To contend with ever-escalating healthcare costs, Americans will need to come to grips with the cost of end-of-life care. Right now, it's my reality. I am seeing, first hand, rampant and seemingly uncontrollable costs of sustaining life in a system that lacks any semblance of common sense.

My mother is 90 years old and, other than some spending on five healthy sons, has expended very limited healthcare dollars in her lifetime. That is, until now. Suffering mild dementia, she is a resident in a very pleasant assisted-living facility on Long Island. The facility takes good care of her creature comforts, but, medically, she appears to be a case study in why we are all facing a cost crisis. Two of my brothers are medical professionals, and we have a concerned, knowledgeable, family that oversees her care, but we are not with her all the time to manage treatment, and that's where things break down.

At the first sign of an issue, the facility phones an ambulance and ships her off to the nearest emergency room -- three times in the past few months. The first was because of the flu. She weathered the illness but, because of scarcity of resources, was bedridden for a week. As a result, she needed more than a month of inpatient rehabilitation to restore her ambulatory skills. I am guessing that this episode cost in excess of $50,000. The doctor believes that the next two episodes - which occurred in the past 10 days - relate to an allergic reaction, and he has been trying to rule out possible culprits. He took her off Prilosec, and soon thereafter she complained of chest pains, which turned out to be indigestion. So the hospital sent her home. She burned through about $3,000 in costs to figure that one out. Then, after some tinkering with her medication, her blood pressure spiked to 200/113. This has resulted in another in-patient stay. We are planning to keep her moving to avoid another costly rehabilitation; so, for this one, Medicare and her supplemental insurance will probably spend less than $20,000.

The medical expenses she has experienced could have easily been reduced. The problem is that our Medicare system pays for services rendered and not for care management. Care management would have resulted in a much better outcome for my mother, for our family and for U.S. taxpayers.

I am convinced that the Affordable Care Act is not the answer to solve the healthcare crisis, which can only be fixed if we change the way we deliver care at the end of life. And those who lobby for Medicare for all can consider my mother's experiences. That's certainly not the answer.

Ceded reinsurance management is still a technology backwater at insurers that manage their reinsurance policies and claims with spreadsheet software. These manual methods are error-prone, slow and labor-intensive. Regulatory compliance is difficult, and legitimate claims can slip through.

Insurers recognize they need a better solution, and there’s progress. While quite a few insurers have implemented a ceded reinsurance system in the last few years, many more are planning to install their first system sometime soon. They want to have software that lets them manage complex facultative reinsurance and treaties and the corresponding policies and claims efficiently in one place.

Insurers looking to upgrade any kind of system have better choices today than ever about how and where to implement it. While licensing the software and running it on-premises is still an option, virtually every insurer is considering putting new systems on the cloud in some way. Nearly every insurer expects vendors to include a SaaS or hosted option in their RFPs.

That’s not surprising. A 2014 Ovum whitepaper said 52% of insurers it surveyed are currently earmarking 20% to 39% of new IT spending on SAAS, while 21% are spending 40% to 59%.

The definition of SaaS is not set in stone, but let’s try for a basic understanding. SaaS normally means that the insurer pays the vendor a monthly fee that covers everything—the use of the software, maintenance, upgrades and support. The software is hosted more often at a secure cloud provider such as Amazon Web Services that offers a sound service level agreement.

A ceded reinsurance system is an especially good candidate for a SaaS or a hybrid solution (more on that later). It’s an opportunity for insurers and IT professionals to get comfortable with SaaS on a smaller scale before putting a core system such as a policy administration system in the cloud.

SaaS is attractive for several key reasons. One is that it can save money. Instead of paying a large upfront fee for a perpetual software license, the insurer just pays a monthly, all-inclusive “rental” fee. The software vendor and the cloud-hosting vendor provide both the application and underlying software (such as Oracle or WebSphere) and servers. All the insurer needs is a solid Internet connection. And if your building is hit with a flood or earthquake and has to close, business won’t stop, because users can access the system from almost anywhere.

Having the experts run, maintain and upgrade the software is another big advantage. Instead of having internal IT people apply patches and updates, the vendor—which knows its own software better than anyone else—keeps the application going 24/7. Because it is doing the same thing for many customers, there are economies of scale.

Lower upfront costs and the ability to outsource maintenance to experts mean that even small and medium-sized insurers can afford a state-of-the-art system that might be out of reach otherwise. But even big insurers that have the money and funds to buy and staff a system can still find SaaS to be a compelling option. Whether the insurer is big, small or mid-sized, SaaS offers a platform that may never become obsolete.

Additionally, going the SaaS route can get your system up and running faster, as you won’t need to buy hardware and install the system on your servers. How long it will take depends on the amount of customization required and on the data requirements.

Scalability is another plus. When the business grows, the customer can just adjust the monthly fee instead of having to buy more hardware.

A 2014 Gartner survey of organizations in 10 countries said most are deploying SaaS for mission-critical functions. The traditional on-premises software model is expected to shrink from 34% today to 18% by 2017, Gartner said.

While these are powerful advantages, there are some real or at least perceived disadvantages with SaaS. Probably the biggest barrier is willingness to have a third party store data. A ceded system uses nearly all data from the insurance company, sometimes over many underwriting years, and executives must be comfortable that their company’s data is 100% safe when it’s stored elsewhere. That can be a big leap of faith that some companies aren’t ready to make.

A hybrid solution can be a good way around that. More common in Europe, hybrid solutions are starting to catch on in North America. With this model, the software and data reside at the insurer or reinsurer, which also owns the license. The difference is that the vendor connects to the insurer’s environment to monitor, optimize and maintain the system. As with SaaS, the insurer’s IT department has little involvement with continuing operations. All that is work is outsourced.

How much access does the vendor have to the insurer’s data and systems under a hybrid solution? There are various options, depending on the insurer’s comfort level.

What’s the right solution for a ceded reinsurance system to your company? Each company is unique, and the best answer depends on many factors. But whether you go the on-premises route, choose SaaS or use a hybrid solution, you’ll get a modern system that handles reinsurance efficiently and effectively. Your company is going to benefit greatly.

Companies should review their use of intercompany reinsurance, through either individual or pooled quota share agreements. If insurance companies (particularly in the property & casualty (P&C) sector and possibly health maintenance organization (HMO) sector) can do this correctly, they can achieve capital and back-office operational efficiencies without disrupting "business-as-usual" front office operations.

Inter-company reinsurance efficiency opportunities

PwC sees opportunities for:

1. Companies that have intercompany reinsurance pools or quota share agreements in place to become more efficient, and
2. Companies that do not currently use or have limited intercompany pooling and quota share to expand the use of these concepts.

Increasingly, regulators are open to these modifications, provided policyholders are not put at a disadvantage.

A well-designed intercompany reinsurance structure can result in a number of efficiencies. Specifically, by establishing 100% quota share or 0% retrocession pooling agreements, a group of P&C companies can move all retention to a single "lead" company. The goal is to have the lead company retain the bulk of the insurers' capital and investment portfolios while ceding companies maintain only minimum surplus levels. The lead company would become the only company where capital needs to be actively managed and would have a larger, consolidated investment portfolio.

Companies (particularly P&C) that retain a relatively large number of legal entities after simplification may find a single pooling agreement more straightforward than managing multiple affiliated reinsurance agreements. However, multiple quota share agreements may streamline future changes for events such as divestitures and acquisitions. Note that multiple agreements transferring business back and forth between the same legal entities will need review and most likely simplification. In those instances where centralization of capital with the lead company is not possible (e.g. mutual affiliations, regulatory requirements), the pool percentage should follow the capital position of all participants (including the lead company). Even companies that have significantly simplified their corporate structure can tie their remaining legal entities together with a common-sense pooling agreement that supports their operating strategy.

Key benefits

• Diversification of underwriting results and earnings by legal entity: Pooling enables a larger spread of risk, allowing for less variable earnings and more predictable dividend streams by legal entity. For 0% net retention structures, including 100% quota share, the lead company enjoys the same diversification.
• Improvement in capital position or financial strength ratings: If this is not the case already, the companies will be rated on a pooled (p) or reinsured (r) grouped basis, reflecting their combined financial strength. Additionally, this increase in financial size and diversification can improve the A.M. Best capital adequacy ratio (BCAR).
• More efficient capital management: Companies can better centrally manage capital while retaining minimum required capital in pool/quota share participants and allocating premiums based on surplus capacity. This can help insurers manage premium to surplus ratios. Pooling and quota share also provide more efficient access to total capital by centralizing capital and avoiding dividend traps in subsidiaries.
• Operational efficiencies: Pooling integrates various businesses' finance and back-office operations, can provide momentum for more standardized and centralized reporting functions and can reduce frictional costs associated with the record-to-report function. Some potential efficiencies include: fewer intercompany agreements; lower audit fees from increased materiality thresholds and a combined statutory audit; consolidated regulatory exam; a more streamlined investment management function; and simplified reporting requirements (for 0% net retention agreements).
• Marketing and branding: Some companies have been able to go to market as a group entity (particularly by affiliations of mutuals), which carries a larger financial size category (FSC). FSC is particularly beneficial for mid-size companies trying to gain market share in the broker market for commercial lines.

Challenges

While insurers operate within similar structures and against similar pressures, every company is different. There are a few common challenges we have encountered with our clients while designing and implementing intercompany pooling and affiliate reinsurance:

• Disparate organizational groups, processes, and technologies: Affiliate reinsurance requires results from potentially disparate processes that may have different timing and data quality. Recording pooling entries may prove especially difficult for companies on multiple general ledgers. For the close, the combined pool is only as strong as its weakest link. This will be especially evident with subsidiaries that may have a streamlined close process but are dependent on other participants to close their books. We have seen companies undertake significant close process improvements to operate efficiently in a pooling agreement. This can be somewhat alleviated by structuring multiple affiliate quota share agreements in place of a pooling arrangement.
• Additional requirements for generally labor intensive processes: It is not uncommon for insurers to have significant manual processes for calculating incurred but not reported losses (IBNR) or producing relevant disclosures such as Schedule P and F. Having distinctly different timing of key calculations and inputs can be a burden that all participants have to share.
• Data management and quality issues: Companies that generally operate in silos, on separate ledgers, different chart of accounts or even make inconsistent use of chartfield values can find it more operationally difficult to execute pooling and difficult to leverage automated solutions.
• Blending different businesses within results: Disparate operations and reporting groups that previously performed duties related to specific lines of business may find it difficult dealing with the new assumed business. For example, certain reporting disclosures required only for specific lines may become applicable to all participants in the pool.

Thinking "outside the box" to maximize value

Optimizing the benefits of affiliate reinsurance may result in arrangements that have previously been considered non-traditional, or at least lacking significant industry precedents. We encourage companies to maintain an open dialogue with regulators and rating agencies and believe that demonstrating a positive impact to operations, financial strength and overall policyholder benefits, outweighs lack of precedent.

1. Centralizing capital and gross written business, where possible, is often the preferred structure for P&C companies: Zero-net-retention arrangements are a way to improve capital efficiency. While we have generally seen these structured as 100% quota share reinsurance, it may also be also possible to structure or modify a traditional pooling agreement to cede 100% of written premium to a lead company, with a 0% or minimal retrocession. Some key benefits we have seen include:

• Capital management efficiencies - 0% net retention structures allow for minimum retained capital across the legal entities, centralizing on a lead company. This streamlines the capital management process and can simplify asset/liability management.
• Financial reporting efficiencies - Centralizing net written business on a lead company can significantly reduce overall reporting requirements across the organization. Legal entities with 0% net business can discontinue certain laborious schedules (e.g. Schedule P Parts 2-4) and other reporting requirements for net business. Similarly, by retaining minimum capital on legal entities, investment disclosures can be simplified (e.g., fair value disclosures). Overall, we have seen companies reduce the statutory annual reporting pages by 50%, which can be compelling for larger organizations.

You should work with regulators to shift capital to the lead company in the most efficient way (usually at the inception of the pooling agreement).

2. There are benefits for certain lines of business that have traditionally not been considered for pooling:

• HMOs - Requirements for HMOs to have legal entity domicile in each state in which they do business yields a corporate structure with a large number of thinly capitalized companies. Pooling can improve the capital efficiency, as well as reduce some other operational burdens. While this does not have significant industry precedent (within affiliated pools), we see no reason an agreement would be disallowed solely because an HMO is involved.
• Significantly different business - Removing preconceived constraints allows further expansion of potential opportunities and related benefits. We have assisted companies implementing agreements that have a mix of significantly different lines in the pool and have seen specialty insurance business (e.g. excess and surplus, program, crop, reinsurance, etc.) pooled with mainstream personal and commercial insurance. While there can be related challenges, if there are tangible benefits to diversification, then those challenges can be justified and overcome in the long run.

3. The lead insurer does not have to be the parent company. In the same spirit of thinking outside the box for pool participants, we have found the lead company may not always be an obvious choice, particularly where all participants share percentage retention in the pool. The selection of the lead company should take into consideration the following:

• Licensing - Requires licensing in all domiciled states of pool participants, all states of participants for retrocession and for all lines of business.
• Domicile and regulatory environment - It is preferable to choose a lead company in a state of domicile where the organization has a favorable relationship with the regulator. Existing reinsurance arrangements or recent business restructurings are helpful. It is also critical to maintain open dialogue and communication with the regulator.
• Capital size and efficiency - For larger companies or those with a more complex corporate structure, this can be a more difficult decision. Consider the efficiency of passing excess capital to an ultimate parent and avoid potential dividend traps. It is not always a parent company or the largest company that is best-suited to be the lead company.
• Marketing and branding - For some companies, branding and marketing may become a factor in choosing the lead company. Some highly acquisitive companies may find certain lead companies inconsistent with their branding strategy.

Key considerations

We believe that intercompany pooling and quota share arrangements need to align with a company's objectives and strategy and must be operationally feasible. It is often beneficial to have a third-party perspective that is not biased toward specific ingrained processes or behaviors. In particular:

• Assess how well your people, process and technology can meet new demands.
• Look beyond finance to consider various internal stakeholder perspectives, including actuarial, risk, investment, reinsurance and business leaders, as well as external constituents such as regulators, rating agencies and investors.
• Because of the breadth of people, process and technology that will be affected, we recommend implementing a senior-level steering committee to oversee and drive design and implementation.

In conclusion

There can be tangible benefits from re-evaluating or implementing intercompany pooling and affiliate reinsurance. This can further streamline the corporate structure, based on pre-determined objectives and supporting parameters. We encourage insurers to keep an open mind when designing pool parameters, including lead company selection. Maintaining an open dialogue with regulators and rating agencies is critical, particularly when setting a precedent with a particular pooling arrangement.

One of the more interesting and challenging issues to surface is the status of drivers at transportation network companies (TNCs) such as Uber and Lyft. Are some or all of them employees? A federal court in California just ruled that this issue may be resolved in a class action (although this is subject to appeal).

That, alone, is a difficult call. Here are two web sites discussing the issue.

http://www.newyorker.com/magazine/2015/07/06/gigs-with-benefits

http://www.thelegalintelligencer.com/latest-news/id=1202730474534/Avoiding-Penalties-When-Classifying-Independent-Contractors?slreturn=20150602053546

Commentary addressing this issue has focused primarily on the added expense created by employee status. "For an employer, the main difference between contractors and W-2 employees is that employers have to 'withhold income taxes, withhold and pay Social Security and Medicare taxes and pay unemployment tax on wages paid to an employee,'" according to the Internal Revenue Service.

Apart from these added expenses, status as an employee creates some difficult insurance challenges. Here a few:

--If you write a workers' compensation policy for the TNC's employees, how many employees are you insuring? Only those who work in the office, or the hundreds or thousands of drivers on the road?

--Most statutes or regulations covering TNCs such as Uber and Lyft require them to carry insurance on their drivers in various amounts -- e.g., $1 million from from the time of agreeing on a ride to after the dropoff. Usually, there is a lower amount required for the time the driver is cruising with the app on looking to connect with a fare ($50,000 primary and $200,000 "excess" in California).

If the driver is an employee, these limits become largely irrelevant because the TNC, as the employer, is liable without limit for any injuries caused by an employee driving within the scope of employment. Put another way, the injuries are backed by all of the TNC's assets, including any insurance it may carry.

--But the issue is more complex than that. What if the driver has a collision on the way to the city, but before turning on the app? Usually, when one is going to or coming from work, the commute is not considered to be in the scope of employment - i.e., no liability on the part of the employer. This "going and coming" rule changes, however, when the employee must use her car in the work. Obviously, TNC drivers must use their cars.

Take the case of Judy Bamberger. She used her car during work to visit clients and carry out other work-related chores. On her way home, she decided to stop for yoga and yogurt. As she made a left turn, she collided with a motorcyclist. Is the employer responsible? "Yes," said the California Court of Appeal. In Moradi v. Marsh USA, Inc., 210 Cal. App.4^th 886 (2013), the court held that her driving fell within the scope of her employment because, since she used her car in her work, going to and from work conferred an "incidental benefit" on the employer.

Thus, the TNCs' liability may extend well beyond the "app on-app off" brackets.

--If this is not complex enough, consider this. Many drivers keep several apps on as they cruise. If a driver keeps three apps on and has a collision, is the driver an employee of all three TNCs? Does that change once the driver accepts a fare? What about the going and coming rule? If the app is not yet turned on, is the driver an employee of each company for whom the driver has an arrangement to drive?

One may imagine other "shared economy" scenarios where status as an employee will affect not only expenses line benefits, but also liability and related insurance issues.

This year, for World Suicide Prevention Day, the theme is "Reaching Out to Save Lives" - a message all employers can use to let people know that everyone can play a role in suicide prevention. The National Action Alliance for Suicide Prevention's Workplace Task Force members and the organizations they serve offer the top six things workplaces can do during the month of September to make prevention a health and safety priority:

1. Offer a Leadership Proclamation: "Not Another Life to Lose"

Members of executive leadership can take bold and visible positions declaring suicide prevention and mental health promotion critical workplace concerns. This proclamation can be in the form of a newsletter to employees or a video on a website.

• There is sample proclamation language within this National Suicide Prevention Week Toolkit from the American Association of Suicidology; for those working with American Indian and Alaska Native audiences, use the Action Alliance's culturally relevant materials for promoting Hope for Life Day.
• Here is a video with Bob Turner, the private sector co-chair of the National Action Alliance for Suicide Prevention, from the 2014 US/Canada Forum on Workplace Suicide Prevention.
• Here are three articles, "A Call to Action on Mental Health," "How to be a Visionary in Mental Health" and "Stand Up for Robin Williams," by Sally Spencer-Thomas, the co-lead of the National Action Alliance for Suicide Prevention's Workplace Task Force.

2. Highlight Mental Health Resources

Host a brown bag lunch program each day for the week. Invite employee assistance program (EAP) representatives or other local mental health professionals to offer educational session on stress, work-life balance, coping with depression or other related topics.

Offer a mental health fair where local suicide prevention, mental health or other wellness resources share more information and employees get a "passport" stamped for each one they visit. Completed passports go into a drawing for a prize.

Send resources to employees such as:

• EAP phone number or website with a list of answers to frequently asked questions
• Screening tool: "Workplace Response: Screening for Mental Health"
• Article: "Making Mental Health Your Business" by Candice Porter of the National Action Alliance for Suicide Prevention's Workplace Task Force
• Hotlines: National Suicide Prevention Lifeline (1-800-273-TALK/8255)
• Online support resources:
  • Community Forum for Suicide Loss Survivors
  • "Get Help" from National Suicide Prevention Lifeline
  • ManTherapy.org - self-screening and humor to engage men to think about mental health in a different way
  • CirclesOfSupports.org - resources for peers and caring adults of youth suicide attempt survivors

3. Launch a Mental Wellness Task Force

A true comprehensive and sustained public health approach to prevention will take more than an awareness week or one-time training. To create significant change, a more strategic approach is needed. Start by pulling together a small group of stakeholders - people whose job titles reflect some level of relevance to this issue (i.e., wellness, HR, risk management, safety) and others who are passionate about prevention because it has touched their lives personally. Their task? To identify culturally relevant areas of strength and vulnerability for suicide within the organization and to develop a strategic approach to change.

Here are some resources:

• Workplace self-assessment tool: "How Mentally Healthy is Your Workplace?"
• Article: "Why Employers Must Help Stop Suicide," by Jodi Jacobsen Frey, a member of the National Action Alliance for Suicide Prevention's Workplace Task Force
• Article: "Suicide Prevention: Talk About It at Work," by Rich Paul, a member of the National Action Alliance for Suicide Prevention's Workplace Task Force
• Article: "Breaking the Silence on Mental Health," by Bernard Dyme, a member of the National Action Alliance for Suicide Prevention's Workplace Task Force
• Article: "A Blueprint for Preventing Suicide," by Michelle Holmberg, a member of the National Action Alliance for Suicide Prevention's Workplace Task Force
• Workplace blueprint from the National Action Alliance for Suicide Prevention
• Online resource: WorkingMinds.org

4. Leverage Social Media

During this week, companies can join the international conversation by posting on Twitter and Facebook.

• Sample posts:
  • [Name of company or Twitter handle] makes #suicideprevention a health and safety priority #WSPD15
  • [Name of company or Twitter handle] We are doing our part to #preventsuicide during #NSPW. Everyone can play a role!
• Hashtags:
  • National Suicide Prevention Week (Sept. 7-13)
    • #NSPW
    • #NSPW15
    • #SuicidePrevention
  • World Suicide Prevention Day (Sept. 10)
    • #WSPD
    • #WSPD15
  • Workplace
    • #WorkplaceMH
    • #WorkingMinds
  • Guidelines on social media and mental health.

5. Honor Suicide Loss With Candle-Lighting Ceremony

How companies respond to the aftermath of suicide matters greatly. Grief and trauma support, thoughtful communication and compassionate leadership can help a workforce make the transition from immobilization to a bonded community.

Here are some resources:

• Example of candle-lighting ceremony honoring those who've died by suicide
• Tool: "A Manager's Guide to Suicide Postvention: 10 Action Steps for Dealing with the Aftermath of Suicide"
• Article: "A Manager's Response to Workplace Suicide" by Jodi Jacobsen Frey, a member of the National Action Alliance for Suicide Prevention's Workplace Task Force
• Article: "Preventing Deaths Following a Suicide," by Judy Beahan, a member of the National Action Alliance for Suicide Prevention's Workplace Task Force

6. Donate to or Volunteer for Local or National Suicide Prevention Organizations

Engaging in community prevention efforts is a great way for employees to give back and to get to know the local resources available. Corporate investments in prevention programs and research will help us get ahead of the problem. Get involved!

Here are some resources:

• Donate to suicide prevention organizations
• Walk for suicide prevention (community walks offered by the American Foundation for Suicide Prevention)
• Article: "Why Invest in Suicide Prevention?" from Insurance Thought Leadership contributor Sue Murray

Keeping antivirus software protection current on all company-owned computing devices has become an essential business practice. That's not a simple endeavor.

ThirdCertainty recently sat down with Andy Hayter, security evangelist at antivirus vendor G Data Software, to discuss the intricacies of managing antivirus solutions effectively, particularly in small and mid-sized companies. (Answers edited for clarity and length.)

3C: With hackers updating their virus signatures almost minute-to-minute, why do companies still need antivirus protection?

Hayter: One of the myths out there today is that antivirus is dead. But the good news is that antivirus software today isn't just signature-based. It includes heuristic technology that looks at the characteristics of a piece of software executing on your computer.

So in many cases, even though a particular piece of malware may not necessarily have been identified through a signature, it can easily be identified through the heuristics.

Security & Privacy Weekly News Roundup: Stay informed of key patterns and trends

3C: As a business owner or manager, if I'm implementing my antivirus solution on my own, what should I know?

Andy Hayter, G Data Software security evangelist

Hayter: Having a management interface is important, so that you can manage all devices and deploy the antivirus software out to all your devices and keep it maintained and updated. Your vendor should offer training to your key personnel.

It's important for them to understand how to manage threats, and understand what's going on in your network environment from a malicious software perspective.

3C: Is relying on my IT department to take charge of security wise?

Hayter: Most small and mid-sized companies are going to look at the IT department to do this. They are not large enough to have a separate security function. The CEO and CFO still must fully understand the impact malware can have.

3C: What about outsourcing security?

Hayter: Many smaller companies don't have the time or resources to get someone up to speed and trained, or even multiple people trained, because this is a 24-hour type of situation. So more companies are looking at managed security Service (MSS) providers to take this on for them. This entails a solution that a third party manages remotely through a remote management console.

So it depends on whether the business has the time and the money to train people or wants to outsource this to a professional whose business is security. Either way, you still need to train your IT staff so they know the fundamentals of security and can protect the business in an emergency.

3C: So I can't just outsource and wash my hands of security?

Hayter: No. You cannot wash your hands of security. Your managed security service provider is there for you, but you still have to understand the basics. You still have to perform the training. And you still are the person on site to talk to your employees about situations that might occur at 8:30 in the morning when they log on their PC and get a strange e-mail.

3C: Establishing a security mind-set for my company is a day-to-day thing?

Hayter: Right. If you do outsource your security, you cannot just forget about it and pray that it's done completely. You still need to train your employees and help them understand that bad things can happen to them.

We're busy gearing up for the annual SMA Summit, where innovation will take center stage. In the spirit of the summit, I started to gather some inescapable facts that could inspire us all to innovate and improve - to truly become the Next-Gen Insurer. But, rather than peddle the same old innovation benefits and business rationale, I thought it would be refreshing to share 10 facts about change and innovation that will directly affect insurance and that may inspire you, surprise you or reinforce why you should be continuously improving by reimagining and reinventing the business of insurance!

1. Younger generations like Millennials and Generation Z are going to be the biggest consumers in the market in five to 10 years. Make sure you can reach them. They will not use paper applications or have a face-to-face meeting, but they will be searching for options from their phones and cars. A typical mobile user checks her phone more than 100 times a day (Marketing to Millennials).
2. Innovative workplaces attract the best and brightest talent. Today, word of a stale, outdated work environment spreads fast. Don't be one of those employers. Invest in talent, but also invest in your infrastructure and creating an innovative workplace (How Great Companies Attract Top Talent).
3. A majority of insurers (65%) have focused on innovation for five years or less. You aren't alone, and, surprisingly, you probably aren't far behind. With the right focus, you can make remarkable strides in a short amount of time (SMA Research: Innovation in Insurance: Expanding Focus and Growing Momentum).
4. 80% of all crowdsourcing is done by small business and start-ups. Embrace the crowd! It is often the most cost-effective way to generate ideas. Big business loves the crowd, too. Just look at McDonald's crowdsourced burger or Apple's crowdsourced mapping tools (Crowdsourcing: Great For Your Business).
5. The amount of stored data doubles every 24 months. The U.S. Census estimates that the population has grown more than 27% in the last two decades. Changing demographics, aging citizens and diverse populations are changing the face of data accessible to insurers. To stay on top of the situation, you need a data and analytics strategy that makes the most of the new data available (Vernon Turner).
6. Wearable devices have grown 200% every month since 2012. This doesn't mean that wearables won't eventually be replaced by something else or evolve. It does mean that wearables are growing so fast that it makes sense to try to tap into some of that innovation and apply it to your own organization, your processes or even your products (2013 Internet Trends).
7. It is six to seven times more expensive to acquire new customers than it is to keep existing ones. One risk of not innovating is that you may start losing customers who can find better, easier-to-use insurance options. Studying consumer behavior might be the best indicator of market trends and areas to innovate. Don't lose renewals because you haven’t kept up with market demands (15 Statistics That Should Change the Business World But Haven't).
8. More than 40% of the companies at the top of the Fortune 500 list in 2000 were not on the list in 2010. The digital age shuttered many long-standing businesses. Some experts think that, in the next decade, businesses that do not embrace innovation or adapt to market demands will suffer the same fate. Insurance is not immune to this phenomenon. Today, everything is connected (Sorry We're Closed: The Rise of Digital Darwinism).
9. Just 10% of cars were connected to the internet in 2012, but by 2020 it is estimated that 90% will be. It is amazing to think of how quickly we are witnessing innovation expand. What was once an outlier is now a standard (Amazing Facts Everyone Should Know About the Internet of Things).
10. Internet of Things (IoT) technology has the potential to add $10 to $15 trillion to global GDP over the next 20 years. Like the connected car, IoT will eventually become standard. What insurers do with the new data available and the amazing growth potential will ultimately make or break them (Internet of Things Market Statistics-2015).

These facts are inescapable. Not only is innovation here, but the statistics are astounding. The time to embrace innovation and become the Next-Generation Insurer is now.

If you're in the insurance industry, then you know why the topic of improving the customer experience is so important. Although insurance is a complex business not so easily entered by "outsiders," as technology becomes more intuitive and simplified, barriers that once protected insurance from outside competition have started to dissipate. Companies like Google can use targeted partnerships and marketing prowess to provide consumers with a process that is quick and painless and offers policies at the right price. This type of business model is especially attractive to Millennials, the largest consumer base in the U,S. at 75 million strong.

Luckily for insurers, even with a side-by-side comparison of policies at their fingertips, Millennials still want the insurance-buying process to be completed through a person they trust. Less luckily for insurers, there is a perception that insurers use outdated methods of communication, making them appear untrustworthy and - dare we say it? - incompetent.

Here are a few ways to help alleviate this problem:

Know a Consumer's Common History

Nothing can make an insurer or agent appear more out of touch than neglecting a customer's history with your company or a past carrier. Simply asking a question that has been answered previously can be the start of a frustrating relationship.

Technology offers ways to engage customers and access databases that record and recall all customer touch points and information gathered thus far. Not taking advantage of these tools reflects poorly on the brand, especially considering how many current companies today employ similar tactics. How can we expect consumers to be loyal to an insurer when there is no understanding of their previous experiences? For example, if their history includes a disputed claim, an agent must pay careful attention on communicating what the policy will cost, what it will cover and most importantly what it won't cover. Showing an intuitive level of care when it comes to a new customer can show that you are up to task of insuring their assets.

Understand Their Journey

Whether researching product offerings, paying bills or submitting a claim, customers are on a path that is transactional and rarely linear. As a carrier, broker, agent or customer service representative, you must adjust your messages based on each customer and provide a way to view a policy that offers structure. Studies have shown that customers do not feel confident about their policies and what they cover, relying on the insurer to walk them through what can be a confusing process. Additionally, responsibilities of each person (insurer and agent) in the internal insurance pipeline must be written down and agreed upon, including who is in charge of sending specific customer information to other team members. The last thing you want is a floating customer with no idea who to speak to regarding a problem. One of the most surprising components leading to poor customer communication is a lack of cohesive internal communication within a company.

Through the use of upgraded core systems, documents like smart forms can strengthen this process. Smart forms have access to all existing data on a customer and can plug it into the appropriate sections of the form. This allows agents more time to think about their individual customers instead of performing low-level work. Agents of the future will likely take more of an advisory role, leaving the grunt work for the new technologies available to them.

Additionally, steps are being taken in the life insurance segment to gain back the trust from Millennials that was lost in the 2008 financial crisis. According to the 2015 Makovsky Wall Street Reputation Study, seven out of 10 Millennials no longer trust financial service firms. One clever example of how these insurers plan to understand the Millennial consumers is the Society of Grownups, an organization backed by MassMutual, offering a social learning environment to teach about credit scores and retirement savings. This type of out-of-the-box initiative is another way for insurers to begin rebuilding trust with their younger customers.

The Age of the Inquisitive Consumer

With the continued rise of the inquisitive consumer, more and more are going into new policy discussions and purchases with their own research and preconceived notions. In fact, according to a recent Ernst & Young survey, 69% of global customers feel that they initiate the purchase of new policies. However, insurance is still a complex business, which means agents have a responsibility to locate and dissolve any discrepancies between customer perceptions based on their own research and what the actual policy dictates.

It's also important to allow for omnichannel communication. This is where delivery can be tailored for each step in the insurance buying process and centered on the preferred communication method. In the beginning of a new policy discussion, perhaps customers would prefer their interaction to be done over mobile phone or through live email chat, but as they get closer to signing the policy they may want a direct line to their agent.

The key ingredient to improving the consumer experience is simple in theory but difficult in practice: to listen to each customer and her specific needs and enter into the discussion from the position of education rather than sales. Millennials gravitate toward a more personal touch that is also transparent and efficient. With the addition of new technologies and refined internal strategies, insurers can help mitigate a perception issue in insurance and help agents move into different roles that are more suitable for the millennial consumer.

What do companies like Southwest Airlines, Ritz-Carlton and Zappos have in common? They hire for attitude and train for skill.

It's a simple mantra but one that has a profound impact on how to successfully recruit and select new employees.

Prioritizing Soft Skills

During their hiring process, these companies weigh "attitudinal" characteristics very heavily.

These are personal attributes that it's difficult to train employees on -- such as being a people-person, having an upbeat personality or possessing a keen ability to learn.

While these firms won't ignore technical skills (Southwest doesn't put unqualified pilots in the cockpit, no matter how bright and cheery they are) they nonetheless look very carefully at these soft skills -- far more than most employers do.

These companies gain a lot from this hiring strategy. By focusing on attitudinal characteristics that align with their company brand, these companies reinforce their distinctive company culture with each new hire.

And because they're hiring people whose values align with that culture, the result is a workforce that's happier, more engaged and less likely to turn over.

But the benefits of this hiring process don't stop there. When a workforce embodies the company brand (think how Southwest employees exude "fun"), it differentiates the customer experience where it counts most -- in consumers’ one-on-one interactions with your staff.

If you have any doubt about the power of that dynamic, just consider how Southwest, Ritz-Carlton and Zappos have dominated their respective markets.

Five Steps to Hiring for Attitude

So how should you go about hiring for attitude, seeding your workforce with true brand ambassadors? You could run your applicants through personality tests and behavioral assessments -- but that can be pricey, time-consuming and onerous for the candidates.

Fortunately, there are other approaches you can employ to put this strategy in practice. Here are five simple, low-cost ways to hire for attitude:

1. Be clear about expectations.

Take advantage of candidate self-selection by clearly broadcasting what qualities you look for when bringing on staff.

For example, if you tell the world that you're in the market for extroverts - fewer introverts will apply (and that's a good outcome for you and them).

By defining what personal qualities you're searching for up-front, you make it more likely that candidates with those attributes will throw their hats into the ring.

2. Be aggressive.

Don't just wait for people with the right attitude to apply for a job - spot them in the marketplace and make your pitch!

When you see someone who clearly embodies the qualities you want on your team, give her your card and invite her to apply for employment.

As any great recruiter knows, that extremely attentive waiter, remarkably patient sales associate or well-spoken repairman could be your next great hire.

3. Focus on the person behind the paper.

Gauging attitude from a resume requires insight and vision. Consider how the personal qualities you seek would manifest themselves in a candidate's resume and background.

For example, individuals who are adept at overcoming adversity may have demonstrated that spirit in how they responded to a layoff. People-oriented extroverts may belong to a variety of business associations and community groups. Skilled communicators will likely design and organize their resume content in exceptional ways.

In addition, your interview questions can also reveal attitudinal characteristics. Looking for someone with customer service in his DNA? Ask about the most over-the-top service he ever delivered (the best service people never forget such stories).

Looking for someone with a sense of humor? Ask about the time she laughed the hardest.

Whatever attitude you seek to hire, the key is to look beyond the words on the resume and search for more subtle clues about a candidate's character.

4. Observe applicants when they think no one is watching.

Want to see a candidate's true colors? Then see how he behaves when he thinks no one is watching.

How did the applicant treat your receptionist? Did he strike up a conversation with other applicants in the waiting room? Did he eat alone in the cafeteria or introduce himself to a table of strangers?

What the candidate says and does outside of the hiring manager's view can give you a glimpse into her true personality (which may differ from how she presents in an interview). Use these clues to help judge if the applicant will really be a good fit in the culture you're cultivating.

5. Enlist today's stars to spot tomorrow's standouts.

Toward the end of the hiring process, see if it's possible to have your job finalists spend some time shadowing existing employees.

This serves two objectives. First, candidates get an unfiltered look at the job they'd be performing, so there's less chance of unpleasant surprises and post-hire buyers' remorse.

Second, by pairing these finalists with the best employees (the ones who embody the desired attitude), your existing staff can help identify those applicants who have the right stuff.

Hiring for attitude is about building a distinctive workplace culture and company brand that, unlike skill sets, can't easily be copied in the market. It's what gives Southwest Airlines, Ritz-Carlton and Zappos their unique character -- and competitive advantage.

Follow the lead of these legendary firms as you look to recruit great candidates. Don't just hire for skill; hire for attitude. It makes all the difference.

This article originally appeared on monster.com.

"Cancer drugs aren't just really expensive; they're a bad value."

That stunning headline is from a Washington Post article. The author is Carolyn Johnson.

She writes, "With some cancer drug prices soaring past $10,000 a month, doctors have begun to ask one nagging question: Do drug prices correctly reflect the value they bring to patients by extending or improving their lives?" The short answer is that many cancer drugs do not. That comment will not surprise regular readers of my book Cracking Health Costs.

Further: "'Currently, the prices of cancer drugs are increasing, and the prices are not linked to the benefit that the drug provides,' Daniel Goldstein, an oncologist at the Winship Cancer Institute at Emory University who led the study, said in an e-mail."

Goldstein suggests: "We propose that drugs that provide a minimal benefit should have a low price, while drugs that provide a major benefit should have a high price."

Makes sense.

Alas.