Risk Insider: Tony Boobier

Texas Flooding Highlights Auto’s New Complexity

By: | June 4, 2015 • 3 min read

Tony Boobier is an experienced independent consultant focusing on insurance analytics. An international speaker, commentator and published author, he lies awake at night thinking about the convergence of insurance and technology. He can be reached at [email protected]

It will take some time to arrive at a hard number, but indications are that the automobile claims from the Texas flooding in May will exceed $250 million, with overall losses at close to $1 billion.

This is a serious issue for automobile insurers. Reports indicate that some auto insurers may have to rely on reinsurance to pay off their Texas claims before all is said and done.

But a substantial problem will remain long after the flood water has gone and the Texas claims and those in neighboring Oklahoma are paid.

The average new vehicle contains more than 100 million lines of code. Compare that to the early space shuttles, which possessed a mere 400,000 lines of code.

That problem is the dilemma of increased automobile claims complexity due to the technology that is now embedded in cars.

While collision accident frequency numbers may fall — due to such things as sensors that can tell you if you’re about to ram into the car behind you as you back up — this new complexity foretells a real risk of an increase in average repair costs.

That’s because cars have essentially become computers on wheels.

The average new vehicle contains more than 100 million lines of code. Compare that to the early space shuttles, which possessed a mere 400,000 lines of code.

With more than 2,000 functional parts, some of them comprising multiple hybrid alloys, even the average car of today is much more complicated than the most expensive cars of previous generations.

The implications for the motor repair process are not insignificant.

At the very least, this complexity creates issues around who does the repair, especially if the vehicle is to continue to remain under warranty.

New questions start to emerge: Who is competent to do the work, where can it be done, and is there adequate capacity in the supply chain to meet claims volumes, especially in a period of surge?

Will the consumer be faced with possible delays due to supply/demand imbalances caused by this added complexity, and if they do face substantial delays, how will that impact their purchasing decisions?

We may already have reached the point where new vehicles with the latest technologies aren’t available for sale in places where the ability to repair them doesn’t exist.

If these are issues for manufacturers and customers, aren’t they also matters of concern for repair centers, which will increasingly need to invest in new technologies and train their staff to use them?

Won’t higher investment by suppliers need to be complemented by longer term commitment from insurers? Beyond this, the need for more advanced capabilities may mean that the selection of competent car repair services will become limited, and insurers will have fewer choices in repair service providers.

Auto assessors will also need additional training. Damage to circuitry is much more problematic to find and resolve than a good old-fashioned dent, especially where the problem is one of water damage and corrosion.

With the Texas flooding giving auto insurers a major pain point, they would be well advised to use this opportunity to gain as much insight into this new car repair/ technology dynamic as possible.

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]