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Power of ‘Claims Advocacy’

“Claims advocacy” is fast getting the attention of workers’ comp claims leaders as a powerful approach to better claims outcomes. The on-demand economy has created cultural and multi-generational expectations around service, speed and simplicity, and some claims leaders have already figured out how to deliver.

The workers’ compensation industry is in the throes of internal debate about mission and purpose.  Employee-centric claims models have become a large part of this debate. Some claims leaders say that payer organizations should move away from a compliance-oriented and, at times, adversarial style to an “advocacy” style of claims management.

Research, too, indicates that claims advocacy is top of mind for industry executives. The responses of 700 participants in Rising Medical Solutions’ Workers’ Compensation Benchmarking Study confirm that many claims leaders know the building blocks of advocacy and recognize its potential value. 

We recently interviewed claims leaders to better understand the practical meaning of the concept, as it applies to all claims operations, from self-administered employers to insurers handling claims for thousands of policyholders.

What Is Claims Advocacy?

We asked Noreen Olson, workers’ compensation manager with Starbucks, for a definition of advocacy.  (Starbucks employs 180,000 “partners” worldwide and has close to 12,000 outlets in the U.S.) Olson proposed this:

“In workers’ comp, advocacy is a process grounded by the values of dignity, respect and transparency that coordinates activities to assist the injured worker effectively and promote expectancy and engagement in recovery, efficiently restores (and often improves upon) health and well-being, and resolves the experience in mutual satisfaction.”

Others we spoke with endorsed this or a similar definition. They all have in mind not a checklist, nor a charm offensive, but a culture.  A claims culture that makes access to benefits simple and builds trust – and one that must be supported by executive buy-in, organizational values, technology and operating systems to be successful.

Access to benefits from the worker’s perspective includes ease of filing a claim, ease in obtaining prescribed medications, access to medical specialists and help in navigating the healthcare maze. Along the course of injury recovery, there are many opportunities that affect access and trust as perceived by the worker. The highly respected Workers’ Compensation Research Institute reports in its Predictors of Worker Outcomes Series that “trust” is a key driver of claims outcomes.

See also: How Should Workers’ Compensation Evolve?

Why Now?

Tom Stark, technical director of workers’ compensation at Nationwide Insurance, told us that advocacy has been around for a long time. He’s practiced advocacy since the 1980s Several forces converge to promote advocacy in claims today. Claims leaders are emphasizing, or perhaps “reemphasizing,” the importance of interpersonal relations. As claims handling has shifted from onsite home visits to lower contact models, the importance of emotional intelligence, soft skills and customer service skills is greater than ever to dispel uncertainty and engender trust.

Perhaps the biggest driver of customer service and transactional speed is the American retail sector. Its massive engagement in these areas has shaped everyone’s expectations – of all generations. Millennials, born in the 1980s and 1990s, in particular have grown up with this customer-focused approach and therefore bring to the claims environment high expectations for both delivering and receiving quality service. Slow, bureaucratic responses can shock injured workers. Darrell Brown, chief claims officer at Sedgwick, says, “We are now an on-demand economy. That is the way it is.”

Why Is Claims Advocacy Attractive?

Brown says that engaging the injured worker is key. Fast and helpful response to injury pays off in worker satisfaction and lower claims costs. “People file claims, but they don’t know what is going to happen. If you lose injured workers at the beginning of the claim, to anxiety and fear, they go to litigation.” Brown also says that when claims professionals engage more constructively with injured workers, their own experience is better. This leads to better morale and talent retention.

For employers, claims advocacy provides a special opportunity to directly align work injury response with their corporate brand, core values, employee communications and benefit delivery.

Walking the Walk

Albertsons Safeway, with more than a quarter million “associates” in 34 states, has crafted its claims approach to reinforce engagement and confidence for the injured workers. Director of Managed Care and Disability Denise Algire, who is also the principal researcher for the Workers’ Compensation Benchmarking Study, says that staff talks with injured employees on the day of injury. “We focus on education and reducing uncertainty,” she says.  They avoid potentially intimidating or antagonistic terms like “adjusting,” “examining” and “investigating.” They also start with the positive expectation that every employee wants to return to work. “Workers’ compensation has become adversarial because we manage the system based on the deceptive few versus the deserving many,” she says. “Our claims approach is based on the majority, not the minority.”

Brown talked to us about tangible actions. “If you can make a compensability determination in two days, even though the law gives you 14 days, imagine how much uncertainty and anxiety is removed,” he says. “The same applies to indemnity payments. The industry is often guided by regulatory requirements. If you can take action and make payments sooner, why make it later? You’ve got to walk the walk.” Starbucks, for example, direct deposits indemnity checks into employees’ accounts to increase speed.

Advocacy does not hinder organizations from being compliance-minded. Rather, it becomes one aspect of a holistic, customer-driven framework that aims higher than the bar often set by regulatory standards.

See Also: How to Win at Work Comp Claims

Barriers to Overcome

Stark sees lagging technology as getting in the way of engaging the injured worker. To him, claims tasks grew exponentially while support staff in claims offices were cut. Claims technology has often not kept up. He says, “Look at the work-arounds – count the number of sticky-notes on the adjuster’s screen. If technology is not there to support effective claims management, even in its most transactional form, you are really stressing the model. How are you going to be an advocate?”

Olson brought up two challenges that Starbucks has solved but still confront most employers. She believes that it is important to make it as easy as possible for a partner to report an injury. At Starbucks, they not only have web, mobile and call center options, they also allow partners to self-report their injuries versus going through their manager or HR.

Olson additionally stresses the importance of easily moving the partner to other benefit programs if the injury is not compensable and to avoid language like “your claim is denied.” She says that placing the award of benefits in the “right benefit bucket” needs to be done seamlessly so that the partner does not feel on the hook. In addition to the state mandated language in these instances, Starbucks includes its own letter that communicates that, while the claim isn’t eligible for workers’ comp, the partner may be eligible for other benefits to help with their injury/illness.

One barrier that Algire notes – simply “rebranding” claims adjusters as advocates is not enough. “A true cultural shift will require organizations to move beyond performance metrics that are based primarily in cost containment to those based on clinical quality, functional outcomes and patient satisfaction,” she says. This shift is critical to “walking the walk” and reinforcing the advocacy approach with claims staff.

Conclusion

The on-demand economy has created cultural and multi-generational expectations around service, speed and simplicity – giving workers’ compensation a blueprint for claims advocacy. Embracing consumer-driven models around injury recovery is emerging as a competitive advantage, both from a claims outcomes and a talent recruitment/retention perspective.

The 2016 Workers’ Compensation Benchmarking Study will be surveying claims leaders on advocacy, among other pressing topics, to better understand its current application and perceived viability.  A copy of the 2016 Study report may be ordered here.

How to Win the ‘Micro-Moment’

The P&C insurers that will win in our increasingly data-driven market are the companies that embrace the possibilities of technology and are able to own the “micro-moment”: Companies that reach consumers when they are making decisions and forming preferences will be ahead of the curve.

Communication technology now makes it possible for insurers to reach out to customers using automated voice, text, social media, email and other platforms. For example, when catastrophe looms, such as a major weather event, insurance companies have a great opportunity to protect policyholders and minimize losses by contacting customers.

This is not only good for the bottom line, because it avoids losses; it’s a great way to deliver an exceptional customer experience, which confers a competitive advantage. Insurance company executives instinctively see the value of using personalized communication to build loyalty and strengthen relationships. But not all companies are fully ready to take advantage of the possibilities of a closer connection with customers.

See Also: Data Science: Methods Matter

Executives worry about the quality and accuracy of the data they have on hand. That’s because many insurance companies only contact customers when processing a claim or following up on a late payment. Some use these opportunities to update their customer data, but since records verification only happens around transactions, a sizable portion of the company’s customer information is always outdated, and that can stymie efforts to own the micro-moment.

Take the connected catastrophe scenario, for example — because much of the customer base is always connected and has higher expectations around personalized communication than ever before, it makes sense to conduct customer outreach when a catastrophe is likely. By reaching out to customers, companies can contribute to customer safety, reduce losses and strengthen relationships.

A P&C company, with an insured population in the path of a hurricane or wildfire, might reach out via automated voice message, text, social media (e.g., Facebook or Twitter) or email to alert customers of the danger, provide advice on documenting insured property and inform customers on how to file claims once the event is over. The P&C company might also identify the location of mobile service centers.

The message this type of initiative sends to customers is unmistakable: The company is looking out for the customer and stands ready to assist during a tough time. And with modern communication technology, companies can implement a system capable of managing affordably customer outreach across multiple platforms, using automation to handle most of the workload.

Another issue is that many P&C companies don’t make a practice of asking for permission to contact customers or recording customer communication preferences. In addition to up-to-date contact information (including landline and mobile numbers), companies need to request communication preferences, such as whether the subscriber prefers to be contacted by voice, text or tweet.

Getting P&C company databases where they need to be to conduct widespread customer outreach in a personalized manner that respects customer communication preferences will take a large-scale data scrubbing effort at most companies. It can be conducted in-house if the insurer has sufficient resources to tackle such a project, or the company can choose to hire a third-party vendor.

When P&C insurers have the clean data they need, they can contact policyholders to help keep them safe, but that’s just the beginning. With clean data and the ability to automate communications using customer preferences, companies can reach out to customers about changing coverage needs, inquire about policy lapses, address late payments and much more.

The first step in fostering closer relationships with customers via personalized communication is making sure the information on hand is clean — data that has been verified as accurate. With clean data, forward-thinking insurance company leaders can ensure that consumer demand for greater personalization is met and that their company thrives in an increasingly data-driven economy.

Could Location Data Be the Golden Thread?

In insurance, location is everything. It helps insurers understand where the risks are, whether there has been accidental (or deliberate) accumulation of risk and where their customers are. Location helps insurers optimize their distribution strategy, their claims services deployment, their supply chain and even how they market and advertise their services.

The technologies of location intelligence and weather prediction also naturally converge to help anticipate the impact of hail and storm, and allow insurers to proactively advise their policyholders to act (although only half of policyholders who are warned of an impending event actually take action). Bringing weather and location information together creates an environment where insurers change from being reactive to being proactive. New touch points are also created with policyholders (as opposed to a single annual request for premium), with the potential both to add value to the insurance proposition and also to improve loyalty

Some might reasonably argue that weather forecasts are already available from the news. Perhaps one task for insurers going forward is to create a more effective interlock between weather forecasting, policyholder behavior and premium reduction?

Increasingly, location is being seen as a subset of big data rather than a stand-alone technology. In a world of data where 80% is unstructured and uncertain, do the coordinates of location provide some sort of anchor for all the new information becoming available? After all, what could be more certain than where something or someone is physically located? Imagine if location data became the golden thread that tied all insurance information together?

For many, location information still equates to mapping and “flat” visualizations. It is fundamentally descriptive in nature, albeit providing effective illustrations of potentially complex issues. As location intelligence increasingly aligns to predictive and cognitive analytics, perhaps the “power of place” may start to assume new meaning?

Location data is becoming increasingly pervasive in the insurance industry. The connected car, the connected home and the connected person all have a location component.

Perhaps the future for insurers isn’t just around being “data-driven” but “location-data-driven”?

How to Turbocharge a Marketing Budget

Competition in the auto insurance industry is at an all-time high, with carriers engaged in an aggressive battle to acquire new customers and grow market share. Massive investments are being made in marketing and advertising to expand brand awareness and drive customer acquisition. This marketing arms race has led to annual ad spending growth of 15% to 20% per year, with total auto insurance advertising spending, by some accounts, eclipsing $8 billion per year.

These marketing investments are having a measurable impact at the top of the sales funnel. The total number of active shoppers looking for auto insurance quotes every year is increasing. Nearly 40% of all insurance policyholders are actively shopping to find a better deal. Likewise, brand-building efforts are having the desired effect on consumer behavior. Consumers are now more likely to begin their research by searching for brand names or visiting a brand advertiser’s site. This “brand shift” in search behavior from generic keywords (“auto insurance quotes”) to brand-specific keywords (“GEICO,” “State Farm”) is a trend. Many suspect that this trend was, in part, behind Google’s recent decision to eliminate ad placements from the right-hand side of the search results page. This move by Google increases the prominence of a few leading advertisers who can pay for premium positioning on generic terms, enabling Google to generate more revenue from the declining share of non-branded insurance searches.

See Also: From Marketing Myths to Truths

The corresponding impact of these marketing investments at the bottom of the funnel is not as clear. In fact, conversion rates across the industry are actually on the decline. J.D. Power’s 2015 U.S. Insurance Shopping Study summarized the market dynamics and customer acquisition challenges facing marketers:

  • 39% of current auto insurance policy holders are shopping, up from 32% in 2013. With close to 200 million policy holding households in the U.S., this translates into almost 80 million shoppers.
  • But only 29% of shoppers switch carriers, down from 37%.
  • And the average industry close rate for auto insurance carriers has declined to 13% from 18% in 2013.

So, on the one hand, 80 million active shoppers represent a large and attractive market of consumers that are engaging auto insurance brands. On the other hand, the total number of shoppers who switch to a new carrier is declining. And the average overall close rate across the industry is just 13%. In essence, the size of the haystack is growing, while the needle is seemingly getting smaller.

These are daunting statistics for insurance marketers and reinforce the importance of marketing efficiency. Additionally, the Google AdWords changes puts pressure on all but the largest brands to find creative ways to optimize budget and stay in front of shoppers. For larger brands, the increased competition for a smaller number of above-the-fold placements will likely inflate cost-per-click (CPC) pricing. In this challenging landscape, marketers need new strategies to optimize the entire sales funnel to get the most out of their marketing dollars and maintain competitive relevance.

Several innovative carriers have begun to embrace a creative solution to this challenge by recognizing that active shoppers on their sites are a highly valuable asset that can be monetized. These carriers are monetizing shoppers by presenting advertising listings for other carriers as part of the quote process. These carriers deliver a significantly improved and streamlined user experience – helping shoppers compare and find the right product more quickly – while also generating substantial incremental revenue.

This simple model has a dramatic effect on marketing efficiency by increasing the percentage of insurance shoppers who can be monetized from just the 5% to 15% (who buy a policy) to more than 50% (those who buy a policy or choose to compare rates on other carrier sites). The marketing departments at these carriers have found an entirely new revenue stream that can be funneled straight into the marketing budget to turbocharge advertising and customer acquisition.

This new way of thinking might sound radical for some auto insurance traditionalists. Yet nothing about this strategy is radical for today’s consumers. Quite the contrary, consumers have come to expect choice and comparison when shopping online. The convergence of several consumer trends is fueling this new monetization strategy:

Growth of Online Channel

The first major trend is the growth of the online channel for auto insurance. Andy Serowitz’s recent article, Demographics and P&C Insurance, did an excellent job highlighting several macro trends affecting the industry, including the growth of the online channel. The online shift that was initiated by direct carriers like GEICO and Progressive has helped establish the Internet as an important acquisition channel for all carriers; the number of policies sold online has increased 400% over the last eight years. Although agents still play a significant role, the online channel now represents 20% to 25% of total insurance sales transactions and influences more than 50% of transactions. Furthermore, the younger demographic found online tends to be more price-sensitive and less brand-loyal, seeking quick results with minimal friction. Marketers have the opportunity to develop creative solutions that are better aligned with the unique perspectives and preferences of this group.

Comparison Shopping

Comparison shopping has simply become a way of life on the internet. Auto insurance shoppers want the ability to compare. Shoppers evaluate an average of 4.5 brands and receive an average of 3.1 quotes, a figure that increases to 3.7 for online shoppers. Insurance carriers need to embrace this reality and deliver a better consumer experience.

Blurring Lines Between Commerce and Search

The last few years have seen a blurring of the lines between traditional search providers and commerce companies. Amazon is an excellent example of a commerce brand that has emerged as a viable search alternative. In 2009, Amazon was the starting point for 18% of shoppers searching for products. In 2015, that figure reached 44%.

Simultaneously, Amazon also built an impressive ad business. For several years, Amazon has been serving sponsored ad listings for other e-commerce sites alongside its own offerings. When Amazon cannot convert a shopper through a direct purchase, it earns ad revenue by sending the shopper elsewhere. Amazon’s ad business now generates an impressive $500 million per year that it reinvests in customer acquisition and other growth initiatives.

Insurance carriers could benefit greatly by taking a page from Amazon’s playbook and recognize that consumers are coming to their sites to initiate a more targeted or vertical-specific search. These shoppers have high purchase intent, which represents a highly valuable marketing asset with significant untapped value. For years, unlocking the media value of this type of search has been the exclusive domain of the search engines. But commerce brands now have the opportunity to play a leading role here that improves consumer experience and delivers tangible economic rewards.

So if the consumer need is there and the economics are significant, why haven’t more carriers already embraced this strategy? For most carriers, there are two common objections to overcome:

1) Cannibalization of policy revenue is an obvious concern for most carriers that consider monetizing more shoppers. The goal is not to replace policy revenue with ad revenue.

But performance results show that cannibalization can be minimized. To begin, most carriers start by monetizing low-risk, “non-served” customer segments, including non-covered geographies or consumers who fall outside of a carrier’s underwriting parameters. These non-served segments offer pure revenue upside.

Within “served markets,” carriers find the impact to policy revenue to be negligible. Many carriers, in fact, experience an increase in conversions as greater openness builds trust with consumers and translates into more policy sales. This is also where advertising technology providers like MediaAlpha play a critical role. Technology tools now exist that empower carriers to take full control of when and how ad listings are shown based upon internal metrics and desired audiences. This ensures that ads are only shown if the economic benefit of showing an ad significantly outweighs any potential impact to policy revenue. The result is minimal cannibalization that is typically offset 3-5X by corresponding ad revenue.

2) The second-most common concern is the perceived negative brand impact from showing ad listings for other carriers. Again, data collected on consumer reaction and preferences indicates no negative impact on brand perception. Shoppers are presented ads simultaneously with a quote (or instead of a quote), so the ad experience is in the context of shopping. This experience is in line with consumer expectations, and there is no data that suggests it creates confusion or negative sentiment.

On the contrary, brands get a powerful opportunity to deliver value where they previously could not. Without ad listings, 85% to 95% of shoppers visiting a carrier website will end their quote search unsuccessfully. The brand experience for that individual shopper is unfulfilled. The shopper is on her own to leave the site and restart a search elsewhere. By providing these shoppers with alternative listings, carriers now have a meaningful and profitable way to improve upon this poor consumer experience and lift their brand perception in the process.

For auto insurance carriers, the value proposition of monetizing shoppers is clear. In a competitive marketplace that necessitates strong marketing efficiency, the ability to generate significant revenue from non-purchasing consumers is a highly compelling economic opportunity. By unlocking this new revenue stream, incremental revenue can immediately be reinvested into more targeted, higher-value consumer segments. Brands can recapture a significant percentage of marketing inefficiency and redeploy those dollars to more effectively acquire the right customers.

Forget Big Data — Focus on Small Data

In their rush to jump on the big data bandwagon, many organizations have lost sight of a much simpler yet effective source of customer insight: “small data.”

Big data is about synthesizing, mining and analyzing mounds of seemingly unrelated information to derive actionable insights about your customer. It’s a complex science but one that can be leveraged to understand and engage customers in new, surprising and sometimes even creepy ways. (Consider the well-documented case where retailer Target figured out that a teenage girl was pregnant before her father even knew—merely by analyzing her purchase history data. See “The Challenges Around Big Data and the Lessons to Be Learned.”)

In contrast, small data is about listening to and observing your customers intently, picking up on simple cues that allow you to better personalize and customize your interactions with them.

Small data doesn’t require supercomputers to decipher. It’s not really a new concept, either—it’s just a new moniker for a tried and true approach that the best sales and service people have employed for decades, if not centuries.

That might make small data sound quaint and old-fashioned, but don’t be fooled. Using it can actually enhance your business’ customer experience in very material ways, without the expensive overhead associated with big data solutions.

See Also: To Go Big (Data), Try Starting Small

To get a flavor of how small data can influence your customer experience, consider these examples of the strategy put into practice:

• Delta Airlines’ 800-Line Greeting

Presuming a customer calls Delta from a phone number the airline has on record, the 800-line voice response system will skip the standard pleasantries and prompt you with a question such as “Are you calling about your delayed flight?” If the answer is yes, then Delta immediately routes the caller to an automated service or a live representative who can help, obviating the need to navigate through a series of menu options.

Once the incoming phone number is identified, Delta’s systems check to see if the customer has reservations coming up, or if perhaps a flight that day has been delayed or canceled.

That’s not a terribly complex undertaking from a data perspective, as it is a relatively simple look-up exercise, rather than a full-blown analytics task.  Yet it yields a much better and more efficient customer experience, particularly at a time when passengers may be frazzled about unexpected changes in their travel plans.

• Ritz-Carlton’s Personalized Guest Experiences

The Ritz-Carlton luxury hotel chain is renowned for its ability to create highly personalized guest experiences. If the Ritz in Boston learns that a guest is allergic to feathers, then the Ritz in Dubai—half a world away—will de-feather that same guest’s room prior to arrival.

How does the company do that? Ritz staff are trained to listen carefully for guests’ likes, dislikes and general preferences. These are small pieces of data (such as a favorite newspaper or snack, or a preferred room location) that Ritz-Carlton employees dutifully record in a customer database dubbed “Mystique.”

They’re also trained to consult that database prior to a guest’s arrival and act on any relevant information they find. This helps ensure that any previously captured small data is used to create an unusually customized guest experience during subsequent visits.

These two examples are from outside of the insurance industry, but the approaches they illustrate are easily transferable. It’s simply a matter of putting your antennae up and looking for small pieces of data that can be used to deliver a more personalized, relevant and anticipatory customer experience.

Consider the small data that’s available to insurance carriers—data that, if captured and capitalized on, could generate some very positive customer impressions:

• Children’s Ages

By recording information about a customer’s children during an initial needs analysis, insurers can engage the policy owner to assist in stressful parenting periods, such as when a child approaches driving age.

While identifying households with youthful drivers isn’t a new idea for insurers, using that information to strengthen the customer relationship is. Historically, such data has been used by insurers to address situations where a new, uninsured driver may be behind the wheel (to adjust premiums).

However, the identification of a youthful household driver shouldn’t just be an exercise in rate adjustment. It’s also an opportunity for the insurer to demonstrate the value it provides—in this case, by communicating relevant information to parents that helps them navigate a difficult family transition (e.g., determining what resources are available to teach their son/daughter how to drive or how they can best ensure their child’s safety while they learn to drive).

Using small data in this way creates a customer experience that appears strikingly prescient to the policy owner, essentially addressing their concerns and questions before they even have a chance to raise them.

• Sales

For certain types of commercial lines coverages, insurers have visibility into business performance measures for their clients (such as sales), which are recorded annually via premium audits.

Here again, as with youthful drivers, the industry has traditionally used such data exclusively to adjust premium rates for coverages that are tied to these business metrics. But this small data can be far more useful.

Consider the first time a commercial lines customer crosses over the $10 million revenue threshold. That’s a milestone that would be reflected in the small data most insurers collect, yet few do anything with it, other than raise premiums.

Imagine if that customer received a handwritten note from his insurer (or agent) a month after renewal, congratulating him on reaching that milestone. Imagine how that small token of recognition would make the customer feel.

Business owners, after all, don’t really care about their business insurance—but they do care about their business. When their business grows, that affords an opportunity to celebrate alongside them, to give them a “pat on the back” that they likely weren’t expecting from their insurance provider but will remember fondly.

• Recurring Information Requests

At Ritz-Carlton hotels, if a guest requests the same newspaper, snack or room location visit after visit, the staff will notice and use that small data to shape the customer’s future stays.

There is an analog for this in the insurance industry. Consider the reports and other information materials that a policy owner requests year after year—e.g., a commercial insured requesting updated certificates of insurance for her core set of clients, or a corporate risk manager requesting loss reports sorted by site.

Every recurring information request represents a piece of behavioral small data that can be used to customize the policy owner’s future experience.

Imagine if a policyholder didn’t even have to make those information requests, just as the Ritz-Carlton guest who’s allergic to feathers need not request a feather-free room.

Imagine if an insurance provider, based on a policyholder’s prior history of information requests, offered all of those reports and certificates to the customer at precisely the right time each year.

That would be the epitome of a more personalized and effortless customer experience, all made possible simply by acting on a piece of small data.

Small data may be less glamorous than its more buzz-worthy big data counterpart, but it’s no less important.

Big data has its merits, but as the “shiny new object” that every company covets it has unfairly eclipsed the value of simpler and more straightforward sources of customer insight.

Better understanding your customers and her needs doesn’t always require intense data crunching and sophisticated analytics. Often, what’s really needed is just a watchful eye, an attentive ear and the discipline to act on whatever insights you uncover.

Because when it comes to creating a positive, memorable and personalized customer experience, small data can have a really big impact.

This article first appeared at Carrier Management.