I have never really understood why the Property Casualty Insurers Association of America has been so vehemently against opt out. While it seems that opt out returned to the back burner for this year with constitutional defeats in Oklahoma and political stalemate in other states, PCI has reignited the debate with an inflammatory paper. The basic arguments, which PCI supports with some data, is that opt out results in costs shifting to other systems and that a lack of standards and transparency is detrimental to consumers (i.e. injured workers). PCI also argues that opt out is all about saving employers money to the detriment of consumers by denying more claims earlier and paying less with capitations and restrictions not found in traditional comp. I get that alternative work injury systems must meet certain standards and need to be more transparent to consumers -- to me, that’s a no-brainer. But the objections that PCI raises are exactly the same complaints made against traditional workers' comp: inadequate benefits, unnecessary delays, cost shifting, etc. See also: Debunking ‘Opt-Out’ Myths (Part 6)   Each statistic cited by PCI against opt out can be asserted against traditional workers' comp -- just use another study or data source. For instance, just a couple of years ago, Paul Leigh of University of California at Davis and lead author of the study, Workers' Compensation Benefits and Shifting Costs for Occupational Injury and Illness, told WorkCompCentral, "We're all paying higher Medicare and income taxes to help cover [the costs not paid by workers' compensation]." That study, published in the April 2012 edition of the Journal of Occupational and Environmental Medicine, found that almost 80% of workers' compensation costs are being covered outside of workers' compensation claims systems. That amounts to roughly $198 billion of the estimated $250 billion in annual costs for work-related injuries and illnesses in 2007. Just $51.7 billion, or 21%, of those costs were covered by workers' compensation, the study said. Of the $250 billion price tag for work-related injury costs, the Leigh study found $67.09 billion of that came from medical care costs, while $182.54 billion was related to lost productivity. In terms of the medical costs, $29.86 billion was paid by workers' compensation, $14.22 billion was picked up by other health insurance, $10.38 billion was covered by the injured workers and their families, $7.16 billion was picked up by Medicare and $5.47 billion was covered by Medicaid. The study drew criticism from the workers' comp crowd, which defended its practices, challenged the data and anecdotally attempted to counter argue, with limited success. If one digs deep enough in the PCI study, I'm sure one could likewise find fault with the data and the reporting on cost shifting -- because the truth is that absolutely no one has a fix on that topic. My good friend Trey Gillespie, PCI assistant vice president of workers’ compensation, told WorkCompCentral that "the fundamental tenets of workers’ compensation [are] protecting injured workers and their families and protecting taxpayers. The general consensus is that the way programs should work is to protect injured workers and taxpayers and avoid cost-shifting.” Of course! All work injury protection systems should do that. But they don't. See also: What Schrodinger Says on Opt-Out That's what the ProPublica and Reveal series of critical articles about workers' compensation programs across the country tell us, both anecdotally and statistically: Injured workers aren't protected, costs are shifted onto other programs, and taxpayers are paying an unfair portion of what workers' comp should be paying. Indeed, in October, 10 federal lawmakers asked the U.S. Department of Labor for greater oversight of the state-run workers’ compensation system, to counteract “a pattern of detrimental changes to state workers’ compensation laws and the resulting cost shift to public programs.”

A majority of the population of countries in the Organization for Economic Cooperation and Development is now classified as overweight or obese, with weight-related health costs accounting for up to 10% of total healthcare spending. Levels of obesity are also rising in the developing world. Excess weight can lead to multiple health issues, increasing the number of sick days, as well as health insurance premiums. In addition, poor health costs U.S. companies U.S. $227 billion a year in lost productivity, while U.K. companies are losing £29 billion a year (U.S. $45 billion) through sick leave costs. With lack of physical activity during modern office workdays, a core contributing factor to the sedentary lifestyles that are increasing obesity, encouraging exercise is in everyone’s interests. The question is no longer so much whether you should invest in employee wellness, but how. In Depth Numerous studies have shown benefits from encouraging employees to exercise:

• Reduced employee susceptibility to illness: Walking briskly for 35-45 minutes a day can lead to a 50% reduction in sick days.

• Better problem solving: Want your employees to get better at solving problems and innovating? Aerobic exercise has been shown to boost both positivity and creativity.

• Boosted brainpower: Exercise has been shown to boost some cognitive functions as much as 10%, while regular exercise can improve memory, and high-impact running can increase learning potential.

• Increased energy: Regular moderate exercise boosts energy and reduces feelings of fatigue, as well as helping regulate sleep patterns, which increases daytime productivity.

• Increased efficiency: Daytime exercise (especially around lunchtime) improves time management and mood.

• Improved mental health: Physically active employees are significantly less likely to suffer from depression or job burnout.

• More capable management: Getting managers exercising not only reduces their stress levels but makes them better managers, according to some studies.

There are several approaches companies can take that can help even the most reluctant employee start adopting a more healthy lifestyle. However, it’s important to remember that, to get the benefit, it is important that employees see the exercise as enjoyable and practical, not as a chore. Here are just a few:

• Calorie-counted staff cafés: Consuming too many calories is the key cause of most weight issues, so helping staff manage their intake by providing healthy yet nutritious meals at an on-site café can be a major boost. In addition, several studies have shown that workplace cafés can act as social hubs that boost employee engagement and motivation.

• On-site gyms: Employees are more likely to exercise if it is convenient, while time lost traveling to an off-site gym can reduce productivity and increase stress. On-site company gyms can save employees an average of $58 a month in membership fees — and make it easy to get the productivity and health benefits of daytime exercise.

• Discounts for regular workouts: With the rise of wearable fitness tracking devices come new opportunities to monitor employee lifestyles, and reward the healthy ones. The ability to keep track of employee activity is sparking a fresh wave of apps that could help reduce insurance premiums if adopted at scale.

• Standing desks: Studies have shown standing desks — a popular alternative in modern workplaces — lead to an increased heart rate, improved energy levels and employees burning as much as 20 additional calories an hour. Long periods of sitting, meanwhile, have been associated with increased mortality across a range of illnesses, with some doctors warning that sitting is the new smoking.

• Cycle-to-work schemes: As well as saving employees money (as much as $7.3 billion a year in the U.S. alone) and being a great way to burn off excess calories, cycling to work is, on average, associated with one less sick day per year than for non-cycling colleagues.

• Group calisthenics: One of the oldest workplace wellness programs (still popular in many Asian countries), organized all-company workouts are starting to make a comeback in the West. Though they can be awkward at first, done right they can boost team spirit and employee health.

It has become a truism that employees are businesses’ biggest asset. Just as you would invest in keeping your machinery operating at its best through regular maintenance, investing in maintaining your staff’s health is increasingly vital. Not only could it be good for productivity, but studies have shown that such programs can be vital in both attracting and retaining top talent. With staff turnover rates increasing across the world, if you want to thrive in the long term, investing in employee health and wellness could be an increasingly important strategy to keep your people active, productive and engaged. Talking Points “Instead of viewing exercise as something we do for ourselves — a personal indulgence that takes us away from our work — it’s time we started considering physical activity as part of the work itself. The alternative, which involves processing information more slowly, forgetting more often and getting easily frustrated makes us less effective at our jobs and harder to get along with for our colleagues.” – Harvard Business Review “Workplace wellness and community prevention programs are a win-win way to make a real difference in improving our health and bottom line all at once.” – Jeff Levi, executive director, Trust for America’s Health “Employees are eight times more likely to be engaged when wellness is a priority in the workplace.” – World Economic Forum “This article originally appeared onTheOneBrief.com, Aon’s weekly guide to the most important issues affecting business, the economy and people’s lives in the world today.” Further Reading

• Are Wellness Programs Right for Your Company? – Entrepreneur, May 2015
• Companies Take a Broader View of Employee Wellness Programs – The Washington Post, June 19, 2015
• The Dark Side of Corporate Wellness Programs – Fast Company, June 8, 2015
• Meta-evaluation of Workplace Health Promotion Economic Return Studies – The Chapman Institute
• Measuring Wellness: From Data to Insights – Economist Intelligence Unit
• Wellness and Beyond: Employers Examine Ways to Improve Employee Health and Productivity, Reduce Cost – Aon report

We have been hearing predictions for decades of a takeover of the world by artificial intelligence. In 1957, Herbert A. Simon predicted that within 10 years a digital computer would be the world’s chess champion. That didn’t happen until 1996. And despite Marvin Minsky’s 1970 prediction that “in from three to eight years we will have a machine with the general intelligence of an average human being,” we still consider that a feat of science fiction. The pioneers of artificial intelligence were surely off on the timing, but they weren’t wrong; AI is coming. It is going to be in our TV sets and driving our cars; it will be our friend and personal assistant; it will take the role of our doctor. There have been more advances in AI over the past three years than there were in the previous three decades. Even technology leaders such as Apple have been caught off guard by the rapid evolution of machine learning, the technology that powers AI. At its recent Worldwide Developers Conference, Apple opened up its AI systems so that independent developers could help it create technologies that rival what Google and Amazon have already built. Apple is way behind. The AI of the past used brute-force computing to analyze data and present them in a way that seemed human. The programmer supplied the intelligence in the form of decision trees and algorithms. Imagine that you were trying to build a machine that could play tic-tac-toe. You would give the computer specific rules on what move to make, and it would follow them. That is essentially how IBM’s Big Blue computer beat chess Grandmaster Garry Kasparov in 1997, by using a supercomputer to calculate every possible move faster than he could. See also: AI: Everywhere and Nowhere (Part 2) Today’s AI uses machine learning, in which you give it examples of previous games and let it learn from those examples. The computer is taught what to learn and how to learn and makes its own decisions. What’s more, the new AIs are modeling the human mind itself, using techniques similar to our learning processes. Before, it could take millions of lines of computer code to perform tasks such as handwriting recognition. Now it can be done in hundreds of lines. What is required is a large number of examples so that the computer can teach itself. The new programming techniques use neural networks — which are modeled on the human brain, in which information is processed in layers and the connections between these layers are strengthened based on what is learned. This is called deep learning because of the increasing numbers of layers of information that are processed by increasingly faster computers. Deep learning is enabling computers to recognize images, voice and text — and to do human-like things. Google searches used to use a technique called PageRank to come up with their results. Using rigid proprietary algorithms, they analyzed the text and links on Web pages to determine what was most relevant and important. Google is replacing this technique in searches and most of its other products with algorithms based on deep learning, the same technologies that it used to defeat a human player at the game Go. During that extremely complex game, observers were themselves confused as to why their computer had made the moves it had. In the fields in which it is trained, AI is now exceeding the capabilities of humans. AI has applications in every area in which data are processed and decisions required. Wired founding editor Kevin Kelly likened AI to electricity: a cheap, reliable, industrial-grade digital smartness running behind everything. He said that it “will enliven inert objects, much as electricity did more than a century ago.  Everything that we formerly electrified we will now ‘cognitize.’ This new utilitarian AI will also augment us individually as people (deepening our memory, speeding our recognition) and collectively as a species.There is almost nothing we can think of that cannot be made new, different or interesting by infusing it with some extra IQ. In fact, the business plans of the next 10,000 start-ups are easy to forecast: Take X and add AI. This is a big deal, and now it’s here.” See also: AI: The Next Stage in Healthcare   AI will soon be everywhere. Businesses are infusing AI into their products and helping them analyze the vast amounts of data they are gathering. Google, Amazon and Apple are working on voice assistants for our homes that manage our lights, order our food and schedule our meetings. Robotic assistants such as Rosie from “The Jetsons” and R2-D2 of Star Wars are about a decade away. Do we need to be worried about the runaway “artificial general intelligence” that goes out of control and takes over the world? Yes — but perhaps not for another 15 or 20 years. There are justified fears that rather than being told what to learn and complementing our capabilities, AIs will start learning everything there is to learn and know far more than we do. Though some people, such as futurist Ray Kurzweil, see us using AI to augment our capabilities and evolve together, others, such as Elon Musk and Stephen Hawking, fear that AI will usurp us. We really don’t know where all this will go. What is certain is that AI is here and making amazing things possible.

Insurance leaders, you spend every day helping customers plan for the future, and you know that disaster can strike anyone, anytime. But have you done all you can to prepare your company for what the future holds? Whatever lines of insurance you sell, there’s just one policy for company longevity: a strong leadership pipeline. Unfortunately, many insurance companies forgo this essential coverage. Last year, Deloitte found that just one in three insurance companies believes its future leaders are prepared to respond to tomorrow’s business challenges — despite 87% citing leadership development as a priority. What’s so important about leadership development? For one, leadership quality cuts straight to the bottom line. Equity analysts place, on average, a 16% premium on company stock prices when they see effective leadership. But when they perceive a company’s leadership is ineffective, analysts discount the company’s stock price by about 20%. Strong leaders build value because they know people are an insurer’s greatest asset. They recognize that empowering team members pays off in loyalty, reduced turnover and enhanced customer service. I’ve seen my company through nearly a quarter of its centennial life, and through the course of my career I’ve learned a thing or two about insurance leadership. Like many of us — be honest — I didn’t grow up dreaming of a lifetime in insurance. California Casualty was my first job out of college, though, and it’s been the incredible career I never expected. The company’s mix of challenge, inspiration and flexibility has helped me grow from sales consultant to team manager to vice president. But I’d have never reached the position I’m in — not to mention stayed for two decades — had I, too, not learned from strong leaders. Now it’s my turn to find the company’s up-and-coming leaders, and I look for five traits in tomorrow’s standard-bearers. See also: The Insurance Renaissance, Part 4 First and foremost, effective leaders have integrity. Integrity is difficult for some, but it’s actually a simple concept: People with integrity do the right thing even — and especially — when no one is watching. In our industry, policyholders depend on us to fulfill our obligations, often when they’re most vulnerable. That’s why California Casualty created a written code in 1965 to act as the company’s moral compass. It champions integrity and the singular importance of doing the right thing for our customers. The code reminds me — and future leaders — that it’s better to fall short of our goals than to meet them through dishonesty. Strong leaders must also be able to influence others, and I’ve seen firsthand the importance of inspiring, motivational leadership. Before any sweeping change, my company informs key influencers and involves them prior to the full-staff rollout. This creates buy-in and helps them serve as role models to team members who might not feel as comfortable with changes, and provides hands-on leadership experience before they truly take charge. Confidence, tempered by humility, is another quality I’ve found is essential for insurance leaders. These leaders surround themselves with team members whom they can learn from — and whom they can teach — when exploring issues and making tough decisions. Confidence also means being transparent with your team. I don’t always make the right decision, but I’m confident that, if I make a wrong move, my team and I will work together to adjust, learn and improve. Alongside confidence, I look for flexibility balanced with accountability, which helps to unlock a team’s potential. When I first became a team manager, I learned that my sales strategy didn’t necessarily work for others. I had to step back and recognize that there’s more than one way to exceed targets. There’s one final trait all successful insurance leaders share: strong communication skills. To build a successful team, you must clearly articulate goals and the drivers behind them. At our sales rallies, we talk about targets, of course, but we also seek to understand the “why” behind our numbers. We recently implemented underwriting changes, for example, that made it more difficult for sales consultants to sell policies. Taking time to discuss policies’ loss ratios and profitability issues has helped our sales team adapt to these changes and improve the company's future. See also: Can Insurance Innovate?   With all the important qualities an insurance leader must possess, it’s tough to find tomorrow’s perfect leadership team. But once you’ve identified promising candidates, you’ll need to help them rise to the challenge. First, start with face time. Get to know tomorrow’s leaders on a personal and professional level. To help them define what they want to achieve — both in their current role and in the next — work with them to create short-term and long-term goals. Boredom lurks behind turnover, so setting “stretch” goals is a great way to keep up-and-coming leaders engaged. Second, find opportunities to let them shine. Never underestimate delegation as a leadership-building tool. When employees are given ownership, it builds their confidence, showcases their talents to others and prepares them for their next positions. I give young leaders opportunities to assist with recruiting and hiring, mentoring new associates, and leading annual meetings. Next, give them a say in company decisions. Employees at all levels have fresh ideas that can benefit the company. By giving them a say, you nurture growth, learn their thought processes and cultivate buy-in at the same time. Finally, build bench strength. Don’t wait for a position to open. Employ an approach of continuous development to ensure you can tap the right talent when you need it. Plan ahead as you hire: Employees who understand technology and analytics will be increasingly important for insurance leadership. In the end, insurance leadership isn’t about titles, nor is it about sales figures. In our industry, it’s our job to be there in policyholders’ times of need; we have the chance to truly improve lives. So while I may not have always dreamed of an insurance career, it has been an incredibly fulfilling one. Now it’s my job to find new leaders who feel that way, too.

Google the phrase “working with millennials,” and more than 22 million results pop up. No other generation has had so much emphasis placed on them as they entered the workforce. Recently, I attended a conference where the primary or secondary focus of nearly every session was how to deal with millennials, or how to make the workplace more palatable to millennials or why we should make millennials comfortable. Who Cares? One panel speaker made two points that sum up the problem: 1) Why do we feel like we need to cater to the millennials? They are coming into a place of work, a professional atmosphere where they need to figure out how to get along with everyone else and not the other way around; and 2) It’s not all the millennials' fault – parents are to blame. Toward his second point he gave two examples, but one really stood out. A millennial showed up for an interview accompanied by her dad. This speaker knew the father, so he assumed the father was just there to say hello and make the introductions. No! When the prospective employee was asked to come into the office for the interview, her father followed right in behind her. I don’t think she got the job. Several years ago, a Harvard Business Review article addressed the problems created for millennials by their parents. One manager interviewed for the article said that if he gave a poor evaluation to a millennial he often got a call from the parents. What!!?? It’s not necessarily the millennials who are the problem, but the parents who have always tried to make things easy for their kids – never letting them experience failure or, Heaven forbid, discipline. See also: The 'Sharing Economy': What It Means for Insurers (Part 1 of 3) No Different Than Us – in Some Ways Let’s face it, college graduates today are no different than we were the day we graduated. We wanted to be in charge and have our ideas appreciated and applied from day one. We were brilliant; after all, we just graduated from college (I wish I was as smart now as I thought I was the day after graduation). We thought we were worth more than we really were. But someone was patient with us. In the same way, we need to be patient with and help (not cater to) this new generation. But there are some differences between past and current generations. Past generations knew – sort of – that there were “dues to be paid" (and what was meant by “dues”). We knew that there were consequences for actions we took. We knew the battles were ours and ours alone – our parents did not feel the need to call our boss (personally, I would have been ashamed to have my battles fought by my parents – especially as an adult). We learned – rather quickly – that we weren’t nearly as smart or important as we thought we were. But the biggest difference: We knew the workplace was not going to change to suit us; we had to fit into it. If we wanted the workplace to change, we had to wait until we were in charge. This is where we are doing millennials a disservice. Their parents protected them from the realities of the world, and now we, as employers, are doing the same thing. No one can grow professionally if they are never allowed to make mistakes, suffer the consequences and learn how to recover stronger. Allow these newly minted adults to grow up, especially if their parents never allowed them to suffer the consequences that they needed to suffer to mature!

On the day after the U.K. referendum voted to leave the European Union, a leading U.K. newspaper ran a cartoon with the caption, "Democracy is too important to be left to the people." Of course, it was tongue in cheek, but the point was well made. Since the vote, markets globally have tumbled, shares in financial institutions have fallen, some as much as a third, the U.K. has "lost" Prime Minster Cameron and some are already seeing this referendum as the first sign of the breakup of the European Union. In my blog of Feb. 29, "What Happens if U.K. Exists the E.U.?", I suggested that, for the insurance industry, nothing good would come of the U.K. leaving Europe. I wasn’t alone in that thinking. In the days immediately before the vote, 20 European insurance institutes signed a letter asking that the U.K. not leave. The U.K.-based institute of brokers BIBA urged its members to vote to remain. Surveys of U.K.-based insurance executives showed almost universal agreement to stay. But everyone was allowed to vote, not just insurance professions. The results showed massive division between different parts of the country, and even directly within families, with the agenda dictated ultimately by three key aspects: the economy; sovereignty and immigration. Some are currently arguing that the third factor, immigration, was the most persuasive and divisive – but in fairness they do a disservice to the complexity of the arguments. In my lifetime, this event is outstanding in that almost everyone had a point of view, and in many cases were prepared to vocalize it. One madman even exercised his democratic freedom by murdering a member of the U.K. Parliament on the other side of the issue. Overall, it was a dirty campaign that, if anything, has undermined the public’s trust in our public representatives. The challenge really rested with the bilateral nature of the decision. You were either Remain or Leave. There was no halfway house or room for indecision. And then the results came in. And chaos was unleashed. The philosopher and statistician Nassim Taleb talks about “black swans" – events of low probability but maximum impact – and many are saying that this is one of them. His 2007 book Black Swans – Coping With the Improbable suggests that many financial services organizations are simply not prepared to cope with losses beyond what they have predicted in their models. But this isn’t entirely true. One major U.K.-based global insurer has already said that, despite its stock value falling by 25%, it has adequately stress tested its business. I really hope that it represents the wider U.K.-based insurance industry, as opposed to being a one-off. Even so, asset managers are already actively reviewing their portfolios, and there will inevitably be a number of knock-on effects. What all this means for the man in the street remains uncertain. In a saturated market, suffering from overcapacity, will the "leave" vote affect insurance premiums and, if so, in what way? There is already a threat of increased taxation, and it’s unlikely that the insurance industry will remain unscathed. How the major global insurers based in mainland Europe will respond to the U.K. "issue" will also make interesting viewing. The fall in value of U.K.-based insurers coupled with the weaker pound sterling will make some U.K. insurers extremely vulnerable to predators, especially those keen to gain a foothold in the Northern hemisphere. Do not be surprised by some M&A activity in the coming months. At the end of the day, despite all the uncertainty, this is an industry – and a country –that is characterized by resilience. For those working in it, and living in it, we have to be honest and recognize that there are likely to be difficult times ahead. But whatever we think of the vote, the essence of how we choose to live in the U.K. (and the Western world) is in respecting the will of the people. Let’s just get on with it.

No industry has been witness to as many changes in the business world as insurance. Paradoxically, the insurance industry has remained (relatively) the same operationally. However, it can no longer turn a blind eye to the change rapidly occurring around and within insurance. The need of the hour is not “inno-va-shun”— shying away from necessary change. It is a straightforward pursuit of real innovation, the combination of modernization and creativity that will capture business and keep it. Unfortunately, our minds have conjured up thoughts around innovation that make it seem like more of a hurdle than it actually is. We may harbor futuristic, expensive, technologically impossible notions around the term. But innovation, stripped of all the hype and abstractness associated with it, is simply a survival tool that will foster competitiveness and growth. There is little mystery involved, and there is much opportunity for payoff to the business. In some cases, becoming innovative is as simple as lifting off traditional constraints. Experts within and outside of insurance are centered on constraint removal, asking, “What is the shortest path from unmet insurance needs to insurance sales?” This has sparked an investment frenzy. InsurTech, (a variant of Fintech) is focused on innovation and investments in insurance, and it is growing by leaps and bounds. CB Insights reports a figure of $2.65 billion in InsurTech investment for 2015, representing 350% growth over 2014 investments.  According to PwC’s survey based on companies included in their DeNovo platform, funding of Fintech start-ups more than doubled in 2015, reaching $12.2 billion, up 118% from $5.6 billion in 2014. Cutting-edge InsurTech and Fintech companies are forcing insurers to take a radically different look at the competitive landscape. There is an increasing awareness by insurers of this change, reflected in a PwC report indicating that 74% of insurance companies identified their own industry as the one part of the financial services sector that will most likely be disrupted by FinTech over the next five years. So what innovation is happening in insurance?  Is it all about hiring a set of experienced contrarians, providing them with a fertile environment, lots of time and space and access to unlimited funds to come up with an assembly line of  “the next” ideas that will radically transform the insurance industry? That sounds exciting. Who wouldn’t want their own highly funded insurance incubator? See also: How to Plant in the Greenfields   The truth is far more prosaic. Innovation in insurance is not just restricted to developing new solutions and technologies or products and services but it is grounded in the consistent development of new offerings, channels and business models to reach and expand in existing and newer markets. It is the building of the next-generation insurance operation that will work as the world changes. Rather than wait for transformation of the existing business, insurers are looking to innovate, reinvent and create new business models to operate and succeed in a new business paradigm. The time is ripe to experiment and be part of the disruption unfolding, rather than being left by the wayside Helping fuel the innovation is an array of new partnerships, accelerators, incubators and innovation labs within the industry and individual companies. They are creating solutions, products, services and business models, de novo options – de novo, from the Latin expression meaning “from the beginning,” “afresh,” “anew,” “beginning again.” And it is not just new capital backing de novo models. Existing traditional insurers are investing into their own greenfields, start-ups and incubators. They are launching new companies and business models to reach new market segments and introduce new products and services. They are carefully building and maintaining the new efforts outside of the traditional brand, distribution channels and business operations to keep the new efforts out from under traditional constraints. There is a wide array of experimentation and de novo options happening within insurance companies to respond to these challenges by generating opportunities. But to do so, these insurers need a “platform solution” that will enable agility, innovation and speed, not unlike platform solutions that have powered de novo options in other industries. Fundamental to the platform is the need for low IT costs because investment must be focused on the business, products and channels, not in the capital and operational expenditures for the traditional bricks and mortar infrastructure. An insurance cloud platform can be the differentiating and critical enabler. See also: InsurTech: Golden Opportunity to Innovate   New platforms need to go beyond the core insurance solution to include ready-to-use, pre-built content, data sources, channel options and best practices that can jump start the business. An ĵacceptable timeframe would be weeks to months, instead of the years that many business transformation projects require. The insurance industry is quickly realizing the need for innovation. It is not a question of when … but how soon one innovates. New insurance companies, MGAs, underwriting firms and others are incubating new products, new business models and new channels and reaching new market segments. The unprecedented number of new endeavors is a clear indication of this phenomenon. Yet, too many insurers are locked into legacy core systems or engaged in multi-year legacy transformation programs, limiting their ability to innovate and experiment with de novo options. Rather than waiting, insurers should aggressively seek to leverage a “platform solution” as outlined in the Majesco report, Greenfields, Startups and Incubators: Innovation in Insurance Products, Channels, Services and Business Models. Experimenting and innovating today will prepare insurers for tomorrow’s opportunities. One cannot but agree with Rob Siltanen when he said, “Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.” How are you preparing to change your world — the world of insurance?

The rising business use of cloud services and mobile devices has opened a Pandora’s box of security exposures. Software as a service (SaaS) tools such as Salesforce.com, Gmail, Office 365 and Dropbox, as well as social media sites such as Facebook, LinkedIn and Twitter, are all being heavily leveraged by companies to boost productivity and collaboration. This SaaS trend also has opened up a whole new matrix of access points for malicious attackers to get deep inside company networks. Wall Street recognizes that all organizations will have to acknowledge and make decisions on how to mitigate new business risks introduced by cloud services. And big bets are being placed on new technologies to help companies get a handle on these fresh exposures. See also: The Need for a Security Mindset ThirdCertainty recently sat down with David Baker, chief security officer at Okta, a cloud identity management vendor that’s one of dozens of security vendors developing cloud security systems. A $75 million round of private investment last fall pushed Okta’s market valuation to more than a billion dollars, vaulting it into so-called “unicorn” status. Okta’s backers include a who’s who of venture-capital firms that are placing big bets on cybersecurity plays: Andreessen Horowitz, Greylock Partners, Sequoia Capital, Khosla Ventures, Altimeter and Glynn Capital, among others. Baker talked to us about this particular big bet on cybersecurity tech. The text is edited for clarity and length. 3C: Congratulations on achieving unicorn status.

Baker: Thank you. We have a lot of work to do as a company to continue growing. The problem that we solve is really about enabling companies —  enterprises, as well as small, medium and big companies — to adopt the cloud. 3C: How would you frame the big challenge? Baker: The problem for companies now is that the things I need to access in the cloud bring a whole host of security concerns. I have users working within my four walls, and they have to authenticate into these applications where I have critical business data. It could be information about my company’s source code, or email or all of the files we share. So what’s needed is a secure way of authenticating users into all of those systems. It also is a challenge to provision that identity into the downstream applications and, just as importantly, to de-provision users. So when a user eventually is transferred to a different group or is terminated, their access has to be disabled. So it’s about managing that identity and also managing the access of that identity to these cloud services. 3C: Lots of employees set up their own Gmail or Dropbox account to be more productive. It sounds like they shouldn’t be doing that? Baker: Correct. The security piece is knowing what set of tools you want your employees using, and then making sure you have an authentication mechanism in place to enable them to go securely into those cloud-based applications. See also: Cyber, Tech Security Start to Merge 3C: The company sets the rules, and its employees should use only the company-sanctioned versions? Baker: Correct. Users get exactly the version of Dropbox the company wants them to use, not their own personal account. Okta creates a secure connection to that version. The IT administrator can give the employees access to hundreds of apps. Right now, we have connectors to well over 4,000 different applications across the internet. 3C: Seems like we’re extending the traditional network perimeter. It’s not just the on-premises servers and clients that companies have to be concerned with, it’s everything out in the internet cloud that employees might try to use. Baker: I’ll do you even one better. The perimeter really exists with respect to identity. When I’m sitting at home or in the coffee shop and using my cellphone to get access into an application, I am now the perimeter. So that’s why we like to say, really, identity is the new perimeter. This article first appeared at Third Certainty. More stories related to cloud security: Be selective about what data you store and access from the cloud Cloud apps routinely expose sensitive data SOC-2 compliance crucial for keeping data safe in the cloud

The 2^nd Appellate District has issued the first of what should prove to be several appellate decisions on the timeliness of independent medical review (IMR) decisions. The court was considering the assertion by a W.C.A.B. panel that IMR timelines are mandatory and that late IMR means the W.C.A.B. -- and not doctors -- will determine whether treatment is medically necessary. In SCIF v W.C.A.B. (Margaris), the court annulled the W.C.A.B. decision and remanded with instructions to issue a new decision. The court’s reason for accepting this case was set out early in the decision: “…We issued a writ of review because this case presents an important issue of first impression regarding the interpretation of section 4610.6, and because it relates to an issue upon which the appeals board has rendered conflicting decisions.” In its analysis, the court provided an extensive discussion of the history of authorization for medical treatment, the implementation of utilization review (UR) for treatment requests and the enactment of the statutory scheme for IMR.  As noted by the court in SB 228 and 899, the legislature changed both the standards and process used by an employer to evaluate a request for medical treatment. The legislature adopted the medical treatment utilization schedule (MTUS). The legislature then removed the existing process for resolving medical disputes using dueling doctors and required the use of utilization review, which required review of treatment requests in light of the MTUS. In 2012, the legislature enacted another set of reforms to address disputes over UR determinations. As noted by the court, a UR determination authorizing medical treatment was binding on the employer but became subject to further review through IMR — but only for the employee. The court further observed that even where an IMR determination is ultimately reversed by the W.C.A.B., the issue of medical appropriateness was to be returned to IMR for further review, not decided by the W.C.A.B. See also: IMR Practices May Be Legal, Yet…   Turning to the specific issue before it, the court determined the use of “shall” in Labor Code 4610.6 was directive, not mandatory: “…The appeals board concluded that section 4610.6, subdivision (d), is clear and unambiguous.  According to the appeals board, “shall” is mandatory, and any IMR determination issued after the 30-day time frame is necessarily invalid. In support of this interpretation, the appeals board cited section 15, which provides “‘[s]hall’ is mandatory and ‘may’ is permissive” (§ 15.). Thus, the appeals board concluded that construing “shall” as mandatory, such that an untimely IMR determination is invalid, comports with both the ordinary meaning and the statutory definition of “shall.” As we explain, however, the issue is more nuanced than the appeals board recognized. … We note that section 15, upon which the appeals board relied in this case to support its interpretation of section 4610.6, subdivision (d), juxtaposes “mandatory” against “permissive,” which arguably suggests the legislature used “shall” in the obligatory permissive sense rather than in the mandatory-directory sense, as the appeals board concluded. (See McGee, supra, 19 Cal.3d at p. 960 [discussing section 15 and concluding that “on its face, the statutory language suggests that the legislature intended the present provision to be mandatory (i.e., obligatory), rather than permissive.”]) However, given the difference in meaning given to “shall” in the statutory context, we conclude section 4610.6, subdivision (d), is ambiguous. Accordingly, we move beyond the plain language of that section and consider its meaning with reference to the rest of the statutory scheme and the intent of the legislature.” The court commented further on this issue: "Generally, time limits applicable to government action are deemed to be directory, unless the legislature clearly expresses a contrary intent.  (Edwards, supra, 25 Cal.3d at p. 410.) “‘In ascertaining probable intent, California courts have expressed a variety of tests. In some cases, focus has been directed at the likely consequences of holding a particular time limitation mandatory, in an attempt to ascertain whether those consequences would defeat or promote the purpose of the enactment.  [Citations.] Other cases have suggested that a time limitation is deemed merely directory ‘unless a consequence or penalty is provided for failure to do the act within the time commanded.’” The court also found the lack of a penalty or consequence for noncompliance to be significant. Citing similar language in actions by the state personnel board, which had been held to be directive rather than mandatory, the court suggested a failure to meet the statutory time frame did not result in a loss of jurisdiction. The court also indicates in its review of the mandatory vs. directory dichotomy that statutes that set time frames for government actions that do not include a self-executing consequence are almost universally construed as directory. The court also noted that construing the 30-day time frame as directory furthers the legislative objective of SB 863. “We conclude from these findings that the legislature intended to remove the authority to make decisions about medical necessity of proposed treatment for injured workers from the appeals board and place it in the hands of independent, unbiased medical professionals. Construing section 4610.6, subdivision (d), as directory best furthers the legislature’s intent in this regard. The appeals board’s conclusion in this case — that an untimely IMR determination terminates the IMR process and vests jurisdiction in the appeals board to determine medical necessity — is wholly inconsistent with the legislature’s stated goals and their evident intent. … Finally, and perhaps most tellingly, the legislature provided that, “[i]n no event shall a workers’ compensation administrative law judge, the appeals board, or any higher court make a determination of medical necessity contrary to the determination of the independent medical review organization” (Stats. 2012, ch. 363, § 45, codified at § 4610.6, subd. (i)). We find this portion of the statute — particularly the use of the phrase “in no event” — to be a frank expression of the legislature’s desire to remove the issue of medical necessity of proposed treatment from the jurisdiction of the appeals board in all cases subject to IMR. The legislature’s intent would be defeated by giving section 4610.6, subdivision (d), mandatory effect, as the appeals board did in the present case.” See also: 20 Work Comp Issues to Watch in 2016 Additionally, the applicant attorney argued that the W.C.A.B.’s holding in the Dubon case (Dubon 2) supported the W.C.A.B's usurpation of authority to decide medical treatment. The court noted the holding in Dubon 2 is supported by the AD’s regulations providing that IMR applies solely to timely and procedurally proper UR but that no similar regulation existed for IMR. The court declined to comment on the W.C.A.B.’s decision in Dubon 2 as the issue was not before it. Comments and Conclusions: There are currently two other cases pending in the appellate courts, both in the 3^rd appellate district — on this same issue and, interestingly, this case was not the first grant on the issue. However, the court set a very aggressive briefing schedule and, even with multiple amicus briefs it heard, considered and decided this case in, what is by appellate standards, a very short time (less than six months). Clearly the court was very interested in this issue, which had multiple W.C.A.B. panel decisions with conflicting holdings. The court, in its decision, also rejected arguments offered by both the applicant and the W.C.A.B. that untimely IMR resulted in unnecessary delays — a rationale offered by the majority panel in both Dubon and Margaris. The court, very astutely, noted this argument made no sense given the time frame for obtaining QME opinions or litigating medical treatment issues before the W.C.A.B.  The court pointed out that, even with the delays in completing IMR, the W.C.A.B. decision was more than 13 months after the initial decision in UR and more than 10 months after Maximus rendered its decision. The court was clearly, and properly, skeptical of the argument that letting the W.C.A.B. decide medical issues would result in a more prompt disposition. The court did offer an option to applicants to challenge untimely UR through the ability to file a petition for writ of mandate to compel a decision. While a statutorily viable option, this is impractical, especially in light of the current timeliness of most IMR determinations. Further, the issue here has never really been the timeliness of IMR. The goal for the applicant attorney bar, and apparently some of the commissioners, has been to usurp the medical decision making process from being medically driven to being litigation-based. The decision does not provide a lot of nourishment for those who are waiting for some sliver of light on the Dubon 2 issue. The court, in its footnote, declined to really comment on Dubon 2, but it did note there was some basis for the W.C.A.B.’s decision. However, the very strong language of the court emphasizing the public and legislative policy behind having medical decisions made by physicians, and the much greater speed and certainty of the UR/IMR process over the legislatively disfavored litigation process, may provide some hope that, given a chance, the appellate court would also reject the W.C.A.B.’s arguments in support of Dubon 2.

This essay takes issue with the Oklahoma Supreme Court’s recent decision in Torres v. Seaboard Foods to declare some workers’ compensation (WC) laws unconstitutional. The problem with the opinions of Justices Edmonson, Combs and Colbert isn’t simply that they reached the wrong conclusion — but that they reached it for the wrong reasons. To justify their decision, all three justices went out of their way to invoke the grand bargain, a historic compromise between employers and employees that guarantees medical and wage replacement benefits to injured workers. Before the grand bargain was struck in 1917, most U.S. employees injured on the job had to sue their employers for damages. The process was often prohibitively expensive, onerous and time-consuming for hardworking citizens who found themselves unable to earn a paycheck — when they needed funds to cover medical bills and other expenses during their convalescence. The grand bargain is worth championing because it put an end to this intolerable state of affairs, thanks, in part, to luminaries such as Crystal Eastman, who thought an injured worker shouldn’t have to spend “nearly half of (his settlement) to pay the cost of fighting for it.” See also: Taking a New Look at the ‘Grand Bargain’ Eastman’s emphasis on avoiding long, costly court battles was typical of the thinking that guided the U.S. into embracing the grand bargain. It is therefore disappointing to see Justice Colbert argue that he is “forced to insure that claimants and employers in the (WC) system have their day in court." Colbert’s rationale is contrary to grand bargain principles. The only thing forcing Colbert to such a conclusion is his decision to put the interests of injury lawyers ahead of the interests of injured workers and of the employers who provide the benefits those workers deserve. If the Oklahoma Supreme Court is as committed to preserving grand bargain principles as Justice Colbert claims, it doesn’t need to do anything revolutionary. It only needs to rule in the same way that it did in 1917, when it initially recognized the state legislature's ability to pass special legislation concerning WC in the interest of the general public. This article is the summary of a much longer essay on the topic, which draws on numerous primary and secondary sources and which you can find here.