The federal government is likely not the first place you would look for innovative inspiration and lessons on implementation. The old stereotypes of stacks of paper gathering dust in corners, outdated technology and endless processes still exist to some degree, but the government is making huge strides in the digital space, and insurers can take note. Recently, I read an article from Yahoo Politics about some new features on FEMA’s (the Federal Emergency Management Agency) mobile application. The app has been around for nearly three years, but in the last few months FEMA has rolled out social media features and geo-spacial weather alerts that allow the app to be customized to users’ own experience before, during and after a disaster. Claims organizations can learn these lessons and offer some of these features to customers. For example, following a disaster, the FEMA app now has a “Disaster Reporter” tab where survivors can upload pictures from their phone and also view other photos or damage or loss of property. If applicable, companies could offer the same services for its customers following a major disaster; it could build a sense of community and also offer insurers valuable information shared directly from the disaster source. Not only would insurance companies benefit from having this capability for their own use, but now they can also leverage information being gathered and publicly accessible directly from FEMA. Claims organizations can also verify data being uploaded from a disaster zone to filed claims. This capability is part of a systemic change in claims where data can be gathered and analyzed from both internal and external sources. In addition, because FEMA is taking a step to modernize its messaging through mobile applications, the agency is making the country more prepared and more resilient, which equates to less risk of loss of property after a disaster. The government will only continue to modernize its public services. While they don’t move at the same rate as private enterprise, what we are starting to see is unique sets of public data gathered by the government that can be repurposed in insurance. The privacy and verification of taking data from the government remains to be seen. But for now, the playing field looks promising to capitalize on these opportunities.

Despite the brouhaha over the ProPublica articles that say companies are unfairly denying treatment to injured workers to save on costs, I still regard the high cost of workers' compensation (for those companies that do have high costs) mostly as a management problem. The companies I see -- which are the ones that have huge problems -- are clueless about workers' comp. They turn their claims and injury process over to their claims administrator or carrier, hardly participating in the process, then they blame the TPA or carrier when costs go up even though they have done nothing internally to manage safety or injuries. These companies never budget for workers' comp management, don't staff the risk department (if there even is a department) properly. THAT would cost money, and our headcount would increase, they say. Often, if they do have staff, they do not allow the staff to attend conferences or seminars, join organizations or purchase resources. THAT would cost money, they say. Sometimes, their brokers offer to help by providing consulting resources, but the companies with high workers' comp costs do not see the merit in such an approach. I worked with a major entertainment facility, speaking with them once per week, on behalf of their broker, hoping to gain insight. I offered to consult with the staff because I am a consultant: Getting to the root of the problem, finding the cost drivers and fixing them is what I do. They did not need a consultant. Then, one day I said I could "help them develop their training program," and they accepted instantly! I had used the wrong word -- they needed "training help" not "consulting help." Within months, the high cost of their workers compensation program went down to almost zero. Problem solved. Several things employers can do, but usually don't, are: 1. Contact employees within a week or two after the injury to do a survey of their medical and claims adjuster experience. Speak to them via phone, just as you would ask a good customer about her experience. Jennifer Christian, chief medical officer at Webility, contacts employees to find out if each injured worker felt that care was poor, fair, good or excellent. Often, poor treatment by medical providers and callous indifference by adjusters causes employees to become angry, seek counsel or even delay recovery because of lack of expertise during the initial treatment experience. 2. Have claims reviewed periodically by an independent auditor with a medical provider on the team. Only an MD is qualified to read the medical reports to determine whether treatment was appropriate and sufficient, whether alternate causation has been considered and whether aggressive and excellent (yes, perhaps more expensive) treatment has been provided. Make sure adjusters are not using utilization review (UR) to deny care. Audit, audit, audit. Care, care, care. Do weekly roundtables with your third-party administrator (TPA) -- for instance, every Friday discuss 10 claims, etc. Don't wait until claims reach $25,000. Discuss them when they are small, BEFORE they get astronomical. 3. Retain an MD to be part of your claims team. This can be an on-site MD part-time or full-time who also speaks with treating physicians and injured employees. Adjusters and nurses do not know "medicalese." Applause to those insurers who have MDs on staff BUT employers still need to have their own medical advisers on the team. Employers often forget we are talking about medical injuries, not simply "claims." 4. Assess the key cost drivers of your workers' compensation costs. Nine out of 10 times, employers misdiagnose the cause of their high workers' compensation costs. In one case, the employer was ready to fire the insurance company because "they thought" there was too much nurse case management. Upon more detailed analysis, including an independent review by claims experts and an MD, we found the claims were handled well 98% of the time. The cause of the problem was misidentified. The REAL problem was a lack of a post-injury response -- employees and supervisors did not have steps to follow within the first 24 hours after the injury. We then held 19 training sessions over three weeks to improve best practices related to rapid medical care and RTW/SAW (return to work/stay at work) in this mega-entertainment theme park. The workers' compensation costs dropped 20% in a year-over-year comparison of total incurred losses with the previous 12-month period. 5. There are no tools to guide employees and supervisors. In the above case, we provided: employee brochure, physician brochure, wallet cards in English/Spanish for supervisors and employees, and other tools. 6. And, most importantly, provide the best quality medical care available. Yes, even if it's more expensive. Pennywise is pound foolish. Get the best, not the cheapest. Pay the doctor more to spend more time with your injured employees, not less time. 7. Establish bundled pre-approval of care in account instructions so UR is not necessary -- e.g., "All PTP (primary treating physician) treatments and as many as five visits to specialists are pre-authorized by insured. All testing requisitioned by PTP and specialists including physical therapy (PT) and MRIs is to be approved; do NOT submit to UR. If you strongly believe treatment or testing is unwarranted, contact the insured's medical director before denying request." If you don't manage and monitor it, the process (any process, not only workers' compensation) will not work well. It's time for employers to become involved in their own business! The first step is assessing the problem at your company, not the industry in general or another company. Get that mirror out and have a look. You are most likely looking at the problem.

The seizure on March 26, 2015, of the Marshall Islands-flagged Maersk Tigris cargo ship by Iranian forces off its coast at the Strait of Hormuz on a years-old dispute over containers is something that should get everyone’s attention. What is even more troubling than the seizure of a commercial vessel is that Maersk had agreed to settle the dispute. Iran is appealing for more money in the courts, but, rather than let the courts proceed, took the matter into its own hands. Understand that one fifth of the world’s oil passes through the Strait of Hormuz in a given year. We know that piracy, especially off the east coast of Africa and in the vast Asian Pacific, has become a major concern to shippers. So much so that Rolls Royce has announced that one of the benefits of its proposed crewless ship is that it would be much easier to take down pirates, because there will not be the crew hostages to deal with, as there are today. However, if nations begin to seize ships outside the law and with as flimsy an excuse as Iran has in the Maersk case, this is cause for alarm. While the U.S. will be escorting U.S.-flagged vessels in the area of the seizure, our military fleet is simply inadequate to serve all potential hot spots. Even with escort protection, the risks of confrontation accelerate. Confrontation can include blockades, using vessels to buzz or interfere with navigation or otherwise harass shipping and their escorts, firing shots across the bow, ramming and even firing on vessels and their escorts. Recall that the U.S. entered World War I and World War II and increased our presence in Vietnam as the result of the Germans' sinking of the Lusitania, the Japanese bombing of Pearl Harbor and the very questionable U.S.-North Vietnamese Gulf of Tonkin incident—all military events involving the sea. Not all military maneuvers on the seas are necessarily problematic. The U.S. Coast Guard has become adept in hunting down drug traffickers and human smugglers in U.S. waters and cooperates with Central and South American countries to interdict traffickers in the greater Gulf of Mexico. However, these small ships, submarines and speedboats are not like the huge container vessels that large shipping conglomerates operate worldwide. Even so, there are times when even larger ships pose challenges to countries and militaries, generally for contraband, drugs or illegal shipments of weapons. In 2013, Panamanian officials detained the North Korean-flagged Chong Chon Gang en route from Cuba to North Korea on suspicion of drug trafficking. The investigation uncovered cargo that looked like weapon systems subject to international sanctions against delivery to North Korea. The Panamanian Government consulted with the UN, and the dispute was resolved. In this incident, international law was followed. In the Iranian incident, it is much less clear that its military had the authority to seize the Maersk ship over a payment dispute already in the court system under appeal.

The Shipping Juggernaut

The World Shipping Council reported that world container shipping alone in 2009 produced an annual economic contribution of:

• Direct gross output or GDP Contribution -- $ 183.3 Billion
• Direct capital expenditure -- $ 29.4 Billion
• Direct jobs -- 4.2 million
• Compensation to those employees $ 27.2 Billion

The global supply matrix relies heavily on container and bulk shipping to move raw materials, parts and components and complete product between producers, suppliers and customers to virtually every large-vessel navigable port in the world. Some of the biggest container vessels can carry 11,000 containers, and the loss of even one could strain world marine insurance resources. The increase in traffic and size of vessels has led to major efforts to widen the Panama and Suez canals. The Port of Long Beach 20-mile Alameda Corridor went online in 2002 to speed rail traffic under the streets of Los Angeles to remove a major bottleneck to the U.S.’s busiest container port. We can only speculate that one reason why Warren Buffett purchased the Burlington Northern Santa Fe (BNSF) railroad in 2009 was because he saw the spectacular increase in container rail traffic from ports on all U.S. coasts to all parts of the interior. The modern insurance industry has its roots and owes even much of its policy language to marine insurance beginning with Lloyds during the first tranche of globalization when Britain and other European powers needed to cover commercial trade to and from their vast worldwide colonies. The ocean is big business.

Law of the Seas Doctrine

Who owns the sea? We all do. However, after World War II, many countries led by the U.S. increased the size of their territorial waters for security, fishing and other purposes. In 1967, the UN decided it was time to convene a group to develop an international law of the sea. Unlike trade agreements, the international law of the sea is a framework not for tariffs, taxes and other international economic activities, but for how we may use the sea as our collective heritage. We might compare the international law of the sea to the rules promulgated by the National Parks Service for what people can and cannot do while visiting, working in or otherwise using the natural resources of Yellowstone Park. The convention can be summarized as follows: The seas are open and free to all states, coastal or landlocked. Passage shall be free and unhindered. The sea is the heritage of all humanity, which includes conservation and protection of these resources from pollution or overfishing or other adverse activities. The seas shall be used for peaceful purposes. Ships and states have a duty to render assistance to vessels and persons in trouble. Cooperation is expected to repress piracy. These are some of the key provisions relevant to the discussion of the Iranian seizure:

• 12-nautical-mile limit on territorial waters.
• “Ships and aircraft of all countries are allowed 'transit passage' through straits used for international navigation; States bordering the straits can regulate navigational and other aspects of passage”
• “All other states have freedom of navigation and overflight in the EEZ [Exclusive Economic Zone], as well as freedom to lay submarine cables and pipelines”
• “Land-locked and geographically disadvantaged states have the right to participate on an equitable basis in exploitation of an appropriate part of the surplus of the living resources of the EEZ's of coastal states of the same region or sub-region; highly migratory species of fish and marine mammals are accorded special protection”
• “All states enjoy the traditional freedoms of navigation, overflight, scientific research and fishing on the high seas; they are obliged to adopt, or cooperate with other states in adopting measures to manage and conserve living resources”
• “Land-locked states have the right of access to and from the sea and enjoy freedom of transit through the territory of transit states”
• “State parties are obliged to settle by peaceful means their disputes concerning the interpretation or application of the convention”
• “Disputes can be submitted to the International Tribunal for the Law of the Sea established under the convention, to the International Court of Justice, or to arbitration. Conciliation is also available, and, in certain circumstances, submission to it would be compulsory. The tribunal has exclusive jurisdiction over deep seabed mining disputes.” (United-Nations 2012)

Iran is a 1982 signatory of the International Law of the Sea and included this statement: In accordance with article 310 of the Convention on the Law of the Sea, the Government of the Islamic Republic of Iran seizes the opportunity at this solemn moment of signing the Convention, to place on the records its "understanding" in relation to certain provisions of the Convention…that only states parties to the Law of the Sea Convention shall be entitled to benefit from the contractual rights created therein. [including] The right of Transit passage through straits used for international navigation…The notion of "Exclusive Economic Zone" (Part V). - All matters regarding the International Seabed Area and the Concept of "Common Heritage of mankind" (Part XI)…In the light of customary international law, the provisions of article 21, read in association with article 19 (on the Meaning of Innocent Passage) and article 25 (on the Rights of Protection of the Coastal States), recognize (though implicitly) the rights of the Coastal States to take measures to safeguard their security interests including the adoption of laws and regulations regarding, inter alia the requirements of prior authorization for warships willing to exercise the right of innocent passage through the territorial sea…The right referred to in article 125 regarding access to and from the sea and freedom of transit of Land-locked States is one which is derived from mutual agreement of States concerned based on the principle of reciprocity. However, Iran included this provision which may have led to its thinking it could lawfully detain the Maersk vessel. Furthermore, with regard to "Compulsory Procedures Entailing Binding Decisions" the Government of the Islamic Republic of Iran, while fully endorsing the Concept of settlement of all international disputes by peaceful means, and recognizing the necessity and desirability of settling, in an atmosphere of mutual understanding and cooperation, issues relating to the interpretation and application of the Convention on the Law of the Sea, at this time will not pronounce on the choice of procedures pursuant to articles 287 and 298 and reserves its positions to be declared in due time." We can expect that there will be incidents that involve questionable cargo subject to international restrictions and conventions, such as drugs, piracy, and prohibited weapons. We can expect that some of these interdictions will involve questions of fact that will be disputed or will later be found to be the result of false or misleading information or observation. However, disputes over cargo payments or other commercial activities whether between commercial ventures or states and commercial ventures deserve to be heard in arbitration procedures, courts of law or other internationally sanctioned dispute resolution venues. Global trade has become too important for individual states to begin regulating the high seas on their own. There are many places of narrow passage like the Strait of Hormuz that border on many countries. We need to be especially vigilant in these areas and all agree to this specific International Law of the Sea provision: “Ships and aircraft of all countries are allowed ‘transit passage’ through straits used for international navigation; States bordering the straits can regulate navigational and other aspects of passage.” We need also to prevent harassment or other restrictive activities so that border states in these narrow straits only introduce navigation and rights of passage regulations that are consistent with legitimate safety and security concerns. Slowages, frequent boardings, detentions and other activities that unnecessarily and intentionally restrain trade should be vigorously protested and prosecuted by international bodies and global industry.

This summarizes a session from RIMS that was headlined by Google Risk Manager Kelly Crowder as well as Google Global Safety Manager Erike Young. I served as the event host and moderator, teeing up the subject matter. We focused on four major areas of technology that are driving transformative change in the way we do things and, thus, changing risk. Disruptive technology, as the panel pointed out, forces risk managers and insurers to imagine and forecast how various advancements affect: safety; risk assessment; regulatory and legal parameters; and insurance implications. Albert Einstein set the course for the future when he said: “The true sign of intelligence is not knowledge but imagination.” Ideas can reach beyond probable or practical restraints. Google takes that notion to heart at Google X, a semi-secret lab located in Silicon Valley that aims via research and development to advance scientific knowledge and fuel discoveries that can change the world. “What if” abstract concepts, also known to Google as “moonshots,” are tireless experiments that often fail but that occasionally produce disruptive technology. The mantra is “fail fast, fail often, fail forward.” Learn and change. Sergey Brin, one of Google’s co-founders, and scientist Astro Teller (Captain of Moonshots) seek to improve existing technologies by a factor of 10. Google began with the self-driving car in 2010. Google X now includes a life sciences division involved in bionics. As with the radical transportation shift to horseless carriages 130 years ago, the technologies are changing risk in profound ways, but the positive and negative impact of new technology can be hard to predict. Starting with Botsourcing and Robotics, the panel highlighted the trend of companies to utilize robots and artificial intelligence for a wide array of service industries, manufacturers, medical providers and first responders, which seek safer, more efficient and cost-effective ways of serving clients or conducting business. While more dangerous occupational risks and blue-collar jobs are expected to be safer and more efficient, it remains uncertain whether the demand for labor will continue to grow as technology marches forward. Within 10 years, more than 40% of the workforce is expected to be affected by or replaced with robotics. One positive sign noted in the presentation is that many American companies using robotics and 3D printing technologies, are transferring production facilities from overseas back to the U.S. and creating homeland jobs in the process. New job skills will become necessary to sustain broad-based prosperity. With respect to the highly advanced robots expected to integrate into society, the panel if their cognition will ever replace emotionally oriented skills. Will the warmth of human interaction remain a value in the future? Another area of advancement is Surveillance and Wearable Biometrics. The Internet of Things represents the embedding of physical objects with sensors and connectivity. Devices like smart thermostats, as Google pointed out, are able to learn from our behavior patterns to anticipate our needs at home or work on a 24- hour basis. Our security and monitoring systems are tied to public safety, medical providers and our smartphones. Data collection is growing at an enormous pace, effectively tracking our every move. This, as pointed out, has created concern for privacy and for the increasing vulnerability to cyber threats. Fixed and mobile surveillance cameras have facial identification technology. Unmanned aerial vehicles (UAV’s), also known as drones, can be preprogrammed to operate autonomously, although the panel pointed out that current FAA restrictions require an operator following visual line-of sight rules below 400 feet of altitude. It’s expected that, within the next few years, there will be autonomous drone surveillance and product delivery systems. Utilities can use drones to monitor power transmission lines at 1/10^th the cost of a helicopter and with safety and efficiency impossible with helicopters. Public safety departments can use UAVs to assess damages as well as risks. Four U.S. insurers are currently using human-operated drones to assess property damage claims arising from natural disasters. The panel showed photos of UAVs that look like insects that are the size of a fingertip. Wearable biometrics are much more sophisticated than Apple watches and Fitbits. Google explained the company’s quest to improve health monitoring systems. With 9.3% of the U.S. population alone (29 million) suffering from diabetes, Google sells a revolutionary contact lens, developed with Novartis, that monitors glucose levels and corrects vision similar to an autofocus camera. Other panel photos show tattoo-like patches thinner than a human hair that stick to the skin. Using microfluidic construction, these nearly invisible patches monitor EKG and EEG bodily functions and transmit the data 24/7 wirelessly. Similar monitors, known as smarty pants, can be sewn into underclothes and bras. Exoskeleton Technologies are being developed by more than a dozen major manufacturers, as the panel demonstrated, and their products are expanding human capacity and endurance far beyond most expectations. These are wearable machines that combine human intelligence and machine power to achieve nearly any conceivable task without falling. Used by the military, public safety, hazmat teams and industries and for medical rehabilitation, exoskeletons let humans perform feats that would have been physically impossible a few years ago. Neuro interfaces with bio-logical signals allow paraplegics to relearn lost functions. Some patients can actually experience running a four-minute mile or play certain sports. Lifting is painless and commonplace with weights of 40 to 60 pounds, with new technology allowing a person to run without falling down with 200 pounds of weight on their back. A la “Iron Man,” exoskeleton suits are being designed into wearable fabrics with micro energy packs. This area of technology has the greatest potential of protecting workers from soft tissue strains and back injuries. In addition, it serves a dual purpose of advancing an injured worker’s rehabilitation and recovery process without the inherent risk of getting reinjured. As pointed out, experts expect industrial injuries to be reduced as much as 70% as exoskeleton technology is woven into the workplace as personal protective equipment (PPE). Perhaps a bigger question, with an aging workforce and population, is the unknown cost and whether employers, insurers or individuals will bear the expense. The fourth and final technology covered by the panel was Autonomous Transportation Systems and Devices. Google pioneered self-driving vehicles and leads in the development of its associated technology, but autonomous vehicles are now being produced and tested by a growing number of manufacturers. In March 2015, Delphi sent a driverless Audi SUV on a 3,400-mile trip through 15 states from San Francisco to New York City in eight days without an accident. Auto manufacturers are approaching self-driving features on an incremental basis with self-braking, self-parking and other autonomous safety-related features. Google has inspired a jump to a fully autonomous vehicle with no steering wheel or brake. These self-driving vehicles perform 7,000 safety processes per second at high speeds with far safer results than any human driver. The impact of self-driving vehicles, including trucks, is expected to be commonplace within 20 years or sooner. A recent national survey of drivers indicated 44% are looking forward to autonomous vehicles. Respondents cited safety as their first priority. Their second reason was their expectation that they would not be paying for car insurance, which averages $820 per licensed vehicle per year in the U.S. Statisticians expected a drastic reduction of injuries as well as reduced violations like DUI, speeding and running red lights. With 35,000 motor vehicle deaths each year in the U.S., increased safety coupled with increased freeway efficiencies of ultimately more than 10 fold are issues that will make this a disruptive technology that will seem long overdue. As the Google risk management team pointed out, insurers don’t know how to react or respond to the inevitable switch to autonomous vehicles. Even on a road test basis, auto insurance underwriters are scratching their heads trying to assess the risk implications. As the panel pointed out to the inquisitive audience during the Q&A session, it may be relatively simple to determine the impact of new technology from a measurable, scientific basis. But the big challenge for risk managers is imagining the implications these various technological advancements will have on our organizations, workforce and insurers. Auto insurers have at least $500 billion in annual premiums at stake in the U.S. alone. What will happen to that revenue when we shed our need to get behind the wheel every day? Google also pointed out that each of the technological areas cover a wide range of regulatory implications. While they attempt to notify every conceivable regulatory entity as they develop and test new products, it’s clear that there often aren’t clear legal or regulatory guidelines in place. How will regulators be able to promulgate new rules, regulations and laws as these science fiction-like inventions come to reality? As Dr. Seuss said so profoundly, “Think and Wonder. Wonder and Think.” ITL and its 400-plus thought leaders are providing the kind of wisdom and insight we will need to help bring all the parties together to solve these challenges. We welcome you to the conversation.

“Do no harm.” That’s part of the doctor’s oath, and it was the underlying thinking behind Progressive’s launch of usage-based insurance (UBI) into the U.S. insurance market back in 2010. The message was straightforward – try our Snapshot device, and your insurance premium can only go down; how far down depends on how well you drive. Fast forward five years of “Flo” hammering way at the virtues of UBI: Progressive claims $2.5 billion in annual premium emanates from UBI, and nearly every tier 1 carrier emulates Progressive’s format...and Progressive has announced, in March 2015, that it is going to charge higher premiums for the worst-behaving drivers, effectively dumping the concept of “Do no harm.” And why not? As the pioneer of UBI in the U.S., Progressive has accumulated the trip data of millions and millions of customers over a number of years – tens of billions of miles of journey data coupled with hundreds of thousands of claims – giving the company unique insights into the behaviors that cause accidents. Based on listening to customers, the marketing program has now shifted from “Plug it in. Drive. Save.” to the concept of “Rate suckers” – bad drivers getting a free ride on the premium that safe drivers pay. Progressive’s research showed that 89% of drivers would be upset to find out that their premiums were subsidizing bad drivers. So loading the premiums of bad drivers backs up the marketing message and should further fuel the positive selection of good drivers moving to Progressive, while chasing away the bad drivers to cheaper, less-data-savvy carriers. This adverse selection for Progressive’s competitors will eventually move the market to fully data-driven underwriting over the medium term. All this goes to show is that UBI is not your typical Insurance product. Key to success for Progressive has been:

1. the ability to accurately model the risk and develop a compelling pricing model based on the new data made available from the telematics device
2. creating an attractive customer proposition and educating the market in the benefits of the proposition with a targeted campaign
3. implementing the operational processes that deliver on the promise of the marketing message

Many insurers get dazzled by the telematics gadget and technology and lose sight of the fact that success really turns on delivering a compelling customer proposition fueled by deep customer insight. I find it intriguing that many UBI programs are still being run by IT departments, as the proposition will only be truly successful when the strategy, marketing, product development and operations teams become involved. I have run a number of telematics engagements, and the technology is quite straightforward. Arguably, the hardest part is finding where to plug in the telematics sensor on the vehicle. Usually, data starts to flow almost immediately, and drivers start getting scores the following day. However, that UBI plugging-in and data flow marks a “moon landing,” as your relationship with the insurance customer will be forever changed. Let’s face it, in the past a customer usually shopped for the cheapest price of motor insurance, bought it and then tucked the policy away in the glove compartment of the vehicle with little or no contact with the insurer until it came time to claim or renew. With UBI, the insurer provides customers with a companion mobile app (and website) that gives daily feedback on their driving skills and opens up a range of value-added services like:

• Real-time vehicle location viewing
• Teen safety monitoring (geo-fencing)
• Driver feedback (rating, score) -- continuing tips to improve driving style and reduce accident risk
• Trip replay capability, with mapping
• Driver behavior indicators (harsh braking, reckless driving, acceleration) within trip
• Logbook – trip information – tax and fuel log expense claims
• Parking meter reminder
• Vehicle fault notifications
• eCall (emergency/panic button) and bCall (breakdown)

You may have noticed I have skirted the issue of “push” marketing offers, which this connectedness will certainly open up. If handled with the mindset of truly benefiting the customer, then this could be a good thing, but it’s a fine line between good and “spam.” I have advocated elsewhere that dynamic affinity offers, when coupled with a high degree of personalization, will present much greater value to the customer rather than the scatter-gun coupon books that typically prevail today. In China, over the last 18 months, quite a few insurers have piloted UBI propositions in advance of the deregulation, and affinity offers – value-added services – have figured prominently. Most have offered a flat 10% insurance discount for simply trying out UBI. PICC, in partnership with Tencent and Shell, launched the “Lubao” box in early 2014. It’s a plug-in device that connects to a mobile App that displays the current status of the car, runs routine diagnostics, offers advice on fuel-saving driving techniques, provides discounts on Shell products, provides road-side assistance and funnels all that data back to the insurance company and its partners. Seems like a dress rehearsal for rolling out a full “Progressive-style” pay-how-you-drive insurance program when regulations allow. Other insurers have offered time-saving features like streamlining the payment of traffic violations, which I am told can be quite inconvenient in China. In some Asian markets, women’s safety while driving has been seen as a good landing place for the UBI proposition, with a “panic” button being built into the app. In other markets, where organized fraud is rampant, UBI provides the data to effectively be a silent witness to what really happened and protect the interest of the customer and the insurer. In Ireland, a fraud ring was systematically targeting drivers on country-side round-abouts and making phony whiplash claims at more than $20,000 per person. The data from the UBI device would help stamp out those kinds of claims, sparing the customer from the resulting increased premiums and months and months of mental anguish during the claim settlement process. In several markets, the advent of UBI has been the key to making insurance affordable for young drivers and families with young drivers. And in Europe, where discrimination based on gender was banned several years ago, a new insurer, Drive-like-a-Girl, launched a telematics proposition quite similar to Progressive’s, where anyone with good driving habits (driving like a girl) earns a discount, eliminating the need for proxy rating factors such as age and gender. The UBI proposition winds up being quite beneficial all around. Firstly, the community wins with improved road safety and easier-to-understand motor insurance contracts – pay for what you use. Secondly, customers win with cheaper insurance, with the ability to control the cost by improving their skills, plus they get a whole range of new features from vehicle fault monitoring through to faster claims settlement. Finally the insurer wins, as it accurately monitors risk and uses data to find new ways to engage customers – moving the conversation from price to value and establishing life-time brand associations with customers. Do no harm. It’s certainly a good starting place as it gets you thinking from the customer’s perspective, but UBI presents a whole lot of value simply waiting to be unleashed for everyone. Just find what’s most important for your customers, and you should have a success when you launch your own UBI proposition. See you in the parking lot. :-)

Not so long ago, a senior executive at Insurance Thought Leadership received a phone call on his smartphone in which the caller claimed to be returning a call.  The ITL executive politely let the caller know that he hadn’t called. Then came another "returned" call… and another. Each caller said he had received a call from the ITL executive's mobile number and that the caller hadn’t left a message. All told, the ITL executive received about a call a day for about a week. Naturally, he called his mobile provider to find out what was going on. The provider said it sounded like "phone spoofing." How It Works Spoofing is effectively falsifying a piece of identifying information, like a return email address. “Phone spoofing” relates to the number that shows up on caller ID -- someone appears to be calling from that number but doesn't own that number and is really calling from somewhere else.  Spoofing is used to trick people into picking up calls they otherwise wouldn’t (and get around the National Do Not Call Registry). For a shady caller from outside the area – and often the country – a local number is less likely to raise suspicion. The real target of the scam is the person on the receiving end of the spoofed call. In the past year, attorneys general in Arkansas, Ohio, Pennsylvania and Rhode Island (among others) have all issued warnings related to phone spoofing scams. If the recipients do answer the calls, they’re treated to a lovely conversation with ethically challenged telemarketers, debt collectors or scammers. And, as with most sketchy callers, they don’t leave a message if the target doesn't answer. If the recipients are curious about who called, all they have to go on is the spoofed (false) number that appeared in their caller ID. The result: numerous angry “return” calls to the wrong person. In effect, the real owner of the spoofed number is collateral damage. Spoofing technology is unfortunately cheap and widely available. As a result, anyone with a smartphone can be a victim -- though the scam works just as well on landlines. What to Do to Protect Yourself The Truth in Caller ID Act of 2009 prohibits anyone in the U.S. from “knowingly transmit[ting] misleading or inaccurate caller identification information with the intent to defraud, cause harm or wrongfully obtain anything of value….” The act also includes penalties of as much as $10,000 per violation, and related FCC rules note that telemarketers are supposed to display an accurate phone number that can be called during regular business hours. That all sounds good, but… there are a couple of problems with this scenario as it plays out in the real world. The nature of phone spoofing can make it tricky to figure out who actually made the call in the first place. Moreover, many of the perpetrators are based outside the U.S., effectively placing them beyond the reach of the law. While there has been an attempt to enact an updated version that expands the law’s reach to include calls made to recipients in the U.S. from outside the U.S., it’s naturally moving at the speed of Congress. And, of course, enforcement of that law against telemarketers, etc. based overseas will present an additional hurdle. Another issue to consider: The FCC tends to view the recipient of the call as the primary victim of a phone spoofing scam. Consequently, “the intent to defraud, cause harm, or wrongfully obtain anything of value” noted in the Truth in Caller ID Act focuses on actions taken against the recipient of the call (as opposed to real owner of the number in question). In a somewhat related matter, in late 2013 the Federal Trade Commission (FTC) decided not to amend its Telemarketing Sales Rule to address caller ID spoofing because it didn’t believe that the proposed changes would have any effect on the problem. As you may have guessed by now, stopping this isn’t easy. It’s fairly difficult – if not impossible – to completely eliminate the risk of having your number used in a caller ID spoofing scam. One step you can take to decrease the likelihood is to reduce the number of places in which your phone number can be found online. In effect, don’t give out your number unless you have to. This includes web contests and other online forms. And if it is required for an online purchase, don’t save that information for next time. That way it – and your credit card details – won’t be there to steal if an intruder subsequently breaks into the retailer’s network. What to Do if It Does Happen to You? For starters, you can file a complaint with the FCC. But, although it’s unlikely that the information on your smartphone itself has been compromised (unless there is an additional, unrelated intrusion), your realistic options are unfortunately somewhat limited once your number is used as part of a spoofing scam. 1)    You can block incoming calls, leave a message explaining what happened and, in effect, hope it stops before too long; or 2)    You can change your number. Of course, that also means notifying friends, family and professional contacts (and perhaps changing your business cards, too). If you don’t feel safe, you can also take the extra step of changing your passwords (which is never a bad idea). And if you would like more information, you can check out the FCC’s Caller ID and Spoofing page. The silver lining here is that phone spoofing doesn’t equate to your phone – or the data on it – being accessed by someone else. Of course, that doesn’t make it any less annoying or disconcerting if it happens to you. Happy Ending In the case of the spoofing against the ITL executive, the system worked as well as possible. The authorities, working with the carrier, tracked the spoofing back to a scam artist in Germany, and an arrest was made.

A monster storm is on a collision course with New York City, and an evacuation is underway. The streets are clogged, and then it happens. Every traffic light turns red. Within minutes, the world’s largest polished diamond, the Cullinan I, on loan to the Metropolitan Museum of Art from the collection of the British crown jewels, is whisked away by helicopter. While this may sound like the elevator pitch for an action film, the possibility of such a scenario is more fact than fiction these days. Cesar Cerrudo is the chief technology officer at IOActive Labs, a global security firm that assesses hardware, software and wetware (that is, the human factor) for enterprises and municipalities. A year ago, Cerrudo made waves when he demonstrated how 200,000 traffic sensors located in major cities around the U/S. — including New York, Seattle, Washington, D.C., and San Francisco — as well as in the U.K., France and Australia, could be disabled or reprogrammed because the Sensys Networks sensors system that regulated them was not secure. According to ThreatPost, these sensors “accepted software modifications without double-checking the code’s integrity.” Translation: There was a vulnerability that made it possible for hackers to reprogram traffic lights and snarl traffic. A widely reported discovery, first discussed last year at a "black hat" hacker convention in Amsterdam, highlighted a more alarming scenario than the attack of the zombie traffic lights. Researchers Javier Vazquez Vidal and Alberto Garcia Illera found that it was possible, through a simple reverse engineering approach to smart meters, for a hacker to order a citywide blackout. The array of attacks made possible by the introduction of smart systems are many. With every innovation, a city’s attackable surface grows. The boon of smart systems brings with it the need for responsibility. It is critical for municipalities to ensure that these systems are secure. Unfortunately, there are signs out there of a responsibility gap. According to the New York Times, Cerrudo successfully hacked the same traffic sensors that made news last year, this time in San Francisco, despite reports that the vulnerabilities had been addressed after the initial flurry of coverage when he revealed the problem a year ago. It bears saying the obvious here: Cerrudo’s findings are alarming. The integration of smart technology into municipalities is a new thing. The same Times article notes that the market for smart city technology is expected to reach $1 trillion by 2020. As with all new technology, compromises are not only possible, but perhaps even likely, in the beginning. The problem here is that we’re talking about large, populous cities. As they become ever more wired, they become more vulnerable. The issue is not dissimilar from the one facing private-sector leaders. Organizations must constantly defend against a barrage of advanced and persistent attacks from an ever-growing phalanx of highly sophisticated hackers. Some of them work alone. Still others are organized into squadrons recruited or sponsored by foreign powers — as we have seen with the North Korean attack on Sony Pictures and the megabreach of Anthem, suspected to be at the hand of Chinese hackers — for a variety of purposes, none of them good. The vulnerabilities are numerous, ranging from the power grid to the water supply to the ability to transport food and other necessities to where they are needed. As Cerrudo told the Times, “The current attack surface for cities is huge and wide open to attack. This is a real and immediate danger.” The solution, however, may not be out of reach. As with the geometric expansion of the Internet of Things market, there is a simple problem here: lack of familiarity at the user level — where human error is always a factor — with proper security protocols. Those protocols are no secret: encryption, long and strong password protection and multifactor authentication for users with security clearance. While the protocols are not a panacea for the problems that face our incipiently smart cities, they will go a long way toward addressing security hazards and pitfalls. Cerrudo also has advocated the creation of computer emergency response teams (CERTs) “to address security incidents, coordinate responses and share threat information with other cities.” While CERTs are crucial, the creation of a chief information security officer role in municipal government to quarterback security initiatives and direct defense in a coordinated way may be even more crucial to the problems that arise from our new smart cities. In the pioneering days of the smart city, there are steps that municipalities can take to keep their cities running like clockwork. It starts with an active approach to security. This article was written by ThirdCertainty contributor Adam Levin. Levin is chairman and co-founder of Credit.com and Identity Theft 911. His experience as former director of the New Jersey Division of Consumer Affairs gives him unique insight into consumer privacy, legislation and financial advocacy. He is a nationally recognized expert on identity theft and credit.

Health insurance plans should be designed to spur the use of the highest-value pharmaceuticals as well as the highest-value care delivery services. In some cases, plans do seek to ensure access to the highest-value care regardless of how it is delivered. Think for a moment about implantable devices, from drug-eluting coronary stents to replacement joints. Patients don’t have to pay for the stent outside of their insurance; it’s included in the total cost of their care because it’s less expensive to cure an individual’s heart or hip than it is to pay for the multiple episodes of care required by a lack of effective treatment. Yet many plans are set up with “buckets” of money that don’t make sense and destroy value. For example, bucketing means there are plans that discourage the use of high-value blood pressure medications because the broader adoption of this therapy caused the plan to exceed its budget for medications – even though the therapy saved dramatically on the cost of hospital and disability care and the reduced incidence of heart attacks and strokes. (As a side note, these savings materialize much more quickly than many typically expect. Better use of blood control medications can reduce the incidence of strokes and heart attacks in as little as six months.) There are also many specialty medications that are exceedingly expensive and tremendously effective. Their use can reduce the overall costs of care, but bucketing means the payment system often isn’t sure how to incorporate them. Examples include new medications for curing hepatitis C as well as “orphan drugs” for rare diseases, including unusual expressions of hemophilia, cystic fibrosis and Gaucher’s disease. So what’s stopping providers from inciting the use of high-value medications? First, too few of the medications (or treatments of any sort) have good outcome data that shows results and costs over the full cycle of care. Second, few providers are set up to provide comprehensive, full-cycle care. The way to get these high-value medications included in care is to eliminate the use of bucketing and instead look at the total cost of care for a patient’s medical circumstances. In the case of an infection like hepatitis C, that cycle of care would be from the time of diagnosis until the patient is cured. For conditions perceived as non-curable or lasting for an extended duration, it would typically be for a period of time or through a particular episode (e.g., an acute flare-up of Crohn’s). This has been done for Gaucher’s disease, particularly in countries with nationalized healthcare, because the new drugs dramatically reduce the total cost of care. Untreated, the condition requires multiple, expensive and painful surgeries. For plans to encourage value-based care, they must similarly minimize fragmentation and instead consider the holistic needs of each medical condition. Only then can the industry truly improve health outcomes and reduce overall spending.