Risk Insider: Brady Kelley

Congress Must Act in 2015

By: | December 22, 2014 • 2 min read
Brady R. Kelley has served as NAPSLO’s Executive Director since September 2011. He is responsible for the overall management of the association’s staff activities, services to members and business operations. He can be reached at brady@napslo.org.

I am disappointed by Congress’ decision to adjourn last week without taking action on legislation to reauthorize of the Terrorism Risk Insurance Act (TRIA) and enact the National Association of Registered Agents and Brokers (NARAB) — and I speak for the entire NAPSLO organization and membership.

As a result of that inaction, insurers and insureds are astounded and scrambling to address the increased exposure of the expiring federal backstop.

Carriers, brokers and insureds are now faced with potential terrorism exclusions and/or acceptance of the exposure between Dec. 31 and the time by which Congress takes needed action — exposure that was assessed and priced assuming Congress would reauthorize TRIA before adjourning in 2014.

NAPSLO believes TRIA has been an important tool for insurers to better manage the risk of terrorism events and provides certainty to the industry in offering private capital and solutions to policyholders.

Surplus lines insurers provided certain terrorism coverage pursuant to the mandatory provisions and subject to the deductibles and triggers of the existing federal program.

In general, we believe private market solutions should be exhausted before government-sponsored programs or residual markets are considered, and governments should not provide coverage options the private or open market is able to address.

However, we also believe a role exists for the federal government in the management of terrorism risk. Insurers can model the severity of a hypothetical terrorist attack, but it is impossible to model the likelihood or frequency of those attacks.

As a result, we have long supported a thoughtful and thorough review of TRIA with a goal of maintaining or increasing opportunities for capacity and solutions delivered by the private market.

Multi-state Needs

NAPSLO has also strongly supported the enactment of NARAB. This critical legislation will streamline agent and broker licensing for those operating on a multi-state basis.

It would create a nonprofit board to be governed by state insurance regulators and industry representatives to create rigorous standards and ethical requirements with a goal of applying licensing, continuing education and nonresident insurance producer standards on a multi-state basis.

We were very pleased when the House of Representatives passed TRIA legislation on Dec. 10 that appeared to be a middle-ground compromise between the House and Senate proposals that had passed through their respective committees last June. That legislation would have extended TRIA for six years and enacted NARAB.

Unfortunately, when the TRIA and NARAB legislation moved to the Senate, leaders were unable to overcome the objections of one Senator in order to pass the bill. When a Member refused to support NARAB absent provisions allowing for states to opt-out of participation in the national licensing system, it marked the end of compromise for this year, and the end of TRIA until further action is taken.

This was a disappointing outcome for our industry and our nation’s insureds.

We at NAPSLO urge Congress to act on this issue as soon as members return on Jan. 6, 2015, as we believe this is an important issue for our nation’s economic security. We look forward to working with our industry partners and the new Congress to see legislation passed that will reauthorize TRIA and enact NARAB in early 2015.

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Risk Insider: Dan Holden

Left To Die On the Vine

By: | December 19, 2014 • 3 min read
Dan Holden is Manager of Corporate Risk & Insurance for Daimler Trucks North America (formerly “Freightliner”). He manages the risk management program in the U.S., Canada and Mexico. He can be reached at daniel.holden@daimler.com.

For once, Congress came up with a plan that made sense; wasn’t a boondoggle; and had bipartisan support. And on 1/1/15 they will let one of the best plans ever conceived simply die on the vine.

Congress established TRIA following the September 11, 2001 attacks as a risk-sharing partnership that allowed the federal government and the insurance industry to share losses in the event of a major terrorist attack.

The program would provide resources to businesses to help them recover/rebuild if they are the victims of a terrorist attack. The plan worked by restoring stability to the insurance and reinsurance markets.

Even better — it cost taxpayers nothing. That was a classic Congressional win-win.

So why would Congress pack up their kit bags and abandon a successful plan?

Apparently there was quibbling within the ranks over the right of each state to decline joining TRIA, as well many who wanted to force more of the financial burden on the insurance industry.

Regardless, instead of working towards a compromise, Congress simply walked away. I find that deplorable.

It’s deplorable because the private sector does not have the capacity to provide insurance/reinsurance for terrorism risk to the extent currently provided by TRIA.

Without TRIA, terrorism risk insurance would be limited and exceedingly expensive. Any coverage available would pale compared to the limits covered by the TRIA plan. I imagine the deductibles would be outrageous.

As a risk manager, my other concern would be the effect on workers’ compensation programs. Employers with a large concentration of workers at one location could see their rates increase significantly.

Insurers, as you know, can’t exclude terrorism-related losses. My employer has large manufacturing plants and highly populated corporate offices across the US. I dread my 2015 work comp renewal … and the sleepless nights leading up to it.

Ditto for property insurance. With no TRIA backstop, insurers will be less likely to write certain locations, or they will place a number of exclusions and sunset clauses to lessen or totally eliminate the terrorism exposure.

From an overall economic standpoint, without TRIA our national security would become destabilized and we become less resilient to future terrorist attacks.

Think of where we were prior to 9/11, The United States was coming off a recession stemming from a bursting bubble; a decline in consumer confidence; and predatory lending had been uncovered. And then we were attacked. The traumatic events magnified and accelerated the underlying trends already in motion in the U.S. economy.

It was a perfect storm for economic disaster. We survived … barely.

As of 1/1/15 we will return to the same place we were prior to the 9/11 attacks – weak and vulnerable from an economic standpoint. If another 9/11 occurs without the TRIA backstop, would we rely on federal aid (which is already stretched beyond capacity)? Imagine what that would do to the economy?

I hate to be one of “those guys” who blames everything on our elected officials, but this time they deserve it. Congress had a chance to do the right thing and they failed.

Read all of Dan Holden’s Risk Insider contributions.

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Sponsored: Healthcare Solutions

The Promise of Technology

A roundtable in Philadelphia explores the power of technology in WC and its potential to take us where we have never been before.
By: | December 10, 2014 • 7 min read

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The field of workers’ compensation claims management seems ideally suited as a proving place for the power of technology.

Predictive analytics in the hands of pharmacy and medical management experts can give claims managers the data they need to intervene in troublesome claims. Wearables and other mobile technologies have the potential to give healthcare providers “real-time” reports on the medical condition of injured workers.

Never before have the goals of quick turnaround and transparency in managing claims appeared so tantalizingly achievable.

In the effort to learn more about technology’s potential, in September, Risk & Insurance® partnered with Duluth, Ga.-based Healthcare Solutions to convene an information technology executive roundtable in Philadelphia.

The goal of the roundtable was to explore technology’s promise and to gauge how advancements are serving the industry’s ultimate purpose, getting injured workers safely back to work.

 

Big Data, Transparency and the Economies of Scale

Integration is a word often heard in connection with workers’ compensation claims management. On one hand, it refers to industry consolidation, as investors and larger service providers seek to combine a host of services through mergers and acquisitions.

In another way, integration applies to workers’ compensation data management. As companies merge, technology is allowing previously siloed stores of data to be combined. Access to these new supersets of data, which technology professionals like to call “Big Data,” present a host of opportunities for payers and service providers.

Through accessible exchange systems that give both providers and payers better access to the internal processes of vendors, a service provider can show the payer the status of the claim across a much broader spectrum of services.

SponsoredContent_HCS“One of the things I see with all of this data starting to exchange is the ability to use analytics to predict outcomes, and to implement workflows to intervene.”
–Matthew Landon, Vice President of Analytics, Bunch CareSolutions.

“Any time that we can integrate with a payer across multiple products such as pharmacy, specialty and PPO services, what it does is gives us a better picture of the claim and that helps us to drive better outcomes,” said roundtable participant Chuck Cavaness, chief information officer for Healthcare Solutions.

Integration across multiple product lines also produces economies of scale for the payer, he said.

Big Data, according to the roundtable participants, also provides claims managers an unparalleled perspective on the cases they manage.

“One of the things that excites us as more data is exchanged is the ability to use analytics to predict outcomes, and to implement workflows to intervene,” said roundtable participant Matthew Landon, vice president of analytics with Lakeland, Fla.-based Bunch CareSolutions, A Xerox Company.

Philadelphia roundtable participant Mike Cwynar, vice president of Irvine, Calif.-based Mitchell International, agrees with Landon.

Jerry Poole, President and Chief Executive Officer, Acrometis

Jerry Poole, President and Chief Executive Officer, Acrometis

“We are utilizing technology to consolidate all of the data, to automate as many tasks as we can, and to provide exception-based processing to flag unusual activity where claims professionals can add value,” Cwynar said.

Technology is also enabling the claims management industry to have more productive interactions with medical providers, long considered one of the Holy Grails of better case management.

Philadelphia roundtable participant Jerry Poole, president and CEO of Malvern, Pa-based claims management company Acrometis, said more uniform and accessible information exchange systems are giving medical providers access to see how bills are moving through the claims manager’s process.

“The technology is enabling providers to call in or to visit a portal to figure out what’s happening in the process,” Poole said.

More efficient data storage and communication is also resulting in quicker turnaround times, which is shortening the duration of claims and driving down the overall cost of risk, according to Cwynar.

 

Going Mobile

Another area where technology is moving the industry forward, according to the Philadelphia technology roundtable participants, is mobile technology, which is being used to support adjustors and case managers and is also contributing to quicker return to work and lower costs for payers.

The ability to take a digital tablet to a meeting with an injured worker or a health care provider is allowing case managers to enter data and give feedback on a patient’s condition in real time.

“Our field-based case managers have mobile connectivity to our claims systems that they use while they’re out of the office attending doctor’s appointments, and can enter the data right there into the system, so they’re not having to wait until they are back at the office to enter critical clinical documentation,” said Landon.

Injured workers that use social media, e-mail and the texting function on their mobile phones are staying in better touch with those that are charged with insuring that they are in compliance with their treatment plans.

Wearable devices that provide in-the-moment information about an injured workers’ condition have the potential to recreate what is known in aviation as the “black box,” a device that will record and store the precise physical state of an employee when they were injured. Such a device could also monitor their recovery process.

But as with many technologies, worker and patient privacy also needs to be observed.

“At the end of the day, we need to make sure that we approach technology enhancement that demonstrates value to the client, while ensuring patient advocacy,” Landon said.

Consolidation

As payers and claims managers set out to harness the power of computing in assessing an injured worker’s condition and response to treatment, the cycle of investment in companies that serve the workers’ compensation space is currently playing a significant role.

The trend of private equity investing in companies that can establish one-stop shopping for such services as medical case management, bill review, pharmacy benefit management and fraud forensics has huge potential.

SponsoredContent_HCS“Any time that we can integrate with a payer across multiple products such as pharmacy, specialty and PPO services, what it does is gives us a better picture of the claim and that helps us to drive better outcomes.”
— Chuck Cavaness, Chief Information Officer, Healthcare Solutions.

The challenge now facing the industry, one the information technology roundtable participants are confident it can meet, is integrating those systems. But doing so won’t happen overnight.

“There’s a lot of specialization in the industry today,” said Jerry Poole of Acrometis.

Years ago there was a PT network. Now there’s a surgical implant guy, there’s specialized negotiations, there’s special investigations, said Poole.

The various data needs to be integrated into an overall data set to be used by the carriers to help lower the cost of risk.

“Consolidating all these providers will take standardization of communication pathways and it will likely be led by the vendors,” Poole said.

 

Securing Sensitive Information

Long before hackers turned the cyber defenses of major national retailers inside out, claims management professionals have focused increased attention on the protection of data shared across multiple partners.

Information security safeguards are changing and apply to what technology pros refer to “data at rest,” data that is stored on a particular company’s servers, and “data in flight,” data that is transferred from one user to another.

Michael Cwynar

Michael Cwynar, Vice President, Mitchell International

Mitchell’s Cwynar said carriers want certification that every company their data is being sent to needs to have that information and that both data at rest and data in flight is encrypted.

The roundtable participants agreed that the industry is in a conundrum. Carriers want more help in predictive analytics but are less willing to share the data needed to make those predictions.

And as crucial as avoiding cyber exposures and the corresponding reputational damage is for large, multinational corporations, it is even more acute for smaller companies in the workers’ compensation industry.

Healthcare Solutions’ Cavaness said the millions in loss notification and credit monitoring costs that impact a Target or a Home Depot in the case of a large data theft would devastate many a workers’ compensation service vendor.

“They’d be done in a minute,” Cavaness said.

The barriers to entry in this space are higher now than ever before, continued Cavaness, and companies wishing to do business with large carriers have the burden of proving that its security standards are uncompromising.

In Reality

Workers’ compensation risk management in the United States is by its very nature, complex and demanding. But keep in mind that those charged with managing that risk get better results year after year.

Technology has a proven capability to iron out the system’s inherent complications and take its more mundane tasks off of the shoulders of case adjustors.

The roundtable members agreed that the business goals of a lower cost of risk and an even more productive workforce will follow.
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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Healthcare Solutions. The editorial staff of Risk & Insurance had no role in its preparation.




Healthcare Solutions serves as a health services company delivering integrated solutions to the property and casualty markets, specializing in workers’ compensation and auto liability/PIP.
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