Tag Archives: 2015

The 10 Top Trends From a Pivotal 2015

Many will pinpoint 2015 as a pivotal year – the turning point in the transformation of the business of insurance. External influencers and rapid technology advancements are resulting in major shifts in strategy, areas of focus and investment. Many insurers are thinking big – beyond the typical incremental change and toward bold moves that will establish them as leaders in the digital age.

Here are the top 10 trends that laid the foundation for this pivotal year and positioned the insurance industry for an amazing 2016 and the years beyond. The trends are dominated and enabled by technology developments, which continue to be interwoven into the fabric of insurance. The trends are:

  1. Digital transformation is taking hold, even in insurance.
  2. Innovation and innovative thinking have no boundaries.
  3. Huge $dollars$ being are being poured into start-ups.
  4. New ecosystems are emerging.
  5. Distribution channels are under strain, leading to shifts in investments.
  6. Core modernization is required and continues to consume insurers.
  7. Positive shifts are occurring in customer focus and priority.
  8. New tools, data and models are being embraced but are still a struggle to adopt.
  9. Many technologies are maturing and being adopted – cloud, analytics…
  10. Tech advancement is still outpacing the ability to consume.

Insurance executives can no longer ignore or play down these trends. Although the terms “disruption” and “transformation” are popping up everywhere, they are no longer buzz words but reality.

It would be a mistake to dismiss the magnitude of the shifts. As one senior industry executive put it, “Our industry will be substantially different five years from now. Companies that do not aggressively transform will be at risk of failing.”

This view is shared by many industry leaders, who sense that the tide is shifting in the new digital era. Unfortunately, many others are hoping to ride out the rest of their career without driving change, an approach that is risky.

The full research brief describing the trends is located here.

The Worst Doctors From 2015

This list of worst doctors came to me via email, and I thought it was too good not to post. The origin of this is a Medscape article written by Lisa Pevtzow, Deborah Flapan, Fredy Perojo and Darbe Rotach. Please read the Medscape article in full. It’s a gem. The Medscape article shows pictures of these offenders.

Here is a summary of the worst doctors:

1) In July, Farid Fata, MD, was sentenced to 45 years in prison in Detroit for administering excessive or unnecessary chemotherapy to 543 patients. Some of them he deliberately misdiagnosed with cancer. In addition to enduring needless chemotherapy, the patients suffered anguish at the possibility of death. The massive criminal scheme netted at least $17 million from Medicare and private insurers.

2) Ophthalmologist David Ming Pon, MD, was found guilty in October of cheating Medicare by pretending to perform procedures on patients who did not need them. A federal jury convicted Dr. Pon on 20 counts of healthcare fraud. The scam netted Dr. Pon more than $7 million, according to the Department of Justice.

3) Joseph Mogan III, MD, was sentenced to about eight years in prison in March for operating two “pill mills” in suburban New Orleans. He gave out illegal prescriptions for narcotics and other controlled substances on a cash-and-carry basis. Dr. Mogan might have received a longer sentence had he not previously testified against a former New Orleans police officer who gave advice on how to operate under the radar of law enforcement. Prosecutors said the officer helped Dr. Mogan and his co-operator, Tiffany Miller, because Miller provided sexual favors and thousands of dollars in cash.

4) Dr. Aria Sabit pleaded guilty in a federal district court in Detroit in May to conspiring to receive kickbacks from a medical technology company. In 2010, Apex Medical Technologies, which distributes spinal surgery instruments, told the surgeon that, if he invested $5,000 in the company and used its hardware, he would share in the revenue. Ultimately, he received $439,000 from his investment. Dr. Sabit also pleaded guilty to stealing $11 million in insurance proceeds after billing Medicare, Medicaid and private insurers.

5) A Virginia jury awarded a patient $500,000 in June after an anesthesiologist made mocking and derogatory comments, which the patient accidentally recorded on a cellphone while he was sedated. The case inflamed the public after the Washington Post reported the story. The recording captured anesthesiologist Tiffany Ingham, MD, commenting on the patient’s penis and making fun of him. The surgical team also entered a fake diagnosis of hemorrhoids into his medical record.

6) A former researcher at Iowa State University was sentenced to 57 months in prison in July for systematically falsifying data to make an experimental HIV vaccine look effective. The researcher, Dong Pyou Han, PhD, was supposed to inject rabbits with a vaccine and test their sera for HIV antibodies. Dr. Han not only gave the head of the lab false test results about the vaccine, but he also injected the rabbits with human antibodies.

7) The Washington Medical Quality Assurance Commissions suspended the license of Arthur Zilberstein, MD, in June for sexting from the operating room. The commission said Dr. Zilberstein “compromised patient safety due to his preoccupation with sexual matters” during surgery. He was charged with exchanging sexually explicit texts during surgeries when he was the responsible anesthesiologist, improperly accessing medical-record imaging for sexual gratification and having sexual encounters in his office.

8) An Ohio cardiologist was convicted in September of billing Medicare and other insurers for $7.2 million in unnecessary tests and procedures. Dr. Harold Persaud put lives at risk by performing stent insertions, catheterizations, imaging tests and referrals for coronary artery bypass graft surgery that were not medically warranted, according to prosecutors.

Alas, such patient mistreatment and fraud is not that rare, as my readers.

2015: Pivotal Year for Emerging Technology

The Consumer Electronics Show (CES) has been the preeminent show for seeing, hearing and feeling what is emerging and hot in consumer electronics. It is the place to go to see new electronic games, mobile devices, TVs, home appliances and other electronics that will be coming to market to amaze and excite us. Remember Onewheel, a self-balancing, one-wheeled, motorized skateboard? Occulus Rift virtual reality? The curved HDTV? Or the best in laptops, tablets and smartphones?

The 2015 show may have been an inflection point, where CES also becomes the leading edge for emerging technology that should be of keen interest for businesses, especially insurance. It is the year where new products will go from science fiction and future thinking to Main Street reality and demand! Move over, George Jetson. For insurers, the future starts right now!

Emerging Technologies

The proliferation of emerging technologies seen at CES is considered by many to contain some of the greatest change agents since the introduction of the Internet, offering breakthroughs that will challenge businesses in many ways. In our 2014 research report, Emerging Technologies: Reshaping the Next-Gen Insurer, insight into the adoption, investment plans and opportunities for business of nine emerging technologies reveals the vast potential for transforming insurance. The research found that adoption is being led by the Internet of Things (IoT) followed by wearables, artificial intelligence (AI) and drones/aerial imagery, with driverless vehicles coming up quickly behind. In fact, five of the nine technologies are projected to arrive at or go well beyond the tipping point within three years, and all nine to surpass the tipping point within five years. CES has reinforced this view. Insurers that have not accepted as fact the fast-paced adoption and impact of these emerging technologies should take great pause. Here are a few reasons:

Autonomous vehicles became one of the hottest items during the show, and even before. Audi drove its autonomous vehicle from Silicon Valley to Las Vegas, generating pre-show buzz. Kicking off the show was Mercedes showing a concept car that looked more like a futuristic living room than a car. These and the other major automotive companies all demonstrated their acceptance, commitment and fast adoption of this new form of transportation introduced by Google just a couple of years ago. At this show, many of these automakers announced their plans to offer autonomous vehicles beginning in 2017! Note they did not make the announcement at the traditional Detroit Auto Show the following week. The future of autonomous vehicles will quickly be a reality, and so much sooner than most thought. So share the road, George J!

The Internet of Things (IoT) was everywhere, exemplified in the connected car, connected home and wearables … highlighting a fast paced market that is reinventing how we work, live and play in a connected world. Wearables with fitness and activity bands were prevalent, along with innovative devices like a pacifier that can monitor a baby’s health. Also included were wearables that were integrated with autos to enable the starting of parked cars. But it was the connected car and connected home that had the highest profiles.

The connected car was touted by many major car manufacturers. Ford, Volkswagen, GM, BMW, Toyota, Audi, Mazda, Daimler and others were showcasing their connected car capabilities and the growing array of services that come with them. The media noted that Mark Fields, Ford’s CEO, sees Ford as thinking of itself as a mobility company rather than an automotive company, delivering a wide array of services and experiences via the auto instead of the mobile phone. Added to this are Apple’s CarPlay and Google’s Android Auto systems that mimic and integrate the functions of smartphones on the auto dashboard touchscreen. Quite a reimagination of the automotive business!

All the devices and capabilities for the connected home added to the IoT’s momentum. Familiar tech companies like Google, Microsoft, Amazon and Apple, along with traditional companies like Cisco, GE, Bosch, Samsung and others, are powering ahead with innovative capabilities that will drive rapid adoption. In fact, Samsung Electronics CEO Boo-Keun Yoon indicated that, by 2017, 90% of all Samsung hardware (TVs, ovens, refrigerators, purifiers and more) will be connected, creating a home personalized to your unique needs. Many of the companies also announced the development of connected home hubs to integrate these wide arrays of devices from various manufacturers and third-party providers. Data from the connected home devices can be used to offer new services. The Jetsons’ home is finally here!

And drones were flying everywhere to demonstrate the high interest and potential for many businesses – from phone and video purposes to building inspections, surveying, delivery, weather data gathering, traffic and much more. The Federal Aviation Administration (FAA) had a booth at the event, announcing that it expects well over 7,000 drones in use by 2018. All of this indicated that, literally, the sky seems to be the limit for drones!

Insurance Implications

What does this all mean for insurers? The event emphasized the need for insurers to take these emerging technologies seriously and to quickly explore, experiment and consider their uses in the business. Why? Because traditional competitors like Progressive and USAA made announcements at the event concerning the connected car and connected home and the potential of new competitors that are looking at how they might leverage these new technologies.

The SMA 2014 emerging technologies survey indicated that these technologies would reach a tipping point in three to five years — or from 2017 to 2019. Based on the announcements at the CES about autonomous vehicles by 2017, home hardware being 90% connected by 2017 and large numbers of drones in use by 2018, the estimated arrival time at the tipping point is right on track, or could even come much earlier.

The results? New customer demands and expectations. Decreased risk. New insurance product needs. New service revenues. New competitors. Redefined customer relationships. Reimagined businesses and industries.

To stay in the game, let alone win it, insurers must aggressively find a way to embrace these technologies and uncover their potential. And, to do so, they must have modern core systems as the foundation to integrate the use of these technologies for innovation, as well as plans to pilot some of these technologies, because the future is coming fast.

The Consumer Electronics Show 2015 has foretold that 2015 will be a pivotal year for many businesses and industries, including insurance, for emerging technologies. Adoption of the emerging technologies is on track or accelerating toward the tipping point. It is no longer science fiction. It is science reality. Welcome to the future … today!

New Year, New Job? Get the Right Support

As the first month of the new year unfolds, some of you may be facing the challenge of starting a new job, or at least a new or expanded role. Psychologically, many people seem to prefer starting new life challenges like this at major milestones, like the turning of the year. Whether that is the case for you, or you’re in the equally challenging position of hiring a new starter, you know how vital it is to start well and make a positive impression.

Anxiety about this type of change has, of course, fueled a whole industry of self-help books and management advice. Perhaps the most famous text on the subject is The First 90 Days,” by Michael Watkins. Although his approach to the first three months can feel like a relentless standard to meet, the structure does discipline you to: set goals; network with stakeholders effectively; listen to your team; and determine actions to be taken (rather than getting trapped in analysis-paralysis on strategy). So, I would recommend it as the classic text on the subject.

However, both from my own experience and from seeing too many new leaders struggle and fail to achieve what is expected, I believe more support is needed to ensure senior hires succeed. This is crucial not just for them, but also for the organization and individuals who hired them. With the high costs of recruitment and potential doubling of those costs if a replacement needs to be found, it is more important than ever to invest in helping your appointment succeed.

A recent article in Coaching at Work magazine, “Gainful Employment,” by Pacifica Goddard, caught my eye as it looked into this very challenge. She quotes Lynne Hardman, CEO of Working Transitions, who has found that the recent recession and cost of recruitment have caused companies to reduce the number of on-boarding programs, even though 40% of new hires don’t work and even though research shows that programs significantly reduce the likelihood that new hires will leave before the cost of their recruitment is recouped.

Given that the costs of hiring a senior customer insight leader can be anything from 50%-200% of annual salary, more businesses are seriously looking at on-boarding strategies. One growing solution, investigated in the Coaching at Work article, is on-boarding coaching, which allows people in senior roles to get more comfortable with not having all the answers. It provides a safe environment for the expression of concerns or issues that would otherwise feel too vulnerable. Such new hires also mention the benefit of having time set aside in their busy schedules to look at the bigger picture (something I’ve heard before from my clients).

Top tips from the “Gainful Employment” article include:

  1. Arrange to first meet new hires prior to start date or induction;
  2. Plan to achieve goals of individual and the organization;
  3. Identify “quick wins” and support early actions to generate support and feedback;
  4. Provide feedback — to client, line manager and stakeholders, identifying next stages, goals the necessary continuing dialogue.

The growing evidence that such interventions are helpful and cost-effective does not surprise me. What is of interest is that a technique that had previously been reserved for the more senior directors is becoming more widely applied to empower strong early performance across key senior and middle-management roles. So, this is of direct relevance for new customer insight leader hires.

While speaking at industry events throughout 2014, I became aware of the scale of the talent wars happening in the customer insight recruitment market. Many companies are struggling to recruit even the analysts they need, let alone their customer insight leader, and are finding the need to pay more and take gambles on imperfect candidates to achieve their targets. Although this is a problem for the industry, it should also be an opportunity for coaches with a background in customer insight.

It will be interesting to see how the fusion of niche technical expertise and coaching practice develops to meet the needs of all those companies who need to ensure their new customer insight leader has a productive first 90 days.

Big Data in Insurance: A Glimpse Into 2015

Bernard Marr is one of the big voices to pay attention to on the subject of big data. His recent piece “Big Data: The Predictions for 2015” is bold and thought-provoking. As a P&C actuary, I tend to look at everything through my insurance-colored glasses. So, of course, I immediately started thinking about the impact on insurance if Marr’s predictions come to pass this year.

As I share my thoughts below, be aware that the section headers are taken from his article; the rest of the content are my thoughts and interpretations of the impact to the insurance industry.

The value of the big data economy will reach $125 billion

That’s a really big number, Mr. Marr. I think I know how to answer my son the next time he comes to me looking for advice on a college major.

But what does this huge number mean for insurance? There’s a potential time bomb here for commercial lines because this $125 billion means we’re going to see new commerce (and new risks) that are not currently reflected in loss history – and therefore not reflected in rates.

Maybe premiums will go up as exposures increase with the new commerce – but that raises a new question: What’s the right exposure base for aggregating and analyzing big data? Is it revenue? Data observation count? Megaflops? We don’t know the answer to this yet. Unfortunately, it’s not until we start seeing losses that we’ll know for sure.

The Internet of Things will go mainstream

We already have some limited integration of “the Internet of Things” into our insurance world. Witness UBI (usage-based insurance), which can tie auto insurance premiums to not only miles driven, but also driving quality.

Google’s Nest thermostat keeps track of when you’re home and away, whether you’re heating or cooling, and communicates this information back to a data store. Could that data be used in more accurate pricing of homeowners insurance? If so, it would be like UBI for the house.

The Internet of Things can extend to healthcare and medical insurance, as well. We already have health plans offering a discount for attending the gym 12 times a month. We all have “a friend” who sometimes checks in at the gym to meet the quota and get the discount. With the proliferation of worn biometric devices (FitBit, Nike Fuel and so on), it would be trivial for the carrier to offer a UBI discount based on the quantity and quality of the workout. Of course, the insurer would need to get the policyholder’s permission to use that data, but, if the discount is big enough, we’ll buy it.

Machines will get better at making decisions

As I talk with carriers about predictive analytics, this concept is one of the most disruptive to underwriters and actuaries. There is a fundamental worry that the model is going to replace them.

Machines are getting better at making decisions, but within most of insurance, and certainly within commercial lines, the machines should be seen as an enabling technology that helps the underwriter to make better decisions, or the actuary to make more accurate rates. Expert systems can do well on risks that fit neatly into a standard underwriting box, but anything outside of that box is going to need some human intervention.

Textual analysis will become more widely used

A recurring theme I hear in talking to carriers is a desire to do claims analysis, fraud detection or claims triage using analysis of text in the claims adjusters’ files. There are early adopters in the industry doing this, and there have emerged several consultants and vendors offering bespoke solutions. I think that 2015 could be the year that we see some standardized, off-the-shelf solutions emerge that offer predictive analytics using textual analysis.

Data visualization tools will dominate the market

This is spot-on in insurance, too. Data visualization and exploration tools are emerging quickly in the insurance space. The lines between “reporting tool” and “data analysis tool” are blurring. Companies are realizing that they can combine key performance indicators (KPIs) and metrics from multiple data streams into single dashboard views. This leads to insights that were never before possible using single-dimension, standard reporting.

There is so much data present in so many dimensions that it no longer makes sense to look at a fixed set of static exhibits when managing insurance operations. Good performance metrics don’t necessarily lead to answers, but instead to better questions – and answering these new questions demands a dynamic data visualization environment.

Matt Mosher, senior vice president of rating services at A.M. Best, will be talking to this point in March at the Valen Analytics Summit and exploring how companies embracing analytics are finding ways to leverage their data-driven approach across the entire enterprise. This ultimately leads to significant benefits for these firms, both in portfolio profitability and in overall financial strength.

There will be a big scare over privacy

Here we are back in the realm of new risks again. P&C underwriters have long been aware of “cyber” risks and control these through specialized forms and policy exclusions.

With big data, however, comes new levels of risk. What happens, for example, when the insurance company knows something about the policyholder that the policyholder hasn’t revealed? (As a thought experiment, imagine what Google knows of your political affiliations or marital status, even though you’ve probably never formally given Google this information.) If the insurance company uses that information in underwriting or pricing, does this raise privacy issues?

Companies and organizations will struggle to find data talent

If this is a huge issue for big data, in general, then it’s a really, really big deal for insurance.

I can understand that college freshmen aren’t necessarily dreaming of a career as a “data analyst” when they graduate. So now put “insurance data analyst” up as a career choice, and we’re even lower on the list. If we’re going to attract the right data talent in the coming decade, the insurance industry has to do something to make this stuff look sexy, starting right now.

Big data will provide the key to the mysteries of the universe

Now, it seems, Mr. Marr has the upper hand. For the life of me, I can’t figure out how to spin prognostication about the Large Hadron Collider into an insurance angle. Well played.

Those of us in the insurance industry have long joked that this industry is one of the last to adopt new methods and technology. I feel we’ve continued the trend with big data and predictive analytics – at least, we certainly weren’t the first to the party. However, there was a tremendous amount of movement in 2013, and again in 2014. Insurance is ready for big data. And just in time, because I agree with Mr. Marr – 2015 is going to be a big year.