<p>But doing away with the need for horses did much more than mean it was good to be Henry Ford and no longer so good to be a horse breeder. The &ldquo;horseless carriage&rdquo; had far-reaching effects that not only redefined the transportation network but also provided the basis for the modern economy and even changed how we live, by making suburbs possible.</p> <p>The &ldquo;driverless car&rdquo; will likewise change dynamics in the economy and in our personal lives in ways that are hard to predict at this remove. (The device will also get a real name, focused on what it is or does, not on what it lacks.)</p> <p>Just in industries directly related to autos, trillions of dollars change hands each year&mdash;flowing to and from auto insurers, auto financiers, service and repair shops, rental agencies, taxi operators, fleet managers, oil companies, transportation and logistics companies, emergency rooms, health insurers, medical practices, personal-injury lawyers, government taxing authorities, road-construction companies, parking-lot operators&nbsp;and on and on and on. Driverless cars will inevitably reduce the need for a lot of that spending&nbsp;and throw much of the rest up for grabs.</p> <p>But&nbsp;if history is any guide, people in these downstream industries feel that it will be decades (at least) before change is pervasive, and therefore decades before they have to worry about their own industry&rsquo;s collision with the disruptive change. Until then, the reasoning goes, companies in industries peripheral to car-making can simply watch as automakers battle among themselves and with Google.</p> <p>This is a dangerous point of view. It is the main failing that this series has tried to address.</p> <p>The raw technology is more developed and improving faster than most observers realize. And several scenarios could dramatically accelerate commercialization and adoption.</p> <p>In addition, the calculation that disruption will not happen until driverless cars are prevalent could be faulty. A modest number of intelligent cars can change the whole dynamic, long before widespread adoption of driverless cars.</p> <p>So, it is important for market leaders in downstream industries to get into the game, rather than be spectators.</p> <p>Even beyond the world of autos, the Google driverless car should be a wake-up call about the pace of disruptive technological change that looms for every industry. Or, taking an optimistic perspective, the driverless car demonstrates the kind of game-changing killer apps that are now possible in almost any industry.</p> <p>While the Google car feels like it comes straight from some science fiction movie, it is nothing more than a mashup of widely available technological innovation&mdash;combining mobile devices, ubiquitous cameras and sensors, social media, the &ldquo;cloud&rdquo; and &ldquo;big data&rdquo; analytical tools. Similarly bold mashups can upend any information-intensive industry.</p> <p>Mary Meeker, the noted venture capitalist and industry analyst, contends that technological forces are <a href="http://www.businessinsider.com/mary-meekers-latest-incredibly-insightful-presentation-about-the-state-of-the-web-2012-5#-86">putting more than $36 trillion of stock-market value up for &ldquo;reimagination&rdquo; in the near future</a>. That $36 trillion is the total market valuation of public companies in the 10 industries that are most vulnerable to change over the next few years&mdash;financials, consumer staples, information technology, energy, consumer discretionary, health care, industrials, materials, telecom and utilities. Companies will either do the reimagining and lay claim to the markets of the future or be reimagined out of existence.</p> <p>No history of success will protect incumbents if they put themselves on the wrong side of innovation. Borders, Circuit City, Blockbuster and many more went from thriving business to out of business in almost no time. Think of how recently Nokia and Blackberry were on top of the world and how they&rsquo;re now irrelevant. And change is still accelerating. The near future will be even more brutal and more lethal, with faster cycle times, than the recent past has been.</p> <p>As I have suggested in my analysis of Google and of Big Auto, the solution for incumbents and new entrants alike is to follow the innovation roadmap that Google demonstrates: Think Big, Start Small and Learn Fast.</p> <p><strong>Thinking big</strong> means innovators must consider the full range of possible futures. Like Google, they should dare to dream big, focusing on the &ldquo;killer apps,&rdquo; new products that can rewrite the rules of an organization or industry, rather than just looking for incrementally faster, better or cheaper products (as Big Auto is currently doing).</p> <p><strong>Starting small</strong> means that, rather than jumping on the bandwagon for one potentially big idea, companies must investigate multiple potential ideas and break them down into smaller pieces for testing. Like Google, successful innovators defer important decisions and keep their options open until they have real data, rather than make decisions early, based on intuition and experience. In addition, successful innovators take the time to make sure that everyone&mdash;the executive team, employees, partners, any agents and maybe even customers&mdash;are working in unison, rather than having people pay lip service to a vision while actually working at cross purposes.</p> <p><strong>Learning fast</strong> means taking a scientific approach to innovation. Successful innovators conduct extensive prototyping before they even get to the pilot phase&mdash;let alone the big rollout&mdash;so they can gather comprehensive information about their attempts at innovation and quickly analyze both what&rsquo;s working and what isn&rsquo;t. The successes also develop the institutional discipline to set aside or alter projects as soon as it&rsquo;s clear that they&rsquo;re not working.</p> <p><strong><em>Series Conclusion</em></strong></p> <p>Think back to the transition from horses to cars and note that cars were initially called &ldquo;horseless carriages.&rdquo; Cars were defined by what they didn&rsquo;t have, just as the &ldquo;driverless car&rdquo; is being defined by what is being removed from the equation.</p>

 Jacques Louis David, The Emperor Napoleon in His Study at the Tuileries, 1812, National Gallery of Art, Samuel H. Kress Collection, Washington, D.C.  Every so often, a big book comes along that, in the words of Ralph Waldo Emerson, can rock people “clean out of my own orbit” and turn us into “a satellite” of the new ideas. French economist Thomas Piketty’s Capital in the Twenty First Century is lodging lots of Emersonian punches just now. He shows us that we have a pervasive problem, a hoarding society. The implications reach to the world of insurance, where many companies hoard what can be toxic securities, such as residential mortgage-backed securities, because a lack of information about the underlying assets makes for an illiquid market and makes companies fear an economic loss. In general, the near-absence of a secondary market for many types of securities retards economic growth in America and Europe for all companies, including insurers. The solution is interactive finance, by which I mean rewarding institutions and individuals with financial or strategic advantages for voluntarily revealing information detailing the risk in assets. Interactive finance resolves hoarding by creating liquidity and stimulating volumes in new risk vehicles and, crucially for insurers, puts incentives in place to enable the insurance industry and other institutions to shed toxic securities. Books like Piketty’s have come along before. Following World War II, John Hersey’s Hiroshima and Norman Mailer’s The Naked and the Dead became best-sellers among a public hungry for information after wartime censorship. At the time the Cuban missile crisis threatened World War III, Rachel Carson’s Silent Spring struck a chord about the fate of the earth. Francis Fukuyama’s The End of History and the Last Man resonated because of the collapse of Soviet communism. Nothing rivals the 9/11 Commission Report, with its stunning conclusions that failures of national imagination and surveillance agency cooperation explain the World Trade Center and Pentagon attacks. Now comes Piketty with the arresting insight that inherited wealth will in all probability exert disproportionate control in mature economies well into the 21^st century, to the detriments of meritocracy and democracy. He describes a permanent class of inherited wealth, augmented by vast new wealth in winner-take-all areas of information technology and in parts of finance that some have been able to game. As long as the top 1%’s capital has a higher rate of return than the overall economy, that top 1% consolidates power and protracts family wealth for succeeding generations. (“He… car'd to hoord for those, whom he did breede,” Spencer wrote in the Faerie Queene roughly 425 years ago.) In other words, Piketty shows that we have a hoarding society -- and a crisis. The super wealthy will invest what they want when they want where they want, and, from here on out, investments stimulating economic growth in national economies would weaken their power, prestige and income by helping disproportionately those less fortunate. So, a long stagnation awaits salaried professionals and wage earners and their progeny. The stagnation will curtail meritocratic achievement and compromise democratic participation and institutions. John Maynard Keynes would find all this unsurprising -- but concerning. “The moral problem of our age is concerned with the love of money, with the habitual appeal to the money motive in nine-tenths of the activities of life, with the universal striving after individual economic security as the prime object of endeavor, with the social approbation of money as the measure of constructive success and with the social appeal to the hoarding instinct as the foundation of the necessary provision for the family for the future,” the neoclassical economist observed in 1925. At the very least at this moment, Piketty is our Antigone. With every successive response, the powerful show themselves to be self-serving. The Financial Times generated buzz by claiming Piketty’s numbers were wrong. Many used that analysis as an excuse to dismiss Piketty. But numerous pieces have shown that he is, in fact, correct – for instance, here and here. His J’accuse punctures, equally mercilessly, Obama palliatives, libertarian rants, big business platitudes and regulator palaver. There have been unremitting waivers, settlements and failed prosecutions of large financial institutions by the Obama administration for billions and trillions of dollars of securities fraud. This comes amid vigorous prosecution of and fines imposed on European banks. The U.S. approach evokes Emile Zola’s withering indictment of corruption in the Third Republic general staff and War Office. In 2014, Thomas Piketty reigns as the Napoleon Bonaparte of neo-classical economics. No one dominates economic discourse so pervasively or as persuasively. Like Napoleon before him, Piketty is consolidating the ideals of the Revolution: liberty, equality and fraternity in a teleology brooking no refutation. In Piketty’s heuristic, the wealthy retain liberty to invest; nation states will exert new laws to tax global wealth to restore equality; and fraternity can then express itself with adequate resources.  All the financial engineering on Wall Street and with the euro since the late ‘90s, coupled with all the vast new wealth in Internet, Silicon Valley, Seattle, oligarchic Russian and Chinese state-chartered enterprises, has dislocated vast numbers of people and segments of national economies outside privileged participants. Obama and discordant, multi-various Europe are but a place-holding Directory, so many wanting Talleyrands,  achieving temporary stability but no real order, so economic growth never really happens. Hence, Piketty proposes a global tax on wealth, a 21^st century economic and public policy correlative to the Code Napoleon. Think of Antoine-Jean Gros’s monumental, heroic painting of Napoleon touching plague-stricken soldiers in Syria in 1799. Like Christ touching the leper, Napoleon reaches out to the afflicted to convey hope. Metaphorically, at this time, Piketty plays the same role in economic and public policy discourse. Tiketty’s triumph in Capital, like Napoleon’s at the Bridge of Arcole, the 1796 battle displaying heroism and brilliance outmaneuvering Austrian troops, may eventually give way to the scholar’s Waterloo, but, for now, none is in sight. No one can deflect the stunning realization that the rich have accumulated and are taking off with the wealth, and nothing any leader has yet achieved on behalf of salaried professionals and wage earners realistically addresses oligarchic shifts in economic power and wealth in national and international economic life. The top 1% are intent on locking in and growing their ever-increasing share of national incomes, which increased from 8% in 1970 to 17% in 2010 in the U.S. An estimated $30 trillion, floating around the world with few owners and whereabouts unknown, according to a 2013 report, simply ices the cake. Invisible elites now control and game inefficient markets and public policy so thoroughly to their advantages that political and social institutions are not equal to the challenge of addressing their hegemony or displacing their dominance. Contemporary regulation, originated in the Progressive period to spur investment and police wrongdoing in industrial capitalism, fails miserably addressing casino capitalism. With all this concentration in wealth, as if to prove there is no fairness in life, Janet Yellen, a capable economist and administrator and first woman to serve as chairman of the Federal Reserve Board, suffers the indignity in Senate testimony of complaining about the weather to explain protracted economic lethargy. She shares that plight with other economic monitoring authorities. In popular culture, “Shine Bright, Jamie Dimon,” Lauren Windsor/aka Lady Libertine’s American Family Voices YouTube hit, lampoons the CEO of JPMorgan Chase:. “Shine bright, Jamie Dimon Shine bright, Jamie Dimon Fined light by the S-E-C None from Sarbanes Oxley To the sky/to the sky Chasing profits ever high Thirteen billion penalty From mortgage securities Fraud you sold me Market dives Chasing profits ever high The regulators let you get away Oh, D-O-J Admission of wrongdoing you don’t have to say Paltry the fine your power buys So sleep tight tonight in your lies Crimes provable sealed from the public eye No jail time Shattered lives Foreclosures spike just like your bottom line Shine bright, Jamie Dimon Shine bright, Jamie Dimon….” Jason Furman, chairman of the Council for Economic Advisors in the second Obama administration, is coming forward with what might be characterized as the American response to Piketty. Furman offers a rehashed take on le defi Americain, articulated so eloquently by J.J. Servan-Schreiber in Charles de Gaulle’s latter days, seeing American dominance in information technologies as a threat to French control of its nuclear arsenal. While Furnam demurs from calling Piketty naughty, he suggests that Piketty is too French. Let’s shy away from Belle Epoque Third Republic wealth metrics and celebrate the frontier, Furnam says. Furnam acknowledges in a thoughtful address at the Institute of International and European Affairs that between 2001 and 2007 “the typical family did not share in the economic gains in the broader economic gains, the first time an economic expansion did not translate into rising middle class incomes.” He says that, because of the 2008 asset implosion, “there has been no net increase in incomes since the late 1990s.” Still, Furman disputes Piketty’s assertion that the return on wealth will necessarily be greater than growth in wages. Furman says “there is no a priori basis to predict [because] of unpredictable technological developments, norms, institutions and public policies.” To appreciable degrees, news from Silicon Valley vindicates both Piketty and Furman. In April, Apple, Google, Intel and Adobe Systems reached a $324 million settlement with salaried professional workers to avoid litigation alleging that the four firms had conspired not to solicit others’ employees lest each pay higher salaries. The suit called for $3 billion in damages, with $9 billion in potential liabilities. The wealthy hoard their riches and suppress labor, the settlement suggests, vindicating Piketty. Institutions and law now enable a labor market to flourish and challenge inequality, vindicating Furnam. Aren’t new money elites supposed to be less greedy and flagrant than aristocratic, merchant, manufacturing and landed elites, given how recently the new wealthy have attained their riches and how supposedly meritocratic they are? Apparently not. In Silicon Valley, salaried workers had to litigate simply to secure labor participation and capital accumulation rights they always held. Picketty’s suggestion for correcting the hoarding problem partly through a tax on international capital strikes me as a non-starter in the U.S. Thirty-four years out from the election of President Reagan, those with millions are not likely to join with those with little to assail those with billions. It may happen, but the constant din of so-called free market, libertarian and socialist-fear-mongering rhetoric make for a very, very long shot. The Solution: ‘Interactive Finance’ The surest means to address the hoarding society and crisis is, in practical terms, interactive finance, by which I mean rewarding institutions and individuals with financial or strategic advantage for voluntarily revealing risk detailing information. For starters, let’s take a breath, look around and recognize information as the 21^st century’s distinct commodity, analogous to steam in the 19th and oil in the 20^th. In the U.S., information is to the 21^st century as continental investment and settlement was in the 19^th and industrial development was in the 20^th. System architectures, information technologies and the Internet are adequately mature and mobile and broadband communications networks sufficiently widespread that information is now commoditized and monetized. Even digital currencies like bitcoin, though classified as property by the IRS, are emerging. Cognitive computing, big data, parallelization, search, capture, curation, storage, sharing, transfer, analysis and visualization are commonplace. Three-quarters of American households pay for broadband access. Nine in 10 Americans carry mobile telephones. Global mobile transactions are projected to show more than 33% average annual growth. User-generated information now creates significant assets. With each additional user, wealth creation shifts toward originators. “As value creation shifts from well-connected MBAs to the innovators themselves, so does wealth creation,” Reddit founder Alexis Ohanian observes in Without Their Permission. Interactive finance will increasingly take place over the Internet and mobile devices. Consumers and institutions will embrace interactive finance to participate in value they are creating. Many shrug off sale of metrics about their data to advertisers as inescapable tradeoffs for Internet and mobile telephone use. But, with interactive finance, users would receive financial or strategic advantages and rewards for information that they create in all these transactions and that they forego more or less involuntarily now. Amid these circumstances, eight in 10 millennials, those born between 1983 and 2003, concur with the statement that "there is too much power concentrated in the hands of a few big companies" and express dubiety about Wall Street, according to a recent Brookings Institution report. While it is amply clear that interactive finance enables users to become more efficient traders, more importantly interactive finance stimulates massive communities of use to capture and to monetize risk-detailing information for those willing to share and those willing to reward information revelations with financial or strategic advantage. By enabling each person’s control of his or her information when he or she chooses to reveal some part of it, interactive finance establishes open and free markets in information. These markets will complement the data miners, credit agencies and Internet behemoths that currently act as sole gatekeepers, repositories and traders of the data. While this may sound rather highfalutin’, interactive finance is wholly pragmatic.  Corporate bonds are all dried up. Residential mortgages are so lethargic that lay-offs are legion. Two key sectors lack adequate liquidity to stimulate aggregate demand. And, as long as the largest too-big-to-fail banks receive lifelines to the tune of roughly $7 billion a month from the Federal Reserve through its Orwellian-named quantitative easing program, a crisis is averted only at stinging, life-altering and phenomenal costs to all but those privileged institutions and their regulators. For instance, Brookings Institution economist Charles L. Schutlze contended in The Public Use of Private Interest (1977), that “according to conventional wisdom, government may intervene when private markets fail to provide goods and services that society values. This view has led to the passage of much legislation and the creation of a host of agencies that have attempted, by exquisitely detailed regulations, to compel legislatively defined behavior in a broad range of activities affecting society as a whole. …Far from achieving the goals of the legislators and regulators, these efforts have been largely ineffective; worse, they have spawned endless litigation and countless administrative proceedings as the individuals and firms on whom the regulations fall seek to avoid, or at least soften, their impact. The result has been long delays in determining whether government programs work at all, thwarting of agreed-upon societal aims and deep skepticism about the power of government to make any difference.” “Strangely enough in a nation that since its inception has valued both the means and the ends of the private market system, the United States has rarely tried to harness private interests to public goals. Whenever private markets fail to produce some desired good or service (or fail to deter undesirable activity), the remedies proposed have hardly ever involved creating a system of incentives similar to those of the marketplace so as to make private choice consonant with public virtue.” Technology now affords, as risk expert David M. Rowe points out, the vehicles to obsolesce regulatory inefficiencies and to challenge ever-worsening inequality by rewarding candor and providing incentives for reciprocity. Persons can do well by doing good. Marketcore, an intellectual property innovator that I am advising, is developing interactive finance with system architectures that reward originators, intermediators and investors alike without bias toward seller or buyer. Its technology enables interactive finance and turns the tables on hoarding and gaming. For instance, any time a borrower of a loan reveals information, the creditor is able to offer a credit toward a future transaction or to provide information that will be of strategic advantage to the borrower. Any time an issuer of a bond reveals projected cash flow, say in connection with scheduled payment, the holder of the bond can offer a credit toward a future transaction or provide information that will be of strategic advantage to the issuer. Because of its robustness, Marketcore system architectures clarify risks for institutions dealing in structured products like residential mortgage-backed securities or bonds, contracts, insurance policies, lines of credit, loans or securities. At this stage in technological and market development, large financial institutions and insurance companies are still incorporating Internet and mobile phones into their business models on terms that sustain revenues and market shares and that maintain margins and ownership of the all-important customer. And, large Internet firms like Google, Facebook, Amazon, Apple and Microsoft exert first-mover advantages by controlling use-generated Internet value-add to sustain market power. Salaried professionals, wage earners and the public generally will find that interactive finance will chart the surest paths to address and reverse hoarding and to supersede regulations now so thoroughly compromised by the elites they were created to regulate that they neither promote nor protect citizens they were designed to serve. For financial services professionals, interactive finance should prove a gold mine by leveraging domain competencies in financial data, creating voluminous new data for repurposing and analysis. Notice, too, that interactive finance channels the best of Piketty and Furman. It achieves egalitarian wealth creation, which each economist champions, more efficiently than contesting market administration systems stacked against average persons or raising taxes. As crucially, interactive finance entails no new 21^st century Code Napoleon and instead enables markets to thrive. No one is doing as much as Piketty to clarify middle-class fragility and impotence in contemporary America. Piketty has stated middle class insecurity, so crucial to Marx in The German Ideology and his earlier Capital, in the precise way that makes Americans gasp at, respect and resent the French. If only Louis Althusser could have commanded a simple sentence and hadn’t murdered his wife, or Michel Foucault had found public leaders as compelling as private pleasures.  

This is Part 1 in a two-part series on automobile insurance fraud. Introduction Traffic engineers would love to unblock the clogged arteries of Southern California's freeway system, where rush hour is anything but "rush" — more like gridlock. But in a land where one's car is one's empire, one's freedom and personal statement, carpooling is a tough sell. The high-occupancy vehicle (HOV) lanes have scant occupancy. In fact, cars carrying multiple passengers are such a rarity that they, alone, raise red flags for auto insurance claims adjusters. Operating under the radar is a fast-growing segment of the "underground economy" — organized criminal enterprises that stage automobile collisions to defraud insurance companies of medical payments. In some cases, the entire incident is created on paper, with fictitious vehicles and false identities. In other cases, the perpetrators take real vehicles with legitimate insurance policies out to vacant lots or remote fields to crash them and then fill out a report. The most compelling cases are the ones where participants intentionally ram vehicles together on city streets — often a rear-end collision in a left-turn lane — then dial 911 and wait for police and emergency medical services (EMS) to arrive. This approach triggers a police report and EMS records, which lend an air of legitimacy to the event. It really happened. Based on instructions from a stager, the driver and two or three passengers — who are known as "stuffed passengers" — report neck and back injuries. The passengers later visit a physician or chiropractor who is in collusion with the criminal ring. The patients sign in and leave without receiving any treatment. If the insurance company balks at paying the specious claim, the claimant enlists the help of an attorney who is also party to the scheme. The attorney is tenacious, willing to go to court, generally able to bluff until the insurance company backs down and settles. In the process, everybody except the insurance company gets easy money. Property damage to the vehicle is paid to the owner of the vehicle, while multiple players split the proceeds of the settlement for medical payments. In a typical case where the insurance company settles for, say, $6,000, each vehicle occupant might get $1,000, the lawyers and doctors collect their fees and the enterprise leader retains 50% of the professional services fees plus the balance of the claimants' settlement, if any. If the enterprise leader successfully stages dozens of such incidents a month, it's a lucrative business. This practice exploded in Southern California in the mid-1990s. If you are a special investigations unit investigator, you are dealing with this every day. The average caseload for an adjuster or claims representative might be 150 or 200 a day, depending on the size of the company. At least 25% of that is some flavor of fraud. It's either a false claim or an embellishment to it. People are doing it. Even people who think of themselves as law-abiding are doing it, because they don't think of insurance companies as victims. This type of activity is so prevalent that our undercover investigators would hear paramedics on the scene saying, "Okay, which one of you is going to the hospital this time?" Automobile insurance fraud is such easy money that the business is even creating unlikely bedfellows. For example, in south central Los Angeles, the Bloods and Crips — gangs that have had an intense and bitter rivalry — are now cooperating with one another in organized insurance fraud, because it's more profitable to join forces. Six Steps to a Successful Insurance Scam Constantin Borloff (not his real name), the former leader of a successful and sophisticated fraud enterprise that operated in San Diego, Los Angeles and San Francisco, shares his top tips for making fraud pay. Having paid his debt to society, the ringleader now tells insurance companies how he was able to steal so much money from them, who does it and why it's so easy. Go for the Med Pay Money Borloff would insist that vehicle insurance policies have med pay coverage — coverage for reasonable expenses to treat accident-related bodily injury. Because this coverage follows the vehicle, passengers in a vehicle that has med pay coverage will likely be covered, as well. Borloff gave vehicle owners a list of insurance companies that would freely provide these policies. In theory, claimants are supposed to repay med pay money if they receive a settlement, but that doesn't happen, according to Borloff. "For all history, maybe two times the insurance company asked for money back. If you say you don't have money and can't pay it back, they say, 'Okay, don't pay back the money.'" Find the Inattentive Insurance Companies Borloff also selected insurance companies with a reputation for laxity, the ones whose claims representatives didn't take a stand and ask the hard questions. "Big companies like State Farm or Farmers have millions of policies, good special investigation units and more experienced adjusters, so that's where you would see more problems. It's better to go to the smaller company or where it's not their main business. These companies usually pay more, while the big companies usually pay a little less." Insiders in the business share this information, so they know which companies to avoid and which ones would pay off like loose slot machines in Henderson, NV. What would make an insurance company an unattractive target? "I don't know what will stop me," Borloff. said "All insurance companies are bound by law to pay. So for us, the system is working perfectly. The insurance company can fight, and they have a lot of resources to fight, but eventually they have to pay something. Maybe more, maybe less, but eventually they have to pay something." Choose Participants Who Won't Raise Suspicion In a perfect world, your participants are white American citizens with clean driving records and their own driver's licenses. Judges and juries look most kindly upon this type of claimant, according to Borloff. It is equally important that their behavior fits accepted patterns. For instance, policies should be active for four to eight months before the staged collision. Claims should be modest, usually no more than $5,000 or $6,000. Activities were choreographed to avoid triggering red flags. "I know insurance companies have about 25 red flags," Borloff says. "What the claims adjusters know, the criminal enterprise knows twice. I knew about all these red flags, and I tried to avoid them." Distributing the cases is one way to avoid detection, Borloff said. "If the enterprise will do, say, 20 collisions a month, the claims will go to five different insurance companies, each to a different attorney — 10, 15 or 20 different attorneys — and any given adjuster will have at most two cases to a specific attorney. Will the adjuster be suspicious about it? I don't think so. It's very difficult for the insurance company to catch these people in this situation." Borloff tells of a fringe case where a woman, working against the advice of her stager, staged four accidents in a single week. She submitted claims to four different insurance agencies. All four claims were paid, but this pattern of activity could have exposed everybody in the fraud enterprise to scrutiny and discovery. Pay More Than Lip Service to the Medical Treatment When private investigators were first sent to wait outside medical clinics to observe and videotape (the comings and goings of visitors), the first people they caught were the ones who walked in, signed in and left within a minute. People quickly learned to stay longer inside the clinic and have follow-up visits at intervals that would seem appropriate for their injuries and type of care. Keep Your Stories Straight Cappers and stagers write notes for people so they can remember their stories when talking to claims representatives and, later on, if they meet with an attorney and go into depositions. Somehow, somewhere, there is a record of all this. If the ring is dealing in volume, there must be good notes, or they won't remember the details of a case, and that's how they get tripped up. Some stagers get tripped up simply by having these notes in their possession — in their offices or briefcases, waiting to be found during a routine traffic stop or search. Insulate the Players From Each Other These groups tend to function as classic cell networks. In an effective cell network, the claimant may or may not be exposed to the other people involved, or may be only exposed to the doctor but not to the attorney. That's how these people are protected from one another. Participants may not have a knowledge of what else the group is doing. When we arrested 72 people on a state level and brought them into interrogation rooms for 72 hours, it was pretty clear that they only knew their own activities or those of friends they had brought into the group. They had no knowledge of the bigger scheme. That's how you protect your enterprise. The parties in these fraud rings learn never to admit to anybody that the accident was staged. Everybody in the enterprise knows it, but if you tell even one person, there's a point of vulnerability. It is especially important to insulate the medical and legal providers, because their professional licenses are critical to facilitate these claims. They take it all the way and never back down. How often would a criminal enterprise walk away from a case because an insurance company's special investigations unit got involved? "I would not walk away, but I would accept lower settlement, for sure," Borloff said. "One time, one of my colleagues made a terrible mistake and sent 63 cases to Allstate — one attorney, same office. They came to me and said, 'What should we do now, SIU is after us?' I said, 'Don't give up, try to fight,' but they decided to give up. It was the biggest red flag. They lost money. It upset people." Giving up is tantamount to an admission of wrongdoing. This series of articles is taken from the SAS white paper of the same name. © 2013, SAS Institute Inc. Used by permission.

As the financial services industry consolidates rapidly, companies are entering into merger and acquisition agreements to grow and to gain infrastructure efficiencies, but many do not deliver the expected cost savings or revenue synergies. Many merger initiatives drag on interminably. There is often insufficient understanding of what is being merged or purchased. The business orientations have not been set at the outset, and the projects may have little direction. The plan to align the two organizations is often superficial. The subsequent steps and accountabilities to ensure that the benefits are delivered are not specified. Cultures clash over processes and information technology. It is crucial to overcome these problems, and a structured and focused management approach to planning merger projects will contribute to building a thriving new entity. To manage a successful merger project, a multi-disciplinary project team needs to actively participate throughout the project. This team is responsible for managing change. Depending on the vision, the business objectives and the nature of the agreement between the two companies, a number of areas within the organizations will need to adjust their operations to integrate. It is important to thoroughly scope the project, identifying all the activities that need to happen. A set of orientation questions needs to be used to support the project team during the planning phase. This approach can be used either in preparation for a merger or as a result of agreements that have already been signed. These questions should be considered as a checklist. By answering these questions, the merger team members will identify areas within all companies that will be affected. Subsequently, these identified areas will need to be analyzed and the magnitude of the change assessed and quantified, which will then form the base for the overall project plan. Each merger project is unique, and new challenges need to be addressed for each. Consequently, the list of questions should evolve as new merger situations are identified. This will allow subsequent project teams to take advantage of accumulated knowledge in this discipline if mergers take place in the future. Insurance Frameworks has developed a list of questions for mergers and acquisitions in the financial industry, primarily for insurance and wealth management organizations. The questions are divided into 11 sections. Each section is a domain within an organization that needs to be managed by the executive management. More than 330 have been developed using our Panorama 360, which is being used by more than 1,000 insurance, wealth management and banking organizations globally. The 11 domains are:

• Marketing
• Product development and management
• Distribution and sales
• Alliance service channels
• Customer care
• Sold product services and management
• Money management
• Asset management
• Business management
• Infrastructure development and management
• Organization management

The list of questions is not divided according to organization structures but according to functional domains that are part of the value chain. Each functional domain is then subdivided into areas that could be affected during a merger project, and a number of strategic questions have been developed from best practices. Such an approach can be used for any merger, acquisition or even partnership to identify the changes that need to take place. What to merge and what not to merge are the key questions. Here are some of the questions: Marketing Domain General Questions

• Is there a holistic vision for this merger?
• Is this merger about penetrating new markets?
• Will you be keeping the status quo once the agreement is signed or are improvements expected out of this merger?
• What are the objectives to achieve and by when?
• Are there any regulatory requirements or merger contractual agreements that need to be completed within a certain time?
• What are the biggest constraints foreseen during this project?
• What is and what is not part of this merger project?
• What are the indicators that will tell you that the merger has succeeded?

Specific Questions 1.1    Define Customer Service Strategy

• What is the customer service strategy for this merger?
• Is the service strategy different than the one you have in your organization?
• Is there a different service strategy as a result of new markets you are now entering as a result of this merger?
• Is the expected service level from the new markets different than what you currently provide to your existing market segments?
• Can you support any new markets with your existing support infrastructure?

1.2    Manage Promotional Campaign

• Are you inheriting product brands that belong to the merged company?
• Will the former brands still exist once the merger is completed?
• Will promotional campaigns be necessary to increase the visibility, focus and recognition?
• Does the merger include affinity, group or association businesses that might require specific promotional efforts?

1.3    Manage Public Relations

• Will there be an official launch of a new brand, services or products?
• Does the industry media need to be advised?
• What are the messages to be conveyed?
• Which media approach will be used?
• Will you need an infrastructure to answer questions once the messages have been communicated to the media?
• Do you need to develop material to support the messages?

1.4    Manage Corporate Communications

• What will be communicated to the distribution channels?
• What will be communicated to the clients?
• What will be communicated to the competition?
• What will be communicated to the employees?
• What will be communicated to unions?
• What will be communicated to the service provider?
• What will be communicated to other employees of your group of companies (if any)?
• Is there anyone else who needs to be kept informed of any developments?
• Will you need an infrastructure to answer the questions once the messages have been communicated?

It is important to understand the various aspects that are part of any merger and acquisition projects. The Panorama 360 includes similar questions for all 11 domains of an organization. If you are interested in getting a complimentary copy of the Panorama 360 – Merger and Acquisition Methodology, you can request it here.

Business owners, executives, board members, and other business leaders of companies facing financial challenges should heed a mounting series of recent fiduciary liability settlement orders, judgments and prosecutions as strong reminders of the potential personal risk they may face if their health, 401(k) or other employee benefit programs are not appropriately funded and administered as required by the Employee Retirement Income Security Act of 1974, as amended (ERISA). Businesses leaders struggling to deal with economic setbacks frequently may be tempted to use employee benefit plan contributions or funds for added liquidity or otherwise fail to take appropriate steps to protect and timely deposit plan contributions or other plan assets. A long and ever- mounting series of decisions demonstrates the risks of yielding to these temptations for businesses that sponsor these plans and the business leaders that make these decisions. EBSA Prosecutes Businesses & Executives That Bungle ERISA Obligations The mishandling of employee benefit obligations by financially distressed companies during the ongoing economic downturn is fueling an increase in Department of Labor Employee Benefit Security Administration (EBSA) enforcement actions against distressed or bankrupt companies and their officers or directors for alleged breaches of fiduciary duties or other mishandling of medical, 401(k) or other pension, and other employee benefit programs sponsored by their financially distressed companies. EBSA enforcement activities during 2009 continue to highlight the longstanding and ongoing policy of aggressive investigation and enforcement of alleged misconduct by companies, company officials, and service providers in connection with the maintenance, administration and funding of ERISA-regulated employee benefit plans. A review of the Labor Department’s enforcement record makes clear that where the Labor Department perceives that a plan sponsor or its management fails to take appropriate steps to protect plan participants, the Labor Department will aggressively pursue enforcement regardless of the size of the plan sponsor or its plan, or the business hardships that the plan sponsor may be facing. The Struthers Industries decision comes on the heels of EBSA’s success in Solis v. T.E. Corcoran Co. Inc. last month in recovering more than $89,000 from business owners and operators found to have breached fiduciary duties to the participants of the T.E. Corcoran Co. Inc. Profit Sharing Plan by improperly loaning plan assets to he plan sponsor and an affiliated company. The Labor Department sued T.E. Corcoran Co. and its owners, John F. Corcoran and Thomas E. Corcoran Jr., alleging that the company and its owners caused the plan to lend money to the two companies at below market interest rates, without terms of payment and without documentation in violation of ERISA. The suit filed in the U.S. District Court for the District of Massachusetts, also named as a defendant Coran Development Co. Inc., a company co-owned by the Corcorans. T.E. Corcoran Co. Inc. was the sponsor and administrator of the plan, while John and Thomas Corcoran were trustees of the plan, making all three fiduciaries and parties in interest with respect to the plan. ERISA specifically prohibits the use of employee benefit plan funds to benefit parties in interest. For this reason, businesses providing employee benefits to employees or dependents, as well as members of management participating in, or having responsibility to oversee or influence decisions concerning the establishment, maintenance, funding, and administration of their organization’s employee benefit programs need a clear understanding of their responsibilities with respect to such programs, the steps that they should take to demonstrate their fulfillment of these responsibilities, and their other options for preventing or mitigating their otherwise applicable fiduciary risks.

The last month has seen a continuation of the vendor consolidation that the workers' compensation industry has been undergoing for the past few years. As most know, a great deal of this consolidation is driven by private equity investors who see all the money flowing through the workers' compensation industry as a way to achieve growth goals. But there is an aspect of this consolidation that is not being heavily reported. When two companies in the same business merge, there are redundancies. This means jobs must be eliminated. Hundreds of people in the workers' compensation industry have lost their jobs because of this consolidation. In my travels around the country attending conference and meeting with employers, I have had the privilege of meeting so many great people in this industry. It saddens me to see some of these people now unemployed, a casualty of consolidation. It is not a reflection of their performance, but just the law of numbers. When there are two people performing the same function, and the new company only needs one, someone loses. By the grace of God, I have never been laid off. I cannot imagine what a kick in the stomach that must be. I do whatever I can to assist friends in finding jobs, including forwarding job openings, making introductions and being a reference. But the sheer number of people out of work in our industry right now is staggering. How can we help? While some companies are eliminating jobs, others are adding them. We need to match those great people needing jobs with those companies that are adding to staff. In the Work Comp Analysis Group, there is a job discussion board. Here, you can post information about job openings at your company. There is NO cost for this, and your post will be seen by thousands of people in the workers' comp industry. If you have a job opening, I encourage you to post it. And recruiters are welcome to post! I'm reminded of a speech in the movie "Dave," where Kevin Kline, a presidential impersonator, is thrust into the role of president of the U.S. He gave a great speech about unemployment that I think rings true today: "If you've ever seen the look on somebody's face the day they finally get a job, I've had some experience with this, they look like they could fly. And its not about the paycheck, it's about respect, it's about looking in the mirror and knowing that you've done something valuable with your day. And if one person could start to feel this way, and then another person, and then another person, soon all these other problems may not seem so impossible." Let's help find a job for those in the workers' comp industry displaced by vendor consolidation. Let's put the workers' comp industry back to work!

Here are the six biggest mediation misconceptions: 1. The mediator might rule against me. Mediators do not make any rulings. The role of the mediator is to help the parties resolve the issues. 2. If I go to mediation, I will have to give up something. Negotiation is about compromise. Each side usually gives up something. You won’t give up anything unless you, and only you, make the choice to negotiate a deal. 3. Mediation is too expensive. Mediation is cheaper than litigation. It is efficient and eliminates other procedures that use up time and money. 4. Mediation is a waste of time. Mediation has been shown repeatedly to be effective in resolving all issues. But even if you don’t conclude your case at the mediation, mediation typically allows parties to learn more about their opponent’s case—and their own. Issues are narrowed, setting the stage for further negotiation or more efficient litigation. 5. There is no reason to mediate—our case is a sure winner. Mediation might be a place to test that hypothesis—or convince the other side. Presumably, you wouldn’t be in litigation if there weren’t two sides to the story. If there is counsel on both sides, your opponent is spending time, money and effort for a reason. Applicants representing themselves might just need a forum to tell their story. Litigation is always uncertain. Settlement is the only way to retain control over the outcome, rather than let a judge impose a resolution on you. 6. We look like pushovers by suggesting mediation. Mediation is the rule rather than the exception in most areas of law in the U.S., and it’s become more common in California workers compensation cases. The fact is that most cases settle at some point. Smart professionals use every tool at their disposal to conclude cases as early as possible.

As I work to inspire and empower my readers and those I teach and coach, it is a natural part of the process to share the technology and tools that work amazingly well. I am not affiliated with nor do I earn commission for recommending the tools I use, but when something works well for me I want to share it with you. As an insurance broker, you know that increasing your production and being more efficient with your time can lead to a lot more business. So how do you accomplish that? It starts with getting organized. There are many different technology tools available. For me, it starts with three things: a calendar, a simple to-do list and the ability to take notes throughout the day from phone conversations or face-to-face meetings. The problem for many people is how to compile and manage the to-do list. The problem with most "to do" lists is there are too many items each day to accomplish. What happens to your confidence when you go home at the end of the day and there are still too many things you have not checked off your list? I typically have five or six items on my list each day that need to be accomplished. For my to-do list, I use a great app called Nozbe. The app is cross platform with great apps, a 10 Step Course, and their own Productivity! magazine to help you along the way. With this power-packed tool, I am able to make my to-do list digital and sync it across all of my platforms and devices. I connect my Nozbe to my other favorite tool, Evernote, and I can even use it with Dropbox and synchronize it with my iCal or Google Calendar. To be successful, personal development and organization are key. You have to get passionate about your productivity. I suggest that you go through the amazing 10-step course (which happens to be available in English, Spanish, German, Polish and Japanese) and learn how to manage not just your to-do list, but your goals, projects, commitments and even your emails. You’ll learn about doing a brain-dump into Nozbe, clearing your mind of the clutter, then organizing that stuff into tasks on your to-do list. It’s amazing how productive you can become just by clearing your mind and focusing. Read the magazine, Productivity!, to gain more inspiration. Implement what you learn and begin to see the changes to not only your weekdays and work life, but your life in general. Nozbe also makes it easy to collaborate with your team. We already know that everyone starts the day with 24 hours. We can also be so busy, though, that we get overwhelmed and miss out on joy. The most successful people in the world: Warren Buffett, Richard Branson, Bill Gates, etc… have teams behind them. I have my own team behind me. Chances are, you have a team behind you. It's not that we need loads of people to help, but delegating tasks to others, sharing ideas collaboratively and enjoying the fruit of a team is pretty powerful stuff. Nozbe allows you to share projects by a simple email invitation. Team members can discuss tasks and pass them back and forth to one another and with you.  Amazing things can happen when your to-do list can be delegated and improved by the thoughts and ideas of your team. I moved my team completely out of email and into this tool. We now have our own common space to work, so we are out of our email (which is full of distractions) and we can comment on tasks and files as needed. There are many other "to do" apps on the market. You can go to Google and search "to do apps" or you can check out this post by Mashable, 6 Fantastic To-Do Apps for Getting Organized. Whichever you choose, find the right technology tools that will help you get organized and be more productive.

Before concluding this series on driverless cars, I’m going to take a detour and use this column to delve into the cars’ potential impact on the auto insurance industry. While I’ve already mentioned the issues in passing, they are starker and more imminent than most realize and deserve a deeper look. The doomsday scenario is clear for the roughly $200 billion in personal and commercial auto insurance premiums written each year in the U.S. Insurance premiums are a direct function of the frequency and severity of accidents. In a world of driverless cars, where accidents are significantly curtailed, most of those premiums will go away. Sure, some car insurance will be needed, but the market might be reduced by 75% or more. Insurers make their profits on the float from their premium income, so plunging premiums spells doom for many insurers. However, based on numerous conversations, it is clear that insurance-industry executives mostly just roll their eyes if asked to contemplate the implications of driverless cars. Even if the driverless cars are possible, conventional wisdom goes, it will be decades before they are relevant. Therefore, there is little need to worry now. Here’s how insurers figure the math: Begin with the assumption that it will be years before the technology matures. Add several more years to sort out the regulatory complexities, including licensing and liability issues. Add some more years to gain consumer confidence. Then, given the long lifespan of cars, add another decade or more before driverless cars make up a significant percentage of the cars on the road. On top of that, the argument goes, even if the frequency of accidents goes down, the severity will go up—as measured in the cost to fix cars with all the cameras, sensors, radars, etc., that are going into them. And, remember, even if you don’t crash into someone else, someone else might well crash into you. So, it will be decades before anyone could even imagine giving up car insurance. Besides, there might be no short-term cost to being wrong. Fewer accidents would just mean fewer claims, and therefore greater profits, until enough actuarial data proved that driverless technology delivered the conjectured savings and forced premiums down. Thus, the prevailing attitude is probably much like that of Glenn Renwick, CEO of Progressive Insurance, as expressed during Progressive’s February 2013 earnings call: The technology to do an autonomous car has been around for a while. We’re now seeing them; we’ll see a lot of talk about them. The real issue is exactly how they are able to be part of the fleet of vehicles on the road in America, and that is probably not something that need keep anyone awake for quite some time. In fact, it’s time for insurance executives to lose a little sleep over driverless cars. For one thing, far-off doomsdays have a way of sneaking up on you. As Paul Carroll and I documented in “Billion-Dollar Lessons,” Kodak concluded through very sophisticated market research in the 1980s that it would not be threatened by digital photography for a decade or more. It was right. Unfortunately, it did little to prepare for the inevitable disruptions. When it did attempt to mobilize, the advantages that it once held had little relevance. A succession of CEOs could not stem Kodak’s decline into bankruptcy. The more tangible danger is that Google’s driverless car program has started a technology arms race across the auto industry. If auto industry executives and boards of directors were not focused on this transition before, they are paying attention now. Most automakers are racing to differentiate their premium models with intelligent driver-assist functions like smart cruise control, accident avoidance and crash monitoring and reporting. These efforts will hasten consumer trust in driverless technology and accelerate the proliferation of the technology throughout all car models. As an example, Volvo, an automaker known for safety but relatively small in terms of global sales, predicts that it will be able to eliminate crashes altogether for anyone driving one of its cars by 2020. If tiny Volvo can aspire to this audacious goal, what might Big Auto be able to do? While, as I discussed in Part 3 of this series, this incremental approach might not save automakers from their eventual business model doomsday brought on by totally autonomous cars—it will hasten the disruption for auto insurers. Guy Fraker, a former director of enterprise innovation at State Farm Insurance and now an executive at AutonomouStuff, says most accidents happen in congested traffic. The accidents, in turn, cause more congestion and more accidents. Fracker argues that even a 25% adoption of incremental driverless technology such as smart cruise control and crash avoidance would significantly relieve congestion and reduce the number of congestion-related accidents. Fraker’s analysis is consistent with the forecast that one large insurer shared with me. That forecast estimated that a 20% adoption rate of incremental driver-assist technology might result in significant enough reductions in accidents to trigger material reductions in premiums. In other words, insurers will feel the effects of driverless technology long before fully autonomous cars become ubiquitous. Because premiums lag actuarial data, insurers will face strategic choices. Some insurers will delay instituting price reductions and enjoy greater short-term profitability. Others, more focused on the transition, will use the drop in claims to be aggressive on pricing, stealing the best customers and gaining market share. The industry may well have to start making these strategic choices in the next few years. Fred Cripe, a former head of product operations at Allstate Insurance and now an industry adviser, is more sanguine about the prospects for insurers in the short term. Cripe believes that adoption will be faster than many industry executives assume but that it will be more chaotic than predicted by advocates of driverless technology. He reasons that human drivers will become more erratic in the short term as they adjust to the technologies, sending accident rates up. Cripe agrees, though, that in the long term, “car insurance goes away.” He also says that, to prepare, the insurance industry needs to fight its tendency to push away liability. Insurers issuing policies based on driverless technologies will be tempted to set high prices or to simply refuse to cover driverless technology at all. The danger with this approach is that it leaves an opening for someone else to innovate and create the right insurance products and business models for the emerging world where driverless cars are pervasive. Cripe argues that, “rather than trying to push the losses out of the system,” insurers should focus on product innovation to “maintain control of the losses.” Google could use its deep pockets to offer cheap insurance, to hasten adoption and grab market share. Automakers could embrace the inevitable increase in their product liability and bundle insurance with their vehicles—rather than letting downstream players take those profits. Fraker hypothesized that automakers could grab a large chunk of the future insurance market by simply extending their warranty operations. Big Venture start-ups might accelerate the emergence of car-sharing fleets, thereby significantly lowering the need for personal insurance coverage. Or, in classic innovator’s dilemma fashion, start-ups like mileage-based insurer MetroMile might eat away at the edges of the market and be best prepared to take advantage as the disruption grows. Whatever the competition does, a traditional industry strength—underwriting—will decline in importance. For decades, insurers have invested heavily in their abilities to assess individual risk and price accordingly. As one CEO told me, “Insurers with better information make smarter underwriting decisions and slaughter those with less; that’s the nature of the business.” But driverless technology will take human error out of the equation and make underwriting less important. The basis of competition will shift to other aspects of the business, such as customer relationships, claims processing, expense management and distribution. The shift will create openings for new competitors such as CoverHound, a well-funded San Francisco startup that has built a multiple-carrier comparison engine. Basil Enan, Coverhound’s CEO, believes that auto insurance will become much more like homeowner’s insurance, where claims are rare but very high. His view is that auto premiums will, of course, go down but that claims and other operating costs will, as well, so insurance will be a more profitable business for the survivors. He plans to manage the insurance relationship for driverless technology adopters by helping them sort out the right policies.

The workers’ compensation insurance marketplace in California may at times seem like the Wild West. From the employer standpoint, it involves a dazzling array of choices and options. It is driven by a value proposition that can perilously tilt to price rather than long-term service and protection. For insurers, it all begins at the Department of Insurance, with what is called the pure premium (claims cost benchmark). As can be expected in this complex system, the pure premium rate-setting process can appear to be as chaotic as any other aspect of this system. There is, however, a method to this madness. Well before federal antitrust laws came into effect, the U.S. Supreme Court determined that insurance was not a part of interstate commerce. Thus, when antitrust laws were enacted, they did not apply to insurance. Insurers were free to share their market data with each other without fear of government prosecution. That all changed in the 1940s when the Supreme Court changed its position and determined that insurance was now part of interstate commerce. Overnight, much of what the industry was doing in terms of sharing data and making rates was illegal. Congress stepped in, and by the early 1950s what we now know as the Workers’ Compensation Insurance Rating Bureau (WCIRB) was licensed by the California Department of Insurance and was doing its business under “active state supervision” – which, under the law, allowed insurers to continue to share information. During most of the history of California workers’ compensation insurance, fully developed rates (losses, loss adjustment expenses, and general expenses) were set by the WCIRB and approved by the commissioner. No insurer could charge a lower rate (with some exceptions), leading to the name “minimum rate law.” No multi-line or interstate combinations of experience were allowed. In other words, workers’ compensation insurance rates had to be standalone adequate. By 1993, employers were experiencing the pain of high insurance costs and a dysfunctional system. Major reforms were enacted, including the repeal of the minimum rate law. Effective Jan. 1, 1995, a new “competitive” rate law was adopted. The WCIRB was to develop an advisory “pure premium” – losses and loss adjustment expenses only – and insurers did not have to use it. Insurers had to file their own rates and rating plans and load their own expenses. And multi-state, multi-line experience was now allowed when determining whether premiums were adequate. Within about five years, the wheels had pretty much come off the insurance marketplace in California. There were insolvencies and impairments; capital was leaving the state; and there was an undeniable crisis that affected the system well beyond the borders of the Golden State. The causes were many and varied, and while the legislature made some changes to the rate law, its primary focus in 2003, 2004 and most recently in 2012 was to rein in the costs of the system and try to bring some stability to the marketplace. But the pure premium rate-setting process has pretty much stayed the same since its enactment more than 20 years ago. The WCIRB does more, much more, than collect the data necessary to develop pure premiums. It develops and administers the statistical plan for data reporting, the uniform classification system and the uniform experience rating plan, for example. Each of these requires the approval of the commissioner, and each is a regulation of the Department of Insurance. As such, they fall under the procedures of the Administrative Procedures Act (APA). For many years, this APA notice and hearing process was used for both the regulatory and rate-setting filings of the WCIRB. Since 2013, however, the two processes have been split up. There’s a good reason for this. The first is that the APA, housed in the Government Code, doesn’t apply to rate-making proceedings. It is the Insurance Code that requires a hearing on pure premiums but also requires that the commissioner issue an order within 30 days of the hearing. The fact is that the department and the WCIRB work very closely together throughout the year, and the intended procedure for the adoption of the pure premium rates acknowledges this. The regulations that fall under the procedural requirements of the Government Code (APA) are not as time-sensitive as the adoption of the pure premium – the latter requiring some sense of certainty not just before Jan. (or July) 1, but with sufficient time to make rate filings and, if necessary, send out notices of nonrenewal depending on the size of the rate increase. The new process developed by the department allows for that. The WCIRB makes available copious amounts of data regarding the performance of the system. These can be found on the bureau’s website: www.wcirb.org. Everyone who is affected by the system would benefit by spending some time looking at these and understanding why we are where we are today, and the still very long journey to get to where we ought to be.