Have you ever been in a meeting where everyone else rallies around a position that you were sure was wrong? You wonder whether you should make waves by being the only one to disagree. Maybe everyone else knows something you don’t? Chances are good that you kept quiet, especially if the boss was among the supporters. Extensive research shows that you would not be alone in doing so—and that organizations would be better off if they could keep dissenters like you from buckling under group pressure. In 1955, Soloman Asch conducted a series of landmark experiments that demonstrated the tendency to acquiesce. Asch put a subject into a small group of people he hadn’t met. The group was taken through a series of visual tests where the answers were obvious but, after a while, all the participants other than the subject would give unanimous, incorrect answers. Unknown to the subject, the others were all cooperating with the experimenters. As Asch put it, subjects were being tested to see what mattered more to them, their eyes or their peers. The eyes had it, but not by much. Asch reported that, in 128 runnings of the experiment, subjects gave the wrong answer 37% of the time. Many subjects looked befuddled. Some expressed their feelings that the rest of the group was wrong. But they went along. Interestingly, Asch found that all it took was one voice of dissent, and the subject gave the correct answer far more frequently. If just one other person in the room, gave the correct answer, the subject went along with the majority just 5% of the time. In organizational settings, the tendency to conform is heightened because the subject is complicated, the answers unclear. There are social and economic bonds that tie a group together, and there is a very human tendency to yield to authority. Following in Asch's footsteps, a series of experiments conducted by Stanley Milgram in the 1960s demonstrated obedience to authority to startling proportions. Executives too often squash dissent because they feel that it will keep them from moving quickly. Some argue that allowing disagreement can halt action entirely. Tom Kelly, the renowned innovation expert at design firm IDEO, wrote in The Ten Faces of Innovation:

"Every day, thousands of great ideas, concepts and plans are nipped in the bud by devil’s advocates."

John Kotter, professor emeritus at Harvard Business School and a highly regarded expert on leadership and change management, captured the frustration of many executives when he said:

"Every visionary knows the frustration of pitching a great idea, only to see it killed by naysayers."

But how do leaders know whether a contrary view is standing in the way of their bold, visionary stroke or a disastrous folly? They don’t. Rather than reinforce conformity and squash dissent, leaders (at every level) should, instead, heed the advice of Peter Drucker, who wrote in The Effective Executive,

"Decisions of the kind the executive has to make are not made well by acclamation. They are made well only if based on conflicting views, the dialogue between different points of view, the choice between different judgments."

More important, Drucker observed, only disagreement can provoke imagination and alternatives:

"A decision without an alternative is a desperate gambler’s throw, no matter how carefully thought out it might be."

In The Essence of Strategic Decisions, Charles Schwenk reports that numerous field and laboratory studies found that decision-making was much improved if someone on the team is brave enough to dissent. In particular, dissenters are most useful when organizations tackle complex, ill-structured problems—such as critical business strategy questions. Constructive questioning and debate increase the quality of assumptions, increase the number of alternatives considered and improve decision makers’ use of ambiguous information to make predictions. But as leaders try to encourage constructive questioning and debate, they must remember that there’s a catch for dissenters. As one executive warned me,

"Devil’s advocates, if occasionally right, will get hunted down and killed by the antibodies in a company. Remember, they just won an argument. That means that someone else lost."

(I think he meant “hunted down and killed” figuratively, which isn’t as dramatic as when Saddam Hussein personally shot a senior minister in his government when that minister suggested, quite mildly, that Iraq might want to consider looking for a peaceful settlement of its 1980s war with Iran.) Indeed, just relaying bad news can be hazardous to your career. A study cited by James Surowiecki in The Wisdom of the Crowds found that those who delivered bad news in corporations were tainted, even if they had nothing to do with causing the problem and even if their bosses said they knew the messenger wasn’t at fault. The current emphasis on teamwork can create problems, too. In good conditions, strong teams can function with impressive efficiency. But the bonds of teamwork can make it hard to deliver tough news. Teams tend to be formed of people who resemble each other in many ways, and they become friends. You don’t want to tell your friend that he’s messed up. So, somehow, a balance must be struck. Constructive debate needs to be encouraged without injecting paralysis into the organization. Always remember, however, that the natural tendency is toward conformity, not debate. And, without debate, the consequences can be disastrous for both the organization and its leaders. Take Bill Smithburg, who led Quaker Oats’ $1.7 billion purchase of Snapple in 1994. Although analysts warned at the time that the price could be as much as $1 billion too high, Smithburg saw synergies. Those synergies never materialized. Quaker sold Snapple for $300 million just three years after buying it, and Smithburg was out as chief executive. Reflecting on the failed acquisition several years later, Smithburg said,

"There was so much excitement about bringing in a new brand, a brand with legs. We should have had a couple of people arguing the ‘no’ side of the equation."

Quaker Oats was eaten up by Pepsico a few years later. Sometimes the "no side of the equation" is the one that pushes for change. In this case, be careful not to follow the example of Ed Schwinn, when he was CEO of the business that bore his family name. When a Schwinn team looked at the possibilities of mountain bikes in the 1980s, Ed Schwinn felt that they were a passing fad and argued against major investment in them. Schwinn was the dominant maker of bikes, and he didn’t see any reason that would change. A senior executive felt otherwise and argued his position vociferously. Ed Schwinn adjourned the meeting and said the group would reconvene on the issue in two weeks. They did—after Schwinn fired the contrarian. That decision turned out to be a catastrophic misjudgment. Schwinn (the company) followed Ed Schwinn's intuition and never caught up. The company went into bankruptcy in 1992. Better to follow the example of Alfred Sloan, the legendary builder of General Motors. Sloan once said to a meeting of one of his top committees, "Gentlemen, I take it we are all in complete agreement on the decision here?" Everyone around the table nodded.

"Then," Sloan continued, "I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about."

Next time you're about to embark on a major initiative, or decide against one, make sure you have a couple of people arguing the "no" side.

We had just finished the national bloggers' panel at the National Workers' Compensation Conference, where one of the things we discussed was how employers can improve outcomes by being more engaged, concerned and communicative with their injured workers, especially early in the claim cycle. I was approached by an attendee who happens to be one of our customers, managing about 150 accounts in our WorkCompResearch Compliance system for his company, a well-known national carrier. He asked a simple, yet critical question. He said, roughly, "All of the people here are big employers, carriers or TPAs. But most of our customers are small employers. How do we reach them with information like this?" Last July, in a similar bloggers panel at an employers association conference, I put that very question to the panel and the audience. It had dawned on me that we were speaking to a very small segment of the overall market, and that most employers simply do not have access to the type of information we were discussing. It is a big concern. According to U.S. Census Bureau data, businesses with fewer than 500 workers accounted for 49% of private sector payrolls in 2011, and those with fewer than 100 workers employed 35%. Businesses with fewer than 20 workers employed 18%. I would suggest that not a single one of the "fewer than 100" employers attends any workers' compensation conference. Ever. And, as difficult as it is to fathom, they probably do not read my blog, either. While I do not have immediate access to supporting statistics, I would lay a week's wages that these employers have a reduced focus on safety, prevention and training, as well as a disproportionate number of workers' compensation claims. And the concept of "return to work" with accommodations is likely nowhere near their radar screens. For small employers, workers' compensation is generally merely a required expense line on their operating statement. They are largely reactive to issues related to the topic. My brother-in-law, a vice president of operations for a small medical equipment start-up in Silicon Valley, called me a couple years back with palpable exasperation in his voice. He asked, "What the hell is an experience mod, and how is it calculated?" I told him that, if he had to ask, it was probably too late, at least for the foreseeable future. Reaching people in small businesses with culture-changing advice and training is difficult, if not impossible. Who in our system could do this? Insurance agents? Doubtful. There is simply not enough incentive currently. I have an agent friend who told me once he won’t even sell comp to any company with fewer than four or five employees because there is little money in it and such companies are a pain to deal with because they mostly have no internal support structures and lean heavily on the agent for HR-style support and information. Brokers? Maybe. These folks deal with the larger side of small and medium-level employers and have a bit more skin in the game. Still, driving useful, method-altering information through that channel will require a paradigm shift. Of course, that is the key. A paradigm shift is needed not just for brokers and agents but for the industry in its entirety.  And, like it or not, the shift probably should start with state regulators, followed closely by carriers. Regulators are the key to driving process and affecting culture, but efforts can start without their immediate intervention. Carriers probably have the best ability to influence small employers across the country. They can do it through dedicated training and education materials, as well as establishing a culture of communication through their supply chains. They can do it by reinforcing positive methods and procedures for safety and, most importantly, can affect the process when a newly injured worker enters the system. I’ve written extensively about what I believe needs to occur within the claims-handling process to improve outcomes for these employers and their injured workers. My ideal culture change involves streamlining processes, empowering claims professionals and improving medical care by rewarding performance -- but mostly relies on vastly improved lines of communications between employers, employees and the professionals who are serving them. Communication that creates a “picture of success” for recovering workers. Much of what I envision cannot occur without regulatory changes, but the idea of a culture of recovery can start with those of us within the industry today. Comprehensive culture change will not be an easy task (if only those small employers read my blog), but it can trickle through the system if the right people and organizations pick up the torch and run with it. Truth be told, via all the blogs and conferences across the country, we are really only reaching a small percentage of large employers, let alone small. Improved process and communication can drive change from the top down and ultimately reach employers, large and small, that unfortunately feed our system all too well. Until employers recognize the critical nature of the topic, they will continue to ignore it. It is up to us to start that change. I’ll be damned. It turns out we are the people we’ve been waiting for after all.

Reports of high-profile data breaches have been hard to miss over the past year. Most recently, it was a breach involving 56 million customers’ personal and credit card information at Home Depot. This is just the latest volley in a wave of sophisticated electronic thefts including Target, Neiman Marcus, Michael’s, P.F. Chang’s and Supervalu. Much like in the other attacks, the suspected culprit in the Home Depot data breach is a type of malware called a RAM scraper that effectively steals card data while it’s briefly unencrypted at the point of sale (POS) to authorize a transaction.  Reports of this type of attack have become increasingly common in the months since the Target breach. Whether the cause is a RAM scraper or an “older” threat like a physical skimmer placed directly on a POS machine used to swipe a credit or debit card, a phishing attack storing customers’ card information insecurely, the result is the same: Credit card data for millions of people winds up in the hands of criminals eager to sell it for profit. How does that process unfold? And how can you – or people you know – get sucked into it? The Basic Process: The journey from initial credit card data theft to fraudulent use of that data to steal goods from other retailers involves multiple layers of transactions. The actual thief taking the card numbers from the victim business’ POS or database doesn’t use it him or herself. First, a hacker – or a team of them – steals the credit card data electronically. Most of these schemes begin in Russia or other parts of Eastern Europe, and much of what you might call the “carding trade” is centered there. Next, brokers (also referred to as “re-sellers”) buy the stolen card numbers and related information in bulk and trade them in online carding forums. A hacker may also sell the card data directly to keep more of the profits, though that’s riskier and more time-consuming than using a broker. These exchanges are found on the dark net (aka the dark web). That’s a part of the Internet you won’t find through Google, where all manner of illegal and unsavory things can take place. Online prices vary depending on:

• The type of card,

• Credit limit (if known),

• How much additional data is available (CVV codes from the backs of cards and associated Zip codes make stolen cards more valuable),

• The card owner’s geographic location (a fake card used in the vicinity of the legitimate card holder is less likely to raise suspicion), and

• How recently the cards began appearing in the carding forums (which relates to the likelihood of card cancellation).

Prices for the individual cards have come down significantly in the past few years because of the sheer amount of records available, though brokers can still do quite well from bulk sales of card data. Despite being on the dark web, many of the brokers conduct themselves like regular online businesses and will provide replacements or the equivalent of store credit if cards purchased from them don’t work. The people who buy the card data from the brokers are called “carders.” Once the carders have the stolen card data, there are at least two distinct variations on the scam: 1) Physical, in-store purchases using fake credit cards. 2) Stolen card numbers used to charge pre-paid credit cards that are, in turn, used to purchase store-specific gift cards (which are less suspicious than general gift cards). Purchases are made online. Variant 1 (“Mystery Shopper”): This variation starts with carders printing up the fake credit cards for use in stores. Once they have the stolen card data, the equipment needed to make the fake cards isn’t that expensive. The carder then usually works with one or more recruiters to find people to use the fake cards (though a carder may do the recruiting himself). The enticement to get people to use the fake cards will generally be in the form of email spam and ads in Craigslist or similar sites offering easy money to be a “mystery shopper” or “secret shopper” as part of a “marketing study” or some other semi-plausible justification. Not surprisingly, the items purchased tend to have high resale value. After the physical purchases are made, the “mystery shopper” can either send items to the recruiter/carder (generally via a secure drop site like a vacant office) or directly to someone who has “purchased” an item via an auction site in response to a posting from the recruiter/carder. If sent straight to the carder, she then auctions the items directly on eBay, Craigslist or an underground forum on the dark web. The people who actually make the purchases with the fake cards may have no clue what they’re involved in (though sometimes they’re active participants in the scheme or simply low-level criminals looking to use the cards for themselves). They are effectively the “drug mules” of the credit card scam, taking the most risk and getting paid the least. You’ve probably seen one step retailers take to try and stop in-person card fraud. On a counterfeit credit card, the numbers on the magnetic strip and the front of the card generally don’t match -- it’s too expensive to create individual fakes. Some retailers have their personnel type in the last four digits on the physical card into the register after the card is swiped. If the numbers don’t match, the card is rejected as a fake. Variant 2 (“Re-shipping”): Rather than making physical cards, in this variation carders use the stolen card data to purchase pre-paid credit cards that are then used to buy store-specific gift cards (Amazon, Best Buy, etc.). As with the “mystery shopper” scheme, recruiters typically use ads and spam emails to entice people, though this time it’s people (especially in the U.S.) seeing “work from home” promises. Sometimes, the recruiters will employ a more personalized approach, even going so far as to start a fake “relationship” with the intended target. Then -- wait, there’s more -- the gift cards are used to purchase items online, and those items are shipped to the people responding to the ads, spam or “relationship” overtures. That’s where the “work from home” angle comes in. The people initially receiving the packages directly from an online retailer are called “re-shippers.” People in the U.S. are used because U.S.-based addresses raise fewer red flags with the retailers. Like the “mystery shoppers,” the re-shippers are the drug mules here (and they are sometimes referred to as  “money mules” or “shipping mules”). And, as with the “mystery shopper” scheme, re-shippers can either send items to the recruiter/carder or directly to someone who has “purchased” the item through an auction site. While this may sound a little convoluted, the shell game-like nature of using one card to buy another and then another makes it more difficult for stores to catch onto this scheme before the purchase has already been made and shipped out.  After that, it’s generally too late.

The 6th US/Canada Forum on Workplace, Mental Health and Productivity, held in Denver, produced a call to action on how employers can make suicide prevention a health and safety priority. Almost 70 CEOs and community influencers participated in the five-hour forum, including senior representatives from RK Mechanical, the U.S. Postal Service, Wells Fargo, Bank of the West, Denver Fire Department and Level (3). Colorado Gov. John Hickenlooper welcomed the guests and applauded their efforts to expand their knowledge and their willingness to take what they learn back to their networks. “Suicide affects three families per day in Colorado, and Colorado is consistently one of the 10 highest states in suicide rates,” the governor said. “The first step in prevention is creating an environment where people can talk about it, including the workplace. Our goal is to build support, and the workplace provides a huge opportunity for prevention efforts.” Larissa Herda, the host and CEO of tw telecom, shared her own experience around family members whose struggles with mental health illnesses have led to suicide. She also echoed the governor’s hope in seeing the workplace as a safe environment for people to feel like they have support and can access help. “Through sharing my own story, I have opened the doors for others in our company to share theirs.” Participants discussed both the human and economic costs of suicide deaths and attempts. International mental health and suicide prevention experts from the U.S., Canada and Australia shared several leadership and programmatic tactics that have helped, such as strategic communication, skill training and mental health resources. “We need to promote the human dignity of people living with mental health conditions. The opposite of isolation is connectedness. The opposite of despair is hope. As leaders and organizations, you can help create these protective factors in the workplace,” said Eduardo Vega, executive director, Mental Health Association of San Francisco. Joel Bosch, chief operating officer of eCD Market, said, "Why do we not talk about mental health in the workplace? Myths and stigma. Business leaders are our community gatekeepers but are often not trained appropriately. There is no way to break stigma through silence. Business leaders are often champions of a cause, and have the ability to create significant change.”

Industry disruptors change the entire industry -- often forever -- and they are coming to workers' comp. Think of Steve Jobs’ invention and Apple’s implementation of the iPod. It turned the music industry on its side. The “smart” iPhone profoundly changed the way we use phones. Land lines have become almost obsolescent and old “Ma Bell” would not recognize the industry. Jobs also disrupted the personal computer industry with the iPad. Sales are down for laptops and portable computers because people rely on the simpler iPad for personal use, for e-reading, for movies and for specific business adaptations. As an example, doctors’ offices now use iPads for data input into EMRs (electronic medical records). iPads and phones even capture credit cards and signatures. A more recent disruptor is Uber. The car-booking company has seriously disrupted the stodgy taxi industry as people find Uber simpler, quicker and more satisfactory. The company doesn't even own cars, yet it was recently valued at $40 billion, in the same ballpark as General Motors, the largest U.S. automaker, whose market capitalization is $53 billion. Disruptors in Workers’ Compensation Everyone agrees workers’ compensation needs updating and improving. Unfortunately, the industry is notoriously resistant to change. What would an industry disruptor create for this industry? Some say the big change needed is to legislate letting the employer opt-out from state regulated systems. Texas and Oklahoma are the change leaders in that effort. A group of employers is working in other states to bring about similar legislation. If well-executed, these efforts could significantly affect the industry. To bring about superior, sustainable change, new applications of technology will be required to monitor consistency, quality and compliance across jurisdictions. The technology is available. Now a unique application is needed, one that everyone loves to use! Loving technology is not a sentiment normally found in workers’ compensation. That is because most still think of technology as tedious data input and mistrust the output. Nevertheless, creative technology could enhance nearly every activity in workers’ compensation. The ultimate goal in any workers’ compensation endeavor is (should be) to optimize the medical care of injured workers at the lowest possible cost. A successful industry disruptor will apply technology in new ways, thereby improving cost and outcome pathways for injured workers and their employers. Any industry disruptor technology will encounter resistance in workers’ compensation. However, everyone can contribute to positive industry disruption by simply being open to change. Creative new use of technology will change the way the workers’ compensation world is managed. Industry disruptors will make sure that happen.

Everybody has needs. These six are acute for parties in workers' compensation:

1) The Need to Be Heard
Applicants need to tell their story. At the Workers' Compensation Appeals Board (WCAB), applicants are sitting in the waiting room or cafeteria, if they are there at all. Mediation may be the only time an applicant can tell his needs to a neutral person and know he has been heard. This emotional release is a first step toward resolution. The employer’s representatives also need to vent. Folks on this side of the table can be just as emotional as the applicant. Mediator feedback can help both sides.   
 
2) The Need for Validation
Good-faith participation in mediation demonstrates respect for the other side and its position. Parties need to show that respect in their words and body language.
 
3) The Need for Revenge
Each side may blame the other for acrimonious litigation. The response may be to ratchet up the aggression. Finally, the two sides may not be able to talk to each other. The mediator can interpret negotiations between the parties without animosity getting in the way. 4) The Need to Create Meaning
Like the blind men feeling different parts of the elephant, parties may not be seeing the whole picture. Mediation sometimes reveals misunderstanding of the other side’s primary concerns. Mediation can help parties make sense of the conflict.  
 
5) The Need for Vindication
When a party feels wronged, that hurt can make her keep fighting. Because the mediator is the communication intermediary, a mediated settlement can help a party feel the wrong has been righted.   
 
6) The Need for Safety
Any resolution must assure both sides that the settlement protects them. The applicant must feel confident that the money on the table is reasonable after consideration of all contingencies. The employer’s side may require protections such as inclusion of a Medicare Set-Aside with custodial administration.

Different businesses continue to use the term “customer insight” (CI) to mean different things. Even in a recent poll of more than 100 customer insight leaders, only half considered data management or database marketing to be part of customer insight. The majority also had only research reporting into them, not analytics. Does that ring true with your role? In June, I shared a definition of customer insight that I find useful: “A non-obvious understanding about your customers, which, if acted upon, has the potential to change their behavior for mutual benefit.” I would stress four parts of that definition: First, that insights are non-obvious. They normally require the convergence of evidence from multiple sources to help spot themes, so you can then dig deeper for motivations. Second, that true insights need to be actionable. There is no point learning something unless you can change commercial results or customer experience as a result. Third, a good test of an “insight” is whether acting on it is powerful enough to change your customers’ behavior (not just data to target those you believe will act as they have in the past). Fourth, in this “Age of the Customer,” the importance of trust should mean any insight has the goal of mutual benefit for the organization and the customer. Anything else is short-term success for long-term value erosion. You may need to wear many “hats” to achieve that kind of insight production from your team. As an earlier post listed, you may need to be a data scientist, psychologist, artist, storyteller, sales coach, economist and people leader. Quite a challenge, and perhaps one reason why leaders like that are hard to find. Some people suggest that customer insight is making use of your data, with the current buzzword being “big data." But it is possible to be drowning in data and still none the wiser about your customers. Perhaps as a result, some leaders appear to equate CI with behavioral analysis and statistical modeling (with the buzzword here being “predictive analytics”). Such analytics can be very powerful, but, without an understanding of why customers are behaving as they are, it won’t pass the test of our insight definition. You may assume that CI as a term applies to research, qualitative and quantitative activities focused on that “why” question. But with the unreliability of self-reporting and the need to behaviorally test what customers actually do, to identify any behavioral economic biases at play, can this really be relied upon by itself? So, you might conclude that the only way to know the reality is to test and learn, using targeted communications and measurement from database marketing. That is also very useful, but what understanding helps create what should be tested? As is probably obvious from my definition, I would recommend that all four of those technical disciplines are needed, to create true customer insights. However, it is not just these separate parts operating effectively in isolation, but the synergies and insights that can be realized by the working together in collaboration. As I’ve heard different experts speak on this topic over the years and seen the progress of customer insight leaders in the field, it seems to me that we are talking about an ecosystem. So, the challenge for CI leaders becomes how to nurture this ecosystem, ensuring each part fulfills its potential and acts symbiotically with others to produce the healthy fruit of actionable customer insights (in a way that feels more organic than mechanistically following a set process). Ensuring a consistent source of quality data for all the technical teams is at the heart of this ecosystem. Then using that data will need to be skilled research, analytics and database marketing teams (brought together in one CI function). Real growth, however, it appears, happens when you use these parts together. For example, converging the evidence from analysis and research to produce a more robust picture of how customers are feeling and acting and why. That should enable hypotheses to be generated as to how customers would feel and act if you did something different. Offering something different (communication/experience/product) can then be tested with experimental design using database marketing skills. Once you can see any changes in customer behavior as a result, also check out the feelings of customers and observe the touch points to get a feel for their new experience. Such research and analysis output then brings us back to the stage of converging evidence and looking for themes (a virtuous circle of continuous improvement). There is more to customer insight generation than that. Perhaps I'll post another time about applications like generating insights for proposition design. But, for now, I wanted to share what is becoming a standard model for me in helping clients. Do those themes resonate with you? Any other tips you can share?

Building on the inaugural 2012 insurance consumer study, the 2014 EY survey asked 24,000 individuals in 30 countries about their relationships with insurance providers, and what matters most across the lifecycle. Their answers show that customer-centricity has never been more important across the global industry -- and that insurers have considerable work to do in developing stronger, mutually beneficial relationships. The time has come for insurers to engage fully in all of their customer relationships and find new ways to deliver value to their customers. Key Numbers

• Only 14% of customers are very satisfied with current outbound communications from insurers.
• 44%  of customers have had no interactions with their insurers during the last 18 months.
• 80% of customers are willing to use digital and remote channel options for different tasks and transactions.

Key Findings

1. High turnover and low trust signal serious relationship issues. Insurers are less trusted than banks, supermarkets, car manufacturers and online shopping sites. The survey results also reveal that far more insurance consumers actually switch insurers than express an intention to switch — an almost unprecedented finding in market research.
2. Just because they leave you doesn't mean they don't love you. Traditional notions of loyalty and advocacy don't necessarily apply to insurance consumers. "Advocates" are not necessarily loyal, meaning that "likelihood to recommend" metrics are largely irrelevant. That "alumni consumers" may be open to purchasing new policies in the future underscores the need for deeper, more detailed customer intelligence across segments.
3. Insurers have so few interactions with their customers that each one becomes a moment of truth. Consumers have so few interactions with their insurers that even the simplest administrative tasks can become a "moment of truth" that shift the perception of insurers or brokers in the consumers' minds. How insurers perform in these instances can lead directly to coverage increases and new policy sales.
4. Consumers want more frequent, meaningful and personalized communications. A full 57% of global insurance consumers, across all product types, prefer to hear from their providers at least semi-annually. Today, only 47% receive that level of contact. In an era when many consumers feel bombarded by push communications and suffer from information overload, it is particularly interesting for survey respondents to express a desire for more communications.
5. As consumers embrace digital, insurers must rethink their distribution strategies and partner relationships. While consumers still gravitate toward traditional contact methods, digital and remote options are fast reaching parity for a range of tasks and inquiries. No matter their precise distribution strategy and service models, insurers need to offer consumers the right mix of channels to maintain healthy relationships — and prepare to manage the potential channel conflict that is likely to result.

The Right Response for Insurers

1. Long-term market success begins with stronger, deeper customer relationships.
2. Insurers must take more responsibility for the health of all customer relationships, regardless of distribution channel.
3. Insurers must master both product and customer experience design.
4. Advanced analytics will define the market-leading insurance enterprise of tomorrow.
5. There is an opportunity for insurers to become true risk mitigation partners, in addition to quantifying and pricing risk.

For the full report, click here.

The HR/safety director at a large national construction company, who was the first to use OSHA-sanctioned medical exams conducted outside the workers' comp system, said the program is "extremely successful" and may have saved the company as much as $1 million in workers' comp expenses over the past few years.

The company, which has asked not to be named, has had employees sign contracts agreeing to diagnostic tests based on OSHA medical exam regulations. But when the company wanted to us a test result in front of the New York State Workers' Comp Commission, the company's insurance lawyer strongly advised against doing so -- the insurance lawyer told the company lawyer she might go to jail!

The company contacted Ted Ronca, a leading workers' comp and disability attorney and author based in New York. Ronca said a section in OSHA record keeping regulations (attached below) allowed an employer to schedule a contemporaneous exam with a medical provider of its choice, at the same time a worker was being examined as part of the workers' comp process. The employer could then request a release of HIPAA-protected medical records from the worker. Ronca made a written request to OSHA and received an official letter of clarification and refinement, which was noted in my ITL article in October, Has OSHA Become a Friend to Insurers?

Both Ronca (reachable at medsearch7@optonline.net) and I were very surprised to learn of these regulations, which can help an employer push back against any overstatement of the injury done to the worker. But as anyone who has worked in the HR/disability world knows, there is a whole alphabet soup of federal regulations involving both occupational and non-occupational disability programs, including ERISA, SSDI, ADA, FMLA, EEOC, OSHA, DOT and both federal and state workers' comp laws, not to mention scores of management/union-negotiated disability benefit programs. None of these programs are actually aligned with one another. Most are run independently from each other by different federal agencies. And most large employers have different internal staffs and outside vendors or insurance companies that administer these various disability/paid-time-off programs.

A retired New York workers' compensation judge said that uncovering the OSHA regulations was "brilliant" and that state courts wouldn't override them. He said the first thing judges are trained to do is "not touch" any other laws in workers' comp cases. A workers' comp judge would have no authority whatsoever on federal OSHA regulations.

An employer has an unequivocal right to schedule a contemporaneous exam under OSHA record keeping regulations, outside of state workers' comp systems. How and when to use these exams is a whole other matter. Their use is not based on any case law. Case law does not exist here. Usage is based on what Ronca has done with the major construction company and other clients. In fact, OSHA exams are now formerly a part of the construction company's employee contract protocol as a union contractor.

The new employment contract includes all the typical rules and regulations but also contains a provision on how to report all work-related injuries and the requirement that the injured worker must go to a company-provided medical/diagnostic exam, paid for 100% by the employer. In addition, new employees or contractors must undergo a confidential post-hire baseline range-of-motion medical exam, which is not read but kept in a private file and used only if there is a subsequent, work-related injury reported.

Ronca and the company have headed off potentially difficult or fraudulent claims, often without ever going to court, since implementing their program in late 2011. It would typically take as long as 18 months to schedule a hearing or independent medical exam (IME) through the state work comp system. Now, the company can take a very active role from the time of injury.

Among the first test cases was a classic type involving an employee who filed a work comp claim, after being fired, for aggravation of a pre-existing back condition. The OSHA-sanctioned medical exam confirmed there was no aggravation of a pre-existing condition. Furthermore, it was discovered that the employee was working a second job "under the table."  No claim was filed.

Ronca says that, depending on results of the OSHA-sanctioned exams, he may be able to tell the employee's work comp attorney, "Your client is a liar." The client and attorney will not show up for a hearing.

In another case, the HR/safety director at the construction company said an attorney at her work comp carrier read the OSHA medical exam report and said, "I have never been so prepared for a hearing."  This was another complicated claim involving aggravation of a pre-existing shoulder and neck condition. The carrier was going to settle for $80,000. Instead, the case was settled for $12,000 when it was determined there was no aggravation of the shoulder injury, only of the neck.

Another case in California involved aggravation of a pre-existing condition, where the claimant claimed total disability as a result. The medical exam found a slight aggravation, but the employee refused to return to work. The company went as far to arrange a modified-duty job with the nonprofit Habitat for Humanity, at full pay and benefits, but the employee refused. The company pointed out the situation to the company union. After a 5 1/2-month stand- off, the employee returned to full duty and dropped his work comp claim.

Ronca feels the strongest tool offered by the OSHA regulation is the ability to obtain prior medical records. He also stressed that the whole goal is to get the employer involved in workers' comp claims from the moment of injury.  Early intervention is a well-known standard and best practice in workers' comp. An OSHA exam is tool employers may use in selected cases.

The construction company is trying to do the right thing -- that is, get the injured worker an early exam to help determine the correct diagnosis and treatment, which is in the best interest of both the employee and the employer. The OSHA exam should also be used if the employer suspects fraud or abuse, pre-existing conditions, employees working second jobs, etc.

Bob "Red" Hollingsworth, CEO of CompMinder in Salt Lake City, is now using this approach and has updated the CompMinder injury reporting tool he offers to employers. There is now a section that asks the employer if it wants to schedule an OSHA exam? If yes, Hollingsworth (reachable at Bob@buckner.com) has arrangements with a highly qualified occupational medical director to set-up a pre-planned program. It is critical that the employer do this directly with medical providers. The work comp carrier or TPA cannot pay for or schedule such an exam.

The work comp folks can't be involved, so non-believers need not apply. But the employer can!

ADDENDUM -- OSHA REGULATIONS UNDER SECTION 1904

"OSHA record keeping regulations permit an employer to request a prompt medical exam and release of HIPPA protected prior medical records outside the workers' compensation system in order to help understand the link between workplace factors and injuries and illnesses in particular cases."

Key Points

The medical exam must be paid 100% by the employer with the provider of its choice outside the workers' compensation system.

An insurance company or third party administrator cannot schedule or pay for such exams because they cannot act outside the state workers' comp system.

The costs of such medical exams are not included in a company's workers' comp costs nor experience modification calculation.

The employer can choose what medical provider's opinion they consider to be the most authoritative for record keeping purposes.

Employee must submit to a prompt medical exam when requested by the employer and release of HIPAA-protected medical records.

Medical information and records obtained through this process can be discoverable with proper procedure and subpoena in workers' comp cases.

OSHA 300 LOG Recordable Rules-1904

Key Language

In certain circumstances, OSHA record keeping requirements permit an employer to choose between two conflicting medical opinions. When an employer receives contemporaneous recommendations from two or more physicians or licensed health care professionals about the need for medical treatment, the employer may decide which recommendation is the most authoritative and record case based on that recommendation.

1904 Frequently Asked Questions

If a physician or licensed health care professional recommends medical treatment, days away from work or restricted activity as a result of a work-related injury or illness, can the employer decline to record the case based on a contemporaneous second provider's opinion that the recommended medical treatment, days away from work or work restrictions are unnecessary, if the employer believes the second opinion is more authoritative?

OSHA ANSWER IS YES

HOWEVER,  

Once medical treatment is provided for a work-related injury or illness, or days away from work or restricted work activity has taken place, the case is recordable.

"If there are conflicting contemporaneous recommendations regarding medical treatment or the need for days away from work or restricted work activity but the medical treatment is not actually provided and no days away from work or work restrictions have occurred, then the employer may determine which recommendation is the most authoritative and record on that basis."

OSHA considers that medical treatment is provided once a prescription is issued.

Key Definitions

Lost-Time: Work day (other than day of injury) when the worker is unable to return to their job.

Contemporaneous: Medical recommendations provided with no change in condition.

Most Authoritative: Best documented, best reasoned and most persuasive

Section 1904.5

Wide variety of issues do not need to be reported on OSHA log 300 but require a medical exam with prior medical records.

Employer can schedule a prompt exam and request HIPAA release for prior medical records.

A carrier or TPA would NOT be permitted to schedule such an exam, because they cannot act outside the workers' comp system.

Note the Department of Transportation (DOT) also has additional exams for drivers such as ability to load, drive etc.

These are known as intermediary exams.

In both cases, exam records and results are not part of the comp record.

Medical exam costs must be paid by employer and are not added in comp claims or the experience modifier. However, with proper procedure and use of subpoena, records may be released and used in the comp claim.

Who Makes the Determination?

OSHA agrees that medical opinions are a burden and impractical and not required in the majority of cases. "This does not mean that employers may not, if they choose, seek advice of a physician or other licensed health care professional to help understand the link between workplace factors and injuries and illness in particular cases. It simply means OSHA does not believe that most employers will need to avail themselves of such professional services in most cases."

Accordingly, OSHA concluded in the final rule that the determination of work-relatedness is "best made by the employer."

Measuring the effectiveness and impact of risk management remains a challenge, and it is difficult to convince many C-suite leaders that the discipline is more than just buying insurance. Central to this question is how effective workers’ compensation reporting is and whether anyone has a truly helpful view into workers’ comp's cost of risk (COR) and its related trends. Based on numerous meetings with key risk and HR leaders throughout the U.S., I can confirm that many need more insightful risk reporting in many areas of exposure, most particularly employee injury and disability. They want to go beyond what most consider the “standard” risk metrics to those that truly reveal the trends. Arguably, depending on your industry and the size of your company, employee injury costs may be the largest component part of the total cost of risk (TCOR). Because most risk managers measure their hazard-based risk costs using TCOR (among other techniques), it seems logical to look more closely at how worker’s compensation costs are specifically measured and how effective those data points are. We should start with that very question: What is success in this realm, and how do we get key stakeholders to care more about these costs and their impact? Hint: Think strategic priorities. In my experience, senior management in many companies pay scant attention to this area of expense, even in larger companies with lots of employees. While it may be that the entirety of risk management gets similarly limited attention in these companies, we’ll leave that debate for another time. Let’s proceed on the assumption that TCOR matters to stakeholders and that workers’ comp is often the largest component driver of this measure for many risk managers. Can companies afford to ignore the direct costs of workers’ comp — an expense that may represent anywhere from 1% to 5% of revenue? One would hope not, but we should not stop there. What about the cost of lost productivity from employees not available to perform their jobs, in whole or in part? It’s been estimated that this “indirect” cost component represents anywhere from two to nine times the “direct” costs in question. Translating that to more meaningful dollars, and using just the midpoints of those two estimated direct and indirect ranges, we’re working with 3% of revenue, with a multiplier of five and a half, giving us an estimated “total” cost impact of 16.5 cents per revenue dollar. Let’s stretch out that math and apply it to both ends of the range. On the low end, we can use an estimate of 1% of revenue in direct costs and an indirect cost multiplier of two, for a total of 2 cents per revenue dollar. But now let’s look at the other end: an estimated 5% of revenue in direct costs with a multiplier of nine — a total of 45% of revenue. The tail of this range may seem absurd to many observers, but that is the point; we don’t often take into account the full impact (direct and indirect) of disabled employees and by extension the potential maximum impact their absence has on companies’ performance. I would further suggest that key senior stakeholders, whether the C-suite, the board or operations management, often have limited understanding of the true cost of the worker’s compensation exposure risk, regardless of how often they see the typical workers’ comp metrics. Clearly, they need more information to make better decisions related to this risk. While there are, of course, those who do a fine job of parsing and reporting on a lot of workers’ comp data and allowing for some comparison and benchmarking, some of these efforts reflect a more dated historical view and focus more on how states are performing against each other, rather than how companies are performing relative to their own short- and long-term strategies for maintaining a motivated, productive workforce. Getting more to the specifics, let me suggest that the big opportunity may be to not only take full account of the indirect costs typically related to lost productivity but to find a more focused way to marry the myriad of workers’ comp cost data with the various exposure data so that, when paired and analyzed effectively, there is a more comprehensive and useful story. For example, one large national retailer has achieved much success in telling its workers’ comp story to management through a selected group of metrics that include the standard traditional measures such as ultimate, incurred or paid losses as a percentage of gross revenue or payroll coupled with more progressive metrics such as claim frequency per 10,000 hours worked (excluding claims without payments). These and other metrics are developed on an enterprise-wide basis, a regional basis and a store-by-store basis with historical comparisons for each to show trend. This approach allows for focusing on controlling frequency and severity on a specific and targeted basis, as each focus would call for distinct reduction and control techniques. The approach also enables a drill-down into significantly underperforming units and specific causes of loss that may be aggravating trends. There are many ways to measure workers’ compensation performance, and obviously the approach and design should be driven by the needs of the company, the type of industry it operates within, the culture of the company and, of course, the needs of management for information to make decisions that would support both their short- and long-term goals. This nexus between metrics and goals is often overlooked as risk managers can easily get distracted by micro-tactical issues that may not be significant to decision-makers. A claim director client recently asked me how to respond to her risk manager boss about how managing the workers’ comp unit relates to managing risk strategically. The answer is as simple and as complicated as knowing what the strategic imperatives for her company are and then assessing and informing management on those elements that most affect those goals. Keeping this sight line will minimize the risk of risk-management irrelevancy.