As an adviser on behalf of the CEO and the board, I recently found myself working with an insurance industry executive suffering from FD&H Syndrome—that’s short for “Fat, Dumb and Happy.” You know the type—the classic myopic naysayer who would rather ignore every outside message and shoot every messenger than to stay lean, smart and open to new insights, including the necessary medicine that may not go down so tastefully? Let me be clear: This is not a personal attack on one individual, but rather a call to awareness of a broader industry leadership concern. As such, here are several symptoms of FD&H I’ve observed in interacting with this executive over the past six months:

• Not Invented Here – If he personally, someone on his team or an industry insider didn’t think of something, it can’t possibly be viable. But isn’t it interesting how often Invented Elsewhere sparks real innovation?
• Smartest Guy in the Room – In several situations, he exhibits a rather obvious need to convey his intellectual prowess. No question he’s an intelligent individual, but astute leaders tend to listen much more than they pontificate.
• That Can’t Possibly Be True – Results of interviews with his staff highlighted key areas for improvement. For each, he had an excuse, a rebuttal or a personal attack against the perceived person who made the comment.
• Entirely Too Input-Oriented – Calls, meetings, focus groups and even some research are all means to an end. But he was so consumed by the input (what and how something was done) that he often lost sight of the outcome (desired business results).
• Paralysis by Analysis – “We need to further discuss that point at the next annual meeting,” “we’ll wait and see” and my favorite, “we need to have more people look into that point,” were all too common responses to uncomfortable findings. Great leaders are action-oriented!
• Don’t Have the Budget – Another common excuse that surfaces often with this executive is budget objections. “Don’t have it”– the budget for this tool, that person, this event or that effort  –  seems to be the de facto response. Don’t misconstrue my point – I’m a strong believer in financial stewardship of limited resources. In my experience, however, budgets are often an issue of setting priorities and seldom strictly a financial issue. Think about it – we’ll prioritize and invest in concerns or opportunities we deem to be important.

It probably won’t surprise you that this COO doesn’t care for outside consultants or advisers. After all, it takes them way too long to get up to speed on the insurance industry nuances, they couldn’t possibly have any good ideas and they often do little more than reiterate what we already know anyway! The first time I expressed my candid view that his product was stale and offered some ideas to reinvent a portion of his business, I got the facial equivalent of the Blue Screen of Doom. “Great, not interested,” he said. When I pressed for deeper insight, he added, “That’ll never work!” Why? “Because we tried it 10 years ago!” What this executive with FD&H doesn’t realize is that he’s quickly working himself out of a job. You see, the board has brought in a visionary CEO who deeply believes in thinking and leading differently. He is out spending time with brokers, attending and speaking at industry conferences. He’s visiting with end clients with the agents and is writing insightful pieces as executive summaries to distribute across the industry. Meanwhile, back at the ranch, the COO is busy covering his behind, demonstrating to peers and subordinates alike his lack of confidence in his operational stewardship. He seems particularly threatened by entrepreneurial thinking by people around him. Whatever his reasons, unfortunately what he is neglecting to see is that he’s a danger to his company, the firm’s clients and the industry. An organization with too many FD&H sufferers will die of stagnation. Allowing “Fat, Dumb and Happy” attitudes to exist within an organization—or worse, spread—leads to increasing irrelevance to your broker community, end customers, agents, investors and other stakeholders. Markets evolve, and so must you. The cure: independent perspective To prevent FD&H syndrome, regularly inoculate your key leaders with independent perspective. They must attend gatherings of senior executives at industry conferences and executive education sessions at respected universities. On a regular basis, they must invite thought and practice leaders (from both within the industry and outside) to host roundtable discussions  or go off-site to work on the business and break the routine. Unlike doctors, independent advisers make house calls. Consultants, thought and practice leaders alike can spark new ideas and unique perspectives and suggest a different lens through which to view the same challenges or opportunities. And if FD&H sufferers stand in the way, overtly or covertly sabotaging every attempt at forward motion, maybe it’s time to retire them to the irrelevant pasture they belong in. My favorite example from my COO interaction is his justification for inaction: “Look how much money I saved us!” As professional interventionists, we come with no agenda. We’re not after anybody’s job. We often bring unique insights and, most importantly, independent perspectives. As outsiders, we can ask, say or do things others within the organization may not be able to for fear of political retribution. Mr. COO has been explicitly directed to evolve the organization, but his severe case of FD&H renders him powerless. I’m trying to give him the vaccine and guide him into alignment with his positional role to lead his organization’s evolution, but it appears my intervention is too late. Invest in relationships that matter Moral of the story? Time is an incredibly effective filtering mechanism. If this particular executive doesn’t change his irrational and protectionist behavior, he cannot continue to be employed by a forward-looking enterprise with a visionary CEO. (And, by the way, the CEO has recently replaced two other FD&H sufferers in the senior leadership team.) Those in the insurance industry who refuse to evolve, as their organizations must, are simply on borrowed time. Sooner or later, this myopic thinking or antagonistic posturing against outsiders will cause him to shoot himself in the foot. “Time wounds all heels,” the joke goes. In this case, the wound is to the entire organization, not just the heel. The critical point for any of his direct reports, as well as several of us outsiders who are genuinely trying to help the organization move forward, is to continue to build productive relationships, up, down and across the organization. If I have the ear of the CEO and the mandate by the board to identify dysfunctions within the organization and recommend opportunities for innovative thinking, a more agile culture and growth strategies, I can appeal to the logical self-interest of this roadblock COO’s peers to think and lead differently. Today’s global, always-on insurance industry is simply too competitive for sufferers of FD&H to last forever. When he’s gone, others will be there, ready to offer fresh and independent insights. For the organization, Fat will become Lean, Dumb will become Smart and Happy will be replaced with Results, as the organization leverages its greater efficiency and effectiveness. Public health warning: If you recognize that someone in your organization is a sufferer of FD&H, don’t wait. Get help now. Takeaways 1. Sufferers of FD&H Syndrome (Fat, Dumb, and Happy) are unacceptable baggage because the insurance industry is boarding maglev trains – and the FD&H folks are still searching for the horse & buggy! 2. The cure for FD&H Syndrome is frequently outsiders’ unique insights and independent perspectives. 3. Time will eventually remove FD&H sufferers, but not quickly enough to meet the demands of today’s agile insurance industry demands.

Second to a building fire, water system failures are the most expensive perils in the construction insurer's risk portfolio.  But there is little incentive for anyone to protect the insurer: After the engineering design for a plumbing system is done, the contractors are only liable for workmanship, and the manufacturer is only liable for materials. The insurer is liable for everything else. The insurer must be aware of the pitfalls of a water system installation to both write the exclusions and investigate for liable cause in the event of a failure. This article discusses a very popular plumbing material commonly referred to as PEX and addresses issues that may not be found in the actuarial tables. PEX stands for “cross-linked polyethylene.” It is a relatively new material (less than 20 years) that has gained widespread acceptance in new construction piping and renovation re-piping for potable water systems. The reasons are obvious – PEX has flex; it is inexpensive; and the installation is fast, simple and reliable. Also, PEX will not burst in freezing conditions like CPVC or copper. PEX installations older than 30 years are common in Europe, with an excellent reliability record. PEX is especially desirable on re-pipes because it can greatly reduce the size of intrusions into walls, as plumbers can snake the material across smaller openings. Unfortunately, there is some vulnerability that the insurer needs to be aware of. While we would always recommend obtaining a professional engineering opinion for assessing a PEX system, this short article will help the insurer understand what PEX is and how to evaluate the big vulnerabilities to using it: brass fittings, UV exposure, water quality and even vermin!. Advantages Cross-linked polyethylene is a modification of polyethylene plastic commonly found in children’s playground equipment. Cross-linking means that the individual "mers" in the "polymer" are bunched up into knots instead of aligned in one direction. This knotting allows the material to return to its original size and shape after being stretched. This is great for holding on to fittings, bending around corners and expanding under pressure, heat or even freezing conditions. PEX is very fast to install and can be threaded through walls without having to necessarily cut out large sections of wallboard. Connections can be inspected visually with great reliability, and precise measurement is not as critical as it is with materials such as copper and CPVC. PEX has been widely used for several decades, with broad acceptance in the market and universal familiarity in the plumbing trade. Many different companies support PEX products with accessories and connectors such as manifolds, hangers and specialty adapters. Concerns -- and Answers PEX is clearly not without its own problems. Fortunately, many of them may be avoidable. In the engineering profession, we understand that it is rare for one single problem to cause a failure; rather, it is the combination of two or more problems that lead to the major accidents. Many times, accidents occur when one party does not communicate with another. With PEX, the owner, contractors, builders, maintenance personnel, etc. must be aware of the system configuration and have a plan for interacting with the system. An insurer can have a strong impact in this area by specifying full disclosure of the hazards. For this reason, engineering counsel is often warranted in a complex system, to assist in assessing risks. Here are six areas that need to be addressed: -- One risk is dezincification of the brass used in fittings. When the zinc content in the brass (an alloy of copper and zinc) is too high, it can corrode away. That leaves a weak and porous copper shell, which can lead to failure conditions ranging from persistent leaks to catastrophic breach of a pressurized line.  At least one class action was filed against the makers of a particular brass fitting that was failing in service and causing substantial property damage. The root cause was found to be the dezincification of fittings (generally purchased in big box hardware stores and made cheaply overseas). This suit was settled for $90 million. The problem of dezincification is now easily avoidable. The owner of a building should specify low-zinc brass fittings or use "engineered plastic" fitting components. -- PEX was also suspected of leaching controversial chemicals such as MBTA, TBA and BPA that are considered toxic. While we cannot testify to the specifics of this claim, the state of California has banned PEX in many buildings. Given the segmented nature of permitting jurisdictions in the U.S., insurers should be aware of these concerns. It is generally accepted that of the three types of PEX (called type A, B and C), type B is the only formulation that does not have any leaching considerations. Leaching concerns can be avoided by giving proper attention to leaching considerations as well as strength and temperature ratings among the three varieties. Insurers should be diligent about knowing what type of PEX is being used. -- The stabilizers in PEX are highly vulnerable to breaking down under UV radiation -- while some sources may claim that some UV exposure is acceptable, we advise that all precautions should be taken to shield this material from UV rays. Even fluorescent lamps and CFLs are to be avoided, especially where piping is routed through a ceiling and may interact with recessed fluorescent lighting. There are many shielding products available to solve this problem. However, PEX is best-suited to total darkness. An insurer can easily specify protection from UV. -- PEX is also known to be slightly vulnerable to chlorinated water and possibly copper ions, resulting from copper corrosion upstream. The temperature rating of the water must be strictly adhered to. Alone, these factors may not be worrisome in many applications. However, when combined with other aggravating factors, the aggressiveness of the water may amplify hazard potential. A test of water chemistry is advisable. -- Most reputable builders will shield a PEX installation to keep a future owner or contractor from, say, hammering a nail into the wall and hitting the PEX. Homeowners should be aware of the potential to cause a leak by intruding through a wall with a nail or saw. Some contractors will use a thermal measurement device to identify water piping before cutting into a wall for any other reason. It is important for everyone who can interface with the system to know where PEX pipes are before cutting into a wall. -- We have seen several instances where mysterious leaks appear in PEX installations when rodents are exterminated. The poison that is often used to kill small animals causes them to become very thirsty and seek water. Rats appear to be especially clever and can discern the sound of water flowing through PEX pipes – then rapidly chew through the PEX to access water. Make sure that all hired contractors -- from electricians to exterminators -- are licensed and experienced when interacting with a building that has a PEX system. Conclusion It can be seen that failures will most likely occur from the combination of two or more seemingly unrelated problems. It is rare that any single person or contractor is aware – on a scientific basis – of all these factors and the way that they can interact with each other. The owner of a building or maintenance personnel cannot be expected to know all of these details – they just install what they buy at the supply shop. It is important that the insurer is aware and able to assess or mitigate the vulnerabilities of PEX and watch the installation closely. A vigilant insurer will retain engineering counsel to oversee building specifications, construction, maintenance and forensics.

Many believe medical quality is sacrificed when attempting to control costs. The logic assumes the way to achieve quality medical care is to deliver more of it. The other side of the same reasoning is that less medical care means less quality. However, the cost-quality balance is not a zero-sum game. These supposed opposites -- high quality and low costs -- can coexist in managing the medical portion of workers’ compensation claims. Quality is not counter to cost management in medical treatment. For instance, managing the number of visits or encounters, prescriptions and the number of specialists the claimant encounters are just a few ways to limit medical services that may, in fact, improve quality. On the one hand, the treating doctor should see the injured worker often enough to understand, direct and maintain control over the recovery process. Yet some physicians embellish their revenue flow by seeing patients more frequently than necessary. To manage excessive utilization of office visits and services, evaluate the data to learn what is reasonable and what is disproportionate. To be effective, the data must be monitored concurrently so that intervention has an impact. The way to objectively measure excessive visits is to monitor and analyze the data. For specific injuries in a given jurisdiction, what is the mean number of medical visits? Outliers can be interpreted to mean either the treating physician is fraudulent or the claimant is in trouble. Either way, focused attention is needed. A claims payment organization can set standards for what should be considered the threshold of excess for given conditions. Beyond that point, the claim is examined and intervention initiated. Some states legislate frequency of care. The state of California, for instance, has placed limits on the number of physical therapy and chiropractor visits. The data system can mobilize notification to the appropriate persons when the benchmark is approaching so that limits are not exceeded. Applying similar methods to a variety of medical visits and services adjusted by diagnosis and other factors such as age and comorbidity will similarly lower costs while sustaining quality. Another example of balancing quality and cost is controlling frequency or volume of services by electronically monitoring prescription practices, especially those for Schedule II or opioid drugs. The literature is replete with examples of ineffective and poor outcomes when opioids are over-used. By monitoring current data, usage and cost can be checked through appropriate intervention. Yet another indicator found in the data reflecting excessive medical treatment is multiple medical referrals. Too often when the patient is not improving, the doctor’s response is to refer to specialists. The data gives up that information by noting the number of medical providers and specialists involved in a claim. Assuredly, a claim with multiple specialists is a claim in trouble, or at least progressing poorly, needing attention. Industry research speaks for itself. Consider this Washington state study, “Long-term Outcomes of Lumbar Fusion Among Workers Compensation Subjects: An Historical Cohort Study.” This study concluded, “Lumbar fusion for disc degeneration, disc herniation and/or radiculopathy in a workers' comp setting is associated with significant increase in disability, opiate use, prolonged work loss and poor RTW status.” Monitor the data to discover outliers early so that interventions will effectively improve outcomes. The key to supporting quality while cutting cost is identifying potential problems early. The longer an issue persists, the more challenging it is to correct it. Consider both medical quality and cost control equal goals. They are not mutually exclusive. The medical profession itself is recognizing and addressing the issues of over-prescribing, over-testing and over-treatment. Medical managers need to assist in the process.

“Delete this email if you are not the intended recipient.” That and similar language theoretically sounds imposing but essentially does nothing to protect sensitive data from any nefarious actors who view it (though they may get a good chuckle before reading the email). Yet almost 90% of attorneys surveyed by LexisNexis for a study it published in May 2014 on law firm security acknowledged using email to communicate with clients and privileged third parties. The vast majority of attorneys surveyed also acknowledged the increasingly important role of various file sharing services and the inherent risk that someone other than a client or privileged third party could gain access to shared documents. Yet only 22% use encrypted email, and 13% use secure file sharing sites, while 77% of firms rely on the effectively worthless “confidentiality statements” within the body of emails. Technology Basics To explain the right approach, I need to start with some technology basics. How does email actually work? By its nature, email is not a terribly secure way to share information. When you send an email, it goes through a powerful, centralized computer called a server on its way to a corresponding email server associated with the recipient’s computer or mobile device. The email passes through any number of servers along the way, like a flat stone skipping across a pond. If that email isn’t encrypted, anyone with access to any one of those servers can read it. What is encryption? Encryption is the use of an algorithm to scramble normal data into an indecipherable mishmash of letters, numbers and symbols (referred to as “ciphertext”). An encryption key (essentially a long string of characters) is used to scramble the text, pictures, videos, etc. into the ciphertext. Depending on how the encryption is set up, either the same key (symmetrical encryption) or a different key (asymmetrical encryption) is used to decrypt the data back into its original state (called “plaintext”). Under most privacy and data breach notification laws, encrypted data is considered secure and typically doesn’t have to be reported as a data breach if it’s lost or stolen (so long as the decryption key isn’t taken, as well). Three Methods to Secure Email 1) Encrypted email. Properly encrypted email messages should be converted to ciphertext before leaving the sender’s computer or mobile device and stay encrypted until they are delivered to the recipient (remaining indecipherable as they pass through each server along the way). This approach is referred to as end-to-end encryption. Until fairly recently, email encryption has been a somewhat technical and cumbersome process, often requiring both sender and recipient to use matching encryption programs and carefully manage their own encryption keys. Now, there are plenty of encrypted email offerings from larger commercial companies, as well as a number of new and interesting email encryption services that have become available in the wake of disclosures made by Edward Snowden. When choosing one, be mindful of where the service you use is located (including where the servers handling the emails on the system actually are). Snowden used a well-regarded U.S.-based encrypted email provider called Lavabit. Not long after Snowden’s revelations came to light, federal law enforcement forced Lavabit to secretly turn over the encryption keys safeguarding its users’ private communications. Lavabit’s founder tried to resist but was overwhelmed in federal court.  As a result, he shut down the service. Another well-regarded service called Silent Mail followed suit shortly thereafter as it felt it could no longer ensure its customers’ privacy. Both have since relocated to Switzerland and are planning to introduce a new encrypted email service called Dark Mail. Larger companies offering encrypted email services typically control the encryption keys and will decrypt data before turning it over in response to a warrant or subpoena (including one coupled with a gag order). In addition, email service providers can legally read any email using their systems under Title II of the Electronic Communications Privacy Act, referred to as the Stored Communications Act. Moreover, emails remaining on a third-party server for more than 180 days are considered abandoned. Any American law enforcement agency can gain access to them with a simple subpoena. Accordingly, if you choose to use a service based in the U.S. or another jurisdiction with similar privacy protections, be mindful of who controls the encryption keys. 2) Secure cloud storage. Another way to securely communicate or share files with a client or privileged third party is to place communication and files in encrypted cloud storage and allow the client or third party to have password-protected access to them. Rather than a direct email with possible attachments, the client or third party would receive a link to the securely stored data. The cloud service you select should be designed for security. Before you ask: DropBox and Google Drive would not be suitable options. There are a number of services offering well-protected cloud storage, and it’s important to do your due diligence before selecting one. If it all seems a bit much to figure out, two services I would recommend looking into are Cubby and Porticor. 3) Secure Web portal. A third approach is to place communications and files in a secure portion of your firm’s network that selected clients and privileged third parties can access. As with the secure cloud storage option, the email sent to the client or third party would have a link back to the secure Web portal’s log-in page. An advantage to this approach is that the communications and files do not actually leave your computer network and should be easier to protect. An additional consideration: A government snoop or competent hacker doesn’t necessarily have to target a message while it’s encrypted. A message that is protected by strong encryption when it’s sent or held in secure cloud storage can still be intercepted and read once it has been opened or accessed using a mobile device or computer that has been compromised. The same holds true for intercepting a message before it’s encrypted initially. What steps can you take to protect yourself? The software on any computer or other device that can potentially access confidential data should be kept as up-to-date as possible. Devices should be protected against possible data loss if they are lost or stolen. And all firm personnel should have regular security awareness training with respect to social engineering and other threats. At the end of the day, there is no single silver bullet to provide perfect security. But there are genuinely helpful steps that you can take to better protect your electronic communications and keep your sensitive data confidential.

At the recent meeting of the Insurance Accounting & Systems Association, President Bill Clinton said in his keynote speech, “Share the future or fight over it.” As an industry, we have a history of collaborating, which has benefited all of us, but we need to raise the bar to succeed in this fast-changing world. Other industries and businesses are changing all around us and seeking to encroach on and challenge insurance. So we must embrace open innovation, collaboration, crowdsourcing and ideation with new standards and at higher levels within companies, within the industry and even between industries. The topics of innovation, change, and emerging technologies were the focus of this year’s IASA “Around the Horn” industry analyst panel. I had the pleasure of representing SMA, and as I prepared for the panel session I found myself taking a step back. I realized that when leveraging the vast base of SMA research and insights and blending that with the broader strategic business implications for the industry, a powerful story emerged. A wave of disruption and innovation has hit our industry with an intensity that we didn’t quite expect. In the spirit of sharing, for those who did not attend, here is a summary of my rapid-fire responses to the panel questions to help inspire you, challenge you and get you to embrace collaboration as an industry to help you quickly define your future: --Innovation is happening all around us. We are at the forefront of what is probably the greatest disruption in history: the digital revolution. And it is affecting every industry. This revolution is fueled by the breadth and depth of the new technologies that are changing customer engagement, transforming products and services, redefining business and revenue models, breaking down barriers to new entrants and more – look at the Apple iPhone, introduced 7 years ago, and the resulting destruction and construction of industries and businesses. Today, the bar is set at a new high. Operational excellence is an absolute. Innovation is necessary for future success. And the Next-Gen Insurer is being defined and shaped. --Insurers must have a strong culture that combines the power of open innovation with an ecosystem that empowers collaboration. If we don’t define our own future as an industry, other industries may try to step in and define it for us. --We must focus on the constantly connected customer. We all must recognize that, in this digital revolution, the customer is in control and is defining the channels that he or she wants to use – from purchasing through service. As insurers seek to become digital insurers, they must have unified digital strategies that create seamless, consistent and connected customer experiences in an omni-channel environment. Think like Google, Zappos, Apple, Nike, AT&T and others that are the new digital leaders. --Product development and configuration are key differentiation levers. These capabilities are shaping today’s competitive landscape, with speed to market of paramount importance. The pressure to stay current, deliver new offerings and price accurately is driving many insurers to seek innovative solutions. The average new product implementation timeline is nearly 7.5 months. Less than 2% of insurers can implement in less than 30 days. But some innovative companies have found a way to implement in less than 5 days! Another emerging capability of even greater importance is the enabling of product co-creation – customers can help to configure their own products according to their wants and needs. --Usage based insurance (UBI) is not just about product; it’s a whole new business model. UBI moves the focus from risk assessment to risk prevention. And its application is much larger than auto insurance. It is about the connected car, the connected home and the connected life. UBI is the precursor of a broader impact of sensors and the Internet of Things that will allow us to connect the dots between data for new customer products, services, outcomes and experiences – providing a real-time view of risk. --Data is the new currency in the digital world. Data has always been seen as the lifeblood of the industry, but its strategic value is now at the forefront. And big data, business intelligence and analytics continue to take the insurance industry by storm. What is holding insurers back is the lack of a data management strategy and a deficient level of data mastery. Both strategy and mastery will be needed to unlock the full business value of data, whether transactional, unstructured, internal or external. --Social media is a subset of digital data. Customers are sharing information about all aspects of their lives – social, pictures, online discussions, GPS, sensors, mobile technologies and more – and all this data is in the cloud. People are able to search their recorded memories and use new tools that can influence and shape their lives like never before. New companies are creating digital lockers for data that can be stored and managed by customers to be used in innovative ways. When new solutions like these form around customer logging activities, the question from customers will be: “Is the value of what I'm revealing worth the services I'm receiving in return?” The key issue will be the customers’ control of their data. --Digitalization is happening and is dramatically destructive. A foundational change is taking place in the way all businesses are approaching value creation. In today’s hyper-connected world, companies are moving from managing value chains to managing ecosystems to power their businesses. The ubiquitous connectivity of people via the Internet and emerging technologies is disrupting traditional business assumptions about how to engage customers, the products and services offered and, ultimately, business and revenue models. Just look at these transformations: from the Yellow Pages to Yelp, hailing a cab to Uber or Lyft, booking a hotel to Airbnb and policemen managing traffic to managing traffic with crowdsourcing Waze. All of these represent the disruption happening all around insurance and point to the imminent disruption that will transpire within insurance. --Mobile is much broader than the phone and tablet. It includes smartphones, MP3 players, e-readers, in-dash car electronics, cameras, portable consoles, home entertainment, appliances and any device or sensor that connects to the internet to share data. And there is now a continuing evolution of mobile apps from multi-purpose websites or portals to single-purpose apps. This will compel companies to design apps as a service layer within an enterprise technical architecture that will enable seamless integration and connectivity between apps – critically important with the Internet of Things. --Cloud is increasingly mainstream because that is where the data is moving. Two years ago, it was an option in core system RFPs, whereas today it is increasingly a preferred choice. The future will be the Cloud of Things, a world of distributed data, devices, technology, intelligence, computing, etc. that is highly connected and will enable the creation of products and services. --The issue is “customer empowerment,” not "customer-centricity." Customer-centricity is a 1990s/early 2000s term and is only a subset of customer empowerment. We used to shape the customer experience; now it is shaped for us by the rest of the world. Customer empowerment defines new engagement models. As customers gain market power, they are increasingly comfortable with technology, have a stronger voice and use it to demand collaboration. Insurers must view all technology as touching customers, because it influences the customer experience, both directly and indirectly, ultimately shaping and defining the customer relationship. --As an industry, we are seeing challenges to our long-held assumptions and business models coming at us every day. Technology is now super-connected, creating new experiences, new products and services, new outcomes and new business and revenue models that were not possible a few years ago. Just as the iPhone provided a platform of possibilities, core systems – integrated with an array of new technologies like mobile, social, Internet of Things, cloud, big data, analytics, driverless vehicles, biotechnology and much more – have the potential to transform our industry … and to do it on our own terms. So be inspired. Be creative. Be collaborative. Be bold. Let’s create and share the future together!

This is a scary story about massive invasions of privacy in the U.S. This is a travesty in my opinion and one that needs exposure. According to a story in Bloomberg, doctors and hospitals are watching what you eat, buy, wear and more. Why? To better manage your health, of course. If you buy a donut somewhere, whether for yourself or as a treat for a grandchild, a company like Acxiom or LexisNexis may be recording that buy and selling that information to your insurer but only for “marketing.” The Carolinas HealthCare System for one…”is placing its data, which include purchases a patient has made using a credit card or store loyalty card, into predictive models that give a risk score to patients.” “University of Pittsburgh, which operates more than 20 hospitals in Pennsylvania and a health insurance plan, is using demographic and household information to try to improve patients’ health.” Remember the Penn State wellness scandal? Is there something bad in the water in Pennsylvania? Okay let me get this straight.  If you buy one of the following, your doctor and your health system really should know about it, and it should become a part of your medical record?

• a dozen donuts
• a cigar for your grandfather
• a pack of condoms
• a burger at McDonalds
• a half pound of deli salami
• a steak dinner
• a milk shake
• a martini after work
• a case of diet soda

How about too many/much:

• pounds of coffee (even if it is for your club)?
•  packages of hot dogs (they won’t know you're feeding your kid's entire soccer team)?
• popcorn?

Or not enough:

• fresh fruit?
• veggies (even if you grow your own)?
• skim milk?

How about if your teenage son buys a package of condoms? That needs to be in his medical record for your health system/insurer to peruse? This is nuts…plain nuts, but, alas, the predicable result of the nation’s and employers’ obsession with collecting your personal heath information. I guess if your want privacy you’d best pay cash. But maybe face recognition tools will thwart that, too. For the record, I can’t think of anything I buy that should be kept secret, but the idea that my health systems can access my purchase is utterly repugnant to me. Here is the understatement of the week: Jorjanne Murry, an accountant in Charlotte, NC, who has Type 1 diabetes, says: ‘I think it is intrusive.’ “ BTW:  I’m not a privacy nut, but these kinds of data will create an abundance of “false positives” and rabbit trails.  I see no real value in this nonsense.

Navigating today’s complex legal and regulatory framework surrounding data breaches can be a daunting process for even the most sophisticated organization. In the United States, there is not currently a national uniform data breach notification law. Instead, organizations experiencing a data breach face a patchwork of 47 different potentially applicable state laws to-date, in addition to industry-specific federal laws such as Gramm-Leach-Bliley. Adding to the complexity, more data is being stored in the “cloud,” thereby allowing potentially sensitive information to move more seamlessly across country borders, and requiring organizations to be familiar and compliant with international laws and regulations. Understanding the various and changing state, federal and international laws and regulations will be increasingly important for organizations moving forward. In addition to keeping pace with evolving state, federal and international laws, organizations will need to ensure that effective data breach and cybersecurity incident response plans are in place to address breach incidents — whether they are local or global in nature. Federal and Foreign Standards — A Renewed Focus on Data Breach Regulation With the recent rise of highly publicized breaches top of mind, several efforts have been made by congressional committees aimed at forging a comprehensive federal data breach notification law. Although lack of consensus on specific issues related to the preemption of state laws has halted this progress in the past, federal legislation is once again a top priority for lawmakers. Legislators in several states are also considering expanding existing breach notification laws by being more prescriptive about what information must be included in a notice. This may include such information as the time of the breach and the type of data affected. On an international level, stricter data breach notification requirements are already underway. The European Union implemented new data breach requirements last August, requiring telecommunication operators and Internet service providers to notify national data protection authorities within 24 hours of detection of a theft, loss or unauthorized access to customer data, including emails, calling data and IP addresses. The EU is now also considering expanding this requirement to all commercial sectors. Data Breach Preparedness — Going Beyond the Regulatory Checklist The number of data breaches is anticipated to continue to increase throughout the year, both within the U.S. and across the globe. Between January and March of 2014 alone, nearly 200 million data records were stolen, the equivalent of approximately 93,000 records stolen every hour. This is an increase of 233 percent over the same period of time last year. These facts, together with the specter of more — and more stringent — laws and regulations present organizations with increasingly important and complex data breach response issues. Unfortunately, most U.S.-based organizations do not appear to be sufficiently prepared to deal with an impending data breach incident. Even after experiencing a breach, a surprising 39 percent of companies surveyed last year indicated they still have not developed a formal data breach response plan. And since 2001, the Federal Trade Commission has brought more than 50 cases alleging that organizations failed to protect consumers’ personal information. Generally, settlements with the FTC require companies to implement a comprehensive information security program and undergo evaluation every two years by a certified third-party. Facing increased regulatory scrutiny, organizations are advised to work closely with legal counsel to ensure that they are prepared to comply with state, federal and international laws and regulations and otherwise are best positioned to mitigate the fallout of a breach incident — both financial and reputational. 1. Develop a Diverse Response Plan According to research from the Ponemon Institute, having an up-to-date response plan can save a business nearly 25 percent per compromised record. The average cost of a breach in the U.S. last year was $188 per record, with each breach reportedly exposing an average of 23,647 records. At that rate, a 25 percent reduction could save a company $1.1 million per breach. Organizations are advised to have a diverse response plan in place that clearly outlines protocols and a response team for security incidents, with scenarios mapped out for both the U.S. and abroad. Just as data breach regulations evolve, so should a data breach response plan. It is important for an organization to regularly audit and adjust its preparedness plan in order to include new technologies and address changes in the legal, regulatory and security landscapes. 2. Engage Outside Legal Counsel Many law firms have attorneys that are dedicated to assisting organizations in developing effective breach incident response plans, including a protocol for who to call within the organization. Additionally the protocol should identify which law firm “breach coach” to notify, in addition to other responders (which are preapproved by the organization, its outside counsel, and preferably by the organization’s insurance carrier) that will undertake critical crisis management functions, such as notification to persons whose personally identifiable information or protected health information may have been compromised, credit monitoring, call center services, forensics, and public relations efforts. Effective incident response and crisis management planning can greatly mitigate an organization’s financial and reputational fallout following a data breach incident. In addition to formulating an effective breach response plan, the engagement of outside counsel first in the wake of a breach incident, before other breach responders, will preserve, to the extent possible, the attorney-client privilege and the work-product doctrine. 3. Communicate With Customers Part of an effective response plan is ensuring quick, clear communication with potentially impacted individuals and providing guidance and next steps on how they can protect themselves. Open communication following a breach can help maintain trust and preserve brand reputation — arguably an organization’s most valuable asset. It is also important to note cultural and language differences may impact a customer’s response to a data breach, and notification materials. When managing an international breach, it can be beneficial to seek counsel on how to mitigate any issues that may arise due to these different standards, and communicate effectively. Regardless of the legislative environment, data breaches present a substantial business risk to organizations both in the U.S. and across country borders. Creating a diverse security incident response plan and proactively engaging with legal counsel, local authorities and forensics experts will enable companies to better handle an incident when it occurs.

Insurance is about collectively managing risks of every person, place or thing. Yet, at best, insurance is the evil step sister of Finance, as the latter, while just as intangible, managed to penetrate mainstream via iconic symbols such as Wall Street and the American dollar, and isn’t that the best brand on earth! Anyhow, that’s all about to change. As the saying goes “If you can dream it, you can do it”. So we went on dreaming…What if insurance spread to the realms of America’s favorite publications because it finally received the attention it deserves?

1. From Wired to Hired   

 

2. From GQ to IQ

   

3. From Vogue to Fraud

4. From Cosmopolitan Catmopolitan

* Miley Cyrus shoot for Cosmopolitan magazine

5. From Playboy to Playsafe

Employer and other plan sponsors should start working now with their insurers, administrators and advisors to understand the implications of and their options for addressing the "Transitional Reinsurance Program" and other new Patient Protection & Affordable Care Act (ACA)-associated cost and plan design changes  so that they are prepared to finalize and implement their health plan design, contracts and arrangements in time to meet the accelerated deadlines for notifying participants of plan changes and otherwise implement their plan changes for the upcoming plan year. The impending imposition of  Transitional Reinsurance Program assessments are only one of a myriad of new and pre-existing federal health plan rules and associated market changes impacting the design of employer and union-sponsored health plans.  Since ACA now also requires 60 days advance written notice of material health plan changes, .  When making these decisions, employer and other health plan sponsors and their advisors, administrators and insurers  should not only focus on the technically new mandates but also the allocation of fiduciary and other responsibilities, liabilities and other plan and services agreements terms.  Plan sponsors and their fiduciaries historically have underappreciated the significance of these allocations or presumed that their vendor contracts allocate responsibility to the service providers and vendors to match the sales pitch.  Always rarely the case, the changes in the marketplace and the law make it even more likely that sponsoring employers and their leaders of even plans that carefully reviewed and negotiated these responsibilities in their past contracts need to carefully look at these plan and contractual terms carefully. The Transitional Reinsurance Program is one of a series of new ACA-imposed assessments that can impact the plan design and costs.    Proper understanding of these rules is critical for plan sponsors and their fiduciaries to ensure that they don't unintentionally assume significantly greater liability for their self-insured health plans in an attempt to design around a relatively small by comparison ACA assessment. Section 1341 of the Patient Protection & Affordable Care Act (ACA) requires the establishment of the reinsurance program to provide for stabilization of funding for exchanges.  Funding for the costs of the program is accomplished through amounts assessed upon insurers and self-insured plan third party administrators.  ACA § 1341 accomplishes this by providing for:

• The establishment for each State of a transitional reinsurance program stabilize premiums for coverage in the individual market from 2014 through 2016;
• Requiring all health insurance issuers and third party administrators on behalf of self-insured group health plans, to pay contributions to support reinsurance payments that cover high-cost individuals in non-grandfathered plans in the individual market.

Registration is now open for a series of webinars that the Department of Health & Human Services will host on "The Transitional Reinsurance Program: Contributing Entities and Counting Methods" on July 14, July 18 and July 23, 2014 from 2:00 p.m. - 3:30 p.m. EST.  The upcoming HHS webinars will cover the same information.  They will focus on reinsurance contributions including who is a contributing entity and how a contributing entity can calculate its annual enrollment count to determine reinsurance contribution amounts. The intended audience for this webinar is health insurance issuers, self-insured group health plans, third party administrators (TPAs) and administrative services-only (ASO) contractors.  To register for the HHS webinar and to obtain additional information see here. Understanding how the Transitional Reinsurance Program assessments will be calculated is one of many critical steps in making plan design changes.  When considering whether to take advantage of options for minimizing these assessments, however, employer, union and other plan sponsors need to consider whether the liability and other consequences of meeting requirements for avoidance of the assessments is warranted by the anticipated savings.  With superficially it might seem desirable to avoid the payment of a few dollars per covered lives associated with the assessment, employers and other sponsoring organizations and the officers or other leadership employees involved in plan design or administration should critically review the effect of meeting these requirements specifically, as well as their proposed vendor contracts and associated plan documents and communications on their personal and organizations' fiduciary and other liabilities.  To the extent that existing or expanded fiduciary liability cannot be avoided, it will be critical that the sponsor and its leadership ensure that proper steps are taken to select, credential, bond, and appoint the persons who will be or help carry out fiduciary or other plan-related responsibilities.  Additionally, most plan sponsors will want to consider exploring the availability of fiduciary liability insurance coverage to help mitigate the potential liability risks associated with plan sponsorship.

As an insurance professional, working with objections can be difficult. The only way to grow is to show people that you’re a professional and offer suggestions to help them solve problems based on your products or services.We need to work through objections and not try to overcome them. When we try to overcome objections, someone wins and someone loses. Objections are not only a natural part of the sales process, they help you to clarify what is on the prospect's or customer's mind. For you to help the prospect or customer with a problem, it’s important to understand what and where are the roadblocks. In other words, what concerns do they have about what you are offering? Their perception is their reality. Asking questions is the way to learn where they are coming from, what their reality is. Who Consider the people you are going to contact. What is the best time to call them? Misunderstanding can cause a loss of rapport and potentially a sale. What Test yourself on all of the questions that could possibly come your way so you are fully prepared. Continue to learn regarding the offers and services you are providing. However, when you receive an objection, it’s common to start explaining all the reasons why the prospect or customer should choose your offers and services. We’ve been taught by the “professionals” to respond that way. Well, guess what? It doesn’t work. If you are patient and listen closely, an opportunity will present itself for you to begin to ask questions instead of explaining. Ask first, then tell. Why Let’s face it, most people do not like being approached by a salesperson. Why? Because they have probably had a bad experience. Prospects or customers might believe that if they needed your products or services they would have contacted you. The reason for a sales call is to remind potential or past customers of what you have to offer and how you can potentially solve their problems, even problems they might not be aware of. How The best way to work with objections when making sales calls is to attend sales training sessions, learn from other people and learn from your mistakes. You should also care for your customers and take their feelings and families into consideration. When you do these things, you’ll have more success. How many times have you heard the objection, "I'm working with someone else" or "I'm happy where I am"? It happens all the time, doesn't it? If you want to engage the prospect, you must begin by asking questions. Stay focused on the purpose of the call and be persistent. However, you always want to leave them better than you found them. When you state the purpose of your call, be sure to listen. If the prospect reveals something to you, capture it. Don’t be so focused on your script and saying what you want to say that you miss an opportunity to engage the customer. Formula for Success:

• Listen and don’t get defensive
• Begin to ask a series of questions
• Get of of the objections and focus back on the purpose of the call.

Examples of questions begin with:

• Who
  • Who are you currently working with?
• What
  • What type of strategies have you implemented that will ____?
• When
  • When was the last time you sat down with your adviser and reviewed your plan?
• Where
  • Where are you in the process?
• How
  • How long until you ____?

After you have asked a series of questions, ask for the appointment again. Say things such as: "I am not asking you to change anything, and I don’t want to duplicate anything you are doing. The purpose of the meeting would be to give you an opportunity to compare our unique approach with what you have done and see if it makes sense. Okay?" Always focus back on the purpose of the call. Refrain from getting defensive. Focus on asking questions and listening to responses. Re-engage the prospect, then restate the purpose, be persistent and ask for the meeting or sale. Remember, you must offer suggestions to help prospects solve problems based on your products or services. Work through objections without trying to overcome them, seek to leave the prospect better than you found him and focus on win-win results. This is the way to work with objections as a professional.