The most important part of the sale is the salesperson. Do you believe this statement? I am telling you from years and years of experience that this statement is 100% true. As a salesperson, you are not only in charge of selling the product, but selling yourself to the consumer. Knowing who you are and what you represent is very, very important.

What It Takes To Be A Salesperson
I hear this question all the time. What does it truly take to be an all-star, professional salesperson?

For one, it takes commitment. A professional salesperson is committed to improving. A professional salesperson is committed to being the best salesperson in the world. If a salesperson is not getting better each and every day, he or she is doing a disservice to his or her consumers and clients.

A salesperson's job is to convince a potential client to purchase a product or work with a service that the company provides. If that potential client decides to pass on the product or service, they are making a huge mistake — and a professional salesperson will tell them that! As a salesperson, if you do not sell yourself or the product, you are not doing as an effective or efficient job as you need to be! The funny thing is, I will end up apologizing to a client if I do not make that sale.

For example, a client will state that he or she is not going to do business with our company. I respond with the following:

"I have to apologize to you. I let you down. I was not as good of a salesperson as I should have been because you said no to me. I feel sorry that you will not be utilizing my product and services to grow your business. Therefore, I am sorry for not being as effective or as efficient as I should have been."

It takes a real salesperson to admit defeat. It also takes a real salesperson to improve after a defeat! A professional salesperson is someone who is working on themselves by constantly undergoing training, reading new books, and striving to grow. That is when a client will honor your service and you will make that sale. The sale begins with you — and your attitude.

A Rock Star And Positive Attitude Is Everything
Negative thoughts will yield negative results. Can you guess what positive thoughts will yield? You guessed it! As a salesperson, having a positive attitude is so important. Think to yourself for a second. How much do you like spending time with people who have a negative attitude? Chances are, not very much! What makes consumers any different? If a salesperson with a negative attitude is face-to-face with a potential client, you can bet that the chances of closing that deal are slim to none.

What type of salesperson does the consumer want to be around and buy from? A positive, enthusiastic, and genuine salesperson, of course! These are the people who give off energy. These are the people who enjoy life, like themselves, and like other people. In return, others will feed off their energy and like them. Attitude is everything as a salesperson. When you pick up a call from a client, you should be smiling. You should be enthusiastic. You should be helpful, upbeat, and positive. Even during those moments when a potential consumer is a little grumpy, you have to remember that everybody has a story. Some days are better than others, but that should not stop you from impacting his or her life in a positive way. Positivity is infectious, and that is what you must bring to the table when you are ready to make a sale. Why? Because the most important part of the sales process is the salesperson.

Are You Cut Out For A Career In Sales?
You may be starting to wonder: Wow, am I even cut out for a career in sales? Let's take a look at a few questions together and discover whether or not you are cut out for sales.

Question #1: Do you turn to the lowest possible price in order to make a sale?

The answer here is simple: If you need to turn to the lowest price and are an order taker, you are not a real salesperson. A real salesperson builds value in the products and does not devalue. The people who are the real deal will find a way around the situation!

Question #2: Has a potential client ever changed their cell phone number on you?

If someone has not done so, you probably have not followed up enough to close the deal. The greatest salespeople out there have had this happen to them!

Question #3: Has anyone every moved out of state or put a restraining order on you?

Kidding! This is obviously a little extreme, but the principle is simple. Consistently following up may seem aggressive but that is the way it works. If you have not tried a number of sales strategies on a client, you are not doing all that you can to service them. Your job is to find a way around a customer's insecurities and concerns. Once you figure out how to do this, you will make the sale.

The Life Of A Salesperson
The Death of a Salesperson — I know it is a cliché, but here is a new cliché for you: The Life of a Salesperson. Why should we add a negative word to such a fulfilling, wonderful career path? The salesperson is the most important part!

If you are a salesperson and you are reading this, I want you to remember this: The most important part of the sale is you. Sometimes, it is not necessarily about the product that you are selling, but it's about who you are as an individual. Consumers are looking to trust someone to help their business or brand. As a professional salesperson, it is time for you to realize that if you are not a good person, honest person, or a person who is consistently improving, you do not have the right to earn someone's business.

Today, the most important part of the sale is you.

This is Part 2 of a multi-part series on building and monitoring networks with intelligence. Part 1 can be found here. Part 3 will be published soon.

California has defined how medical networks in Workers' Compensation should be structured and managed. Part 1 of this series described how California's SB 863 LC 4616 (b) (2) and LC 4616 (b)(3) takes medical provider network directives to a new level. The key imperative is, "Every MPN must establish and follow procedures continuously to review the quality of care, performance of medical personnel, utilization of services, facilities, and costs."

California SB 863
The emphasis on network review is a chief imperative of SB 863, effective January 1, 2013. Many directives in the bill require continuous data monitoring to discover provider and network compliance and non-compliance. Some of the directives that require continuous attention are:

• Chiropractors are limited to a 24 adjustment maximum [LC 4600(c)].
• MPN's must have geo-coding of network physicians, updated every four years to insure access requirements are fulfilled.
• LC 4616 (b)(2) and LC 4616 (b)(3) state every MPN must establish and follow procedures continuously to review quality of care, performance of medical personnel, utilization of services, facilities, and costs.
• Anyone can complain, initiate an investigation, and petition to suspend or revoke an MPN.
• Injuries while under unapproved, non-MPN care are no longer compensable!
• Multiple conditions of escaping the MPN, non-MPN payment, and disputes must be monitored.
• Home Health Care must be prescribed by an MD or DO.
• MPN's are approved for four years from date of the most recent application or modification.

Provider Performance Analysis
Medical provider performance must be analyzed and monitored not only for compliance with SB 863, but also for acknowledgement of the nuances of Workers' Compensation in the treatment process. Work loss and disability payments, return to work and modified work, claimant legal involvement, along with frequency, duration, and costs of medical services should be analyzed and scored for individual providers, groups, and facilities, whether in California or another jurisdiction.

Provider Data Issue
A problem confronting many organizations is that their medical provider data is insufficient, making accurate analysis impossible. Unfortunately, most provider records in claim systems and bill review systems is severely lacking in quality and comprehensiveness.

Until now, these records were used only to pay bills, consequently, name, address, and FEIN (Tax ID) were adequate. Now, however, because of SB 863 and increased attention to the medical portion of claims nationally, much more information is needed.

Duplicate Records
Most systems contain duplicate provider records. Slight differences in data entry create multiple records for the same provider, each associated with different claims. Under those conditions, provider analysis is inaccurate and incomplete. Such duplicate records must be scrubbed and merged before beginning performance analysis.

Medical Specialty
Medical specialty or specialties should be included in provider records in the data. Those providers certified in a specialty should be compared with others who are similarly certified. Without the provider's specialty, analysis of performance is non-specific and often misleading.

For instance, pain management doctors' performance should be compared to that of other pain management doctors, rather than dermatologists or internists. Pain management physicians often receive cases when they are growing more complex and already costly. Analyzing providers of similar specialties is a matter of comparing "apples to apples."

Differentiating Individuals
Medical providers who are members of groups or facilities should be analyzed and selected for networks individually even if the group or facility is approved. Some believe all members of a group should be included in the MPN when the group is approved. Actually, individual members might be problematic and automatic approval should not be guaranteed.

Currently many doctors and other providers submit bills under a single Tax ID. Measuring collective performance quality is not acceptable for a network with intelligence. The way to differentiate individuals is to analyze their unique performance using specific identifiers such as the state medical license number or NPI (National Provider Identification).

Networks With ROI
Whether complying with California SB 863 or building Workers' Compensation medical networks anywhere in the country, developing quality networks will return huge savings. Medical providers, especially doctors who score poorly in comprehensive data analysis, drive complexity, high costs, and poor outcomes. Those should be avoided and injured employees should be directed to best in class doctors to receive the best medical care with the best medical and employment outcomes. The business of developing and managing Networks with Intelligence should be given high priority.

First Steps
The first step in building quality medical networks is to scrub and enhance medical provider data in the organization's systems. The next step is selecting best practice providers based on integrated and comprehensive data associated with the claim. Developing and monitoring medical networks requires analytical knowledge and technical skill. Because internal resources are often limited, a practical solution is to outsource to the experts for provider performance analytics and continuous monitoring.

Authors
Karen Wolfe collaborated with Margaret Wagner to write this article. Ms. Wagner is President and CEO of Signature Networks Plus. She is considered an expert in network selection, monitoring and management, thereby creating Networks with Intelligence™ for clients.

This is Part 1 of a multi-part series on building and monitoring networks with intelligence. Subsequent parts in the series will be published soon.

Background
Building a medical provider community for Workers' Compensation can be challenging, regardless of the jurisdiction. Nevertheless, carving out a legislatively-compliant, outcome-based, quality network is doable, and the return on investment is certain.

Injured workers deserve good medical treatment while employers and payers deserve transparent and fair costs. Moreover, industry research clearly shows that poorly performing providers are costly and lead to abysmal outcomes for injured employees, their families, and employers. This article features California SB 863 regarding MPNs (medical provider networks), but the concepts apply to creating intelligent medical provider networks anywhere.

Traditional Medical Networks
Medical networks in Workers' Comp are not new, in fact, PPOs (Preferred Provider Organizations) have been around in Workers' Comp since the early 1990s. Traditionally, the network administrator contracts with all physicians and other treating providers available. The trade-off is that providers exchange their discounted fees for increased patient volume. However, quality of medical care measured by outcomes and acknowledgment of Workers' Comp nuances such as return to work are not considered. Some jurisdictions have made attempts to modify this practice.

Old SB 899 — LC 4616 Medical Provider Network (MPN)
In April of 2004 the governor of California signed SB 899 into law. It addressed MPNs under section LC 4616 (d) stating "In developing a medical provider network, an employer shall have the exclusive right to determine the members of their network."

Encouragement to analyze provider performance is clear under section LC 4616.1: "Economic Profiling means the evaluation of a particular physician, provider, medical group, or individual practice associations based in whole or in part of the economic costs or utilization of services associated with medical care provided or authorized by the physician, provider, medical group, or individual practice association." In other words, quality and costs matter and should be analyzed and monitored.

Direction Of Care
An important opportunity in California and many other states is that employers and payers are allowed to direct care for injured employees to doctors and other medical providers in their medical provider networks. After selecting the best doctors for a network, injured workers can be directed to them, a win-win scenario.

Even in states where direction of care is not permitted, payers or employers who have intelligent networks can give injured employees information regarding who are the best-in-class doctors based on objective analysis. Doing so is a service to employees who will often make use of them in selecting a doctor.

Ramping Up — SB 863
The logic of creating an intelligent network with measureable outcomes was recently fortified with California SB 863, effective January 1, 2013. The old bill is strengthened under SB 863, LC 4616 (b) (2) and LC 4616 (b)(3) "Every MPN must establish and follow procedures continuously to review the quality of care, performance of medical personnel, utilization of services, facilities, and costs."

Quality Control
In other words, all MPN plans must have procedures in place to continuously review the quality of care and costs for medical providers in the network. The mandate is now even stronger to evaluate and monitor medical provider performance. No longer is it adequate to contract with medical providers, print the list of providers in the network, and forget it.

However, many employers and payers are at a loss about how to analytically select and continuously review provider performance.

Intelligent Networks
Legislative mandates and industry wisdom remove the question about whether to upgrade network quality through outcome analytics and monitoring. Yet, selecting the right doctors and other providers, then monitoring, and managing an intelligent MPN is a business in itself.

Most organizations do not have the appropriate resources and should outsource to companies that focus on intelligent network design, provider selection through analytics, review, and management. The following are some details for building and managing intelligent networks, whether they are legislated or not.

Gather The Data
The way to develop an intelligent network is to select the best in class medical providers determined by analysis of actual performance demonstrated in the data. Historic data must be combined with current and continually updated data to evaluate performance now and going forward. Reviews of updated data should be frequent and regular.

Additionally, the data must be derived from a broad spectrum of sources. Workers' Compensation organizations typically segment data into bill review data, claims, pharmacy (PBM) and other silos such as UR and Medical Case Management. All are necessary for provider performance assessment. Do not be misled by those who say bill review data is adequate to the task.

Integrate The Data
Integrate the data with claims as the focal point for a complete picture of the claim. Execute algorithms that analyze the data and score provider performance based on multiple performance indicators. Individual medical providers, groups, and facilities should all be analyzed in this regard.

Continuous data update and electronic monitoring insures network and individual provider quality going forward as prescribed in SB 863 legislation. Maximize medical network quality and cost control using analytics, thereby complying with legislation and maximizing positive benefits.

More About Building Networks With Intelligence
Part 2 of this series will add more details of California SB 863 regarding medical provider networks and how to create networks with intelligence using analytics and common sense, an imperative for all medical networks in all states.

Authors
Karen Wolfe collaborated with Margaret Wagner to write this article. Ms. Wagner is President and CEO of Signature Networks Plus. She is considered an expert in network selection, monitoring and management, thereby creating Networks with Intelligence&#153 for clients.

Workers' compensation laws protect people who are injured on the job. They are designed to make sure that employees who are injured or disabled on the job are provided with fixed monetary awards, removing the need for litigation.

The California Labor Code essentially tells us that anyone working for a homeowner will be an employee unless you can prove otherwise. Further, California Law tells employers — the homeowner in this case — that they must purchase workers' compensation insurance when any employee works for them.

The standard home policy, with liability insurance, includes coverage for "occasional workers' comp risks." By "occasional," the policy would be intended to provide insurance for your gardener that swings by once a week or your housekeeper that comes in twice a month, or other folks who perform small tasks at your home. The "occasional worker" is defined as someone who performs less than 10 hours outside of the house work or 20 hours inside of the house work.

When the homeowner is going to reach these thresholds, they should contact their insurance agent to change their Homeowner's policy to cover these new events. The costs for this change can vary quite considerably between companies, but it has been my experience that the additional charges are a fraction of the cost of worker's comp for a business operation.

How do you avoid all of these potential risks and threats, plus involvement in the insurance industry? Here is a short list of steps to simplify your life and avoid becoming an employer. First, hire licensed and insured contractors who have their own workers' compensation insurance. Next, hire other service providers who are licensed, if appropriate, and insured.

Any company or contractor that you hire should have liability and workers' compensation insurance. How to know if they are insured? This is the crucial point to understand. Before any organization, business or contractor begins work for you, ask them to provide you with a Certificate of Insurance which will list all of their insurance policies. This certificate will show that, on that date, there is a list of the insurance policies this business has in place listing their insurance companies, the amounts and types of insurance, and the dates the policy started and are to end.

The homeowner, to further protect themselves, should be listed as a Certificate Holder on this certificate. The Liability insurance listed on the certificate should list the homeowner as an Additional Insured, and the page of their insurance policy that confirms this is to be attached to the certificate.

The workers' compensation insurance should show that the business has provided a Waiver of Subrogation Endorsement on their policy. A waiver of subrogation endorsement requires one party on the contract to waive their right to sue for and recover damages from the other party.

In short, what do these worker's compensation terms mean to the homeowner?

First, the Additional Insured means the insurance for the hired business will provide you with some protection on their policy before your insurance policy may be involved in a claim.

Next, the Waiver of Subrogation means that when the businesses' employee is injured at the homeowner's home, the workers' comp insurance company paying for the employee's treatment can't come back to the homeowner to recover what they have paid injured workers.

When in doubt, call your insurance agent to guide you through this process. There are many talented and knowledgeable insurance agents who can help you. So, ask!

California homeowners have a duty to be aware of the workers' compensation rules to avoid fines and penalties. This knowledge can help them avoid legal problems in case a worker gets injured on their property.

In this video, Tom Searcy — an expert in large account sales and the founder of Big Hunt Sales — shares with agents and brokers three keys to maximizing their influence when first meeting with potential clients.

Recent research has revealed these three baseline concepts:

1. Information = Confidence. At your first meeting, your level of confidence will rise with the amount of information you have about the people with whom you are meeting. Doing your research before the meeting (through LinkedIn, Google, their website, etc.). Knowing background information on your potential client's representatives will give you something to talk or ask about.
2. Body Language. Eye contact, smiling, and handshake are common elements of the first meeting. But do you know which of the three should last the longest?
3. Say Something Specific.Use your research to introduce a question or comment that will help you frame future conversations.

Watch Tom's video above to learn more.

• Monitoring initiatives include monitoring and capturing: any legislative bills available for public comment; discussions from the insurance legislators in each state, the NAIC, the FIO, the FSOC, the various influencer groups, and online trade press articles and commentary concerning legislative issues impacting the insurance industry; and existing regulations and proposed and actual changes to these regulations for each state in which the company conducts and wants to conduct business.
• Management initiatives include storing, cleaning, tagging, and otherwise preparing the primarily unstructured content captured above, for analysis and preliminary preparation of regulatory compliance initiatives.
• Analysis initiatives include analyzing the captured content's potential impact on existing company regulatory compliance initiatives or the resources needed to create new initiatives. The analysis is likely to encompass financial analysis and modeling if the regulatory discussion impacts the amount of capital reserves the insurance company will need, or alters the investments it can make or the mix of risks it can insure. It also includes the creation of interactive dashboards that enable insurance executives and legal, compliance, and other insurance departments to track compliance with state and, where necessary, federal regulations.
• Reporting initiatives include creating reports for internal insurance company use, for each state insurance commissioner's office for the states in which the company conducts business, and, where necessary, for the FIO and the FSOC.

• Text data mining/semantic technology to create a tagged and searchable repository of existing and pending regulations.
• Master data management (MDM) applications to establish, maintain, and update a repository of existing and proposed industry regulations.
• Analytics, including predictive analytics, to measure the company's capital adequacy and ensure it complies with state and, where necessary, FIO and FSOC requirements, and to model and project the company's current and projected density of risk (i.e. total exposure across all insurance lines of business that the insurer is selling for all or specific geographies).
• Data visualization to create dashboards to track the company's alignment with regulatory deadlines and capital requirements, and its progress toward adopting insurance regulatory initiatives (e.g. uniform producer licensing).
• Database technologies to create, store, and manage producer demographic, insurance experience, training, and licensing information for every insurance company producer (i.e. agent/broker/financial advisor) for each insurance line of business, for every state (or jurisdiction) in which the agent is legally authorized to sell insurance.
• Collaboration and communications technologies within the insurance company, including the agent/broker/financial advisor intermediaries, to discuss progress toward regulatory compliance including concerns or problems and potential solutions if the company believes it is non-compliant on certain issues.
• Reporting capabilities to create compliance reports and send them to internal insurance departments, to each state insurance commissioner's office for each state in which the company conducts business, and, where necessary, to the FIO and the FSOC.

The recent natural disasters in Oklahoma and New Jersey, and the wildfire season in the western United States, have a lot in common when one thinks both of insurance risk — plus the intended and unintended consequences of these events.

The insurance industry knows natural disasters will happen. The industry thus creates and follows protocols and response plans. For the most part, the industry and public-safety officials handle the crisis, and restore calm and order in our communities.

The insurance industry knows these events will occur, and planning is generally pretty solid per the axiom, "If it's predictable, it's preventable."

But in the world of insurance fraud, many sectors of the insurance industry seem to lack the same energy to mitigate this crime. Using the same acumen gained from restoring order after disasters, the key is to apply the same proven strategies of history, response, performance and mitigation of future risks. This approach will better help combat insurance fraud with equal success.

The modern strategy of "speed to detection" is a uniting principal and operating strategy for mitigating the epidemic of fraudulent claims.

Optimizing speed to detection involves synchronizing all layers of insurer personnel into informed, enterprise-wide fraud fighters. They are well-trained to spot warning signs of this crime, personally motivated, and encouraged to follow internal processes that allow open lines of communication about fraud leads, needed process improvements and action solutions.

Bogus claims thus can be discovered and mitigated faster. Quick detection also is an intimidating deterrent that can convince more fraudsters to avoid trying to breach that insurer. The risk of arrest and conviction is too high, and odds of financial reward are too low.

Speed to detection is a timely precept: Insurers today are confronting a persistent crime that is morphing, in many respects, to higher levels of sophistication and ability to steal insurance money.

Insurance fraud harms law-abiding consumers (higher premiums), aids the underground economy, facilitates other illegal enterprises such as trade-based money-laundering, and poses a public-safety threat (e.g., staged automobile collisions, arson, murder for life insurance, needless medical procedures).

Conservatively, fraud steals $80 billion a year across all lines of insurance.¹ Some estimates rate the annual losses much higher.

And the problem is growing. Questionable property-casualty claims in the U.S. have increased 27 percent in 2012 over 2010, the National Insurance Crime Bureau (NICB) says in an analysis of its database of claims released in May.

That reflects 91,652 questionable claims in 2010 compared to 116,171 claims in 2012.² Similarly, most consumer research reveals a disturbing public cynicism about this crime, and even a backslide toward higher consumer tolerance of fraud.³

Confronting this epidemic is a large network of organizations dedicated to minimizing fraud as a virulent national threat.

Insurance companies have teams of experts (the Special Investigation Unit, or SIU) trained to deal with suspicious claims.

State law-enforcement agencies have created specialized departments and bureaus dedicated to thwarting this crime.

State insurance departments have strengthened their processes for identifying, investigating and reporting suspicious claims for potential prosecution.

States also have enacted numerous fraud laws and regulations that further strengthen enforcement. More are being added or bolstered every year.

At first glance, these processes appear sound, prudent and presumably effective. A lot of money, personnel and effort have been thrown at insurance fraud. Shouldn't schemes be going down instead of up? Or at minimum, leveling off?

Many of the following observations are guided by my 32 years of combating insurance fraud, including several years as a Bureau Chief, and one year as the Division Chief with the nation's largest anti-fraud unit, the California Department of Insurance, Fraud Division. Some academic backup also is cited for added information.

Despite the large defense shield, growing numbers of insurance executives at the decisionmaking levels — inside and outside the anti-fraud ranks — are frustrated about how fraud persists as a costly national epidemic.

To illustrate: In recent years, I have provided consulting and analysis and review of first-party bad-faith cases involving fraud, the actions of SIUs in a claim or series of claims, and expertise for qui tam civil actions by insurance companies.

In these many interactions with insurance executives, anti-fraud directors and other colleagues throughout the industry, the frustrated question they ask most often about fraud is: "Why do we keep throwing money at a crime that never seems to go away?"

Typically they offer two reasons why fraud remains so vexing and persistent:

"The insurance system invites fraud." Indeed, our insurance system is one of the best in the world. But the most skillful fraudsters effectively exploit weaknesses when the system is not synchronized and calibrated among partners to create a hardened shield.

"We need the best team to investigate these crimes." Insurance companies and government entities are constantly working to create an elusive Dream Team for investigations. Key ingredients of team members are passion, creativity, and ability to wade through a series of complex conspiracies either to deny a claim, or have an offender arrested and prosecuted.

Many insurers are frustrated because qualified people with the acumen to investigate fraud are hard to come by. Time after time, when insurance carriers lose bad-faith lawsuits involving the SIU and fraud, some of the common denominators are training, unqualified people and bad leadership decisions.

An important reason fraud appears to keep rising is that insurance companies and regulators are slow to recognize the value and impact of anti-fraud technology leveraged with best business practices.

The anti-fraud community needs to rethink its strategies, and examine ways to identify problems and risks before they become crimes.

Resources should be synchronized to optimize speed to detection.

This requires insurers to have their anti-fraud operations well-aligned with their internal corporate structure, strategies and practices — and with external partners such as state fraud bureaus, law enforcement and NICB.

Reaching this goal must start with an honest discussion about technology and other best practices. A major problem is that too many insurers use outmoded methods of fraud detection. These methods have little impact on modern, sophisticated fraud rings that are a significant source of money outflow.

Meanwhile, insurance fraud is evolving and organized crime increasingly is infiltrating fraud. Such rings have been around for years, but their sheer number and growing sophistication are changing the criminal landscape. Many insurers aren't equipped to counter this new breed of criminal, especially using indicators.

Recently, I gave a presentation at the Insurance Fraud Management Symposium (IFM). This is the largest annual conference of insurer anti-fraud directors, executives and other personnel.⁴ The presentation covered a major criminal investigation and prosecution involving a staged accident ring in Southern California.

This case illustrates two frequent insurer vulnerabilities: a) over-reliance on weak fraud indicators that allowed fraudsters to penetrate the insurer's anti-fraud defenses relatively easily; and b) how vulnerable insurers become when they compromise their business processes by speeding up claims payouts by compromising vigilance.

The leader of this criminal enterprise joined me in the presentation. He was under court order to assist the California Division of Insurance in public education after his conviction.

He related how he ran the operation, who he involved, and how and why he targeted specific insurance companies with bogus injury claims from the setup collisions.

He made a chilling point:

"You will never win the war on fraud."

He urged insurers to avoid over-reliance on the so-called "indicators" they use to identify fraudulent claims. Indicators are a relatively basic investigative tool. Insurers look for specific actions or behaviors that are red flags of possible fraud during the claims process. With staged accidents, for example, indicators might include flags such as multiple people in both vehicles, expensive treatment at the same clinic, and similar last names to suggest a possible family fraud ring.

This ringleader knew the indicators well, probably better than some claims staff. Thus he could rig his crashes and phony claims to easily avoid being detected by common flags. Just as important, he also relied on inexperienced and untrained claims representatives to give in and pay claims with little scrutiny.

"It is a game of poker: Who is going to bluff the best, and who will stay in the game with a winning hand?" he warned.

In a similarly illustrative case, Greg Foshee was educated, articulate and knew the insurance claims system well. He should have. Foshee was a claims representative for one of the nation's largest property-casualty insurers. He saw large profit potential when his supervisor ordered him to "just process the claims."

So Foshee went to the "dark side." He started staging vehicle accidents and then helped process the ensuing bogus injury claims without insurer scrutiny.

He staged more than 82 vehicle collisions that stole $1 million worth of insurance money. During questioning after his arrest, Foshee said his supervisors told him: "Don't ask too many questions, just get the claims off your desk."

Foshee used multiple individuals with multiple valid drivers licenses from several states. He kept the operation simple to avoid detection. He had only 13 ring members, with just three cohorts working full time and controlling the group.

Nor did Foshee involve attorneys and physicians. They would have slowed the claims, and he would have had to split the ill-gotten insurance money with them.

He made smaller claims just for vehicle damage and minor medical treatments in order to stay under insurer radars. The treatments usually consisted of an emergency-room visit for subjective injuries such as whiplash that are typically associated with minor traffic accidents.

Foshee also knew that if his ring members went to emergency rooms too often in a given city, someone might notice and start asking questions. So instead he created false medical bills and treatment reports using letterhead and forms stolen from the hospital.

If the targeted insurance companies had simply called the hospitals to verify patient information, they would have discovered that the so-called patients were never treated there. This would have confirmed that the treatment reports and bills were false.

Foshee averaged $10,000-12,000 income per staged accident, and went undetected for several years. He knew how the claims process worked, and how to avoid scrutiny and detection. The California Highway Patrol's Investigations Unit completed the investigation in 1988. Foshee was convicted of insurance fraud, conspiracy, grand theft, and was sentenced to several years in state prison.

Let's think about this for a minute ... These aren't isolated cases. Over the last 30 years, large segments of the insurance industry, law enforcement and other government agencies have relied heavily on old-fashioned indicators of false claims, and similar basic tools. These indicators have been identified, written, promulgated, and used in the daily business of receiving and closing insurance claims.

Reality check, please?

The crime rings knew the insurers' fraud indicators, and avoided them. The insurers also compromised their internal anti-fraud processes to turn around claims quickly. Many other organized fraud groups and bold criminal entrepreneurs like these are operating daily, skillfully compromising the insurer claims systems. Collectively, they likely steal millions of dollars everyday. Whether detected or undetected, usually it is too late to recoup the stolen money.

Rethinking The Fraud Fight
If speed to detection is to move from an energizing concept to transformative anti-fraud practice, fraud fighters must step out of the indicator box and rethink their entire approach to combating modern, emerging threats such as complex and organized crime rings.

Some insurers just seem to be going through the motions of fighting fraud, indicators and all. But the more progressive insurers are transforming their internal cultures and business practices to create a coordinated, enterprise-wide response to this crime.

They are taking the fight more directly to the criminal underworld instead of waiting for the underworld to come to them. As a result, these insurers are also far more resistant to schemers of all kinds.

Insurance companies and government agencies need the ability to change direction quickly to address emerging fraud schemes, trends and problems. Nimbleness is a key attribute of sophisticated fraudsters. It also should be a core trait of every insurer's speed-to-detection process.

The goal is not to eliminate fraud indicators or other basic tools. These tools may play a role in the overall mix of anti-fraud business processes and strategies each insurer custom fits for its own anti-fraud challenges.

Several strategic best practices can help optimize speed to detection.

Advanced Analytics
Advanced analytics rank among today's most transformative best practices for increasing speed to detection and allowing better-informed decision making.⁵

Analytics involves the discovery and practical use of meaningful patterns of anti-fraud data. Properly marshaled, advanced analytics can quickly move insurers miles beyond indicators. Analytics can reduce the ineffective pay-and-chase mindset of many insurer detection processes. Analytics also can put insurers quickly on the offensive, and thus dramatically increasing speed to detection.

Advanced analytics tools come in many flavors. Each organization must customize an analytics strategy to its unique challenges. Rarely is there one off-the-shelf software solution. Analytics solutions increasingly are being adopted by some insurers. Among the solutions that are gaining momentum:

Predictive analytics. Allows insurers to uncover suspicious activity in close to real time, and even to forecast the likelihood of potentially fraudulent behaviors.

Text analysis. Insurers can ferret out previously inaccessible data such as an adjuster's field notes — even handwritten notes.

Social network (link) analysis. Helps an insurer examine relationships among organizations, people and transactions to discover suspiciously related claims that appear unrelated on the surface.

Social media analysis. More insurers recently have begun mining social media for clues. A workers compensation insurer, for example, might uncover a supposedly disabled worker posting photos of his Hawaiian surfing vacation on his Facebook page.

But analytics alone — whether advanced or more basic — cannot reverse the tide of fraud. Analytics must be supported by other best practices and processes.

Some insurers and smaller regulatory agencies believe the cost of advanced analytics platforms is too high, or that they do not have the data to support such robust systems.

But analytics can be affordable by starting small (don't try to boil the ocean), and strategically planning to gradually layer in advanced analytics into the business process and technology platform. Start small, and build upon the new platform incrementally, first addressing immediate business needs and problems.

Marshall Big Data
Mobilizing big data is gaining wider attention in anti-fraud circles. Insurers are sitting on troves of data, hard and soft. Much is never accessed for fraud-fighting. Insurers can dramatically increase their anti-fraud assertiveness by insightfully accessing, analyzing and mobilizing their large volumes of untapped data.

But the terabytes and even petabytes can overwhelm an insurer's analytical capabilities.

Insurers must invest in analytic expertise to retrieve, filter and use big data properly. Insurers also must know what questions to ask when mining for big data. This information will be more focused and useful, and avoid the confusion and fuzzy results that too much data can impose.

Limit Pay And Chase
Insurers must re-evaluate their reliance on the ineffective "pay-and-chase" model that drives the anti-fraud-strategies of so many insurers. Using this model, insurers routinely pay claims and then investigate afterward.

But the money is gone by then, and the trail is growing cold. It is rare for an insurance company, self-insured or government program to recover much or any stolen money. In fact, usually no money is recovered.

This is especially true of the larger, complex fraud rings that often operate internationally. They are adept at trade-based laundering of stolen insurance money through shell corporations.

Some insurance rings are learning from criminal brethren such as drug cartels in Mexico and South America. They are effectively laundering stolen money (e.g., proceeds from human trafficking, firearms and narcotics). They wash the money through sophisticated shell companies and corporations involved in global commerce. The money is difficult, if not impossible, to trace and recover.

In the public sector, Medicare once was the poster child for ineffective pay-and-chase practices. But the federal health program for seniors is replacing that approach in part by installing predictive analytics to uncover more false claims before payment.

Take On Difficult Cases
Simply going after safe, low-level frauds (i.e., low-hanging fruit such as an inflated claim from a home burglary) might look good on the anti-fraud unit's statistics reports.

But this also may ignore the largest fraud problems and sources of claims-money outflow such as modern rings that steal safely and efficiently.

They often are organized like a classic cell network. Ring members do not know each other, nor do they know all activities in the enterprise. But advanced analytics can expose these complex groups and their crimes much faster and more efficiently.

Insurers must commit to taking on the difficult higher-dollar cases such as those perpetrated by organized crime rings, even if it entails considerable cost and personnel. This is essential to diminishing what for many insurers is a significant source of false claims payouts.

Collaboration
Better collaboration is essential to turning the corner on America's fraud epidemic. This collaboration must include all stakeholder organizations and personnel.

To underscore this point, visit another statement the fraud-ring member said at the IFM conference:

"We know when the insurance company will pay based on the actions and interaction with an inexperienced, and not properly trained, claims representative. And we also know which companies pay claims easily."

External. Insurers must retain open lines of communication with state fraud bureaus, local law enforcement, state attorneys general, the FBI and other stakeholders.

Insurers in different lines of insurance also must collaborate. Auto, workers compensation and health insurers, for example, may find synergy by comparing best practices and exchanging case leads that may uncover hidden crimes.

Insurers in the public and private sectors also must better collaborate for the same reasons. Many organized crime rings, for example, defraud numerous insurance programs. A large Armenian crime ring in California, for instance, staged car crashes against auto insurers and also bilked Medicare. If public and private insurance programs share case leads, they can dramatically increase the joint knowledge base needed to more speedily break down that ring.

One promising collaborative effort is the new Fraud Prevention Partnership. It was formally announced last July by HHS Secretary Kathleen Sebelius and U.S. Attorney General Eric Holder.⁶

Medicare, private health insurers, automobile insurers and others are formalizing closer lines of cooperation. The partnership is building up its operating structure, and partnership members are beginning to share fruitful case leads. It could become a model for collaborative techniques.

The Payoff
Marshaling analytics and big data with current rules and indicators into a seamless and unified anti-fraud effort creates an expansive world of possibilities.

Imagine the ability to search a billion rows of data and derive incisive answers to complex questions in seconds.

Imagine being able to comb through huge numbers of claim files quickly.

Imagine more-quickly linking numerous ring members and entities acting in well-disguised concert. These suspects likely could not be detected with sole or even primary reliance on basic methods such as fraud indicators.

Ultimately, imagine analyzing entire caseloads faster and more completely, thus addressing the largest fraud problems and cost drivers in any of an insurer's coverage territories.

Conclusion
Insurance companies are not in the anti-fraud business. They are in the business of managing a risk pool, mitigating those risks and returning a fair profit. Government law-enforcement agencies are specifically charged with preventing crime and disorder.

To prevent fraud, all involved organizations must scrutinize their systems with a fresh view and openness to evaluating how to better combat this crime.

Advanced analytics, coupled with sound business practices and preventive measures, will yield better anti-fraud results. For insurance swindlers, speed to detection should mean speed to jail.

¹ Coalition Against Insurance Fraud, estimate of annual fraud losses.

² U.S. Questionable Claims Report, National Insurance Crime Bureau, May 16, 2013.

³ Four Faces of Insurance Fraud, Coalition Against Fraud, 2007; Poor Service Leads to Fraudulent Claims, Accenture consumer survey, 2010.

⁴ An Insider's Perspective on Automobile Insurance Fraud — Why It Is So Easy to Steal From Insurance Companies, and What To Do About It. White Paper by SAS, 2013.

⁵ Competing on Analytics, The New Science of Winning. Thomas H. Davenport and Jeanne Harris, Harvard Business School Press. 2007.

⁶ New Anti-Fraud Partnership is a Force Multiplier, news release, Coalition Against Insurance Fraud, July 25, 2012.

The Identity Theft Resource Center (ITRC) has growing concerns regarding the potential for new scams concerning the implementation of the Health Insurance Exchange (HIE) websites as part of the Patient Protection and Affordable Care Act (also known as Obamacare). These exchanges are currently online with enrollment due to start on October 1st.

According to the Act, each state must implement insurance exchanges. These exchanges are to serve as online marketplaces (websites) for consumers to compare rates and make choices about which health insurance coverage is best for them. Each state has the ability to determine the best way to manage these exchanges in order to meet the needs of their uninsured residents.

The open enrollment period for these exchanges begins on October 1, 2013. There have already been some predictions that there will be "bugs and glitches," to quote President Obama, during this process. IT professionals are already voicing concerns regarding the ability to handle the amount of traffic anticipated on the first day of the rollout. However, no one is talking about ensuring that consumers actually know and understand where to go in the first place.

There is huge potential for misinformation and misunderstanding with this new insurance exchange program. Consumers will now be mandated (or face a penalty come tax time) to purchase health insurance if they don't have existing coverage. The official website, www.healthcare.gov will be used by the majority of the states. But 17 states have opted to manage their own unique exchange with a different URL. This has the potential to cause much confusion for consumers. While it may appear that this information would easily be located via an internet search, our experience was that the official website was not easy to locate. In fact, when we searched for "health insurance exchange official websites" (rather than "website") the websites for the 17 states that have their own unique URLs appeared, but www.healthcare.gov did not appear on the first page.

From our experience with scams and fake websites, we believe it would be extremely easy for scammers to create multiple websites that will trick consumers into thinking that it is either the federal health exchange website or one of the alternative state websites. Without known and reliable sources, there exists a great opportunity for gaming of the Internet search engines to attract consumers to websites intent on harming them by eliciting the fraudulent collection of personal identifying information (PII). There is a need to present factual information about which websites represent the accredited websites for the new insurance exchanges.

While there is a comprehensive list of insurance exchange websites on www.healthcare.gov, we are concerned that consumers may not find their way there in the first place. Already our searches indicate that there are organizations using keywords such as "Obamacare" and "Health insurance exchange" in the paid advertising section that are not the official insurance exchange websites. While these websites may not be scams, our concern is that it will only be a matter of time before imposter websites intent on real consumer harm surface.

This concern has a historical basis. The Fair Credit Reporting Act (FCRA) requires each of the Credit Reporting Agencies (CRAs: Experian, Transunion, and Equifax) to provide consumers with one free credit report annually. Confusion still exists between www.annualcreditreport.com, which is the court-mandated website hosted by the credit reporting agencies that actually provides annual free credit reports to consumers, and other websites that offer free credit reports or free credit scores such as www.freecreditreport.com, hosted by one of the credit reporting agencies. Soon after the creation of the original mandated website, dozens of look-alike websites were created. Consumer protection organizations, including the Federal Trade Commission, continue to educate consumers about this to this day (Consumer Information: Free Credit Reports) even though the mandated free website was launched in December 2004.

With the operational launch of these new insurance exchanges just a few short months away, consumers will be scrambling to comply before the January 1st, 2014 deadline. We already stated that we expect consumers to use search engines to locate the particular website they are supposed to use, and that the searches are inconsistent. With that knowledge, will regulators put provisions in place to identify, deter, monitor and address imposter websites? Or do they presume that the existing regulatory or enforcement provisions will deter those who create malicious fake websites intended to capture the personally identifiable information of consumers? Information provided to a fake insurance exchange website could be used to commit identity theft and other frauds.

There will be two types of imposter websites that will require redress. Not all imposter websites are created equal. There are differing levels of harm depending upon the type of imposter website consumers discover. There are legitimate businesses cutting corners and engaging in misleading tactics to secure new business and there are outright scam websites, whose intention is to secure personally identifiable information for malicious use.

Phishing and smishing could eventually come into play.

In 2012 "Imposter Scams" ranked 6th (out of 30) in the list of most complained about fraud events according to the FTC Consumer Sentinel Report. The 82,896 complaints represented 4% of the total complaints received by the FTC.

This category is defined by the FTC as "complaints about scammers claiming to be family, friends, a romantic interest, companies, or government agencies to induce people to send money or divulge personal information." Complaints included the following: Scammers posing as friends or relatives stranded in foreign countries without money, scammers claiming to be working for or affiliated with government agencies, and scammers claiming to be affiliated with a private entity (a charity or company).

By far, the largest subtype of scam was regarding government agency imposters, with over 43,000 of the total in that category. Previous years' statistics indicate that year over year, government imposters were the most complained about subtype: 47,454 in 2011 and 49,321 in 2010.

This demonstrates that the scammers continue to find impersonating the government to be a lucrative enterprise. Since this is a new program, even those consumers who normally know not to click on strange links in emails or respond to unknown senders of text messages, may feel compelled to respond and potentially share their personally identifiable information via these means. Why should we believe that the health care exchanges will be immune to this kind of impersonation?

If past behavior is an indicator, we can be sure that there will be financial harm to at least some of these victims.

The Internet Crimes Complaint Center (IC3) 2011 report states that it received approximately 39 complaints per day regarding FBI impersonation email scams. IC3 presented a total loss for this type of impersonation scam (via phishing emails) as over $3 million dollars. This number is just for the complaints that the IC3 received and does not take into account all the unreported losses.

A fundamental part of the Identity Theft Resource Center's mission is to serve as a relevant national resource on topics such as this. In an effort to provide consumers with the important information they need about potential insurance exchange scams, the Identity Theft Resource Center has developed a scam alert and posted additional information on its website to help educate consumers.

The Identity Theft Resource Center is hopeful that there will be strong and coordinated efforts to educate consumers as to the authentic websites for these exchanges. As they differ from state to state, universal messaging will be difficult to coordinate. Of course, there will be glitches, and as with any new process, we will only discover what these are when the actual user experience is reviewed. However, these efforts need to take place now.

Are you covered for cyber-terrorism? If you have not purchased Cyberliability insurance, the answer is likely no. A General Liability policy needs bodily injury, property damage or possibly an advertising injury to respond. Property insurers don't view data as tangible property, and a property policy needs a peril like wind, fire or hail to respond to a loss. Crime policies cover embezzlement by employees. In the event of a cyber-terrorism loss, you can look to all of these policies for coverage, but there is only one policy that is designed specifically for this type of exposure — Cyberliability.

The next question is, what constitutes cyber-terrorism? When you think of activities committed by a terrorist, your first thoughts might be actions that lead to death or destruction of property. There are other ways terrorists can inflict harm, including through electronic means.

Below are scenarios that might be covered by a properly structured Cyberliability policy:

Sadly, the array of bad things for a terrorist to try extends far beyond the items listed above. They are out there working on ways to cause mayhem without leaving the comfort of wherever they may call home.

1. Hackers funded by a foreign government get into your insured's network and cause private information to be leaked into the public domain.
2. Hackers funded by a hostile party hijack an insured's network and computers and use them to cause a denial of service attack against other third parties, who then sue the insured for not preventing such an event.
3. Unnamed hackers from a foreign nation deliver a virus to an insured's network and wipe out 30,000 company laptops causing a business interruption loss.
4. Foreign-sponsored hackers launch denial of service attacks at everyone in the insured's industry in retaliation for some action taken by our own government. The business interruption may be covered, as well as a security breach arising from the attack.
5. Hackers penetrate the control system for a manufacturing client's assembly line and prevent them from producing their product.
6. Hackers replace a client's website with offensive or politically motivated content that causes people to sue for emotional distress, libel or slander.
7. Hackers penetrate an insured's network and threaten to release private records or intellectual property.

To most insurers, it won't matter who is behind the security breach. The hackers can be foreign-sponsored, the kid next door, a disgruntled former employee or an organized crime gang. Coverage should apply regardless of who funded the attack. Cyberliability insurance policies are there to respond to liability claims arising from a security breach as well as some first-party expenses. There are also policies that include coverage for data restoration expenses and business interruption losses.

You probably won't see a policy that states, "You are covered for cyber-terrorism;" however, you should look for any definition of what constitutes a hacker. We have yet to see any definition that differentiates between prankster hackers, criminal hackers, political hackers, organized crime hackers or any other group. It is in the policyholder's favor that the definition isn't limited by a detailed description.

Most policies will be silent regarding the origin of the network attack; it remains your responsibility to be vigilant for any terrorism exclusion as well as acts of war exclusions. If you have been reading the newspapers lately, you have seen articles alleging that other nations have sponsored network attacks against companies and defense contractors in the United States. Some of those alleged foreign nations include Iran, China and North Korea. Our government hasn't classified those as acts of war, but at some point those actions could be deemed a precursor to war. A declaration of war usually requires a vote by Congress, which could take months, meaning that an insurer would likely have to wait to respond until the point a formal declaration of war is made. Insurers aren't intending to cover an aspect of war between two countries, but if an insured's computer network is collateral damage, they should provide coverage for the damages and liability.

A commonly asked Cyberliability question concerns the theft of intellectual property by a foreign nation, company or other party. Unfortunately that first-party loss is not contemplated in current Cyberliability insurance policies. There are intellectual property policies out there designed to defend and enforce patents, but it can be challenging to prove who took the information and how to find them. Those policies usually respond to claims once a competing product with the same or similar design(s) is sold on the open market. The theft of digital blueprints may not be enough to trigger these policies. There are also issues regarding the enforceability of intellectual property rights outside the United States.

A quick search of our major metropolitan newspapers shows that a number of industries are in the sights of a variety of hacker groups. The current list of primary targets includes financial institutions, power companies and defense contractors. In light of these ongoing activities of terrorists and state-sponsored hackers, it remains a good time to look at Cyberliability insurance. Your clients may not specifically be targeted by cyber-terrorists, but their network could suffer collateral damage or be used to inflict damage upon others.

Lawsuits based upon the misclassification of employees as overtime-exempt have been extremely common in California for the past 10 years. Given the incentives for filing such suits, it's not surprising that the trend continues. A new case involving an assistant manager working for a major grocery chain provides importance guidance on proper classification and should serve as a reminder for employers to audit any position potentially misclassified.

The rules on employee classification can be tricky and a number of tests must be applied. One of the most important tests focuses on the employee's job duties. In order to be properly classified as exempt, an employee must be "primarily engaged" in exempt duties. This means that an employer facing allegations of misclassification must prove the employee was performing exempt duties more than 50 percent of the time. This can be difficult when an employee also performs non-exempt duties.

This was exactly the issue with the grocery store assistant manager, and the jury was charged with determining whether or not she was misclassified as exempt. The jury was informed that duties such as forecasting sales, scheduling the work of employees, interviewing and hiring employees and preparing reports were exempt. Duties such as stocking shelves, gathering shopping carts and cashiering were non-exempt.

The jury was further instructed that the grocery store was required to prove that the plaintiff spent more than 50 percent of her time engaged in exempt tasks. This quantitative test requires, first and foremost, examining the actual tasks performed by the plaintiff. The jury was told that merely because an employee has the duty of managing is not sufficient to establish exempt status. They were instructed to examine the time spent on all of the plaintiff's activities and classify the time as either exempt or non-exempt. If the plaintiff was simultaneously doing exempt and non-exempt work, the jury was to consider the primary purpose for which the activity was undertaken in counting the time as exempt or non-exempt.

The grocery store argued that the instruction on how to count the time of simultaneous exempt and non-exempt activities was wrong. It proposed a different standard for determining whether a manager is performing exempt or nonexempt work. The standard was based upon the notion that a manager does not stop managing just because she performs some non-exempt tasks. So long as the manager is still actively functioning in her managerial capacity, and addressing her attention to managerial tasks such as observing how the store is running and considering how to make the store perform more efficiently and profitably, how to best model and train the store's employees in proper service activities, how to resolve any employee or operational problems that have arisen or are arising, and instructing employees in that regard, all the time should be considered exempt.

The plaintiff countered that the grocery store's proposed standard is inconsistent with California law. She relied upon an opinion from the Labor Commissioner which concluded that it would be impossible for an employee to be engaged with managerial work while at the same time performing other, non-exempt duties. In other words, there can be no activity which is concurrently exempt and non-exempt. It must be one or the other. The plaintiff argued that where she merely answers a question while stocking shelves, she is not performing managerial work. Rather, she is primarily engaged in non-exempt production work. In order to count as exempt work, the manager must clearly disengage from the non-exempt activity and engage in the exempt activity.

Although the court stated the grocery store's argument had some intuitive appeal, it ruled that California law did not support the "concurrent activity" approach. The court noted that the applicable regulations recognize that managers sometimes engage in tasks that do not involve the actual management of a department or supervision of employees. In those circumstances, the regulations do not say that those tasks should be considered exempt so long as the manager continues to supervise while performing them. Instead, the regulations look to the manager's reason or purpose for undertaking the task. If the task is performed because it is helpful in supervising the employees or contributes to the smooth functioning of the manager's department, the work is exempt; if not, it is non-exempt.

It is extremely common for managers to "roll up their sleeves" and pitch in with non-exempt production work. This is not a phenomenon isolated to small businesses. Employers must be aware that even if a manager never stops monitoring and managing, once the manager engages in non-exempt duties, there is a risk that the entire time performing those duties will be counted as non-exempt time when evaluating the "primarily engaged" test for exempt status.

The court's opinion can be found here.