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

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

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

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

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

The Affordable Care Act “pay or play” penalty under §4980 now, after a delay, takes effect for large companies in January 2015 and for smaller companies (with at least 50 employees) a year later. There is a great deal for all employers to do now to get ready. Here are the 13 steps you should take now: 1. Know Your Workforce and Proper Worker Classifications ACA decides what rules apply to which businesses or health plans based on the number of employees a business is considered to employ, their hours worked, their seasonal or other status and other relevant classification. Rules vary in the relevant number of employees that trigger applicability of the rule and how businesses must count workers to decide when a particular rule applies. While employers historically have collected and retained the names, place of residence, family relationships, Social Security number and other information about employees, these requirements will continue to expand dramatically.

An article in Business Insurance(http://www.businessinsurance.com/article/20140521/NEWS03/140529962?tags=334%7C342%7C58%7C339%7C257%7C74) describes how a speaker at a conference said productive gains justify company-sponsored wellness. He was quoted as saying, “Many employers have implemented disease management programs to try to control health care costs, but the big savings are elsewhere.”   His “elsewhere” is  productivty gains. Whenever I hear someone make a claim like that I ask one simple question: if an employer is having productivity gains, then are its wages as a percent of sales declining? I’ve asked that question dozens and dozens of times. Not one person has ever said they even looked at that most obvious measurement of true productivity gains…not one. When discussing productivity gains, the only valid measurement is declining payroll or wages as a percent of sales. After all, if employee productivity at a company is up, say, 10%, the employer should need 10% fewer workers

Since about 1980, healthcare “experts” have been getting a tremendous amount of attention with claims that patients need to be better educated about their health and more “engaged." Let’s review a little history and see how that plan has worked. Around 1975, healthcare spending and insurance premiums started surging about 12% 15% per year. Those spending increases spurred the development of health maintenance organizations (HMOs), preferred provider organizations (PPOs) and other forms of managed care. A common word to describe those spending increases was “skyrocketing.” “Experts” thought that better-educated consumers would help contain rising costs, so, starting about 1980, companies started flooding their employees with brochures, information packets of various levels of glossiness, paycheck stuffers, break-room posters, table tents, meetings, health fairs, etc. But employees didn’t get much use out of that education (read: ignored it), and it certainly was not effective in changing consumer speeding habits. Starting in the 1990s, companies additionally set up or “rented” websites, both intranet and Internet, where employees could access health information. Problem is: Employees rarely accessed them. In the 2000s, companies started setting up special Internet sites for employees, ones that included employees’ personal health information. Sounds terrific, right? Just what the doctor ordered, right? The problem was: Few employees used such sites. Some were very expensive, but one in a hundred workers -- or fewer -- ever used them. Even fewer used them more than once. The truth is that employees have never trusted their employers or its agents or insurers for health information. Where do they want to get health information? From their doctors, of course. Wellness became popular as a way to drive consumer education and “engagement” (whatever the term “engagement” means). When employers began to realize that was not working, they typically changed wellness vendors. When that failed (predictably), employers tried to provide incentives to employees to become educated and “engaged.” After more failure, employers moved to the latest iteration: coercive wellness and education programs. But if all the other iterations of wellness-style employee education worked so well, why coerce employees? My prediction: The end is near. Big penalties designed to improve employee “engagement”? Gimme a break. Coercion leads to more distrust, lampooning, disloyalty, unionization, etc. Look at the mess Penn State created, or CVS. What were they thinking?  Perhaps this: The beatings should continue until morale improves. Or, as Al Lewis and Vik Khanna say in Surviving Workplace Wellness, employers are going to make their employees happy whether they like it or not. Alas, lately I’m seeing a resurgence in 1) the notion of flogging employees until “engagement” improves and 2) a new concentration on more gimmicks to educate consumers/patients. Using coercion to improve employee engagement?  Have HR executives gone off the deep end? Hmm. Makes you wonder.

All great performers are highly disciplined. Look no further than to Hall of Fame athletes, who often reflect on their careers and understand that self-discipline was an essential ingredient to their success. Improving your self-discipline will have a profound impact on maximizing your potential. Consider these 10 tips:

1. Set attainable goals: Start small and set yourself up for success.
2. Make them your priority: Design your daily life around taking steps toward achieving the goals you have set.
3. Reward yourself: When you meet a goal, treat yourself to something you love.
4. Involve others: Turn to those you trust and who care about your success. If you are now accountable to them, not just to yourself, you may find that you are more motivated to stay the course.
5. Come up with a phrase that will be your reminder when things get tough: Practice self-talk. Something like “keep going” or “yes, I can!” might work well.
6. Strengthen your inner focus: Spend some time each day or week on an activity that requires quiet focus.
7. Don’t stop because of setbacks: If you slip, don’t let that be an excuse to quit altogether.
8. Avoid distractions: Until you are in a stronger place with your self-discipline, avoid people or places that will derail your efforts.
9. Get on a routine: The power of a routine cannot be overemphasized. It creates a flow to your day that you will soon find yourself addicted to.
10. Eliminate excuses: Do not allow yourself to make an excuse for missing a single day in working toward achieving your goals.