The '80s — Bon Jovi's "Livin' on a Prayer" blaring from car stereos; Back to the Future taking the country by storm; and who could forget velour track suits? While most of the world has moved on from big hair and parachute pants, many of today's most widely used workers' compensation payment processes are as outdated as your once-trusty Sony Walkman. Traditional payment methods like checks and electronic funds transfers (EFTs) are leveraged for both indemnity and provider payments by many organizations. However, their shortcomings signal the need to modernize the workers’ compensation revenue cycle and bring it into the 21st century. Checks Check use is gradually declining, but it continues to account for 50% of business-to-business payments in the U.S. Its continued prevalence makes checks the most highly targeted payment method by those committing fraud attacks, making up 77% of all attempted or actual payment fraud in 2014. Checks also accounted for the largest dollar amount of loss because of fraud in 2014. Even when fraud can be avoided, payers are still faced with an expensive payment method. According to an AP automation study, processing alone can cost as much as $8 per transaction (enough to buy eight loaves of Wonder Bread in 1986!).On top of processing and postage fees, the potential for lost or late checks adds to claim costs. Even if a payment is received on time, increasingly complex claims mean more valuable time is spent by providers depositing and processing payments. And if an injured worker receives a late indemnity check, he may not be able pay his mortgage or car payment on time. Electronic Funds Transfers EFTs date back to the advent of the ATM in the mid-1960s. Despite attempts to modernize, EFTs are prone to incorrect distribution, potential duplication of payments and delays in posting and hidden processing fees (sometimes per transaction). Additionally, workers are increasingly reluctant to give out sensitive account information to receive their indemnity payments via EFT. Pair the shortcomings of these traditional payment methods with an increasingly complex workers’ compensation landscape, and payers and providers alike are looking at a detrimental domino effect. Medical payments have increased to $30.8 billion—a staggering increase from years past—and claim severity is experiencing slight, but significant, increases. The more severe the claim, the longer it is open. And the longer the claim is open, the more payments must be pushed through the revenue cycle. Where Do We Go From Here? Simply put, it’s time to say goodbye to the outdated, inefficient payment methods of 1985 and say hello to the future. The good news? Viable alternatives are starting to gain traction. Centralized virtual payment solutions can help workers’ compensation payers streamline the revenue management cycle by automating payment processing, reconciliation and management. With faster reconciliation, reduced paperwork and more transparency, providers also benefit greatly from virtual payment solutions. Card-based solutions provide additional options with unique benefits for both injured workers and payers. A pre-paid, bank-neutral card given to injured workers reduces payment errors, decreases operational expenses and ensures all workers receive accurate, timely payments. Traditional payment processes have had their place in time, but, as with the DeLorean, it’s time to retire.

Most people who purchase an insurance policy are faced with the daunting task of filling out an extensive application. The insurance company – either directly or through an intermediary – asks a myriad of questions about the “risk” for which insurance is being sought. The data requested includes information about the entity seeking to purchase insurance, the nature of the risk, prior loss experience and the amount of coverage requested. Insurers may supplement that information with a limited amount of external data such as motor vehicle records and credit scores. The majority of information used to inform the valuation process, however, has been provided by the applicant. This approach is much like turning off your satellite and data-driven GPS navigation system to ask a local for directions. According to the EMC Digital Universe with research and analysis by IDC in 2014, the digital universe is “doubling in size every two years, and by 2020 the digital universe – the data we create and copy annually – will reach 44 zettabytes.” That explosion in the information ecosystem expands the data potentially available to insurers and the value they can provide to their clients. But it requires new analytical tools and approaches to unlock the value. The resulting benefits can be grouped generally into two categories:

• Providing Risk Insights: Mining a wider variety of data sources yields valuable risk insights more quickly
• Improving Customer Experience: Improving the origination policy service and claims processes through technology enhances client satisfaction

For each of these areas, I’ll highlight a vision for a better client value proposition, identify some of the foundational work that is used to deliver that value and flesh out some of the tools needed to realize this potential. Risk Insights Insurance professionals have expertise that gives them insight into the core drivers of risk. From there, they have the opportunity to identify existing data that will help them understand the evolving risk landscape or identify data that could be captured with today’s technology. One can see the potential value of coupling an insurer's own data with that from various currently available sources:

• Research findings from universities are almost universally available digitally, and these can provide deep insights into risk.
• Publicly available data on marine vessel position can be used to provide valuable insights to shippers regarding potentially hazardous routes and ports, from both a hull and cargo perspective.
• Satellite imagery can be used to assess everything from damage after a storm to proximity of other structures to the ground water levels, providing a wealth of insights into risk.

The list of potential sources is impressive, limited in some sense only by our imagination. When using the broad digital landscape to understand risk -- say, exposure to a potentially harmful chemical -- we know that two important aspects to consider are scientific evidence and the legal landscape. Historically, insurers would have relied on expert judgment to assess these risks, but in a world where court proceedings and academic literature are both digitized, we can do better, using analytical approaches that move beyond those generally employed. Praedicat is a company doing pioneering work in this field that is deriving deep insights by systematically and electronically evaluating evidence from various sources. According to the CEO Dr. Robert Reville, “Our success did not come solely from our ability to mine data bases and create meta data, which many companies today can do. While that work was complex, given the myriad of text-based data sources, others could have done that work. What we do that is unique is overlay an underlying model of the evolution of science, the legal process and the dynamics of litigation that we created from the domain expertise of our experts to provide context that allows us to create useful information from that data built to convert the metadata into quantitative risk metrics ready to guide decisions.” The key point is that if the insurance industry wants to generate insights of value to clients, identifying or creating valuable data sources is necessary, but making sense of it all requires a mental model to provide relevance to the data. The work of Praedicat, and others like it, should not stop on the underwriter’s desktop. One underexploited value of the insurance industry is to provide insights into risk that gives clients the ability to fundamentally change their own destiny. Accordingly, advances in analytics enable a deeper value proposition for those insurers willing to take the leap. Customer Experience Requiring clients to provide copious amounts of application data in this information age is unnecessary and burdensome. I contrast the experience of many insurance purchasers with my own experience as a credit card customer. I, like thousands of other consumers, routinely receive “preapproved” offers in the mail from credit card companies soliciting my business. However appealing it may be to interpret this phenomenon as a benevolent gesture of trust, I know I have found myself on the receiving end of a lending process whereby banks efficiently employ available data ecosystems to gather insights that allow the assessment of risk without ever needing to ask me a single question before extending an offer. I contrast this with my experience as an insurance purchaser, where I fill out lengthy applications, providing information that could be gained from readily available government data, satellite imagery or a litany of other sources. Imagine a time when much of the insurance buying process is inverted, beginning with an offer for coverage, rather than a lengthy application and quote request. In that future, an insurer provides both an assessment of the risks faced, mitigations that could be undertaken (and the savings associated), along with the price it would charge. While no doubt more client-friendly, is such a structure possible? As Louis Bode, former senior enterprise architect and solution architect manager at Great American Insurance group and current CSO of a new startup in stealth-mode observes, “The insurance industry will be challenged to assimilate and digest the fire hose of big data needed to achieve ease of use and more powerful data analytics.” According to Bode, “Two elements that will be most important for us as an industry will be to 1) ensure our data is good through a process of dynamic data scoring; and 2) utilize algorithmic risk determination to break down the large amounts of data into meaningful granular risk indexes.” Bode predicts “a future where insurers will be able to underwrite policies more easily, more quickly and with less human touch than ever imagined." The potential to use a broader array of data sources to improve customer experience extends well beyond the origination process. Imagine crowdsourcing in real time the analysis of images to an area affected by a natural disaster, getting real time insights into where to send adjusters before a claim is submitted. Tomnod is already crowdsourcing the kinds of analysis that would make this possible. Or imagine being able to settle an automobile claim by simply snapping a picture and getting an estimate in real time. Tractable is already enabling that enhanced level of customer experience. The future for insurance clients is bright. Data and analytics will enable insurers to deliver more value to clients, not for additional fees, but as a fundamental part of the value they provide. Clients can, and should, demand more from their insurance experience. Current players will deliver or be replaced by those who can. I’d like to finish with a brief, three-question poll to see how well readers think the industry is performing in its delivery of value through data and analytics to clients. Here is my google forms survey.

America loves teams and team players, even outside of sports. What’s not to love? Team players are selfless—they set aside their personal goals and focus their talents on coordinating efforts with their fellow team members to achieve a common goal. Teams personify cooperation and collaboration and synergistic effort. And, of course, we’ve all been taught that teams inevitably generate better outcomes than individuals do. So it’s good to be on a team, and teams do good work, which means teams and teamwork are iconic realities of life in America—socially, educationally and professionally. It really doesn’t matter whether you are a toddler, a college student, a retail clerk or a corporate executive, today you regularly find yourself slotted onto teams (or onto committees or into small groups) where you are expected to behave like a good team player. And how does a good team player behave? According to leadership coach Joel Garfinkle, “You just need to be an active participant and do more than your job title states. Put the team’s objectives above yours and take the initiative to get things done without waiting to be asked.” He identifies five characteristics that make a team player great:

1. Always reliable
2. Communicates with confidence
3. Does more than asked
4. Adapts quickly and easily
5. Displays genuine commitment

Seems obvious, but think of your most recent team experiences. Were your team members behaving that way? Were you? Not likely, and J. Richard Hackman, a former professor of social and organizational psychology at Harvard University and a leading expert on teams, knows why. When interviewed by Diane Coutou for a 2009 Harvard Business Review article (Why Teams Don’t Work), he said:

Research consistently shows that teams underperform, despite all the extra resources they have. That’s because problems with coordination and motivation typically chip away at the benefits of collaboration.

Problems with coordination and motivation interfering with team collaboration and performance—doesn’t that sound like a rather modest challenge that could be resolved with more effective team management? Sure, to a certain extent. Teams are often too large; they are thoughtlessly staffed (proximity and position rather than proven talents and ability to produce results); and they are routinely launched with murky objectives, vague group member accountabilities and no formal support network for team process management. In other words, most teams don’t meet the five basic conditions Hackman, in his book Leading Teams, said teams require to perform effectively:

1. Teams must be real. People have to know who is on the team and who is not. It’s the leader’s job to make that clear.
2. Teams need a compelling direction. Members need to know, and agree on, what they’re supposed to be doing together. Unless a leader articulates a clear direction, there is a real risk that different members will pursue different agendas.
3. Teams need enabling structures. Teams that have poorly designed tasks, the wrong number or mix of members or fuzzy and unenforced norms of conduct invariably get into trouble.
4. Teams need a supportive organization. The organizational context—including the reward system, the human resource system and the information system—must facilitate teamwork.
5. Teams need expert coaching. Most executive coaches focus on individual performance, which does not significantly improve teamwork. Teams need coaching as a group in team processes, especially at the beginning, midpoint and end of a team project.

But there’s another challenge, and it is presented by the people who don’t want to be team players. People who, when added to a team, immediately focus their attention and effort not on being a good team player but instead on dodging work, avoiding exposure and manipulating the conscientious team players into doing more than their share of the work. This is known as social loafing (or slacking), and it describes the tendency of some members of a work group to exert less effort than they would when working alone. Kent Faught, associate professor of management at the Frank D. Hickingbotham School of Business, argues in his paper about student work groups in the Journal of Business Administration Online that social loafers can’t be successful, however, unless the other team members permit the loafing and complete the project successfully: 

…the social loafer must find at least one group member that CAN and WILL achieve the group's goals and ALLOW themselves to be social loafed on. "Social Loafer Bait" is the term used here to describe the profile of the ideal target for social loafers.

This problem isn’t new. Max Ringelmann, a French agricultural engineer, conducted one of the earliest social loafing experiments in 1913, asking participants to pull on a “tug of war” rope both individually and in groups. When people were part of a group, they exerted much less effort pulling the rope than they did when pulling alone. According to Joshua Kennon, Ringelmann’s social loafing results were replicated over the years in many other experiments (involving typing, shouting, clapping, pumping water, etc.), leading psychologists to believe that humans tend toward social loafing in virtually all group activities. Kennon shared two other conclusions:

• The more people you put into a group, the less individual effort each person will contribute;
• When confronted with proof they are contributing less, the individuals in the group deny it because they believe they are contributing just as much as they would have if they were working alone.

I recently asked a group of friends and colleagues who have been involved in group work at school or in their jobs to respond to a brief, unscientific survey on how they deal with social loafing. Their response pattern is shown in parentheses, and, although respondents varied in age from 20 to 50-plus, answer patterns didn’t seem to vary by age group: You are working on an important, time-sensitive project with a group of people. One of the group members is slacking off, not contributing to project work. What do you do about it? (choose one)

• Ask/Tell the slacker to commit to the project and start contributing (40%)
• Report the slacker to the project sponsor (3%)
• Complain about the slacker to other team members (10%)
• Work harder to pick up the slack and ensure the project is successful (30%)
• Follow the slacker’s lead and reduce your commitment and effort (0%)
• Other (17%—Most respondents who chose this reported they would employ more than one of the listed strategies)

How effective is the response you identified above?

• Solves the problem (27%)
• Partially solves the problem (53%)
• Fails to solve the problem (17%)
• Causes other problems (3%)

Respondents who took some action (talking to the slacker, or reporting the slacker to the project sponsor) were much more likely to report that their actions solved all or part of the problem. Complaining to other team members failed to solve the problem—no surprise there. And even though 30% of respondents elected to address the slacking problem by working harder to pick up the slack (earning themselves a “social loafer bait” ID badge), the effect of doing so was mixed, spread fairly evenly among solving, partially solving, failing to solve and causing other problems. What’s not clear is why we are so willing to tolerate social loafing in group projects and why we are so reluctant to call slackers out and hold them accountable. According to Kerry Patterson, co-author of the book Crucial Conversations: Tools for Talking When Stakes Are High:

93% of employees report they have co-workers who don't pull their weight, but only one in 10 confronts lackluster colleagues.

I suppose the reality is that unless work groups are tightly managed, they offer excellent cover for slackers—relative anonymity, little or no pressure from team members, great individual performance camouflage—with only a slight threat of exposure or penalty for not being a good team player. So the solution to the social loafer problem probably involves not only changes in how groups are formed, resourced and supported but also changes in the group work dynamic to eliminate the cover and camouflage and to illuminate how each individual contributes to the group work effort. (This is sometimes accomplished in university student work groups by using a formal peer review process to help group members hold each other accountable.) As you might expect, Google is serious about teamwork (all Google employees work on at least one team), and Google wants teams to be successful. A recent study of team effectiveness at Google determined that five team dynamics (psychological safety; dependability; structure and clarity; meaning of work; and impact of work) are more important to successful teams than the talents of the individuals on the teams. To help teams manage these dynamics, Google developed a tool called the gTeams exercise, described by Julia Rozovsky of Google People Operations as:

…a 10-minute pulse-check on the five dynamics, a report that summarizes how the team is doing, a live in-person conversation to discuss the results and tailored developmental resources to help teams improve.

According to Rozovsky, Google teams reported that having a framework around team effectiveness and a forcing function (the gTeams exercise) to talk about these dynamics was the part of the experience that had the most impact. That’s not surprising, because any “forcing function” that puts a public spotlight on ineffective or unacceptable behavior makes it easier to identify and eliminate that behavior. Given the concentration of talent at Google, I imagine the social loafers there probably boast a more refined slacker “craftiness” pedigree than most of us normally encounter. Still, I am betting the Google slackers aren’t very pleased with the light and heat generated by the gTeams exercise spotlight.

On average, 4% of the workforce experiences a non-fatal work injury each year. Considering the current number of employed workers in the U.S. is 144 million, the workers’ compensation industry is a huge sector that often flies under the radar – at least until recent years. With the establishment of the Affordable Care Act, combined with medical advancements and the way consumers interact with evolving technology, the industry is taking a new shape. Workers’ compensation triage did not exist two decades ago. I recall starting in the business and having to convince companies of the need for telephonic nurse triage. Today, virtually every large company is seeking solutions to better manage work injuries to both reduce costs and to have employees return to work more quickly. Substantial evidence shows that better outcomes are produced when an injured worker seeks care sooner rather than later. Because of that, a trend has emerged in which more entities are offering nurse triage as part of their workers’ compensation package to clients. Whereas big insurance brokers used to offer it, the service is now being offered at regional boutique firms as a way to control costs for clients. Another trend that is rapidly changing the workers’ compensation industry is telemedicine. How medical care is delivered to the injured worker is shifting and, with it, so must we. Digital health-at-large is among the biggest developments that workers’ compensation has been facing in recent years. What remains the same in treating work injury cases is fundamental human nature: care and empathy. Initiating positive early intervention is the cornerstone of a successful claims management program. Offering empathy to injured workers has been our guiding principle as our business model has been adapted over the years. Technology used to service a work injury claim must be seamless, efficient and robust to ensure the injured employee feels appropriately cared for in their very personal situation. In 2016, we will be releasing details on how we will be spearheading a new direction for the workers’ compensation industry using this new technology. Stay tuned.

We’ve been taking a look at how a confluence of forces are having an impact on insurance distribution and how insurance companies need to respond by following a 2D strategy. In my first two blogs, we detailed the four fundamental drivers of the changes. In my first blog post, “Bringing Insurance Distribution Back Into Sync Part 1: What Happened to Insurance Distribution?”  we talked about how new expectations are being set by other industries and technology.  Last time, in “Unending Waves of Change in Digital Expectations and Distribution Issues ,” I discussed the other three of the four fundamental drivers: that new products are needed to meet new needs and risks distributed in new channels; that channel options are expanding; and that the lines are blurring between insurance and other industries. Today, we’ll dive deeper into the components of the 2D strategy, which calls for:

• Optimizing the front-end with a digital platform that orchestrates customer engagement across multiple channels
• Creating an optimized back-end that effectively manages the growing array and complexity of multiple distribution channels beyond the traditional agent channel.

Optimize the Front End The digital revolution is being powered by an array of technologies and the changing expectations of customers across all demographic groups. As customers gain market power, they are increasingly comfortable with technology, have a stronger voice and are willing to use it to make their expectations and needs known. In this new world, all technology should be viewed as customer-touching, because it directly or indirectly influences the customer experience. As a result, many insurers are rapidly investing in digital initiatives and technologies, but too often they do so in a tactical, fragmented and reactionary approach. In today’s world, insurers must look to orchestrate the customer experience through any channel and technology that consumers choose to use. Whether they choose agents, websites, mobile apps, portals, compare sites, aggregators or retail firms, consumers want a consistent and compelling experience that gives them confidence in the insurer. This demands a platform that enables personalization of portal and mobile solutions based on the unique customer journeys and personas defined by each insurer. To fulfill their unique and multi-channel distribution and customer experience needs, the platform must be integrated with other core insurance solutions as well as an extensive partner ecosystem that integrates content, channels and technology. Optimize the Back End In a fast-paced competitive market, distribution channels and effective management of those channels is increasingly critical. Designing, developing, maintaining and managing productive channel relationships is crucial to achieve sustainable competitive advantage. Effective distribution management should cover a broad array of capabilities to drive operational effectiveness (including distribution registration and licensing); compensation plan design and configuration; compensation payments and reconciliation; and performance management reporting and analytics. Channel management and productivity are critical in contributing to overall growth and profitability. The ability to improve channel productivity, reduce sales cycles and increase cross-sell and up-sell opportunities is increasingly important for long-term success. To stay competitive and keep distribution channels engaged, insurers are increasingly putting a priority on servicing these channels. From providing access to their production and compensation reports to providing new leads and licensing compliance and education, these all offer opportunities for channel service excellence to retain and grow the channels. Enter the growing need for effective distribution management and systems that improve carriers’ capabilities to manage multiple channels and multiple factors. Conclusion An insurer can have the best insurance products, pricing and advertising to build its market presence, but if it doesn’t have a distribution ecosystem underpinned by a connected, digital front-end and a robust distribution management system on the back-end to optimize and maximize these channels, its customer growth and retention potential will remain limited. If it is difficult to effectively manage or, better yet, optimize compliance, compensation and performance of distribution channels, insurers could end up losing business to competitors that can. Customers expect and demand multiple, coordinated channel options to learn about, shop for, buy and use products and services, and insurance is no exception. Just as long-established retailers will remodel every few years, the place you meet your customers can’t remain untouched without your organization and its products losing their sense of value. Building an integrated digital distribution framework within a foundation of modern distribution management capabilities will provide new efficiencies, new opportunities and additional fuel for growth.

Having health insurance and dependable healthcare is one of the biggest concerns for people all over the world, but, unfortunately, there are many doctors who simply don’t trust the health insurance their patients use. No matter if you currently have health insurance, knowing what your doctor feels about your coverage can give you a deeper insight into just how well (or poorly) insured you truly are. One of the main reasons physicians don’t trust health insurance providers is because they feel insurance companies prevent them from offering patients the absolute best care. It’s understandable to be upset at the idea of not being able to perform your job to the best of your abilities. Insurance providers that are considered the most trustworthy include Blue Cross Blue Shield and Cigna, while those deemed the least trustworthy are UnitedHealthcare and Humana. These results stem from a 2015 survey conducted by the ReviveHealth Payor Trust Index, with responses from more than 600 specialists and primary care physicians. One thing to note is that Blue Cross Blue Shield earned a combined trust index rating of about 60 out of 100, which was the highest score but which also leaves an abundance of room for improvement. The Future of American Health Insurance The two most important factors physicians cited as influencing their opinions about how health plans help or hurt the quality of care they deliver were the level of coverage and number of claim denials. Physicians might also soon have to contend with new medical insurance companies made up of two or more of the most difficult companies to deal with, such as through the proposed merger of Anthem and Humana. If the deal goes through, physicians might find health insurance companies to be downright insufferable. Additional Reasons Besides having their hands tied, doctors provided the ReviveHealth Payor Trust with several more reasons they distrust health insurance companies. Physicians also don’t believe insurance providers do their best to honor commitments made to policyholders. Nor do they believe that companies advertise themselves accurately or honestly. Respondents to the survey also said insurance providers take advantage of doctors. If even doctors don’t trust insurance companies, where does that leave their patients? Not only do doctors have a better idea than their patients about how the human body works, doctors also have a better idea about how the health insurance industry works. If you’re considering health insurance plans, or if you’re thinking about switching insurance providers, ask your doctor for recommendations.

There’s a lot of talk these days about how failure is not just fine but fantastic. Tech companies famously tout “fail fast”-style mantras. One of Facebook’s guiding principles is "Done is better than perfect." Many start-up founders are known for having built companies that failed before finding long-term success. The philosophy of encouraging mistakes and quickly learning from them complements the design-thinking movement. In this way of thinking, you’re encouraged to launch quickly, shipping imperfect product and iterating based on customer feedback. But what role can this approach play in a slow-moving, large company? After all, many of the small start-ups that encourage fast failure will grow quickly, and maintaining that kind of culture as it scales is tricky. How do you treat not-quite-perfect, disappointing or outright failed ideas and projects as acceptable among hundreds or thousands of employees? Here are a few guiding principles for instilling an innovative, fail-fast philosophy in a larger organization. Set up mini innovation groups: I worked with an organization that set up small teams across the company with the mandate to drive innovations in the everyday routines of work. The teams discuss new processes, test their ideas and then present a summary of improvement initiatives. They share ways to extend their concept, and the teams look at other potential business implications. A review board makes the final approvals based on the portfolio and suggests ways to make wider impact. It’s an organized, civilized and, yet, wholly innovative way of working in a bigger company. And if the teams’  ideas fail? Well, at least they were given permission to try. Focus on feedback year-round: If you were working on a new project and it failed to launch or didn’t perform well in a test, would you want to hear about what you could’ve done better from your manager a year later? Real-time development happens throughout the work days and weeks– not during an annual performance review – and allows you to constantly and more quickly improve. But this is a change you should make as part of a bigger talent innovation strategy in performance management – it can’t be executed effectively alone. Recruit, promote and succession-plan differently: To encourage a fail-fast mentality, we must reimagine what we consider successful. Along with rethinking annual performance reviews, consider what guidance and framework you use to define a productive employee. Can you reward the team that boldly pushed new ideas, even if the ideas didn’t come to fruition? Is a top performer one who differentiated your brand in the marketplace with a new angle, even if it didn’t have the same broad reach as last year’s campaign? Adhere to what principles your organization’s strategy prioritizes, but ensure you’re not inadvertently punishing people who take smart risks. Follow basic culture evolution lessons: Strategy+business magazine’s article “Culture and the Chief Executive” shared how culture can evolve by following four tenets, and they’ll of course apply here, too.  The basic steps to remember:

• Demonstrate positive urgency by focusing on your company’s aspirations — its unfulfilled potential — rather than on any impending crisis.
• Pick a critical few behaviors that exemplify the best of your company and culture that you want everyone to adopt. Set an example by visibly adopting these behaviors yourself.
• Balance your appeals to the company to include both rational and emotional cues.
• Make the change sustainable by maintaining vigilance on the few critical elements that you have established as important.

Know your limitations: Certain companies, organizations within an enterprise and missions can more easily afford to push the envelope and experiment than others. While inspiration can come from the tech world, there are limits to how far your organization can go. The key is to understand, challenge and ultimately work within these limits to foster a culture of innovation. Even in risk-averse circumstances, some businesses exercise the fail-fast philosophy on non-mission-critical projects that won’t harm the business, brand or customers if they don’t pan out. This approach can reinforce your culture and can empower and engage the team. It can even lead to new value if the idea can spark other future, more achievable initiatives. It’s difficult to create a work world balance where innovation and creativity can quickly become executable projects or products in the market while also staying within the complex boundaries of a large organization — especially one that’s regulated. But a learning culture that embraces fresh ideas, even those that could fail, is increasingly essential. More than ever, our clients ask PwC to help them stay competitive and innovative while smaller organizations threaten their growth. And, more than ever, big businesses risk losing talent to these companies, too. To keep up, you’ve got to re-up. There’s little progress to be made by doing things the way you’ve done them in the past few years. If you consider how your company’s culture could better embrace risk and failed ideas, you’ll be better positioned to deal with more unpredictability and to grow in the future.

Recently, I've read more and more articles asserting that millennials are one of the most difficult consumer segments to nail down and serve. It's a complicated equation with moving and changing variables, and every company is scrambling to find out which social media platform, which YouTube video and which new mobile app will give it the sustainable competitive advantage it needs to corner the market for millennials. I'd actually argue it's a simple equation. The classic formula is well understood: Sales = Speed + Price + Service But, just as Leonhard Euler’s clarification of Descartes formula will forever be known as “Euler's Formula For Polyhedra” (F-E+V=2) and James Clerk Maxwell’s improvements on Michael Faraday’s pioneering work is still known as “Maxwell’s Equations” 170 years henceforth, I submit for your critique “McMyler’s Equations of Millennial Mathematics.” First Postulate:  Technology = (Greater Speed + Better Pricing + Superior Service) or  Technology = Sales^x The emergence of technology in our everyday lives has changed the way this generation perceives the world and, in turn, its expectations from it. Technology has enabled us to do everything we used to do ... faster, cheaper and, arguably, with better service. Millennials know this and prefer companies that embrace it. But, at the end of the day, it’s the same basic calculus: It’s not because you have a hip YouTube video or a Facebook page, and it’s not because you have cool apps or tens of thousands of “likes.” It’s because you are able to do the basics … faster, cheaper and with better service. Since even Einstein acknowledged that his famed E=MC^2 would be met with skepticism and therefore immediately set out to defend it, I feel I should do no less. And, so, for your consideration: This past February I moved to a new apartment. As a skilled professional procrastinator, I waited eight weeks until the end of March to remember to purchase renter’s insurance.  I remembered this because it was Friday night. And it wasn't just any Friday night, it was the Friday night before my Tuesday 4 a.m. sojourn to the airport for a restful vacation far from home.  This unfortunate, yet real, situation demonstrated the morbid time limitations of the classic model or, essentially, the equation for getting quotes and purchasing insurance coverage.  I hopped online to try and get some quotes. I called a mutual insurer who, in addition to having a solid insurance product, possessed the advanced technology platform that would allow me to get coverage in a timely manner … er, I mean …  test my mathematical hypothesis. If the classic calculation describes time as measured by the activity of purchasing insurance, The McMyler’s Equations of Millennial Mathematics demonstrated how the time element of purchasing insurance in all its components could be shifted, bent and even stopped.  I called the customer service number and was connected to the sales department. I asked a ton of coverage questions, all of which the woman was able to answer. When we were done, she emailed me my quote. Like a good little insurance geek, I thoroughly read through the entire policy (no lie, policy review is actually my favorite part of getting insurance) and emailed my supplemental list of questions. Within the hour, her electronic response almost magically appeared in my inbox. Along with the quote, I received a link to an eSign service to initial and sign the documents. Great, we were moving along!  While that should be sufficient proof of the integrity of the McMyler’s Equations of Millennial Mathematics, I am willing to provide further proof. As the Princess of Procrastination, it wasn't until 6 a.m. at the airport – well, to be more specific, on the tarmac waiting to take off – that I remembered I forgot to sign those documents. So, I confidently pulled out my smartphone, accessed the email that would link me to the eSign URL, signed the documents, reviewed the confirmation and went on to have a (fabulous) vacation free of any worries about my apartment or insurance coverage.  (I did, however, continue to wonder if I locked the door and shut off the lights.) The insurers definitively proved the McMyler’s Equations of Millennial Mathematics: it was faster than expected, at the right price, with flawless customer service provided through effective use of technology. But, more than just my business, the insurers earned my loyalty. The mathematical probability of my leaving them approaches zero. Of course, because of the mathematician Zeno’s 2,500-year-old work, known as Zeno’s Paradox of the Tortoise and Achilles, it can approach but never achieve absolute zero. But I digress just long enough to complete my second postulate (also known as McMyler's Constant): Sales Mass = Circle of Influence  where Technology  ≥ the Customer’s Expectations. In the great tradition of mathematicians, I seek thoughtful peer review.

While most of us were buying supplies for partying on New Year's Eve (in my case, I was in charge of bringing broccoli and Boggle), the federal court in the Western District of Wisconsin quietly handed down an earth-shattering decision in the Flambeau case, which went pretty much unnoticed due to the timing. You may recall this was the case where employees refusing wellness lost all insurance benefits. The case looked like it would be a layup win for the Equal Employment Opportunity Commission (EEOC).  After all, the Affordable Care Act (ACA) clearly states that penalties for non-smokers are capped at 30%, and this penalty was 100%. But, here’s the rub: Flambeau conditioned the entire insurance benefit on participation in its “pry, poke and prod” program.  The company knew most employees hate “pry, poke and prod” programs to begin with, so they created a program so onerous that some number of employees would prefer to forego insurance altogether rather than participate in wellness.  And, indeed, that’s what happened at Flambeau. This decision means the company is getting away with it, saving thousands of dollars for each employee who refused to submit. Make sure you catch that distinction between the 30% penalties and the 100% penalties: (1) It is not OK to penalize an employee more than 30% for refusing to submit to a “pry, poke and prod” program if they already have insurance, or they can get insurance through the employer without this requirement. (2) However, it is OK to say: “There is no incentive or penalty for wellness once you have insurance, but you can’t have insurance at all unless you submit.” If that seems like an artificial distinction, well, that’s because it is.  All an employer has to do is require pry-poke-and-prod before you get insurance. Assuming other federal courts follow this district’s lead (as they usually do), employers create a 100% de facto non-participation penalty: If you don’t participate, you don’t get insurance, period. The implications of this case: (1) It will allow some vendors, such as Bravo, to double down on bragging about the “savings” from wellness by creating programs employees don’t like; (2) Because the decision only applies to participatory programs and not outcomes-based programs, many companies will either not switch to outcomes-based programs or else maybe switch back. The court's decision also puts pressure on the EEOC to put the kibosh on this end-run around the Affordable Care Act’s wellness provision. The decision can, and should, be appealed. Otherwise, it is a de facto repeal of a big chunk of the Affordable Care Act. The bottom line is that there is now universal agreement (albeit inadvertently in the case of HERO, which apparently didn’t mean to tell the truth, but failed to proofread their own document) that wellness loses money. Any pretense of “pry, poke and prod” being about the employee is gone. Obviously, forced wellness isn’t about trying to save the $0.99 PMPM (before program fees!) that HERO says can be saved with healthier employees. It’s about gutting the key ACA requirement that employers provide insurance. And, unless the EEOC steps up in its final regulations or prevails on appeal of Flambeau, the opponents of ACA will have succeeded.

More often than not, a large property and business interruption insurance claim turns into an “us vs. them” scenario, creating a rough process for all involved. Not unlike a football game, someone is always trying to win and is willing to do so at any cost. As a forensic accountant for more than 20 years specializing in quantifying business interruption losses and documenting property claims for policyholders, I’ve seen the good, the bad and the ugly. The problem is that the process is designed to focus on disagreements. We’ve heard the concerns from our clients and the insurers, and we can understand both perspectives. Policyholders accuse the adjuster of being unreasonable, trying to stick it to the policyholder at every turn. Insurers accuse policyholders of trying to take advantage of the claim in an attempt to get more than they deserve. The battles can become very heated, even on a personal level. Once, during a claim meeting on a large loss, the discussion between the parties intensified until an executive from the insured side of the disagreement ordered the adjustment team to “get out of my building!” Disagreement in the course of a property insurance claim is an anticipated part of the process, but there are ways to keep it civilized and productive. It is possible to come to a fair representation of the loss without all the aggravation. The fix is really quite simple, but it will require the insured and insurer to take responsibility for their contribution to both the problem and the solution. Here are some ways insurers can improve the claim process: Take time to understand the insured’s business  Too often the adjuster wants to appear to know it all. It is better to listen first and try to understand the insured's position. Understanding your customer is common business sense. Adjusters should have superlative people skills A big part of an adjuster’s role is to coordinate with experts needed for a given situation. These are management and organizational skills. In other words, the adjuster does not need to know all the technical aspects of every loss and would be better served knowing more about how to manage people and deal with customers. Whether it’s from retiring baby boomers or cost cutting, there is a lack of well-trained and experienced adjusters. Give the adjuster more control  Even the best adjusters are impaired by the current claim process; Adjusters seem to have limited authority to make decisions. Policyholders find it pointless to explain their issues in great detail when the real decision maker is somewhere in the background. When pressed to make a decision, policyholders just throw their hands up. It’s difficult to make any progress when the adjuster has to get every little decision approved by superiors. To the insured, it just seems like a delay tactic to put off payment and only adds to feeding mistrust. Here are some ways policyholders can improve the claims process: Give the process a chance  While there are many times you will experience some of the problems mentioned above, the process can work with the right people involved. Communicate with the adjuster and his or her team. Be responsive to all requests that are reasonable and appropriate and ask for clarification and address your concerns right away. Maintain good relations with realistic expectations Set realistic expectations for what you want, such as advance payments and resolution of differences. Though insurers are not obligated to finance a rebuild project, they should be willing to advance money to stay ahead of the cash expenditure. By maintaining good relations with the adjuster, insurers will be more open to working with – rather than against – you. The best defense is a good offense  On your end, be prepared and organized so you can require the same of the insurance company. You cannot withhold information until the last minute and then demand resolution and payment. The faster you answer questions and requests, the faster the insurance company can review them. Often times, it takes them longer to review the support you provide because they review the information in a vacuum. Don’t assume they understand what to ask for or what has been presented. Promote frequent meetings and discussion to make sure misunderstandings are not made part of their reports to underwriters. Once it is on the record, it is harder to change. Escalate when needed If issues start to arise that cannot be resolved, rather than letting it fester, escalate it to the markets involved. It is no different than speaking to a manager at a restaurant. It’s better to deal with decision-makers when action is needed. However, this should only be used as a last resort to avoid litigation. The insurance claim process has its flaws. I don’t think it’s intentional but rather a result of how it has evolved. The best approach to improving the process is by recognizing the challenges with an “us vs. them” mentality and finding a way to work cooperatively through the claim. Both sides need to help to fix it so that more claims get resolved as they should.