Their emergence has been hailed as a “game changer” and “the biggest discussion topic in insurance.” Inspired by developments in the consumer marketplace, connected personal protection equipment, or “wearables,” can track a variety of employee risk factors and generate data so powerful that many believe it will revolutionize workplace safety procedures and risk modeling.
Health-related wearables such as the FitBit are taking the consumer market by storm, but far more powerful technology is being developed and implemented in commercial settings, from heavy industry to aviation, logistics and manufacturing.
Mining giant Rio Tinto is an early adopter of wearables, providing its workers with a “SmartCap” that measures brainwaves to detect fatigue. Honeywell and Intel recently released a prototype of their “Connected Worker” solution for industrial workers and first responders, which uses a hub of sensors to track workers’ location, vital signs, motion and exposure to hazardous gases.
Whether in the form of vests, caps, glasses or materials, it is now possible to generate valuable data that brings risk managers and insurers closer to workplace risk than ever before. It is hoped these insights should in turn help safety supervisors improve workplace design and procedure, foster safer worker behaviors and reduce workers’ compensation claims.
Having observed several pilot studies closely, David Bassi, former head of innovation and risk consulting, casualty for AIG, said safety wearables could reduce losses by up to 50 percent in some situations.
“The test cases are so compelling, it’s just a matter of scalability,” he said.
“The explosion will come pretty quickly. Virtually everyone I know in a safety role at a big company is interested in participating in a pilot or thinking about how to incorporate this kind of technology into their workplace.”
With demand strong, supply growing and costs coming down, the final piece of the puzzle is the insurance market, which insureds hope will begin to offer responsive pricing, customized products and client incentives once wearables’ benefits begin to be realized.
“In an age when data is becoming ever more critical for the insurance industry, this is huge,” said Michael Sillat, CEO of WKFC Underwriting Managers (part of Ryan Specialty Group). “A lot of the technology being developed is only being spoken about and is not available in the marketplace, but it has certainly grabbed my attention and that of many of my peers,” he said.
“Connected devices are going to have profound implications for the commercial property casualty insurance world, and wearables in particular are going to be very important in improving worker safety,” said Lex Baugh, president of casualty at AIG, which recently invested in wearable tech firm Human Condition Safety.
Nigel Walsh, vice president of CapGemini, expects more partnerships of this ilk, and heralds the ability to interact and advise on a daily, hourly or real-time basis as “game changing” for insurers.
“Insurers will no longer be claims paying companies — they will become better risk managers. When you provide value-added service and insight driven out of IoT, rather than just changing the price, you create real engagement and real value,” he said.
However, insurers don’t make knee-jerk adjustments to their terms or pricing, so for now organizations will need to take something of a leap of faith, and invest in wearables knowing it may take a number of years for improved loss experience to yield premium reductions.
The costs associated with implementing wearables into the workplace vary hugely, from a few dollars for the most rudimentary device up to millions for enterprise solutions including real-time feedback loops, network operation centers and the latest wearable technology. While the cost of equipment and data capacity continues to slowly decline, companies will need to think carefully before investing.
Rachel Michael, senior consultant in Aon Global Risk Consulting’s ergonomics practice group, said there are “no excuses” for not knowing the location and well-being of workers in hazardous jobs like firefighting or mining, for whom even expensive investments will be worthwhile, but she pointed out that companies should be sure they have done all they can to improve workplace ergonomics prior to investing.
“If an employer is palletizing 30-lb. boxes at ground level, do they really need a wearable spinal loading measurement system to determine whether this is bad?
You could save lots of time and money if you fix your line first,” she said.
Data management is also a concern — both in coping with the sheer volume of data (which Bassi said runs on some pilots into exabytes per week) and also avoiding what Michael terms “death by data” — having reams of information at your disposal but no clear plan of action.
Before a wearable technology is even considered, Michael said a planning discussion including the risk manager, HR, IT and possibly several other departments must take place. “You need to understand how much and what type of data is to be collected, how it is to be used, and what changes can be driven with the outcomes,” she said.
And companies should be prepared in case data raises uncomfortable truths, she added.
“If you hook all your workers up to smart caps and find that they are all suffering fatigue, are you willing to shut down your operations?” Michael asked, noting that this would be all but impossible in industries such as health care, firefighting or aviation.
Wearables are faced with various other challenges — from unions raising objections over potential worker discomfort or invasion of privacy, to workers becoming over-reliant on or overconfident because of the technology, or even the potential health risks associated with prolonged proximity to sensors and WiFi.
Then there are the questions around liability. If a worker with known heart issues has a heart attack on the job, could an employer tracking the vital signs be deemed negligent for not acting on warning signs? Would companies use wearables to offload responsibility for unsafe practices and workplace injury on their staff?
Ultimately, this highly promising technology should offer a win-win for insureds and insurers alike, but it can only be successful if the data is used effectively and risk managers enforce best practices through training, education and procedures.
“If all we do is sit back at the end of the week and look at the data, we’ve missed the opportunity,” said Michael.
Insuring the Towers
Shari Natovitz, the director of risk management for Silverstein Properties, is a Jersey girl. She grew up in Fair Lawn, N.J., which is less than 20 miles from Lower Manhattan.
Children in her family were not coddled.
B-plus on your English paper? Not good enough.
A-minus in Trigonometry? Meh.
“You had to bring home an A,” Natovitz remembers as she spoke with R&I on the 46th floor of 7 World Trade Center in Lower Manhattan on a windy March morning.
“My brother and I were in the same elementary school, about two and a half years apart. I remember sitting in front of this little black and white television, with our macaroni and cheese, and ‘Jeopardy’ would be on.”
The dynamics of the house were such that the two siblings would play along, competing against one another for allowance money. The home was devoid of gender bias.
“I grew up playing baseball, softball and football out in the street. My mom ran track and field, so I ran track and field,” Natovitz said.
These days, Natovitz manages a $100 million-plus insurance program for one of the highest profile projects in the nation, the resurrection of the World Trade Center in Lower Manhattan.
In place of the seven buildings that were either destroyed or heavily damaged by terrorists in 2001, a new set of towers is rising.
Natovitz manages risk for four of them with one assistant; not to mention her responsibilities for additional Silverstein Properties holdings.
Is she intimidated by the scope and responsibility of her job? No, she is not.
Natovitz says she has the background and the passion to meet those challenges.
“Her demands are very high and she wants everyone else to be prepared.” —Tim Egan, senior vice president, property broking, Willis Towers Watson
Before joining Silverstein, Natovitz spent decades as a construction broker with Marsh, its predecessor Johnson & Higgins, and later with USI. It was at the conclusion of bidding on the broking work for part of the WTC rebuild — when Natovitz was the East Coast construction practice leader for USI — that Silverstein offered her the job of risk manager.
“I have an extremely strong brokerage background and believe in transparency and negotiations to secure a mutually acceptable outcome. Because I grew up in the Johnson & Higgins system, it was a much more consultative than transactional approach, which was really what was needed to organize this and set a solid foundation for the transition to risk manager,” she said.
The passion stems from the fact that Natovitz, like many insurance veterans, lost friends and colleagues in the inferno of 9/11.
“I was a Marsh/J&H person for 20 years and left the company in late 2000, and was a part of the construction group. The construction group was meeting at the North Tower that day,” she said.
Marsh & McLennan lost 295 people in the attack.
“For me, it became very personal and life-affirming. It wasn’t a job, rather a mission, and a tremendous desire to be a part of and contribute to the rebuild,” she said.
Managing risk for the rebuild of the World Trade Center is, perhaps needless to say, complex and demanding. When Natovitz took the job in 2005, she had several obstacles to overcome. Perhaps the most forbidding barrier was that insurance carriers were reluctant to offer cover.
“What did surprise me when I got here, stunned me, were the number of markets in 2005 that did not want to do business with our company; absolutely floored me,” she said.
A number of factors played into that reluctance.
Discord over who should rebuild the towers and how they should be designed generated headlines in many New York newspapers.
“They weren’t flattering headlines. They weren’t truthful. Not unusual in the world, but frustrating,” she said.
“What did surprise me when I got here, stunned me, were the number of markets in 2005 that did not want to do business with our company; absolutely floored me.” — Shari Natovitz, director of risk management, Silverstein Properties
There was also the fact that the WTC was twice a target for terrorists. First came the 1993 attempt to bring down both towers by exploding a truck bomb in a garage of the North Tower. Then there was the 2001 attack via two hijacked commercial jetliners that did bring them down.
Thus, two terror attacks on one site’s loss run.
“Nobody else in the U.S. had that experience,” she said.
Natovitz said that going forward she and her brokerage team needed to showcase the re-engineering and security of the new structures — including life safety — that made this a different and more robust project.
The coverage of the Silverstein buildings lost or damaged in the 2001 attack was also in dispute at the time and wouldn’t be settled until 2007, with a number of carriers eventually agreeing to pay the company $4.55 billion.
Natovitz also began her task dealing with four different insurance brokerages. Within a year or two, banking on her own deep experience as a broker, she had seen enough to put the entire program in the hands of Willis, now Willis Towers Watson.
“Willis didn’t get anything they didn’t deserve,” she said.
Natovitz said she was impressed by the way Tim Egan — a WTW senior vice president, property broking — solved problems for her on a property placement for 7 World Trade Center.
“That made me feel like they were the broker who best understood the market challenges and lack of market identity and could best lead us through that,” she said.
The insurance program for the operational buildings was fragmented.
The coverage for each property was being placed separately, under the name of each building, as opposed to one comprehensive program.
“There was no understanding of the collective premium that was being put in the marketplace. This not only affected the quality of coverage, but also the buying power,” she said.
She was also impressed with the assertion that $6 billion in needed builders’ risk capacity could be developed and had confidence in the plan put together by Neil Kent, a WTW builders’ risk placement leader.
A prior broker told Natovitz, a Maryland resident, that she didn’t understand the New York market (she had worked for her first 10 years in the New York market) and stated that the capacity needed to protect the project was unobtainable.
A year and a half into her new position, the redesign of the Freedom Tower and responsibility for it — which formerly fell into Natovitz’s risk management portfolio — transferred to the Port Authority.
Natovitz met with Silverstein Properties management to explain why they needed their “own dog in the hunt” for limited capacity. That preferred bloodhound was what we now know as Willis Towers Watson.
With her WTW team, Natovitz set about creating an owner-controlled insurance program, known as an OCIP, for the construction of 2 WTC, 3 WTC and 4 WTC and a builders’ risk and terrorism program that required $6 billion in capacity, which was a hard sell.
The solution to the builders’ risk capacity challenge was to break the risk into three $2 billion risks, and pull the terror and fire following risk out and put that in a captive.
“We knew that $6 billion of construction capacity was not available in the market. But we knew that there was $2 billion available in the market,” WTW’s Kent said.
The captive option for terrorism needed to be explained to management.
“Among the real estate community there was a lot of differing opinions as to whether it was a viable risk transfer option,” Natovitz said, “but over the past 10 years, it has become an option that many have adopted to address capacity/aggregation issues.”
Be on Your Toes
Neil Kent and Tim Egan said Natovitz expects everyone that works with her to be very well-prepared.
“I think she reads everything and knows everybody,” said Kent.
“Her demands are very high and she wants everyone else to be prepared,” Egan said.
“This is a very important project to everybody, and I think everybody feels the same way. She’s done a lot of things to bring this project to the front and center,” he said.
“Certain risk managers, when you deal with them, you learn from them how they see this. I don’t think there is a better example of that than Shari in that respect,” Kent added.
Natovitz and her risk management partners at WTW are also very conscious of the importance of maintaining long-term relationships with carriers.
Throughout the recent coverage history of the WTC, from the terror attacks through the rebuild, transparency and buy-in from senior insurance carrier management occupied a place of utmost importance.
“The key to all of this was never operating in a vacuum with the marketplace,” said Ray Blackton, an executive vice president with Willis Towers Watson.
“When Shari first took the job, one of her big concerns was that her company was not really known by the markets or had a misconception of the markets. Our first plan was high-level meetings with the most senior people of the organizations before any submission ever went out on the Trade Centers,” Blackton said.
There are now more than 50 carriers/carrier profit centers, including the domestic and international markets, on the Silverstein Properties program overall.
“Everybody’s a key to the placement, but Lexington, Munich Re, Zurich, Swiss Re and Starr really provide a significant part of the capacity, along with XL Catlin and Chubb,” she said.
Through high-stakes insurance settlement litigation, political squabbling and the flooding from Superstorm Sandy, keeping an eye on the long-term and the value of respectful relationships remained of paramount concern.
“We have enjoyed a great working relationship with Shari over the years,” said George Stratts, president, property and special risks for AIG.
“And as with any good relationship or partnership, it’s honest, it’s open. And one of the things that I think we have appreciated from Shari is seeing both sides of an issue. How do you see multiple points of view so that we arrive at the best answer for all parties?” he said.
That came into play when there were World Trade Center construction delays. The delays meant that Silverstein was paying insurance premiums for two years when there was no exposure.
Natovitz went to her brokers and asked them to approach the markets to adjust the premium for the two years without any exposure and move the term forward to represent the new schedule.
“I knew this would be a difficult request, but wanted to work out a solution to continue coverage with the same carriers for the completion of the project without the financial burden of paying for an extra two years with no construction taking place.
“In addition, we were now only going to build two of the three towers,” she said.
“The carriers were very fair in their responses and almost one-third of the casualty program was returned, with the knowledge that the coverage would be placed with those same insurance partners down the line. We have continued the placement through 2019 with these partners,” Natovitz said.
New York’s Brilliant Place
No American citizen could look out from the 46th floor of 7 World Trade Center and not be moved.
The view is stunning. The human drama that unfolded over time in New York and that’s reflected in its skyline is profound.
Then there is our more recent history. Brutal attacks of terrorism, grief and a remarkable recovery.
“I can always say I worked on the World Trade Center project when it was being built and operational,” said WTW’s Tim Egan.
“I think it’s the most important thing I’ve done in my career,” he said.
“When you get to the core of what we do as risk and insurance professionals, it’s making good and helping restore and being part of that restoration process,” said AIG’s Stratts.
“That rebuilding process has been a way to affirm what we do as a profession and also honor the suffering that took place,” he added.
“Everybody who is on this placement through not even two or three degrees of separation knows somebody whose name is on that memorial,” Natovitz said.
“This is part of reinvesting and honoring them in the future.” &
Compounding: Is it Coming of Age?
The WC managed care market has generally viewed the treatment method of Rx compounding through the lens of its negative impact to cost for treating chronic pain without examining fully the opportunity to utilize “best practice” prescription compounds to help combat the opioid epidemic this nation faces. IPS stands on the front lines of this opioid battle every day making a difference for its clients.
After a shaky start cost-wise, prescription drug compounding is turning the corner in managing chronic pain without the risk of opioid addiction. A push from forward-thinking states and workers’ compensation PBMs who have the networks and resources to manage it is helping, too.
Prescription drug compounding has been around for more than a decade, but after a rocky start (primarily in terms of cost), compounding is finally coming into its own as an effective chronic pain management strategy – and a worthy alternative for costly and dangerous opioids – in workers’ compensation.
According to Greg Todd, CEO and founder of Integrated Prescription Solutions Inc. (IPS), a Costa Mesa, Calif.-based pharmacy benefit manager (PBM) for the workers’ compensation and disability market, one reason compounding is beginning to hit its stride is because some states have enacted laws to manage it more effectively. Another is PBMs like IPS have stepped up and are now managing compound drugs in a much more proactive manner from an oversight perspective.
By definition, compounding is a practice through which a licensed pharmacist or physician (or, in the case of an outsourcing facility, a person under the supervision of a licensed pharmacist) combines, mixes, or alters ingredients of a drug to create a medication tailored to the needs of an individual patient.
During that decade, Todd explains, opioids have filled the chronic pain management needs gap, bringing with them an enormous amount of problems as the ensuing addiction epidemic sweeping the nation resulted in the proliferation and over-consumption of opioids – at a staggering cost to both the bottom line and society at large.
As an alternative, compounded topical cream formulations also offer strong chronic pain management but have limited side effects and require much reduced dosage amounts to achieve effective tissue level penetration. In fact, they have a very low systemic absorption rate.
Bottom line, compounding provides prescribers with an excellent alternative treatment modality for chronic pain patients, both early and late stage, Todd says.
Time for Compounding Consideration
That scenario sets up the perfect argument for compounding, because for one thing, doctors are seeking a new solution, with all the pressure and scrutiny they’re receiving when trying to solve people’s chronic pain problems using opioids.
Todd explains the best news about neuropathic pain treatment using compounded topical analgesic creams is the results are outstanding, both in terms of patient satisfaction in VAS pain reduction but also in reduction potentially dangerous side effects of opioids.
The main issue with some of the early topical creams created via compounding was their high costs. In the early years, compounding, which does not require FDA approval, had little oversight or controls in place. But in the past few years, the workers compensation industry began to take notice of the solid science. At the same time, medical providers also were seeing the same science and began writing more prescriptions for compounding – which also offers them a revenue stream.
This is where oversight and rigor on the part of a PBM can make a difference, Todd says.
“You don’t let that compounded drug get dispensed when you’re going to pay for it without having a chance to approve it,” Todd says.
Education is Critical
At the same time, there is the growing, and genuine, need to start educating the doctors, helping them understand how they can really deliver quality pain management to a patient without gouging the system. A good compounding specialty pharmacy network offering tight, strict rules is fundamental, Todd says. And that means one that really reaches out to work with the doctors that are writing the prescriptions. The idea is to ensure that the active ingredients being chosen aren’t the most expensive sub-components because that unnecessarily will drive the cost of overall compound “through the ceiling.”
IPS has been able to mitigate costs in the last couple years just by having good common sense approach and a lot of physician outreach. Working with DermaTran Health Solutions and its national network of compounding pharmacies, IPS has been successfully impacting the cost while not reducing the effectiveness of a compounded prescription.
In Colorado, which has cracked down on compounding profiteering, Legislative change demanded no compound could be more than $350.00 period. What is notable, in an 18-month window for one client in Colorado, IPS had 38 compound prescriptions come through the door and each had between 4 and 7 active ingredients. Through its physician education efforts, IPS brought all 38 prescriptions down 3 active ingredients or less. IPS also helped patients achieve therapeutic success (and with medical community acceptance). In that case, the cost of compound prescriptions was down to an average of $350, versus the industry average of $788. Nationwide IPS has reduced the average cost of a compound prescription to $478.00.
Todd says. “We’ve still got a way to go, but we’ve made amazing progress in just the past couple of years on the cost and effective use of compound prescriptions.”
For more information on how you can better manage your costs for compound prescriptions, please call IPS at 866-846-9279.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with IPS. The editorial staff of Risk & Insurance had no role in its preparation.