Trending | Technological Innovation Is Making Self-Insurance Easier. Here’s How

Positive safety trends and new technologies are driving a pull away from traditional risk transfer as carriers work to adapt.
By: | November 19, 2019

For more than half of employers, workers’ compensation risk transfer still happens in the “usual” way, via the purchase of private workers’ comp coverage, according to the most recent data available from the National Academy of Social Insurance.

Self-insurance, however, is becoming an increasingly attractive option for workers’ compensation, particularly for small and mid-sized employers that first adopted or explored self-insurance for their health care benefits.

According to the Self-Insurance Institute of America (SIIA), more than 6,000 corporations and their subsidiaries nationwide operate self-insured workers’ compensation programs, not including employers who join group self-insurance funds.

One reason for the growth in interest is that workplaces are becoming safer overall, bringing the level of risk into a financially manageable range for a growing number of employers.

Another reason is the level of technology available to make it easier than ever for self-insured employers to manage and administer their own claims. A growing number of Insurtech start-ups are setting their sights on the pain points of workers’ comp claims.

TPAs Should Take Notice

These trends should be on the radar of carriers and TPAs alike as technology enables more employers to take their workers’ comp claims management into their into hands and kiss the middle-men good-bye — particularly those that have been slow to invest in technology.

Ivania Konieczka, vice president for workers’ compensation claims products at Liberty Mutual, knows both TPAs and traditional carriers can suffer from this inertia.

“One of the pain points in terms of handling claims is getting the funding and resources to continue to develop your claims handling practices to be up-to-date with modern workflows and highlighting all the potential risk areas in a more automated way,” Konieczka explained.

As employers and claimants demand 24-hour instant access to information, claims handler workflow can influence all aspects of the claim as it matures, and good workflows can ensure that the injured worker has all of the information they need at the very beginning of a claim.

“We are investing heavily in our mobile communication touchpoints with our injured workers and I think a lot of people in the workers’ comp space are trying to understand the intersection of self-service and what that really means for workers’ comp,” Konieczka said.

“For us, it’s a marriage of the injured worker experience and those mobile touchpoints; we want to advance those touchpoints, not replace them.”

Liberty Mutual has implemented a model that they call “Cat Playbook” which detects upcoming weather events that could affect injured workers in the area.

The system can identify the subset of claimants in that area that might benefit from being relocated because of the nature of their injuries, and those that lack direct deposit and are dependent on paper checks that could be delayed because mail is disrupted.

Mobile Applications Are the Future of Workers’ Comp

The intersection of self-service in workers’ comp is also at issue on the macro scale in the use of data analytics.

Audrey Allsopp, claim consultant and workers’ compensation practice leader for Connor Strong & Buckelew noted that all of the carriers and TPAs she works with offer some kind of mobile application to improve communication, but there’s still more that can be done.

Martin Frappolli, senior director of knowledge resources, The Institutes

Regardless of the data sources, experts generally agree that carriers need different protocols for employing data sets over time. “You can look at leveraging data on two different levels,” Konieczka said.

“At the claims handler’s desk, it’s about driving insights and operational dashboards to the frontline managers. If you’re thinking about the wealth of data that you have, how do you really extract those components that you think they need to manage to be effective? At the larger scale, it’s employing that data to make connections that humans aren’t going to make easily through modeling techniques.”

For his part, Martin Frappolli, senior director of knowledge resources at The Institutes, sees the innovation push driving insurers to place more emphasis on risk management services and loss control in order to prove their value and prevent claims from occurring in the first place.

Frappolli sees wearable technology and other IoT devices as major factors in that effort. Just as job growth in the United States is moving in the direction of services rather than labor, insurers’ level of service must keep pace.

“It’s not so much about reclaiming or maintaining premium at this point because exposures are shrinking,” Frappolli said. “Of course, there will be a continuing fight for slices of an ever-shrinking pie, but the big idea that insurers need to embrace now more than ever is replacing the premiums that come with exposures with risk management services.”

“I don’t anticipate dramatic premium drops in three to five years, but in 20 to 30 years, unless there are new exposures, we’ll see a dramatic drop,” he added.

Data Analytics Will Drive Risk Management

Those risk management services will again depend on data analytics. Geraldine Henley, senior vice president and claim services director for Conner Strong & Buckelew, put this in terms of the strength traditional carriers can have for predictive analytics on both the underwriting and claims side.

“Analytics tells a story and it’s a historical story, but it’s useful to avoid claims from happening in the future in certain situations,” Henley said. “Carriers, on a much greater scale, have what they consider to be much greater predictive analytics and outcomes-based strategies. This is only the beginning of the use of technology in insurance because we were behind to begin with.”

As insurance catches up with the rest of American business services sectors, it appears that the workers’ comp line could face a continued squeeze. An S&P Global report issued late September indicated that 14 of the top 20 workers’ compensation underwriters reported first-half premium declines.

Among that group, premium declined 3.5 percent, while total workers’ comp market premium volume declined 2.82 percent. As Frappolli indicated, this is largely due to lower frequency contributing to declines in loss ratios.

Traditional carriers have significant advantages awaiting them as they continue to parse the value of vast troves of data, injured worker self-service, and modeling in claims, but only if they can prove their worth before an accident happens as well.

As Konieczka put it, some in the marketplace think that technology can “disengage or offset touchpoints and processing” in claims, but they do so at their own peril. Rather, it is enhancing the connection to the injured worker that maintains the insurer/customer relationship in workers’ comp. &

Nina Luckman is a business journalist based in New Orleans, focusing primarily on the workers' compensation industry. Over the last several years, Nina has served as Editor of Louisiana Comp Blog, a news site she started in 2014 under the auspices of a group self-insurance fund. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

The Betrayal of Elizabeth

In this Risk Scenario, Risk & Insurance explores what might happen in the event a telemedicine or similar home health visit violates a patient's privacy. What consequences await when a young girl's tele visit goes viral?
By: | October 12, 2020
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.


Elizabeth Cunningham seemingly had it all. The daughter of two well-established professionals — her father was a personal injury attorney, her mother, also an attorney, had her own estate planning practice — she grew up in a house in Maryland horse country with lots of love and the financial security that can iron out at least some of life’s problems.

Tall, good-looking and talented, Elizabeth was moving through her junior year at the University of Pennsylvania in seemingly good order; check that, very good order, by all appearances.

Her pre-med grades were outstanding. Despite the heavy load of her course work, she’d even managed to place in the Penn Relays in the mile, in the spring of her sophomore season, in May of 2019.

But the winter of 2019/2020 brought challenges, challenges that festered below the surface, known only to her and a couple of close friends.

First came betrayal at the hands of her boyfriend, Tom, right around Thanksgiving. She saw a message pop up on his phone from Rebecca, a young woman she thought was their friend. As it turned out, Rebecca and Tom had been intimate together, and both seemed game to do it again.

Reeling, her holiday mood shattered and her relationship with Tom fractured, Elizabeth was beset by deep feelings of anxiety. As the winter gray became more dense and forbidding, the anxiety grew.

Fed up, she broke up with Tom just after Christmas. What looked like a promising start to 2020 now didn’t feel as joyous.

Right around the end of the year, she plucked a copy of her father’s New York Times from the table in his study. A budding physician, her eyes were drawn to a piece about an outbreak of a highly contagious virus in Wuhan, China.

“Sounds dreadful,” she said to herself.

Within three months, anxiety gnawed at Elizabeth daily as she sat cloistered in her family’s house in Bel Air, Maryland.

It didn’t help matters that her brother, Billy, a high school senior and a constant thorn in her side, was cloistered with her.

She felt like she was suffocating.

One night in early May, feeling shutdown and unable to bring herself to tell her parents about her true condition, Elizabeth reached out to her family physician for help.

Dr. Johnson had been Elizabeth’s doctor for a number of years and, being from a small town, Elizabeth had grown up and gone to school with Dr. Johnson’s son Evan. In fact, back in high school, Evan had asked Elizabeth out once. Not interested, Elizabeth had declined Evan’s advances and did not give this a second thought.

Dr. Johnson’s practice had recently been acquired by a Virginia-based hospital system, Medwell, so when Elizabeth called the office, she was first patched through to Medwell’s receptionist/scheduling service. Within 30 minutes, an online Telehealth consult had been arranged for her to speak directly with Dr. Johnson.

Due to the pandemic, Dr. Johnson called from the office in her home. The doctor was kind. She was practiced.

“So can you tell me what’s going on?” she said.

Elizabeth took a deep breath. She tried to fight what was happening. But she could not. Tears started streaming down her face.

“It’s just… It’s just…” she managed to stammer.

The doctor waited patiently. “It’s okay,” she said. “Just take your time.”

Elizabeth took a deep breath. “It’s like I can’t manage my own mind anymore. It’s nonstop. It won’t turn off…”

More tears streamed down her face.

Patiently, with compassion, the doctor walked Elizabeth through what she might be experiencing. The doctor recommended a follow-up with Medwell’s psychology department.

“Okay,” Elizabeth said, some semblance of relief passing through her.

Unbeknownst to Dr. Johnson, her office door had not been completely closed. During the telehealth call, Evan stopped by his mother’s office to ask her a question. Before knocking he overheard Elizabeth talking and decided to listen in.


As Elizabeth was finding the courage to open up to Dr. Johnson about her psychological condition, Evan was recording her with his smartphone through a crack in the doorway.

Spurred by who knows what — his attraction to her, his irritation at being rejected, the idleness of the COVID quarantine — it really didn’t matter. Evan posted his recording of Elizabeth to his Instagram feed.

#CantManageMyMind, #CrazyGirl, #HelpMeDoctorImBeautiful is just some of what followed.

Elizabeth and Evan were both well-liked and very well connected on social media. The posts, shares and reactions that followed Evan’s digital betrayal numbered in the hundreds. Each one of them a knife into the already troubled soul of Elizabeth Cunningham.

By noon of the following day, her well-connected father unleashed the dogs of war.

Rand Davis, the risk manager for the Medwell Health System, a 15-hospital health care company based in Alexandria, Virginia was just finishing lunch when he got a call from the company’s general counsel, Emily Vittorio.

“Yes?” Rand said. He and Emily were accustomed to being quick and blunt with each other. They didn’t have time for much else.

“I just picked up a notice of intent to sue from a personal injury attorney in Bel Air, Maryland. It seems his daughter was in a teleconference with one of our docs. She was experiencing anxiety, the daughter that is. The doctor’s son recorded the call and posted it to social media.”

“Great. Thanks, kid,” Rand said.

“His attorneys want to initiate a discovery dialogue on Monday,” Emily said.

It was Thursday. Rand’s dreams of slipping onto his fishing boat over the weekend evaporated, just like that. He closed his eyes and tilted his face up to the heavens.

Wasn’t it enough that he and the other members of the C-suite fought tooth and nail to keep thousands of people safe and treat them during the COVID-crisis?

He’d watched the explosion in the use of telemedicine with a mixture of awe and alarm. On the one hand, they were saving lives. On the other hand, they were opening themselves to exposures under the Health Insurance Portability and Accountability Act. He just knew it.

He and his colleagues tried to do the right thing. But what they were doing, overwhelmed as they were, was simply not enough.


Within the space of two weeks, the torture suffered by Elizabeth Cunningham grew into a class action against Medwell.

In addition to the violation of her privacy, the investigation by Mr. Cunningham’s attorneys revealed the following:

Medwell’s telemedicine component, as needed and well-intended as it was, lacked a viable informed consent protocol.

The consultation with Elizabeth, and as it turned out, hundreds of additional patients in Maryland, Pennsylvania and West Virginia, violated telemedicine regulations in all three states.

Numerous practitioners in the system took part in teleconferences with patients in states in which they were not credentialed to provide that service.

Even if Evan hadn’t cracked open Dr. Johnson’s door and surreptitiously recorded her conversation with Elizabeth, the Medwell telehealth system was found to be insecure — yet another violation of HIPAA.

The amount sought in the class action was $100 million. In an era of social inflation, with jury awards that were once unthinkable becoming commonplace, Medwell was standing squarely in the crosshairs of a liability jury decision that was going to devour entire towers of its insurance program.

Adding another layer of certain pain to the equation was that the case would be heard in Baltimore, a jurisdiction where plaintiffs’ attorneys tended to dance out of courtrooms with millions in their pockets.

That fall, Rand sat with his broker on a call with a specialty insurer, talking about renewals of the group’s general liability, cyber and professional liability programs.

“Yeah, we were kind of hoping to keep the increases on all three at less than 25%,” the broker said breezily.

There was a long silence from the underwriters at the other end of the phone.

“To be honest, we’re borderline about being able to offer you any cover at all,” one of the lead underwriters said.

Rand just sat silently and waited for another shoe to drop.

“Well, what can you do?” the broker said, with hope draining from his voice.

The conversation that followed would propel Rand and his broker on the difficult, next to impossible path of trying to find coverage, with general liability underwriters in full retreat, professional liability underwriters looking for double digit increases and cyber underwriters asking very pointed questions about the health system’s risk management.

Elizabeth, a strong young woman with a good support network, would eventually recover from the damage done to her.

Medwell’s relationships with the insurance markets looked like it almost never would. &


Risk & Insurance® partnered with Allied World to produce this scenario. Below are Allied World’s recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

The use of telehealth has exponentially accelerated with the advent of COVID-19. Few health care providers were prepared for this shift. Health care organizations should confirm that Telehealth coverage is included in their Medical Professional, General Liability and Cyber policies, and to what extent. Concerns around Telehealth focus on HIPAA compliance and the internal policies in place to meet the federal and state standards and best practices for privacy and quality care. As states open businesses and the crisis abates, will pre-COVID-19 telehealth policies and regulations once again be enforced?

Risk Management Considerations:

The same ethical and standard of care issues around caring for patients face-to-face in an office apply in telehealth settings:

  • maintain a strong patient-physician relationship;
  • protect patient privacy; and
  • seek the best possible outcome.

Telehealth can create challenges around “informed consent.” It is critical to inform patients of the potential benefits and risks of telehealth (including privacy and security), ensure the use of HIPAA compliant platforms and make sure there is a good level of understanding of the scope of telehealth. Providers must be aware of the regulatory and licensure requirements in the state where the patient is located, as well as those of the state in which they are licensed.

A professional and private environment should be maintained for patient privacy and confidentiality. Best practices must be in place and followed. Medical professionals who engage in telehealth should be fully trained in operating the technology. Patients must also be instructed in its use and provided instructions on what to do if there are technical difficulties.

This case study is for illustrative purposes only and is not intended to be a summary of, and does not in any way vary, the actual coverage available to a policyholder under any insurance policy. Actual coverage for specific claims will be determined by the actual policy language and will be based on the specific facts and circumstances of the claim. Consult your insurance advisors or legal counsel for guidance on your organization’s policies and coverage matters and other issues specific to your organization.

This information is provided as a general overview for agents and brokers. Coverage will be underwritten by an insurance subsidiary of Allied World Assurance Company Holdings, Ltd, a Fairfax company (“Allied World”). Such subsidiaries currently carry an A.M. Best rating of “A” (Excellent), a Moody’s rating of “A3” (Good) and a Standard & Poor’s rating of “A-” (Strong), as applicable. Coverage is offered only through licensed agents and brokers. Actual coverage may vary and is subject to policy language as issued. Coverage may not be available in all jurisdictions. Risk management services are provided or arranged through AWAC Services Company, a member company of Allied World. © 2020 Allied World Assurance Company Holdings, Ltd. All rights reserved.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]