Defending the Digital Frontier
Digital technology continues to transform the global publishing arena, from changes in copyright law to ways in which media and technology are insured.
Kevin P. Kalinich, Chicago-based global practice leader for cyber/network risk at Aon Risk Solutions, emphasized just how dramatic the transformation in global publishing has been in recent years.
“If you take a look at the top four or five publishers like Pearson, Reuters, Thomson, Reed Elsevier and Wolters Kluwer … in just the last five years they’ve converted from being 75 percent hard copy to being 80 percent electronic.
“It’s amazing, and here’s why it’s so important,” Kalinich added. “In the old world when hard copy ruled, the end user — the consumer — would not be liable because the publisher was liable for publishing it.”
Now, however, there are few limits to how an end user can use digitally published content. And it’s not always clear where the line is between fair use and infringement.
Kalinich and others said that publishers walk the tightrope of trying to protect the original content owner while protecting the end user from unintentional intellectual property infringement.
“End users need the appropriate legal rights to use copyrighted materials or they could potentially commit copyright or trademark infringement,” said Kalinich. “Typically, the IP rights are granted through a licensing agreement or ‘fair use exception’ to copyright violations. Fair use is a limitation and exception to the exclusive right granted by copyright law to the author of a creative work.”
The Role of Intent
In the past year, there have been two landmark copyright decisions in the online publishing realm that have media/technology experts buzzing.
One is Authors Guild Inc., et al. vs. Google Inc., a decision rendered in mid-November. The other is the Associated Press vs. Meltwater U.S. Holdings Inc., a decision reached last March.
In the Google case, book authors and several major book author associations challenged Google’s reproductions of books and “snippets” of millions of books on its website. The book authors claimed this did not constitute “fair use” and violated their copyright protection.
The decision by U.S. Circuit Court Judge Denny Chin in Manhattan — if it survives an announced appeal of the ruling — lets Google continue expanding the online library. Chin ruled that Google’s product helps readers find books they might not otherwise locate.
The institutions that have provided works for scanning of snippets include Harvard University, Oxford University, Stanford University and the New York Public Library.
A key element in Chin’s “fair use” decision was that Google does not receive any monetary gain from posting whole volumes or snippets of some 20 million books in its electronic library.
In the Meltwater case, New York District Court Judge Denise Cote ruled that online aggregator Meltwater infringed upon AP’s copyright protection by using original content that AP had “labored to create.”
Not long after Cote’s ruling, AP and Meltwater entered into an agreement for AP to produce and Meltwater to electronically distribute content in a joint venture.
“It’s encouraging to see collaborations like the one between the Associated Press and Meltwater aggregating service as they try to work together, because clearly this is what the future looks like,” said Joanne Richardson, New York-based practice leader, U.S. media and entertainment, E&O at Hiscox USA.
“Companies that find ways to bring content and distribution together are really going to be the winners at the end of the day,” Richardson added. “I think it’s the way things are going to have to go. They need each other. It’s a win/win for everybody.”
Eric Seyfried, New York-based senior vice president at Marsh & McLennan Cos.’ FINPRO group, makes a distinction between online aggregators that are in business for monetary gain, like Meltwater, and online aggregators like Google Books, which exist to serve research and other scholarly purposes.
“In Judge Chin’s decision, he talks about Google providing significant public benefit,” said Seyfried. “Are they making available information that has been buried in the bowels of libraries, for example? In the Google case you have to look at the purpose and character of the use. Are they bringing potentially long-lost volumes to light for scholarship and research?”
Seyfried believed that Chin was “growing the pie” of books available.
Aon Risk Solutions’ Kalinich noted that Chin said he believed the authors involved would get more sales because Google was cataloguing their work, and that Google wasn’t making any money off the arrangement.
In the Meltwater case, Marsh’s Seyfried said, Meltwater used its proprietary technology to “scrape” the Internet for news stories and then processed the information into some sort of news digest for their subscribers.
“Is Google trying to further some level of scholarship and research, whereas Meltwater is looking to monetize content for its own benefit through selling subscriptions?” asked Seyfried. “It’s not some sort of academic or intellectual exercise, while Google is about building the brand rather than a subscription base.”
Louis Scimecca, Kansas City, Mo.-based senior vice president for AXIS PRO, which provides media and entertainment coverage, among other solutions, noted: “With the Internet and electronic communications flourishing and expanding, in a lot of cases the law hasn’t caught up with new technology. The technology comes and then the law follows.”
Scimecca said that the issue isn’t restricted to content aggregators. Any individual can find themselves in a legal tangle for using another party’s copyrighted material or trademarked digital matter without permission. “Generally right now, if a person or an entity is taking somebody’s else’s copyright material without permission or consent, that is a problem,” he said.
As in the Google case, Scimecca said, “fair use” might be a defense if material is used for educational, scholarly or teaching purposes.
Protecting the Business
In the realm of insuring risks at media/technology companies, Chad Milton, a partner at Kansas City, Mo.-based Media Risk Consultants LLC, said that as technology at media companies with innovative strategies change, these businesses threaten somebody else’s old business model.
“And the result more often than not leads to a copyright infringement claim,” said Milton. “The history of this kind of litigation is that it’s really about business practices rather than about individual bits of content. We’re not really talking about infringements in a writer’s product or work, we’re really talking about infringements in the way media companies do business.”
It wasn’t often that anybody cared about copyright infringement when content was free, Milton added. “But now that so many online publishers are trying to find ways to monetize their content, it now conflicts with the business models of the online aggregators who want to use other people’s content without paying for it.”
This environment creates interesting risks for insurers because formerly the insurers were asked to insure individual bits of media content: individual songs, individual films, individual stories and individual broadcasts, Milton said.
“They’re now being put in the position of insuring business models, and it’s harder for insurers to be able to insure the innovators,” Milton said. “And I think they need to find a way to convince underwriters that this is a manageable risk. I know there’s some resistance on the carriers’ part about this.”
But Hiscox USA is not one of those underwriters. As long as a decade ago Hiscox was creating product to address the merger of media and technology.
“We were able to put a form together that addressed both, so there was no gap in coverage because media companies now had technology exposure and technology companies had media exposures,” said Hiscox’s Richardson. “Today, there’s a lot more combined forms of media, technology and data privacy.”
Richardson said Hiscox tends to look at things on an individual risk basis, which means they want to understand how these new technologies work and function and be able to sort out exactly what some of the hiccups for them might be along the way.
“We will need a lot more case law to develop in some of these areas before we’re able to ultimately and completely understand all the exposures,” she added.
Observed Marsh’s Seyfried: “The key to insuring a media company is to try to come up with a comprehensive professional liability program. The foundation of that program is based on media liability insurance and making sure that a robust program covers a variety of media perils.”
The next step is finding a market that has the appetite to take on the risk. The other piece of the coverage is some sort of technology offering.
“I can say I do not have one significant media client in the whole risk management space that does not buy some combination of network privacy coverage and/or technology products and services coverage,” Seyfried said.
Coping with Cancellations
Airlines typically can offset revenue losses for cancellations due to bad weather either by saving on fuel and salary costs or rerouting passengers on other flights, but this year’s revenue losses from the worst winter storm season in years might be too much for traditional measures.
At least one broker said the time may be right for airlines to consider crafting custom insurance programs to account for such devastating seasons.
For a good part of the country, including many parts of the Southeast, snow and ice storms have wreaked havoc on flight cancellations, with a mid-February storm being the worst of all. On Feb. 13, a snowstorm from Virginia to Maine caused airlines to scrub 7,561 U.S. flights, more than the 7,400 cancelled flights due to Hurricane Sandy, according to MasFlight, industry data tracker based in Bethesda, Md.
Roughly 100,000 flights have been canceled since Dec. 1, MasFlight said.
Just United, alone, the world’s second-largest airline, reported that it had cancelled 22,500 flights in January and February, 2014, according to Bloomberg. The airline’s completed regional flights was 87.1 percent, which was “an extraordinarily low level,” and almost 9 percentage points below its mainline operations, it reported.
And another potentially heavy snowfall was forecast for last weekend, from California to New England.
The sheer amount of cancellations this winter are likely straining airlines’ bottom lines, said Katie Connell, a spokeswoman for Airlines for America, a trade group for major U.S. airline companies.
“The airline industry’s fixed costs are high, therefore the majority of operating costs will still be incurred by airlines, even for canceled flights,” Connell wrote in an email. “If a flight is canceled due to weather, the only significant cost that the airline avoids is fuel; otherwise, it must still pay ownership costs for aircraft and ground equipment, maintenance costs and overhead and most crew costs. Extended storms and other sources of irregular operations are clear reminders of the industry’s operational and financial vulnerability to factors outside its control.”
Bob Mann, an independent airline analyst and consultant who is principal of R.W. Mann & Co. Inc. in Port Washington, N.Y., said that two-thirds of costs — fuel and labor — are short-term variable costs, but that fixed charges are “unfortunately incurred.” Airlines just typically absorb those costs.
“I am not aware of any airline that has considered taking out business interruption insurance for weather-related disruptions; it is simply a part of the business,” Mann said.
Chuck Cederroth, managing director at Aon Risk Solutions’ aviation practice, said carriers would probably not want to insure airlines against cancellations because airlines have control over whether a flight will be canceled, particularly if they don’t want to risk being fined up to $27,500 for each passenger by the Federal Aviation Administration when passengers are stuck on a tarmac for hours.
“How could an insurance product work when the insured is the one who controls the trigger?” Cederroth asked. “I think it would be a product that insurance companies would probably have a hard time providing.”
But Brad Meinhardt, U.S. aviation practice leader, for Arthur J. Gallagher & Co., said now may be the best time for airlines — and insurance carriers — to think about crafting a specialized insurance program to cover fluke years like this one.
“I would be stunned if this subject hasn’t made its way up into the C-suites of major and mid-sized airlines,” Meinhardt said. “When these events happen, people tend to look over their shoulder and ask if there is a solution for such events.”
Airlines often hedge losses from unknown variables such as varying fuel costs or interest rate fluctuations using derivatives, but those tools may not be enough for severe winters such as this year’s, he said. While products like business interruption insurance may not be used for airlines, they could look at weather-related insurance products that have very specific triggers.
For example, airlines could designate a period of time for such a “tough winter policy,” say from the period of November to March, in which they can manage cancellations due to 10 days of heavy snowfall, Meinhardt said. That amount could be designated their retention in such a policy, and anything in excess of the designated snowfall days could be a defined benefit that a carrier could pay if the policy is triggered. Possibly, the trigger would be inches of snowfall. “Custom solutions are the idea,” he said.
“Airlines are not likely buying any of these types of products now, but I think there’s probably some thinking along those lines right now as many might have to take losses as write-downs on their quarterly earnings and hope this doesn’t happen again,” he said. “There probably needs to be one airline making a trailblazing action on an insurance or derivative product — something that gets people talking about how to hedge against those losses in the future.”
The Doctor as Partner
Professionals helping employees return to work after being on disability or a leave of absence face many challenges. After all, there is a personal story behind each case and each case is unique.
In the end, the best outcome is an employee who returns to the job healthy and feeling well taken care of, while at the same time managing the associated claim costs.
Learn what most employers want from their group disability and life benefits program.
While many carriers and claims managers work toward these goals, in the end they often tend to focus on minimizing costs by aggressively managing claims to get the worker back on the job, or they “fast track” claims, approving everything and paying little attention to case management.
Aggressively managed claims can leave many employees and their doctors feeling defensive and ill-at-ease, creating an adversarial relationship that ultimately hinders return to work and results in higher direct and indirect employee benefit costs for the employer. Fast track or non-managed claims can lead to increased durations, costs and workforce productivity issues for employers.
Is it possible to provide a positive employee benefit experience while at the same time effectively managing disability and lowering an employer’s overall benefit costs?
A Unique Approach
Liberty Mutual Insurance’s approach to managing disability and absence management focuses on building consensus among all stakeholders – the disabled employee, treating physician, employer and insurer. And a key component of this process is a large team of consulting physician specialists, leading practitioners from a variety of specialties, highly regarded experts affiliated with leading medical universities across the country.
“About 16 years ago, our national medical director, Dr. Ed Crouch, proposed that if we worked with a core group of external consulting medical specialists – rather than sending most claims for Independent Medical Evaluations – we could do a better job making disabled employees and their attending physicians comfortable, and therefore true partners in producing better disability management outcomes and employee benefit experiences,” said Tim Kastrinelis, senior vice president, Distribution Partnerships at Liberty Mutual Benefits.
“In this way, our consulting physician and the attending physician are able to work with the disability case manager, the employee and the employer to deliver a coordinated, collaborative approach that facilitates a productive lifestyle and return to work.”
The result of Dr. Crouch’s initiative has produced positive results for the clients of Liberty Mutual Insurance. This consensus building approach to managing disability with consulting physician expertise has helped achieve industry leading client retention results over the past decade. In fact, 96 percent of Liberty Mutual’s group disability and group life clients renew their programs.
“By getting all stakeholders on the same page and investing heavily in consulting physician specialists, we have been able to lower claim costs and shortened claim duration for our group disability policyholders. …In the end, it’s a win-win for all.”
–Tim Kastrinelis, Senior Vice President, Distribution Partnerships, Liberty Mutual Benefits
A Collaborative Approach
In the case of complex disability medical health situations, Liberty Mutual’s disability case managers play a vital role in seeking additional expertise—an area where the industry’s standard has been to outsource the claimant for independent medical examinations.
However, Liberty Mutual empowers its disability case managers with the ultimate responsibility for the outcome of each claim. The claimant and the case manager stay together throughout the life of the claim. This relationship is the foundation for a collaborative approach that delivers a better employee benefit experience and enables the claimant to return to work sooner; which more effectively controls total disability claim and absence costs.
Sending a disabled employee with complex medical needs to an external specialist may sound like a cost-effective path, but it often comes at the cost of sacrificing the relationship and trust built between the employee and case manager. The disabled employee must explain their medical history to a new clinician, which he or she is often reluctant to do. The attending physician may be uncooperative as this move can appear to question his or her treatment plan for the employee.
As a result, the entire claims process takes on an adversarial atmosphere, building major roadblocks to the ultimate goal of helping the claimant return to a productive lifestyle.
Liberty Mutual takes a different approach. Nearly 100 physicians representing more than 30 medical specialties are available to consult with its medical and claims professionals, working side-by-side with case managers.
More than 95 percent of these consulting physicians are in active practice, and therefore up-to-date on the latest clinical best practices, treatment guidelines, therapies, medications, and programs. Most of these physicians are affiliated with leading medical universities across the country. “We recruit specialists from around the country, getting the best from such prestigious institutions as Harvard, Yale, and Duke,” said Kastrinelis.
These highly-credentialed physicians help case managers focus on providing the support needed for the disabled employee to successfully return to work as quickly as appropriate. Their collaborative work with the attending physicians provides the behind-the-scenes foundation that leads to a positive claimant experience, results in a better outcome for the claimant, and more effectively reduces total claim costs.
Coordinated Care Plan
When one of these consulting physicians reaches out to an attending physician, there’s an immediate degree of respect and high regard for his or her opinion. This helps pave the way to working together in the best interest of the employee, improving treatment plans and return to work results.
In this process, the claimant is not sent to yet another doctor; instead, the consulting specialist works with the attending physician to help fill in the gaps of knowledge or provide information that only a specialist would have. Although not an opportunity to direct care, these peer-to-peer discussions can help optimize care with the goal of helping the employee return to work.
The attending physician may have no knowledge of the challenges the employee faces in order to return to work. A return to work plan created in concert with the specialist, disability case manager, employer, and attending physician can set expectations and provide the framework for a proactive and effective return to a productive lifestyle.
“Our consulting physicians bring sophisticated medical expertise to the discussion, and help build consensus around a return-to-work plan, helping us more effectively impact a claim’s outcome and costs, and at the same time provide a better claimant experience,” said Kastrinelis.
“We can work more collaboratively with the attending physician, manage expectations, and shepherd the employee through the process much more effectively and in a much more high-touch, caring, and compassionate manner. Overall, we’re able to produce better outcomes as a result of this consensus building approach.”
“Our approach – including the use of consulting medical experts – helped us significantly reduce disability costs over two years for one large health service company,” notes Kastrinelis. “We cut average short-term disability claim durations by 4.2 days in that time, while increasing employee satisfaction with our unique disability management model and collaborative, partnership approach.
How did Liberty Mutual’s unique approach lower claim costs, reduce disability duration and improve the benefit experience for one customer?
“By getting all stakeholders on the same page and investing heavily in consulting physician specialists, we have been able to lower claim costs and shortened claim duration for our group disability policyholders,” said Kastrinelis.
“Plus, we, the employee, and the employer also get the bonus of creating a better employee benefit experience. This model has shaped our disability and absence management program to more aptly reflect our core mission of helping people live safer, more secure lives. In the end, it’s a win-win for all.”
How does Liberty Mutual provide a superior employee benefit experience?
Tim Kastrinelis can be reached at firstname.lastname@example.org. More information on Liberty Mutual’s group disability and absence management offerings can be seen at https://www.libertymutualgroup.com/business-insurance/business-insurance-coverages/employee-benefits.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.