Sponsored Content by Milliman

Will You Survive the Great InsureTech Disruption?

An abundance of data and analytics technology creates both threats and opportunities for insurers.
By: | July 6, 2017 • 5 min read


In insurance, whoever holds the data, holds the power.

That’s because data is the key to effective risk assessment and underwriting.

Big Data and analytics are forcing insurers to adjust their processes when it comes to collecting and using data. With the expansion of the Internet of Things, sensor technology, machine learning and artificial intelligence, there is more information available than ever before.

The abundance of data – and the technology used to capture it – is driving profound disruption in the relationship structure of the insurance industry. As the traditional gatherers and guards of massive amounts of data, insurers face threats from new, tech-savvy competitors who can adapt to changes more quickly.

“There are very powerful trends coming together to cause serious industry disruption. That can be a big threat, but if insurers start responding now and embracing the change, it could also be a big opportunity,” said James Dodge, Senior Consultant, Advanced Analytics & Data Solutions, Milliman.

InsureTech Overturning the Status Quo

James Dodge, Senior Consultant, Advanced Analytics & Data Solutions

Technologists, data scientists and their deep-pocketed capital backers are jumping in with both feet. Though lacking insurance expertise, they see the vast opportunity to harness the data that insurers need. In doing so, they present a threat to traditional insurers, especially smaller and mid-size companies who lack their own large data stores.

“Not a lot of Insuretech companies actually want to be in insurance,” said Robert Meyer, FCAS, MAAA, Principal, Consulting Actuary, Milliman. “It’s a highly regulated industry that requires a lot of capital, and few have actually jumped into the pool of taking on risk. But they are positioning themselves as the purveyors of data.”

Distribution is a key area of focus for many Insuretech startups. Specifically, the new players think they can disintermediate brokers for small and mid-size accounts.

But there are other ways that technology can profoundly change insurance distribution.

Original equipment manufacturers (OEMs), especially in the case of IoT-enabled ‘connected cars,’ are one example of a new competitive threat to traditional distribution. Instead of providing auto coverage through a traditional carrier, they may try to capture more margin by partnering with an InsureTech startup.

“Say, for example, a young InsureTech firm builds a great app and sells it to a reinsurer. The OEM may decide they want to offer that as a value-added bundled offering to their customers,” Meyer said. “In doing so, they bypass the middleman, save costs, and create a more modern, digital experience for their customers.

“Insurers will then have a disintermediation problem, along with a new emergent competitor they never thought was their competitor before.”
Other insures could take a similar tactic by white labeling their products and selling them through InsureTech firms to trim expenses and expand their market share.

Insurers who are too slow to digitize or update their process could be pushed out altogether. They’ll lose customer loyalty to competitors who have refined their customer experience and engagement and fall behind those competitors who reduce their costs faster.

Opportunities Emerge

Robert Meyer, FCAS, MAAA, Principal, Consulting Actuary

The flipside to the threat of competition is that insurers who manage to stand out from the crowd win over customer support.

Small insurers, for example, are better positioned to adopt new technology and build ecosystems that are flexible enough to adapt to shifting trends and further technology advancements. Large insurers relying on legacy systems will have a harder time making that change and staying up to date.

But larger insurers can leverage their resources by directly investing in or acquiring InsureTech firms. Even if they can’t build the platforms themselves, partnering with InsureTech companies provides a closer look at their infrastructure and allows them to reap the benefits of access to data without storing or managing the data themselves.

“Using these firms as a stand alone data vendor also helps insurers avoid some regulatory overreach,” Dodge said.

Regulatory obstacles in the use of data science in underwriting often leave insurers unsure of how to apply new data sets, and therefore hesitant to embrace the new, interconnected technologies that help collect it. It’s a fear based on a limited view of data analytics.

“Insurers really do six major things. There’s product design, marketing and sales, pricing, underwriting, claims, and services,” Dodge said. “Regulators may not allow data science in setting rates if they perceive it as discriminatory, but you can absolutely still apply data analytics to the other five processes.”

Carriers can target marketing and distribution with demographic data, enhance their claims experience with user-friendly portals, improve claims handling through predictive analytics, and perhaps most importantly, incorporate data into the underwriting process.

“If regulators will not allow data to dictate pricing, you can achieve a similar effect in underwriting, outside of the rate structure,” Meyer said. Collecting data about a potential client’s financial reliability, exposure to different types of risk, and risk mitigation strength can guide underwriters to, for example, offer premium discounts for positive marks, or perhaps reduce sub-limits for higher-risk insureds.

“By taking in as many data elements as you can and applying them in other areas of your business, your organization will learn an awful lot about managing a high volume of data, learning from it, and then acting on it,” he said.

Digitize or Die

To reap the benefits of data and analytics technology, insurers have to act now. Taking a reactive instead of a proactive approach could do irreparable harm long term.

But throwing the latest technology at a problem without adjusting an accompanying process isn’t the answer.

“Clients are asking how they should embark on their own digital transformation. Not only do we have expertise in managing large data sets, but we can also advise on how to adjust relationship management within the industry along the way as the market undergoes continual disruption,” Meyer said.

Milliman is focused on working with both Insuretech players and traditional insurers to create a technology ecosystem built to adapt to continuing changes. They have dedicated themselves to staying at the leading edge of technology and the Insuretech trend.

“We are branching out from actuarial work and consulting into Big Data, machine learning, and analytics. We’re not focused on client-facing platforms, but rather building ways to combine human and machine learning to get the best outcome,” Dodge said. “We can help clients take advantage of the opportunities and plan for the future as changes continue.”

To learn more, visit http://us.milliman.com/.

SponsoredContent

BrandStudioLogo

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Milliman. The editorial staff of Risk & Insurance had no role in its preparation.




Milliman is among the world's largest providers of actuarial and related products and services. Milliman serves the full spectrum of business, financial, government, union, education, and nonprofit organizations. In addition to our consulting actuaries, Milliman's body of professionals includes numerous other specialists, ranging from clinicians to economists.

Workers' Comp

Keeping Workers on Their Feet

Slip and fall prevention programs must interweave all of the factors contributing to the risk.
By: | July 6, 2017 • 11 min read

If you peruse the last decade’s worth of literature from the CDC, NIOSH, or numerous other agencies or organizations, you’re bound to come across the “good news” that slips, trips and falls are largely preventable.

Advertisement




So it’s frustrating, then, that slip, trip and fall injuries consistently account for more than a quarter of all nonfatal occupational injuries, and at least 65 percent of those injuries happen on same-level walking surfaces. And those figures just don’t budge all that much from year to year.

According to the “2016 Liberty Mutual Workplace Safety Index,” falls on same level currently rank as the second highest cause of disabling injuries in the U.S., with direct costs of $10.17 billion, accounting for 16.4 percent of the total national injury burden.

“Not only are they still happening often, but they tend to be very significant injuries,” said Mike Lampl, director of research at the Ohio Bureau of Workers’ Compensation.

“We’ve seen these trends grow over the years,” said Wayne Maynard, product director, risk control, with Liberty Mutual. “Bottom line is, it’s a real, real big problem.”

So why are preventable falls so hard to prevent? This stubborn status quo, say experts, is that the causes of slips and trips are typically far more complex than they seem. There are nearly always multiple factors in play, from footwear and flooring and the interplay of both, to cleaning procedures, lighting, housekeeping, weather, and workers’ mental or physical conditions as well as overall awareness.

And all of these factors are being exacerbated by the fact that incidents often go unreported.

“Slips, falls — people get up, move on, they don’t report it,” said Maynard.

“When somebody’s injured and files a claim — in the workers’ arena, how many are behind the scenes that may have happened that are not reportable? …. The unreported number is considerable in my opinion.”

The key to making any headway in reducing slips and falls on the same surface, say experts, is to have a comprehensive fall prevention plan that addresses all possible factors. No small task.

Engineering Solutions

Flooring conditions are often the most obvious starting point. Ideally, said Maynard, all the right choices are made at the planning and design stage. But sometimes mistakes are made, and in other cases, a business may be inheriting an older space with floor chosen for a different purpose.

Patricia Showerman, senior loss control consultant, Arthur J. Gallagher & Co.

So even flooring in good condition may be the wrong type of material and may not have the necessary coefficient of friction (slip resistance) needed for the work being done.

If companies want to drill down into all the details of the surfaces in their facilities, a friction coefficient study is always an option, said Patricia Showerman, senior loss control consultant at Arthur J. Gallagher & Co.

But if a company doesn’t want to take that step, she said, it may be a simpler matter of saying, “Let’s look at what you’ve got. Let’s look at your floor surfaces and how you’re maintaining them.”

A lot of people want that “shiny grocery store glam look,” she said. “And if you can do it properly, and maintain it properly and keep that coefficient of friction and have the shiny look, that’s great. That’s what everybody wants but how do they get there?”

Certain surfaces may start out with an adequate coefficient of friction when they’re clean and dry. But add even an invisible layer of dust or debris, “and it’s like microscopic little BBs that you slide across,” said Showerman. “So if you have dust on your floor, you are dramatically reducing your slip coefficient.”

For companies that do have flooring surfaces in need of improvement, ripping up the floor and replacing it isn’t typically a feasible option. Fortunately there are more budget-friendly ways to get the maximum slip resistance from existing flooring, such as coatings and etchings.

A coating adds a microscopic layer on top of the flooring that creates a grip surface while maintaining the shine. Showerman likened the effect to the way that Velcro fasteners work.

“You want that hook effect … sharp points are going to microscopically stick into the soles of your shoes, rather than rolling off the top.”

Etching can work in a similar way, chemically altering the existing surface to make it imperceptibly gritty. Etching can also be used to create pores in an existing surface, which is useful for areas such as machine shops, she said.

Be Smart With Surfactants

While keeping floor surfaces clean is one of the best ways to remove slip and fall hazards, cleaning them the wrong way can actually do more harm than good.

Failure to follow appropriate cleaning procedures can severely diminish a surface’s coefficient of friction.

Experts suggest that companies engage with their chemical suppliers, and discuss their flooring as well as the types of dirt or grease removal and disinfectant needs. Detergents – which can contain different types of surfactants — aren’t a one size fits all solution.

Advertisement




Sometimes purchasers might be inclined to try to cover all their bases by buying the strongest product on the market, but that might mean adding unnecessary surfactants that make surfaces less slip resistant.

“Clearly identify the types of surfaces you’re using it for, the type of oil or dirt or debris you have, and whether or not you need a sanitizing step,” said Showerman.

“You’ve got to find the right balance.”

But that’s only half the battle. A significant problem experts see time and time again is that companies don’t understand how their flooring is being maintained on a day-to-day basis by front-line employees. Failure to follow appropriate cleaning procedures can severely diminish a surface’s coefficient of friction.

“This is where you’re seeing someone with a mop and bucket and they are just re-smearing that grease from one place to another. They put the dirty mop in the dirty bucket, the mop gets full of that emulsified grease and you’re smearing it across the room. In high grease areas, you have to replace with clean water consistently.”

In other cases, a worker without the proper training may grab the first detergent he finds, even if it’s meant for the equipment rather than the floor. Or perhaps he mixes equal parts detergent and water when he was supposed to only use 8 oz. of detergent for every five gallons of water.
Sometimes people will even over-concentrate the detergent on purpose, she added.

Peter Koch, safety management specialist, The MEMIC Group

“I see that in the food industry frequently,” said Showerman. “They find that the more detergent they leave on the floor, the easier it is to clean up next time … but then everyone’s slipping and falling like in a cartoon.”

A company could invest a significant amount in flooring improvements, only to have the benefits undone by improper detergent use or failure to follow recommended rinsing procedures.

It’s incumbent upon safety managers to reinforce that maintaining floor surfaces isn’t just a matter of housekeeping, but a key part of the company’s workplace safety program.

The Human Factor

When you’ve done everything possible to address hazards in the physical work environment, workers themselves remain the wildcard. Most employers routinely include slip and fall hazards in their safety awareness training or toolbox talk programs. But that training should go well beyond a general “watch where you walk” message, say experts.

“One of the most overlooked parts for employee safety is actually employee training,” said Peter Koch, safety management specialist at  The MEMIC Group.

“How do you train an employee to not slip and fall? I think many times that is wrapped in a “you have to be more careful” message, which is valid but nebulous and not very helpful — it means something different to everyone based on your risk tolerance as an individual.”

Koch’s employee training regimen revolves around four elements: surfaces, awareness, footwear and environment (SAFE).

Advertisement




The first goal of the surface portion is just to get employees to start thinking about the different types of surfaces they walk on and how it can change throughout the work day. Koch said he likes to ask: “How many different types of surfaces did you have to walk on the get to this training room?”

The footwear piece of it is the most straightforward. Are your shoes designed for the work that you’re doing and the surfaces you’re walking on? Are they in good condition? Are the soles worn out?

There is no ASTM standard for measuring the performance of slip-resistant footwear, added Gallagher’s Showerman. So workers should be reminded that wearing the right shoe isn’t a guarantee — it’s just one piece of the solution.

Awareness, said Koch, may be the most challenging piece of the puzzle — helping people to think about their gait, what they’re carrying, what they’re doing, and simply where their heads are at any given moment.

“If you’re thinking about 15 things you have to get done by the end of the day, or you have a particularly challenging employee interaction coming up that day, or you had a fight with your girlfriend last night— or whatever it is — you’re not focused. Then you take that step through the icy patch, and now it relies completely on your athletic ability and luck to stay upright.”

Workers may not necessarily make the connection between personal factors and fall risk. Someone who has an ear infection or is taking certain medications, for example, may not even be aware that their balance might be compromised, putting them at higher risk for a fall.

Employees also should be reminded of how even normal daily stressors can contribute to risk. Everyone is under pressure to deliver more in less time. Everyone is rushing, everyone is stretched to their limits. Add the ever-present cellphone beeping and buzzing and demanding our attention and perhaps it’s a wonder slips and falls don’t happen even more often than they already do.

We’re so conditioned to react when the vibration goes off or the tone chimes in our pockets that we just grab it without thinking, Koch said.

“If you knowingly put yourself at risk by knowingly going quickly through an area with slip and fall exposures, it’s just Russian roulette – at some point you’re going to get broken.” — Peter Koch, safety management specialist, The MEMIC Group.

“Even that, in certain conditions, is going to be enough to put you on the ground.”

Awareness of environmental factors should also be part of the training, Koch said, especially in terms of what workers can’t control, like inclement weather.  He said the main thing he tries to impress upon people is to slow down in a high-risk environment.

“If you knowingly put yourself at risk by knowingly going quickly through an area with slip and fall exposures, it’s just Russian roulette – at some point you’re going to get broken.”

Koch says that getting people to put all of these facets of awareness together is where the training can really click.

The goal is that when they approach an area with a higher-risk surface, employees are thinking “for those few seconds or minutes that I’m going to be walking through it, I need to have a greater sense of awareness, I need to put away the mental [distractions] and focus on what I’m doing – don’t answer your phone, don’t answer your texts.”

Some employers are looking to address the human piece of the slip and fall puzzle by using training that goes far beyond hazard awareness. Active slip-prevention training focuses on body mechanics and teaches workers how to respond when they feel themselves begin to slip.

One such program revolves around the Slip Simulator, technology born of a research partnership between Virginia Tech researchers and UPS. The simulator that creates slippery and hazardous conditions in a controlled environment while participants walk in a harness so they can slip safely. An instructor offers real-time guidance on how to alter their movements to avoid falling.

Advertisement




After mastering the initial technique, trainees face additional challenges related to their specific work environments, such as walking up ramps or turning wheels. A New Mexico security team practiced drawing firearms while standing on the simulator, which led to a change in how they wear their weapons. Workers at an Ohio refinery practiced stepping over pipes and turning large valves.

Clients of the program are reporting 60 to 80 percent reductions in accident rates.

The Road Ahead

A comprehensive slip and fall prevention plan is a must for employers, experts agreed, with clear, consistent procedures that empower employees to be a part of the solution.

“Employees play a very critical role,” said Liberty Mutual’s Maynard. “If they see a slip risk or a slipperiness issue, they need to be able to report it and they need to be able to get that corrected immediately. They have an important role in maintaining a safe facility and reducing risk themselves — be proactive, don’t walk by, clean it up.

“Any time you can involve the employee in solutions …. the likelihood of success of that intervention is higher.”

Maynard added that the best prevention plans will also be forward-looking.

“Understand where current safety performance is. Then make a roadmap to get better,” he said. “Emphasize where you’re doing well,” then identify opportunities to effect improvement, now and over the next three, four or five years.

“Prevention is too often reactive,” Maynard said. “We’ve got an issue and now what do we do? The goal is for companies to be proactive.” &

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