The politics of guns in America are volatile, divisive and passionate, yet the risks that firearms present to organizations every day do not depend on the politics of the moment. Employers must deal with the reality of gun violence in America. A RIMS 2016 session discussed the legal aspects of what organizations can do and the practical implications of creating a firearms risk management program. Speakers were:

• Michael Lowry, attorney, Thorndal Armstrong Delk Balkenbush & Eisinger
• Danielle Goodgion, director of human resources, Texas de Brazil

What Risks Do Firearms Pose? OSHA states that an employer must provide “employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.” See Also: Active Shooter Scenarios There are several risks to your organization, including:

• Operations can halt in the case of a shooting. You have issues like police investigations and possibly injured employees.
• Workers’ compensation will kick in if employees become injured.
• General liability will be activated to cover injuries of non-employees.
• Reputational risks are possibly the largest risks. You do not want your business associated with a violent act.

Most think that the Second Amendment bars private businesses from banning guns, but this is incorrect. The amendment applies to governments, not private homes and businesses. Some employers react by posting signs banning all guns. This simple sign can be a recipe for disaster for several reasons:

• Have you created a duty? If you post a sign, you have officially created a duty.
• Why did you create this policy?
• What are you doing to enforce this policy? Did you have a manual? Did you put up X-ray detectors? Probably not. You have to be able to prove you are enforcing the policy if you post a sign.
• Did you train your employees to enforce this policy? If this policy is not enforced, a person might be injured by a firearm on your property.

"Bring Your Gun to Work" Laws This is not a good idea. According to the law, business may not bar a person who is legally entitled to possess a firearm from possessing a firearm, part of a firearm, ammunition or ammunition component in a vehicle on the property. In Kentucky, an employee may retrieve the firearm in the case of self-defense, defense of another, defense of property or as authorized by the owner, lessee or occupant of the property. In Florida, the employer has been held liable for civil damages if it takes action against an employee exercising this right. Reputational risks also can apply. You could either get special interest groups protesting against your business or people who refuse to do business with you. The Middle Ground It is best to create a policy. Even if you support the right to bear arms, you can do it subtly. There are several provisions on what type of carry you allow and what signs are required. Business owners also do have the ability to allow no guns on the premises. See Also: Broader Approach to Workplace Violence Your policy should describe exactly how to approach a customer if an employee sees a weapon, including who should approach the customer, what to say and the steps to take to address the issue. Training is important. Why Train?

• Researchers from the Harvard School of Public Health and Northeastern University found the rate of mass shootings has tripled since 2011.
• In 2014, an FBI study considered 160 events between 2000 and 2013. 70% occurred in business or educational setting.
• In 2000-2006, the annual average rate was 6.4 shootings. That jumped to 16.4 in 2007-2014.

This is clearly a problem that is getting worse, so why is training rarely provided? Places of business are a target – especially retail, restaurants and businesses in the hospitality industry. The active shooter wants soft, easy targets in large, open, public and crowded areas, and the goal is to kill indiscriminately. If your business is doing well with large crowds, you are a soft target. Active Shooter Resources To learn how to manage this risk, you can find resources from:

• Law enforcement
• Insurance partners
• Government
• Outside experts
• Legal
• Human Resources

Online resources include:

• City of Houston: Run. Hide. Fight. Surviving an Active Shooter Event
• Los Angeles County Sheriff’s Department: Surviving an Active Shooter

My day job at Ribbit.me keeps me insanely busy. Too busy, unfortunately, to spend enough time thinking about one of the more exciting and disruptive impacts of blockchain technology: the breakdown of double-entry bookkeeping. In a previous life, I was a CPA, and I’ve been wanting to put some thoughts out there for a while. I still see very few people talking about the effect on blockchain on bookkeeping despite its potentially bringing into doubt the effectiveness of the most fundamental foundation of commerce today.  Tried and True Double-Entry Bookkeeping Double-entry bookkeeping is the basic foundation of how we account for value today. For 2,000 years it has served as an unquestionable given in commerce. There are two columns, the debit column and the credit column. There are two entries — the first entry is to record what you have, and the second entry is to record how you got it (e.g. debit cash and credit sales). If these aren't equal, we know counterparty exposure has not been properly accounted for, prompting an audit and a correction. It mandates the accounting of counterparty exposure for every single movement of value. It is a beautiful system in its simplicity and effectiveness. See Also: What's In Store for Blockchain But, what happens if the counterparty exposure is not known? What if we don’t know who owns, or is liable for, the value of assets recorded on a ledger? In the old paradigm, this was simply an impossibility. Counterparty claims to assets were always known, because, to receive or send an asset of value, it must be received by or sent to a counterparty! It seems so basic and fundamental, someone would think this could never be questioned. Until now. Permissionless and Permissioned Blockchains Enter blockchain. A blockchain is a single-entry bookkeeping ecosystem. Well, technically a permissionless blockchain is a single-entry bookkeeping ecosystem. A permissionless blockchain is an ecosystem where, obviously, permission is not required to participate. On the other hand, there is the permissioned blockchain. My company Ribbit.me uses a permissioned ledger as its platform. In the permissioned blockchain ecosystem, permission is required for a user to participate. The degree of permission can vary from ecosystem to ecosystem. Permissioned blockchains have come about to facilitate enterprise adoption of blockchain technology. If you want to know why, it's all about counterparty risk. A pure permissionless blockchain ecosystem is a type of distributed autonomous organization (DAO). In a DAO, there is no central authority running the show. Control is decentralized across anonymous users in the distributed network, and anyone can participate as a user. The blockchain does not know or care who the users are. It introduces the real potential for true universal and global financial inclusion. This is great! But, wait, the road to utopia isn’t that simple. An ecosystem of anonymous users means transactions with counterparties of unknown identity. In other words, it means we no longer know the identity of who has ownership of or who has creditor claims to the assets on the ledger. Double-Entry Bookkeeping in Legacy Banking When we deposit money into a bank account, we are transferring value to the bank as custodian of our asset. We still own the asset in our account and, at some point, the bank is required to return the asset to us. On the bank’s ledger, this transaction will result in a debit to cash, an asset account on the left hand side of the ledger and a credit to demand deposits (a liability account on the right hand side of the ledger). Easy-peasy double-entry bookkeeping!  Single-Entry Bookkeeping in a Permissionless Blockchain When a user acquires access to (not ownership of — keep reading to know why) a permissionless blockchain native token, it is effectively doing the same thing as what was described above. It is transferring or depositing value into a ledger wallet. In this case, the bank is replaced with network nodes performing as custodians of a distributed ledger. The depositor and the custodians can also be anonymous. On the permissionless-blockchain-distributed ledger, this transaction is recorded as a debit to the user’s wallet, an asset account on the left side of the ledger and a credit to… what? To answer that question, we need to figure out who is actually liable for the distributed ledger. Well, the network nodes should be, as they are our custodians of the ledger and, therefore, of the value contained within it. Furthermore, since every network node is of equal importance and authority, in theory, every node should equally share the custodianship liability of the assets recorded in the left hand column of the ledger. Anonymous Counterparties We have two problems here. In this ecosystem, both the users and the network nodes are anonymous. And because it is a DAO, there is no centralized owner/operator of the ledger to approach for access to network node identities. The Introduction of Single-Entry Bookkeeping Because the user’s network node counterparty is anonymous, it is impossible to record it as the entity liable for the asset. A search for ledger ownership in the form of a capital account will not be any more fruitful. Remember, this ledger is a DAO. By definition, no single entity owns or operates it. And, just like that, with nobody to attribute liability to and nobody to attribute ownership to, the right hand-side of the credit column disappears. Double-entry bookkeeping collapses. What is left behind is a single-column ledger in a single-entry bookkeeping ecosystem. I omitted one part of the bank-deposit example out of this blockchain example: “We still own the asset in our account, and, at some point, the bank is required to return the asset to us.” This was omitted because there is a possibility that the user can never really own value embodied as a blockchain native token. First, the user’s identity may be anonymous. Second, even if the user chooses to reveal its identity, the value it claims ownership of always resides within the blockchain ledger. It is literally impossible to have physical possession of the value. To do so would require a counterparty to request the returning of the user’s value to it. Paradoxically, the deeper one’s understanding of double-entry bookkeeping, the more difficult it may be to understand all of this. More than once, I’ve spent more than an hour trying explain this to university accounting professors and professional-practicing CPAs. They are so close to double-entry bookkeeping that asking them to question it is something akin to asking a physicist to question gravity. It’s like they say: Don’t try this at home, kids! Entirely New Challenges and Risks Cognitive dissonance aside, blockchain has introduced a new age of single-entry bookkeeping. This has opened a Pandora’s box of entirely new challenges and risks that are brought about by undefinable asset ownership/liability and unquantifiable counterparty risk. These are not just new challenges and risks for the transaction counterparties but for the regulators mandated to oversee it all. See Also: What Is and What Isn't a Blockchain? Challenges for Enterprise Adoption If the user is an individual, as sole proprietor of its person, it can make decisions regarding risk exposure on its own behalf. But can a corporate director? Can a corporate director authorize the use of shareholder capital for an anonymous counterparty transaction in a single-entry ledger ecosystem without violating its fiduciary duty to those shareholders? Can a regulator determine (with confidence) that a regulated entity in the same transaction is not in violation of KYC/AML or anti-terrorism financing laws? These are very important questions that have yet to be answered and that risk managers must demand answers to. Entirely New Accounting Standards Are Needed Once considered the boring bedrock of commerce, accounting as a discipline is now entering an era of uncertainty at the most fundamental level. This will force us to redefine how value is accounted for. This brings new opportunities — as we will soon see, single-entry bookkeeping will emerge as a new discipline of study and research. There will be a real market need to innovate standards that allow us to account for value in the new paradigm. This probably terrifies the accountants out there. But in reality it is good, as it is human innovation itself that is true source of wealth creation. If I have sparked an interest, feel free to reach out! You may very well be a pencil-pushing geek just like me.

At American Family Ventures, we think advances in product development will have a dramatic impact on the insurance industry. We’re also excited about new insurance experiences that combine “Insurance 2.0” distribution, structural and product innovation. We’ll discuss both subjects below. Product Before we dive in, let’s define a few things. We consider an “insurance product” to be the entire financial protection experience. From a whole product perspective, this definition includes processes inherent in the creation and the use of such products, including methods of underwriting and activities like claims and policy administration. We’re watching two product trends in particular:  behavioral disaggregation and the unbundling of policy time and coverages. Behavioral Disaggregation As the world becomes increasingly connected through mobile devices, sensors, networks and information sharing, new context becomes available for managing risk. Dynamic insurance products that react to comprehensive information on behavior will be a direct result of these increases in contextual information. See Also: Insurance 2.0: How Distribution Evolves The concept of contextual insurance is not new. In fact, the purpose of insurance underwriting is to segment and accurately price insurance using information about the applicant. Even behavior-based pricing is not a new concept. Since the 1950s, insurers have used access to DMV records to adjust rates in the event of speeding tickets or other traffic violations. However, the innovation we’re seeking goes a few steps further. An insurance provider that accurately understands the discrete behaviors influencing the safety of an asset and its users could also offer novel and effective ways to protect both. Behavioral data could be generated through connected devices, more robust asset histories and inventory tracking, collaboration with the owner on risk mitigating activities and the like. Using enhanced access to relevant behavioral information, new products would offer increased customization, accessibility, frictionless coverage acquisition and live reconfiguration. Perhaps someday we’ll see dynamic, multi-factor insurance policies that continuously and automatically adjust to choices the policyholder makes. Consider the following homeowners insurance example: A homeowner replaces an old fireplace with a new model that has important safety features. Of course, this fireplace is “connected.” As soon as the fireplace cloud tells the homeowner’s insurance carrier the new model is installed and active, the homeowner’s premium payment drops by 10%. Impressed with this outcome, the homeowner tells three of her neighbors about the product, and they promptly replace their own rickety fireplaces. As a result of the newly safe cul-de-sac , rates drop an incremental 3% for all residents in the neighborhood. Soon after, one of the neighbors is shocked to discover that his new model was incorrectly installed, creating a small gas leak that would become dangerous over time. Fortunately, his insurer, in coordination with the manufacturer, flags this issue and repairs the unit before it becomes a hazard. A week later, the three homeowners who originally purchased the product, dining out with their insurance savings, all decide to purchase water-leak-detection systems, for which they are promptly rewarded with an additional insurance discount. We’re still in the early innings of behavior-based insurance, but, as you can see, its impacts are meaningful. Contextual data doesn’t have all the answers, but it will drive new insights and, perhaps more importantly, prevent losses. Unbundling Policy Time and Coverages Existing insurance products bundle coverages. For example, consider that a standard homeowners policy consists of four types of coverages:

1. Coverage for the structure of your home
2. Coverage for your personal belongings
3. Liability protection
4. Additional living expenses if your home is temporarily unlivable

Each of these coverage areas then insures against loss from a number of specific perils (fire, lightning, wind, etc.). Each also has distinct exclusions. These coverages are put together, often in very standard ways, to create homeowner’s insurance. However, insurers might also unbundle coverages and fragment coverage time periods to create tailored coverage systems that react to the risks present (and absent) in various circumstances. These strategies subdivide coverage profile and duration into more relevant and accurate segments, offering more accurate pricing or supporting new forms of self-insurance. Fragmenting coverage time can be accomplished with on-demand or transactional insurance. As we all witness large portions of our lives becoming managed services — transportation, home ownership, fitness — paying to be protected against loss only when specific risks are present or a unique event occurs is an increasingly useful option. This could imply securing insurance only when circumstances or behavior indicate need, or using broad, umbrella-type coverage for losses in everyday activities and ratcheting up coverage for specific types of risk. For example, imagine an insurance service that uses access to a mobile calendar and other apps to offer timely insurance products based on daily activities. If your morning commute is in a Zipcar (that doesn’t drive itself… yet), you might be offered short-term, simplified personal auto insurance options before you leave. If you instead decide to walk to work that morning, you receive credit toward discounted health and life products. If you’re taking a long flight during inclement weather, you’re prompted with an offer to increase your term life insurance amount. If your job requires you to travel to an unsavory place, your employer is reminded to add kidnapping and ransom insurance to its existing commercial policy (yes, that exists). Unbundling coverage can be done with a la carte policies. In using a la carte features, insurers can offer insureds more control over the assumption or transfer of risk and, in turn, greater capacity to segment and self-insure (alone or in groups) specific parts of an asset, incidents or perils. This allows for the personal assumption of precise risks by excluding them from coverage. This is accomplished today, in part, through the selection of deductible levels, but we think there are ways to push the concept further. Of note, we believe the inverse of unbundling — “super-bundling”— is also quite powerful. This refers to insurance products that increase the scope of protection until the insured is no longer required to consider insurance at all. In essence, they abstract the idea of insurance from the buyer. Instead, as long as any obligations the customer owes the insurer (payments or data) are fulfilled, everything and anything is covered. Of course, this convenience is likely to carry additional costs. These contrasting approaches to providing insurance offer distinct benefits. Unbundling offers maximum economic efficiency in exchange for increased engagement and complexity, whereas super-bundling offers maximum simplicity in exchange for decreased control and higher costs. Additional Considerations and Questions Balancing the interests of the individual with the interests of society and public policy is a key question surrounding product innovation. For example, assuming unbundling scenarios are economically viable for the individual, how do we ensure the presence of coverage for liability-related incidents and the protection of third parties? Other questions that need answering as product innovation advances include:

• How will privacy and data sharing be addressed in mutually beneficial and safe ways? Customers will expect value in exchange for sharing information about behavior, so data recipients must create the right incentives and will have to protect personal data vigilantly.
• How does the unbundling of insurance consumption affect the way risk is aggregated and spread across large groups of people?
• Will frequent, accessible and granular self-insurance create adverse selection issues?
• Can unbundled customers effectively select risks to self-insure, or will people fall victim to the ludic fallacy, applying oversimplified statistical models to complex systems?
• And, as with any product, what is the appropriate balance between customization and ease of use?

Combinations Insurance distribution and structural/product innovation support one another in ways that are both reactive and complex. As a result, they can be used in coordination to create entirely new insurance experiences. One example we often discuss is the idea of “entire life” insurance. This is not the same as whole life insurance but rather describes a “super-bundled” risk management product offering the maximum amount of simplicity and flexibility to the insured. In short, entire life insurance would offer a single policy that captures information related to all of your daily needs (transportation, housing, health, travel, etc.) and wraps it into a dynamically priced instrument that indemnifies you against loss from anything bad that might happen. In contrast to the on-demand insurance, usage of entire life insurance is abstracted from the buyer. Instead, the policyholder has a single policy that represents the entire cost to insure that individual based on dynamically adjusted, minute-by-minute protection for all activities. Such a product, if at all feasible, would require a substantial amount of behavioral data and insight. The makers of this product, at least at first, might also need to discover new approaches to capital raising and risk pooling to offer the product within the bounds of state and federal law. Finally, it stands to reason that a product so deeply integrated with other services and data sources might be sold most effectively via some form of digitally enhanced adviser or life concierge service. Think Jarvis for financial security. See Also: P2P Start-Ups From Around the World

We also think that combinations like entire life create barriers to entry. If we revisit the simple Venn diagram from our first post, you can imagine a defensibility gradient, where increasingly challenging activities — from a technical, regulatory or human capital perspective — build on each other to create complex, difficult-to-replicate models and relationships.

Defensibility across three areas of Insurance 2.0 While the gradient diagram above portrays the center as the most difficult to replicate, it’s not hard to imagine the dark portion of the circle shifting based on the source of competition. In other words, it may be that, when comparing tech startups to insurance incumbents, barriers to entry are shifted toward the product, but when considering incumbent defensibility against market share erosion from incidental channels (competing directly with carriers), the gradient shifts towards distribution. ________________________________ In the past few posts, we’ve offered some guesses on what the future holds for insurance. However, given the speed of change and complexity of the systems in play, we've surely missed things and made mistakes. So, instead of making internal forecasts that are precisely wrong, we opted to share our observations with you, in the hopes you can incorporate or transform these ideas into your own. If you’re working on changing insurance in these or new ways, let us know!

It was in 14th century Florence that an epic awakening happened. It was all-pervasive. It wasn’t just art that began to thrive. Philosophy, economics, culture and science began rapid change, too. Education, technology and literature were thrown into a cauldron of modernization, and world-shaking disruption and advancements spread rapidly. Fast-forward to today, and the comparison is striking. As we enter a new era of disruption and change underpinned by new technologies, business models and more (see Future Trends: A Seismic Shift Underway), the past offers an opportunity to guide and inform our future. The insights may help us see opportunities from a new perspective. We’ve identified dozens of parallels and lessons from the Renaissance that can give insurers and technology experts food for thought as they prepare for this journey. Over the coming months, we will be taking a look at the renaissance unfolding in insurance and reflecting on when the world was shifting from the “dark ages” to a future of opportunities, possibilities and enlightenment. See Also: The Five Charts on Insurance Disruption As a preview, consider the original Renaissance and these modern parallels to today’s: Focus on People In the dark ages, individuals didn’t matter on the level they did during the Renaissance, when individual thought was cultivated and education encouraged. People gained freedoms to act and create in ways they hadn’t thought of before. Today, technology and connectivity have brought a new level of individualism to insurance. We are moving from mass standardization to hyper-personalization for everything from marketing to product pricing. The individual voice, rather than groups, matters more than ever. Universal Access The Renaissance changed communication. Moveable type and printing allowed communication to be more widely disseminated to the larger population. In today’s world, we can reach nearly everyone, any time, anywhere and in any way.  Transactions take place on mobile devices. Social media has made it so customer thoughts and decisions are not hampered by distance or hours of operation. The enlightened and prepared insurer has nothing standing between it and its customer. “Trade” has blossomed in the city of the internet. Reality and Empiricism Art and science in the Renaissance shared a trait — the drive for a “real view.” Artists approached painting and sculpture from the standpoint of realism, while science began to revisit the idea of research and empirical evidence. In our era, at least for the last several decades, insurers have also attempted to operate from a standpoint of mathematical certainty — pricing products based on historical data trends. Yet the digital era is bringing with it an entirely new set of real-time data streams and, with those, real-time, personalized analysis, pricing and decision-making. Our new perspectives will soon allow us to see into individual lives and habits with striking clarity. (For more on this, see John Johansen’s blog series on Data Symmetry.) We will enjoy enhanced levels of insight to engage and service customers as never before.  And all of this reality will be brought to us with dramatic speed. Insurers that are prepared with the agility to consume and analyze data in real time will have the advantage over their competitors to better serve their customers. Money-Driven Innovation The Renaissance didn’t happen overnight. It was spurred by a convergence of factors, the greatest of which was increased wealth. Trade in Florence had produced a new class of financier who was willing to fund artistic and scientific endeavors. Wealth created ease; ease allowed time for thought and innovation. Our modern businesses are also the beneficiaries of affluence. Population and economic growth have created a culture where even many of the economically disadvantaged have access to digital and mobile technologies. Those technologies provide online access to insurance to protect them against a growing array of risks. Likewise, investments in the 20th century helped insurers become more efficient and more accessible, fueling an improved product and service landscape within the traditional insurance business model. Today’s renaissance, however, is moving well beyond the traditional model. Significant capital investment in new insurance greenfield or start-up companies is fueling massive innovation in products, services and business models. For reference, simply consult the CB Insights Periodic Table of Insurance Tech. CB Insights has indicated that Q1 2016 has already topped the record for most early-stage insurance tech deal activity (Seed/Series A). This includes two start-ups: a peer-to-peer insurance company, Lemonade, and a small business insurance start-up, Next Insurance. Interest and investment is also expanding beyond venture investors to carriers and reinsurers such as Guardian Life’s GIS Strategic Ventures investment in health benefits startup, Maxwell Health and many more. For the 130-plus start-ups and private companies in the insurance tech space, CB Insights indicates that more than $3.5 billion in aggregate funding has been raised.  Money is the seed and the fuel for the massive innovation taking hold in insurance. In the coming weeks, we will dig deeper into the details of the insurance renaissance. We will uncover some of the philosophy behind modernization, while also thinking about the practical aspects of improved operations, digital capabilities and customer service. In each case, we’ll be keeping our focus on agility, innovation and speed so that we won’t just be learning about the renaissance, but we’ll be living out its lessons within our organizations.

The P2P insurance model promises to change the conflict dynamic between insured and the insurer. From Friendsurance to Guevara and the eagerly anticipated Lemonade, P2P insurance has already evolved two generations in six years. Now, we see the emergence of the next generation of P2P insurance; the self-governing model. People-to-People Insurance The jury may be out on the peer-to-peer insurance model, but that hasn’t stopped the steady stream of new entrants who believe in fundamentally changing the dynamic between insured and insurer. Back in December, I wrote this article on P2P insurance and featured two very different InsurTech start-ups. First, there was TongJuBao, a Chinese peer-to-peer insurer that provides social risk sharing insurance products. Recently, Tang Loaec, the founder/CEO sent me this announcement of a strategic partnership to distribute the company's products through Huaxia Finance across Greater China. See Also: Is P2P a Realistic Alternative? The second was Guevara, the U.K. motor insurer that was first to take the P2P model beyond a pure distribution play. I must give credit to Paul Andersen, Guevara’s co-founder and CEO, for the term “people-to-people insurance,” which is way more appropriate than peer-to-peer. Since that article, there has been a stream of announcements from the pseudo-stealth peer-to-peer insurer Lemonade. First, the company caught everyone’s attention with a $13 million seed round (which is significantly higher than usually associated with a pre-revenue, no-customer first raise.) Then, the company announced a list of high profile reinsurers lined up to back the business when it launches later this year. The latest news is the announcement that the company had hired a chief behavioral officer in guru Dan Ariely. There’s much speculation about what they’re going to do when they go live, but we’ll just have to wait and see on this one. In the meantime, I’ve been drawn to a new wave of P2P insurers. Some on the blockchain, some using Bitcoin and all based on a self-governing, peer-to-peer network model. The Next Wave of Peer-to-Peer Insurance is “Self-Governing” The first wave is based on a distribution model where "friends and family" risk pools self-insured each other's deductibles to lower premiums. Then we saw the carrier model, wave 2. Here, the pools are the primary bearers of risk, and they share in any retained premiums not paid out in claims. Wave 3 is the self-governing model, A back-to-the-future model that takes us further toward a mutual insurance than we’ve seen to-date. To find out more, I Skyped with Alex Paperno, the co-founder of Teambrella, the Russian InsurTech that uses Bitcoin to hold client money. This article appeared in The Digital Insurer.

Employers across the country are looking to provide employees with the largest and widest PPO networks as a means of giving employees choice.  Somehow the health insurance industry has determined that networks should be "all-inclusive." The more medical professionals and facilities in your network, the better your network is. It is time to raise a red flag on this kind of thinking. Before your organization looks to increase employee access to doctors and hospitals, there are three things you must understand about PPO networks. Larger Networks Can Lead to Larger Plan Costs You hear it all the time. Insurance carriers battle over who has the largest network both locally and nationally. Now, having a network with a national presence can be appealing if you are an employer with facilities and a workforce scattered across the country. However, a larger network opens the door for greater access to poor-performing physicians and medical facilities. The bigger the network, the greater the odds your employees are accessing doctors and hospitals who are not on the right side of cost, quality and outcomes. As a result, your medical plan's costs continue to rise year after year. See Also: Untapped Opportunity in Healthcare A Network "Discount" Can Be Misleading In a typical medical plan, the majority of the member population will use the plan via day-to-day services such as preventive exams, sick children and the occasional medication. For these folks, a network discount does an adequate job reducing costs for both the member and the health plan. However, imaging, surgeries and hospital stays are driving plan costs today, and it is here where a network "discount" can be misleading. Yes, network discounts are still applied to these services and, yes, the discounts can be 50% or more. However, when facilities are allowed to charge 400%+ of the limit allowed by Medicare, you are not getting much of a deal at all. To put it into simple terms, if I told you my iPhone is worth $2,000 but agreed to sell it to you for a 50% discount, I would still be ripping you off. Networks Often Block Creativity Recently, I had an interesting conversation with a national insurance carrier about a mutual client. After a thorough review of the client’s claim activity, we uncovered several facilities that were providing imaging services (MRIs, CT scans, etc.) at a low cost, much lower than the same services provided at other facilities. Knowing this, the client wanted to give members incentives to choose the low-cost facilities when needing imaging services by agreeing to have the health plan pay 100% of the service, saving both the member and the health plan money. However, we were told “no” by the insurance carrier because it had a duty to “keep the rest of the network happy.” If we are going to create change in the health insurance market, employers need to implement creativity into health-plan design. Unfortunately, most PPO networks discourage this kind of thinking. Remember, there is a place for PPO networks within the healthcare industry. However, if you are an employer looking for creative ways to give your employees access to high-quality, low-cost doctors and hospitals, do not count on PPO networks to pave the way.  

Would you buy a house if you didn’t know its price or the continuing cost of your mortgage? It seems like a ridiculous question, but many claimants are asked to make decisions of the same magnitude on the non-Medicare covered portion of their settlements with little to no reliable information. Most of the time, claimants don’t know the current cost of their medical treatment nor the future expected increases. While a Medicare Set Aside may provide a vote of confidence to the claimant for the MSA portion of a settlement, given that Medicare approves the amount, the costs that would not be covered by Medicare (also known as “non-qualified costs”) can be particularly daunting. Many adjusters try to avoid addressing the issue of non-Medicare covered items altogether in a settlement, but oftentimes it is a necessary component of the offer and a very contentious one. Estimating the pricing on big-ticket items, such as facility costs, custodial care service and home healthcare can be extremely difficult and often result in many cases never reaching settlement.  Working with a hands-on professional administration company, you can gain transparency into real-world pricing for these items and reach a definitive number for the costs.       What are some of the most significant non-Medicare covered expenses?

• Long-term skilled nursing facilities
• Home health aides and custodial care services
• Home modifications
• Certain creams, gels & compounds (Lidocaine, Voltaren, )
• Transportation
• Medical supplies sold over the counter
• DME bathroom supplies
• Services like acupuncture, gym memberships, home IV therapy

See Also: Healthcare Costs: We've Had Enough There is no exact science for how to appropriately cost out these expenses for a settlement. Many adjusters are trained to look at the past two years’ cost and then project out the future costs based on the claimant’s life expectancy. The issue with this method, as many applicant attorneys will be quick to point out, is that the carrier has sophisticated cost-containment systems in place to reduce what it pays on its bills. The true expense can be dramatically higher after settlement when the claimant is no longer covered by the payer’s systems and instead faces these costs alone, paying retail prices with cash. Other adjusters rely on MSA vendors to put together a “non-qualified” projection for these costs. It is worthwhile to examine the basis of these projections, given that, unlike MSAs, there is no specific guideline across the industry that the vendor must follow, so the figures can vary significantly. In contrast, with a professional administration provider you can often discover the exact cost that the claimant will incur after settlement for these expenses. Professional administration companies can go out and secure pricing for some of the largest cost-drivers, and often minimize or at least lock in inflation risks. For example, at Careguard, we have locked-in rates for claimants at specific facilities for long periods: 10 to 15 years, or for the rest of their lives. In other instances, we have been able to secure rates for home health treatment, depending on the type of care and requirements of the claimant. In addition, many professional administration companies have pharmacy networks that drive discounts on the creams, gels and medications that are non-qualified. Case Study: California Facility Costs An attorney introduced a case to CareGuard that was not going to settle due to disagreements over non-Medicare covered costs. The claimant was in a long-term skilled nursing facility in California. He and his family were interested in settling, but hesitant about the continuing expense of the care and medical cost inflation.  CareGuard took the following steps to help move the case forward: In this case, CareGuard was able to negotiate a rate with the facility that was about $54 a day less than the carrier had been paying. This reduced rate over 17 years generated a significant savings that allowed the carrier and claimant to find a middle ground and to settle the case. Non-Medicare covered expenses will continue to become more significant components of settlements. Reports indicate that home health attendant costs have risen between 1% and 2% over the past five years, that nursing facility costs have risen approximately 4% per year and that, in the last year alone, rates for adult day care rose almost 6% nationwide. There is also enormous price inflation and variance in the cost of the prescriptions. These challenges are not going away any time soon. As the parties to a settlement try to come to a resolution, knowing and using real-world pricing through a platform such as CareGuard can help bridge the gap. Don’t let the discrepancy in estimates of non-Medicare costs become a huge sticking point in your negotiations. Instead, introduce visibility into the cost and let a professional administrator help get everyone on the same page so claimants can feel confident that they’ve made an informed choice when they settle their case.

This is the second in a four part series. To read the first article click here. To help industry players navigate the changes in the banking, fund transfer and payments, insurance and asset and wealth management sectors, we have identified the main emerging trends that will be most significant in the next five years in each area of the FS industry. Overall, the key trends will enhance customer experience, self-directed services, sophisticated data analytics and cybersecurity. However, the focus will differ from one FS segment to another. Banks are going for a renewed digital customer experience Banks are moving toward non-physical channels by implementing operational solutions and developing new methods to reach, engage and retain customers. As they pursue a renewed digital customer experience, many are engaging in FinTech to provide customer experiences on a par with large tech companies and innovative start-ups. Simplified operations to improve customer experience The trends that financial institutions are prioritizing in the banking industry are closely linked. Solutions that banks can easily integrate to improve and simplify operations are rated highest in terms of level of importance, whereas the move toward non-physical or virtual channels is ranked highest in terms of likelihood to respond. Banks are adopting new solutions to improve and simplify operations, which foster a move away from physical channels and toward digital/mobile delivery. Open development and software-as-a-service (SaaS) solutions have been central to giving banks the ability to streamline operational capabilities. The incorporation of application program interfaces (APIs) enables third parties to develop value-added solutions and features that can easily be integrated with bank platforms; and SaaS solutions assist banks in offering customers a wider array of options—which are constantly upgraded, without banks having to invest in the requisite research, design and development of new technologies. The move toward virtual banking solutions is being driven, in large part, by consumer expectations. While some customer segments still prefer human interactions in certain parts of the process, a viable digital approach is now mandatory for lenders wishing to compete across all segments. Online banks rely  on transparency, service quality and unlimited global access to attract Millennials, who are willing to access multiple service channels. In addition, new players in the banking market offer ease of use in product design and prioritize 24/7 customer service, often provided through non-traditional methods such as social media. So what?—Put the customer at the center of operations Traditional banks may already have many of the streamlined and digital-/mobile-first capabilities, but they should look to integrate their multiple digital channels into an omni-channel customer experience and leverage their existing customer relationships and scale. Banks can organize around customers, rather than a single product or channel, and refine their approach to provide holistic solutions by tailoring their offerings to customer expectations. These efforts can also be supported by using newfound digital channels to collect data from customers to help better predict their needs, offer compelling value propositions and generate new revenue streams. Fund transfer and payments priorities are security and increased ease of payment Our survey shows that the major trends for fund transfer and payments companies are related to both increased ease and security of payments. Safe and fast payments are emerging trends Smartphone adoption is one of the drivers of changing payments patterns. Today’s mobile-first consumers expect immediacy, convenience and security to be integral to payments. In our culture of on-demand streaming of digital products and services, archaic payment solutions that take days rather than seconds for settlement are considered unacceptable, motivating both incumbents and newcomers to develop solutions that enable transfer of funds globally in real time. End users also expect a consistent omni-channel experience in banking and payments, making digital wallets key to streamlining the user experience and enabling reduced friction at the checkout. Finally, end users expect all of this to be safe. Security and privacy are paramount to galvanizing support for nascent forms of digital transactions, and solutions that leverage biometrics for fast and robust authentication, coupled with obfuscation technologies, such as tokenization, are critical components in creating an environment of trust for new payment paradigms. So what?—Speed up, but in a secure way Speed, security and digitization will be growing trends for the payments ecosystem. In an environment where traditional loyalty to financial institutions is being diminished and barriers to entry from third parties are lowered, the competitive landscape is fluid and potentially changeable, as newcomers like Apple Pay, Venmo and Dwolla have demonstrated. Incumbents that are slow to adapt to change could well find themselves losing market share to companies that may not have a traditional payments pedigree but that have a critical mass of users and the network capability to enable payment experiences that are considered at least equivalent to the status quo. While most of these solutions “ride the rails” of traditional banking, in doing so they risk losing control of the customer experience and ceding ground to innovators, or “steers,” who conduct transactions as they see fit. Asset and wealth management shifts from technology-enabled human advice to human-supported technology-driven advice The proliferation of data, along with new methods to capture it and the declining cost of doing so, is reshaping the investment landscape. New uses of data analytics span the spectrum from institutional trading and risk management to small notional retail wealth management. The increased sophistication of data analytics is reducing the asymmetry of information between small- and large-scale financial institutions and investors, with the latter taking advantage of automated FS solutions. Sophisticated analytics also uses advanced trading and risk management approaches such as behavioral and predictive algorithms, enabling the analysis of all transactions in real time. Wealth managers are increasingly using analytics solutions at every stage of the customer relationship to increase client retention and reduce operational costs. By incorporating broader and multi-source data sets, they are forming a more holistic view of customers to better anticipate and satisfy their needs. Given that wealth managers have a multitrillion-dollar opportunity in the transfer of wealth from Baby Boomers to Millennials, the incorporation of automated advisory capabilities—either in whole or in part—will be a prerequisite. This fundamental change in the financial adviser’s role empowers customers and can directly inform their financial decision-making process. So what?—Withstand the pressure of automation Automated investment advice (i.e. robo-advisers) poses a significant competitive threat to operators in the execution-only and self-directed investment market, as well as to traditional financial advisers. Such robot and automatic advisory capabilities will put pressure on traditional advisory services and fees, and they will transform the delivery of advice. Many self-directed firms have responded with in-house and proprietary solutions, and advisers are likely to adapt with hybrid high-tech/high-touch models. A secondary by-product of automated customer analysis is the lower cost of customer onboarding, conversion and funding rates. This change in the financial advisory model has created a challenge for wealth managers, who have struggled for years to figure out how to create profitable relationships with clients in possession of fewer total assets. Robo-advisers provide a viable solution for this segment and, if positioned correctly as part of a full service offering, can serve as a segue to full service advice for clients with specific needs or higher touch. Insurers leverage data and analytics to bring personalized value propositions while managing risk The insurance sector sees usage-based risk models and new methods for capturing risk-related data as key trends, while the shift to more self-directed services remains a top priority to efficiently meet existing customer expectations. Increasing self-directed services for insurance clients Our survey shows that self-directed services are the most important trend and the one to which the market is by far most likely to respond. As is the case in other industry segments, insurance companies are investing in the design and implementation of more self-directed services for both customer acquisition and customer servicing. This allows companies to improve their operational efficiency while enabling online/mobile channels that are demanded by emerging segments such as Millennials. There have been interesting cases where customer-centric designs create compelling user experiences (e.g. quotes obtained by sending a quick picture of the driving license and the car vehicle identification number (VIN)), and where new solutions bring the opportunity to mobilize core processes in a matter of hours (e.g. provide access to services by using robots to create a mobile layer on top of legacy systems) or augment current key processes (e.g. FNOL3 notification, which includes differentiated mobile experiences). Usage-based insurance is becoming more relevant Current trends also show an increasing interest in finding new underwriting approaches based on the generation of deep risk insights. In this respect, usage-based models—rated the second most important trend by survey participants—are becoming more relevant, even as initial challenges such as data privacy are being overcome. Auto insurance pay-as-you-drive is now the most popular usage-based insurance (UBI), and the current focus is shifting from underwriting to the customer. Initially, incumbents viewed UBI as an opportunity to underwrite risk in a more granular way by using new driving/ behavioral variables, but new players see UBI as an opportunity to meet new customers’ needs (e.g. low mileage or sporadic drivers). Data capture and analytics as an emerging trend Remote access and data capture was ranked third by the survey respondents in level of importance. Deep risk (and loss) insights can be generated from new data sources that can be accessed remotely and in real time if needed. This ability to capture huge amounts of data must be coupled with the ability to analyze it to generate the required insights. This trend also includes the impact of the Internet of Things (IoT); for example, (1) drones offer the ability to access remote areas and assess loss by running advanced imagery analytics, and (2) integrated IoT platforms solutions include various types of sensors, such as telematics, wearables and those found in industrial sites, connected homes or any other facilities/ equipment. So what?—Differentiate, personalize and leverage new data sources Customers with new expectations and the need to build trusted relationships are forcing incumbents to seek value propositions where experience, transaction efficiency and transparency are key elements. As self-directed solutions emerge among competitors, the ability to differentiate will be a challenge. Similarly, usage-based models are emerging in response to customer demands for personalized insurance solutions. The ability to access and capture remote risk data will help develop a more granular view of the risk, thus enabling personalization. The telematics-based solution that enables pay-as-you-drive is one of the first models to emerge and is gaining momentum; new approaches are also emerging in the life insurance market where the use of wearables to monitor the healthiness of lifestyles can bring rewards and premium discounts, among other benefits. Leveraging new data sources to obtain a more granular view of the risk will not only offer a key competitive advantage in a market where risk selection and pricing strategies can be augmented, but it will also allow incumbents to explore unpenetrated segments. In this line, new players that have generated deep risk insights are also expected to enter these unpenetrated segments of the market; for example, life insurance for individuals with specific diseases. Finally, we believe that, in addition to social changes, the driving force behind innovation in insurance can largely be attributed to technological advances outside the insurance sector that will bring new opportunities to understand and manage the risk (e.g. telematics, wearables, connected homes, industrial sensors, medical advances, etc.), but will also have a direct impact on some of the foundations (e.g. ADAS and autonomous cars). Blockchain: An untapped technology is rewriting the FS rulebook Blockchain is a new technology that combines a number of mathematical, cryptographic and economic principles to maintain a database between multiple participants without the need for any third party validator or reconciliation. In simple terms, it is a secure and distributed ledger. Our insight is that blockchain represents the next evolutionary jump in business process optimization technology. Just as enterprise resource planning (ERP) software allowed functions and entities within a business to optimize business processes by sharing data and logic within the enterprise, blockchain will allow entire industries to optimize business processes further by sharing data between businesses that have different or competing economic objectives. That said, although the technology shows a lot of promise, several challenges and barriers to adoption remain. Further, a deep understanding of blockchain and its commercial implications requires knowledge that intersects various disparate fields, and this leads to some uncertainty regarding its potential applications. Uncertain responses to the promises of blockchain Compared with the other trends, blockchain ranks lower on the agendas of survey participants. While a majority of respondents (56%) recognize its importance, 57% say they are unsure or unlikely to respond to this trend. This may be explained by the low level of familiarity with this new technology: 83% of respondents are at best “moderately” familiar with it, and very few consider themselves to be experts. This lack of understanding may lead market participants to underestimate the potential impact of blockchain on their activities. The greatest level of familiarity with blockchain can be seen among fund transfer and payments institutions, with 30% of respondents saying they are very familiar with blockchain (meaning they are relatively confident about their knowledge of how the technology works). How the financial sector can benefit from blockchain In our view, blockchain technology may result in a radically different competitive future in the FS industry, where current profit pools are disrupted and redistributed toward the owners of new, highly efficient blockchain platforms. Not only could there be huge cost savings through its use in back-office operations, but there could also be large gains in transparency that could be very positive from an audit and regulatory point of view. One particular hot topic is that of "smart contracts"—contracts that are translated into computer programs and, as such, have the ability to be self-executing and self-maintaining. This area is just starting to be explored, but its potential for automating and speeding up manual and costly processes is huge. Innovation from start-ups in this space is frenetic, with the pace of change so rapid that by the time print materials go to press, they could already be out-of-date. To put this in perspective, PwC’s Global Blockchain team has identified more than 700 companies entering this arena. Among them, 150 are worthy to be tracked, and 25 will likely emerge as leaders. The use cases are coming thick and fast but usually center on increasing efficiency by removing the need for reconciliation between parties, speeding up the settlement of trades or completely revamping existing processes, including:

• Enhancing efficiency in loan origination and servicing;
• Improving clearing house functions used by banks;
• Facilitating access to securities. For example, a bond that could automatically pay the coupons to bondholders, and any additional provisions could be executed when the conditions are met, without any need for human maintenance; and
• The application of smart contracts in relation to the Internet of Things (IoT). Imagine a car insurance that is embedded in the car and changes the premium paid based on the driving habits of the owner. The car contract could also contact the nearest garages that have a contract with the insurance company in the event of an accident or a request for towing. All of this could happen with very limited human interaction.

So what?—An area worth exploring When faced with disruptive technologies, the most effective companies thrive by incorporating them into the way they do business. Distributed ledger technologies offer FS institutions a once-in-a-generation opportunity to transform the industry to their benefit, or not. However, as seen in the survey responses, the knowledge of and the likelihood to react to the developments in blockchain technology are relatively low. We believe that lack of understanding of the technology and its potential for disruption poses significant risks to the existing profit pools and business models. Therefore, we recommend an active approach to identify and respond to the various threats and opportunities this transformative technology presents. A number of start-ups in the field, such as R3CEV, Digital Asset Holdings and Blockstream, are working to create entirely new business models that would lead to accelerated "creative destruction" in the industry. The ability to collaborate on both the strategic and business levels with a few key partners, in our view, could become a key competitive advantage in the coming years. This post was co-written by: John Shipman, Dean Nicolacakis, Manoj Kashyap and Steve Davies.

After several years of having courageous leaders in the insurance industry begin to fund the flow of new ideas, it is evident that we have begun to overcome one problem and are now facing another. The old problem was a lack of game-changing ideas. The new problem is our bias against them. Result: The game-changing ideas are not getting launched. The operative phrase here is “game-changing.” The insurance industry has no trouble launching products, services and business models that are similar to the ones we already have. In fact, the industry is pretty darn good at incremental thinking — but we must do better. When inspired thinkers offer up disruptive ideas, we turn our backs on them. Why? Many think it is because their cultures are afraid to fail, and the likelihood of failure is high. The real reason for “failure to launch” is that (most of) your people are repulsed by the real game-changing ideas. Repulsed. What an ugly word. But it’s true. Why? Because those ideas are different. Natural instinct is to push it aside, try to get rid of it, or wish someone else would deal with it. GE has a fabulous commercial spot that personifies the new idea as repelling people socially. If you think about what happens to people who are pushed aside from groups, it is usually because they are different in some way. They may communicate differently, look different, eat different food or live by different rules. It’s the same for game-changing ideas. They have their own language, their own rule sets, and must be measured differently than familiar ideas because they were created to be disruptive. See Also: How to Choose a Great Coach The most successful innovation leaders are beginning to address this bias. They start by helping their teams answer these four questions: 1) How do we determine consumer acceptance? An idea must be boiled down to its core components, and the key hypotheses must be tested. This usually requires several rounds of testing because, with each test, you learn more about what’s missing and what’s not necessary. With game-changing ideas, consumers can barely articulate a need but know it when they see it. The most important skill set here is the ability to prototype so people can imagine themselves experiencing this product or service. Most insurance companies are weak at prototyping. That’s OK because these skills can be borrowed or bought. 2) What critical capability is needed to make this idea work? Take the most important benefit of the idea and determine what might stand in the way of its being realized. With game-changing ideas, believability is typically a barrier. So you need to figure out ways to help consumers trust the outcomes. This might require some proof or a creative way to tell a story. 3) Who has these capabilities? If you do not find the capability within your organization, you must look externally for pieces of that capability. For game-changing ideas, companies must almost always look externally. Entrepreneurial start-ups often have solutions looking for a home, so they are a great place to start your search. 4) What are the right measurements and milestones for this idea? The “language” of measurement is totally different for game-changing ideas than for familiar ones. If your CFO is looking for revenue numbers, the expectation needs to be reset because measuring a game-changing idea with short-term financials won’t work. Instead, measure key indicators of consumer acceptance. For example, many new start-ups get their early funding by setting up an offer that isn’t available and seeing who clicks. The clicks become the measure, and when they get to a certain number, it marks the milestone for funding. Big ideas matter. Overcoming short-term bias and becoming skillful at disrupting ourselves are the only things that will keep us from being blindsided. Now, who wants to embrace a big idea with me? This post was previously published at National Underwriter Life and Health Magazine.

A new report from the Workers Compensation Research Institute (WCRI) found evidence of frequent physician dispensing of new drug strengths and a new formulation at much higher prices. This phenomenon was observed in several states that recently instituted reforms aimed at reducing the prices for physician-dispensed prescriptions. Skirting the goals of those reforms, dispensing increased for new formulations of drugs that carried higher prices. That trend led to substantial increases in average prices for some common physician-dispensed drugs. “When prices are reduced by regulation, the regulated parties―in this case physician-dispensers―sometimes find new ways to retain the higher revenues they had prior to the reforms,” said Dr. John Ruser, president and CEO of WCRI. “The results raise questions about the effectiveness and sustainability of the price-focused reforms. The study also provides lessons for those states where physician dispensing is permitted.” See Also: Novel Controls on Physician Dispensing This report, Physician Dispensing of Higher-Priced New Drug Strengths and Formulation, is part of a series of WCRI studies that examine the effects of regulatory or legislative changes to the rules governing reimbursement for physician-dispensed prescriptions. In the past decade, many states in the U.S. have enacted reforms to cap prices paid to physicians by tying the maximum reimbursement amount to the average wholesale price (AWP) set by the original manufacturer of the drug. However, new strengths and formulations of drugs are labeled as being made by generic manufacturers, not merely as being repackaged, a technical distinction that lets the new strengths and formulations avoid the new reimbursement rules -- the generic "manufacturer" gets to set its own, much higher AWP. The study reported several drugs that exhibited this phenomenon and highlighted several states where physician dispensing of these new drug products was prevalent. Take cyclobenzaprine, a muscle-relaxant. The 7.5-milligram new strength was not seen in the market until 2012. For many years, the most common strengths were 5 and 10 milligrams. The manufacturer of this new strength assigned a new AWP, which was much higher than the AWPs for the 5- and 10-milligram products. Below are some examples from the study of the frequent physician dispensing of higher-priced new strengths.

• California: The average prices paid to physicians for cyclobenzaprine of 5 and 10 milligrams ranged from $0.38 to $0.39 per pill in the first quarter of 2014. The 7.5-milligram product, introduced in 2012 and almost always dispensed by physicians, cost $3.01 per pill in the same quarter. The percentage of physician-dispensed cyclobenzaprine prescriptions that were for the 7.5-milligram strength increased from 0% prior to 2012 to 55% in the first quarter of 2014.

• Florida: The average prices paid for physician-dispensed cyclobenzaprine of 5 and 10 milligrams were $1.75 and $1.29 per pill, respectively, in the first quarter of 2014. The 7.5-milligram new strength was seen prior to Florida’s 2013 reform, but the frequency of dispensing increased substantially post-reform—from 16% in the pre-reform second quarter of 2013 to 49% in the first quarter of 2014. When physicians dispensed the 7.5-milligram new-strength product, they were paid an average of $4.11 per pill.

• Illinois: The average prices paid to physicians for cyclobenzaprine of 5 and 10 milligrams were $1.55 and $1.25 per pill, respectively, in the first quarter of 2014. Prior to Illinois’ 2012 reforms, the 7.5-milligram new strength was rarely seen in the market, but, by the first quarter of 2014, 22% of all physician-dispensed cyclobenzaprine prescriptions were for the new strength. When physicians dispensed the new strength, they were paid on average $3.86 per pill.

• Tennessee: Ten-milligram cyclobenzaprine was the most-commonly dispensed drug strength by physicians in the state, which cost $1.08 per pill on average in the first quarter of 2014. The 7.5-milligram product was not seen in the initial post-reform quarters until the fourth quarter of 2013. By the first quarter of 2014, 19% of physician-dispensed cyclobenzaprine prescriptions were for the 7.5-milligram new strength. When physicians dispensed the new strength, it cost $3.97 per pill on average.

The data used for this report came from payers that represented 31–70% of all medical claims across 22 states studied and covered detailed prescriptions based on calendar quarter from the first quarter of 2012 though the first quarter of 2014. The 22 states in the study are Arizona, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Missouri, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Virginia and Wisconsin. To purchase this study, visit here.