Risk Insider: Greg Bangs

No Consensus on Blockchain Standards

By: | May 18, 2017 • 3 min read
Gregory W. Bangs is senior vice president, crime regional leader for North America at AXA XL, a division of AXA XL. Over the last 30 years, he’s been underwriting insurance and developing new products in the U.S., UK, Hong Kong and France. He can be reached at [email protected]

Technology has transformed the way many companies transact business. And, with the advent and increasing acceptance of “blockchain” technology, we should expect even more dramatic change.

As R&I’s Roger Crombie noted in his column “The Blockchain Revolution?” there’s been an awful lot of hoopla about blockchain in the insurance industry, yet few really understand it and how it’s going to work.

Originally developed as the technology underlying crypto-currency transactions, blockchain technology may eventually enable greater efficiency, transparency and security in a wide range of industries from financial services companies — including insurers — to many others. Before jumping on the blockchain bandwagon though, there are still some issues and risks to consider.

For one, there’s still a lack of consensus on blockchain standards and no regulatory structure addressing risk transfer and loss allocation. This may create potential exposures that need to be considered when buying insurance. Private and semi-private blockchains also present concerns around determining who has access to potentially relevant transactional information and ensuring that limitations on access are fully in place.

I’ve recently worked with my industry colleagues Scott Schmookler and Katherine Musbach, attorneys with the Chicago-based law firm, Gordon & Rees, to outline some top concerns particularly as they relate to such crimes as fraud. As we see it, while this technology intends to make fraud tougher, using it to transfer securities and negotiable instruments could potentially increase the risk. Every time a document is subjected to a copying process, a small amount of information is lost.

Originally developed as the technology underlying crypto-currency transactions, blockchain technology may eventually enable greater efficiency, transparency and security in a wide range of industries from financial services companies — including insurers — to many others. Before jumping on the blockchain bandwagon though, there are still some issues and risks to consider.

The issue is worsened with multi-generational copies, or copies of copies, many of which contain insufficient quality for examination and comparison. The key to preventing falsification of the blockchain is to make the additions costly and there are many ways to do that.

Also, blockchain transactions may be less likely to receive comprehensive reviews looking for fraud, alteration and forgery. For instance, participating institutions may not receive the original documents on which the transaction is based, and therefore may not have an opportunity to analyze their authenticity. And if the technology evolves such that original documents are no longer provided, that could increase the potential for information to be lost through hacking or through a technological failure.

With a growing number of competing blockchain-based platforms, there is also a potential for assets to be double-pledged or for parties to enter into conflicting transactions. For example, the seller of a promissory note could use one proprietary blockchain-based platform to sell a note. Absent a means to compare transactions effected on one platform against transactions effected on another platform, the same seller could attempt to sell the same note through a different proprietary blockchain-based platform, in essence defrauding the purchaser, who — absent strict verification procedures — could be induced to unknowingly purchase a note the seller did not own.

Blockchain’s efficiency advantages must be weighed against the risks. As more businesses move forward into the brave new world of blockchain technology, they must remain mindful that this is just another means of conducting business transactions, and the time-honored principle of caveat emptor still applies. All those entering into blockchain transactions should do their due diligence.

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.

Advertisement




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.

Advertisement




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]