It is time to step up automation in commercial lines, and you can do just that with a powerfully rich combination of enhanced technology capabilities in the key areas of underwriting and policy administration – a combination that lowers cost, simplifies doing business, makes it easier to enter new markets and significantly improves underwriting outcomes. Modern policy administration systems for commercial lines have matured and expanded. Many now offer automation assistance to a few aspects of the underwriting process, and a handful even address select parts of the quoting transaction process. But the news is that exciting, next-generation underwriting technologies and solutions are delivering automation directly to the desk of the underwriter and assisting in the management of the entire underwriting process. These capabilities are enabling more insightful and timely service to the agent: a significantly streamlined process and workflow; rapid, if not immediate, turnaround of quotations; precision pricing; better risk selection – all in a user-friendly, collaborative environment. While all commercial lines insurers are able to benefit from some level of increased underwriting automation, this enriched level of underwriting finesse is particularly important to insurers that are writing mid- to large market risks and even highly specialized and complex risks, especially those that require negotiation and collaboration with the agent or broker. Insurers that are not paying close attention to what is being implemented by some of the market leaders are likely to be burdened with higher underwriting expense and saddled with less effective underwriting outcomes. If this automation plays out as projected, it might become a continual struggle to match the level of service that leaders are providing to agents and brokers – a struggle that could leave some insurance companies in the dust. So why haven't all commercial insurers installed these next-generation underwriting technologies and solutions – the very approaches that would put them in a leadership position or at least enable them to keep up with the mainstreamers of tomorrow? The answer boils down to a disconnect in linking desired business capabilities to the available technology capabilities and, perhaps of more importance, two major misconceptions. First, there is a misunderstanding relative to what a modern policy administration system can do for commercial lines underwriting. Some mistakenly believe that a modern policy administration system can and will provide next-generation underwriting automation for the underwriter. Second, there are misperceptions about the complexity involved in managing any overlaps or duplications that exist between the policy systems and underwriting solutions. The reality is that advanced underwriting solutions and technologies coupled with a modern policy administration system create a powerful combination that delivers a tangible competitive advantage. It is indeed possible to transform the commercial lines underwriting process. This is a maturing area for solutions with new entries in the marketplace. These solutions now offer a rich and complete set of capabilities specifically designed for commercial lines underwriting – solutions that align well with the changing needs of the business and also capitalize on developing opportunities. These solutions really step it up for commercial lines insurers by applying the right level of automation to properly balance the science and the art of underwriting, to deliver real competitive advantage today and place desirable business that stands the test of time on the books. Insurers seeking new capabilities need to look closely at these new offerings. Yes, the overlaps with what a modern policy administration system does are real, but this can be managed without great difficulty. Any perception of extreme complexity is typically misguided. The value an insurer can achieve from the powerful combination of a modern policy system and a complete suite of advanced underwriting solutions will far outweigh any effort involved. I have been conducting research on, tracking, and reporting on both underwriting and policy administration capabilities in commercial lines for more than 13 years. These are exciting times for the industry. Real opportunities for stepping up to the challenges of the increasingly complex world of commercial insurance are here. The smart insurers will capitalize and become intelligently nimble – realizing their reward in profitability and market share. The rest will follow, struggling to catch up and stay in the game.

1. You will gain the knowledge you need to truly understand the overall property/casualty insurance industry at a high level.
2. You will get access to membership in the CPCU Society both locally and nationally, which will open up amazing networking opportunities with the leaders of our industry.
3. Only 4% of our industry has achieved the CPCU, so it immediately puts you in the top echelon of the industry when it comes to education.
4. CPCU opens the door to promotions and new positions. Getting the interview for better positions becomes much easier with the highly respected CPCU letters next to your name.
5. The average CPCU is 54 years old. With so many retirements happening in our industry, young CPCUs are in very high demand.
6. Many of the local CPCU Society chapters are looking for young talent for their boards, giving you lots of opportunity to gain experience in a leadership role.
7. At around $4,000 for the whole program, it's much less costly than an MBA.
8. Chances are your company will pay 100% of the cost of the program and pay for the trip to the annual meeting, and some even give bonuses for each test passed and for completing the program.
9. It shows a real commitment to the industry, which makes companies much more likely to take a risk on you and offer you a stretch assignment.
10. The average CPCU makes 29% more than non-CPCUs with the same job title.
11. If you start today, you have just enough time to finish in time for Hawaii 2016!!!!

Share this article with those at your company who would benefit from getting their CPCU! If this article inspires you to get going on CPCU, let me know in the comments, and I will personally call you to answer any questions you might have about the CPCU program! :-D Already have your CPCU? Tell us: How has earning your CPCU improved your career? How did you decide to start pursuing it? Comment below.

For many years, Americans did not need to worry about contracting the once-widespread disease called the measles. In fact, the Centers for Disease Control and Prevention (CDC) officially declared measles eliminated in the U.S. in 2000. Unfortunately, that is no longer the case. In January 2015 alone, there were already more confirmed cases in the U.S. than are typically diagnosed in a full year. Public health officials are very concerned and have moved to aggressively contain this very contagious, but 100% preventable, disease. The current outbreak and surge in confirmed cases of measles, most notably in California, has been scientifically linked by researchers from MIT and Boston's Children Hospital to the outbreak that began in Disneyland in December 2014. Medical researchers believe the spread of the current measles outbreak is solely because of low vaccination rates in certain communities based on a widespread but false link between childhood immunizations and autism. International health officials have called the link between the MMR (measles, mumps and rubella) vaccine and autism "the most damaging public health hoax in the past 100 years."

Just last week on April 21, the Journal of the American Medical Association (JAMA) released the findings of a comprehensive study using the health insurance data base of 95,000 children and found no overall link between autism and the MMR vaccine. The study also found no link for children with an autistic sibling. The study did find a lower vaccination rate for the younger siblings of children with autism based on parents' continued fears of a link. The JAMA study authors from the Lewin Group in Falls Church, Va., stated; "Consistent with studies in other populations, we observed no association between MMR vaccine and increased ASD (autism spectrum disorder) risk among privately insured children."

Despite the overwhelming medical evidence that the MMR vaccine is both very safe and highly effective, anti-vaccination groups still dispute the facts and are warning parents not to be pressured into having their children vaccinated, which is the crux of this public health problem. On the same day that the JAMA study was released, CBS Evening News ran a segment on the current U.S. Surgeon General Vice Admiral Vivek Murthy, MD, MBA, or "America's Doctor," who appeared on Sesame Street to promote childhood vaccinations. CBS closed the segment with; "Vaccination critics don't see anything cute about this video after the controversy over the recent measles outbreak." Really? There is no controversy. It was all based on a documented hoax.

The original belief that vaccinations cause autism was based on a reported study in 1988 by Dr. Andrew Wakefield in the U.K., which has since been 100% completely discredited. His report unnecessarily panicked many parents around the world, causing a sharp decline in the number of children getting the MMR vaccine. The false claims and widespread panic began when a British medical journal, the Lancet, published Wakefield's article. It was later determined that the author had multiple conflicts of interest, had manipulated evidence and had broken ethical research codes of conduct, including accepting funding by attorneys involved in lawsuits against vaccine manufacturers. The Lancet fully retracted the article, but not until 2010, when the editor-in-chief stated that the link was "totally false" and that the world-famous medical journal was "deceived." The Canadian Medical Journal in 2010 went on to state that the original research included a "callous disregard" for the "carefully selected" study group of only 12 children and that "several elements of this research were incorrect and contrary to findings of an earlier investigation." Dr. Wakefield subsequently lost his license to practice medicine in the U.K as a result of this fraudulent research.

These are the facts that parents need to know about the measles. Symptoms typically begin with a high fever, runny nose, sore throat and cough, which can easily be misdiagnosed as a simple cold or the flu. The incubation period is between seven and 18 days of exposure to the virus. It is very dangerous because people are contagious up to four days before the red rash appears and likely do not know they are infected. In addition, a room can still be contaminated as long as two hours after an infected person leaves. A single infected person can spread the disease to between 11 and 18 people. An unvaccinated person has a 90% chance of infection if exposed to the virus. The risk of serious complications and death is even greater for adults and infants than for children and teenagers. Rubella, known as the German measles, is also caused by the virus and is usually a mild form of the disease but is a very serious infection that causes miscarriages, still births or birth defects in unborn children when pregnant women get the disease.

Most people born prior to 1957 had the measles. The disease was once so prevalent that in New York City, in the first 10 weeks of 1933 alone, there were 10,000 cases and 434 deaths. The first vaccines developed began in 1958 and became widely available in 1963. Prior to 1963, there were three to four million cases of measles reported each year in the U.S., with 400 to 500 reported deaths annually.

Although many parents in the anti-vaccination movement believe the measles is not dangerous and the MMR vaccine is, the medical facts state otherwise. In fact, from 2001 to 2013, 28% of children in the U.S. with the measles had to be hospitalized. Public health officials fear that many more cases will develop from this outbreak of a very preventable disease, unless aggressive public health measures are undertaken. What is required is an extensive education campaign including widespread vaccination of the unvaccinated U.S. population, starting with infants at 12 months and a booster shot at age four to six, prior to pre-school or kindergarten. Unvaccinated adults also need to be vaccinated.

There are a number of myths associated with the measles vaccination that keep some parents from protecting their children. The controversy surrounding the anti-vaccination movement is based largely on parents' philosophical beliefs against the vaccination. Dr. James Cherry, a pediatric infectious disease expert at UCLA, believes that the recent outbreak in California is "100% connected to the anti-immunization campaign." He went on the say that there are "some pretty dumb people out there."

Medical researchers from MIT and Boston Children's Hospital documented that the rapid spread of measles from the Disneyland outbreak, beginning in mid-December 2014, indicated a significant percentage of the population exposed had low vaccination rates. These researchers determined that the exposed population rate might have been as low as 50% and likely no higher than 86%. These rates are well below the 96%-99% level known as "herd immunity," which is required to prevent future outbreaks.

The anti-vaccination movement includes those parents who believe that there is no medical risk from not vaccinating their child, that the disease is extinct, that doctors and drug companies push vaccinations for their own profit, and that you can get the measles from the vaccination. Still others believe the false and discredited link to autism. For the parents who are against vaccination, they not only put their own children at risk, they dramatically increase the risk for the general population who are unable to get the vaccination, such as infants under the age of one, and children and adults with weak immune systems, including people with cancer and other diseases.

Measles is still widespread throughout the world. Travelers from overseas continue to bring the disease into the U.S on a daily basis. The anti-vaccination conspiracy movement belief that doctors and insurance companies promote the vaccination to increase profit is absurd and is negated by the fact that health insurance companies pay for the vaccinations at no cost to the patient. Similar to the flu shot that is a dead virus from which someone cannot get the flu, it is almost impossible to get the measles from the MMR vaccine.

The CDC states there is a 1 in 3,000 chance of a mild allergic reaction to the MMR vaccine but a 90% chance of infection if an unvaccinated child is exposed to the virus. Parents should do the math. In addition, a blood product containing an immune globulin is available for people who are medically unable to immunize with the MMR vaccine for any reason.

What parents need to know is that the scientific community has found no evidence whatsoever of a link between MMR vaccine and autism or any other childhood development disorder. In addition to the just-released JAMA study, large epidemiological studies conducted by the CDC, the American Academy of Pediatrics, the Institute of Medicine at the U.S. National Academy of Sciences and the U.K. National Health Services all found no link between MMR and autism. This original false research has done significant damage to the field of public health and has done serious harm to children of parents who were misled by this report, which resulted in unnecessary deaths, severe impairment and permanent injury in unvaccinated children. Because of wide dissemination of this discredited link, there were many lawsuits by parents with children with autism, but a special court convened by the National Vaccination Injury Compensation program denied all compensation claims in U.S. federal court against manufacturers of the vaccine in 2009.

The recent measles outbreak in California is what has spiked the "controversy" over vaccinations, which has made the national news in 2015 including; CNN, the New York Times and Time Magazine. There have been 178 documented new cases of the measles by late March by the CDC, including five unvaccinated Disneyland workers in Orange County, and the outbreak is now spreading across the U.S.

Although traditional public health issues are typically rooted in poor or rural areas of the country, this current measles outbreak is concentrated in wealthy neighborhoods in California and surrounding states. Although it is reported that only 3.1% of parents in California refuse to vaccinate their children, for health or religious reasons, this number is misleading. In fact, many areas within California have double-digit exemption rates from vaccinations, with some areas as high as 50%.

The MMR vaccination is the best way to prevent disease both for the individual and the general population. It works by making the body produce anti-bodies against the virus. The measles vaccination is recommended for all people 12 months of age or older, and especially people traveling overseas. MMR vaccinations are supported by the American Academy of Family Physicians, American Academy of Pediatrics, the Centers for Disease Control and Prevention and the Mayo Clinic, to name just a few.

An extensive education campaign is required to overcome false and unfounded fears among parents of unvaccinated children. Legislation is needed to strengthen immunization laws requiring all school-age children to receive the measles vaccination, except for those with a medical exemption certified by a licensed physician. Public health officials should also track and verify both statewide and local immunization rates and should mandate that schools maintain an up-to-date list of pupils with exemptions so they can be excluded quickly if an outbreak occurs, temporarily exclude unvaccinated students and teachers from attending school and offer measles vaccinations for unvaccinated students and teachers.

The MMR vaccine is 99% effective and provides immunity for a lifetime. It was once considered one of the major public health campaign success stories. Now, health officials fear the potential for a public health crisis based on blatantly false research and unfounded fears. The CDC points out that people who refuse to vaccinate usually live in the same community. "When measles find its way into these communities, outbreaks are more likely to occur." Consumers and parents should confirm with their doctor that they or their children do not have any allergic reactions to other medications. They should also verify that they do not have an immune deficiency condition, which may cause side effects and decrease the vaccine's usefulness.

The myth that childhood vaccinations lead to autism was based largely on a completely discredited medical research hoax. This myth is still being widely perpetuated today not only by the anti-vaccination conspiracy movement led by Hollywood celebrities but also by the mainstream media.

My heart breaks for the parents of children with autism, including a close family friend. But it breaks my heart even more knowing that thousands of children are unnecessarily exposed to unimaginable consequences of birth defects and death from something so preventable. Parents need to listen to the Surgeon General, the CDC, the Mayo Clinic and the American Academy of Pediatrics and not Hollywood celebrities with zero background in public health.

I would like to thank my research assistant and co-author Ms. Chandler Berke who is a public health/science undergraduate student at the College of Charleston in South Carolina.

Managing partners at many insurance defense law firms across the country are on an elusive quest to get on more insurance panels. Defense law firms traditionally build client relationships with insurance carriers, self-insured entities and municipalities over many years. In today’s rapidly changing legal climate, however, these relationships are increasingly being replaced with a formalized application process. Being named as panel counsel is not easy. For starters, it is frequently difficult to determine who is in charge of the hiring process. This article provides some insight into the panel counsel selection process. How to Become Panel Counsel for an Insurance Company At one level, every insurance company panel is different. Listed below are the most common ways that insurance companies are organized to manage the panel process:

• National overseers may review all panel counsel applications
• Regional managers may have responsibility for multiple states
• State-level coordinators may be the point of entry
• Panels for multi-subsidiary insurance companies may be consolidated in one division
• Purchasing departments increasingly are screening interested vendors
• Online applications are also becoming popular

In some insurance companies, there may be multiple points of entry that could be used to gain consideration for a panel. Many carriers, for example, maintain multiple panels. Examples might include a separate employment practices (EPLI) panel or a construction defect panel. There may be an independent panel manager for each of these claims areas who has some independent hiring capabilities. While a variety of panels adds opportunities to counsel selection, it also adds to the complexity of the business development effort. There are also many similarities in the panel application process:

• Personal referrals are the best way to gain panel consideration
• Periodic panel reviews (every one to two years) may be used
• Even if a law firm gets on a panel, it may take time to establish a consistent stream of new cases

Finding the Panel Manager There are several ways to identify the best point of contact within an insurance company, including:

• Ask around within your network
• Attend industry conferences
• Conduct Internet research
• Review insurance company websites
• Make telephone calls to the carrier

Insurance company websites typically do not specifically identify an individual as the actual panel manager, but they might point an interested party in the right direction. Claims adjusters used to play a significant role in panel counsel selection, but this is becoming less common. A law firm in search of new insurance defense panel positions may, however, find it worthwhile to explore professional meetings of insurance adjusters in its geographic area, particularly if there is an active claims association. A recommendation from a local adjuster can certainly help to reinforce a panel application. Starting the panel research process from a blank piece of paper can be an extremely time-consuming and frustrating process. Trying to balance this research with the demands of a very busy law practice is particularly challenging. Background on the Insurance Market There are 2,700 property and casualty (P&C) insurance companies in the U.S., according to the U.S. Federal Insurance Office and A.M. Best. Insurers are regulated at the state rather than the federal level, meaning that each state maintains a department of insurance with information on the insurance carriers admitted to do business in that state. Insurers with primary corporate headquarters located in a given state are called domestic insurers. Law firms starting a search for panel positions may find data posted on the website of their state’s insurance commissioner to be useful. Annual market share reports are frequently available, which identify the top 25 carriers in the state by service line, such as auto, commercial general liability, medical liability, etc. Additionally, the department of insurance within each state typically provides an online list of all carriers admitted to sell insurance in that state. While this may appear to be helpful at first glance, the researcher who downloads a list of admitted carriers is frequently faced with hundreds of different insurance company names to sift through. Upon closer inspection, it becomes clear that many of the carriers admitted within a state are actually subsidiaries of larger insurance companies. Business Development Is a Numbers Game As discussed earlier, a personal introduction to the panel manager is generally the most productive approach. In today’s world of carrier consolidation and litigation centralization, however, it can be difficult to stay abreast of panel managers. The law firm is faced with the challenge of first identifying the panel manager and collecting accurate contact information. Next, the firm’s managing partner or lead rainmaker needs to reach out to the manager and make an introduction to the firm. An in-person meeting is ideal, but difficult to achieve initially. Generally, an introductory letter or email can be used to try and arrange a phone call to start the business development process. Here are some of the responses a law firm is likely to get from panel managers during this early outreach effort:

• Request for more information about rates and services
• Agreement to set up an in-person meeting (which is likely to involve travel)
• Notification of the panel review cycle, with a promise of notification prior to the next cycle
• Indication that the panel is full, with a promise to contact the firm in the event of a conflict
• Silence (meaning no response)

While many law firms optimistically hope to be engaged by one out of every two or three carriers they contact, the more common reality is that business development can be a long and arduous process. A law firm is best served by constantly screening dozens of insurance carriers, self-insureds and other prospective clients for business development opportunities. Firms that are expanding geographically or into new product lines may also be creating panel opportunities. Insurance companies that are consolidating because of mergers or the growth of in-house counsel should be avoided. Never Stop Marketing The best time to start looking for new clients is while the law firm is operating from a position of strength. Business development can have a long timeline, and it is impossible to predict when a prospect’s needs for legal services may develop. Delaying the start of a campaign until the law firm is desperate for new business is not advisable, because the firm may then be forced to accept a lower-quality client at less than ideal rates. After making an initial introduction to a carrier, the challenge is to keep the conversation going. Reaching out to the panel manager in a substantive way every four to six months can be an effective way to build a positive impression for the law firm. Meaningful ways to stay in touch can include the following:

• Send an article written by the law firm.
• Keep carriers informed of favorable case outcomes
• Offer to teach an in-house CLE
• Submit an analysis of pending legislation or emerging market trends
• Maintain an active social media profile, especially on LinkedIn

Dropping the ball on prospect communications, while understandable, can be deadly to a business development effort. Rejection is a common first response, but the successful rainmaker will be best served by considering a negative initial response from a panel manager to simply mean “not now.” An exception is the carrier that says something like, “We have used ABC law firm exclusively for the past 10 years and have no reason to change” or “Our case volume is so low that we handle most matters internally.” The administrative assistant to the panel manager can also be your friend. Treat all members of the panel management team respectfully to build a positive impression of the law firm. Industry conferences can be an ideal forum for meeting panel managers. Of course, many law firms are thinking the same thing, so it can be helpful to make advance appointments. The Claims & Litigation Management Alliance (CLM) and DRI are two leading organizations that bring claims executives together with insurance defense lawyers. Specialized organizations targeting selected industries can also be helpful. Examples include the Trucking Industry Defense Association (TIDA) and the National Retail and Restaurant Association (NRRDA). Maintain Attractive Marketing Materials The business development cycle will generate the best results when backed by attractive and informative marketing materials. The law firm’s website is an important foundation for any marketing effort, because the attorney bio pages are frequently the starting point in a prospect’s effort to become better acquainted with a candidate. A “beauty contest” can be an apt descriptor for the competitive process of vying for coveted panel positions. While the primary goal is to have a law firm stand out from the competition in substantive ways, the techniques outlined below can significantly enhance an RFP or business presentation.

• Graphic design. Extend the law firm’s brand by using the logo, color scheme and photo styles from the website.

• Attorney photos. Four-color head shots start the get-acquainted process and help the prospect to envision a lawyer in a court representation.

• Credential icons. Martindale, A.M. Best and the CLM logos all have high recognition value within the insurance industry.

When including a list of clients or references, client confidentiality guidelines suggest that the law firm first obtain written informed consent from each client. In Summary Marketing is a process and not an event. Managing partners of insurance defense law firms are advised to get started on a serious business development effort, perhaps backed to an active law firm marketing committee. Staying actively committed to an expansion effort, while challenging, will yield the best results in the long run.

There was an interesting article in Medical Economics magazine titled, “Lopsided Value: Why cost may ‘level the playing field’ for independent, office-based physicians.” The article by Tammy Worth describes how, when a hospital system buys a physician practice, the hospital can then consider the doctor’s office part of its "outpatient" facility and therefore charge a facility fee in addition to the doctor’s professional fee. This holds true for when hospitals bill Medicare or private insurance carriers. As an example, the article states how an EKG at a doctor’s office cost $188 before it was bought by a hospital. If that same EKG is billed as an "outpatient" hospital service, it costs $452.89—more than twice as much, because of that additional facility fee. In another example, an office visit for a complex new patient appointment costs $200 at an physician practice not owned by a hospital. However, if the hospital buys the practice and charges the additional facility fee, the price goes up to $340—170% as much. Medicare and private insurance carriers have been slow to adjust their reimbursements, so, as of now, they are just paying these higher fees. What does this mean to employee benefits professionals and healthcare consumers?

• If you do nothing to your plan, your costs will go up because the provider community is consolidating and using that consolidation to charge more. Even if your population does not use more medical services, your costs will go up because the cost per service is going up.
• If you are a healthcare consumer and are going to doctor’s offices that are owned by hospitals, expect an additional facility charge and find out how much it will be in advance. It could double the price of your medical care. You might want to vote with your feet and go elsewhere.

State Farm, AIG and USAA have received preliminary approval from the Federal Aviation Administration to test drones for their claims and underwriting functions. On the surface, this sounds like a straightforward proposition. Drones can more quickly and easily survey damage sites after fires, tornados and hurricanes than personnel on the ground. Drones can be equipped to use global positioning software to identify insured structures and take pictures of damage to better and more quickly inform ground-based adjusters, leading to faster settlements and good press for insurers. Drones might also be used by adjusters to reveal hail damage on roofs, which will help to mitigate falls and other injuries to adjusters. The thought is that drones also might be helpful in certain loss control activities, such as identifying otherwise hidden internal or external fire hazards to large structures or plants. Small portable drones may also find bodies or even survivors in the aftermath of storms. Drones and their operators may see crimes such as looting or arson being committed. But questions arise: What responsibilities will insurers now have to report crimes to the authorities? How quickly will insurers be required to report? Some drones may use live streamed images to ground-based operators; others may take static pictures that will be retrieved when the drone returns to base. Will the drone-equipped disaster adjuster be required to analyze these pictures immediately or send them to the authorities via Internet uplink as soon as they are retrieved? To avoid problems, should drones not be sent in until after all rescue efforts have ended? However, would this also not create an ethical issue about delaying the use of lifesaving tools because of possible legal complications? What issues of privacy of customer information or stranger images will insurers face as a result of these new capabilities? For example, the camera is left on while the drone ascends the side of the building, capturing images of people in various stages of dress, seeing a man beating a woman on the 14th or witnessing people shooting up at a party in the penthouse. What must the adjuster report and to whom? What if the party in the penthouse is for diabetics and the adjuster reports this to police as a suspicious incident? Will the adjuster now need to add police investigative skills to competency requirements? How secure will these drones be from tampering if they should malfunction, or how easily can hackers intercept image transmission? Will they be equipped to hear, meaning they can record conversations that may have otherwise been thought to be confidential? In other words, will the drone engender additional responsibilities for the adjuster or will issues otherwise be covered by existing laws and regulations? We can argue that the courts have agreed that our expectations of privacy with airplanes flying overhead is already reduced. However, airplanes and other commercial or pleasure craft rarely fly under 1,000 feet for any length of time. Commercial drones will operate at a much more personal, in-your-face, level; today they cannot fly higher than 400 feet. Will the courts react the same way as they have with aircraft to privacy concerns associated with drones? Underwriters will want to use drones, as well, to survey large property complexes to establish baselines not only for pricing and capacity purposes but to provide claims adjusters with a before-loss picture of the property. Drones may also capture more than their own customer’s property. For example, the drone captures a picture or a video of a new product being tested in a courtyard of another business. The other business, fearing industrial espionage, calls the police and gives the clearly visible drone FAA-issued ID number to them. Ground-based adjusters can trespass or go where they aren’t wanted. However, most are trained to get permission directly from owners and others before trampling on private property. I do not think we will see distantly operated drones knocking on doors, “Greetings human, I am seeking permission to scan your property…please sign here or just nod your agreement.” Then again, there is the psychological. The convoy of multiple insurer trucks shows up at the town just after a devastating tornado. Up go the drones, circling like buzzards over the wreckage and the dead. Townspeople make rude gestures to the eyes in the sky and clamor after the trucks to gain anything, any image of a missing relative or friend. And the police and fire officials are there, too, crowding the adjusters for information. Will the insurers need to circle the wagons, be available all together to the authorities in an approved command post so that the authorities can gain immediate access to their images? The authorities might have some immunity if they arrest looters from these pictures, but will the insurers, for giving the authorities pictures of the alleged crime? Will the drone bring more frivolous lawsuits from perpetrators of crimes at disaster sites for invasions of personal privacy? I do not want this to be a Luddite’s rant against drones. Far from it; drones have useful purposes. While drone capabilities were honed in war, their peaceful use should be considered. There is no reason why realtors, insurers, surveyors and others should not have a shot at making their case to use drones in the course of their legitimate business. However, there will be others who use drones in less than legal ways, and we must provide some guidance to insurers and others what constitutes legal and authorized use. We must also have means within each drone’s system that provide credible and legal evidentiary documentation of use: authorized, legal or not. Because the drone increases the field of vision for its user, issues of privacy and legitimate acquisition of images and other information by authorities needs to be spelled out. Disposal of drones must also be spelled out in regulations so that they or any remnant information are destroyed so that they do not get into the wrong hands. The question isn’t whether drones will be used for legitimate business reasons; the question is when. Because they increase the visibility of their users, issues are raised in the area of privacy that require discussion and perhaps court attention. There is also the unknown, the psychological—the vulture drones over the tornado-stricken town. People in war zones have learned to fear the drones because they are harbingers of death. Granted, we have not experienced drone warfare in the U.S., but we know that they have been used as impersonal killers in other places. Unlike whirring helicopters and buzzing planes, they are small, quiet, can hover low to the ground and will interface with individuals. What will we think of the drone climbing outside of our apartment building with its dark camera lens pointed directly at us? Will we think Big Brother, or will we come to accept this new technology as we have the convenience store video camera or the red-light camera at the busy intersection? These questions must be asked and answered to some satisfaction before we go trundling off and build vast drone fleets. The time is now, because after drones are deployed is not the time to understand that the user has increased his or her company’s risk of lawsuit and even criminal prosecution that has not been properly identified, assessed, and managed. Select articles and studies of the issues associated with drones. -- Calo, Ryan. "The Drone as Privacy Catalyst." Stanford Law Review Online 64 (2011): 29-33. Abstract: Associated today with the theater of war, the widespread domestic use of drones for surveillance seems inevitable. Existing privacy law will not stand in its way. It may be tempting to conclude on this basis that drones will further erode our individual and collective privacy. Yet the opposite may happen. Drones may help restore our mental model of a privacy violation. They could be just the visceral jolt society needs to drag privacy law into the 21st century. -- Cavoukian, Ann. Privacy and Drones: Unmanned Aerial Vehicles. Information and Privacy Commissioner of Ontario, Canada, 2012. Summary: The aim of this paper is to provide a background for general privacy readers, as well as for potential users or regulators of UAV activities, as they relate to the collection, use, and disclosure of personal information. -- Friedenzohn, Daniel, and Alexander Mirot. "The Fear of Drones: Privacy and Unmanned Aircraft." Journal of Law Enforcement 3, No. 5 (2013): 1-14. Abstract: The article focuses on the consequence of the use of unmanned aircraft systems, (UAS) or drones, planned to be integrated by U.S. in the national space. Topics discussed use of the technology by military forces, confirmation hearings of disclosed by Central Intelligence Agency (CIA) Director John Brennan and degradation of privacy as a result of law enforcement's relation with the use of the UAS. -- Pasztor, Andy, and John Emshwiller. "Drone Use Takes Off on the Home Front." The Wall Street Journal, April 12, 2012. Issue Discussed: With little public attention, dozens of universities and law-enforcement agencies have been given approval by federal aviation regulators to use unmanned aircraft known as drones, according to documents obtained via Freedom of Information Act requests by an advocacy group. -- Wesson, Kyle, and Todd Humphreys. "Hacking Drones." Scientific American 309, No. 5 (2013): 55-59. Abstract: The article focuses on the lack of safety measures in drone aircraft. It states that drones can be used in various settings, which include search and rescue operations, scientific research and power line monitoring. Also mentioned are the Modernization and Reform Act of 2012 issued by the U.S. Federal Aviation Administration (FAA), effectiveness of jamming devices in the navigation system of drones and the challenges to balance the economic benefits of drones. considering the public safety.

I recently read an article about "digital insurance stores." The article made some good points, though this was not one of them: "Agents need to go beyond their traditional roles as sellers of auto insurance because auto is fast becoming more commoditized." [emphasis added]

Once again, we're told that auto insurance is a commodity. In articles (see the “Price Check” article, for example) and webinars, we've communicated why auto insurance in particular, and personal lines insurance in general, is not a commodity, nor is it "fast becoming more commoditized." If anything, the opposite is true. In his paper, “Reevaluating Standardized Insurance Policies,” University of Minnesota Law School Professor Daniel Schwarcz writes about homeowners insurance:

"The current personal-lines insurance marketplace is largely organized around a myth. That myth is that personal-lines insurance policies are completely uniform. This myth explains regulatory rules that do nothing to promote insurance contract transparency….

“Different carriers' homeowners policies differ radically with respect to numerous important coverage provisions. A substantial majority of these deviations produce decreases in the amount of coverage relative to the presumptive industry standard…."

"If regulators do not act to substantially improve consumer protection in this domain, then it can be expected that coverage will continue to degrade for most carriers, in a modern-day reenactment of the race to the bottom in fire insurance that triggered the first wave of standardized insurance policies…."

Most of the agents I know recognize the demonstrated market share threat of direct, price-focused sales but don't fear it. Transparent competition is generally a good thing. Historically, intensified industry competition has, more often than not, resulted in more broadened, innovative products. That's no longer the case given the lack of transparency in the marketing of direct/online insurance products.

Given a focus almost entirely based on low-price, "painless" marketing by increasingly data-driven, tunnel-visioned and short-sighted financial bean counters, what we're likely seeing now is the beginning of a lemming-like stampede over a coverage oblivion cliff. Too many carriers today couldn't care less about the role their products play in protecting American families from financial ruin. They've convinced themselves (and much of America) that what consumers really want and need is fast, cheap and funny and that the way to sell that is through lizards with Australian accents and box store clerks who'll sell you a generic brown-paper-packaged insurance product at whatever price you tell her.

So-called experts and researchers who likely have never read their own auto policies and almost certainly have never compared two or more policies tell us that car insurance is a commodity where the best deal is the cheapest price that can be quoted in two minutes (yes, one company implies that it can ascertain your unique exposures and quote you the right product in two minutes, not 15, 7.5, or five). The experts tout the efficiencies of the Internet as the marketing channel that can bring even greater riches to insurers, as they predict the imminent demise of ignorant, un-hip Baby Boomer insurance agents who foolishly believe that consumers need consultation and advocacy. Note, too, that virtually all of these research reports focus on the advantages to the insurance company, with almost complete disregard to the obvious disadvantages to the American consumer.

But let's say they're right, that the Internet provides efficiencies that traditional marketing and sales channels cannot compete with. When all you can offer is "fast and cheap," at some point you can't provide that product any faster or cheaper. You've become as efficient as you possibly can be. So, when price is your only value proposition, what do you do at this point when you can't cut the expense ratio any closer? Presumably, you'd look to, by far, the biggest component of premium – losses and loss adjustment expenses. So, how do you reduce that component, which accounts for 75% to 80% of premium, to continue to compete on price?

One way would be to actually return to underwriting. But you can't do that when you're quoting in two minutes. So, what does that leave? Reducing coverage or becoming more restrictive in claims handling practices. After all, who will know? Everyone agrees that "car insurance" is a commodity, so no one is considering what the policy actually covers or doesn't cover. Until claim time. And, on average, that's only once every seven years or so. So, again, no one much will notice…other than the families who lose just about everything they own because they bought an inferior product.

As Mr. Schwarcz opines, that's exactly where the industry is headed in auto insurance unless agents make their case to the consuming public about the value of consultative selling and claims advocacy. And unless regulators return to carefully vetting the products they approve for the marketplace to ensure that they do not leave unreasonable, potentially catastrophic coverage gaps for insureds and that they reasonably protect the public from becoming victims to overly restrictive policy exclusions and limitations.

Copyright 2015 by the Independent Insurance Agents & Brokers of America. Reprinted with permission.