Our healthcare (HC) and healthcare financing ( HCF) systems are not sustainable. To think about why that is, find a picture of a rainbow (or draw your own). There are seven bands of color. Label your rainbow from the bottom to the top: Soul/Mind/Body/Wellness/Primary Care/Secondary Care/Tertiary Care (healthcare from specialists in a large hospital after referral from primary or secondary care). See also: Has The Projected Cost Of Health Care Reform Changed?   At this moment, there are 324,414, 852 people in the U.S. Most believe that we are made up of those three bottom elements: spirit, mind and body. The center band of the rainbow is wellness – an ideal for any HC system. The three upper bands define the delivery systems of HC in our country today. The flaws in the HC and HCF model displayed are simple – our current system has at its core a focus of “sickness,” not the ideal of “wellness.” Our system was built on a focus on the body. Yet you can get nearly universal agreement from doctors that much of illness originates in the head, and most will agree that a “believer” supported by a prayer community gets better results. Our care giver systems are intertwined with HCF and superimposed on “we the people,” not fully integrated with us as individuals. We go to the doctor. Our world of specialists is defined by organs du jour. Our care is explained to us in the vernacular of medicine, not language we understand. When care doesn’t work, we are sent to a different specialty. Finally, our demographics are killing us. Diabetes, obesity, sedentary lifestyles, a victim mentality and a sense of entitlement are limiting our future. The heaviest users of care are spending other people’s money for the treatment! And, while our systems have become very good at delaying death, they are less effective at extending the quality of life. (Don’t believe me? Go visit a nursing home every day for a month.) See also: What Trump Means for Healthcare Reform   Yet healthcare reform is based on the same flawed thinking got us into this mess. America and her people are genius – when they work together for good. Need evidence? We’ve already walked on the moon. We have the money, the need and the motivation to save us all – now we must just find a way to do it. What can we do? What should we do? What do you suggest? Somebody out there – outside of the special interests – has the answer for the common interest or an idea that we the people can use to bring health/wellness to our HC and HCF systems. Marcus Welby, MD is dead. We aren’t. Help!

"Companies that offer consistently best-in-class customer experiences tend to grow faster and more profitably" - McKinsey

If you've been in the insurance business for any length of time, no one has to tell you that times are changing. Thanks to the ever-increasing popularity of the sharing economy, consumers are re-thinking the traditional agent-policyholder relationship. Any new thinking regarding ways to make insurance more convenient and affordable always leads to the notion of working directly with online resources. This scenario was true with the advent of the internet and is seeing its second wave in the face of various marketplace innovations -- including the sharing economy. Customer Experience is Changing: Insurance Industry Historically, the insurance industry has been highly regulated, with strict underwriting requirements and tightly guarded claim adjustment policies. So you may be asking how would an industry such as this even begin to follow the unconventional rules of sharing economy? Let's go look! Making Lemonade out of Lemons A ground-breaking insurtech startup, Lemonade, has changed the rules and is attempting to modify the image of the insurance industry forever. Lemonade has certainly ignited the discussion. Currently licensed to sell personal insurance in New York, Lemonade plans to expand and set a standard in the insurance industry. According to Fortune, the startup Lemonade was founded by Daniel Schreiber and Shai Wininger and is loosely based on the principles of successful sharing economy companies such as Uber and Airbnb. See also: 4 Mandates for Agents in Sharing Economy   Lemonade aims to sell insurance policies online to individuals who become a member of the peer-to-peer company. It goes something like this… You can join the online community at Lemonade and pay your monthly premiums just like you would to your traditional insurance agent/company. However, the premiums are pooled together by members of the group for the payout of claims. Sharing Economy Benefits to Insurance Consumers Because consumers don't have the time or patience to wait for days or weeks to start a new insurance policy, the ability to get instant coverage with the click of a button on a mobile phone app is highly attractive. It offers consumers the ability to be insured immediately. Here are a few more self-described benefits of the new peer-to-peer model:

• A startup like Lemonade doesn't have anything to gain by denying claims, so the odds of a fast and fair settlement increase.
• A reduction in fraud and much lower operating costs keep premiums low.
• Monthly fees are low (as low as $35/month for homeowner's insurance, $5/month for renter's insurance)
• Customers get a more personal consumer experience with peers instead of dealing with large insurance companies, which helps rebuild the trust factor in purchasing insurance.
• Monthly premium money is considered "peer money," and leftover funds from underwriting profits at the end of a term are donated to a cause, chosen by the peer members.

This is by no means a promotion of Lemonade specifically, just an acknowledgment that "the times they are a-changin'." And this is a good thing. Customer Experience is Changing: Not Feeling the Love There is no question that some consumers have a less-than-glowing opinion about insurance companies. Many don't like the idea of having to pay premiums to large and often impersonal firms. This consumer grievance is by no means limited to insurance carriers (I'm looking at you too, finance industry). If there should be a rate increase or a claim procedure gets complicated, the consumer/insurance company relationship doesn't get better. The trust levels go down, right along with customer satisfaction. The goal of the sharing economy is not only to give the consumer additional options but to provide a better, more technologically friendly, customer experience. The goal is to produce better feelings toward having to pay insurance premiums. Many carriers fail to realize that speed of claims resolution is just as important to consumers as professionalism and courtesy. And, with the all the innovations within the sharing economy that are premised on mobile technology, consumers are ready for a change. And that change is going mobile. Customer Experience Is Changing (Finally) Schreiber stated that he was pleasantly surprised at how many large reinsurers were interested in providing support and seed money to fund the start-up. Schreiber stated, "Instead of being antagonistic, the insurance industry has taken a more 'We've been waiting for you' approach." See also: Sharing Economy: The Concept of Trust   As for this trend catching on, more than 90% of consumers who participate in sharing economy ventures would endorse or recommend the company or service they have recently used, according to Vision Critical. According to Forbes, "the sharing economy excels at customer experience, and that is what inspires customer love and loyalty." This new world of customer services involves choice and a seamless mobile experience. Simple as that. As the demand for more convenient, affordable goods and services will only increase, it's clear that consumers are sending a loud and clear message of support…even in the insurance industry. Customer experience into the future will involve speed and ease of service. This, as we have seen, is premised entirely on mobile technology and innovative business models.

It’s not easy trying to predict the unpredictable. Yet that’s what risk managers are responsible for doing every day. Sometimes, the plans to identify or protect against a particular disaster come up short. Read on for four of the biggest risk management disasters in history – and how the risk management industry has learned from them. It’s become an iconic image in pop culture – Leonardo DiCaprio leans in close behind Kate Winslet as she raises her arms and exclaims “I’m flying!” But what can Kate and Leo teach us about risk management? Quite a lot, in fact. Thanks to several movies and countless other retellings, the tragedy of the Titanic is something everyone knows. But with a better understanding of some basic risk management principles, the Titanic never would have sunk at all. Michael Angelina, executive director of the Academy of Risk Management and Insurance at Saint Joseph's University, uses the Titanic and other notable risk management disasters to give his students a better idea of what exactly risk management is – and why they should care about it. It turns out some of the most notable risk management disasters had specific causes that create pretty clear lessons for risk managers in a range of industries to learn. Let’s take a closer look at four of the biggest risk management disasters in history and what ARMs and risk managers took from them, starting with the event everyone’s favorite '90s epic/romance/disaster movie is based on. The sinking of the Titanic The shortage of lifeboats on board the Titanic on April 15, 1912, has become a well-known fact representing the arrogance and naiveté of designers, crew members and passengers who were positive the massive vessel was unsinkable. To be sure, pretty much everyone was overconfident, from not giving lookouts binoculars to ignoring warnings from other ships about icebergs in the area. And while the lack of lifeboats is held up as the primary example of that hubris, the 20 lifeboats actually complied with safety regulations at the time. In fact, only 16 rescue ships were required. Lifeboat capacity was determined by the weight of the ship, not the number of passengers on board. This rule was developed for much smaller ships and hadn’t been updated to adjust for the enormous ships that were built in the early years of the 20th century. What’s more, there hadn’t been a significant loss of life at sea for 40 years, and large ships usually stayed afloat long enough for individual lifeboats to make multiple trips to and from a rescue vessel. For all of those reasons, everyone tragically assumed there were an adequate number of lifeboats for passengers. The risk management lesson learned: Complying with regulations and established best practices is no guarantee that a specific risk has been effectively mitigated. Risk managers need to consider these safeguards the same way they would any other risk prevention effort and take additional action when they don’t sufficiently guard against risk. See also: A Revolution in Risk Management   Deepwater Horizon explosion When the Deepwater Horizon oil rig exploded on April 20, 2010, several executives from BP and Transocean were actually on the structure to celebrate seven years without a lost-time safety incident on the project. Company leaders were so focused on preventing – and measuring – lesser risks like slips, trips and falls that they failed to identify the more complicated process management risks that ultimately led to the explosion. Risk management lesson learned: All risk analysis is essentially weighing how likely an event is to occur against what impact that event would have, then identifying effective ways to address those risks. Thanks to complacency, cutting corners, arrogance or some combination of those factors and others, BP and Transocean targeted risks with high probabilities and low impact. In the process, they neglected risks in the opposite quadrant of that matrix that were unlikely to occur but could have catastrophic results. Sept. 11 attacks Since the tragic events of Sept. 11, 2001, individuals, businesses and the U.S. government have put vast effort and resources into preparing for and defending our nation against further attacks. Professors of risk management at the University of Pennsylvania call 9/11 a “black swan” event – one that is very rare and difficult to prepare for. Risk managers are extremely good at preventing what’s happened before from happening again. But unlikely events are extremely difficult to predict. Before Sept. 11, 2001, terrorism was listed as an unnamed peril in a majority of commercial insurance deals, according to Penn researchers. After the attacks, insurers paid $23 billion, and many states passed laws permitting insurers to exclude terrorism from corporate policies. Today, the semi-public Terrorism Risk Insurance Act covers as much as $100 billion in insured losses from terrorist attack. Risk management lesson learned: These black swan events are difficult to predict and even more difficult to prepare for. A portion of the risk management field will always be reacting to the specifics of previous significant events and incorporating them into their models forecasting future risk. Financial Crisis of 2007-2008 Plenty of people were quick to blame risk managers for failing to protect the world’s largest financial institutions against the biggest economic disaster since the Great Depression. The Harvard Business Review identified six ways companies fail to manage risk, while the Risk and Insurance Management Society (RIMS) argues the financial crisis was not caused by the failure of risk management, but rather organizations’ failure to embrace appropriate enterprise risk management behaviors. Companies provided short-term incentives and did not communicate enterprise risk management principles to all levels of the organization. Risk management lesson learned: Risk management cannot exist in a vacuum. Creating a robust enterprise risk management program also requires communicating it to all levels of the organization and creating a culture and incentive system that matches the level of risk. See also: Can Risk Management Even Be Effective?   Interested in learning more about risk management? Check out the Associate in Risk Management designation from The Institutes.

This paper discusses the current state of Medicare secondary payer (MSP) compliance within the property and casualty (P&C) industry. Our payer survey findings show payers view MSP compliance as unmanaged and out of control. MSP compliance is excessively costly. The time has come for a data-driven or analytic-powered approach to compliance that leaders of the future will embrace. An analytic-powered approach uses high-quality data and strong algorithms to augment human decision-making in the process. Medicare Secondary Payer Medicare was born in 1966 as the primary payer for medical claims involving Medicare beneficiaries not covered by workers' compensation (WC), federal black lung, or veteran’s administration benefits. In 1980, In an attempt to collect as much money for the Medicare trust fund through rule-making, Congress enacted the Medicare secondary payer act expanding Medicare’s recovery to; group health and non-group health plans or self-insurance for liability, automobile and no-fault. Including all plans under those P&C lines that paid for any medical or personal injury, sweeping in travel insurance, medical payments coverages under commercial and personal property plans as well as plans that typically do not pay for a bodily injury such as treatment for medical professional liability, director and officer and errors and omission policies. Medicare has a right to both reimbursement for Medicare dollars paid, and recovery of payments Medicare might make in the future, where another primary plan exists. Primary Payer Survey We randomly and confidentially surveyed 35 non-group health primary payers, including carriers, third-party administrators, state funds and self-insured entities, to learn about their MSP compliance programs. The table presents the results. Companies surveyed agree 100% that MSP compliance delays or interferes with claims settlements. However, few have a formal monitoring process (4%), a fragmented vendor panel is used (71%), and few (30%) have a centralized program, such as an internal department or individual responsible for the oversight of MSP compliance. Most compelling is that 92% of companies surveyed do not have any confidence that their adjusters’ or claim handlers are capable enough to identify the risk or execute on MSP compliance at the time of settlement. These results clearly reveal a clear absence of risk management or quality measures for identifying, controlling or monitoring MSP compliance. Further, most payers do not establish internal best practices, relying heavily instead on external MSA vendor suggested best practice. See also: How Medicare Can Heal Workers’ Comp   Discussion Why do primary payers remain uncomfortable with MSP after 15 years of experience? To answer this question, let’s look at some background. On July 23, 2001, Medicare released a memo to all regional administrators to answer questions raised as to how to evaluate Medicare’s future interests for WC settlements. The memo did not detail any specific methodology for forecasting future medical care. Following the release of this memo, the first Medicare Set Aside (MSA) companies emerged to produce formalized MSA reports. These early companies cobbled together a mix of approaches used in the practice of Life Care Planning as used for the valuation of future medical costs for litigated claims. This untested, short-cut approach was sold as a solution to non-group health plans and third party administrators to satisfy Medicare’s requirements for MSAs. Thus, a small cottage industry established claims best practices for MSAs. Vendors have defined the requirement to not only prepare, but to submit MSAs to Medicare for review and approval, a voluntary process under the Act, that has become a WC claims best practice. While conventional MSA methodology may have offered a solution fifteen years ago, it is time to re-assess the industry’s approach. MSP compliance, as it has evolved, has outgrown existing models. Primary payers deserve to have much greater confidence and control. Primary payers can and should develop internal best practices for Medicare Secondary Payer. We believe a data-driven approach will increase payer confidence, create transparency in the MSP process and lower costs. Data is Power! An Analytic-Powered Approach to MSP Analytic-powered or data-driven decision management (DDDM) is an approach to governance, using data that has been appropriately gathered and verified to make business decisions. The technique has been around since the early days of the computer in the 1950’s when data was first mined and extracted for analysis. Today, business intelligence has advanced to offer technology based dashboards that display data, in an organized form, for analysis and decision making. These tools no longer require an expensive IT staff to gather and analyze information. The quality of the data and effectiveness of the analysis are the foundations for a successful data driven solution. Using data intelligence, primary payers can identify, manage and control MSP exposure and make decisions about managing MSP compliance risks. The table below compares the analytic-powered approach to the conventional approach. The difference between an analytic-powered and a conventional approach to Medicare Set Asides is dramatic. An analytic-powered approach relies upon a robust claims data warehouse of real medical transactions for bodily injuries over time. A standardized digital platform with algorithms and tables is applied. Given the same exact set of medical claim variables, an outcome will be the same every time. It offers tighter security standards, HIPAA (PHI/PII) protection with fewer hands touching the files. It remains in the hands of a payer’s internal professionals and can stay within the confines of its IT structure. Case Study Comparison We analyzed the experience of a primary payer who sent the same set of medical records, for a given claim involving a Medicare beneficiary, to 5 different MSA preparers. The primary payer received five different MSA forecasts as follows: Conventional methods are subjective, non-standardization, and therefore variable in nature and lack transparency. The same medical variables or medical claims record information can be reviewed by five different people and interpreted differently by each person; the same variables are not reproducible or consistent. Today’s conventional methods increase the complexity of future care analysis and vendor dependency. An analytic-powered approach offers exceptional return on investment of time and redeployment of labor. When one compares an analytic-powered MSA report to conventional methods for an identical case, the analytic- powered method used one thirty-sixth (1/36) the amount of human time and completed the report within 15 minutes. These reports are not submitted to CMS for review and approval because of the strength of the data and CMS guidelines that supports the proposal are irrefutable. A data-driven approach will not only drastically improve the quality, reliability and validity of an MSP program. It will provide the platform for a company’s internal program, offering transparency and control that will cut the overall total cost of MSP compliance by 50% or more. “Non-Group Health Plans and self- insureds are frustrated by the world of Medicare Set-Asides. This frustration has led to attempts to change the policy guidance in Congress, numerous meetings with CMS, and searches for new solutions. Some of the “Best in Class” have determined that the only way to secure superior outcomes is to control the process, bringing it inside their organizations and using data to secure superior results, thereby affording themselves an advantage in the marketplace.” Peter R. Foley C.P.C.U., C.I.C, Principal at C.L.A.I.M.S, LLC and former Vice President, Claims Administration, American Insurance Association. See also: Urgency of Rising Medicare Fraud   Conclusion Our survey of 35 companies exposes the failure of the current state of MSP compliance and highlights the need for disruptive and revolutionary change. As future guidance for MSP compliance is released, there is a real risk of greater complexity in the execution of a solution for primary payers and third party administrators who rely on conventional practices. The time has come for primary payers to own and develop their internal best practices for MSP compliance establishing alignment between the obligation to protect Medicare and close claims. The future is here for a data-driven solution that is streamlined, efficient and compliant with the intent of the MSP Act.

2016 was a hectic year here at the Cluttered Desk. That is due in part to the fact I wasn’t behind it much of the time these past 12 months. Travel demands this last year exceeded all before it, and I spent a fairly significant amount of time away from the office. This makes foretelling the events of 2017 difficult; mostly because I am still trying to accomplish the tasks I was supposed to finish way back in 2015. Now that I think about it, predicting the past would be much easier. At any rate, I wanted to lay out for you EXACTLY what will be occurring as the year 2017 unfolds. I wanted to do that, but have absolutely no clue as to what the future will exactly be. Instead I will make these Top Ten Predictions and hope for the best. 1. The president will appoint a federal commission on workers’ compensation President Trump will appoint a federal commission to identify and recommend improvements for the workers’ compensation system. The 142-member group, composed mainly of fellow students from Ivanka’s Hot Yoga class, will toil for 10 months trying to identify the most pressing issues for the industry. They will ultimately be overwhelmed by the system's current complexities, causing complete work stoppages for the panel. Originally intended as a key part of the “drain the swamp” campaign, workers’ comp will ironically instead “swamp the drain,” causing chaos and confusion throughout the government. The commission’s final report will be issued via Twitter, with seven characters left to spare. 2. A federal emergency guest worker program will be established Construction of the long-awaited “Great Wall Numero Dos” will begin along our southern border just four weeks after the new administration is in place. Unfortunately, it will be discovered that in the third week of new management the country deported all the people willing to perform the back-breaking labor in the middle of the desert Southwest. An emergency guest worker program will be established to allow people to return to the country to build the wall designed to keep them out of the country in the first place. 3. Florida will successfully reform its workers’ compensation system Florida legislators will pull out all the stops to fix the state’s ailing workers’ compensation system this year. When the dust of reform settles, the system will be housed in a large canvas tent with three rings, and there will be shiny new cages for all the animals. Caretakers will be allocated glistening new poop-scooping shovels. The job of Chief Deputy Judge of the Office of Judges of Compensation Claims will be retitled “Ringmaster.” See also: 10 Predictions for Insurtech in 2017   4. The state of California will opt out Unhappy with the fact that much of the rest of the nation did not agree with it in the recent presidential election, California will push for and ultimately be successful at separating itself from the U.S. The effort will get a huge boost when petitions supporting the measure gain 162 million signatures from people living outside the state. The move will not quite be complete, however, as most of the inland and southernmost regions will choose to remain a part of the U.S. This will leave Los Angeles County and the San Francisco Bay area to go their own ways. They will have screaming internet and cutting-edge technology but no food, because all of that is grown inland. Additionally, most LA commuters will have to register as foreign workers, because their three-hour commute means they now reside on foreign soil. The newly formed country of Los Angelinos will have an immediate crisis in workers’ comp, because their outrageous injury costs will no longer be subsidized by what used to be the rest of the state. The chairperson of the Los Angelinos People’s Politburo will embark on a reform effort modeled after Florida efforts. The new system will look quite similar, with the exception that the tent will be resistant to earthquakes, and all bathrooms will be gender-neutral. 5. Healthcare reform will meet medical marijuana As Republicans dismantle the Affordable Care Act, they will strive to develop an affordable alternative to ensure prompt medical care for the dozens of people who actually paid for health insurance they obtained through the government exchanges. It will be discovered that locally sourced, organically grown and affordable medical marijuana will be the singularly stellar solution for the country’s medical ills. Free marijuana will be distributed to all persons with any illness or ailment and will serve as the single authorized medicine listed on the new health systems formulary. No one will really recover from anything, but no one will really care, either. The national anthem will be changed to Bob Dylan’s “Rainy Day Women #12 & 35” (Everybody must get stoned). 6. Artificial Intelligence will make inroads into workers’ compensation The first rounds of automation will be employed in the workers’ comp industry in 2017. Artificial Intelligence will make inroads in claims management, transportation and the medical industry. Surprisingly, artificial intelligence will make the most dramatic advances in the online publishing arena; notably, many workers’ comp blogs will be taken over by these wunderkind computers. This will be ironic, as it will represent the first time actual intelligence of any kind has been applied to that sector. 7. Workers’ compensation will almost be named workers’ recovery Long a personal goal of this prognosticator, the industry will come perilously close to being renamed “workers’ recovery” this year. The International Association of Industrial Accident Boards and Commissions (IAIABC) will commit to the cause and put the full power of its influence behind it. The effort almost succeeds, but falters slightly in the final moments. The German representatives on the Industry Rebranding Committee insist on a slight change to the word “Recovery.” The final result is the industry will be called “Nur die Klappe Halten und Arbeiten,” which essentially means, “Just Shut Up and Work.” All is not lost, however. The people at WorkersCompensation.com successfully obtain the domain name www.nurdieklappehaltenundarbeiten.com, ensuring that these inane predictions can continue for years to come. 8. Illinois will dramatically simplify and improve its workers’ comp program In a completely unforeseen move, Illinois legislators will totally scrap their currently chaotic workers’ compensation system and replace it with a simplified, recovery-centric program based on an advocacy-based claims model. Injury durations decrease, litigation ceases to exist and everyone benefits from what is now considered the model workers’ compensation program in the nation. On a completely unrelated note, pigs will fly, and hell will freeze over. See also: 5 Predictions for the IoT in 2017   9. Amazon will sell workers’ compensation insurance Online retailing behemoth Amazon will start to sell workers’ compensation insurance via their Prime “One Click Order” system. Alternately, Amazon Echo owners will be able to order a policy by saying, “Alexa, buy me workers’ compensation coverage.” Policy paperwork will be delivered within one hour via drone. When an injury occurs, employers will simply be able to return the broken worker to Amazon by generating a return authorization and shipping label from within their account area. 10. Bob Wilson will lose 50 pounds – again Suffering with chronic knee issues and having been told to lose weight by his orthopedic surgeon, Bob Wilson will try in vain to find a new orthopedic surgeon, preferably one who weighs 300 pounds and smokes. Failing in that attempt, he will lose 50 pounds. Again. This will bring his total lifetime weight loss to more than 1,750 pounds. And there you have it. We will look forward to returning at year's end to see how accurate I was. Until then, have a great 2017! This article first appeared at www.workerscompensation.com. 

For some, winter is a time of celebration – the holidays, winter sports, beautiful snowy landscapes and a reason to drink hot chocolate. For others, the shortened days bring on something called Seasonal Affective Disorder (SAD). For people who experience SAD, otherwise known as the “Winter Blues,” they find their symptoms of mild depression start in the fall and end as the sun shines for more hours in the spring. People who live farther from the equator are more likely to feel the effects of shorter days. According to the American Family Physician, about 6% experience severe SAD and as many as 20% may experience a milder form of the disorder. Common symptoms include:

• Lack of energy that is not fixed by increased sleep
• Upset mood: irritability, sadness, mood swings, anxiety
• Less interest in your usual activities
• Weight gain from increased carbohydrate craving
• Distraction and decreased ability to cope with stress.

What causes SAD? How can it be treated? Sunlight affects our biological rhythms and our sleeping and hunger schedules. When we lose our ability to access sunlight, our “biological clock” is disrupted. Furthermore, sunlight affects one of our main mood chemicals, serotonin, the brain chemical that affects sexual desire, feelings of well-being, sleep, memory and even the way we interact with one another. Thus, treatment for SAD can involve light therapy, counseling and medications. Dealing with SAD also means making a conscious effort to get outdoors when there is sunlight. Here the Mayo Clinic offers more information on treatment and home remedies. What is the relationship between SAD and suicide? See also: Blueprint for Suicide Prevention   There is a myth that the winter holidays and “winter blues” increase the risk for suicide. Many inadvertently may increase risk by perpetuating this myth and interfering with prevention efforts through this misinformation. According to the CDC, the suicide rate is, in fact, the lowest in December and the winter months around the world; the rate peaks in the spring and the fall. Several theories exist as to why this might be so. One is that during the holidays, more family tend to be around, which might increase a sense of connection or decrease opportunity for suicide. Another reason might be that people hold on for hope of positive changes in the new year, and when these changes don’t happen, their hopelessness increases. One final reason related to SAD is that, when the sun returns and the weather warms, some may find an “energized despair,” when before their energy was too low to act on their suicidal thoughts. See also: What Is the Business of Workers’ Comp?   In summary, Seasonal Affective Disorder is real and can be very disruptive to health, productivity and relationships. Like all other health conditions, early detection and treatment can significantly improve quality of life.

The insurance industry has been historically slow to embrace technology, lagging behind even the banking sector. This attitude is understandable -- the industry relies heavily on historical data, which is generally not available for new technology, and the industry is immensely risk-averse, as even one failure to live up to their commitments could be devastating to an insurer. Technology is putting pressure on the insurance industry from three sides. New customer demand The first is customers, who have grown accustomed to an easy, Facebook-like experience in interacting with large service providers. Current insurance products are far too generalized and one-size-fits-all to appeal to a customer base that is expecting easily individualized products. Technology like usage-based insurance can make a provider significantly more appealing in this respect by making it possible to only pay the premium for risk actually taken; wearables can revolutionize the healthcare insurance market by allowing for truly personalized pricing. Competitors The second source of pressure comes from competitors. Not only will consumers be more likely to give their business to a digital-native insurer, but entire new kinds of exposure are opening that will give a challenger an opportunity to strike. The cybersecurity market is growing everywhere, along with the pressure to contain and manage the risk better, yet traditional insurers are slow to make convincing offers to threatened customers. In addition, the blockchain is making a more decentralized market possible: While insurers could so far count on the immense need for capital as a barrier to entry, the blockchain could finally bring the transparency and reliability needed to make dynamic, small-scale insurance underwriting possible. Internal Processes Lastly, technology provides new avenues to cut costs in internal processes and pricing products by making available huge sources of data and enabling its more efficient analysis. Insurers currently spend a lot of money on services that aren’t in their core specialty- processing claims, detecting fraud or manually assessing new risk. New algorithms for predicting risk, for example using machine learning, will allow for vast automation of the underwriting process, and managing contracts and identities with the blockchain will reduce the resources needed for fraud detection. New diagnostic technology, like wearables for healthcare or GPS trackers for cars, is bringing a new wealth of data that may balance the lack of historical data that is currently keeping insurers in as-is mode. See also: Which Rules Should Insurtech Break?   With those pressures, however, come a number of important opportunities in three areas: underwriting automation, connected devices and cybersecurity Underwriting Automation Data Automation in the insurance industry can make underwriting both more efficient and more precise, with different lines offering different opportunities for automation. Current Automation Insurers are currently using automation primarily to support underwriters and aid in triage, with only a fifth saying their primary objective is to fully automate the process. What kind of automation is possible varies between business lines, but even in the most advanced segment, personal lines, only 42% of insurers say they have “mastered or almost mastered” automation. At the bottom end, life insurance, 80% of insurers say they are struggling or just getting started with automation. Insurer ambitions Insurers are focusing on personal lines and small and mid-market commercial to expand their automated underwriting capacities, with more than 40% saying they will increase their spending in each field. However, in line with being late adopters, it is estimated that only 10% of insurers will have an algorithmic business strategy in 2019 that makes use of more advanced techniques like machine learning, which could make automation viable for more involved lines like health. New Data For most policies in motor, home and life, an underwriter reviews between eight and 15 factors. Current automation systems for life insurance have similarly small data requirements, with around half the systems drilling down into no more than 10 questions, and a third of them asking as many as 60 follow-up questions. Most systems incorporate lab data and prescriptions databases. These amounts of data are small compared with what a sophisticated automated system could use to assess risk. Trends As a naturally data- and analysis-heavy industry, insurance stands to profit from advances both in the sophistication of automation and in its affordability. As an industry that is also conservative and late to adopt technology, it faces the risk of being outflanked by a less risk-averse challenger that’s willing to bet on automation skills. Insurers have for more than 25 years used primitive systems to fully automate small-scale risk in simple lines (for example, travel insurance), or to aid their underwriters by more effectively triaging requests and directing them to the underwriter that’s best suited for them, or to do some preliminary analysis. These systems generally rely on simple rules and are seen as supporting underwriters. As automation products become easier and cheaper to implement, and new decentralized technologies like blockchain make small-scale underwriting more transparent and available, we can expect their share to increase incrementally. More importantly, insurers are also facing a new wealth of data both for historical risk research and for better assessment of new risk that could fundamentally change the way risk is priced. However, traditional systems are not equipped to deal with these amounts of data, and few insurers are ready to implement the machine learning technology that would be. The problem is that modern machine-learning can produce results but cannot generally explain them. Policy underwriters are naturally skeptical of underwriting risk based on a technology that provides no justification for a pricing beyond the rigor of its setup and the vastness of the data it has been trained on. However, insurers already use fundamentally similar systems for assessing their underwriters’ competence---if a junior underwriter repeatedly prices a risk outside of the usual range the same way a more senior underwriter would, the junior underwriter will be allowed to price those risks without supervision. If insurers can learn to trust this approach with technology, too, they will embrace machine learning. Insights Underwriting automation will become a significant field of innovation around both reducing staffing and coping with the new amounts of data, with each business line requiring its proper automation technology. As risk assessment algorithms become more reliable and executives more confident in them, they will be able to make low-level underwriting both cheaper and more consistent. As new sources of data for risk analysis become available, insurers will have to use machine learning algorithms to be able to make sense of the vast amounts of data. Connected Devices Data Connected devices in insurance describes the network of smartphones, wearables, home diagnostics and other internet-connected devices that form one of the fastest growing spaces within insurtech. This stands to make available a new wealth of data for insurers to handle better pricing and encouragement of risk-decreasing customer behavior. Wearables and Diagnostics 87.7 million U.S. adults, or about 38%, are expected to be using a wearable device in 2019, a growth mainly fueled by smartwatches and wristbands. VCs invested around $3 billion in IoT startups worldwide in 2015, and 38 million European and North American households are expected to have a smart thermostat in 2018, with two-thirds of those lying in North America. Nearly two-thirds of consumers already own or plan to purchase an in-home IoT device in the next five years. Only 3% of insurers are already making use of wearable devices, and less than a fourth are developing a strategy for them, even though 60% of insurance executives believe that wearable technologies will be adopted broadly by the industry. Telematics Telematics in cars allow insurers to track driving patterns of their customers. The advent of cheap GPS devices has made this technology ready for widespread adoption with usage-based insurance (UBI) and dynamically adjusted premiums. More than 15% of the U.K. car insurance market is usage-based, and Progressive alone has more than 4 million UBI customers in the U.K. In the U.S., there are around 5 million UBI policies in effect, and approximately 70% of all auto insurance carriers in the U.S. are expected to use UBI by 2020, with more than 26% of all motor policies being usage-based. Usage-based programs on average lead to a 57% decrease in total claims cost. Health Insurance Health insurance tech startups raised more than $1.2 billion in venture funding in 2015, more than twice as much as in 2014, and making up almost half of the $2.6 billion in venture funding that was raised by insurance tech startups overall. Insurers themselves have committed more than $1 billion to investments in startups, and many of them have established their own in-house venture capital funds to exploit IoT and ready themselves for new markets. 58% percent of smartphone users in the U.S. have downloaded a health-related app, and around 41% have more than five health-related apps, generating data that insurance providers could use to fine-tune their individual premium pricing and encourage low-risk customer behavior. The first insurance company to offer discounts to customers using technology aids for better living was John Hancock in 2015. Other companies in the U.S. and elsewhere have since followed suit, offering as much as a 15% premium discount. Trends The number of connected devices is projected to grow by 35% each year over the coming years. This creates a new wealth of data, which insurers see as important but do not know how to tackle. To understand how insurers can approach the issue, we must look at the health insurance industry, which is at the forefront of integrating wearable tech and makes up for about half of all insurance tech investment. Most of the efforts to integrate technology by insurers are simple and mainly designed as promotions, like awarding credits for a number of steps taken: this is a far cry from what big data could do for adaptive premium pricing based on comprehensive health data for each customer. The problem is likely a skepticism toward new technology for which no historical experience is available. See also: Top 10 Insurtech Trends for 2017   The other major industry using connected devices is car insurance. Here discounts are given to customers who drive less and more safely than others, and the benefits so far have been clear: a 57% reduction in claims. It remains to be seen how much of this reduction will turn out be a temporary Hawthorne effect, but it is sizable enough to pique interest everywhere. The major problem is that so far insurers do not penalize worse-than-average drivers, and it is unclear to what extent customer will accept self-tracking as mandatory or de facto mandatory by pricing. The same issues will also have to be faced by other insurance industries moving to integrate IoT. Insights Insurers agree that the Internet of Things and wearables will play a major role for the industry but have so far only used them in often-gimmicky promotional efforts, hindered by the fact that they cannot penalize customers for risk-increasing behavior. The health insurance market is the main point of investment for insurance tech, but the rise of smart devices everywhere makes innovation possible in all parts of life. The first insurer to overcome the regulatory hurdles and offer truly adaptive and responsive insurance that is not limited to one or two factors but embraces big data will have a strong first-mover advantage. Cybersecurity Data The cyber insurance market grows each year both in size and import but is insufficiently understood and served by insurance providers, who so far have few technological options to contain, predict and address cyber risk. Risk levels and market size Estimates for the yearly cost of cybercrime vary from €330 billion to €506 billion. The cost will increase as businesses and their supply chains become more digitally integrated. In the past three years, the average economic impact of cybercrime per organization in the U.S. has risen from $11.6 million to $15.4 million. The biggest share of this impact comes from the cost of business disruption. The global market for cyber insurance is estimated to rise to $20 billion in premiums by 2025. Customer awareness and adoption Businesses are insufficiently insured and informed around cyber risk. Around 40% of Fortune 500 businesses currently have insurance against cyber incidents, but generally not enough to cover their full exposure. In the U.S., 24% of all business have some form of cyber insurance. 48% of enterprise customers say they lack the necessary understanding of the complexity of cyber risks to better prepare against them. Available products and expertise Of the 10 largest insurers, only five offer standalone cyber coverage. While 90% of all insurance underwriters offer cyber insurance as an add-on to other products, more than 50% do not have any dedicated underwriters for cyber risk and rely on underwriters for other lines. Consequently, 70% of insurance brokers claim there is little to no clarity about what is covered in cyber products. Trends Cyber insurance is a major challenge for insurers as there is little historical data to inform the correct insurance pricing, and there is great variation from year to year in the kind of cyber attacks and damages that businesses face most. Technological solutions to better protect against cyber threats or at least contain the risk are unsatisfying. As a consequence, the traditionally conservative, risk-averse and technologically skeptical insurers are failing to live up to their role as protectors of businesses against new, existentially threatening cyber risks. While adapting rapidly, the strength of protection against cyber crime is unlikely to proportionally increase with the strength of the attacks, so defenses against cyber attacks are usually about one generation behind, with new types of attacks emerging each year. Businesses and their supply chain are digitally integrating to an ever larger extent, so both the target size and sophistication of cyber attacks will lead to rising risk and damage from cyber incidents, creating more exposure for businesses everywhere. These businesses are by and large aware of this threat but find themselves insufficiently informed about how to protect themselves because insurers fail to provide the much-needed expertise. The damage to different developed countries’ GDP from cyber crime ranges from 0.5% to 1.5%. As this share increases, we can expect regulatory pressure, which already represents a big liability risk for cyber incidents, to lead to an even higher demand for comprehensive cyber insurance. At the moment, insurers are still unsure about how to best underwrite cyber risk and often go the safe route of not offering dedicated cyber products at all, or only offering very limited products. As cyber insurance becomes more of a business necessity, insurers that cannot provide expertise on it will seem unreliable and unfit to support a business and see their market share suffer in other lines as well, and hence this area becomes an important space for further investment. See also: How to Measure ‘Vital Signs’ for Cyber Risk   Insights Cyber risk is a major, growing risk to insurance providers, including banks, and businesses looking for insurance, both because of liability exposure and the threat of business interruption that could run into substantial unplanned-for costs. Even though awareness is increasing among business leaders, insurers are struggling with offering the right products with relevant features and pricing because of their lack of experience. An insurer that knows how and is willing to underwrite this new type of risk will quickly capture a sizable market share. There is a level playing field for insurers and new players as there is no historical data available for both -- agility and willingness to use new sources of data could be a competitive edge for new insurtech players. You can find the full report from which this article is excerpted here.

Every day, our colleagues take care of people facing uncertain situations. Whether they have a workplace injury, need time away for the birth of a child, experience a medical situation that will lead to time off, are in an auto accident or suffer product or property damage, we are here to let them know that it’s going to be okay. Part of our job in caring for these people is to simplify and clarify the process and to explain what consumers can expect. An evolving system, shifting regulations, rapidly advancing technology and economic uncertainties add to the complexities they face. Key areas in the spotlight for the coming year include good health empowerments, regulation transformations, consumer-centric progressions, risk circumventions and tech modernisms. We will continue to offer our insights as we monitor the following business advancements and challenges throughout 2017: Good health empowerments Accessing care via technology Technology advancements will continue to influence healthcare delivery. Connecting a specific injury or condition with a quality provider in a virtual setting for more immediate treatment will make these advancements more readily acceptable and increase demand. Balancing the scale of pain management Increasing opioid addiction and the legalization of medical marijuana will ensure pain management remains at the forefront of industry discussions. Increased education about the dangers of opioid abuse, the availability of marijuana as a medical alternative and the introduction of alternative pain management techniques will continue to dominate the conversation. Supporting mental health initiatives The pressures to reduce stigma and strengthen initiatives aimed at psychosocial issues and behavioral health will continue to mount. The linkage between absence at the workplace and mental health will continue to be highlighted. See also: 10 Insurance Questions for 2017   Regulation transformations Compliance enforcement Employers will continue to manage compliance-related issues as they respond to changes in the ADA/ADAAA, FMLA and other federal and state laws affecting our industry. Political reorganization and shifting administrative priorities may also create regulatory shifts for OSHA and the EEOC. Navigating regulatory changes Assessing the impact of provisions introduced by newly elected officials from the federal and state level in the areas of healthcare, workers’ compensation and parental leave will be at the forefront. It will be necessary to monitor newly introduced legislation in key states such as California, New York and Florida to determine how best to respond and comply with new regulations. Workers’ compensation strategies Primary steps among industry leaders include finding common ground and developing strategies focused on benefiting all key stakeholders. Those who favor a federal workers’ compensation option point to inconsistent benefits, rules and regulations among the states. Others believe the state systems have proven to be effective and simply need to be updated. By understanding what should be changed or replicated, legislators can work to revitalize workers’ compensation and help ensure that it continues to fulfill its original purpose. Consumer-centric progressions Enhancing the claims experience The current claims paradigm will continue to shift and be characterized by an increasing focus on the consumer. The needs of injured or ill employees and other consumers will assume center stage. Claims expectations will be established early on; information and resources to support the consumers’ needs will become more readily available; and care and concern will drive and transform the claims experience. Bridging benefit models Integrated benefit plans have long been discussed, but not widely implemented. Pushing the boundary between various benefit providers, administrators, payers and employers through advanced online platforms could be at the forefront of many discussions. In addition to technology advancements, there is a renewed health, wellness and compliance mindset that is fostering increased interest in integration. On-demand consumerism Consumer and customer expectations are on the rise, and providing an immediate response has become expected in many industries. Increased connectivity and immediate communication are now the standard. In the past, it was enough to provide claim and case details through push technology, seamless payment processing and direct bank deposits. Now, the gold standard is to provide a consumer-focused experience where access to resources and data are a click away. With enhanced consumer engagement comes faster resolution, reduced litigation and reallocation of resources to focus on more complex matters. Risk circumventions Crisis plans Building resiliency through new predictive models in pre-catastrophic events and using new technologies in post-disaster recoveries is on the mind of many employers. Whether the emergency is natural or man-made, cyber- or product-related or a supply chain interruption, having the right pre-catastrophe plan in place continues to be a discussion among employers, brokers, carriers and payers. Geo risks More organizations are likely to consider an enterprise-wide response to growing political, economic and global risks as customer markets expand. There is also an increasing need to address travel risks for employees servicing global customers on a short-term or interim basis, and ensure preparedness plans are in place. Talent strategies There continues to be a need to attract, train and retain new talent as baby boomers enter retirement years. Employers must learn how to accommodate multiple generations with varied preferences – from telecommuting to technology – and ensure successful integration with the existing workforce. Creating strategies and using new tools for knowledge sharing will help enhance communication and understanding. See also: 2017 Priorities for Innovation, Automation   Tech modernisms Artificial and emotional intelligence The rapid advancement of technology has led to conversations and interest in artificial and emotional intelligence. Developments in these areas and others such as new connected health technologies, Internet of Things, drones, driverless cars and services using virtual technology are contributing to privacy law and ethical guideline debates. Explosion in actionable data With today’s technology advancements and increasing number of connected devices come an explosion in actionable data, creating a need for more data miners. There is a growing demand for data scientists and engineers who can interpret actionable information. The use and expectation of having more refined predictive analytics to drive decisions will continue to increase and underscore the need for this specialized talent. Deciphering actionable insights as more data pours in from various connected devices will continue to be an important topic of discussion. Self-service innovations Having been introduced in the banking and airlines industries early on, consumer self-service options are becoming increasingly popular in the risk and benefits industry. Consumers of claims services are seeking the same user experiences that they have become accustomed to in the B2C world, including instant information access, connectivity to tech support and two-way communication when and how they want it. You can find the original report here.

As 2017 gets rolling, state legislatures are convening all over the country. Several of them are about to make mistakes in the area of medication management in workers' compensation. My colleague, Mark Pew, and I have written and spoken extensively on the topic of drug formularies. And we're currently working, formally and informally, with regulators and other stakeholders in jurisdictions across the country on approaches that make sense for employers, doctors, pharmacists and, most importantly, injured workers. While there's not a lot to be gained for any of us in calling out individual states, there's a great deal at stake for all of us in the successes and failures of drug formulary implementations. A failure (perceived or real) in one jurisdiction can lead another jurisdiction to delay its own attempt at a formulary — or to scrap it altogether. So how can we tell if a law or rule set is headed in the right direction? Or, alternatively, if a state's efforts are more likely to lead to sub-optimal results? Here's a quick litmus test that you can apply to make your own determination: 1. Will the formulary rely on independent, third-party medical treatment guidelines? There's a great deal of industry discussion surrounding this topic, mostly focused on the definition of "evidence-based medicine." While that conversation is interesting, it's not the critical factor in overall formulary success. The crucial questions are twofold: First, will there be room for political influence in the formation of the guidelines? Second, will the guidelines be updated with sufficient frequency? See also: How Should Workers’ Compensation Evolve?   2. Does the formulary process build off of existing dispute resolution processes? States that have successfully implemented drug formularies thus far have done so by relying on existing rules regarding resolution of medical treatment disputes. States that try to simultaneously create a formulary and new dispute resolution processes to support it are, in reality, trying to do two things at once. Not impossible, but certainly creates execution risk. 3. Does the formulary allow for a remediation period for legacy claims?  On the one hand, a single effective date creates chaos as employers and physicians try to figure out how to address legacy claims, which tend to be more complicated. On the other hand, applying new rules to new injuries creates two standards of care within a workers’ compensation system, where an injured worker’s treatment plan is driven entirely by the date on which he was injured (which makes no clinical sense). I look for regulatory language that takes a balanced approach — an initial implementation date for new injuries, followed by a remediation period for legacy claims, followed by a fully effective date for new rules and all claims. 4. Is the formulary process scalable?   I always look to see if the dispute resolution process can stand up to a significant volume of cases. While the goal of any formulary adoption should be to streamline access to medically necessary medications for injured workers, states should take a "hope for the best, plan for the worst" approach. Dispute resolution processes that rely on one individual or one office for ultimate resolution may lead to bottlenecks and, in a worst-case scenario, undue influence. I always ask myself, what will this look like if there are more disputes than the state expects? See also: Five Workers’ Compensation Myths One bad apple can spoil the bunch. Let's get this right. The article was originally published here.

A conclusion concerning insurance aggregators (aka comparison portals) in the Accenture Distribution and Agency Management Survey is: “Irrespective of insurers’ views on the role of aggregators, it seems they are here to stay." This conclusion is supported by many others, but I venture to doubt it . The aggregator business may be nearing a tipping point. There are (normal business) threats like:

• heavy competition (usual in a successful and booming market)
• takeover by the insurers (ending neutrality, a key issue for a serious comparison offer)
• high cost of acquiring customers (apportioned to the customers)
• pressure on product development (requiring cheaper derivatives of existing products, producing less transparency for the customer and making the process of buying insurance even more complex)

Maybe those can be overcome but I see a more fundamental threat for aggregators.  Comparability Comparison of coverages and premiums is possible because of the standard insurance products we have in all markets. Products were already quite standard, but the aggregation business has forced them to become even more comparable. See also: The New Age of Insurance Aggregators   Insurance, which generates little interest among buyers and which has price as the main buying parameter, might have lived happily ever after as a mature, not innovative market, but.... The New Insurance Is No Insurance Forced by extreme pressure and pushed by new technology, a new type of service is being deployed: The insurance industry will move from claims handler to claims preventer. Creating a safer environment for the customer and his/her beloved and belongings; optimizing prevention via smart vehicles, homes and people; analyzing the residual exposure and insuring only the part that is worthwhile to transfer -- this is where insurance is headed. There are huge opportunities for the insurance provider that is willing and able to shift to:

• Real customer-centricity
• Customer engagement with continuing advice and loyalty programs
• Long policy life-cycles, away from aggregator dominance and costs
• New products and services
• New earning models
• A safer and greener environment

All will result in customized and optimized interactive protection and insurance services for the complete household. There will be one-to-one services, on the road to living services (see also Fjord Report). Non-Comparability So what’s to compare in one-to-one services and products? In living services? Of course, customers will need some guidance in this new world, as well. But it’s going to be a completely different ball game than the relatively easy “matching and ranking.” The Peak There is so much going on, to develop and to learn that this new world will take some time and the mass market has to follow, adopt and adapt. Therefore, I believe the aggregator business has not reached the peak YET. But, in my opinion, for aggregators the sky is not the limit, and they are not here to stay. At least not in their current modus operandi. See also: Understanding Insurtech: the ABCs   Ultimately The U.K. seems ahead with close to 70% aggregator-involvement in car. So there's a fair chance that the U.K. will be leading in reaching the peak, as well. Technology is developing very quickly, and prices are falling rapidly. Tech companies, OEMs, consumer electronics giants, telcos, media and utilities are already rolling out worldwide their connected devices and ecosystems. Millennials and other digital natives do expect continuous connected value added services in return for their effort and data. Revolution will come suddenly and from unexpected sources.