Three Powerful Technologies Are Joining Forces to Revolutionize Workplace Safety

When the data from wearables is integrated with virtual and augmented reality, simulated ‘virtual workers’ will help companies get a grip on workplace risk before incidents even occur.

By: Antony Ireland | February 21, 2019

Ask people in 2019 what a “virtual worker” is, and most might suggest an employee who works remotely in the gig economy. Or, perhaps, they might say some form of artificial intelligence automating a manual job. But soon “virtual worker” may mean something entirely different.

In the coming years, sensor-laden wearable technology (wearables), virtual reality (VR) and augmented reality (AR) are set to converge, revolutionizing workplace risk management. These technologies are slated to allow employers to use virtual workers as a way to review the physiological limits of a task before sending a live human to do it.

Wearables already transformed our understanding of the impact of work on the human body. Real world data is gradually being aggregated to help employers manage staff more safely and efficiently. Soon there will be enough to confidently simulate human physiology and work environments.

Real workers could also be employed to simulate body movements in simulated environments — think Andy Serkis strapped to electrodes to create Gollum in the Lord of the Rings franchise — adding volumetric body reconstructions to the dataset.

“2020 is less than two years away, by which time 40 percent of the workforce will be millennials who will expect this kind of training.” — Kate Barnes, underwriters counsel, Swiss Re Corporate Solutions

“We think AR and VR is the next frontier when it comes to workplace health and safety,” said Lars Skari, managing partner of Altumai, a tech firm dedicated to advancing the application of wearables in the workplace. “There is a lot of disparate technology and data begging to be integrated.”

Altumai’s “connected worker platform” aggregates data from various wearable sensors and other data sources, including smart phones — which Skari believes will complement or supplant wearables in some use cases — then feeds that data back to clients in the form of risk mitigation advice.

Most of this work has so far been in agriculture: “Agriculture presents a unique set of connectivity and environmental challenges,” said Skari. “We felt that if we master that, everything else will be relatively straightforward.”

The Wearable Revolution

Wearable tech has advanced significantly in just a few years. Its origins were in tracking single movements, such as bending at the waist, but its scope quickly widened — not always with success; the AIG-backed startup Human Condition Safety, for example, filed for bankruptcy as recently as January.

Nevertheless, the sector has more success stories than failures. Ford’s SafeCap is a well-known example, monitoring truck drivers’ brainwaves to detect tiredness, instructing them to pull over and communicating with headquarters.

Doug Turk, chief marketing officer, JLT Specialty USA

Real-time worker location systems are now commonly employed in hazardous environments such as building sites to ensure people don’t walk into no-go zones and to track people quickly in the event of an accident. Once employers know what activities are driving injuries and accidents, they can better allocate resources towards safety and procedural training.

And it is little surprise more companies are taking this concept seriously. U.S. businesses spend around $60 billion annually in workers’ compensation premium, and in labor-intensive industries, this spend can be the largest single ongoing expense.

“A lot of time, money and technology are being applied to the connected worker space. Network, sensor and IoT capabilities have steadily improved and can now give us meaningful data. We are suddenly at an inflection point, and companies are now starting to realize the value,” said Doug Turk, chief marketing officer, JLT Specialty USA.

He cites Altumai’s platform, Modjoul, StrongArm and Triax among the companies whose platforms are turning wearable data from useful information to actionable data.

According to Skari, its systems have the capability to cut musculoskeletal injuries by a third and the potential to significantly reduce claim severity, frequency and processing time. “If you can reduce worker absenteeism and improve the work environment so that workers are more effective, productivity goes up and so do revenues,” he added.

With the dataset on worker behavior growing all the time, simulated models of work environments and behaviors are inevitable — and this is where VR and AR technology comes in.

Converging Tools

Today, virtual reality is used primarily as a training tool. Employees don a VR headset and can instantly practice flying an airplane, handling hazardous materials or operating a forklift truck without putting themselves or others in danger.

“2020 is less than two years away, by which time 40 percent of the workforce will be millennials who will expect this kind of training,” said Kate Barnes, underwriters counsel for Swiss Re Corporate Solutions.

She is already seeing strong uptake of VR in the construction sector, where trainees can navigate increasingly large, complex and hazardous projects through simulations. And Barnes thinks the integration of VR, AR and wearables is a natural fit: “We tell our clients the future is now,” she said.

Indeed, it is not a huge leap to see how VR simulations can be integrated with data gathered from wearables or other IoT, such as proximity or environmental sensors, then supplemented with AR to create a powerful risk management matrix.

“Wearables are just one piece of the puzzle,” added Turk. “Once you have that data, you can then employ VR and AR to create a virtual worker model to show how certain roles should be conducted.”

Simulated workers can be stress-tested against certain industry-specific variables, such as temperature or yield in a strawberry picking field, for example. The next iteration would be to overlay AR onto real world environments to assist safety officers with risk mitigation and training.

Floor supervisors could, for example, overlay a camera or lens over the work environment in question. Their screen will show how each workers’ movements compare to ideal ranges of movement. It could also detect an employee’s propensity to get injured, as well as offer training cues.

“Wearables and IoT will give rise to more data, which will allow AR and VR to provide a richer experience. The ability to interact with the physical data in this more visual way makes it much more actionable, allowing us to coach and provide directional guidance more effectively,” said Skari.

This is all leading to a future in which each worker has a real-time risk score that is constantly monitored. The impact on insurance premiums could be significant for companies and can provide robust data demonstrating how work behaviors and incident rates have improved.

“Any safety improvement has to be considered in pricing,” said Barnes. Alternatively, Turk thinks access to these insights could encourage more firms to choose adaptive self-insurance for workers’ comp.

Making the Leap

But when will this become a reality? Skari believes the way we interact with data will change dramatically in the next two to three years thanks to the rise of 5G and further improvements to 3D modelling techniques.

“Will it change dramatically within the next year? Perhaps not,” he added, though he revealed his company is working on a smartphone app that would allow the user to scan the work environment and to see risks and mitigating coaching factors pop up on the screen for each worker.

“We’re closer than we think,” said Turk. “If we consider the human body as a machine, once we have enough data to understand how the machine operates, we can quite easily conduct virtual stress tests,” though, Turk added, he doesn’t expect to see this kind of system in use for a number of years.

“Network, sensor and IoT capabilities have steadily improved and can now give us meaningful data. We are suddenly at an inflection point, and companies are now starting to realize the value.” — Doug Turk, chief marketing officer, JLT Specialty USA

The primary challenge is to build a large and reliable dataset from which to model workers and work environments. Data processing power is of course a key hurdle — wearables generate enough data on their own without the computational demands of VR or AR also being thrust upon a single server.

Then there are ongoing issues around the consent of workers and the privacy and security of data generated by wearables. However, these challenges are surmountable, and virtual worker simulations are an inevitable next step. Those companies that partner with insurtech experts to develop models of their own workplaces may just unearth a game-changing influence on their bottom lines. &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected].

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.