Risk Insider: Kevin Kalinich

Risky Things

By: | August 27, 2015 • 2 min read

Kevin Kalinich is the global cyber risk practice leader for Aon Risk Solutions, focusing on identifying exposures and developing insurance solutions. He can be reached at [email protected]

Some of us are old enough to remember when our stand-alone computers first became networked with other computers. Who over 40 years old doesn’t recall sending and receiving that first email?

That profound technological development – networked computing – brought enormous advantages but also set the stage for security concerns, like viruses and malware, which can be an Achilles heel of computer technology.

With the rise of the Internet of Things (IoT), we find that it is more than just our computers that are connected. Our homes, possessions and even our physical bodies are becoming connected.

Many IoT products can actually reduce exposures.

Arrays of smart, sensor-equipped, connected devices that collect and digitize a wide variety of data are already being used, with exponentially more in development.

Literally tens of billions of “things” containing sensors – cars, homes, medical devices – will be connected in the next several years. A range of twenty to 50 billion of these “things” are estimated to be installed by 2020, with a vast amount more to follow.

An example is car manufacturers’ strategies to sell “tires as a service.” The car manufacturers use embedded technology to detect tire wear and under-inflation, which improves service and increases safety.

The IoT phenomenon is unfolding faster than developers can address the accompanying security vulnerabilities and risk management concerns. We are living in a new world in which our “things” can tattle on us, compromise our privacy or even harm us.

While telematics in vehicles or home appliances may seem helpful when we need roadside assistance or to diagnose maintenance issues, they can also report our speed or our diet, which to some may seem invasive.

Drones, hidden cameras and driverless cars once seemed like fantasy objects in a futuristic world, but suddenly that future is here, and it is unclear how liability would be assigned when one of these “things” misbehaves or is used to harm another.

On the contrary, not all IoT innovations are necessarily harmful. Many IoT products can actually reduce exposures. Home automation startups being incubated by Microsoft Ventures carry a number of safety benefits, such as turning off your stove or protecting your home from water damage.

IBM just announced a $3 billion investment in IoT and is launching a multitude of services that will help make us safer, such as alerting car insurance policyholders of storms to help prevent damage. So it’s important to remember that IoT exposures are not necessarily negative, just different.

With the increased use of internet-connected devices, however, new types of exposures have arisen to increase the possibility of certain damages. This creates an enterprise risk management challenge as businesses seek to harness the exciting potential of this evolving technology while managing the related cyber threats.

The data gathered by IoT is often quite vulnerable. According to a study by HP, it’s estimated that 70 percent of the most commonly used devices contain serious vulnerabilities. Potential concerns include a dangerous hacker disabling a life-sustaining medical device, the brakes in an automobile, or aviation systems from Wi-Fi or power grids.

As it has repeatedly done throughout history, our ability to create new technology is opening up worlds of opportunity. It’s also creating new types of risk.

Plaintiffs’ attorneys will look to those involved in the design, production, delivery and servicing of the IoT device that allegedly causes economic loss, bodily injury or tangible property damage.

While it is impossible to predict the exact impact of the IoT on the insurance industry, this much is clear: future IoT evolution will force the insurance industry to better clarify where coverage starts and stops under each type of policy.

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]