Asleep on Data Security?

By: | September 1, 2013 • 3 min read

Ara Trembly is founder of The Tech Consultant and The Rogue Guru Blog. He can be reached at [email protected]

The reality of cyber crime and its disturbing rate of growth is well known to just about everyone, even to the sleepy insurance industry. Yet, one has to wonder how the industry — which is built on data — will respond to this reality, given its penchant for shunning new technology and ignoring the threats that other industries take more seriously.

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On the surface, it would seem that it’s not all that worried about losing the precious data that is the lifeblood of its business. Having given a number of talks on this topic at insurance industry forums, I can tell you that data security is not among the primary things that keep insurance executives up at night. Perhaps the industry thinks there’s not much it can do about it, so it writes it off as a “cost of doing business.” Or maybe it (mistakenly) believes that data thieves have better targets to aim for than the insurance business.

Whatever the reason, this relative indifference to a very damaging problem is reflected in the somewhat low-key data security products market in insurance. It was very interesting to note that among the dozens of vendor announcements at the recent IASA Educational Conference and Business Show, only one directly addressed the issue of data security.

That one, from Baker Tilly, was an announcement that it had published an educational article on the recent executive order on cyber security from the federal government. So it wasn’t a product or a solution, but just a heads-up. And Baker Tilly is a network of accounting and business advisory firms — not an insurer or an insurance tech vendor.

But the industry actually has come up with a response to this obvious threat. In fact, its response is just what you would expect. Carriers are now selling insurance to cover cyber risks and exposures.

A number of insurers are proffering products that offer a wide range of benefits. These include coverage for legal defense expenses and liabilities arising from claims related to a data breach; coverage for the cost of notifying customers and employees of the breach; coverage for all kinds of breaches (including stealing of credit card numbers by employees or third parties); coverage for statutory violations, regulatory investigation, and negligence or breach of contract; provision of credit and identity protection services; and even access to a team of experts that can help the insured respond to a security breach and limit financial loss or damage.

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At first blush, these would seem like ideal products that — while they do little to prevent illegal intrusions and thefts, and accompanying charges and lawsuits — at least make the insured feel less worried about being hacked. The question that arises, however, is how insurers rate the risks that they are now covering for individual companies. Who qualifies for these cyber threat insurance policies and who doesn’t — and why?

One executive told me privately, “Sure, we sell the coverage, but if we were the customer, I’m not sure I would cover us.”

And there is the problem in a nutshell. If my source’s observations apply to other insurers, then carriers are selling products for which they would not qualify.

Wouldn’t it be a good idea for the industry to clean up its house first, before offering cleaning services to others.

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

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