Change is happening on all fronts in the risk and insurance world.
The explosion of data enables more proactive risk management and more granular underwriting, but has also created a bifurcation among brokers and carriers, separating those that have the scale and capabilities to harness that data from those that don’t.
The rise of artificial intelligence and machine learning are slowly modernizing and automating many manual processes within insurance. As with the influx of data, the organizations that can nimbly adapt to these technologies will be the ones to thrive.
“Technology and data produce many benefits, but implementing new technology requires a significant investment of resources. As a result, greater reliance on technology is shifting the competitive landscape,” said Morris Tooker, head of Middle & Large Commercial for The Hartford.
At the end of the day, the carriers that will come out on top are those that take advantage of these trends rather than resist them. In each case, insurers can identify a point of friction for clients and use it as an opportunity to provide better service.
In most categories of risk, a greater volume of data provides a window into the exposure that never existed before. Rather than waiting for trends to emerge in loss patterns, risk managers can spot common drivers earlier and take action.
Slips, trips and falls offer a perfect example.
“Data allows you to see the problem more clearly. If the majority of slips and falls are happening in a specific part of your building, having the ability to capture that data point right away and aggregate with other claims information provides the opportunity to see a pattern. Then you can evaluate and fix the root of the problem. Maybe you put down more non-slip coatings or another risk management technique,” said Tooker.
“Especially as the labor market tightens and there may be varied skill levels in the workforce, creating a safer work environment can go a long way in preventing future losses.”
Data also allows risk managers to prioritize those efforts that can produce the greatest benefit.
“Partnering the early identification of a claim trend with data about litigation rates, for example, results in more informed decisions being made by business leaders or risk managers,”said Tooker.
More data also allows greater sophistication in risk evaluation and selection for underwriters, and more cost-effective claim management. This has been particularly evident in the realm of workers’ comp, where predictive analytics gets extra eyes on potentially complex claims.
“Our claims organization has the ability to harness the power of data and advanced analytics that often lead to better outcomes for our insureds and return employees back to work sooner. We can look for patterns, raise red flags early in the claim process if needed and assign extra resources like nurse case managers to help mitigate certain risks,” Tooker said.
“In the case of opioid use in particular, these added resources can help avoid addiction and ensure a good outcome for the injured worker.”
In the volatile world of auto risk, fleet telematics likewise let risk managers and insurers look more closely at what might be driving losses, zeroing in on individual drivers exhibiting unsafe behaviors on the road. This helps insureds avoid claims and makes their fleet drivers safer.
“Telematics can help identify problematic driving behaviors,” Tooker said.
“Issues like taking sharp turns, braking too quickly or speeding can be proactively addressed and help lessen the likelihood of an accident.”
“Arising out of consolidation is access to more data, which means that you’re able to leverage that more for your customer,” Tooker said. “We see this as an avenue for specialization.”
Organizing claims data by industry — rather than by line — better aligns it with the client data that brokers bring to the table. This provides a fuller picture of a company’s operations and risk exposures, allowing insurers to both direct risk engineering resources more appropriately and better identify coverage gaps.
“Specialization means being focused on the complete insurance and risk management needs of a business. Our thinking has to shift away from a coverage focus to a risk focus and really creating a deep understanding of the clients’ operations and industry,” Tooker said.
Companies have come to expect specialization in claims and risk engineering services from their carrier partners. Risk managers increasingly want to know how they compare to their competitors in terms of claim frequency and severity, risk mitigation protocols, and their overall risk profile.
“There’s an expectation that you’ll bring a specialized expertise to their programs, and have the data insight to back that up,” Tooker said.
Just like data has been a catalyst for better risk management and a more specialized insurance approach, artificial intelligence, automation and the technologies collectively referred to as Insuretech have sparked a change in the delivery of customer service.
The Hartford has implemented automation and machine learning technologies to several key functions to do just that.
State license verification for agents is one example.
“We found that for our agents and producers, conducting that verification was a manual process. We automated the entire thing and now are running that step automatically in the background. That saves time and headaches for brokers and by extension, our clients,” Tooker said.
Eliminating policy errors is another application.
“We know that receiving policies that contain errors is a pain point for agents and brokers – and it’s an industry-wide issue. We built a model that uses predictive analytics to bring down errors in policy wording, and our quality has increased as a result,” Tooker said.
Artificial intelligence has also been applied to the processing of incoming submissions. Text processing technology can identify whether a request is from a small commercial or midsize company, for example, or whether the request is to add an insured or an endorsement. That request can then be automatically funneled to the right process internally.
Together, these types of enhancements ultimately allow insurance professionals to spend less time on administrative processes and more time where it matters most — applying their expertise to deliver greater, more specialized solutions for their policyholders.
“We find it’s about executing the little things well,” Tooker said.
“The conversation used to be about disruption. It was initially all about how Silicon Valley was going to come in and displace the long-standing, traditional insurers.
“Now, it’s much more about partnership — about finding the little things that make the insurance business difficult and smoothing out those pain points. “This makes life easier for insurers, but it ultimately translates into faster and more streamlined service for insureds,” he said. “That remains the primary goal amid ongoing change.”
To learn more, visit thehartford.com/specialization .
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with The Hartford. The editorial staff of Risk & Insurance had no role in its preparation.
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.
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.
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. &