Once upon a time, an insurance COO was walking along a beach, deep in thought. His CEO had just asked him to increase the motor business. The COO was in a sweat, knowing that he could quickly increase sales by dropping premium rates and excesses, but that claims would also follow. The loss ratio was already 103 – a marketing push like that would certainly throw them further over the edge! On he walked. As he strolled, deep in thought, he came across a strange glowing bottle, rolling back and forth in the surf as waves gently lapped on the beach. He picked up the bottle and marveled at its exquisite beauty, yet simple design. Wondering what on earth could be inside such a work of art, he pulled off the cap. Suddenly, purple smoke erupted from the opening, which gradually took the form of a smiling genie. “Who the heck are you?” the stunned COO asked. “I am the career genie. I grant three wishes that help people along with their jobs,” the genie replied. “OK,” the COO thought, “let’s test this guy out.” He said, “Genie, for my first wish, I would like safe drivers to buy my motor insurance product.” The genie crossed his arms and blinked. “It’s done,” he said with a smile. “Safe drivers will actively choose your insurance product over those of your competitors.” “Amazing!” the COO thought. “OK, genie, for my next wish, I want to find a way to charge more premium for dangerous drivers before they have an accident.” Again, the genie crossed his arms and blinked. “Your wish is my command. Poor drivers will automatically get smaller discounts. You will know how well your policy holders drive as they drive. In fact, you will be able to coach them to be better drivers as they go. Bad drivers won’t like the net premium you charge and will move to your competitors.” “Awesome!!” the COO thought. “OK, genie, for my last wish, I want you to reduce claims and fraud -- make my motor line of business really profitable.” Once again, the genie crossed his arms and blinked. “Your wish is granted. Claims will drop by at least 20%, and fraudsters will find my magic accident reconstruction technology difficult to overcome and will move to easier pickings with your competitors.” The insurance COO was dumbfounded. He stammered: “Oh great career genie, what is your name?” The genie replied, “Some know me as UBI the Amazing; others know me as Telematics the Fantastic. I am a magical creature who simply likes to help mortals such as you to find better ways to do business. I hope your wishes work out for you.” In a flash, the genie disappeared, and the COO was left alone, with his loss ratio sitting at 80, his customer renewal rate at 96% and his customer satisfaction going through the roof. Happily, he headed back to the office, ready to recommend a brisk beach walk to all the other senior executives. Yes, this story is a fiction, but the results are very real. Usage-based insurance (UBI) is fast becoming a mainstream game-changing offering for general insurers in the U.S., Europe and elsewhere directly because of the outstanding results it delivers for insurers and customers. The first truly successful UBI program was Progressive in the U.S. with its patented Snapshot technology that was introduced in 2010. As of the end of 2013, the program has achieved more than US$1.5 billion in annual premiums, with nearly 35% of motor customers having signed up. Customers are given discounts of as much as 30% by opting into the program. Snapshot works through a device linked to the vehicle’s On Board Diagnostic Interface (OBDI), which captures the distance driven, braking force and the time of journey and transmits the journey data back to the insurer, enabling the calculation of premium discount. Progressive continues to enhance Snapshot and is currently planning to add GPS location data. A number of other large U.S. P&C insurers have become fast followers, most notably Allstate with Drivewise, State Farm with Drive Safe and Save, plus another 10 carriers with similar programs. In Europe, some legislation has stepped in to help drive UBI adoption. In the past, some premium rating factors discriminated based on gender, with young males paying more premium than young females. This practice is now banned under EU regulations and has spurred one UBI program called “Drive like a girl,” which combines a clever social media pitch to promote safe driving habits in young drivers while premium discounts are calculated in a gender-neutral fashion, based purely on how the insured drives. A recent study shows UBI programs in the UK, Ireland, France, Germany, Spain, Italy, Belgium, Netherlands, Denmark, Finland and Sweden involving considerably more than 50 insurers. It also estimates the global policy count to be more than 5 million as of mid-2013. Here in Asia, I am aware of established UBI programs in Japan, China and Australia. The UBI genie is out of the bottle, and more and more markets are catching on. The value proposition is really game-changing: • Safe drivers will tend to opt in to UBI programs as they believe they will get a better deal and be rewarded for their superior driving skills; • Poor drivers will migrate away simply based on price, if they can get a cheaper base deal; • Overall, the UBI approach appeals to people’s common sense – you drive less, you pay less; you drive more, you pay more – you pay for what you use; • Driver behavior/style is monitored, and, where UBI provides feed-back, drivers tend to drive more safely; • UBI programs are statistically proven to reduce claims, and in some instances have achieved 30% reductions – this has the biggest impact on insurers’ bottom lines where typically motor makes up 65% of the portfolio and claims make up 70% of expenses; • Claims are much more difficult to stage, because the UBI device records much of the vehicle’s performance data and geo-location data. When UBI is coupled with dashcams, accidents are easy to reconstruct, thereby chasing away fraudsters to competitors; • Because UBI provides rich data and customer engagement, claims can be settled faster, thereby improving customer satisfaction; and • Because the pricing is dynamic based on how you drive, it becomes more difficult for customers to do an apples-to-apples comparison between different insurance providers policies when shopping around. In the past, you bought your policy, tucked the schedule in the glove compartment and forgot about it until you had a claim, at which time your insurer became your adversary. With the UBI model, your insurer is right there in the vehicle with you on every journey, telling you when you brake too hard, alerting you when you accelerate too quickly, letting you know when you are swerving and swapping lanes too much. Your insurer is engaging with you – partnering with you to avoid accidents, and to be a better, more efficient driver. This is a perfect platform for introducing value-added services. The UBI program is serving up a great data set from which the insurer can potentially craft personalized services with relevance to each individual driver. Ideally, the value created will entice the insured to share even more data from which further services can be fashioned. With UBI customers focused on value, it becomes much more difficult for other insurers to compete simply on price. Policy retention rates and customer satisfaction will naturally increase. It is clear that insurers in the region are starting to look at UBI. The rewards are immense for those that adopt this game-changing approach. Do not wait to stumble over your own genie on the beach. Do your career and your customers a big favor by checking out this new approach to motor insurance. After all, if you don’t, your competitors certainly will.

The benefits of next-generation underwriting for complex risks are quantifiable and real. So, when, where and how to start? When? Now. The sooner, the better. Where? It all starts with understanding the possible. You need to know what is realistically possible with the offerings that are available today. It is equally important to figure out what will be possible in the not too distant future. Once you’ve got a grip on the possibilities, it’s time to set priorities. Describe the capabilities that go on the priority list using business terminology. This makes it much easier to have meaningful conversations between the business and IT interests. It is very important to look at how your plans for underwriting will align and work in concert with your policy administration system. Figure out what the best path for your organization is, and then just make it happen. How? The most effective path for making progress depends on the characteristics and culture of the company. For some insurers, shifting focus to the possibilities for underwriting gets things moving. Other organizations might need some help or just a kick-start. You can move the ball forward significantly by bringing in advisers who can describe what the options are and then put the value in context for your company. The important thing is to make progress one way or another. Time is of the essence. Simply put, the goal of underwriting is to maximize efficiency and effectiveness. SMA’s concept of modern underwriting capabilities can best be described by using the 5 I’s: Intuitive, Intelligent, Interconnected, Informative and Insightful. The next-generation insurers are embracing solutions that embody these characteristics, and they are reaping the benefits. What do these 5 I’s mean for you? Let’s explore: Intuitive — A user-experience-centric desktop, an intuitive desktop, saves time spent hunting and searching for information, and it eliminates rekeying into several systems. It also reduces the learning curve and ties directly to the main goals of underwriting: efficiency and effectiveness. Intelligent — For complex risks that require the touch of an underwriter, the modern underwriting workstation can significantly augment the expertise and experience by incorporating and taking advantage of new sources of data and models. This new level of intelligence automation will help make better decisions and provide controlled discipline. Interconnected — Modern underwriting capabilities are delivered through a variety of solutions that are tightly integrated with everything underwriting needs and feeds. The required capabilities extend beyond what a single solution can deliver. The requirements include an interconnected, intelligent, modern platform that facilitates easy integration and synchronization with core systems, tools, spreadsheets, models and data, as well as external data sources. Informative and Insightful — Modern platforms provide underwriting with data and analytics like never before. Emerging technologies, as well as an abundance of new information, are generating new possibilities for underwriting and new ways to accomplish far-reaching transformation for the next generation of underwriting excellence. It is now possible to make smarter, more informed decisions by using new sources of data and models. New levels of sophistication in the information about both risk and customer intelligence are possible. Looking back on my past-life as an insurer, I am in awe of today’s possibilities. The power that data and analytics are giving our industry is boundless. Just thinking about how far underwriting has come in a very short time makes me even more excited for the future! This is why at SMA we consider “Interconnect Intelligence for Underwriting” an imperative. It is critical to becoming a next-gen insurer. The world is moving as fast as we think it is. Any steps you can take to gain an edge by improving efficiency and effectiveness are must-take steps!

Recently, I participated in an NACD Master Class. I was a panelist in discussions of technology and cyber risk with 40 to 50 board members very actively involved, because this is a hot topic for boards. I developed and shared a list of 12 questions that directors can use when they ask management about their organization’s understanding and management of cyber-related business risk. The set of questions can also be used by executive management, risk professionals or internal auditors, or even by information security professionals interested in assessing whether they have all the necessary bases covered. This is my list: How do you identify and assess cyber-related risks? Is your assessment of cyber-related risks integrated with your enterprise-wide risk management program so you can include all the potential effects on the business (including business disruption, reputation risk, inability to bill customers, loss of intellectual property, compliance risk and so on) and not just IT risk? How do you evaluate the risk to know whether it is too high? How do you decide what actions to take and how much resource to allocate? How often do you update your cyber risk assessment? Do you have sufficient insight into changes in cyber-related risks? How do you assess the potential new risks introduced by new technology? How do you determine when to take the risk because of the business value? Are you satisfied that you have an appropriate level of protection in place to minimize the risk of a successful attack? How will you know when your defenses have been breached? Will you know fast enough to minimize any loss or damage? Can you respond appropriately at speed? What procedures are in place to notify you, and then the board, in the event of a breach? Who has responsibility for cybersecurity, and do they have the access they need to senior management? Is there an appropriate risk-aware culture within the organization, especially given the potential for any manager to introduce new risks by signing up for new cloud services? I am interested in your comments on the list, how it can be improved and how useful it is – and to whom.

The words "disruption" and "innovation" are in everyday lexicon surrounding many concepts, products and services. At times, it seems almost impossible to navigate the full range of opportunities for insurance innovation. This makes it extremely difficult to make the right choice to adopt a specific technology or strategy to redefine or reinvent a business. Certainly, budgets are not limitless, and time is scarce. How do we ensure that we invest in the right technologies at the right time and prioritize the investments in proper order? How do we make sure that the opportunity to adopt a new technology is not being overlooked or unintentionally delayed? Innovation Teams Many insurance carriers deployed innovation teams to stay on top of the technological landscape and drive forward-thinking decisions. These teams have done a marvelous job. Yet, even with these teams in place, most organizations seem to drastically fall behind in adopting the technology early enough to make the most impact. With modern, cloud-based SaaS offerings that can be fielded without internal IT investments, with very little set-up requirements and with lean operations provided by young ventures that drive most of the innovative technologies to the front lines, why do we still find it difficult change? In a recent article, Steve Blank, a serial entrepreneur recognized for customer development methodology that led to the Lean Startup movement, described two of the most common issues with deploying innovations teams to drive organizational change. The first: making it easy for innovation teams to drive the selection of the right business units to field the solutions as soon as possible. The second: ensuring that the organization separates the execution part of the business, which operates an existing business model, from the innovation business unit, which is modifying the existing model or creating one. Beyond the Innovation Noise The key to a successful continuous innovation cycle is looking beyond the hype and the related group think about innovations. Technologies such as big data, analytics and Drones receive a lot of attention. However, getting full value from them is far from simple. Big data, for example, interprets information with analytics tools. To derive value from it, however, it is important to identify what purpose is to be achieved, what data is important and where to acquire it -- before using the analytics. Experts say the most critical, time-consuming and expensive part of adopting big data comes from the effort required to analyze the business and all of the data sources, so the upfront investment is quite high. The spotlight on drones often seemingly ignores the limitations of the technology. In certain weather conditions, like wind, rain and fog, the control of the drone becomes challenging, and the video quality drops. In addition, use of drones is highly unscalable, as one operator can only control a single drone within the line of sight. In addition, satellite imagery can be significantly more effective in collecting real-time aerial imagery of an area hit by a storm, if visibility allows. This is a possible threat as real-time satellite technology becomes more affordable to the masses. Is there a future in drones? Absolutely, but it will take time to perfect this technology, as the industry is still exploring the right fit in the field. This is where looking outside the box provides the clues that prevent falling into a common innovation trap. Think Outside the Box, Think ROI Sometimes, looking too closely at a solution creates a commitment to a technology that has a much longer innovation and implementation cycle than expected. Playing with new technology is always fun, and there is value in being recognized as the first to explore new tools for the organization. However, the goal has to be generating a competitive advantage that provides the highest benefits – the best ROI. Today’s most important technologies are the ones that can be implemented with very low up-front investments in IT support and employee training and the ones that can simplify or even eliminate the largest, most unscalable and expensive operations. Technologies that deliver enhancements to existing business processes like mobile tools, real-time video communications, litigation document management solutions and field resource planning and dispatch platforms are easier to acquire and evaluate. These technologies are less expensive and cause less conflict with an existing part of the business. At the same time, they deliver substantial tactical improvements in operations and can be quickly deployed within the necessary workflow. Larger-scope solutions such as claims management, policy management and billing systems typically require a significant modification or a complete replacement of existing systems. Implementation or upgrade of these systems is a high-risk exercise, while the projected ROI is mostly strategic -- long-term efficiency, productivity and other future capabilities. To assess the value of investment in a specific technology, most enterprises have adopted the Lean Startup model, piloting software before full adoption. There is, however, a significant difference between a proof-of-concept and a proof-of-value approach to identifying the right technologies. Proof of concept starts at the business problem and validates a solution using specific technologies, while proof of value begins by looking for a specific solution to a known business problem. The first validates that the technology works; the latter ensures the investment is worthwhile. For any organization looking to continuously change and innovate, the right approach is in proof of value – being able to quickly assess and adopt solutions with the lowest barriers, fastest implementation and highest returns.

This is the Year of Awareness -- awareness by the general public about workers' compensation issues. There is the series by ProPublica, with three installments so far and more to come. You might not like it, but Michael Grabell and his team are accurately portraying pain points in workers' compensation. The Federal Occupation Safety and Health Administration's review of the literature over the past couple of decades also fuels the fire about the inadequacy of workers' compensation, and the spill of employer obligations onto the general taxpaying population. Last year, the Texas Tribune ran a series, "Hurting for Work," that criticized that state's work injury protection system (or lack of it). And a Florida trial judge has taken the position that workers' comp is no longer of constitutional grade. Now, Mother Jones has published an article it says exposes the true intent of the opt-out movement: to diminish benefits across the nation. Opt-out supporters contest that conclusion and say they only want employers (in this case, only big business can afford the resources to opt out) to be able to provide better benefits in a more consolidated manner to their workers. Proponents are not, however, shy about confirming that their intent is to take opt-out nationwide, to all states. The latest test case is Tennessee, where Sen. Mark Green's SB 721 has gone through several amendments in an attempt to address critics -- albeit, in my opinion, these amendments fall far short. There are two major problems with opt-out, and in particular with SB 721 if it is to be used as a model: 1) the cap on lifetime medical benefits; and 2) the lack of accountability to public regulators. Most state workers' compensation systems have a limitation on both temporary disability indemnity and permanent disability indemnity. There has been for a long time a debate as to the adequacy of indemnity benefits to keep the paycheck-to-paycheck worker sustained during recovery, and those benefits differ greatly from state to state. This debate is sure to continue regardless of what "reform" ever gets passed. This debate also applies to the adequacy of permanent disability indemnity-- whether it adequately compensates for the loss of an eye, etc. Again, where one gets hurt makes a huge difference in how much money a disability is "worth," and the debate about this will never settle. The provision of medical benefits for the lifetime of an injured worker, however, has never been on the table -- that is a topic that is simply sacrosanct, for the very simple reason that it was part of the original grand bargain. State reforms have, however, over the past two decades done as much as possible to eviscerate lifetime medical by requiring adherence to guidelines, by scaling based on co-morbidities, by forcing third-party reviews and by trimming reimbursement or rebalancing fee schedules, among other tactics. These efforts have been in reaction to perceptions that employers are unfairly paying for someone else's problem, or to abuses by unscrupulous providers. Broad-brush attempts to correct these problems reel in unsuspecting victims, just as tuna nets capture innocent dolphins. The Mother Jones article is critical of the lobbying efforts of the Association for Responsible Alternatives to Workers' Compensation, implying that its big-company sponsorships and spending is sinful. It's not -- it's just political reality. Just because a bunch of people with resources get together on a specific mission is not a reason to castigate either the people or the mission. It's done on both sides of nearly any debate. That's how we do things in America. Painful as it is for this industry, though, the fact is that workers' compensation is under attack -- from all sides. Employers are sick and tired of the cost of the system and how little control they have over it. They're paying for it and don't see much if any value or return on investment. And guess what? Workers who go through workers' compensation are likewise sick and tired over the cost of the system and how little control they have over it. Is this the fault of us, the professionals who have the task of administering benefits? In part, yes. But the larger issue is what society wants, and what all this attention lately is telling me is that society wants a way to provide security to both business and workers -- in a manner that is better than what workers' compensation has devolved into. I don't view opt-out as evil. I do view it as a necessary element in the debate about the adequacy of workers' compensation to deliver on its original promise: protect employers from economic ruin when someone gets hurt, and protect the worker who got hurt. If you take ARAWC's mission at face value, what the group wants to do is laudable. It is saying that state workers' comp systems no longer are a viable piece of the social contract, that private industry can do it better. Maybe it can, if there are reasonable protections that meet the essential elements of work injury protection -- and that means taking care of an injury for life and not stacking dispute resolution in favor of one party or the other. But this column isn't about ARAWC, or opt-out; it's about an awareness that is developing. Workers' compensation used to hide in the shadows of healthcare and disability. Ask anyone just a few years ago about work injuries and you'd get an earful about "workman's compensation" and how a neighbor is cheating the system. Now the public is beginning to ask: What are all these businesses doing for their pay when there's all these people who are being thrown to the curb for trash pick-up day? Why are businesses paying for services that don't seem to be delivered on time or in enough quantity? How is it that an insurance company that agreed to take care of an injured person for life can delegate that obligation to public welfare? As I see it, the public assault on workers' compensation, the trend that is developing toward opt-out systems and the overall malaise that seems to have settled over work comp portends a much-needed, long-deserved debate. The public is asking questions. Hard questions. Because the public isn't seeing the value in work comp that had been promised (and delivered) for so long. We're entering into a whole new era of business vs. labor dispute. The haves and the have-nots are drawing lines in the sand. The last time this happened, the federal government threatened imposition. It could happen again. What we rely on for work injury protection systems will be vastly different in 10 years than what exists now. It's clear to me this is what's happening. Less clear is what will actually exist in 10 years. This article first appeared at WorkCompCentral.

When speaking about the power of having different technical disciplines converge to yield customer insights, it's common to focus on analytics and research. However, another rich territory for seeing the benefit of multiple technical disciplines to deliver customer insight (CI) is measuring how effective your marketing is. One reason for calling on the skills of two complementary CI disciplines is the need to measure different types of marketing spending. The most obvious example is probably the challenge of measuring the effectiveness of "below the line" vs. "above the line" marketing. For those not so familiar with this language, born out of accounting terminology, the difference can perhaps be best understood by considering the "purchase funnel." Most, if not all, marketers will be familiar with the concept of a purchase funnel. It represents the steps that need to be achieved in a consumer journey toward making a purchase. Although often now made more complex, to represent the nuanced stages of online engagement/research or the post-sale stages toward retention/loyalty, at its simplest a purchase funnel represents four challenges. These are to reach a mass of potential consumers and take some on the journey through awareness, consideration and preference to purchase. The analogy of the funnel represents that fewer people will progress to each subsequent stage. Back to our twin types of marketing: Above-the-line marketing (ATL) is normally the use of broadcast or mass media to achieve brand awareness and consideration for meeting certain needs. Getting on the "consideration list," if you will. Traditionally, ATL was often TV, radio, cinema, outdoor and newspaper advertising. Below-the-line marketing (BTL) is normally the use of targeted direct marketing communications to achieve brand/product preference and sales promotions. Traditionally, this was often direct mail, outbound calling and email marketing. In recent years, many marketers talk in terms of "through-the-line" (TTL) advertising, which is an integrated combination of ATL and BTL messages for a campaign. Social media marketing is often best categorized as TTL, but elements can be either ATL or BTL, largely distinguished by whether you can measure who saw the marketing and have feedback data on their response. Let's return to the theme of using multiple CI disciplines to measure the effectiveness of these different types of marketing. The simpler example is BTL. Here, the data that can be captured on both who was targeted and how they behaved enables the application of what is called the experimental or scientific method. In essence, the skills of database marketing teams, to set-up campaigns with control cells and feedback loops. To merge the resulting data and evidence incremental changes in behavior as a result of the stimuli of marketing campaigns and optimize future targeting. ATL is more of a challenge. Because control cells do not exist and it is impossible to be certain who saw the marketing, the comparison needs to be based on time series data. Here, the expertise of analytics teams comes to the fore, especially econometric modeling. This can be best understood as a set of statistical techniques for identifying which of many possible factors can best explain changes in sales over time and then the ability to combine these into a model that can predict future sales patterns based on those inputs. There are many skills needed here, and the topic is worthy of a separate post, but for now suffice to say that analytical questioning techniques to elicit potential internal and external factors are as important as modelling skills. I hope you can see that my definition of today's TTL marketing campaigns thus necessitates making use of both database marketing and analytics team skills to measure marketing effectiveness. But beyond this simply being a division of labor between ATL elements being measured by analytics teams and BTL by database marketing ones, there is another way they need to work together. Reaching the most accurate or helpful marketing attribution is an art as much as a science. In reality, even BTL marketing effectiveness measurement is imprecise (because of the complexities of media interdependencies and not knowing if the consumer really paid attention to communications received). In a world where your potential consumers are exposed to TTL marketing with omni-channel options of response, no one source of evidence or skill set provides a definitive answer. For that reason, I once again recommend convergence of customer insight evidence. Best practice is to garner the evidence from: (a) incremental behavior models (econometric or experimental method); (b) sales reporting (reconciling with finance numbers); (c) market position (research trackers); (d) media effectiveness tracking (reconciling with behavior achieved throughout purchase funnel). Converging all this evidence, provided by data, analytics, research and database marketing, provides the best opportunity to determine robust marketing attribution. But do keep a record of your assumptions and hypotheses to be tested in future campaigns. I hope that was helpful. How are you doing at measuring the effectiveness of your marketing? I hope you're focused on incremental profit, not "followers."

He had just launched China Chilcano, the latest in his burgeoning empire of restaurants, only three days old at the time, and was only a month away from opening yet another concept. He asked how I was doing, and I told him I’d had a great week—that a bill I’d been working on for literally 23 years at the Council (NARAB, attached to the TRIA extension), was passed by the Senate just the day before. About then, another well-wisher approached José and congratulated him on his latest achievement. “Meet my friend Joel,” he says to the guy. “He’s either the best lobbyist I’ve ever met—or he’s the [worst].” Rightly or wrongly, I’ve been majorly associated with NARAB (“National Association of Registered Agents and Brokers”) in its multiple iterations since the early 1990s. It’s not the biggest thing I’ve worked on by any stretch—the Terrorism Risk Insurance Act, the Affordable Care Act and Dodd-Frank are all far more important to the nation, our member firms and your clients. But NARAB has been the most painstaking. We’ve snatched defeat out of the jaws of victory on so many occasions that it almost seemed preordained we’d lose again when TRIA failed in December. Facing implacable opposition to NARAB from retiring Sen. Tom Coburn, R-Okla., then-Majority Leader Harry Reid, D-Nev., pulled the plug on TRIA and adjourned the Senate for the year—astonishing all of us who’d worked so hard on the legislation. Much of the blame at the time went to Coburn, as he was the only announced senator down the stretch with a “hold” on the TRIA/NARAB legislation, but the truth is more complicated, as there was considerable liberal discontent with the legislation. That’s all water under the bridge now. Within a couple days of the disaster, House Speaker John Boehner, R-Ohio, and incoming Senate Majority Leader Mitch McConnell, R-Ky., both released strong statements saying they would put TRIA passage on the “early” priority list for January. Both kept their word. Congress convened Jan. 6. The House bill passed in December was re-enacted Jan. 7, and the identical bill cleared the Senate Jan. 8. President Obama signed the bill into law Jan. 12. This followed critical leadership on the issue from Chairman Jeb Hensarling, R-Texas, of the House Financial Services Committee, and Sen. Richard Shelby, R-Ala., the new chairman of the Senate Banking Committee. Now the work can begin to actually create NARAB—an interstate licensure clearinghouse for nonresident producer licensure. Decades of compromises to get the legislation to the finish line will now become complications you’ll hear about in the coming months. The governance of the body will come principally from state insurance commissioners and the National Association of Insurance Commissioners. Funding problems will emerge because no federal dollars or borrowing will be allowed. And there will be disagreements about the standards for NARAB membership. The basic deal is this: Any producer first has to be properly licensed in his or her own state. Then on a purely optional basis, he or she can apply for membership in NARAB and meet whatever requirements are established. The applicant can then check off the states in which he or she needs a nonresident licensure, paying the applicable state fees. That all sounds really simple, but we’re sure in practice it will be akin to giving birth to a live squirrel. The protracted lobbying effort initiated in 1992 by the Council’s forerunner organizations (the National Association of Casualty and Surety Agents and the National Association of Insurance Brokers) seems disproportionate. At its core, NARAB is simply an administrative mechanism to facilitate nonresident producer licensure. But since its inception NARAB has been caught up in the push and pull of the broader debates over federal-vs.-state insurance regulation. Many colleagues of mine are putting their children through college in this continuing war of attrition. My own children, meanwhile, are nonplussed by the history of NARAB, but here it is anyway. First it was a purely federal option, as a part of now-retired Rep. John Dingell’s, D-Mich., insurer solvency legislation, which would have created an Optional Federal Charter for insurers. That went nowhere. Then we spun it off as a stand-alone and waged a lonely battle for years, culminating in the “NARAB 1” title of the Gramm-Leach-Bliley Act of 1999. To sneak it through Congress over the opposition of then-Sen. Phil Gramm (for months, my colleagues referred to me as “Dead Man Walking” on the assumption that Gramm would prevail), we had to dumb down the provision. If a majority of states passed reciprocal licensing laws, there would be no NARAB. So a majority of states did so, which was welcome. But it wasn’t enough. In the past decade, the coalition of NARAB supporters has grown substantially, with other producer organizations and the NAIC itself moving from a position of opposition to strong support over the years. In that decade, NARAB passed the House on at least six occasions (I lose count), both as a stand-alone measure and as part of other reforms. As we now move to implementation issues, I will pause to give thanks for the many in Congress who made this happen. Most recently, our champions and authors were Rep. Randy Neugebauer, R-Texas, Rep. David Scott, D-Ga., Sen. Jon Tester, D-Mont., and now-retired Sen. Mike Johanns, R-Neb. We can’t thank them enough. And I think back to the 1999 Gramm-Leach-Bliley debate, when Rep. Sue Kelly, R-N.Y., and the late Sen. Rod Grams, R-Minn., fought so hard for NARAB. I guess it’s easier to be gracious in victory, but we wish all the best for Sen. Coburn, who did everything he could to beat NARAB. I regarded him as an obstinate SOB for many months, but he always acted out of his own federalism principles. He retired from the Senate when his cancer recurred, and we have high hopes he can beat it. Because he’s just that obstinate. This article first appeared in Leader's Edge magazine.

April Fools.

Of course wellness doesn’t save money. Even the industry trade association itself, the Health Enhancement Research Organization, admits wellness loses money.

That doesn’t mean the industry lacks other benefits, such as levity. And in the spirit of the wellness field’s most appropriate holiday, we present “On the (Even) Lighter Side,” a compendium of the funniest moments in recent wellness history.

Unfortunately, the joke is that wellness is not a joke. Besides damaging morale, things are being done to employees that could even harm them -- medical interventions that the U.S. Preventive Services Task Force (USPSTF) urges not be done. Even routine screens that are done to employees -- only for cholesterol and related blood values -- shouldn’t be done annually, and shouldn’t be done on everyone, according to the USPSTF.

Still, we’ll let it go this one day and urge you to do the same and enjoy the one contribution that wellness advocates are bringing to the healthcare policy debate: merriment.

I have spent the bulk of my software career as a member of the sales camp. My comfort zone is nurturing big ideas and helping to motivate clients to embrace change. It is thrilling to earn the right to engage with clients through the decision-making process, help clients gain confidence that transformation is possible and support the first steps in execution. Pretty lofty, I know. But something happened this past year…the tables turned, and I became a software-buying customer. The loftiness of strategic vision met the cold, hard pavement of execution. I found the descent both rapid and eye-opening. First, a little context -- my sales enablement team convinced me the time had come to implement a learning management system (LMS). A LMS was a necessary platform for our team's and company’s growth ambitions. A LMS system would eliminate a ton of manual processing, freeing resources on the team. At the same time, it would help us focus learner and management attention on building skills that matter, a benefit to the larger sales organization. I agreed, and, in doing so, I stepped into the shoes of our customers. For sure, a LMS implementation is not the size, scale or complexity our Guidewire customers face replacing core systems. But, even at a smaller scale, the implementation has been a valuable education.

• Success depends upon strong partnership between business and IT. There is just no way IT can run a project without involvement from the business, and the business needs strong project management partners and the technical subject matter expertise from IT. It’s just that simple.
• If you don’t have the resources to dedicate to the project, don’t do it. It’s hard to find the time to focus on software implementation when there is a business to run. But if there isn’t someone on the business side getting up every day to advance the project, the project is at risk. Asking someone from the business to manage a software project as a part-time job is the myth of multitasking in action. Projects by their nature need focused attention.
• Process matters. I can hear the words of Alex Naddaff, senior vice president, programs, at Guidewire (who led our professional services organization for the first decade of our company’s history), ringing in my ear: “Project success depended on small teams, empowered to make decisions, who can do so quickly.” He’s right. Without an agile process that promotes consistent communication and team transparency, the project will find rough going.

These aren’t new lessons. These are the same lessons we bring to the table every time we engage with Guidewire prospects and customers. We preach that success depends on:

• Strong business and IT partnerships;
• Focused dedication of small teams; and
• Transparent processes.

The lesson for me is just how hard it is to stay true to these principles. It requires trade-offs, budget allocation and the prioritization of team members’ time. It means accepting that some things won’t get done. I will share the good news: Because we are following these fundamentals, our project is green, and we are closing in on our deployment date. I’ve got nothing but thanks and praise for the team leading the charge (Sarah from IT and Wendy from enablement, you both rock). We’re not there yet – there are more weeks and months of tough decisions and trade-offs ahead. But we’re close, the goal line is in sight and the realization of benefits is just around the corner. Even more than the deployment, the biggest win for me is that next time I get the chance to talk to customers and prospects about the perils of software implementation, I can engage with this first-hand experience and empathy for the process. I can say with complete sincerity that the work sucks, but that it’s worth it.  

The world continues to buzz about cyber security (or, perhaps we should say, insecurity). Now we have the Chinese government apparently admitting that it has a cyberwarfare capability: not just one unit, but three. Other nations, including the U.S., Japan and some European nations, are talking about their ineffective defenses and the need to develop an offensive capability. What can the targets, not only any public or private company, but each of us as an individual target (yes, our personal devices are constantly under attack), do about this? The first step is to get our collective heads out of the sand and understand that we are all, collectively and individually, at risk. The level of successful attacks is enormous (a billion records with personal information were hacked in 2014, according to IBM, as reported here). According to a survey discussed in Fortune, 71% of companies admit they were hacked last year, and the majority expect to be hacked this year. However, nearly a quarter, according to Fortune, have not only kept their heads in the sand but do so with unbelievable confidence; they think a successful cyber attack is “not likely” in the next 12 months. The trouble is that very often successful attacks are not detected! It took a long time before JPMorgan Chase found out it had been hacked, and even longer before it knew the extent of the damage. Organizations need to be ready to respond effectively and fast! The JPMorgan Chase article reports that, “The people with knowledge of the investigation said it would take months for the bank to swap out its programs and applications and renegotiate licensing deals with its technology suppliers, possibly giving the hackers time to mine the bank’s systems for unpatched, or undiscovered, vulnerabilities that would allow them re-entry into JPMorgan’s systems.” All is for naught if successful intrusions are not detected and responses are not initiated on a timely basis. In the Target case, reports say that the security monitoring service detected suspicious activity, but the company did not respond. According to ComputerWeekly.com, many companies make the mistake of “over-focusing on prevention and not paying enough attention to detection and response. Organizations need to accept that breaches are inevitable and develop and test response plans, differentiating between different types of attacks to highlight the important ones.” Another insightful article discusses the critical need for pre-planned response capabilities. IT cannot do it all itself; business executives need to not only be involved but actively work to ensure their operations can survive a successful intrusion. What else should we do? We have to stop using passwords like "password," the name of a pet or our birthday. Password managers are excellent tools (see this article on the top-rated products) and merit serious consideration. I have one. (BTW, I don’t plan to replace it with the latest idea from Yahoo of one-time text messages. However, I do like the fingerprint authentication on my iPhone.) A risk-based approach to cyber security is the right path, in my view. But that does mean that organizations have to continuously monitor new and emerging risks, or new observations about existing risks. An example is a new article on insecure mobile apps -- both from in-house developers and from external sources. Organizations need to allocate resources to cyber and information security commensurate with the risks, and individuals have to take the time to update the software on their personal devices. Internal audit departments should make sure they have the talent to make a difference, providing objective evaluations and practical suggestions for improvement. Companies and individuals, both, need to make sure they apply all the security patches released by software vendors. They address the vulnerabilities most often targeted, and, when there is a breach, very often it’s because the patches have not been applied. As individuals, we should have a credit-monitoring service (I do), set up alerts for suspicious activity on bank accounts and use all the anti-virus and spam protection that is reasonable to apply. Finally, as individuals and as organizations, we need to make sure we and our people are alert to hackers’ attempts through malware, social engineering and so on. It is distressing that so many successful intrusions start with somebody clicking where they should not be clicking.