Risk Insider: Chris Mandel

Data Protection in the EU: GDPR’s New Level of Accountability and Exposure

By: | July 30, 2018 • 3 min read

Chris Mandel is SVP, strategic solutions for Sedgwick and Director of the Sedgwick Institute. He is a long-term risk management leader and a former president of RIMS. He can be reached at [email protected]

The General Data Protection Regulation (GDPR) may be one of the biggest changes implemented by the European Union with the intent to provide individuals more control over their personal information.

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GDPR, now in full effect as of May 25, 2018, gives the European Commission Office authority to impose heavy fines on all organizations that fail to follow the new guidelines.

Insurance companies and many players in the industry, through the ordinary course of business, collect large amounts of personal data and regularly process this data through the many and varied transactions completed daily. This new law applies to insurance companies around the world that do business in the EU.

All companies processing personal data of European citizens must comply. Therefore, insurance companies must ensure their operations align with GDPR requirements. There are three major issues risk managers and insurance industry professionals must be ready to comply with: receiving accurate consent, ensuring third-party compliance and avoiding completely automated decision making.

A greater weight is now being placed on receiving consent, with violations subject to the higher tier of fines. Consent is considered to be a statement or clear affirmative action giving a company permission to gather and use individuals’ personal data.

Consent must be well informed, given freely by the subject and made easily able to be withdrawn. Third-party users must be specifically named in the consent request and documentation about what, when and how an individual has consented must be maintained and available to EU enforcement authorities upon request.

Historically, ensuring the security of personal data has been the responsibility of the entity controlling the data. Under GDRP however, the burden is divided between the data processor and data controller.

For internet and mobile applications, it is no longer acceptable to obtain consent using pre-ticked check-boxes; the subject must take an affirmative action to be counted as consent.

In addition to individuals having the right to have their data erased, insurance companies must be careful not to retain data longer than necessary for the purpose of which it was collected. Nevertheless, there are exceptions to this rule, such as the allowance that data may be kept indefinitely if it is anonymized or kept for historical research or statistical purposes.

Historically, ensuring the security of personal data has been the responsibility of the entity controlling the data. Under GDRP however, the burden is divided between the data processor and data controller.

A controlling entity can be a natural or legal person, public authority or agency that determines the purpose and means of personal information being collected.

This differs from the data processor who holds and handles data for any purpose. With most insurance providers being data controllers, they must ensure all third parties who process data on their behalf are GDRP compliant.

Another major issue the insurance industry must be wary of is profiling. Profiling can be a part of automated processing of data to evaluate and predict certain characteristics, interests, behaviors or habits of individuals.

GDPR has strict requirements regarding decisions made entirely automatically without any human intervention. Examples of profiling used by insurance professionals include setting premiums, investigating fraud and planning marketing campaigns.

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However, automated individual decision making can only be carried out if necessary for the performance of a contract or based on an individual’s explicit consent.

GDPR also grants individuals the right to request human intervention and challenge decisions made about them. Consequently, insurance companies must regularly check to ensure their systems are operating as intended.

Companies affected by this new law will want to take notice of the substantial fines for non-compliance. The maximum penalty is €20 million (about $23 million in U.S. dollars) or 4 percent of a company’s worldwide annual revenue, whichever is higher.

The core of the more critical aspects to understand include the requirements for ensuring personal data held is accurate, necessary to retain and that consent has been granted.

Finally, risk managers will want to ensure that their company’s contracts with data processors and data controllers account for relevant GDPR requirements in order to effectively manage this broadened regulatory exposure to data privacy and protection.

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]