately managed reporting centers. The model initially emerged in Canada 20 years ago when the insurance industry and police joined forces to solve a mutual challenge. Today, the operation manages 32 Collision Reporting Centers in partnership with 53 police departments across Canada and serves 80% of the Canadian auto insurance industry. Recently, the operator expanded into the U.S., opening its first Collision Reporting Center in Roanoke, VA, in the fall of 2016, with plans to open several more centers soon. At the Collision Reporting Center, drivers involved in an accident provide their individual accounts of what happened and other information while professional staff take digital images to document damage. The information is reviewed by an on-site police officer at the CRC and is immediately sent to the driver’s insurance company, where a claim is initiated and processed. Drivers are provided with a customized instructional guide from their own carriers describing what to do next and a private room where they can make a phone call to their insurance company or family members. The Collision Reporting Center provides a comfortable and safe environment, eliminating the need for drivers to wait on the roadway. As we move toward self-driving automobiles and the elimination of most accidents,, we will see many innovative accident and claim management programs emerge that can bridge the gap between the auto accident and resolution of the claim process. Collision Reporting Centers are an excellent solution to these needs – they provide personalized customer service and a human touch with the power of technology making the auto accident reporting process as non-intrusive as possible into our busy lives.