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How Advocates Can Reengage Workers

A historical challenge in workers’ compensation has been creating the best possible approach to communication: consistently reinforcing transparency, putting the injured employees’ needs first and reassuring them that their claims team is working in their best interests.

Employers today, more than ever before, are engaged in the workers’ compensation process and, in partnership with Sedgwick, have developed efficient healthcare and treatment solutions that provide the highest quality of care. They have also developed return-to-work programs that not only accommodate potential injury-related restrictions and ensure compliance with state and federal employment laws (e.g. Americans with Disabilities Act) but that also encourage employees to come back to work as quickly as possible. This approach ultimately results in an improved experience and outcome for all parties. The responsibilities of claims and managed care professionals encompass many activities that already assist with this process, but there is an emerging need to take employee care above and beyond the standard claims management efforts.

This expanded approach involves being an advocate for the employee by listening, communicating, providing information and proper medical care, explaining how this complicated process works—and being there to assist them at every turn. From the time an injury occurs to the moment the claim is closed, the examiners, the nurses and the colleagues who assist the employee all serve important roles that can have an impact on the outcome of the claim. It’s through their experiences that our industry can see the value of employee advocacy and the advantages it can bring for all parties involved.

Exploring the Shift in Philosophy 

There seems to be a change in the philosophy of employers as it relates to workers’ compensation injuries. Today, businesses are more interested in making sure their injured employees get everything they need to recover, and they are willing to spend the money and do all the right things as a part of their responsibilities as an employer. Instead of questioning claims, they are more focused on restoring the health of their employees. To do this successfully, employers must work closely with claims administrators to develop and implement a process around employee advocacy. This may include assigning a trained, knowledgeable member of the claims team to guide employees through the process or connecting them with a nurse who can assist with their medical concerns. There are different options based on the individual employer’s needs, but each one is designed around the same objective: improving injured employees’ health and well-being.

Surrounding the Employee With Support

The employee advocate typically performs an outreach to the employee after receipt of the first report of injury. The advocate is someone who asks how the employee is doing and offers a sympathetic ear. The advocate is also someone who has information on their claim and is connected to all of the resources available to assist the employee. This initial call can offer several advantages, including:

  • Reassuring the employee that the employer cares and that the employee is not going to lose his job for filing a workers’ compensation claim;
  • Providing guidance to the injured employee that could prevent a minor claim from becoming something major;
  • Answering initial questions to resolve possible issues that could lead to litigation—if the employee needs additional information, the advocate can get what she needs and call back; and
  • Keeping everyone calm at the outset of the injury and having a positive impact on the employee’s attitude.

In this role, the advocate becomes the employee’s key contact and will make sure the employee does not feel alone in this process. The topics for the advocate’s outbound calls may include explaining workers’ compensation; setting expectations related to claim investigation, medical bills, prescriptions, benefit payments and return to work; or explaining the roles of the adjuster or nurse case manager assigned to the employee’s claim.

Providing Specialized Clinical Advocacy

Clinical resources may be needed for an employee based on his injury. This type of advocacy includes a phone call from a registered nurse who will ask the employee how she is doing, answer her medical questions and direct her to the best provider for her injury. At this time, the nurse may also identify any psychosocial issues or other concerns that may affect the employee’s ability to recover or return to work, and the nurse may then direct the employee to behavioral health or return-to-work specialists.

Benefits and Proven Results

When employees are injured at work, this can be an unsettling time for them—filled with many questions. Providing upfront communication and a healthcare team focused on their well-being can make the process better for everyone. Employer benefits include reductions in litigation, medical costs and lost time. With the average cost of litigated workers’ compensation claims about 65% more expensive than non-litigated claims, reassuring employees and keeping them as happy as possible throughout the claims process can have immeasurable value.

We have experience working with several employers that have implemented successful advocacy programs. One is a retail company that has an advocate who contacts every employee on the first day of an injury to see how they are doing. This company’s goal was to reduce litigation, and it has accomplished that through this process. The company feels having someone reach out gives each employee a sense of security, as well as the reassurance that he won’t lose his job due to filing a claim and the feeling that he is part of a system that protects him.

Focusing on the Employee

Examiners, nurses, assigned advocates and other members of the claims and managed care teams all work together to ensure the injured employee has the best possible outcomes. Having a team to surround the employee with care and recovery solutions provides significant dividends related to the continuation of productivity and employee morale—and it can positively influence the overall view of their employer.

Better Way to Assess Cyber Risks?

As the saying goes, there are two kinds of motorcyclists: Those who have fallen off their bikes and those who will.

The insurance industry assesses the corporate world’s cybersecurity risk much the same way. Everyone is equally at risk, and, therefore, everyone pays the price for higher insurance premiums.

Not a day seems to go by without news of a high-profile security breach. It’s no surprise, then, that the cybersecurity insurance market is expected to rise to $7.5 billion by 2020, according to PwC. Even worse, the industry does not have effective actuarial models for corporate cybersecurity, say Mike Baukes and Alan Sharp-Paul, the co-founders and co-CEOs of UpGuard.

The two audacious Australians have developed what they say is a better way to assess the risk for cybersecurity breaches.

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Alan Sharp-Paul (L) and Mike Baukes (R), Co-Founders and CO-CEOs, UpGuard

The pair’s company recently unveiled its Cybersecurity Threat Assessment Rating (CSTAR), the industry’s first cybersecurity preparedness score for businesses. UpGuard’s CSTAR ranking is a FICO-like score that allows businesses to measurably understand the risk of data breaches and unplanned outages because of misconfigurations and software vulnerabilities, while also offering insurance carriers a new standard by which to more effectively assess risk and compliance profiles.

According to Baukes and Sharp-Paul, many companies forego available policies due to perceived high cost and uncertainty that their organizations will suffer an attack. With countless patches and endpoint fixes slapped onto IT infrastructure to hastily remediate breaches, companies have found themselves with less visibility into their core systems than ever before and, as a result, no way to understand how at-risk they are for hacks. With CSTAR, businesses are able to regain transparency into their own stack and take the appropriate steps to bolster their cybersecurity. Insurance carriers, meanwhile, can make smarter underwriting decisions while accelerating the availability of comprehensive and cost-effective cybersecurity insurance policies for businesses. It’s a win-win for both the insurance industry and for businesses.

After spending years in financial services in Australia and the U.K. and witnessing the disarray of corporate IT, Up-Guard’s two co-founders decided they could make a difference by developing a better way for corporations to understand their software portfolios and their associated potential risk for security breaches. Baukes says, “Our experience showed that that there were thousands of applications and thousands of machines powering all of this critical infrastructure. And the thing that we learned throughout all this was just how hard it is for an IT organization to understand and get a handle on what they’ve got.”

“Today, everything is out in the cloud,” Sharp-Paul says. “We’re all more connected. Employees are connected 24 hours a day, seven days a week. Now what keeps CIOs and CEOs up at night is, ‘If we get breached, I could get thrown in jail. I could get sued.’ It’s a very, very different world we live in today. We built a system to help companies understand and prevent downtime, and helping them save on project costs is just as relevant today from a security perspective.”

The two initially started a consulting company to help companies catalogue and manage their software platforms and applications. According to Sharp-Paul, “We realized the biggest problem companies have from an IT perspective is that they don’t really have appropriate visibility into what they’ve got and how it’s changing because so many things are changing daily in these environments that it’s really hard for them to know what ‘good’ looks like.”

Sharp-Paul and Baukes’s consulting led them to develop software to automate the process, providing the means to quickly and effectively crawl every server and software application to present a profile of what needed to be updated or patched and to identify the system holes that allowed for security breaches.

As Baukes tells it, “Getting that all to mix well and be safe, secure and capable of pinpointing where problems go wrong really quickly is an incredibly difficult task. So, we built up the first commercial version of the product—a very rudimentary version—and we shopped it around, and people were very excited at the time.”

From there, the pair realized their software had commercial potential and implications more far-reaching than what they had first thought. “We started with that very simple version with a few sales and no sales force—just Alan and [me] at the time—growing to the point now where we now have 3,000-plus customers, and the team is steadily being built,” Baukes says.

Now, the company has nearly 50 employees and is growing fast. The Mountain View, CA–based company attracted early seed funding from the likes of Peter Thiel, Dave McClure and Scott Petry, leading to a near $9 million Series A funding underwritten by August Capital.

The co-CEOs admit the co-managing arrangement is unconventional and would be challenging to make work under different circumstances. However, Baukes and Sharp-Paul feel their skills and temperament complement each other.

“To be honest, when people ask us about it, my first response is always that it’s a terrible idea,” Sharp-Paul says. “And that’s not because it’s been a horrible experience for us. It’s because I kind of think we’re really the exception. And the only reason I say that is that I know the unique things we went through and the type of people we are that makes this work. I can’t imagine that being a common thing at all.”

Baukes is generally a more aggressive and strategic thinker, while Sharp-Paul describes himself as more pragmatic and conservative.

Sharp-Paul and Baukes first worked together at the Colonial First State Investment firm back in Sydney, where the two lived the DevOps experience before DevOps became the buzzy concept that it is today. There, Sharp-Paul was a web developer, and Baukes was a systems administrator, and they talked a lot about things like continuous integration and continuous delivery.

“Now these are all fantastic things,” Sharp-Paul says. “But you need a foundation or a basis of understanding what you have. I mean, we like to say you can’t automate what you don’t understand. Or you can’t secure or fix what you don’t understand. And that’s always missing. Everyone’s trying to rush to this goal of DevOps or moving to the cloud. Everyone wanted to be there, but companies and vendors in particular weren’t helping businesses on the journey there.”

Baukes says, “Once you have that base understanding of what you have, then that opens everything else up. You can think about DevOps. You can think about automation. At the time, we were thinking, ‘Why hasn’t anyone thought to do this before?’ It seemed like such a foundational, basic thing. It was almost like it was so foundational that everyone just moved past it, and they were looking at the next shiny thing down the road. I think that was the white space. That was our opportunity. We jumped on it.”

As it turns out, in the world of corporate IT, applications never get retired. Even worse, the people who manage them move on because the life cycle of an employee at a company is short. As as result, the institutional knowledge about these applications is lost.

“Corporate memory is so short typically,” Sharp-Paul says. “They often get to this point five years down the track where they rediscover this server or this application, and everyone’s too scared to touch it because they don’t know what it does. They don’t know how it works. The people with the knowledge just left with it all in their heads. We come across that all the time.”

Sharp-Paul and Baukes had always seemed destined to do something on their own.

“I always had a healthy disrespect for authority. Throughout my corporate life, I was looking outside to see what else is [WAS?] out there,” Sharp-Paul says. “I actually started the first step of creating a business on my own—with something as mundane as a French language website that I used when I moved overseas for a couple of years. … It taught me that I can actually build something myself that makes money.”

Baukes agrees.

“The big difference is that I grew up in an immigrant family in the middle of nowhere, effectively. I won’t say the Australian Outback, but really rural,” he says. “We built everything ourselves. My father was a great wheeler and dealer. So, I learned a lot of from him. I fell into all of this by playing computer games and was really good at it, frankly. For me, that was a springboard into an accidental corporate life. I always knew that I would do something else.”

Now, for the future?

Baukes says, “It makes good business sense to quantify the risk in your company’s IT systems and report it effectively. And I think that for us, we could continue growing our business with that in mind—giving people visibility, helping them get to the truth of what they’ve got, teaching them how to configure it, and showing them if they’re vulnerable. That is beginning to accelerate for us, and we’re incredibly proud of that.

“We truly believe that, over time, CSTAR will be adopted as an industry standard that companies and carriers alike can rely on to make critical coverage and cybersecurity decisions.”

The Problem With Telematics

When I attended the Insurance Telematics USA conference in Chicago earlier this month, I expected to see much more enthusiasm. I first wrote about Progressive’s venture into telematics all the way back in the late 1990s, and technology has improved so much since then that the telematics industry would surely be bragging about its breakout into the mainstream or at least predicting that one was imminent. The idea just makes so much sense: being able to track cars so that insurance risks can be determined very precisely for individual drivers, while even providing feedback that improves driving.

While the telematics technology is, in fact, stunning and while there are reasons for great optimism, what I found was not an industry brimming with confidence. I found an industry still searching for the right business model.

Until the industry solves that problem, progress will remain limited.

The Problem

The current approach to telematics is generally to install a device in a customer’s car for six months and have it relay the driver’s actions back to the insurer for evaluation. At the end of the six months, the device is uninstalled, and the insurer tells the driver what sort of discount, if any, she will receive based on her driving habits. A key point is that the issue at hand only concerns discounts; insurers have promised that they won’t raise rates if they find that someone is a worse risk than expected.

Think about the expense that goes into that model: manufacturing the telematics devices; installing and uninstalling them; and transmitting lots of data over a wireless network on which the insurer has to buy bandwidth.

Now think about the benefits. The prospect of a discount has attracted enough good drivers that, if all telematics-based auto policies were rolled into one company, it would be close to being in the top 10 among auto insurers in the U.S. Ptolemus, a strategy consulting firm, said there are 4.4 million cars in the U.S. carrying usage-based insurance (UBI). That’s a lot of cars. But there are 253 million cars and trucks in the U.S., so the market penetration of UBI is just 1.7%. Even in the main ballroom of the conference, full of ardent proponents, only about 5% raised their hands when asked if they had UBI.

Many customers turn out to not be that focused on discounts. They would prefer receiving free access to other services, such as roadside assistance — but what services customers want, how to bundle those services, etc. has yet to be worked out.

Even if some new package of free services drove 10 times as many people to buy UBI auto policies, telematics wouldn’t do much to make roads safer. Insurers are offering incentives to a self-selected group of drivers who are already among the safest on the road but, because insurers have decided they can’t raise rates for bad drivers, won’t be doing anything about the people who cause a huge portion of the accidents and, thus, the costs.

The current business model works — barely. The costs are too high, the offering to consumers isn’t right and the benefits to insurers are too low.

The Potential

Help is on the way from two main sources, which I have seen drive innovation in industry after industry since I started following the world of information technology almost 30 years ago. One source is what I think of as the power of “free.” The other is the power of a platform.

The Power of “Free”

The behavioral economist Dan Ariely has done all sorts of experiments about the power of free and found that it is almost magic. For instance, if someone does volunteer work and you decide to thank him by paying him a little, he will likely cut back on the work he does for you or even stop. Ariely reasons that people evaluate paid work in a hard-nosed way — how many hours do I work, how hard or skilled is the work, how much do others get paid for this work, etc.? — and evaluate volunteer work based on altruistic measures, such as the quality of a cause. If you have people evaluate the return from their free work on a paid scale, you’ll lose them. Similarly, he says, you can get people to do all kinds of uneconomic things if remove a paltry cost and make something free.

The power of free computing and communication has driven the upheaval of business over the past 30 years, spawning the wide adoption of the Internet, smartphones, etc. and all the business models that have come along with them. (Obviously, we still pay for computers and storage devices, but they are essentially free by comparison with where they were in the 1980s — a gigabyte of memory, which cost $300,000 then, costs about a penny today. Communication costs have gone way down and are headed toward something approaching free, even though telecom and cable companies will fight a rear guard action as long as they can.)

Now the power of free is coming to telematics, because the cost of acquiring information on drivers is heading toward zero.

In the short term, that will be because of smartphone apps. Although some say the data they generate isn’t quite as precise as that from sensors in cars, the apps are good enough for the vast majority of uses, and they cost roughly nothing. There isn’t any need to make a dongle for the car and install and uninstall it. Nor is there a need for the insurer to buy a wireless data plan for the car. The app can do most of the analysis on the phone and just send modest amounts of data back to the insurer, using the driver’s wireless plan.

In the long term, things will get even better as “connected cars” move into the market. These cars, already connected wirelessly to the Internet, will automatically generate the kind of information that insurers need. Insurers will be able to know what kind of a driver someone is at the moment she applies, rather than having to guess and then wait six months to know for sure.

The Power of a Platform

From the 1950s through the early 1980s, when IBM controlled the computer industry, the pace of innovation was glacial by today’s standards. Part of the reason was that the pace let IBM milk maximum profits, but part was also because IBM had to produce what software types would call the “full stack.” IBM had to develop the semiconductor technology that allowed for faster processors; design those processors; manufacture the processors; design and manufacture just about all the support chips, especially memory; assemble the mainframes; code the operating system; and generate the major pieces of application software. Everything had to come together, from one company, before the next step in innovation happened.

When the PC came along in 1981, with its open architecture, innovation became a free-for-all. Intel owned the chip, and Microsoft the operating system, but everything else was fair game. Companies flooded into the market, innovating in all kinds of smart ways, especially with applications such as the spreadsheet, and the market took off.

The telematics market is well on its way to making the transition from the IBM mainframe days to the open days of the PC and beyond. Initially, Progressive had to pull an IBM and invent the whole process for telematics from beginning to end. Now, an ecosystem has developed, and all sorts of companies are free to innovate at any part of the process.

Verisk has announced an exchange, to which car makers and insurers can contribute data on drivers and from which they can pull information. GM has said it will contribute data from its OnStar system, and GM has one million 4G-connected cars on the road in the U.S. So, the need for everyone to generate their own data is going away.

The Weather Channel (represented on the panel I moderated at the conference) has information that can correlate bad weather very precisely with driving behavior — the company is even working to aggregate information on the speed at which cars’ wipers are operating, to understand in a very granular way just how severe a storm is in a certain spot.

Many other companies are innovating in new parts of the ecosystem, rather than just focusing on pricing risks better or acquiring customers. For instance, my friend and colleague Stefan Heck, a former director at McKinsey with whom I wrote a book (along with Matt Rogers) about how innovation can overcome resource scarcity, just unveiled an extremely ambitious approach to improving safety, through a company called Nauto. (A writeup in re/code is here.) Agero made a presentation at the conference about how telematics can speed claims processing and cut costs while making customers happy — essentially, the telematics system notifies the insurer instantly about an accident, so the insurer can provide whatever reassurance and help is necessary, while also sending someone to the scene so fast that it can take control of the process, rather than deferring to, among others, municipal towing companies.

The Future

The power of free and the power of a platform ensure that, before too many years go by, the costs for telematics will drop drastically and the benefits to insurers and customers will increase greatly. That still leaves insurers with the task of figuring out the right offering to customers, but, in my experience, once costs get low enough and lots of innovators get interested, experimentation eventually produces the right business model.

The question to me is: Who will that winner be?