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Robotics in the Workplace

Helping Hands?

Robotics will forever change the landscape of the U.S. workplace. That may create new liability concerns and eliminate others.
By: | October 15, 2014 • 10 min read

It’s probably way too soon to start dreaming up insurance products that will respond to the risk that robots are going to rise up and annihilate humankind. And good luck finding the market capacity for it anyway.

However, robots and robotics are fast becoming a fixture of our reality, and the industry is poised for rapid expansion.

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Robots, in some form or another, have been present in the manufacturing sector since 1962, when a New Jersey General Motors factory began using a robot to do spot welding and extract die castings. By the ’70s, increasingly sophisticated machines, operated by minicomputers, were being widely used for small parts assembly.

Robotics have long since moved away from the assembly line. Robots are present everywhere from warehouses to hospitals, from farms to laboratories, and from the military to mines and more.

One of the latest robotic forays into the workplace is at the Aloft hotel in Cupertino, Calif., where “The Botlr” — a service robot that looks like a distant cousin of R2-D2 — is being used to make small deliveries to guests’ rooms. Robots may soon be flipping your burgers or picking the grapes that make your favorite wine.

Video: The Botlr, a robotic bellhop built for Aloft Hotels, delivers an item to a guest in his room.

But the application of robotics is going ever deeper.

The development of robots connected to the Internet, big data, the cloud and advanced computing technology such as artificial intelligence (AI) algorithms are bringing a new class of robots into the workplace — those that can sense, think and act based on specific data and sensory input, and make routine decisions.

In June, the Associated Press began experimenting with having machines write short business stories. The news organization said that eventually, the majority of its U.S. corporate earnings stories would be produced using automation. (As of press time, Risk & Insurance® is not yet employing robotic journalists.)

There are obvious positives to the growth of robotics in the workplace. It makes sense to give robots the high-turnover jobs that are mind-numbingly rote, as well as those jobs and tasks considered extremely dangerous.

But the change that is coming may be far more profound. Garry Mathiason, co-chair of the Robotics, Artificial Intelligence and Automation practice group at Littler Mendelson in San Francisco, cited a 2013 study published by the Oxford Martin School, examining automation potential across the U.S. labor market.

According to the study, said Mathiason, “47 percent of jobs currently done by people in the United States will be done by machines and software within one to two decades. That doesn’t mean there’s going to be 50 percent unemployment; it does mean there’s going to be that much change taking place.”

(For the record, the Oxford Martin study said that insurance underwriters are in the highest risk category for being taken over by automation, just ahead of claims and policy processing personnel, claims adjusters, examiners and investigators.)

“2010 was a turning point in terms of the acceleration of the technology and its implications,” said Mathiason. “There is a change taking place that will be the equivalent of the Internet in terms of what it will do to the workplace.”

Video: At the fulfillment center of North Reading, Mass.-based Kiva Systems, 100 robots work alongside 300 fulfillment associates.

Pointing Fingers

So far though, companies that employ robots see the importance of having human checks and balances on the robots’ work. Many companies are actually increasing staffing levels to support their robotic equipment.

That raises concerns about whether employees are at increased risk of harm by robotic equipment, or may inadvertently interfere with safe robotic operations. A fair number of workplace fatalities related to robotics have occurred in the last decade or two.

As it stands, employers are covered by existing workers’ comp statutes if a robot were to cause a workplace injury or fatality, the same as they would be in the event of an injury or death caused by any other piece of equipment.

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The same would not be true, however, if a robot were to injure a customer, a vendor or any other visitor to a facility. In those cases, who can expect to face a lawsuit? The answer, for now, is: It depends.

Liability issues get sketchy when you factor in the element of closed versus open robotics.

In a closed robotics system, a robot is designed and manufactured for one specific purpose. (iRobot’s Roomba, for instance, is a vacuum — period — no matter how many YouTubers use it as an amusement park ride for their cats.)

But with an open robotic system, independent developers would be able to create programs, or apps, to allow the system to accomplish different user-defined tasks, adding more potential culprits in the event of a claim.

“This is going to be a big issue,” said Stephen Wu, an attorney who is of counsel to Silicon Valley Law Group based in San Jose, Calif.

“[In the event of a robot-related accident], I’m going to be doing an investigation and using experts to determine the root cause. Was it my own environment? Was it the hardware manufacturer? Was it the firmware manufacturer? Was it the application software? Was it the operating system manufacturer? Or was it some subcomponents thereof? Or else … was it a data service provider [such as one providing mapping data]?”

These questions will grow still more complicated with the growth of adaptive technology — meaning when robots make decisions on their own based on the data and sensory input they receive.

“Increasingly, adaptive intelligence is being built in where the robot is going to be changing what it does based on external stimuli,” said Drew Haaser, U.S. technology practice leader for Marsh.

“Let’s say it’s putting welds on an auto and it’s been programmed to sense the properties of the materials it’s welding and adapt … . If it makes the wrong decision — what are going to be the legal implications to that?”

That question reaches a whole other level when the consequence is a loss of life.

“What if you have a robot that is … facing the decision to either run over your daughter or hit a school bus full of kids, what is the right thing to do in that situation?” asked David Beyer, managing member of Digital Risk Resources.

“I think that it’s a very complex issue. … They try to think through a lot of these situational risks but you can’t predict all the risks all the time.”

“I think what we’re going to see is that all parties are going to be drawn into these lawsuits. They’re all going to have their feet put to the fire and they’re all going to point at each other. Unfortunately, a jury is going to have to decide these things.” — David Beyer, managing member, Digital Risk Resources

It’s crucial, said Guy Fraker, that we remember robotics is not synonymous with infallible.

“You can say, ‘We can fix that with an algorithm.’ But can you program for that kind of variability in advance? No,” said Fraker, former director of business trends and foresight for State Farm and co-founder and CEO of consultancy Autonomous Stuff.

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“We’re learning new things about the technology every day.”

“These are not dumb devices anymore,” said Haaser, “and when they make mistakes in how they interpret stimuli, is it a professional liability error in the design of the product or in the software as opposed to a straightforward bodily injury/property damage claim?”

As more businesses incorporate adaptive technology into the workplace and robotics follow cues based on what they’re learning in their environments, the more that risk management will be expected to have thought through all of the implications of how the robot or robotic systems might respond.

Eventually, there will be cases where robots make “correct” decisions that result in tragic outcomes.

Several experts cited the example of a driverless car faced with a choice of hitting a tractor trailer or hitting an occupied baby stroller. Most assume that the car would attempt to minimize damage by hitting the stroller.

In a case like that, “Was it a mistake? Well, no,” said Haaser.

“Was it what a human with a duty to care would have done? No! And how will the courts treat that? Unfortunately, there are a whole lot of questions and not a whole lot of answers yet as to how the courts will treat that.”

“I think what we’re going to see,” said Beyer, “is that all parties are going to be drawn into these lawsuits.

“They’re all going to have their feet put to the fire and they’re all going to point at each other. Unfortunately, a jury is going to have to decide these things.”

Human Augmentation

The extremely good robotics news is that a great many of the developments coming out of the industry have the potential to decrease employer exposure rather than increase it.

In particular, advances in exoskeleton technology are moving to the forefront, even gaining a global stage during the 2014 World Cup, when a young paraplegic man made the first official kick of the event, wearing a mind-controlled robotic exoskeleton.

Video: Juliano Pinto, 29-year-old paraplegic man, successfully made the first kick of the 2014 World Cup in Sao Paulo, wearing a full body robotic suit.

In South Korea last year, employees of Daewoo Shipbuilding and Marine Engineering helped test a prototype of a full-body exoskeleton that will enable them to lift large hunks of metal, pipes and other objects without excess exertion or risk of strain or injury.

“In basic safety and loss control, the first line of defense is to engineer the risk out; robotics is one of the purest forms of ‘engineering out’ a risk,” said Bill Spiers, vice president and risk consulting manager, Lockton Cos.

Bill Spiers, vice president and risk consulting manager, Lockton Cos.

Bill Spiers, vice president and risk consulting manager, Lockton Cos.

“You have eliminated the human interaction around a task that’s going to create soft tissue strains that are very costly.”

Industry leaders such as Ekso Bionics and Cyberdyne are actively producing exoskeletons that have a broad range of applications. Robotic suits could dramatically reduce injury risk for workers with physically intensive jobs, potentially enhancing productivity at the same time.

“Wearable technology has the potential for ameliorating some [health and safety] concerns,” said Littler Mendelson’s Mathiason. “You can see it someday becoming as common as safety shoes.”

Mathiason said this may eventually be of equal importance as applied to Americans with Disabilities Act accommodation issues.

“You have people who couldn’t perform the essential functions of the job. Then seven million paraplegics can suddenly walk and do things nobody thought they would ever do again,” he said.

For workers who’ve already suffered temporary or permanent disabling injuries, exoskeletons could eventually open the doors for new means to keep injured workers on the job. Even severely disabled employees could potentially be returned to productive and essential work, increasing quality of life for injured workers while saving employers millions in partial and total disability payments.

“You have people who couldn’t perform the essential functions of the job. Then seven million paraplegics can suddenly walk and do things nobody thought they would ever do again.” — Garry Mathiason, co-chair of the Robotics, Artificial Intelligence and Automation practice group, Littler Mendelson

Currently, 330 of Cyberdyne’s HAL-5 full-body exoskeletons have been leased to hospitals across Japan, where they assist patients with muscle weakness or disabilities due to stroke and spinal cord injuries. In some industries, this area of robotics could virtually eliminate obstacles to accommodating injured or disabled workers.

Due Diligence

As companies make critical decisions about incorporating robotics into their operations, it’s important to bring risk management into the loop early on.

While companies increasingly transition processes to robotics for the sake of cost savings, said Haaser, “the challenge for the risk manager will be to see that some of those savings are being reinvested back into risk management.”

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But the most urgent piece is getting risk management involved in decisions about capital expenditures like robotics from the get-go.

John Abbott, an account executive at Arthur J. Gallagher & Co., said there are a host of questions that risk managers need to think through in advance.

“Are you going to be using it to do something that’s never been done before? Do you want to go into an area where there’s a potential environmental issue that may impair the robot’s performance? Robots are mechanical and electrical systems — any robotic system is prone to wear and tear and failure to some degree.”

Wu of the Silicon Valley Law Group added that due diligence is of utmost importance when selecting vendors for robotic system components, including whether there are any kinds of certifications that apply to the machines.

“Is there a UL-type seal of approval that we could look for that can be had?” Wu asked. “And what kind of testing went into the robots in the first place?”

Issues such as hackers and the potential for fraud must also be given consideration, said Fraker. “For every great capability that’s ever been developed … there’s an opposing potential dark side,” he cautioned.

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Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

High Net Worth

To the High Net Worth Homeowner: Build a Disaster Resiliency Plan You Can Be Proud Of

Having a resiliency plan and practicing it can make all the difference in a disaster.
By: | September 14, 2018 • 7 min read

Packed with state-of-the-art electronics, priceless collections and high-end furnishings, and situated in scenic, often remote locations, the dwellings of high net worth individuals and families pose particular challenges when it comes to disaster resiliency. But help is on the way.

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Armed with loss data, innovative new programs, technological advances, and a growing army of niche service-providers aimed at addressing an astonishingly diverse set of risks, insurers are increasingly determined to not just insure against their high net worth clients’ losses, but to prevent them.

Insurers have long been proactive in risk mitigation, but increasingly, after the recent surge in wildfire and storm losses, insureds are now, too.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy,” said Laura Sherman, founding partner at Baldwin Krystyn Sherman Partners.

And especially in the high net worth space, preventing that loss is vastly preferable to a payout, for insurers and insureds alike.

“If insurers can preserve even one house that’s 10 or 20 or 40 million dollars … whatever they have spent in a year is money well spent. Plus they’ve saved this important asset for the client,” said Bruce Gendelman, chairman and founder Bruce Gendelman Insurance Services.

High Net Worth Vulnerabilities

Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

As the number and size of luxury homes built in vulnerable areas has increased, so has the frequency and magnitude of extreme weather events, including hurricanes, harsh cold and winter storms, and wildfires.

“There is a growing desire to inhabit this riskier terrain,” said Jason Metzger, SVP Risk Management, PURE group of insurance companies. “In the western states alone, a little over a million homes are highly vulnerable to wildfires because of their proximity to forests that are fuller of fuel than they have been in years past.”

Such homes are often filled with expensive artwork and collections, from fine wine to rare books to couture to automobiles, each presenting unique challenges. The homes themselves present other vulnerabilities.

“Larger, more sophisticated homes are bristling with more technology than ever,” said Stephen Poux, SVP and head of Risk Management Services and Loss Prevention for AIG’s Private Client Group.

“A lightning strike can trash every electronic in the home.”

Niche Service Providers

A variety of niche service providers are stepping forward to help.

Secure facilities provide hurricane-proof, wildfire-proof off-site storage for artwork, antiques, and all manner of collectibles for seasonal or rotating storage, as well as ahead of impending disasters.

Other companies help manage such collections — a substantial challenge anytime, but especially during a crisis.

“Knowing where it is, is a huge part of mitigating the risk,” said Eric Kahan, founder of Collector Systems, a cloud-based collection management company that allows collectors to monitor their collections during loans to museums, transit between homes, or evacuation to secure storage.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy.” — Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

Insurers also employ specialists in-house. AIG employs four art curators who advise clients on how to protect and preserve their art collections.

Perhaps the best known and most striking example of this kind of direct insurer involvement are the fire teams insurers retain or employ to monitor fires and even spray retardant or water on threatened properties.

High-Level Service for High Net Worth

All high net worth carriers have programs that leverage expertise, loss data, and relationships with vendors to help clients avoid and recover from losses, employing the highest levels of customer service to accomplish this as unobtrusively as possible.

“What allows you to do your job best is when you develop that relationship with a client, where it’s the same people that are interacting with them on every front for their risk management,” said Steve Bitterman, chief risk services officer for Vault Insurance.

Site visits are an essential first step, allowing insurers to assess risks, make recommendations to reduce them, and establish plans in the event of a disaster.

“When you’re in a catastrophic situation, it’s high stress, time is of the essence, and people forget things,” said Sherman. “Having a written plan in place is paramount to success.”

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Another important component is knowing who will execute that plan in homes that are often unoccupied.

Domestic staff may lack the knowledge or authority to protect the homeowner’s assets, and during a disaster may be distracted dealing with threats to their own homes and families. Adequate planning includes ensuring that whoever is responsible has the training and authority to execute the plan.

Evaluating New Technology

Insurers use technologies like GPS and satellite imagery to determine which homes are directly threatened by storms or wildfires. They also assess and vet technologies that can be implemented by homeowners, from impact glass to alarm and monitoring systems, to more obscure but potentially more important options.

AIG’s Poux recommends two types of vents that mitigate important, and unexpected risks.

“There’s a fantastic technology called Smart Vent, which allows water to flow in and out of the foundation,” Poux said. “… The weight of water outside a foundation can push a foundation wall in. If you equalize that water inside and out at the same level, you negate that.”

Another wildfire risk — embers getting sucked into the attic — is, according to Poux, “typically the greatest cause of the destruction of homes.” But, he said, “Special ember-resisting venting, like Brandguard Vents, can remove that exposure altogether.”

Building Smart

Many disaster resiliency technologies can be applied at any time, but often the cost is fractional if implemented during initial construction. AIG’s Smart Build is a free program for new or remodeled homes that evolved out of AIG’s construction insurance programs.

Previously available only to homes valued at $5 million and up, Smart Build recently expanded to include homes of $1 million and up. Roughly 100 homes are enrolled, with an average value of $13 million.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work.” — Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“We know what goes wrong in high net worth homes,” said Poux, citing AIG’s decades of loss data.

“We’re incenting our client and by proxy their builder, their architects and their broker, to give us a seat at the design table. … That enables us to help tweak the architectural plans in ways that are very easy to do with a pencil, as opposed to after a home is built.”

Poux cites a remote ranch property in Texas.

Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“The client was rebuilding a home but also installing new roads and grading and driveways. … The property was very far from the fire department and there wasn’t any available water on the property.”

Poux’s team was able to recommend underground water storage tanks, something that would have been prohibitively expensive after construction.

“But if the ground is open and you’ve got heavy equipment, it’s a relatively minor additional expense.”

Homes that graduate from the Smart Build program may be eligible for preferred pricing due to their added resilience, Poux said.

Recovery from Loss

A major component of disaster resiliency is still recovery from loss, and preparation is key to the prompt service expected by homeowners paying six- or seven-figure premiums.

Before Irma, PURE sent contact information for pre-assigned claim adjusters to insureds in the storm’s direct path.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work,” said Curt Goetsch, head of underwriting for Ironshore’s Private Client Group.

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“If you’ve got custom construction or imported materials in your house, you’re not going to go down the street and just find somebody that can do that kind of work, or has those materials in stock.”

In the wake of disaster, even basic services can be scarce.

“Our claims and risk management departments have to work together in advance of the storm,” said Bitterman, “to have contractors and restoration companies and tarp and board services that are going to respond to our company’s clients, that will commit resources to us.”

And while local agents’ connections can be invaluable, Goetsch sees insurers taking more of that responsibility from the agent, to at least get the claim started.

“When there is a disaster, the agency’s staff may have to deal with personal losses,” Goetsch said. &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at [email protected]