Emerging Technology Redraws Lines of Risk, Challenges the Underwriting Paradigm

By: | October 26, 2018 • 3 min read

Warren Berey is SVP of Multinational Insurance at Generali Global Corporate & Commercial U.S.A., overseeing the development of international casualty and package insurance solutions for U.S. companies and U.S. subsidiaries of foreign companies. He can be reached at [email protected]

There has been a lot published lately about how emerging technology will change the insurance process, but what is often overlooked is how emerging technology will change the very nature of risk.

Underwriters, brokers, and risk managers need to be thinking about how their future loss trends will be affected by changes in technology related to things like assembly lines, distribution, and end products. The evolution of technology is of course enhancing processes and products, but it is also clouding the ability to measure risk. To date, future risk is primarily calculated by past events – but the speed at which technology is advancing is now turning past events into a less influential benchmark of potential future issues.

Cyber as a risk is certainly one of the industry’s most prominent concerns, but the evolution of risk does not end there.  Many companies are already beginning to think about how the sharing economy and autonomous vehicles will affect liability lines. Robotics, artificial intelligence, and blockchain are only beginning to take over common industry and should have an impact on how we evaluate risk. These technologies will not only bring about change that the insurance industry has not yet seen but it will also come about at a greater pace than ever before.

The risk landscape for organizations is changing rapidly and is therefore shifting the entire paradigm.

So, what does this mean to risk management professionals?  Most importantly it means that risk managers, brokers and underwriters need to be thinking proactively. The risk landscape for organizations is changing rapidly and is therefore shifting the entire paradigm. Coverage, pricing, risk engineering, and claims needs are already evolving. For risk management professionals of multinational organizations, it is especially important to understand how their company is evolving and what that means for the different jurisdictions in which it operates around the world.  Accordingly, it is important to work with organizations that can help you understand and manage this global evolution of risk.

Of course, as corporate and commercial insurers we must also look toward many of these new technologies to help balance the additional burden this evolution of risk will have on our underwriting processes.  For a traditional industry built on a legacy of fundamentals there is a lot to learn from these changing times.  Remaining aware of how other industries, where technological disruptions have already taken hold more significantly, is critical. Taking a holistic view in analyzing how other sectors evolve from an operating perspective and from a risk management perspective is key to maintaining long term stability for insureds and insurers.

For a traditional industry built on a legacy of fundamentals there is a lot to learn from these changing times.

In short, we need to become more proactive instead of reactive, as the future is looking less and less like the past with each passing day.  Despite the growing popularity of predictive models which are largely driven by past observation, understanding the evolution of risk is where experienced risk management professionals will excel.  Since models can only predict the future based on existing data, risk management professionals that apply their experience toward predicting the future will create a more stable environment and build more predictable solutions.

This is not to say there is no applicability for big data and predictive analytics in the future of underwriting and risk management.  It simply means that it is not a catchall and a balance is required between technology and quality risk management professionals.

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]