The Internal Revenue Service is taking as long as 21 days to review tax returns, according to research from fraud prevention vendor iovation, a clear sign that Uncle Sam has stepped up anti-fraud measures. Even so, tax return scams that pivot off stolen identity data continue to rise for the third consecutive tax season. The latest twist: Tax scammers are increasingly targeting vulnerable populations—low-income, children, seniors and homeless—as well as prisoners, overseas military personnel and the deceased, according to an FBI alert. Complimentary webinar: How identity theft protection has become a must-have employee benefit And criminals have gotten very creative about conducting phishing campaigns to fool individual consumers—and key employees at targeted companies—into handing over personal tax-related information, useful for filing fake returns. Tax software vulnerable The FBI also says criminals often use online tax software to commit the fraud. That’s particularly troubling, considering what the Online Trust Alliance found in a recent audit of free e-filing services approved by the IRS. Of the 13 services audited, about half failed somewhat basic security protocols, such as email authentication and SSL configurations. Craig Spiezle, Online Trust Alliance executive director Craig Spiezle, executive director of Online Trust Alliance, says some of the vulnerabilities, such as unsecure sites, are obvious to the casual person, let alone criminals. “These sites are such high targets, you’d expect 100% of these to be like Fort Knox,” he says. “There’s no perfect security, but you would expect not to see (simple) vulnerabilities.” Some e-filing sites, for example, had simple server misconfigurations or didn’t have current secure protocols; one provider failed to adopt an extended validation (EV) SSL certificate, leaving it open to spoofing. Although not everyone is eligible for the free e-filing services that OTA audited, Spiezle says many of the paid e-filing services are run by some of the same parent companies, and thus use much of the same lightly protected infrastructure. He says it would be fair to assume that many of the paid e-filing sites would have the same 46% failure rate as the free e-filing services audited by OTA. Personal information trades on black market Even if cyber criminals don’t use stolen tax-related data for filing fraudulent returns, that information is highly valuable on the black market. Spiezle points out that it’s the only place where this type of rich information—such as income, employer, number of dependents, Social Security numbers and even bank accounts—is available all in one swoop. “All that data that’s amassed is a treasure chest,” he says. “If you want to create a persona of someone’s identity, you have all the data in one place.” The IRS expects that, this year, 80% of the estimated 150 million individual tax returns will be prepared with tax software and e-filed—and that’s music to fraudsters’ ears. One typical avenue for cyber thieves is to file returns as early as possible, claiming refunds as large as $1,000 to $4,000 on untraceable prepaid debit cards. They can fly under the radar by filing very generic returns, and those multiple refunds turn into a lucrative operation. “They have immediate access to that cash, as opposed to credit card fraud where the value is not as high and the delivery is through a retailer, so they have to figure out what to do with those goods,” says Scott Olson, vice president of product at iovation, a provider of device authentication and mobile security solutions. Phishing, malware skyrocket According to the Government Accountability Office, the IRS prevented $24 billion in fraudulent tax refunds related to identity theft in 2013, while paying out $5.8 billion in fraudulent refunds that it didn’t discover until a year later. And the number of fraud attempts is on the rise: As of March 25, the IRS reported a 400% increase in phishing and malware incidents related to the 2016 tax season. Email phishing campaigns include links to web pages requesting personal information, useful for filing fake returns. These fake pages often imitate an official-looking website, such as IRS.gov or an e-filing service, and also may carry malware, which can turn over control of the victim’s computer to the attacker. This January alone, the IRS counted 1,026 email-related fraud incidents, compared with 254 a year earlier. Phishing scams also are targeting employers—because criminals know that’s where they can find large caches of income-related information. One growing trend is the so-called business email compromise (also known as “CEO fraud”), a variation of spear phishing. The phisher does deep research on a targeted company, then impersonates a senior executive to get a subordinate to do something.

Vidur Apparao, chief technology officer at Agari, which offers an email security platform, says malicious attachments and URLs compromised the bulk of spear phishing emails in the past. But what his company is seeing now is phishing ruses aimed at specific employees that leverage trust to get the recipient to take a specific action. Such attacks do not carry any viral attachments or bad URLs that can be detected. Yet they have proven to be very effective at duping the recipient into forwarding files containing employees’ W2 forms. “Criminals are leveraging the cloud at three separate points, in ways they couldn’t before: developing social engineering content, sending out spear phishing attacks and getting back a response,” he says. Basic security helps According to the OTA, 92% of the publicly reported breaches in 2015 could have been prevented. Take email authentication. It’s almost a basic security tool that prevents emails from being spoofed. Those OTA-audited e-filing services that didn’t use it are contributing to the breaches. “The lack of email authentication or the slow adoption in some cases has led to the prevalence of this easy type of attack,” Apparao says. Spiezle says people need to be aware that emails and other tactics are becoming more sophisticated, and protect themselves accordingly. “The problem is that we are all moving so fast, and we have all these devices and desktops—we are multitasking,” he says. “And the criminals play off that, and they’re getting more precise.” This article was written by Third Certainty's Rodika Tollefsen.

A new study―Do Higher Fee Schedules Increase the Number of Workers’ Compensation Cases?―from the Workers Compensation Research Institute (WCRI) explores to what extent workers’ compensation reimbursement rates influence the decision by the medical provider on whether to classify an injury as work-related. According to previously published WCRI research, in many states, workers’ compensation pays higher prices for treatment than group health does. For example, one study found that workers’ compensation prices were two to four times higher than group health prices in some states. And, in most states, workers’ compensation systems rely heavily on the treating physician to determine whether a patient’s injury is work-related. ”Physicians may call an injury work-related in order to receive a higher reimbursement for care he or she provides to the patient,” said Dr. Olesya Fomenko, the author of the report and an economist at WCRI. See Also: Are Your Health Cost Savings an Illusion? The study found, among other things:

• If the cause of injury is not straightforward (e.g., soft tissue conditions), case-shifting is more common in the states with higher workers’ compensation reimbursement rates. In particular, the study estimated that a 20% increase in workers’ compensation payments for physician services provided during an office visit increases the number of soft tissue injuries being called work-related by 6%.
• There was no evidence of case-shifting from group health to workers’ compensation for patients with conditions for which causation is more certain (e.g., fractures, lacerations, and contusions).

This analysis relies principally on workers’ compensation and group health medical data coming from a large commercial database. This database is based on a large national sample of patients where the data were provided by health insurers and self-insured employers. It includes individuals employed by mostly large employers and insured or administered by one of approximately 100 group health plans. The database is unique in that, for a given employee, it shows whether a given medical encounter (visit) was paid for by group health or workers’ compensation. For more information about this study, visit here.

In the technology future we are headed into, the half-life of a career will be about five years because entire industries will rapidly be reinvented. Education counts more than ever. A bachelor’s degree is now the equivalent of high school, and technology skills are as fundamental as reading and writing. Given this, my greatest frustration is that Silicon Valley is regressing by encouraging children to skip college and play the start-up lottery. That approach glorifies college dropouts who start companies—even though the vast majority will fail and permanently wreck their careers. Billionaire Peter Thiel, who cofounded PayPayl and Palantir, goes as far as giving elite students $100,000 to drop out of college. Sadly, I am on the losing side of this debate. My first defeat was in a globally telecast Intelligence Squared debate on whether too many kids go to college. With Northwestern University President Emeritus Henry Bienen by my side, I debated Peter Thiel and conservative icon Charles Murray. We lost, with 40% of the well-educated Chicago audience voting against the need to college and 39% agreeing with us. Needless to say, I was shocked. I lost again over the weekend, on a segment on CBS Sunday Morning, which is the most watched morning news show in the U.S. CBS hyped the college dropouts without showcasing the dozens of failures and lives that have been ruined. CBS took the Thiel Foundation at its word that its fellows have started world-changing companies, created 1,000 jobs and raised $330 million in venture capital. These are gross exaggerations; even the  start-ups that CBS featured are all more of the same silly apps—and there are literally thousands more like these. Here is what I said on the show: "It breaks my heart when some of the most promising students don't fulfill their potential because they're chasing rainbows. "It's like what happens in Hollywood: You have tens of thousands of young people flocking to Hollywood thinking that they're gonna become a Brad Pitt or an Angelina Jolie; they don't. "They don't become billionaires. There haven't been many Mark Zuckerbergs after Mark Zuckerberg achieved success." I added that there is little evidence the Thiel dropouts are doing much that isn't already being done in Silicon Valley. "Everyone does the same thing: It's social media, it's photo-sharing apps. Today it's sharing economy. It's 'Me, too,' 'More of the same.'" You can see the full article published by CBS here, and you can view the segment here.

This is part of a series of interviews by Shefi Ben Hutta with insurance practitioners who bring an interesting perspective to their work and to the industry as a whole. Here, she speaks with Marti Ryan and Tom Yates at Telematic. To see more of the “A Word With Shefi” series, visit her thought leader profile. To subscribe to her free newsletter, Insurance Entertainment, click here. Describe Telematic in 50 words or less: Telematic is a SaaS platform that creates personalized pricing models based on driving behavior, mobile phone usage and lifestyle behaviors. It offers insurance companies a way to more accurately price risk, yet more importantly it's a new marketing channel for a more personalized insurance experience. Why Telematic? [Marti] Because usage-based insurance (UBI) makes sense; it’s where insurance is moving; and it’s a good problem for us to solve as a team. Tom was working for a top carrier and saw how difficult it was to execute a dongle-based telematics program and realized that mobile would most likely replace the dongle/hardware solution, so he went home and built it for a year. [Tom] Marti has over 10 years of market research experience making cities sticky for the next generation. Together, we can make insurance sticky. Describe your typical client: We are in the B2B space targeting small to mid-sized, forward-thinking carriers that are looking to explore UBI and are willing to do something different and stand out. Biggest challenge: Convincing insurance companies that telematics is a play toward a one-to-one relationship with their customers, rather than an extra tool to price risk. The space is crowded with several companies focused on actuarial, B2C and fleets, but then again that's an indication of the role this technology has in the currently evolving insurance value chain. Our solution brings in a different approach to the space, one that creates a new marketing channel using 17 years of combined insurance experience to leverage mobile in an engaging way for the next generation. Who has been supportive of your cause? Co-Manager at Wisconsin Investment Partners Bob Wood has been a champion, Brian Worden CEO of TeamSoft, Liz Eversol from SOLOMO Technology, Tera Johnson of the UW-Extension Small Business Development Center programming in Madison and, of course, our families. Why did you decide to take part in the Global Insurance Accelerator? [Marti] The timing of our start-up lent itself well to an accelerator program that took place in the spring. I’m new to the accelerator scene but understand the huge value it can offer when the right circumstances align to the right program. We had applied to a Madison-based program, and in doing so we broadened our application to the Midwest market. GIA proved to be the perfect fit for us given its insurance focus and our goals; we've made connections and built relationships within the GIA network that will help us get Telematic to where it needs to be. If not for Telematic, what would you be doing? [Marti] Most likely doing three to four other things; working with the B-Corp group to help B-Corps tell their story via B The Change Media and continuing to provide business planing and consulting for the food industry, including a non-profit, kitchen incubator (FEED Kitchens) and a local restaurant kitchen buildout to allow scaling a meal preparation and delivery business using organic, local and gluten-free ingredients. [Tom] Working as a software engineer for another SaaS startup. Best life lesson: Never give up and keep asking the right questions to the right people. What are you most excited about with respect to Telematic? The opportunities that are in front of us are outstanding. We’re certain we’ve got a shot at being a partner for our target market, and, because we’re in the GIA, we’re well positioned to support Midwest-based carriers.

The New England Journal of Medicine carried an excellent article by David Casarette, MD, on the topic of healthcare illusions and medical appropriateness. Click here to read the full article. Casarette observes that humans have a tendency to see success in what they do, even if there is none. Casarette writes, “Psychologists call this phenomenon, which is based on our tendency to infer causality where none exists, the ‘illusion of control.'” This illusion applies in all walks of life, especially in politics and parenting, and it includes medical care. In medical care, the phenomenon has been referred to as “therapeutic illusion,“ and it affects both doctors and patients. Undoubtedly, therapeutic illusion is why placebos can be so effective. In one clinical study, faux surgery worked as well or better than an actual surgery for the treatment of specific conditions. If patients perceive they need surgery, e.g. for knee pain, even though it may not be medically appropriate some will search for a surgeon who can validate the need and perform the surgery. Casarette writes, “Physicians also overestimate the benefits of everything from interventions for back pain to cancer chemotherapy.” Casarette’s article is most interesting to us. Why? We’ve often felt that doctors who perform unnecessary surgeries have ethical problems. The reality may be a little more complicated. The surgery decisions may have a subconscious influence. Toomey had an interesting conversation with the chief medical officer (CMO) of a major health system. The CMO relayed that his wife was having pain in her hand, so they scheduled an appointment with one of their system’s highly recommended specialists. The specialist looked at the wife’s hand and, after a few minutes, stated that she needed surgery. The specialist did not know he was taking to a physician, and the CMO questioned how the specialist could arrive at a diagnosis from just looking at a hand. The response was, “years of experience.” The CMO and his wife got a second opinion and opted for the recommended therapy rather than surgery, and the therapy solved her issue. The attention today is on value-based contracting and data analysis. A group of 20 national employers have come together to share data, so they can assess the healthcare supply chain. But, as noted in our last blog post, analyzing the data is complex, especially because claims data are just a collection of medical bills. How are employers assessing medical appropriateness? What reports can be generated to assess a need for care? In 2014, one state's Medicare costs were $6,631 per capita while another's were $10,610. A big driver was the variation in the volume of procedures, and cognitive biases among doctors can help drive those volumes. Healthcare involves people – patients, physicians, and other providers -- and the human element makes it even more complex. So how do those involved in healthcare address the variation in medical care that is driving up costs? We are biased – we believe the employers are the catalyst to drive change for increased consistency by working collaboratively with suppliers (think Six Sigma). In any case, it’s time for change.

I’m the founder and CEO of WorkersCompensationOptions.com (WCO), a company dedicated to workers’ compensation (WC) and its legal alternatives. This letter is intended to quell the concerns of employees in our client companies—employees who may have been distressed by the recent (mostly negative) publicity from ProPublica and NPR regarding options to WC in Texas and Oklahoma. In case you only saw one installment from the Insult to Injury series, I’ll provide a quick summary. In 2014, the project's authors started to assimilate massive amounts of data from their research concerning each state’s (and the federal government’s) WC system. In March 2015, the authors began releasing articles with an indisputable premise: Collectively, these systems need improvement. That commendable beginning eventually gave way, however, to a hypothesis that is supported neither by reality nor by the overwhelming quantity of data the authors provide. Their conclusion (that employers are in cahoots with insurers to pressure attorneys, anonymous doctors and legislators into discarding the lives of an unfortunate few for the sake of bolstering corporate profits) completely misses the mark in pinpointing why so many WC systems are broken beyond repair. In fact, attorneys and doctors put at least as much pressure on WC systems as insurers, and any attempt to depict the medical and legal communities as innocent bystanders in the WC feud is simply too naive to be taken seriously.[1] I do not doubt the authors’ sincerity in addressing a serious societal problem, but I also do not believe they are equipped to understand the problem they sought—however earnestly—to demystify for their readers. Worse yet, I fear they have positioned themselves in the WC space in a manner that is only likely to retard the implementation of practical solutions. This letter is prompted by the article on Oct. 14, 2015, which painted an inaccurate—even an irresponsible—picture of both Texas nonsubscription (TXNS) and the Oklahoma option (OKO). As that article’s title (“Inside Corporate America’s Campaign to Ditch Workers’ Comp”) is lengthy, I’ll shorten it to CDWC going forward. Texas Nonsubscribing Employees: What Can We Learn? Texas is exceptional in the WC world because it has, for more than a century, offered employers a viable alternative to WC. Of approximately 380,000 employers in Texas, roughly two-thirds subscribe to a traditional WC system; the other third are nonsubscribers who develop their own models. That’s about 120,000 different systems, and there is plenty to be learned. We’ve seen various organically grown components develop from these disparate systems, many of which superficially resemble WC. Despite those similarities, however, industry experts understand how counterproductive it is to make unilateral comparisons between TXNS and WC. The authors of CDWC didn’t get that memo. Of all the various lessons learned from diverse TXNS models, one runs counter to conventional WC dogma: Employers can protect themselves while delivering superior care for employees at a fraction of the cost of WC. Eliminating the inflated costs associated with abusive practices that run rampant in WC is a critical component of that particular lesson. Because the CDWC authors insist on judging TXNS through the lens of WC, TXNS looks to them like a system that would appeal to skinflint employers who simply do not care whether their employees get hurt. However, because employees of nonsubscribing companies can sue their employers for tort, the decision to opt out of WC is likely to be penny-wise and pound-foolish for employers who do not take measures to ensure the safety of employees. The CDWC authors’ failure to unpack the importance of tort negligence means many readers will come away from the article without understanding that a typical $50,000 payout in WC could easily be either $0 or $5 million in TXNS—depending on who is at fault for the accident. Even more disappointing is CDWC’s attempt, in a one-sentence paragraph, to gloss over one of WC’s most dangerous shortcomings: the extent to which the no-fault arrangement between employers and employees has removed incentives for safety in the workplace throughout the country. If you are an employee of one of our Texas nonsubscribers, rest assured that your employer has every reason to minimize workplace accidents and to take very good care of you if an occupational injury occurs. In a nutshell, your interests are aligned with your employer’s—another critical lesson we’ve learned from TXNS. Oklahoma Option Employees: A Whack-a-Mole WC System Led You Here ProPublica and NPR harp on a consistent theme throughout the Insult to Injury series: WC is broken. We at WCO agree, and Oklahoma may provide the single best example of how and why a state’s WC system becomes unsustainable. The WC ecosystem is made up of five major communities: insurance, medical, legal, employer and employee. Abuse within the system by any of these communities leads to adjustments to the boundaries of the system. Throughout the Insult to Injury series, the authors go out of their way to sidestep the discussion of systemic abuse. They even attempt to dismiss fraud by citing a study that minimizes its role. Abuse and fraud in WC are, in some ways, analogous to speeding on the highway: Almost all drivers abuse the speed limit, but very few are issued citations. Similarly, the cases of clear-cut fraud in WC only reflect a small portion of the amount of abuse going on. But even if we allow the authors to exclude all instances of clear-cut fraud from the WC conversation, we are still left with rampant abuse driven by insidious systemic incentives. For decades, abuses and inefficiencies within the WC system have led to each of the five communities touting the need for major reforms—at the others’ expense. Real reform threatens each community, which leads to stalemates in negotiations. Major upheaval has been avoided via the compromise of pushing and pulling the system’s boundaries, resulting in a decades-long game of whack-a-mole being played across the nation. If one voice cries, “Data shows an alarming trend in opioid abuse,” that mole gets swatted by requiring more medical credentials for prescribing pain killers. When another shrieks, “Overutilization is surging,” that mole is whacked through costly and time-consuming independent medical examinations. When someone else observes, “Our disability payouts are higher than neighboring jurisdictions,” that mole prompts us to lower disability payouts. Immediately, a fourth voice shouts, “Pharmaceutical abuses make up 8.4% of total costs,” and that mole persuades us to introduce drug formularies. But there isn’t even a moment of silence before another voice remarks, “Our analysis shows dismemberment payouts in this jurisdiction are lower than those of our neighboring jurisdiction.” That mole gets whacked by proposing legislation to increase dismemberment payouts—legislation that is dead on arrival.^[2] At some point, we have to realize the moles are multiplying faster than we can whack them. (If my commentary doesn’t apply to other jurisdictions, I’m happy to restrict it to Oklahoma and Texas because writers can best serve their readers by acknowledging the limitations of their own expertise.) Even if we concede that the changes detailed in the paragraph above aren’t necessarily bad (which I’m not conceding; I’m just trying to be polite and move the argument along), they demonstrate a persistent pattern of outcomes, inclusive of abuse, inherent in any hierarchical bureaucratic system. Regulators are busy reacting to entrenched abuses while market participants find new and exciting ways to game the system. This futile game of whack-a-mole is endless. The Sooner State had a front row seat to witness what TXNS accomplished—both the good and the bad.[3] With that first-hand knowledge, the Oklahoma legislature has finally provided the state—and the country—with an opportunity to see whether real change can restore function to a malfunctioning system. While WC stakeholders assure us they are only a few more whacks-at-the-mole away from making WC hum, Oklahoma lawmakers have written a new chapter in the history of workplace accident legislation. The OKO is neither WC nor TXNS. The brilliance of the OKO is that it doesn’t attempt to overhaul a broken WC system. The legislators effectively stepped away from that decades-old stalemate. Instead of an all-out overthrow, they left WC in place and created an option for employers who were willing to try something new—which is exactly how WC itself was introduced a century ago. Because the OKO is substantially modeled on TXNS, it is easy to see why the CDWC writers conflated the two in their analysis. The errors in CDWC concerning ERISA’s applicability, employee benefits and appeals committee processes in Oklahoma are all presumably honest mistakes made by writers who, in their zeal to distinguish TXNS and the OKO from WC, failed to distinguish TXNS and the OKO from each other. Nevertheless, it’s important for employees to understand that TXNS varies dramatically from one employer to another, and many of the rules concerning TXNS do not apply north of the Red River. Although the CDWC authors misleadingly couple TXNS and the OKO with respect to ERISA’s applicability, ERISA plays no direct role in occupational accidents in the OKO.^[4] We’ll be happy to get you a legal opinion on that, but for our purposes regarding CDWC, take my non-legal opinion as on the record. If others disagree, they should go on the record, as well. While ERISA has served employers and employees well in TXNS, its role in the OKO is only implied (if that). We are free to use it where we wish, as long as we are compliant at the state level. Presumably tied to their ERISA misapplication, the CDWC authors assert that “benefits under opt-out plans are subject to income and payroll taxes.” Such tax advice is unusual from investigative journalists without citation, and I have asked the authors to share their source. Although the jury is still out on this tax issue, it is a point the CDWC authors must distort to substantiate their otherwise baffling claim that the workplace accident plans of OKO employers “almost universally have lower benefits.”[5] If any OKO plans really do offer benefits that aren’t at least as good as those provided by WC, they’re illegal. That’s how the legislators have written the law, and it’s what they’re dedicated to achieving for workers, regardless of obfuscations invoking TXNS, ERISA and unresolved tax implications. The authors of CDWC also completely misrepresent appeals committees for at least a majority of OKO employers. The authors overlook a dramatic improvement to employee protection that the OKO makes to TXNS when they claim that appeals committees in Oklahoma work analogously to appeals committees in Texas: “Workers must accept whatever is offered or lose all benefits. If they wish to appeal, they can—to a committee set up by their employers.” That’s dead wrong. Executives at each of our OKO employers are fully aware that, in case of an employee appeal, the employer has nothing to do with the selection of the appeals committee panel members or the work they complete. The process is independent from the employer and extremely fair.[6] The CDWC authors would do well to read Section 211 of the law more carefully. On the subject of benefit denials, I’ll share a single data point from our OKO book: To date, we have denied exactly one claim. This is a nascent system, so we must be very careful in drawing actuarial conclusions. Still, our company has led more employers from traditional WC into the new OKO than any other retailer, so we have a bit of credibility to offer on this subject. The point of the system isn’t to deny benefits to deserving employees but to ensure benefits are delivered more efficiently. The system is working. The CDWC authors only provide one OKO case study, Rachel Jenkins. Strangely, they lump Jenkins in with four TXNS case studies. The Jenkins case is still being tried. We will withhold opinions—as we hope others would—until a more appropriate time. As a reminder, while the OKO law is stronger today than ever, if it were to be deemed unconstitutional by the Oklahoma Supreme Court, we would have 90 days to get everyone back into traditional WC (per Section 213.B.4.). Next: Vigilance and Diligence My comments are mine and mine alone. I do not speak for any associations or lobbyists. I have no interest in debating those who inexplicably assume that any alternatives proposed to a failing system must stem from sinister motives. However, I encourage anyone (from prospective clients to employees of existing clients) with questions or concerns to call me. Another option for learning more is to click here and watch a formal debate regarding the OKO. This footage was shot in September 2015. It features Michael Clingman arguing against the OKO while I, predictably, argue for it. One thing you can’t miss in that video is my desire to oust most attorneys from the scene. To help explain, I’ll adapt a quotation from John F. Kennedy (who was discussing taxation) to my own area of concern (the well-being of employees): “In short, it is a paradoxical truth that employee outcomes from increased WC protections are worse today, while economic results suffer, and the soundest way to create higher and better standards of living for employees is to eliminate these abused protections.” For philosopher kings, the theory of the OKO may not sound as good as the theory of WC, but when it comes to practical realities the results demand everyone’s attention. To summarize my primary criticism of Insult to Injury, it simply hasn’t done enough. The story it tells is insufficient and smacks of partisanship and ideology, two biases that ProPublica’s journalists allegedly avoid. WC is substantially more complex than a corporation-out-to-exploit-its-workforce short story. Ignoring abuse in each of the communities in a five-sided WC debate demonstrates a lack of journalistic impartiality and a stunning deficiency of perception. Moreover, to my knowledge, ProPublica hasn’t crafted any relevant suggestions for legislation, simply leaving its readers with the vague and implicit notion that federal oversight is needed. If that is the goal of Insult to Injury—to provide one-sided, emotional yarns alongside a treasure trove of data, hoping it will all spur some federally elected officials to create real change at long last—then I suspect ProPublica will still be holding this subject up to the light of opprobrium upon the retirement of each of the series’ authors. We do not aspire to win over the authors or even their followers. We will focus our energies each day on providing the best workplace accident programs for employers and employees alike. Our results should speak for themselves. Finally, I am not an attorney, and nothing in this letter should be taken as legal advice. Sincere regards, Daryl Davis Footnotes: [1] With medical providers, overutilization is always a concern. Click here and watch the video from the 12-minute to the 15-minute mark for a detailed description of rampant WC abuse by surgeons who provide unnecessary and damaging back procedures. If the workers weren’t disabled prior to the surgeries, many were afterward. As for the legal community, simply view slide 73 of the NCCI’s 2013 Oklahoma Advisory Forum. WC disability payments, which is where attorneys get their cut, were 38% higher in Oklahoma than in neighboring states—not because jobs are 38% more dangerous in Oklahoma than in Kansas or Texas but because Oklahoma attorneys are 38% more effective at gaming the state’s WC system. [2] Alabama SB 330—which was prompted by Insult to Injury—never got out of conference. From what I could gather, lengthy negotiations between several different interest groups led nowhere, with the Alabama Medical Association at the center of this particular stalemate. Not surprisingly, the two special sessions called by Alabama Gov. Bentley in 2015 were strictly focused on the state’s budgetary crisis; this bill was never discussed. [3] The final Texas case study offered in CDWC deals with Billy Walker, who fell to his death while on the job. The upside to TXNS is his estate’s common law right to pursue a tort lawsuit against his employer. The employer could have been ordered to pay Walker’s estate a settlement in the millions, but the employer filed bankruptcy before any such judgment could be awarded, which is plainly an unacceptable outcome. This demonstrates a lack of surety—the single biggest problem in TXNS. OKO addresses this issue in various ways, most notably in Section 205 of Title 85A, which guarantees surety for injured workers. [4] For the non-occupational components of your OKO program, ERISA does apply. [5] Per Section 203.B. of the statute, compliant plans “shall provide for payment of the same forms of benefits included in the Administrative Workers' Compensation Act for temporary total disability; temporary partial disability; permanent partial disability; vocational rehabilitation; permanent total disability; disfigurement; amputation or permanent total loss of use of a scheduled member; death; and medical benefits as a result of an occupational injury, on a no-fault basis, with the same statute of limitations, and with dollar, percentage and duration limits that are at least equal to or greater than the dollar, percentage and duration limits contained in Sections 45, 46 and 47 of this act.” (Emphasis mine.) [6] Details of OKO appeals committee procedures are generally misunderstood—for now—by plaintiffs’ attorneys (and, apparently, investigative journalists). Attorneys frequently assume that, because the employer foots the bill, the employer controls the process. For a peek at how the appeals committee process really works for a majority of OKO employers, those curious should watch this video.

If you are a CFO or HR professional reading this article, you are probably familiar with the typical renewal discussion with your employee benefits broker. It goes something like this: Broker: "Well, the insurance company initially wanted a 12% increase." You: "How can that be? We have performed fairly well this year." Broker: "I agree, so we went back to the insurance company and negotiated the increase down to 5%. That is two percentage points below the industry average, so I suggest we lock it in and wrap up the renewal." This conversation happens all too often. Cost increases are the norm in the health insurance industry, and employers are satisfied with merely beating industry averages (while brokers are receiving pay raises because of commissions on the higher premiums). By accepting these terms, employers may be overlooking a big problem. See Also: 7 Tools for Cutting Insurance Costs in 2016 Let's pretend the data below is your three-year insurance summary. Take a look and determine if you have had a successful run.

• Enrolled employees: 300
• Total health plan costs: $3.5 million
• Average annual cost increase: 2.5%

At first glance, it would appear that you had a pretty successful stint. A 2.5% average over the past three years is definitely beating industry averages. So what is the problem? A closer look shows you are spending more than $10,000 per-employee-per-year (PEPY). Was this really a successful three-year run?  No. You should be ticked off with this performance. because YOU WERE PAYING TOO MUCH TO BEGIN WITH. For comparison, the average cost of providing a group medical plan in the state of Colorado is $8,160 PEPY. The average cost of providing a group medical plan in the U.S. is $9,504 PEPY.. By spending more than $10,000 PEPY, you are spending more than the average U.S. employer and significantly more than the average employer in Colorado. Now, plan costs can differ based on industry and location, but the message here is clear. Do not be satisfied with merely beating industry averages. It is too easy to be satisfied when you are only comparing your current costs with your previous costs. If you are an employer that is already spending too much, it is time to challenge your broker and the status quo. Dig in and find out why you are paying too much, and begin implementing the appropriate cost-containment strategies that will help you reverse the cost increases (albeit small) that have affected your plan for far too long.

In my last post, I described the state of the life insurance industry, including the pain points where InsurTech entrants are poised for impact. The life insurance industry is suffering from a dying (literally) distribution model, complex products and a flawed purchase funnel. New entrants can transform the industry by bringing a clean-sheet approach to:

• Putting the client at the center of the business
• Prioritizing the direct-to-client experience, including simpler products and path-to-purchase
• Launching businesses on a back-end that enables low-cost, fast issuance and personalized underwriting and offers
• Creating business models that align carrier and client interests and flex beyond protection-after-the-fact to providing value through prevention services
• Supporting multi-channel servicing and claims management that satisfy clients
• Using data responsibly to be proactive, personalized, timely, cost-effective and relevant
• Treating life insurance as part of the client’s broader financial plan, including the connection to anticipating one’s healthcare requirements and managing the drivers, to the extent these are controllable, of health problems
• Aligning with the demographic trends (the boomer handoff to the millennial generation and the emergence of the new majority in the U.S.) and the technology trends (mobile as the main screen; the role of social media in the client experience; and the application of big data to change the experience and business model)
• Disproving orthodoxies that have become barriers to innovation for the sector, i.e., “insurance is sold not bought,” “the agent is the customer,” et al.

As much as start-ups are emerging and being funded aiming at health, home and auto, much less attention is being paid to either life insurance or its sibling, long-term care. One founder/CEO with whom I spoke this week had two possible explanations: (1) Life insurance is the stepchild of the sector, and (2) the “sold not bought” orthodoxy is embedded, even among start-ups, which are typically seen as better not only at casting aside such self-imposed obstacles but seizing upon them as open doors for disruption. These factors may be deflecting entrepreneurial energy and attention in other directions. See Also: InsurTech Can Help Fix Drop in Life Insurance Long-term care has been a challenging product for traditional carriers, with players either abandoning the product or re-pricing and reconfiguring their products as flaws in earlier underwriting have become clear. According to Consumer Reports, between 2007 and 2012, 10 of the 20 top long-term-care providers stopped selling the product, and those in the business began raising rates, some reportedly as much as 90%, to address high claims projections. That said, there are new ventures worth watching, and the good news about the relatively low level of attention being paid to life insurance, for those who see ignored space as white space, is that there could be more opportunity to succeed for those who engage. Here are a few start-ups focused on the valuable white spaces: In stealth mode are three companies worth keeping an eye on:

• Sureify Labs is focused on “bridging the gap between insurers and their current and future policyholders” through a B2B offering aimed at helping traditional carriers move into the new world. The company’s site states that the platform “starts with consumer web and mobile applications that drive engagement through device-integrated wellness, savings and rewards programs tied to a policy. Behind the scenes, we give you as the carrier all the tools necessary to engage, communicate and up-sell your policyholders through digital mediums.” This sounds as though it would be a dream come true for carriers that are serious about building client-centric businesses.

• Ladder, formed just a year ago (see: CB Insights report) is reportedly starting with a mobile value proposition built around easier and faster access to term life insurance, using available, permissible data sources to improve the underwriting process. If, as the name suggests, the company is building a value proposition that redefines the traditional notion of an insurance ladder – a construct that lets you plan for extra coverage when you'll need it the most and taper off coverage at other times – I would expect them to develop more dynamic, effective relationships with clients than those propagated by the traditional one-and-almost-always-done insurance sales model.

• Human Condition Safety (HCS’ site is under construction) is an example of a start-up focused on expanding the value a life insurance carrier can provide by offering prevention services in addition to protection. AIG became a strategic investor in the company earlier this year. HCS is said to be “developing wearable devices, analytics and systems to improve worker safety.”

A number of start-ups are building capabilities to solve carrier problems improving on the traditional distribution and product models. An investor might ask if these are businesses or features:

• Force Diagnostics is focused on “combining science and a customer-centric streamlined process” to transform health and wellness screening. The expense (to the carrier), hassle (to the applicant) and elapsed time (a burden to all) associated with today’s underwriting requirements for blood and urine samples are ripe for reinvention.

• Insurance Social Media, part of Serious Social Media, is offering a “set it and forget it” capability to improve agent effectiveness on social media. Given the demographic profile of the average agent (57 years old, and accustomed to pushing product), kick-starting their social media presence and providing relevant content solve pain points for today’s distributors. Of course, two questions regarding any start-up aiming to mass-produce content are: first, can such content come across as authentic, and second, how does this model scale?

• Insquik offers agents a white label solution to create their own online stores. The focus is on term life automatic issuance up to $350,000 face value, and, according to the company’s site, aims specifically to serve the sub-segment of agents who “have access to large populations of consumers i.e., focused on Worksite Employee Benefits, Affinity Groups, Unions, Groups and Associations.”

• Fitsense is a start-up coming out of StartupBootcamp that is building a data analytics platform focused on enabling insurance companies to reduce premiums “for anyone with a smartphone or wearable device.”

• Sure provides a digital front-end and a more real-time experience for an old idea – a micro-duration life insurance policy that provides coverage during air travel. (In the pre-digital era, this was simply called “per trip coverage”.) American Express is one company that for more than 30 years offered air flight life insurance policies at varying face amounts, as part of a portfolio of travel-related protection benefits.

The opportunity for Insurtech to expand efforts in the life insurance category is not simply the commercial potential of disrupting a model that has proven its limitations. It is also the prospect of addressing a societal need that has been neglected for decades. These are two compelling reasons to encourage more participation by investors and entrepreneurs, stimulating a bigger pipeline of entrants to take on the reinvention of the category.

The Institute of Leadership & Management (ILM) published a report titled “Coaching for Success: The key ingredients for coaching delivery and coach recruitment.” There’s plenty of interesting snippets of research findings and practical advice. If you have time, it is well worth a read, but the points that caught my eye were a three-stage process for coach selection. I agree with the ILM that the selection of coaches often still lacks a robust structured process and so am going to share their recommended process as a good example. This process can be used by individuals for themselves or by someone selecting on behalf of an organization. It assumes that a long list of possible coaches has already been found. To achieve that, you could go as Wild West as a general Google search on "coach"/"leadership coach"/"executive coach." However, I’d recommend starting with a pre-qualified list like the Association for Coaching (AfC) directory of coaches or equivalents from other coaching bodies. Here are the stages that the ILM recommends, to be used like a checklist of questions to ask (I've added what I’d say if asked): Stage 1: Long-list to Short-list

• What experience of coaching does the coach have? (I could evidence my number of coaching hours and cite previous mentoring experience within a large corporation)
• Can the coach demonstrate an understanding of the leadership challenges in your industry? (I’ve found some clients value my experience in customer insight leadership or within the insurance industry)
• What training do they have? (I could evidence my ILM Level 7 qualification in Executive Coaching and Mentoring)
• What ethical standards do they work to? (I share with clients a copy of the AfC code of ethics and explain that I abide by that)
• What supervision does the coach have in place? (I use AfC/University of South Wales co-coaching forums)

Stage 2: Getting down to the last few

• What coaching methodologies does the coach use, when and why? (my primary tools are active listening, Socratic questioning, goal-oriented models and, where relevant, positive psychology tools like Strength Finders)
• What price do they charge? (average fees can vary around the country, but between £100-250 per hour is typical; I normally charge £150 per hour)

Stage 3: Final selection

• What does the coach he can achieve for the individual coachee/client? (this is where a free introductory meeting can help me clarify where I may be able to help or if another intervention other than coaching might help more)
• What do they believe they can achieve for the organization? (it’s always worth doing your homework on an organization and discussing context with a client, before you can offer a view on this)
• Will the coach and the coachee/client get on? (at the end of the day, a lot comes down to personal chemistry, so I will meet up for a chat over a coffee and let us both assess if we feel it can work)

I hope you find that helpful, especially if you are facing this challenge. The ILM also suggests that competency frameworks from leading global coaching bodies can help, but I like the clear simplicity of the above list. Has anyone found another approach to selecting a coach worked for them? Please share your experience.

Arthur C. Clarke, who knew a thing or two about futuristic technology, observed, “Any sufficiently advanced technology is indistinguishable from magic.” His observation certainly applies to driverless cars. In a recent Forbes article, I made the case that strategists, policy makers, regulators and other stakeholders needed to exercise “patient urgency” in balancing the hope and fear inspired by driverless cars. It is worth highlighting the hope—in the form of the seven huge societal benefits that driverless cars would deliver. It is a magical list. 1.  Reduce injuries and deaths Americans were in more than 6 million police-reported car crashes in 2014. As a result, more than 2.3 million individuals suffered serious injuries, and 32,675 were killed. Worldwide, more than 50 million people are injured each year, and more than 1.2 million are killed. Globally, road traffic crashes are a leading cause of death among young people, and the main cause of death among those aged 15–29 years. Human error caused more than 90% of those crashes, and, in recent years, accident and fatality rates have gone up—due in large part to distracted driving. See Also: How to Picture the Future of Driverless Driverless cars, which promise to see better and react faster than humans while never getting sleepy, drunk or distracted, offer the possibility of dramatically reducing driver error and the resultant human suffering. Consider the relative magnitude of success: A 25% reduction in auto-accident-induced fatalities would save more lives than curing leukemia; a 75% reduction would save more lives than eliminating suicide. 2.  Lower accident-inflicted costs The economic cost of driver error is also horrific. NHTSA estimated in 2010 that vehicle accidents inflicted $242 billion in economic costs (medical costs, property damage, lost productivity, legal and court costs, emergency service costs, insurance administration costs, congestion costs and workplace losses). The total cost rises to $836 billion when the impact to quality of life is taken into account. Globally, the World Health Organization estimates that 3% of GDP is lost to road traffic deaths and injuries. These costs are inflicted not just on those involved but also on society as a whole. Each year, in the U.S., more than $218 billion is spent on auto insurance premiums. Motor vehicle accidents also make up one of the largest categories of disability and workman’s compensation claims. Worldwide, approximately $700 billion is spent on auto insurance. 3.  Reduce resource consumption Driverless cars offer the hope of tremendous savings beyond the high price of accidents. Donald Shoup estimates that 30% of urban center traffic is due to drivers looking for parking. Driverless cars could deliver their passengers to their destination and drive away, eliminating the need to hunt for parking or walk back to the office. Morgan Stanley estimates that avoiding congestion due to the hunt for parking could translate into $11 billion in fuel savings across the U.S. each year. This $11 billion is the smallest category of efficiency and accident cost avoidance delivered by this technology. By Morgan Stanley’s estimate, the total savings in the U.S. could reach $1.3 trillion. 4.  Reduce transportation cost Driverless cars could enable driverless taxi services at prices much lower than individual car ownership or human-driven car services. KPMG, for example, estimates that such services could cost 48% less than the cost of individual car ownership on a per-mile basis—while also eliminating the high up-front cost and the time required for maintenance and regulatory compliance. Similarly, in a study at Columbia University’s Earth Institute, Larry Burns and William Jordon estimate that driverless taxis would offer 90% savings over human-driven car services. Considering that the average American household spends 19% of income on transportation (the largest category after housing), these cost savings will make a tangible difference in every American’s life. 5.  Enhance quality of life The reduced cost of mobility coupled with the availability of high-quality, on-demand, point-to-point transportation would enhance freedom, independence and self-reliance for many seniors and people with disabilities. It would also reduce the substantial burden on the individual, family and community caregivers. An estimated 8.4 million seniors in the U.S. cannot drive. As baby boomers age, the number of seniors is expected to grow quickly, effectively doubling from 43 million in 2012 to 82.3 million in 2040. 12% of the roughly 50 million Americans with disabilities report difficulty getting the transportation that they need, with the reason cited most often being no or limited public transportation. Those who could otherwise drive would benefit, as well, through increased productivity and reduced stress as chauffeured passengers instead of drivers. The typical American commuter, for example, could use the 50-minute daily commute for in-car work and leisure rather than having to focus on driving. For America’s 120 million workers, that adds up to 6 billion minutes per day. 6.  Increase economic mobility For the poor and economically disadvantaged, more affordable mobility would enable increased economic mobility by allowing faster and cheaper transportation to jobs in a wider geographical region—especially to those areas not well-served by public transportation. A longitudinal study conducted by Raj Chetty and Nathaniel Hendren at Harvard has shown that commuting time is the most important factor to the odds of escaping poverty. New York University’s Rudin Center for Transportation conducted a study that came to a similar conclusion. Autonomous vehicles would not only give disadvantaged Americans access to better job opportunities, but also better access to schools, stores and services. 7.  Accelerate Vehicle Electrification 92% of American transportation is dependent on petroleum. Not only does burning this fuel create pollution, but it also makes America dependent on foreign suppliers. Autonomous vehicles offer a remedy, because they will in most cases be electric. There is a virtuous cycle in which autonomous vehicles lead to vehicle sharing, which in turn leads to high vehicle utilization, favoring the low marginal cost of electric vehicles. This would not only cut emissions and pollution from vehicles but also dramatically cut petroleum dependency.

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As I’ve previously acknowledged, a vast number of technical and implementation challenges have to be overcome before these societal benefits can be reaped. World-class engineers and scientists stand on either side of the question about whether these challenges can be adequately addressed. Arthur C. Clarke was one of the believers. Clarke predicted in 1962 that “the automobile of the day-after-tomorrow will not be driven by its owner, but by itself.” See Also: Lack of Enthusiasm for Driverless Cars? More generally, Clarke also had something to say about seemingly impossible challenges. He observed, “The only way of discovering the limits of the possible is to venture a little way past them into the impossible.” As to the arguments of world-class engineers and scientists, Clarke had this to offer: When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong. Let’s hope that the distinguished Arthur C. Clarke was right.