Underwriting’s New World

Q&A with Kieran Dempsey, Executive Vice President, Chief Underwriting Officer, Ryan Specialty Group

Inside The Shop

Step inside and take in the sights and sounds of a Barbershop in Hyattsville Maryland, where health advocates work with barbers.

On average, black Americans are less likely to be screened for numerous diseases, including colon cancer, making black men more prone to developing the deadly disease.

The Doctor Is In

A community-based education program trains barbers as health advocates, reaching underserved, high-risk individuals.

Stephen Thomas loves barbershops. For him, as for so many African-American men, they are a place of historical and cultural relevance. In the 19th century, some barbershops doubled as abolitionist sites or stops on the Underground Railroad.


The goal is to improve the health of the barbers and their mostly African-American clientele.

One partner in the program is Capital Digestive Care, one of the largest private gastrointestinal practices in the country.

On average, black Americans are less likely than white Americans to get screened for colon cancer and more likely to develop colon cancer.

Savor the Flavor

The city’s culinary horizons are expanding beyond the traditional.

My Weinfelden, Switzerland

Jörg Schmidt, President of Schmidt Versicherungs Treuhand, shares his local favorites.

Telematics Proves in Pilot

Cyber Confidence

Q&A with Patrick Costello, Principal, Evolve MGA

Quake Queller

A new technology called the seismic muffler brings new hope for reducing earthquake damage.

On Jan. 17, 1994, a 6.7-magnitude earthquake struck the San Fernando Valley region of Los Angeles, killing 72 people, injuring more than 10,000, and causing an estimated $40 billion in widespread property damage. Thousands of homes, buildings and cars were destroyed in what remains one of the costliest catastrophes in U.S. history.


Developed by scientists at MIT, the seismic muffler consists of a V-shaped array of boreholes dug hundreds of feet deep.

The one- to three-foot-diameter boreholes, cased in steel or a comparable composite material, slope away from the protected asset.

The boreholes divert hazardous surface waves generated by an earthquake away from the protected asset.

Vicki Gunvalson

In a boring industry? Whoop it up.

Being a televised Real Housewife is not all fake eyelashes, cleavage and cat fighting. The girls often have jobs, too, but none as lofty as Vicki Gunvalson, the longest-standing Real Housewife of Orange County, who owns and runs Coto Insurance in Irvine, California.

The Grass Is…Different

I’ve been in many roles, but seeing things as a client made my picture complete.

I’ve always been partial to the saying, “The grass is always greener…” Over the years it has kept me on my toes—especially when it has come to my career.

Genetic Benefit

Q&A with Nick Bellanca, EVP of sales and business development for Wamberg Genomic Advisors

Wamberg is an advisory firm that provides genetic products and services as part of employer benefit packages. Bellanca discusses how the burgeoning field of genomic testing has the potential to improve employee health and reduce employer medical spend.

Jay Weintraub

Co-founder, InsureTech Connect; Founder & CEO, NextCustomer

It was such a great feeling to say, “I don’t care if I fail.”

Building a Culture That Works

Our biggest issue is not the attraction of talent. Our biggest issue is culture.

During the 1992 presidential campaign, Clinton campaign strategist James Carville famously coined the phrase “The economy, stupid.” That message was reportedly intended to be only an internal note for campaign workers in the Little Rock headquarters to highlight when speaking with constituents (for those keeping track, one of the other talking points was “Don’t forget healthcare.”) As the story goes, the phrase ended up becoming the slogan for the entire election campaign.

Welcome to The Shop

A glimpse of life inside a cultural and community hub that is making a difference in population health.

In conversations with industry stakeholders—brokers, carriers and others—we often hear how insurance is misunderstood, that the industry needs to do a better job telling its story. Well, they’re right. But it’s difficult to get down to that deeper level—the one that makes the story worth telling—amid the complicated web  of relationships, contracts, regulations, markets and capital.

Privacy’s Perilous Path

Legal use does not always equate to ethical use.

Lots of things happened in 2018 that focused our attention on privacy. Facebook got everyone’s attention in March when The New York Times and The Guardian revealed that Cambridge Analytica used the personal data of more than 50 million Facebook subscribers to help the Trump campaign.

Money to Burn

Reinvest in your firm while the economy is hot.

I have a friend who recently decided to invest in solar panels on his roof. By financing the transaction, his fixed monthly payments would be far less than his historical electric bills, and in some way, he is probably helping save the planet.

Doing Well by Doing Good

A construction demolition company is making it possible to reduce waste while gaining a tax benefit.

“Life’s most persistent and urgent question is, ‘What are you doing for others?’" —Dr. Martin Luther King Jr.

How Influential Are You?

Probably not as much as you think.

Are you as influential as you think? Research says probably not. Ninety-five percent of leaders think they are more influential than they are.

Capitalizing on Mini-Cap Ventures

IMA Select steps onto gig economy platform.

Gig economy businesses are underinsured. But a new niche product that capitalizes on digital connections between service providers and customers is an example of how innovative brokerages can carve out a specialized block of business that may lead to big accounts as gig startups mature.

1984 or 2019?

Who’s driving the next evolution of healthcare data?

When Apple first aired its now-famous 1984 Super Bowl commercial it sold us—in a really dramatic and masterful way—the promise that its technology would open the door to freedom of thought, freedom of expression and freedom of innovation. It started the journey that would lead to Apple being arguably ubiquitous in our society.

Our Washington, D.C.

We couldn’t resist tapping into our own local experts to cap off our coverage of Washington, D.C.

Caught Off Guard…and Online

Your cell phone and laptop could easily be hacked during your next business trip.

Your personal technology is vulnerable not only in your hotel room safe but tucked in your pocket walking down a street. We talked with technology expert David Holtzman about the unknown risks you take with your proprietary business information when you travel. —Editor

Tech for Life

One life insurance company is going all in on the mobile health app movement.


Health monitoring is evolving in workplace benefits.

It is estimated that one in six Americans now wears a fitness tracker or a smart watch and 77% own a smart phone, up from just 35% in 2011, according to the Pew Research Center. In the newest evolution of digital health monitoring in the workplace, these technologies are converging. 


The accumulation of personal data on wearable devices has changed the definition of employee wellness.

A key component in the evolution of tracking employee wellness is the ubiquitous smart phone.

Experts view consumer access to medical records via mobile devices as a logical next step in the health app revolution.


Read the Sidebars

Tech for Life

Setting the Standards

Public sector initiatives aim to create technical standards for health data sharing.

Healthcare Hold’em

The game is changing and so are the players. Who will end up with the cards?

In the summer of 2017, Seema Verma, administrator for the Centers for Medicare & Medicaid Services (CMS), spent several terrifying hours trying to access her husband’s medical records after he suffered a heart attack in an airport. 


A Trump administration initiative is designed to expand patient access to clinical data.

Proprietary and technical impediments to sharing data reduce patients’ ability to be effective healthcare consumers.

Data sharing enables third-party applications to better track the quality and price of care.


Read the Sidebars

Setting the Standards

Cloudy…with a Chance of Optimism

Blue Dogs to bipartisanship to herbal tea—The Council’s government affairs team gives their perspectives on 2019.

Once again we asked our Council lobbyists (this time including Government Affairs director Blaire Bartlett) to give us a read on where we are and where we are going. Here’s their 2019 outlook. —Editor

The Wharf

It’s time to check out D.C.’s new waterfront playground.

Water is magic. It brings out the best in everybody.

Health Negotiator

Q&A with Marilyn Bartlett, Special Projects Coordinator for the State of Montana’s Commissioner of Securities and Insurance

Bartlett discusses how crunching data and tough negotiations enabled her to save the state’s struggling employee health insurance plan.

Google Applies Itself

Q&A with Reid French, CEO, Applied Systems

Thinking About Tomorrow

NFP works with Tomorrow Ideas on app-based life insurance.

Jay Ajayi

Receiving from the Bench

Having a back fracture and one bum knee is no fun, but when Philadelphia Eagles running back Jay Ajayi tore an ACL in the other knee in October, he was out for the season. 

Andy Barrengos

CEO, Woodruff Sawyer, San Francisco

Fear is actually an amazing friend. 

The Bubble Continues to Get Bigger

And a burst is nowhere in sight.

I hope everyone had a very happy New Year! For those in the deal-making business, buying or selling, 2018 was likely a very fruitful year for you. The merger and acquisition marketplace ended 2018 strong with a flurry of transactions.

Single Payer in South America

A look into Brazil’s healthcare system offers insights for brokers across the globe.

When it comes to healthcare provision, every country offers a different service, though at their core, many of them face similar struggles. Brazil is known internationally as having the largest state-funded health system in the world.

The New Power Skills

Once dissed as “soft skills,” these abilities are high-value currency in today’s workplace.

Once dismissed by serious businesspeople as mushy nice-to-haves, so-called “soft skills”—critical thinking, problem solving, communication, leadership, adaptability and emotional intelligence—are in high demand and short supply.

Common Ground for the Greater Good

Civility, leadership and the talent war are tied more closely than you might think.

I’ve been in the brokerage business since 1973, and in virtually every year since, I’ve heard that the most pressing issue we as an industry face is the ability to attract and retain talent. Of course, that is likely true for every other industry, too.

It’s Not Easy Being Green, (It Is)

The new marijuana economy is, despite federal impediments, the fastest-growing sector of our economy overall.

The election is finally behind us. Or at least by the time you are reading this, the recounts and runoffs will all finally and officially be over (I hope).

Coffee Talk

Visiting an ASL Starbucks

Just a couple of blocks from the hustle and bustle of Union Station and the Capitol Building in Washington, D.C., lies a Starbucks on H Street.

James Corden

A Jewel of a Cameo

Every theft film has to have at least one insurance investigator, and perhaps the most unlikely one ever is James Corden, in Ocean’s 8

Hyper Scale

Q&A with Timothy Attia, CEO and Co-founder, Slice Labs


Puerto Vallarta is full of history and romance and prime for making memories.

This year, Puerto Vallarta celebrated 100 years of being a municipality and 50 years of being a city. But 1964 is when this then-remote fishing village made its debut on the world stage.

Mobile, Alabama

Allen Ladd, partner at Thames Batre Insurance, shares Mobile’s eclectic finds.

Council Foundation Scholars Soar

The Council Foundation’s scholarship program is drawing in and training the next generation of stellar insurance professionals.

In an effort to build our industry’s future, The Council Foundation’s scholarship program has again awarded $375,000 in academic scholarships to 75 college juniors and seniors interested in pursuing a career in insurance brokerage. Each receives a $5,000 grant.

Too Costly to Ignore

Q&A with Darcy Gruttadaro, director of the Center for Workplace Mental Health, and Mandie Conforti, director of health and benefits at Willis Towers Watson

Gruttadaro and Conforti discuss what employers and brokers should know about behavioral health and substance abuse coverage, which are costing employers increasingly more.

Going Places

A sampling of the ambitious students at Gallaudet University’s Maguire Academy of Insurance and Risk Management

Untapped Talent

Find talent in unexpected places.

Graham Forsey is a Senior eCommerce Technical Analyst for Whirlpool Corp, office suite mate of The Council. Graham also is hearing impaired and taught an informal ASL class for the Council staff, including ASL coffee chats.

In the late 1950s, an ambitious young agent beginning his insurance career at Metropolitan Life found himself in the midst of an entirely untapped and underserved market. James Maguire was attending church with his friends and neighbors, Victor and Helen Saggase. The Saggases were deaf, and the service was conducted in sign language.


As a senior at St. Joseph’s University, in Philadelphia, James Maguire volunteered to work with athletes from a nearby deaf school.

Among Maguire’s many gifts to Saint Joseph’s is a namesake Academy of Insurance and Risk Management.

In 2015, Maguire helped establish an RMI program at Gallaudet University, in Washington, D.C., whose students are deaf and hard of hearing.



Read the Sidebars

Going Places

Pushing the Edge

For 15 years, Rick Pullen did things differently than everyone else, changing the game for a trade rag.

Leader’s Edge editor in chief Sandy Laycox sat down with founding editor and game changer Rick Pullen for a conversation on his legacy and future. Rick will be leaving Leader’s Edge at the end of 2018. —Editor

Beyond Borders

WFII chair Rick Jensen discusses Brexit, blockchain and emerging markets.

Rick Jensen is chairman of the World Federation of Insurance Intermediaries. Leader’s Edge founding editor Rick Pullen talked with him recently about issues facing brokers in the United States and on the world stage. —Editor

Business Acumen Matters

Two human resource experts explain how a deeper understanding of the business can benefit you in any role.

Rod Fox

Managing Partner & CEO, TigerRisk Partners, Stamford, Connecticut

It’s perseverance. It’s the idea that anything’s possible, so you should think big.

Go Big or Get Out?

Just because everyone around you is getting bigger doesn’t mean you should stop trying to get better.

Everyone around you is getting bigger. 
This year, four firms with revenues between $150 million and $200 million sold—brokerages that were big enough to compete and didn’t need to sell to remain competitive.

Come On In, The Water’s Fine

Untapped pools of talent could make a difference in your firm.

It’s around this time every year that I force myself to recite the old adage, “If you always do what you’ve always done, you’ll always get what you’ve always got.” 

Who Owns the Data?

The emerging view is that individuals do and can direct who uses it.

The question of who owns the data has always troubled me. In our world, the question has roots in the debate over who owns expiration data, which predates our industry tenure by decades.

Preparing for New Cyber Threats

What’s on the horizon in 2019? Make sure you’ve got a comprehensive and tested plan.

As companies look to the year ahead, they should make sure they are prepared for the types of cyber attacks they might encounter in 2019. The cyber threat environment is more sophisticated than ever, and nation-states have increasingly played a role, often in coordination with other actors. 

Q&A with Chris Downer of XL Innovate

The Council also caught up with Chris Downer of XL Innovate.

The Council also caught up with Chris Downer of XL Innovate this week. Downer is a principal at XL Innovate who focuses on insurtech investments in North America, Europe and Asia. He is responsible for due diligence and deal sourcing. Downer also pens a daily email (signup required) highlighting the latest insurtech developments.

Plug and Play’s First Annual Broker Age Event Gathers Brokers and Insurtechs Together

The Council participated in the first-ever Plug and Play Broker Age event in Silicon Valley.

The Council participated in the first-ever Plug and Play Broker Age event in Silicon Valley. Plug and Play, an early-stage accelerator, focuses on technology startups from seed to series B funding rounds.

Business Program Bytes: Efficiency Rules

A panel on how brokers will stay relevant in a world inundated with new technologies.

The Council Dives In

World-wide meetings address insurance industry office inclusion.

You’re walking down the hall at work and pass the boss who makes a crack about your gender, race, religion or heritage. You cringe because you don’t want to make a scene, yet once again you’ve been made to feel like you don’t belong.

The Pharmaceutical Supply Chain

How money and services flow through the system

Lack of consensus about how to approach the complex pharmacy supply chain has prompted debate about the most effective way to lower prescription drug costs. Focusing on the inner workings of the entire supply chain may broaden how costs and solutions are discussed. 

Reinventing Beantown

Boston is under construction, with new business, restaurants and hotels adding to the city’s historic architecture.

In 2010, Boston’s late mayor Thomas Menino launched a plan to turn a stretch of dilapidated piers and underutilized warehouses and parking lots in South Boston into an “innovation district.” 

What Motivates Hate?

It takes courage to face what you don’t know.

Herman and Philip Roth

Lasting Lessons in Last Things

Many a celebrity has had a parent in insurance, but few are more famous than Herman Roth, father of the late Philip Roth. The younger Roth was one of America’s greatest novelists. (Portnoy’s Complaint, Goodbye, Columbus and 15 more). 

We Don’t Know

Diversity specialist Vernā Myers asks us to admit that we have no idea and start there.

For many years, Vernā Myers has consulted and lectured on diversity and inclusion in the workplace. She recently sat down with founding editor Rick Pullen and editor in chief Sandy Laycox to talk about her views and experiences. Shortly after our interview, she was hired as vice president for inclusion strategy at Netflix. —Editor


When Vernā Myers landed her first job as a lawyer, in Boston in 1985, she was the first black person the firm had ever hired.

When you make a mistake with a workplace comment, Myers says, don’t qualify the apology.

Myers believes we can’t make progress without first acknowledging our biases.


Read the Sidebars

What Motivates Hate?

Dark Angel

San Francisco wants insurers to cut ties with coal, oil and tar sands industries. Prudent plan or gross overreach?

The insurance industry appears to be becoming a political tool for politicians and advocates of popular causes.


San Francisco has become the first American city to urge insurers to divest from the fossil-fuel industry.

Insurance leaders contend that using the industry to achieve political aims sets a dangerous precedent.

If the movement is taken to its extreme, could the insurance industry be compelled not to insure or invest in other industries deemed unacceptable?

The Human Quirk

Behavioral economics provides key insights into employee engagement and a successful approach to benefits.

Can the “science of the irrational” help employees make better choices when it comes to benefits? That’s a key question for anyone involved in employee benefits.

The Long View

Most Americans have no plan for long-term care should they need it.

It’s no secret that most Americans do not understand long-term care insurance and have no idea who would pay for the treatment should they ever need it.

Primary Care Benefits


The majority of healthcare spend goes toward a small minority of patients. How can we better serve them?

In 2002, a young primary care doctor in Camden, New Jersey, began working with the city’s police department after witnessing a shooting near his home. Using the department’s data, he found there were “hot spots” in the city that were responsible for a large portion of its crime. 


With healthcare costs rising, brokers and employers want to identify their largest sources of spending.

A Colorado study found the highest-cost patients were those with terminal cancer and those receiving emergency dialysis.

Some experts believe predictive analytics can help determine future high-cost users; others say such projections are more difficult to achieve.


Read the Sidebars

Primary Care Benefits

Frankfurt, Germany

Jochen Köerner, Managing Director at Ecclesia Holding, offers tips to finding local gems in this diverse city.

Incubating Insurance

Q&A with Jean Vernor, Head of Incubator, New Strategic Markets, Munich Reinsurance America

Silent Cyber

The industry is raising the volume on hidden cyber risks.

Money Well Spent

Q&A with Shane Wolverton, SVP of corporate development for Quantros

Quantros is a healthcare analytics and risk management consultancy. Wolverton discusses why brokers should understand healthcare quality and how doing so may change their relationship with clients for the better.

Marty Hughes

Executive Chairman of the Board of Directors, HUB International, Chicago

Listening for Cues

Learn from what others are saying and doing.

As this year’s Insurance Leadership Forum event wound down at the Broadmoor, I had the pleasure of watching a one-hour interview with President George W. Bush. I found his message to be one of optimism and strength…mixed in with a significant amount of humor. 

Stand Up and Be Counted

Politics and D&I are not easy topics, but they shouldn’t be difficult to talk about.

The most important message I have this month is to vote. I’m so serious about it that I propose for all of us do our part and close our offices until 10:00 a.m. on November 6 so 100 percent of our employees can get to the polls without worrying about being late for work.

All Abroad!

Here’s a playbook for the first conversation when helping clients expand overseas.

As full-service brokers, we take pride in the fact that we’re ready for anything our clients need. But global expansion is growing ever more complicated with increasing regulatory issues, cross-cultural differences and privacy concerns, to name just a few. 

Creating Career Pathways

The Campbell Group revamped its hiring process and team structure to make a clear path for success from entry to retirement.

It’s no secret that the age demographic in the insurance industry has changed. When I started with the Campbell Group in 2013, the average tenure of the support staff was well over 15 years. 

IDD and the Pursuit of Clients’ Happiness

Now in force, the new EU directive will require better coordination among brokers and carriers.

The Insurance Distribution Directive (IDD) came into force on October 1, changing the operational and compliance framework for brokers based in the European Union. 

Benefits Data Bullseye

Healthcare and employee benefits data are gold for cyber criminals.

The HITECH Act requires covered entities to report breaches of unsecured protected health information affecting 500 or more individuals to the U.S. Health and Human Services Office for Civil Rights. 

NAIC 2018: State Ahead

The NAIC’s newest strategic plan is all about technology and innovation.

The state insurance regulators and their trade association, the National Association of Insurance Commissioners, have never been accused of being on the cutting edge.

ITC 2018: Q&A with Jay Weintraub, Co-Founder and CEO, Insuretech Connect

His perspective on ITC and how he expects the industry to evolve and adapt in the coming years.

On the last day of ITC we had the opportunity to sit down with Jay Weintraub for an exclusive interview to discuss his perspective on ITC and how he expects the industry to evolve and adapt in the coming years.

ITC 2018: Q&A with Ali Safavi, Global Head of Insurtech, Plug & Play

An emphasis on broker-focused insurtech solutions.

We met one-on-one with Ali Safavi to discuss Plug & Play’s investment strategies and how the investment firm is trying to put more of an emphasis on broker-focused insurtech solutions.

ITC 2018 Interview with Adam Demos, CEO of TowerIQ

A deep dive into TowerIQ and the product it offers.

We had the opportunity to sit down with Adam Demos, CEO of TowerIQ, for a deep dive into TowerIQ and the product it offers.

ITC 2018 Interview with Chris Cheatham, CEO of RiskGenius

Using AI to introduce efficiencies into the insurance value chain.

We asked Chris Cheatham, CEO of insurtech firm RiskGenius, to take us through how they used AI to introduce efficiencies into the insurance value chain, as well as how his firm engendered partnerships with incumbents.

ITC 2018: Spotlight on Small Commercial

Transform small business insurance.

In the Spotlight on Small Commercial panel Tuesday afternoon, we heard from innovators in the small commercial space to discuss how they plan to transform small business insurance, go direct, streamline inefficiencies, and remove friction in the process, with a heavy focus on the consumer journey.

ITC 2018: Moving Beyond Legacy

Bettering the customer experience.

At another panel Tuesday afternoon, John Drzik, President of Global Risk and Digital at Marsh, and Greg Hendrick, CEO of AXA XL came together to discuss the different areas of innovation at play in the insurtech space, including the study of new risks and bettering the customer experience, as well as the best path forward to move on from the legacy systems so pervasive in the industry today.

ITC 2018 Fireside Chat with Inga Beale

Attracting and retaining new, young talent.

Inga Beale, CEO of Lloyd’s of London, was at InsureTech Connect on Wednesday to discuss modernization and how to attract and retain new, young talent in the insurance industry.

ITC 2018 Interview with Debb Smallwood, CEO & President, Strategy Meets Action

Navigating InsureTech Connect.

We asked Debb Smallwood, CEO & President of insurance strategic advisory firm Strategy Meets Action (SMA) about their investment strategy and how they’re navigating ITC.

ITC 2018 Interview with Kacie Conroy, Director of Information Technology, M3

Innovation from a broker perspective and more at this year’s ITC.

We had the opportunity to speak with Kacie Conroy, Director of Information Technology at member firm M3. We asked her about the dialogue around innovation from a broker perspective, M3’s current investment strategy, and their mission at this year’s ITC:

Living Is Easy

With more than 70 beaches, life’s a breeze in this global city.

Shirley MacLaine and Jessica Lange

Feeling Their Whole Life Oats

In a 2016 film frolic, two old gray mares take a comic romp through la dolce vita after an insurance error loads them with dough.

INTERNal Perspective

What do your summer interns really think of brokerage? We asked them.

This summer we asked four Council interns to survey interns at member brokerage firms. We wanted some real feedback on how college students view the industry and how their perceptions have changed since working in it. After analyzing their survey data for trends and following up with multiple phone interviews, they wrote this article to convey their findings. —Editor


Internships provide companies with opportunities to identify rising talent and engage them in their business.

College students who don’t understand the industry overlook the opportunities that a brokerage provides.

Once students are exposed to all the industry has to offer, many of them can envision insurance as a potential career.

Intimate Relationships

QBE North America has a limited distribution model that promotes meaningful relationships and industry expertise.

No two farmers are alike. Whether it’s how they work their fields or pay for the land or grow their crops, farming is a uniquely specialized business venture. 

A Light in the Tunnel

Mining is one industry that has had proven success with wearables.

Caution: Falls Likely

Wearable technology is opening employers’ eyes to danger zones.

Eric Martinez spent six years as executive vice president of claims and operations for AIG in New York. In the course of handling 30,000 workers compensation claims a month, he concluded that insurers were investing big bucks in medical management programs for injured workers but not addressing why the injuries were occurring in the first place.


Wearable technology was all the rage a few years ago, but it has not taken off as quickly as anticipated.

Risk management experts believe wearables will ultimately have a significant impact on workers comp and other commercial lines.

The construction and manufacturing sectors and material-moving organizations have shown the greatest interest in wearable technology.


Read the Sidebars

A Light in the Tunnel

Mightier Than the Sword

Insurance has a role to play in protecting schools from mass shootings.

Like many of his colleagues in the insurance industry, Paul Marshall remembers a time when students routinely kept firearms in their cars or pickup trucks in the high school parking lot. “In Ohio, we went rabbit hunting and squirrel hunting,” Marshall, managing director of active shooter/workplace violence insurance programs at the McGowan Companies, recalls. 


To address the enormous costs associated with a mass shooting, insurers have introduced “active shooter” coverage.

Gun control advocates have called for insurers to treat firearms as an “attractive nuisance” liability risk, similar to a swimming pool or large dog.

The industry is moving toward providing stronger risk management to reduce the incidence of school shootings.

The Cost

Aided by technology, new players and the capital markets can step in.

A Terrible Tally

Can We Bear the Cost?

The planet is warming. How can we prepare?

It’s one thing to read about raging wildfires in California and quite another to experience the possibility of such a catastrophe. In early August, our secondary home in Idyllwild, a small town nestled in the San Jacinto mountains, was imperiled by the Cranston fire, just one of the many wildfires burning throughout the state.


Natural disasters caused $337 billion in damage in 2017, the second highest total on record.

Across the United States, wildfires burned more than 9.8 million acres last year, causing $18 billion in damages—triple the annual wildfire season record.

Climate change is a factor in higher precipitation events, such as the 60 inches of rain that engulfed the greater Houston area during Hurricane Harvey.


Read the Sidebars

A Terrible Tally

Can We Bear the Cost?

What’s your role at Ryan Specialty Group?
As Chief Underwriter at RSG, I have two main responsibilities—protecting the capital that supports our 22 MGUs and binding authorities, and assisting those teams with developing and managing various underwriting initiatives. My team includes our actuaries and cat modelers which give us insight into underwriting performance but also assist in product development and management.

Our team is also responsible for helping the underwriting and binding teams build tools and best practices, insert automation, monitor underwriting performance and develop our ultimate loss ratios by product and with our different capital providers.

In what kind of technology are you investing?
The Connector is our brand for a digital strategy for small accounts. The technology is designed for retail agents to be able to bind a policy in minutes, without any underwriter involvement. It pulls data from third party vendors like building age, roof age, risk characteristics, crime scores and more which enables a digital underwriting process.  The platform offers multiple lines of business from multiple carriers, giving retailers a true small commercial marketplace.

The Connector portfolio will be monitored by underwriters as opposed to underwriters making individual account decisions. They’ll be able to look at the data on submitted and bound data, as well as referred business, which will enable us to keep the products competitive and profitable.

The platform incorporates everything for the retailer including collecting payments, and issuing contracts, electronically. We pulled in all of the available technology that’s out there...So it’s sort of a wholesale binding authority in a digital box.

What is the point at which the human experience has to take over from technology in underwriting?
You can’t automate the larger account underwriting process but you can certainly make those underwriting decisions better informed. We have a data scientist now to sift through the data, triage it, look for any correlations we can draw across all of RSG to lead to product development hopefully, or just uncover insights we can get from that tremendous amount of data.

We also have many initiatives around what we call data enrichment, which looks at all the applications that come in and all the individual underwriting judgments on each underwriting platform. It’s like a predictive list. What is out there that can better inform that underwriting decision? Is the crime score going to be something that is more predictive of property loss?  Or even looking at web scraping and other techniques to better inform the underwriting decision.

Do these changes drive your hiring strategy?
Absolutely. I’ll give you an example in our actuarial team. Today, it’s not enough to be an experienced casualty actuary. You have to bring some predictive modeling capability, probably some coding capability. Also, we’re looking for comfort with data visualization so they can present information in a visually relevant way to the underwriters.

What about acquisitions?
We’re always looking for experienced underwriters that have a differentiated underwriting philosophy and approach to their business. And then we try to wrap shared services and technology around them, so they operate as independent underwriting businesses within a larger framework.

What has been one of your biggest takeaways or lessons learned from an acquisition?
The lesson I’ve learned is to pay for quality and then enhance that high-quality, rather than trying
to build quality from scratch.

Step inside and take in the sights and sounds of a Barbershop in Hyattsville Maryland, where health advocates work with barbers to fight colon cancer and other diseases.

In other shops, wealthy white men made business deals while slaves cut their hair. Today, with a clientele that is likely to consist of rich and poor, black and white, laborer and boss, the barbershop occupies a singular station in modern society, the communal gathering place where customers not only get groomed but play games, talk sports, listen to music, watch TV, share stories, and live their lives.
“You can have a judge seated next to a guy who works on a loading dock at Safeway who has a homeless man seated on his other side,” says Thomas, the director of the Maryland Center for Health Equity at the University of Maryland’s School of Public Health. “There is no other venue where you have such a ranging socioeconomic spectrum. A barbershop is a gem. It’s only when you get exposed to it that you can realize how amazing it is.”
And Thomas has figured out a way to harness the power of barbershops to improve the health of their employees and customers, especially those who might not have access to regular healthcare. In 2015, Thomas introduced the HAIR program to the Washington, D.C., area. HAIR stands for Health Advocates In-Reach and Research, an initiative in which healthcare providers work with barbers to improve the barbers’ health and train them to be health advocates for their customers. The goal is to prevent diseases, such as colon cancer, among the shops’ mostly African-American clientele.
While the health outcome data are largely anecdotal at this early stage, Thomas believes HAIR’s experience has proven that a collaboration between academia, small businesses, healthcare providers and insurers can improve people’s health. Surely lessons can be learned from HAIR about improving the health of any high-risk, underserved population.

An Unmet Need

Colon cancer is the third most common cancer in the nation, with more than 97,000 new cases diagnosed each year. It hits African Americans particularly hard. On average, blacks are more likely to develop colon cancer than whites and to develop the disease at an earlier age. And their mortality rate is higher. They are less likely to get screened for colon cancer, even though screening can lead to quicker diagnoses and better outcomes. This means raising awareness is critical among African Americans, says Cara Reymann, chief marketing officer and director of practice development at Capital Digestive Care, one of the largest private gastrointestinal practices in the country and part of the HAIR program.

“We’ve always had a strong interest in advocacy, especially around colon cancer, because it is one of only two cancers that can be prevented through screening,” Reymann says. (The other is cervical cancer.) “We can detect abnormalities that can become cancerous, and if you remove them, you can prevent the cancer from forming in the first place.”

There are a lot of barriers that keep African Americans from getting colonoscopies, including less healthcare access and a fear surrounding the screening process. “They think, ‘Why would a man want to do that to me, even if he is a doctor?’” Thomas says.

Why Barbershops?

In 2001, seeking to reduce health disparities, the Department of Health and Human Services launched a public health campaign encouraging African Americans to establish medical homes for needed healthcare. A number of African-American communities across the nation hosted Take a Loved One to the Doctor days. But Thomas, who worked at the University of Pittsburgh’s Graduate School of Public Health at the time, realized this wouldn’t be effective in communities where a majority of the people weren’t seeing doctors already. So he countered with a Take a Health Professional to the People day. He looked to barbershops because of their trusted position in communities as well as the unique client interactions.

“People in barbershops and salons are there for long periods of time,” Thomas says. “No self-respecting black barber will say, ‘I’ll get you in and out in 10 minutes.’ They are in rest mode, and that hanging out makes it the perfect venue.”

Barbers also have roles as ad hoc consultants on all kinds of issues for their clientele. Thomas was in a barbershop once when a man walked in who had recently left the hospital after suffering a heart attack. After discharge, the customer was given medications, which he pulled from his pocket in the shop and showed everyone.

According to Thomas, the barber looked at the man and said, “If you take those pills, you won’t be able to keep up your obligations.” He was referring to a common side effect of the medication: erectile dysfunction.

“I looked at that man’s face and knew immediately he wasn’t going to take those pills; the barber has that much sway,” Thomas says. “A doctor can write a prescription, but what happens when people get home and talk with these opinion leaders in the community? They don’t have PhDs or MDs, but they have trust that conveys credibility that health professionals themselves don’t have.”

Thomas realized that health information was already being disseminated in barbershops and norms were being shaped—but not always the best kind. He sought to bring an “ecosystem of wellness” to these spaces.

The barbershop program was born after he gave a presentation in Philadelphia about health disparities in the African-American community. At the end of a long line of people waiting to talk with him afterward was Christina Stasiuk, Cigna’s national medical director for health disparities. After talking with Thomas, Stasiuk spent time looking into his work. A year later, the program came to fruition with the help of the Cigna Foundation’s World of Difference Grants, which the insurer gives to nonprofits to improve health opportunities in their communities.

Thomas began with three barbershops in Pittsburgh hosting 10 health professionals who offered screening and information to clientele. By 2008, the program had grown to amass 10 shops with more than 200 healthcare providers. At one point, they screened 700 people in one day. Many of the clients were in such poor health they were sent directly from the barbershop to the emergency room. “That’s how prevalent the morbidity is in these communities,” Thomas says.

Barbers as Advocates

A barbershop is a gem. It’s only when you get exposed to it that you can realize how amazing it is.

Stephen Thomas, director, Maryland Center for Health Equity, University of Maryland

In 2010, Thomas and his entire research team were recruited to the Washington area to launch the Maryland Center for Health Equity. He says they immediately began working on community engagement, research and infrastructure needed for another barbershop program. He reached out to local clinical partners, including the Center for Health Equity and Wellness at Adventist HealthCare and Capital Digestive Care, and received funding and support from Cigna. The D.C. program focused on raising awareness of colon cancer screenings in barbershops and reducing obesity in area salons. There were essentially two parts to the initiative: improving the health of barbers and then training them to provide health information to their clients.

Thomas says when he reached out to local clinical partners like Adventist and Capital Digestive Care, they were eager to get out of their offices and into the community. The first gastroenterologist to go into the shops in D.C. was an African-American woman, which surprised the barbers and their customers.

“They were like, ‘This is what a gastroenterologist looks like?’” Thomas says of the barbers, who proceeded to braid her hair and talk with her about all kinds of health-related issues. “It completely melted away any fear they had of the process.”

The first goal of the program was to work with barbers and improve their health however possible. Roberto Rubio, senior program coordinator and coach for Adventist HealthCare, says Adventist healthcare providers went into the shops each week and offered health screenings and education. They checked each barber’s blood pressure, body mass index and carbon monoxide levels (many of the barbers were smokers). Then they provided information on different topics for them to educate their clients, particularly focusing on colon cancer and other areas of concern for African-American men.

“It’s about building trust in a community of need,” says Marilyn Lynk, director for the Center for Health Equity at Adventist. “These barbers could really be advocates. They could talk about how they did this themselves, how their blood pressure was high and now how eating better or taking medications improved it.”

Rubio conceded that it took a little time for the barbers to get comfortable having healthcare providers in their shops, but they did over time. They even helped the barbers get insurance. Because many are self-employed, they didn’t have coverage and hadn’t been to a doctor in a while.

The providers began by frequenting the shops on a regular basis. Over time, they went less as they saw greater health knowledge and positive health results among the barbers. Many barbers cut back on smoking, and there were improvements in blood pressure and body mass index among them.

“We wanted to prepare the barbers with healthcare knowledge and let them know it was important to talk to clients so barbershops could become health portals where clients could come in and discuss these issues,” Rubio says.

Julia Huggins, vice president of U.S. markets at Cigna, says the simplest part of the equation was teaching the barbers to engage their clients. They already talk about how their kids and family are doing. And it was natural for a barber to engage a client in a conversation about how his health might be affected if the man’s father had recently passed away of something like colon cancer.

“We tapped into a resource that is already viewed as a trusted advisor,” Huggins says. “We didn’t have to teach them to force the conversation; we just had to arm and train the individuals with the right information to provide.”

But the healthcare providers walked a fine line regarding the kind of training that was passed along to clients. Capital Digestive Care’s Reymann says they were careful not to make the barbers surrogates for doctors. Initially, Thomas says, the providers referred to the trained barbers as health advisors but changed that title to health advocates. They didn’t want someone in a health crisis looking to their barber for answers.

A Whole-Body Approach

It was clear relatively early in the HAIR program that health information and screenings had to go beyond colon cancer. The populations in the Washington communities where the barbershops were located mirrored those across the country.

Data show that African Americans are much more likely to die from heart disease and stroke than their white counterparts. They are also more likely to have high blood pressure and diabetes—and all of these at earlier ages. They are also more likely to die younger of any cause than are white Americans.

The healthcare providers ended up screening and educating barbers on issues including alcohol consumption, nutrition and obesity. They also brought in mental health counselors to work on stress management and unresolved trauma.

We’ve always had a strong interest in advocacy, especially around colon cancer, because it is one of only two cancers that can be prevented through screening.

Cara Reymann, chief marketing officer and director of practice development, Capital Digestive Care

Lynk says many of the screenings showed the barbers were at high risk for chronic conditions or unknowingly had them already. Lynk’s group provided information on diabetes management and heart disease, got barbers connected with a primary care provider and discussed healthy eating habits and weight loss. “We tried to be culturally sensitive and find ways to align with the cultural norms or resources in their own neighborhoods,” Lynk says.

Pharmacists, Thomas says, were “big hits” in the shops. One shop held a Brown Bag Day during which the pharmacists encouraged people to bring all the medications they were using or were administering to others as caregivers. Participants talked to the pharmacists about side effects and interactions and how to be better advocates for their own health.

A team from the Mayo Clinic visited one of the shops and performed echocardiograms with laptop devices. Nurse practitioners drew blood to check for prostate-specific antigens (used to identify prostate cancer) and performed digital rectal exams (for which the shop had to be temporarily renovated to create a private space).

“Providers are able today to do so much work outside of the office. All kinds of things are possible,” Thomas says. “The miniaturization of diagnostics equipment means they no longer need to be tethered to a hospital or clinic.”

Creating Healthy Partnerships

Huggins says Cigna feels obligated to be part of improving health in communities where its employees live and work. And part of that is working with under-resourced areas and understanding how cultural differences may impact health outcomes among various groups.

“We have to reach certain communities in ways they can understand and take the information and implement it in their own lives,” she says. “Cultural differences are important, and traditional ways of communicating don’t always reach who we are trying to impact. The HAIR program was geared toward the African-American community, where there are some perceptions and misconceptions of illness and the need for screening.”

Huggins sees the role of health service organizations, such as insurers, as conveners for programs such as HAIR. When Thomas’s organization was looking for a partner to help initiate the program, it aligned with Cigna’s desire to promote and deliver screenings and health information in a new and engaging way. Their wide reach and plentiful data can be leveraged to reach out in areas of need.

For example, Huggins says they knew colon cancer was one of the deadliest cancers among African Americans, who were not receiving sufficient education and care.

“We need to make sure we enable partners in the communities to take advantage of our data and tools and knowledge and deliver resources or programs in a way that the communities own them,” Huggins says.

“People won’t be receptive to an entity coming in and telling them what to do. We have to enable them with whatever resources they need because they understand the culture, linguistic barriers and other components that a company is far removed from.”

The success of the HAIR program and others in which Cigna has taken part have reinforced her belief that these partnerships are the right kind of outreach opportunities—and that Cigna’s resources are being delivered where and how they are needed.

Capital Digestive Care has long served as a resource for communities lacking good healthcare services. Reymann says the organization jumped on board because they saw HAIR as a unique way to approach what they knew was a significant issue in the community.

Reymann participated in planning calls to determine the educational materials and other resources necessary prior to the program’s launch in D.C. As part of Capital’s mission, the providers there volunteer for education and community events and serve as a resource for patients who need screening. Barbershop clients they find to be at risk and who have health insurance are further screened in their offices. If clients don’t have insurance, Capital’s providers are able to direct them to local nonprofit healthcare organizations that can provide education and perform the tests.

And it’s not just the communities that are benefiting from providers’ outreach. Health professionals, who are predominately white, can also benefit from working in communities different from their own, learning to educate and screen high-risk populations.

We tapped into a resource that is already viewed as a trusted advisor. We didn’t have to teach them to force the conversation; we just had to arm and train the individuals with the right information to provide.

Julia Huggins, VP of U.S. markets, Cigna

“It helps their competency and confidence reaching settings outside of the hospital,” Thomas says. “And it’s my observation that the doctors really like it. It’s a win-win all the way around.”

Duplicating the Efforts

Insurers and public health groups clearly believe in the possibility of population health management to improve health outcomes. Businesses, too, can consider looking at innovative ways to work with their own organizations to improve health and, in turn, better control costs.

Reymann says the most important tool a self-insured employer has is working directly with a provider for preventive services. “It’s a trend we are seeing on a national level, but there’s not enough of it,” she says. “The downstream effects of prevention instead of treatment are so great.”

Employers can engage directly with providers and negotiate for lower costs or bundled rates. They can start by working with whoever holds the data, which could be the insurance company or third-party aggregators, to determine what an employee population looks like from a health perspective. Screenings and personal health histories can help gauge areas of need.

Employers can use creative tactics like giving gift certificates for completing health histories, offering paid time off when employees get a physical, or a day off for a more complicated test, like a colonoscopy.

Lynk recommends working with as broad a group of stakeholders as possible to identify and treat where need and disparities exist in a population. These can include the business community, faith-based organizations or local health departments.

There are likely hospitals in most places with missions and dollars to do outreach, education or screenings to improve their communities’ health. When thinking about investing, she says, most hospitals want to see data to identify issues of concern in the community and work there to improve outcomes. Adventist, for example, partners with groups to deal with community issues like education, housing, air quality and food insecurity.

Barbershop Expansion

Thomas has big dreams to expand the barbershop program. His first goal is to create a nationwide group, the National Association of Black Barbershops and Salons for Health, which would enroll barbershops and salons that want to be involved in the health arena.

“We want to make sure they are open, ready and willing to disseminate evidence-based health information and are able to have professionals come in and provide screenings,” he says.

Thomas is using his anchor shop in the D.C. area to test out new ideas. There, flat-screen TVs hang on the walls. On the HAIR wall, the TV doesn’t show sports or Judge Judy, but rotates health information. Nearby is a shoebox where people can submit health questions, which his staff answers and turns into infographics. Thomas wants to be able to deploy the messages to all barbershops taking part in HAIR.

He’s working with a technology company to create a smart phone app called My Barbershop Buddy. The app will provide and track health information of barbers and their customers who are served by HAIR. He even has dreams of creating a smart barbershop chair where people getting haircuts can plug in their phones and download information they have tracked, including their weight, food intake or steps walked.

“This is an innovative, outside-the-box strategy for reaching high-risk populations,” Thomas says. “We can have health professionals available in barbershops, and to get there we need partners like Cigna who are willing to invest in these kinds of crazy ideas—ones who recognize that, at the end of the day, they are paying the bills.”

Worth is a contributing writer and healthcare editor. tammy.worth@sbcglobal.net

Whether you’re attending the “Leadership Lessons from World War II” program at The National WWII Museum in New Orleans March 26-27 or headed to the 50th anniversary of the New Orleans Jazz & Heritage Festival to see The Rolling Stones play the Acura Stage for the first time, deciding where to eat is always a challenge. From the elegance of Brennan’s brunch to local institutions like Domilise’s Po-Boy & Bar, there is no shortage of outstanding Creole and Cajun restaurants in New Orleans.

Three James Beard Award-winning chefs in New Orleans—Sue Zemanick, Alon Shaya and Nina Compton—are continuing to expand the city’s culinary horizons with the opening of their latest restaurants, Zasu, Saba and Bywater American Bistro respectively. Located in some of New Orleans’ coolest neighborhoods, they are a good reason to expand your own horizons beyond the French Quarter and Downtown.

Zemanick established her reputation for her exact but subtle upscale fare like foie gras with pear at Gautreau’s in Uptown. Tucked into a former apothecary in a wealthy Uptown neighborhood, with no sign out front, the fine dining restaurant felt like a clubhouse for the well-heeled women in pearls and men in seersucker suits who walked to the restaurant from their nearby homes. Two years after she departed, she has opened the more casual but equally refined Zasu in Mid-City. The menu is an exploration of flavors, mixing local and international ingredients and spices to produce some of the most innovative yet delightful dining experiences you can have in the city.

White walls with azure stripes set a Mediterranean mood at Saba, Shaya’s homage to his Israeli heritage. (This is Shaya’s second foray into this kind of cooking. Chef John Besh’s former restaurant group owns his first restaurant, Shaya. The split is fodder for a restaurant reality show.) This is a place where you want to graze, enjoying the interesting combinations of flavors course after course over a bottle of wine from Greece or Italy. You could make a meal out of the hummus alone, whipped to lusciousness and topped with delightful ingredients like blue crab and roasted pumpkin and served with freshly baked pita.

Compton’s first restaurant, Compère Lapin in the Warehouse District, combines her love for her Caribbean roots and experiences cooking at upscale Italian and French restaurants. Bywater American Bistro, which opened last March across from the New Orleans Center for Creative Arts (art by NOCCA students hangs on the walls), has a sophisticated neighborhood vibe. An open kitchen and exhibition bar anchor the cavernous dining room, with brick walls, wood columns, and hues of blue and green, tempering the industrial bones. The infusion of Louisiana further defines her approach. Many dishes are presented with flair. Pumpkin soup with brown butter is poured into the bowl tableside over croutons and buttermilk sorbet, a lively mix of hot and cold, smooth and crunchy.

The synergy between the inventive cocktails and reasonably priced and thoughtful wines and the food at these restaurants is a nice surprise. Reservations are a must.

The scoop 
Weinfelden is situated about 40 miles northeast of Zurich, very close to the German border and Lake Constance. You can reach our little town by train or car from Zurich in about 50 minutes. About 15,000 people live here. Life is quiet and luckily not as hectic as in the larger cities of Switzerland. We speak Swiss German, which is a dialect of the German language.

What’s to love 
It’s worth spending a week in this part of Switzerland. Our area is a wonderful place with lots of little hills. Almost everything is within walking distance (my commute is only 10 minutes). Good food, wonderful wine, breathtaking surroundings and great hospitality impress every visitor from all over the world.

Our cuisine is similar to the rest of Switzerland. A classic meal is roesti (like hash browns) with minced veal in a creamy sauce. Since Weinfelden lies in the heart of the Canton Thurgau, the main producer of apples and pears in Switzerland, many of our dishes contain this fruit. However, as small as we are, we have a large choice of restaurants, from Italian and Chinese to steakhouses and Thai.

Favorite restaurant 
Ristorante Pulcinella. The chef has run this Italian restaurant for more than 20 years and still provides the same great quality. Their pasta and all of the food on the menu is prepared in their own kitchen every day. My favorite dishes are scaloppine al limone or saltimbocca with risotto.

The best hotel in the area is the Golf Panorama, a four-star-plus resort next to a wonderful golf course in Lipperswil. It is only a 10-minute drive from Weinfelden.

Our vineyards grow mainly red grapes for Burgundy and Merlot, but they also produce Rieslings and Sauvignon blancs. The best wines are Wolfer Pinot Noir Grand Vin, Sequana (a rich red blend) and Sauvignon blanc; Schlossgut Bachtobel Pinot Noir No. 3 and Sauvignon blanc; Broger Weinbau Blauburgunder Weinfelden (classic Pinot noir); and Müller Thurgau (a fruity, mineral white).

Hike through the vineyards on the Wine Trail for wonderful views. You can see as far as the Swiss Alps. I would also suggest hiking (if you are in great shape) or taking the cable car up to the mountain Säntis, the highest mountain in northeastern Switzerland, an hour’s drive from here.

Don’t miss
Lake Constance and the city of Constance. The city is located directly at the lake, and the old part of town is really worth visiting. The thing to do is rent a bicycle and ride on dedicated pathways around the lake.

Telematics devices do drive significant safety improvements for fleets. In a pilot of its GPS monitoring system, Philadelphia Insurance saw dramatic reductions in dangerous driving behaviors. Based on those results, the company is rapidly expanding complimentary access to the PHLYTRAC GPS to its policyholders. More than 20,000 devices are already in use, and the company projects considerable growth this year and beyond.

In the commercial lines space, it’s my understanding that this is one of the largest telematics programs out there,” says Mark Konchan, vice president of risk management services for Philadelphia Insurance.

The results of the company’s 18-month pilot showed a 98% reduction in hard braking, a 97% reduction in hard acceleration, a 69% reduction in speeding overall, and an 89% reduction in speeding in excess of 15 mph over the limit.

“We got 5,000 devices out there to our policyholders, and we benchmarked those accounts,” Konchan says of the pilot that began in July 2016. “At the end of the pilot study, for the bulk of the accounts, we saw improvements, and for those that were struggling along the way, we coached them.”

Technology alone is not enough, Konchan stresses. At the start of a monitoring program, drivers improve their behavior because they know they’re being monitored, in what’s known as the Hawthorne Effect, but without follow-up, they can backslide. That makes enforcement and training essential. 

“If you don’t have enforcement follow-up…on the unsafe driving observations, you’re going to see these drivers go back to their old habits,” Konchan says. So far, clients have been enthusiastic.

“The feedback we have received from our policyholders has been exceptional,” Konchan says. “Some of these policyholders would not be able to install this technology based on their budget restraints.”

Going forward, Philadelphia Insurance is looking to enhance the program.

“In the future, we’re looking at including route optimization as a component to what we have now, and that is currently in development,” Konchan says. “I don’t have a timeline, but the route optimization will certainly help from a safety standpoint. They could be scheduling at certain times of a day, taking different routes, as well as the potential for the elimination of left-hand turns.”

Let’s start with your platform—the MGA. How does it fit into the insurtech space? 
In my mind, the MGA platform is ideal for a product like cyber insurance. From our perspective at Evolve, we have the ability to go super deep when it comes to cyber exposures, cyber coverage, making our quote-to-buying process as absolutely efficient as it can possibly be. And really, at the end of the day, the MGA model allows us to maximize the amount of value that we can provide to retail insurance brokers.

A number of cyber-focused MGAs are popping up. How do you compete in that kind of market?
I’m confident we have the best cyber coverage that’s currently available. I truly believe there’s a massive deficit in coverage across the industry. It’s really common to see carriers that are excluding or limiting first-party coverage. There’s tons of new cyber policies that will include risk management warranties that will remove coverage in the event of a claim.

To give you an example, if you don't perform something like dual-factor authentication…or maybe you’re not implementing the recommended cyber-security procedures. You’re not going to receive coverage. This is really frustrating to me, because a lot of competitors’ coverage seems to be smoke and mirrors and it kind of discredits cyber insurance as a whole. Beyond coverage, I think our efficiency is unparalleled. We are super focused on going the extra mile to make sure brokers and our insureds truly understand their exposures.

Who are your insureds, and what are the biggest cyber threats they’re facing now?
We work with insureds in almost every industry out there. If I were to break it down to one major cyber threat that really every insured is facing, it’s the fact that everything is getting connected to the internet—your car, your doorbell, your TV, your heat, maybe even your refrigerator. The fact that all these things are getting connected to the internet dramatically increases your chances of getting hacked.

I always tell people you need to focus on what you can control. Make sure you have the right cyber security in place. Make sure you have the right cyber insurance policy in place. You want to make sure your employees have effective training. You’d be shocked at the amount of claims we see that are the result of human error and phishing.

What cyber threats do you see out there on the horizon that people might not be thinking about? 
Forbes recently said that cryptojacking is now more prevalent than ransomware. It’s when a criminal will hijack your computing power to mine for cryptocurrency, like bitcoin. It’s a scary thing, because it really, really slows down your systems and will drive business interruption losses and overtime costs. We actually just released an updated cyber form, our new Evolve 4.0 form, that specifically writes in coverage for this type of loss.

There’s a lot of talk about silent cyber. How do you approach that? 
Silent cyber refers to potential cyber exposures contained within traditional property liability insurance policies, which may or may not include or exclude cyber risks. They’re silent, right. This is a huge issue when a claim happens, because it can result in finger pointing from different carriers that say, OK, you should pick up the coverage because you say this or you say that. To avoid this issue, we always try to make sure the intent of our cyber policy is to respond primary so we know we are the first ones in there, and we want to be picking up those costs right away. In our minds, affirmative cover and that primary layer is the position we always want to take so there’s no confusion on the part of the insured.

When it comes to underwriting, what’s your philosophy? 
We don’t get overly technical with cyber-security related questions. We can gauge a lot from the industry class and the revenue, and we have lots of internal data that helps drive our decisions. We like to know how much an insured is invested in their IT security. You know, if they have a chief information security officer. If they have legitimately thought about their cyber exposures. We like to know if our insureds are compliant with industry-specific standards, but at the same time, we’re fully aware that human error is a huge reason for cyber claims and we take that into account with our underwriting, as well.

What changes would you like to see in the current insurance distribution model?
Insurance is a very old-school industry with a significant age gap. Two changes I would like to see are increased efficiency and increased expertise. I think that a lot of times in the insurance distribution chain you have folks that are looking to add middlemen that are wearing multiple hats to the distribution chain. And it seems completely illogical to me, but it’s very common to see, you know, for example, a wholesale broker who specializes in executive lines. So they’re doing cyber, E&O, D&O, but with a developing product like cyber, I truly believe that retail brokers need a specialist who understands the environment inside and out.

You mentioned insurance being old-school with the age gap. What’s your hiring and talent development strategy to deal with that? 
Because most people, even within the insurance industry, are in the dark when it comes to cyber, we created a structured intensive-training program that will significantly boost an employee’s knowledge on everything cyber-related. Our new hires will go through different phases, they’ll pass tests, they’ll do industry-specific write-ups, they’ll review competitor forms, they’ll give internal presentations, etc. It’s a super-detailed process. We really want to make sure our employees are experts when they’re looking at risk or speaking with any of our brokers.

We’re looking to hire people right out of college. We’re looking to hire people that have some experience in the industry. But we’re also looking at people that have had serious experience in the industry. So I wouldn’t restrict it to one demographic or another. But it seems to me that millennials are a bit more attracted to just the overall vibe of cyber insurance and a lot of times, just based on the technology element of the industry, they have a strong grasp on it already.

Your family has a long history in insurance. How did it play into your decision to start an MGA?
My great grandfather was an insurance broker, and I am the fourth generation of my family in insurance. I grew up working for my dad’s agency in Marin County, going into the office in high school. I got my P&C license when I was in college, and immediately out of college I jumped into an underwriting role with Ace in San Francisco. So I got a really broad perspective of the industry, not only from the carrier side but from the retail broker side.

I also saw my brother, who co-founded Evolve with me, at Lloyd’s of London, and I saw the wholesale distribution chain, as well, and how Lloyd’s of London worked. It was a great education in the industry. That’s really what caused us to jump into the MGA model and find the correct mentors in the industry that knew where the market was going and knew how to provide true value to the demographic of retail insurance brokers we’re working with. I think it was kind of a perfect storm of the experience across the industry, the family history, and the emerging product, like cyber, that we could really jump in and actually provide value when it comes to an emerging product.

The Northridge Earthquake, named for its apparent epicenter (later determined to be the nearby community of Reseda), stunned seismologists with its ferocity. Catastrophe prediction models had estimated the probability of a 6.7-magnitude earthquake as a one in 500-year event. Now, just 24 years after Northridge, scientists at the U.S. Geological Survey predict a 99.7% of another 6.7-magnitude temblor in Los Angeles within the next 30 years.

Much worse is the possibility of a mammoth earthquake striking coastal residents of the Pacific Northwest along the 620-mile Cascadia Subduction Zone, where the Juan de Fuca ocean plate dips under the North American continental plate. The fault zone encompasses the cities of Seattle and Portland, which confront an 8% to 20% chance of experiencing a magnitude-8.0 or higher quake in the next 50 years.

Such doom and gloom projections are daunting for anyone living along the western coastline of the United States. The risk is also of great economic consequence to the global insurance and reinsurance industries, which absorb the financial brunt of earthquakes along with local, state and federal taxpayers. The Northridge Earthquake alone caused insured losses estimated at $25.6 billion in 2017 dollars, more than the industry had collected in earthquake premiums over the prior 30 years. According to the Federal Emergency Management Agency, the damage losses add up to $4.4 billion annually nationwide. Across the planet, earthquake losses in 2016 alone surpassed $53 billion.

Limiting the Impact

On average, roughly 500,000 detectable earthquakes occur each year, of which 100,000 can be felt and 100 cause significant property damage. For millennia, people living in regions prone to earthquakes have tried to limit the impact of earthquakes on buildings. Pliny the Elder’s history of ancient Greece includes a reference to the use of sheepskin between the ground and the foundation of a temple to permit the structure to slip and slide with less damage during a temblor. This ancient prevention technique is actually a primitive version of base isolation, a current protection technology. In base isolation, spring-like flexible pads are inserted between a building’s foundation in the ground and the building itself to absorb devastating ground motions.

Now another earthquake protection technology has been developed to do something similar, albeit in a way that stretches the bounds of credulity. OK, it blows the mind.

Developed by scientists at the Massachusetts Institute of Technology’s Lincoln Laboratory, it’s called a seismic muffler, at least for the time being. The concept calls for drilling a V-shaped array of boreholes hundreds of feet deep that slope away from the protected asset, such as a building, an airport runway or a power plant. The array of boreholes one to three feet in diameter is similar in shape and dimension to a set of trench walls.

Cased in steel or a comparable composite material to maintain the structural integrity of the underlying soil and rock, the boreholes divert hazardous surface waves generated by an earthquake away from the protected asset. The bottom aperture of the borehole array allows only higher-frequency, lower-energy seismic waves traveling from the depths of the Earth to enter and propagate. By the time this wave energy reaches the ground surface, it dissipates in much the same way the sounds emanating from a car’s combustion engine are softened by an acoustic muffler.

Tabletop exercises by MIT’s Lincoln Lab, using 3-D supercomputing calculations, indicate the V-shaped array of mufflers can decrease the ground-shaking effects of a 7.0-magnitude earthquake to a 5.5-magnitude earthquake and lower. That’s a vast improvement, given the logarithmic Richter magnitude scale. For the purposes of simple math, a magnitude-7.0 quake is 10 times stronger than a magnitude-6.0 quake but is 100 times stronger than a magnitude-5.0 quake.

Pliny the Elder’s history of ancient Greece includes a reference to the use of sheepskin between the ground and the foundation of a temple to permit the structure to slip and slide with less damage during a temblor.

Will a seismic muffler work in practice as it does in the lab? The answer appears to be yes. A patent has been issued for the technology, and a 20-page scientific research paper on the muffler was peer reviewed and published in the November 2018 Bulletin of the Seismological Society of America. “We have already received licensing interest in the technology,” says Robert Haupt, the Lincoln Lab staff scientist leading the development of the new earthquake protection system.

Too Good to Be True?

“Wow” factor aside, the technology has yet to be tested in the field. However, the boreholes in their V-shaped array (see diagram) should perform as intended, diverting surface energy away from the protected asset. Questions certainly remain, including the effect of these reflected waves on neighboring structures, the impact of drilling thousands of boreholes, and the overall cost compared to existing technologies, such as base isolation, which is limited to new construction. The effectiveness of boreholes may be greater than base isolation, since the total surface wave energy is diverted. But more analysis, including cost analysis, would be needed to determine the relative effectiveness of each approach for a particular property.

Putting aside these answers for the moment, we sent a description of the new technology to several structural engineers, a leading catastrophe risk modeler, two state insurance regulators, two large reinsurers, and the California Earthquake Authority. Collectively, their interest was piqued, but they were guardedly optimistic. As Dave Jones, then California insurance commissioner (his term ended in 2018), puts it, “The question comes down to what is realistic and affordable. While this appears promising, will it prove to be practical and affordable?”

“I read the piece you sent with an open mind, and it seems perfectly plausible to me,” says Keith Porter, a research professor in the Department of Civil, Environmental and Architectural Engineering at the University of Colorado. “That’s not saying I would recommend its use tomorrow, because it is not quite there yet, much less available. But I get the concept. The fact that it is peer reviewed in such a reputable journal gives further credence to its scientific validity and usefulness.” Porter holds a PhD in structural engineering from Stanford University.

Certainly, there are obstacles in the way of deploying the technology, including the need to obtain site access permits to bore thousands of holes. But Haupt believes the benefits of the solution overshadow its impediments.

“As long as you’re able to drill the boreholes at a distance of 300 meters or so from the asset, you can protect all kinds of structures—from a nuclear power plant to an entire neighborhood of residential homes,” he says. “If a community like Beverly Hills wanted to invest in putting this in to protect their homes on an aggregate basis, the destructive ground motion from an earthquake would be significantly reduced.”

This possibility caught the attention of Janiele Maffei, chief mitigation officer at the California Earthquake Authority, a privately funded, publicly managed organization that sells California earthquake insurance policies through participating insurance companies. Maffei, a registered structural engineer, is responsible for directing the authority’s statewide residential earthquake retrofit program.

“That’s a very interesting possibility, since we’ve been looking solely at mitigation on a building-by-building basis,” Maffei says. “The possibility of protecting more than one structure at a time is an exciting thing, particularly in California, which bears two thirds of the nation’s earthquake risks.”

Maffei cautioned that her opinion is tempered by financial reality—that is, the cost of the new technology. Other experts agreed. “This all sounds very interesting and promising, but we need to consider the real-world implications of the technology, chiefly its scalability and cost-effectiveness,” says Erdem Karaca, Swiss Re’s head of catastrophe perils in the Americas. (Not incidentally, Karaca holds a PhD in civil engineering from MIT.) “We’re talking thousands of boreholes drilled hundreds of meters deep to protect a hospital or a power plant. Is this safe? And how much will it cost?”

The possibility of protecting more than one structure at a time is an exciting thing, particularly in California, which bears two thirds of the nation’s earthquake risks.

Janiele Maffei, chief mitigation officer, California Earthquake Authority

Haupt says the number of boreholes and their dimensions depend on the application. “Say you wanted to protect a kilometer-long airport runway,” he says. “The depth of the boreholes would be approximately 50 meters, the diameter about one foot, and the number of boreholes around 5,000 on each side of the runway.”

He further estimates it would require about 5,000 boreholes to protect a hospital, about 10,000 for a nuclear power plant, 40,000 for a 10-kilometer-long oil and gas pipeline, and 50,000 to 200,000 for a residential community (depending, of course, on its size). That sure sounds like a lot of boreholes, but Haupt countered that drilling with modern technology is “relatively straightforward.”

But what about the cost of all that drilling, compared to the expense of base isolation? According to various estimates, it costs $2,000 to $3,000 to drill a one-foot-diameter well 300 feet into the ground. And that’s just one borehole. Nevertheless, Haupt maintains the aggregate cost of seismic mufflers is much less than comparable base isolation expenditures.

“To build a tall skyscraper today using base isolation costs tens of millions of dollars per building,” he explains. “Based on general calculations from our extensive 3-D supercomputer computations, we estimate we could protect many more buildings at the same cost. So, yes, it would be cost effective.”

A more rigorous cost-benefit analysis will be available following the lab’s field-testing, Haupt says, noting that the lab is looking to drum up a combination of government and private-sector funding to produce a more comprehensive systems analysis. If the test findings are consistent with previous experiments and current cost estimations, former California insurance commissioner Jones says, the technology “could add a new level of protection for Californians. Anything we can do to reduce the potential for loss of life or property from damaging earthquakes we would support.”

Questions on Efficacy

Not all experts are optimistic about the efficacy of the technology. Robert Muir-Wood, the chief research officer at catastrophe modeling firm RMS, who holds a PhD in Earth sciences from Cambridge University, is dubious on several fronts. “This is interesting, ingenious and certainly a novel idea, but my gut reaction is that it’s science fiction,” Muir-Wood says. “Earthquakes are rich in many frequencies of vibration, and this procedure by design cannot anticipate what these frequencies will be prior to an event. It may muffle some frequencies but not all of them. Consequently, I don’t think it will work.”

Apprised of the criticism, Haupt responds that Muir-Wood is correct about earthquake vibration frequencies, which he equated to the frequencies in a broadband spectrum.

“He’s right that an earthquake does not produce a single tone of vibration but many different tones at once,” Haupt says. “But he may be unaware that our system is a broadband defense. By having multiple boreholes surrounding the protected asset, the surface waves approaching the borehole system are reflected or diverted. Any energy coming from below the earth and into the aperture is dissipated, enabling an indifference to frequency. So there is no frequency dependence.”

Karaca, from Swiss Re, brought up another concern—whether or not the V-shaped array of seismic mufflers might divert the energy of an earthquake toward neighboring structures. “Since the technology is designed to deflect surface waves, which are the most damaging aspect of an earthquake, that energy has to go somewhere,” he says. “My question is: where?”

If a community like Beverly Hills wanted to invest in putting this in to protect their homes on an aggregate basis, the destructive ground motion from an earthquake would be significantly reduced.

Robert Haupt, staff scientist, Massachusetts Institute of Technology

“That’s an excellent query,” Haupt says. “He’s right that the energy will be diverted. However, the array pattern is designed to promote seismic wave self-interference, diverting the destructive effects of the waves. In other words, we’ve designed it in such a way that neighboring structures would not experience anything greater than the ground shaking already produced by the earthquake.”

Now What?

All in all, the unique earthquake protection technology appears to present a viable alternative to base isolation, although Haupt prefers to call it a “supplement” to current mitigations. The next step, he says, “is to go outside.”

The lab is undoubtedly eager to undertake real-Earth scenario testing, which Haupt believes will confirm the findings of the detailed 3-D supercomputer models demonstrating the technology’s effectiveness. Physical tests to date have involved drilling boreholes into thick blocks of plastic topped with scaled-down structures. To approximate different earthquake magnitudes, the blocks were shaken and the effects measured by an accelerometer. “We’re confident that the supercomputer modeling is accurate, but to really prove this works, we need to scale up the testing and experiment with actual boreholes drilled in the earth at different depths, densities, and so on,” Haupt says.

Like all academic laboratories, budgets are tight when it comes to large-scale tests. Is this something the insurance and reinsurance industries might be interested in funding, given the potential for a long-term return in decreased damage losses?

Maffei, from the California Earthquake Authority, is sanguine about the possibility. “Any technology that would mitigate the impact of an earthquake deserves monetary means for further testing,” she says. “When base isolation was explored in the aftermath of the Northridge Earthquake, it was tested first on a single structure. The results were encouraging, guiding its use in additional buildings. Little by little, it has proven itself.”

Richard Quill, expert risk research analyst at Allianz, shares this perspective. “We insure some of the earthquake risks affecting nuclear power plants and large oil refineries,” says Quill, who analyzes and coordinates the large reinsurer’s response to natural catastrophes. “If this technology is proven to work, it would obviously reduce earthquake damage risks to these facilities. From an insurance perspective, it is all very interesting. We’ve invested in the past in new risk-mitigation technologies, including how to make automobiles safer. But we would need more evidence.”

Gunvalson, 56, says she began pondering an insurance career after she found out a girlfriend’s commission on the life insurance policy she sold Gunvalson on a soon-to-be ex-husband. Later, as a single mom of two, she found a firm, got licensed, “and I became the first woman agent who was hitting the numbers out of the park every single month,” she told InsuranceNewsNet Magazine. She eventually started her own firm, Coto Insurance and Financial Services, which sells life, health, auto, home and business insurance.

Besides that, she runs a small production company and a sideline called “Diamonds by Vicki,” which vends $11,000 earrings on Amazon. Last December, she peddled her very presence by inviting fans to join her and her boyfriend on a five-day trip to Mexico for only $1,550.

“I want to control my own paycheck. I want to have full control of what I do and therefore I can go to bed at night knowing that I’m never going to be dependent upon a man ever,” she said.

Surprising statement from a Housewife? Maybe. But Gunvalson is anything but predictable. She is at the forefront of many a party scene, flaunting her favorite expression, “Whoop it up!” and keeping the ladies on their toes.

Twice married and divorced, she is dating former Anaheim policeman and frequent local political candidate Steve Lodge. She vows she’ll marry him—hopefully on camera—if only he would ask.

After obtaining a dual degree in biochemistry and managerial economics, I did a grueling short stint walking the hospital halls and working out of my car as a starter pharmaceutical-device intern. Healthcare business consulting seemed a great alternative to that, and I was recruited by global consulting firm Mercer, within its U.S. domestic HR/benefits practice. But curiosity about what the other side of the world was like eventually kicked in. An international HR/benefits opportunity took me to Aon Hewitt as a global consultant, which launched my expertise in over 45 countries for the next few years with Woodruff-Sawyer.

I flattened my world by taking several multinationals abroad, learning both the business and cultural nuances. That kept my grass green for a while, waking up to firm European narratives, easing into my day with the Canadians and Latin projects, and closing out evenings with the Asian sunrise.

With each experience, I put my consultant hat on. I listened, planned, deployed. Strategies were put in place for each type of client—from those who spoke the global HR language to those who got handed the role out of left field.
• Trouble being competitive? Here are the comprehensive benchmark reports tiered by percentile.
• Want a strategy in place? Here are your customized three- to five-year strategic road maps aligned with your culture and priorities.
• Need a tool to track all your data globally? Let me build a state-of-the-art global data management system.
• Renewal coming up? Here is the OE 101 onsites, negotiations and marketing results with the carriers, and employee communications drafts.
• Want more to retain your talent? Here is a list of perks and unique offerings to distinguish yourself.

Wait. Wow. Look at some of these perks within the tech sector. Do their employees really get it all? Maybe that grass is greener.

Turning the Tables

Almost half a century of countries and what felt like a century later helping all the multinationals worldwide, it was time to test the waters. I went in-house—as the global head of benefits and mobility at Square, officially, and with all sorts of hats unofficially. That’s the nature of a fast-growing startup. They wanted me to expand into 13 countries in one year. I had done that with my team for numerous clients before. What could be so hard about this role?

You see, as a domestic broker or a global consultant, I listened, but it was hard to truly hear it all. I planned, but it was impossible to always anticipate it all. I reacted/deployed but couldn’t get into all the weeds.

My learnings as an HR leader were cultivated as I overcame obstacles in each project that I otherwise had always had a simple answer to:

  • Comprehensive benchmark reports tiered by percentile are great, but how does one solve for it all as a small fish competing with the big sharks in Silicon Valley?
  • Three- to five-year strategic road maps exist, but how does it map to our business objectives balancing against employee needs?
  • Open enrollment help is available, but we need technical experts to do testing, audits, reviews. QLE audits. Unit testing of elections. Case testing of scenarios. Experience testing of the portal. Suddenly my consultative world of ben-admin systems was just one piece of a giant puzzle.
  • Communication resources are at my disposal, but my employees won’t even read or listen. There is email overload, intranet information overload. There was a huge noise-to-signal ratio mismatch.
  • Compliance support is helpful, but have you seen the back-end beast of its administration?

What now? I realized I had to start from scratch and focus on quality over quantity.

  • We conducted an experience survey among our employees—not just asking about satisfaction or feedback but also utilizing a stack-rank and give-and-take approach to dig deeper into employee expectations versus business priorities. What would you be willing to compromise on to get more of something else you demanded? How would you rank and prioritize your asks against each other?
  • We reviewed the last five years of data to get to know the trends.
  • We partnered with the Diversity & Inclusion and Business Partners teams to conduct culture audits, which is the essence of any strategy.
  • We kept the executive and finance teams apprised along the way instead of making one final presentation “asking” for it all at once.
  • Data is king, so I became a member of the ever-so-inclusive Silicon Valley Employers Forum, which gave access to benchmarking data and best practices across all the top-tiered tech firms worldwide.

That was just the starting point; we still had a whole journey to get to the end point. And that was the case with each hat I wore: 401(k), healthcare, wellness, immigration, mobility, international HR operations.

It has been a beautiful journey to be able to blend my consultative expertise with in-house skills. You can’t do a strategy plan without cultural awareness. Can’t do vendor change and implementation without full technical support. Can’t improve employee experience without HR information systems and back-end tech support. Can’t be competitive without survey, stack-rank, game plan, communication, and an actionable approach.

Placemats are great. Strategy meetings are informative. But it’s time to look at the entire picture if you want to paint your clients’ grass green.

Rishi is on a brief sabbatical from her role at square to work on hunger relief and children’s education. She is also founder of Global HR Advice. ME

How did the organization get its start?
WGA was founded about a year and a half ago with a team made up of individuals with a background in life insurance, employee benefits, and the clinical and genetic side of things.
There was a lot of interest in this field, but no one had done a good job of bringing the two sides together—genetics and employee benefits. The mission is to make genomic programs affordable and accessible to the masses because we believe genetic testing can improve the overall health and well-being of an individual.

Cancer Guardian is your flagship product. Why is cancer a good space for genomics?
Cancer is a genetic disease and is the most common genetic disease in the country. Anywhere from 10% to 15% of all cancers are hereditary. We test for genetic markers relating to breast, ovarian, uterine, colorectal, melanoma, pancreatic, stomach and prostate cancer.

The first aspect included in the Guardian product was advanced DNA testing of the cancer itself. The value of that is you are looking at a very comprehensive test of the cancer. This can help ensure accurate diagnosis and identify genetically matched treatment.

The normal standard of care doesn’t include this type of testing, and insurance often doesn’t cover it either. If someone wants this type of testing, they have to pay out of pocket, and often the cost can range from $5,800 to $10,000 depending on the specific type of test. We offer it in a more affordable way by having employers pay for the Cancer Guardian on a per-member, per-month basis. They roll it out, and if—God forbid—anyone is diagnosed, they will have access to this when they need it most.

What opportunities are there in genetic testing to improve cancer care?
[Cancer Guardian] is designed as a comprehensive cancer support program. When someone is diagnosed with cancer, we have a team of nurses trained in oncology who guide the person through their journey and give personalized information based on their diagnosis.

It begins with an orientation assessment with one of our support specialists. They find out where the patient is in their journey, and a nurse navigator reaches out to their physician directly to let them know the employee is enrolled in the program and they have access to DNA testing at no additional cost. If they choose to take part, we do the testing and offer a second opinion pathology review through Duke Medicine. We also cover the cost of an on-site nurse who can go with the individual to doctors’ appointments to ensure they are getting all of the information they need. When testing is completed, we can educate their oncologist on their options and let them choose how to move forward. It may show that chemotherapy or radiation is best, but it also may show that immunotherapy is a better option.

We also recently embedded hereditary screening into the program. So an employee will have access to this test through Color Genomics Inc., our screening partner. This product is offered before any kind of cancer diagnosis. An individual provides a saliva sample and gets a report offering information including their hereditary risk for cancer. (We also give information on their risk for heart disease and what their response might be for behavioral health medications.)

Color offers access to licensed genetic counselors to help individuals understand their results. It may show someone has an elevated risk of a certain type of cancer, and that can be scary news. But now that they are aware of it, they can potentially do things to help prevent or delay them from getting it.

How are these programs different from what someone would get by being tested with a commercial product like 23andMe?
Direct-to-consumer tests are very limited by the U.S. Food and Drug Administration because, once the information they provide passes a specific threshold that is clinically actionable (like Cancer Guardian), it requires a physician to sign off on the results. These tests are really more recreational, and about 24 million people bought them in 2018.

There has been such an increase in the number of consumers who have taken genetic tests in recent years. It really goes back to the first whole genome sequencing. Since then, the cost has dropped like a rock and bottomed out (a recent MIT technology review showed sequencing a human genome has dropped from $95 million in 2001 to about $1,100 today). Down the road, the cost of interpreting and understanding how to apply the results will be more expensive than the testing itself.

What kind of companies will these products work for? How are they doled out on a national level?
Our plans range from an eight-life law firm to 10,000-life tree-trimming company. So it works with a wide range of employers.

We are not a lab. We don’t do any of the testing itself. Instead, we have a chief science officer who vets the lab partners we work with for advanced cancer testing. Employees can pick up the phone to talk nurses on the support line and ask any cancer-related questions they have. We also partner with a national network of nurses who take part in the on-site visits with patients and physicians.

How is the benefit paid for?
We learned that, to make the programs accessible and look like other benefits, we had to price them on a per-employee, per-month basis instead of charging one fee. It has to look and feel like every other benefit and be offered seamlessly. It is a voluntary benefit that the employer pays for.

This is somewhat early-stage work. Is there much outcome data in this space?
There are some studies that back up the importance of genetic testing, especially in relationship to cancer. Like with breast cancer, if someone knows they are at higher risk, they might be able to catch cancer earlier, which improves outcomes. If you catch it at Stage 1 as opposed to Stage 4, 98% of people are alive five years later, and 25% have the chance of being alive beyond that.

Another study showed that there’s a 31-month median survival length for Stage 4 lung cancer patients who had DNA testing and then received a targeted therapy. Those without the testing had a median survival rate of just more than a year.

Why should employers consider these programs?
One in every two individuals born today will be diagnosed with cancer at some point. It not only decreases productivity but is a big driver of healthcare spend. It makes sense that they would look for solutions here.

Taking part in genetic testing also increases the opportunity for employees to participate in clinical trials, which can be beneficial to patients and also to employers. If they can have a patient qualify for a clinical trial, the drug sponsor often covers the cost of the drug used for the treatment. And the average cost of cancer treatment is around $10,000 per month.

We heard from Bayer at one point that one of the biggest challenges they face is finding participants in clinical trials for new drugs. A big reason is they often have to find people with a specific genetic biomarker to qualify for treatment. In many cases, if individuals don’t undergo this type of testing, there is no way to know if they can take part. There are some estimates that people have more than double the chance of qualifying for clinical trials if they have genetic testing than those just going through the traditional standard of care.

What’s the ROI?
According to research we found, the annual cost savings for avoiding one cancer misdiagnosis by getting a second opinion is $21,500 a year. This would be per 1,000 employees, assuming there were seven to eight diagnoses in a year. We also estimate that having a support specialist reduces the annual cost per cancer diagnosis by just more than $13,000.

A study presented at the 2018 ASCO [American Society of Clinical Oncology] annual meeting by researchers from the Cleveland Clinic looked at metastatic non-small-cell lung cancer and genomic testing. The researchers analyzed data from more than 2,000 patients and estimated from their records that, on an annual basis, more than $250,000 can be saved for commercial insurance plans if cancers are tested to see if they are amenable to being treated with immunotherapy. Savings could be found in reduced testing costs and earlier implementation of appropriate therapies.

Anything else people should know about how genomics is changing cancer care?
These tests are a lot more comprehensive than ones most insurance pays for. We include upfront and backend comprehensive DNA testing to look at 300 to 500 genes of the individual’s cancer itself. For certain types of cancer, it’s important that this is done. Under the standard of care today, most insurance tests are single-gene and hot-spot tests and are much more limited in nature. These have a high miss rate for identifying genetic drivers of cancer.

Our entire focus is to provide clinically actionable insights that are predictive so people can be proactive and preventive. If someone has the cancer genes, they have a much higher risk of getting cancer than if they don’t. The risk for breast, ovarian and colorectal cancers goes from less than 20% to between 50% and 75%. When cancer is caught early, it increases the survival rate dramatically and reduces treatment costs 50% to 90%.

But people should know that your genes are not your fate. Just because an individual has a higher risk, it doesn’t mean they will be diagnosed. But they do know they are at risk, so now can take steps to reduce that risk.

Are you a native New Yorker?
I am not. I was born and raised in San Antonio, Texas.

What’s the most common misconception about Texas?
Everything is bigger in Texas. It really isn’t. The Alamo is surprisingly small.

What brought you to New York?
Internet advertising brought me to Los Angeles in 2002. I ended up starting a conference for the world of internet advertising called LeadsCon. I lived in L.A. for five years. Everywhere I went in L.A., people would ask me, “Are you from New York?” I said, “You know what? This is the time to try it.” So I took my job with me.

Where do you live now?
In Manhattan. I work in the Flatiron area, east of Chelsea.

And now you have five-year-old twins. What’s it like raising kids in New York?
The joy of New York is that it’s an amazing melting pot. I’m so glad they get the experience of seeing this city and becoming comfortable with all cultures. It creates a sense of unity, and I’m glad our kids get to experience that firsthand.

Mets or Yankees?
“Neither” is the actual answer, which is why I can’t yet say I’m a true New Yorker.

When friends come to visit, what’s one place you take them?
Central Park. I think it is sort of magical to have such peace and beauty in the midst of such activity.

You’ve called yourself an accidental entrepreneur. Why?
It was such a great feeling to say, “I don’t care if I fail.” You leave a job and go for something that hasn’t been built before. It was outside of my knowledge base and comfort zone, and it was the best decision I ever made.

You’ve also referred to your history of “wondering why things couldn’t be a certain way.” What do you mean by that?
I love seeing things improve. I think about why InsureTech is so interesting. You have a commitment embracing what a better industry would look like and how tech might play a role in that.

How did that idea evolve?
It’s really about the insurance industry being able to meet the needs of the world better. Yes, tech is a key. We have an opportunity to create products people want and deliver them in a way people want. Every industry has to become more consumer-centric. If it doesn’t, somebody else will.

Is there a business leader you most admire?
Don Pazour is the CEO of Access Intelligence, which acquired LeadsCon in 2012. It was Don who helped me appreciate what we do and what we can do, to think of an event as more than just an event.

What has been the biggest surprise in running such a new enterprise?
Just how much support there is for innovation and transformation.

Tell me a little about your business.
We have a team of about 10 who work on InsureTech Connect. We’re expecting about 7,000 people in the 2019 edition, which is September 23 to 25, back at the MGM Grand in Las Vegas. One of things we’re most proud of is that it’s a global gathering. In 2018, there were more than 1,000 people who attended from outside the United States, out of about 6,000. The seniority of the audience is something we’re also very proud of: we had 500 people with the title of CEO or founder.

Was the global nature of the conference intentional?
It was. The best way to move the industry forward is to make sure a diverse group of industry leaders get together, especially ones that might not do so otherwise.

What would your co-workers be surprised to learn about you?
Just how many Hallmark movies my wife and I enjoy watching and that it’s not her fault. I’m a willing participant.

How would your co-workers describe your management style?
Encouraging and inclusive. I continually challenge them to tap into their passions and grow as we grow.

Last question: What gives you your leader’s edge?
A combination of our curiosity and our passion. We are a service business. We genuinely care about the people who attend and the people in the industry.



The Weintraub File
Favorite New York neighborhood: Flatiron
Favorite New York restaurant: Maialino (Lexington Avenue at 21st Street) “Dining in New York is probably one of the best things possible.”
Favorite dish at Maialino: Cacio e Pepe
Favorite vacation spot: Portugal
Favorite movie: The Matrix
Favorite actor: James Earl Jones
Favorite musical group: U2
Favorite business book: Crucial Conversations: Tools for Talking When Stakes Are High, by Kerry Patterson, Joseph Grenny, Ron McMillan, and Al Switzler. “Communicating with others is probably one of the most important aspects of life. But no one talks about how we can make it better.”
Wheels: “I love cars, but I don’t own one in New York City.”

When I last wrote in December, my message was for all of us to get creative about solving the industry’s talent crisis. Today, I’m thinking beyond just attracting the talent; I’m thinking, “The culture, stupid!”

This mantra of sorts rang through my head (a lot) last month as I sat through a number of interviews to fill a position at The Council. I kept catching myself instinctively evaluating each candidate from my own generational perspective as an employer and worker and keeper of the culture instead of, perhaps, focusing more on how they might be successful here. Fortunately, I had generational expert Warren Wright’s recent presentation about “second-wave” millennials still in my head.

Wright invited us to throw out all our generational misconceptions. Take millennials, for example, who are cited to hold an average of seven jobs between the ages of 18 and 28. Most of us boomers believe that millennials are impossible to wrangle and understand and that more often than not they leave jobs because the ping-pong table is broken, they didn’t get a gold star on their last report and the coffee is weak. Wright reminded us, however, that those things aren’t necessarily true; millennials leave jobs because of poor management.

It became clear to me after reflecting on this research that our industry’s biggest issue is not the attraction of talent or “getting the word out”; it’s culture. Regardless of our efforts to attract new people to our industry and to be diverse and inclusive, the success or failure of talent in any organization comes down to the culture.

Culture is the single most difficult management challenge there is. Ask the hundreds of leaders who have tried to maintain or redeploy their culture during an acquisition. This is the first time in modern history there are five generations working side by side. There are boomers, Gen X, millennials and Gen Y (those aforementioned “second-wave” millennials). Gen Z is young, but they’re out there too. And with each new generation comes a new workplace dynamic, adding yet another layer of complexity to cross-generational harmony.

The good news is there’s great talent in each generation. The challenge is bringing together their different insights, perspectives, motivations and modes of thinking to accomplish shared organizational goals.

I believe we can learn something by digging into this generational misconception exercise. If you really think about it, employees of all ages are looking for similar things in the workplace: a mission and a company they can be proud of, a sense of community, and leaders they can trust. A strong digital presence doesn’t hurt either (more on that later).

We should be spending less time on the differences and more time on the shared values.

If we don’t get a handle on this, we won’t drive the best of our organizations. Leadership is not only about having a vision and setting the strategic direction; it’s about being a steward of the culture you are keeping. And driving the most out of your organization means understanding who is sitting at the table, what their strengths are and what they value.

Building a culture that works is a journey that is well worth the effort. How’s that for your firm’s 2019 campaign slogan?

(Oh, and don’t forget about healthcare.)

We invite you to spend a few moments in The Shop with us, and as you do, think about the communities in which you live and work, and where this story can be re-told. It’s a story of the lives affected by the transfer of risk in a deeply personal way. It’s the kind of story our industry needs to tell more of. Click here to see the full photo spread.

A former-employee-turned-whistleblower revealed that Facebook never audited the application developers it allowed to access its data to confirm they were using the data according to terms. Facebook subsequently announced it would conduct a thorough review of all application developer use of its data.

The drumbeat on privacy in the United States was enhanced with congressional hearings that probed Facebook on its data-sharing practices. The controversy revealed how 126 million Facebook users might have been played by Russians in an attempt to influence the 2016 presidential election. A few months later, the Times reported that Facebook had allowed numerous device manufacturers, including Amazon, Apple and Samsung, access to user data without Facebook users’ explicit consent, an apparent violation of a Federal Trade Commission consent decree. Then, late last year, the Times obtained documents indicating that Facebook had entered into agreements with at least 150 companies to share its data, including Amazon and Microsoft.

All the attention fueled investigations over how much of Facebook’s data—and other social media data—are shared with third parties. It also raised questions on what and when Facebook knew about Russia’s manipulation of its platform and users. The Times reported in late November that Facebook’s senior leaders were deliberately trying to keep what it knew about Russia’s tactics under wraps. The company’s directors pushed back on that report, claiming they pressed CEO Mark Zuckerberg and COO Sheryl Sandberg to speed up its Russia investigation and calling allegations that the two executives ignored or hindered investigations as “grossly unfair.”

By mid-2018, online users (that is, all of us) were finally beginning to understand the power of big data. Yet they also realized they really had no idea how every digital fingerprint they leave in texts, emails, Facebook posts, tweets, Google searches, etc., was being shared with others. A Pew Center report in September indicated that more than half of Facebook users changed their privacy settings, 40% took a break from Facebook, and 25% deleted the Facebook app on their phone.

Important lesson: privacy expectations can be more powerful than laws, because its hammer is market forces, not fines or penalties. After the Cambridge Analytica scandal, Facebook was forced to report lower-than-expected earnings. Within hours, Facebook lost $130 billion in market value.

Meanwhile, on May 25, 2018, the European Union’s General Data Protection Regulation took effect, forcing companies to focus on what data they have, where they get it and who accesses it. Shortly thereafter, California enacted the California Consumer Privacy Act of 2018, which takes effect next Jan. 1. The law is similar to the European Union’s data protection regulation, but there are key differences. For example, the California law does not require consent to process personal information and does not include the right to be forgotten or to have data corrected—two important features of the EU regulation. Nevertheless, California’s law is as close as any U.S. law has come to emulating EU privacy requirements, a development that thrilled privacy advocates and scared companies.

Ethics of Data Sharing

Another topic that emerged last year was the ethics of data sharing. Wired ran a story last July headlined “Was It Ethical for Dropbox to Share Customer Data with Scientists?” In a Harvard Business Review article, Northwestern University researchers revealed they obtained data from Dropbox and analyzed the data-sharing and collaboration activities of tens of thousands of scientists from over 1,000 universities. Dropbox justified its sharing of this data by relying on its privacy policy and terms of use. The ensuing uproar caused Dropbox and the researchers to clarify that the data had been anonymized and aggregated prior to their obtaining it. Others, however, pointed out how folder structures and file names could still be used to identify individuals. Dropbox was in the hot seat.

The Cybersecurity Division of the Homeland Security Advanced Research Projects Agency funded a multi-year project examining the ethics associated with the use of communications traffic data by cyber-security researchers. The resulting report, known as The Menlo Report, published in 2012, was an early attempt to establish parameters for the ethical use of personal data in cyber-security research projects.

The ethics of data sharing is not always consistent. When a researcher finds a trove of data in a cyber criminal’s online cache, the temptation to use the data is probably no less compelling than when Uber was offered Lyft customer receipts in 2017 by Unroll.me. A privacy policy or terms-of-use statement might give you legal cover for data sharing, but the users whose data you share—or buy—might question your ethics.

Accenture has studied the ethics of digital data and developed 12 “universal principles.”

These include:

  • Maintain respect for the people who are behind the data.
  • Create metadata to enable tracking of context of collection, consent, data integrity, etc.
  • Attempt to match privacy expectations with privacy controls.
  • Do not collect data simply to have more data.
  • Listen to concerned stakeholders and minimize impacts.
  • Practice transparency, configurability and accountability.

Companies face real risks and perhaps internal disagreement when trying to balance their customers’ privacy expectations and maximize profits. Remember that Sheryl Sandberg was reported to favor keeping quiet the discoveries of Russian interference and the exploitation of user data while the chief information security officer at the time favored more public disclosure. Two University of Colorado researchers studied the public reactions to the sale of Lyft customer receipts to Uber and WhatsApp’s announcement in 2016 that it would share data with Facebook to improve Facebook ads and user experience. Their conclusion is noteworthy.

Our findings also point to the importance of understanding user expectations when it comes to privacy; whether most users agree that it’s okay to be the product or not, shaping expectations with more transparency could help reduce the frequency of these kinds of privacy controversies.

But relying on privacy policies or terms of service can be a perilous path. User expectations of privacy will often prevail over legalese. And no one can really keep a straight face and say they believe their users actually read their privacy policy or terms of service. The events of 2018 struck a note of outrage in online users, and legislators, regulators and plaintiff’s attorneys are paying close attention.

In 2019, organizations would be wise to analyze the data they buy, share, use and store, to examine their legal basis to do so, and to consider that their customers might have contrary privacy expectations. Legal use may still violate a person’s expectation of privacy and thus be viewed as an unethical use. Agents and brokers should encourage their clients to be forward thinking on this issue and proactively manage potential privacy risks associated with their data or the data they may obtain from third parties.

Westby is CEO of Global Cyber Risk. westby@globalcyberrisk.com

As he was finalizing the paperwork for this investment, the young 20-something salesperson, who is making a living by hustling door to door selling solar panels, abruptly asked my friend, “So, what are you going to do with all the money you are saving?” A pretty bold and startling question. It seems a bit intrusive but should actually make you pause and think.

In January, the U.S. Treasury issued final regulations clarifying that, other than income from investment or financial planning, insurance agencies do qualify for the full 20% deduction for their 2018 taxes and for years going forward until 2025 under President Trump’s new tax law. This allows owners and shareholders of insurance agencies and brokerages to take up to a 20% tax deduction on qualified business income, no matter their taxable income levels.

Congratulations to each of you that benefit from this ruling. While I am not a tax expert, it sounds like your tax payments will go down. But what are you going to do with all the money you are saving?

Consider reinvesting in your business. Organic growth rates continue to be strong. In most cases, however, it is not because your firm is writing more new business than it has historically. It is primarily backed by a growing economy which results in exposure and employment growth. Some of our best clients have found the ideal time to reinvest in their business is when they don’t have to.

Now may be the best time to bring on new production staff or a sales infrastructure to support the production staff. It is time to free up your leadership that currently has a secondary responsibility for leading your sales team. This setup, which is quite common in the industry, tends to be counterproductive for the leader and the sales team.

Consider hiring new leadership positions in human resources, training and development, data analytics, or customer experience. Focus on roles that you know are vital to your long-term growth and sustainability but that you have rationalized as something you are not quite big enough for—these hires that have long been a good idea but never an expenditure you could quite justify.

This newly found tax savings can help you position your firm to grow 15% and double in the next five years, or you can distribute the savings to shareholders and hope your historical investments can help you remain competitive in an ever-changing marketplace.

Many of you are wrestling with whether you should stay the course or sell in what appears to be the most aggressive merger and acquisition market our industry has ever seen. With more deals completed in 2018 than in any previous year and valuations at levels never seen before, it is easy to get swept up in all the excitement. There was a whirlwind of activity in 2018 within the top 100 brokerages, and the momentum in 2019 is not slowing down. A new national brokerage was formed in Patriot Growth Insurance Services (Patriot) (see market update below for more detail), Alliant Insurance Services just took on a Canadian pension investment manager on as a capital partner, AssuredPartners is rumored to be taking on a new capital partner, and there are more unverified whisperings of at least five other large brokerages that are currently or will soon be in the market for either a new sponsor or a sale to another strategic buyer.

Where does this leave you? In this industry, size does matter. It gives you access to more resources to provide your clients with the best service possible, and the scale gives you some influence with vendors, service providers and trading partners for better terms and conditions. If you are going to stay the course, you have to invest to compete. Your peers and competitors are growing at a rapid pace, and you need to keep up. 

Many of you will choose to sell this year. And for that I congratulate you on monetizing an asset you likely built over many years. Just make sure it’s a conscious decision and not a knee-jerk reaction. If you end up selling, have a plan and privately be able to answer the looming question: What are you going to do with all that money?

Market Update

M&A activity within the brokerage space did not lose pace in 2018 and appears to be continuing full steam ahead in 2019. Even after a record-setting year, with the announcement of 580 transactions in 2018, January of 2019 brought another 63 announced transactions. This is a 40% increase in transactions compared to January 2018, which is likely to increase further as retroactive announcements trickle in throughout the year. If this is a foreshadowing of the year to come, it appears the flurry of deals is bound to continue.

The leading acquirer in January 2019 was Patriot, which announced 18 transactions on Jan. 1, 2019. AssuredPartners and Arthur J. Gallagher & Co. are tied for the second most active buyers, each announcing four deals.

Patriot made a big splash entering the brokerage space with the acquisition of 17 independent agencies as well as TRUE Network Advisors. Patriot received financial backing from Summit Partners and is led by CEO Matt Gardner. Headquartered in Ft. Washington, Pennsylvania, Patriot spans coast to coast with 21 offices across seven states. This is the second national brokerage to be formed in the last two years in which multiple agencies rolled a portion of their equity into a newly formed firm to leverage the scale of their collective offering. Alera Group was formed at the end of 2016 in a similar way. (MarshBerry was the investment banker for the individual firms forming both Patriot and Alera Group.)

Trem is EVP of MarshBerry. phil.trem@marshberry.com

What if I told you that you can help the world, support the needs of individuals who are less well off in your communities, and do so while netting a benefit potentially of tens of thousands of dollars (or more) all at the same time? If you (or a client) are doing any sort of home or commercial demolition or renovation project, this one’s for you.

Today, Americans generate over 250 million tons of trash per year, which translates into individual waste generation of about 4.5 pounds per day. And we recycle or compost only about 1.5 pounds of that amount. Needless to say, we are generating a lot of trash. Donating the contents and building materials from a home or commercial space helps reduce landfill burdens and gives a second life to those materials.

The economics of this are compelling, and a cottage industry (complete with formal deconstruction training and certification programs) is being built to help you take advantage of it.

The program allows you to get others to do the demo work. In many cases, they use the process as an employee training exercise and use the materials to support charitable causes more broadly in the community. They also effectively pay you for the privilege of doing that work (as you will be donating everything) and make you eligible for what, in many cases, will be a significant charitable tax deduction (and you will save the costs of doing the demolition work yourself).

What’s Not to Like?

Ryan Mariman, deconstruction manager for Second Chance, a Baltimore-based deconstruction nonprofit that does deconstruction work throughout the mid-Atlantic region and beyond, outlined a real-life example for me.

An individual bought a property with the intent of demolishing the existing home and building a new home. Green Donation Consultants, an independent appraisal firm that now focuses exclusively on these types of charitable deconstruction projects, at its own expense did an initial inspection of the property—a 5 bedroom rental home—and estimated that the building materials and contents had an appraised value of $250,000.

The $250,000 donation was projected to have a net cash benefit to this donator of $100,000. Second Chance will do all of the deconstruction work in exchange for a donation, which also is a tax deductible contribution. Green Donation then charges a fee to prepare the tax appraisal that can be used to support the tax deduction which varies but in this instance was approximately $5,000, which also may be tax deductible.

The net cash benefit to the donator was therefore approximately $60,000 (40% of the $250k plus 40% of the $50k donation less that donation, the $5k appraisal charge and the $5k in saved demolition costs). Naomi Ganoe, a managing director and CPA with CBIZ, cautions that “the IRS has strict rules which govern these donations, so you should obtain your tax appraisal from a ‘qualified appraiser’ under those rules and consult closely with your tax advisor throughout the process to ensure you will qualify for the full tax benefits.”

Bernie Mancuso, president and CEO of Mancuso Development, an award-winning luxury home builder based on the Outer Banks in North Carolina, worked with Second Chance on a recent project. “I was pleasantly surprised with the experience. They showed up the day after the new owners had closed on the property as promised, spent one week as promised, and stripped that house down to the studs. They took absolutely everything. And the process was seamless. They did not disrupt our schedule at all.”

This type of deconstruction opportunity is not limited to complete home demolitions. Jessica Marschall-Newbee, Green Donation’s CEO, says, for example, that Green Donation’s projects have ranged from a $7,000 kitchen remodeling project to a $9 million commercial renovation. In the past eight years, Green Donation has assisted with the complete or partial deconstruction of more than 2,500 properties that resulted in over $275 million in donated materials and an estimated net benefit to property owners of over $86 million. What’s more, millions of tons of materials were diverted from landfills through these efforts.

Mariman explains that Second Chance distributes some of the materials they reclaim to community organizations immediately. Then, they warehouse others to be resold to the public, with the proceeds being used to support the program’s overall efforts and the efforts of other charitable organizations.

Second Chance also uses its deconstruction process as a workforce development and job training platform through which it has provided a pathway to sustainable employment for hundreds of Second Chance associates. Associates who have completed Second Chance training now are employed by a broad array of mainstream employers including, for example, for the University of Maryland Medical School, Amazon and Baltimore-Washington International Airport.

Marschall-Newbee notes, “Obviously there is a financial benefit to the individual or organization that is donating, but we have many clients interested in reducing landfill loads.” Patrick Smith, founder and president of Green Donation, thinks “of the benefits in three tiers: (1) helping the environment by giving a second life to the materials and being good environmental stewards; (2) helping society by helping organizations that support those in need; and (3) helping ourselves through the financial benefits.” Doing well by doing good, you might say.

Mariman says the program’s biggest challenge is awareness. “You are going to throw those things out anyway so why not help the world and get a good tax benefit while doing it?” Sounds like a no-brainer to me.

Sinder is The Council’s chief legal officer and Steptoe & Johnson partner. ssinder@steptoe.com

In January, I went to a workshop on Communicating with Influence. The facilitators videotaped us several times, making for an eye-opening (and a little painful) experience. I thought of myself as an effective and influential communicator. Turns out I’m not. Truth be told, I am not nearly as effective as I could be. I am using what I learned in the workshop to clean up my act. I thought you might appreciate a little refresher as well.

According to Stacy Hanke, author of Influence Redefined, the disconnect between how influential we think we are and how influential we actually are can be traced to two reasons. One is a phenomenon called illusionary superiority, which means people overestimate their positive qualities and downplay their negative ones. The second reason is a misperception of what it means to be influential. Hanke talks about three myths of influence:

  • Myth One: I feel influential; therefore, I am.
    Reality: Influence is evidenced by results. Just feeling confident, credible and knowledgeable when you see your audience members nodding their heads doesn’t mean you really are. Will they ultimately do what you want them to do?
  • Myth Two: Influence is situational. Some people think you turn influence on for important events—board meetings, product launches, conferences—but that it’s not necessary to be influential in our day-to-day-transactions.
    Reality: Real influence is exerted every day, in every exchange, with every supervisor, co-worker, or client. It’s developed through the accumulation of daily actions and interactions.
  • Myth Three: Title equals influence.
    Reality: Anyone has the capacity to be influential if you are willing to do the work. It is not something awarded or mandated. Influence is earned.

Getting Their Attention

A key component of influence is communicating effectively, and that requires getting someone’s attention. If you don’t have their attention, you can’t influence them. In our efforts to capture attention, technology is often our biggest nemesis. We’ve all been in meetings where people are texting or checking emails while we are talking. You could ignore them, assuming they are multitasking. You might talk louder and faster, hoping to draw their attention. You may even be tempted to call them out, which embarrasses them and makes you look like a first-class jerk.

Hanke has some ideas to regain control in these situations:

  1. Pause. Silence will grab the offender’s attention and bring it back to you and your message.
  2. Engage listeners by holding eye contact with them through a complete thought.
  3. Take control from the beginning. Ask everyone to put their devices away to honor the time of everyone in the room, which will allow an on-time ending.
  4. Be interesting! Don’t read from slides. Make a connection with your audience and communicate with passion and authenticity.

Business communication consultant Ben Decker says building an emotional connection with our audience is critical to inspiring them. Conveying authenticity and warmth through your behaviors and your voice will foster this connection. Decker, co-author of Communicate to Influence: How to Inspire Your Audience to Action, recommends that messages be structured but not scripted. He offers the Decker Grid, which can be downloaded at decker.com. The Decker Grid helps you prepare your message, create and maintain focus, build listener-friendly messages, involve and connect with your audience and move from information to influence. In short, this simple tool can help you increase your effectiveness in all communication opportunities, which are also opportunities to influence.

If my training in January paid off, you’re already thinking of ways to make your messages clearer and more interesting. You may even want to attend a class so you can get an honest look at how you come across when you have a message to deliver. If none of this is resonating for you, then I better keep practicing my influence skills.

McDaid is The Council’s SVP of leadership and management resources. elizabeth.mcdaid@ciab.com

Caught up in the logistics and pressures of being self-employed, many startup entrepreneurs are not fully prepared for injuries and liability damages. While some carriers have started to work with sectors of the gig economy, many self-employed workers still don’t know where to go for insurance or don’t have time to figure out all the logistics surrounding coverage. Tackling that time constraint and making it easy for gig economy businesses to get the right coverage are key to unlocking a growing swath of insurance customers.

Brian Sandy, president of IMA Select, a subsidiary of The IMA Financial Group specializing  in small business partnerships, says providing coverage in this new industry is about making things simple and short.

“How can we reduce the number of questions that we ask?” Sandy asks. “Left unfettered, there’s a lot of things they’d [insurance carriers] like to know, and some of their typical, standard applications have a lot of questions on them… How can insurance companies use some of the third-party data sources they have to help better understand the class, better understand the risk, without having the client fill out pages and pages of information—because you’ll lose them pretty quickly when you do that.”

IMA Select recently announced a new partnership with a gig economy company, Lawn Buddy, that capitalizes on the already developed relationship the platform has with its users.  Through Lawn Buddy’s app, gig workers can do everything from request information and quotes to purchase insurance through IMA select. Workers can receive confirmation of insurance within one business day of the request.

Lawn Buddy allows lawncare enterprises to connect with people who need their yards mowed. Through its app, Lawn Buddy also lets mowers estimate how much they should charge per lawn size, using Google maps.

“How can you create something that is there for them, tailored for them?” Sandy asks. With a few, easy questions, he says, “you’re really able to reduce the transaction component of that business. That’s what we really like about this partnership.”

Portable and Priced to Sell

Lawn Buddy allows lawn care enterprises to connect with people who need their yards mowed. Through its app, Lawn Buddy also lets mowers estimate how much they should charge per lawn size, using Google maps.

In the freelance sector, insurance has to become more portable and more affordable. Many gig economy workers move nomadically to find business, working across state—and even international—boundaries.

YouTuber and founder of The Rideshare Guy.com Harry Campbell answers questions and educates fellow entrepreneurs on the gig economy.

“For drivers and other gig workers, flexibility is key,” Campbell says. “I’ve heard from many older drivers who drive between states, particularly if they work in one state and live in another state. How does insurance work for them? Many people are becoming increasingly price-conscious about insurance, and the ability to use insurance anywhere is a big benefit to many gig workers.”

Along with struggling to understand what they are and are not covered for, workers in the gig economy also look for low—very low—insurance costs.

“You get into the cost aspect too,” Campbell says, “particularly when you have somebody that’s doing a side hustle and it’s just a part-time gig. Oftentimes the insurance carriers have minimum premiums… [The entrepreneurs] are so far below those minimums that it becomes really prohibitively expensive.”

According  to a 2017 J.D. Power study, although the small-commercial insurance market grew in size, small-business satisfaction with commercial insurance declined 18 index points. Conversely, the satisfaction of commercial insurance for larger organizations rose 13.

“Insurers will have to play a larger role in the gig economy’s future,” Campbell said. “This is particularly important for auto insurance, but I could see all aspects of the insurance market playing a larger part in the gig economy in the future. You can see it now as people start their own companies, become gig employees, etc. The traditional insurance market isn’t there for them, and even the Affordable Care Act is pretty expensive for a lot of people in the gig economy. As this market grows, insurance will have to evolve and grow as well.”

When we began researching healthcare data and workplace wearables, we weren’t necessarily thinking about Apple, yet there it was—leading the adoption of interoperability standards for data transfer; working with leading healthcare institutions to pilot the use of its health records app for patient data; and essentially turning  its phone (and watch) into a medical device. These are just a few of Apple’s pursuits (for a deeper dive, check out the Apple in Healthcare briefing put out by CB Insights in early January).

Two of our features this month describe the healthcare universe in which Apple is just one participant. This universe combines legislative and regulatory initiatives, employer wants and needs, and technology-driven consumer behavior. The push for value-based care, the competition for talent, and, well, the smartphone are all converging. And they could, one day, lead to a utopia-like world of personalized, quality-driven, cost-efficient medicine…How’s that for a Super Bowl ad? 

They’ll tell you where to go and what to get there. This is your insider list for your next visit (in no particular order). —Editor

Bistro Cacao One of D.C.’s finest and niche French restaurants.

Mari Vanna Serious Russian dishes both bitter and sweet.

Comet Ping Pong Hand-crafted pizza and an assortment of ping pong tables

Penn Quarter Sports Tavern A quick meal before attending a sporting event (or even to watch an event there). I just love their fried Brussel sprouts.

The Source Layer carrot cake with ginger ice cream. Very thinly sliced and plenty to share.

The Smith Grilled chicken sandwich on a sesame baguette with all the works. A meal in itself and absolutely delectable.

Founding Farmers Chicken and waffles with homemade syrup. Must leave room for their kettle popcorn.

Tosca Outstanding scallops and pasta.

Sticky Fingers Infamous bakery treats as well as unforgettable vegan alt-tuna melt and black bean and green chili.

China Chilcano Funky, comfortable, artsy fartsy. Try the yummy citrusy Pisco Sour, Aeroporto (a noodly bunch of stir fired veggies with a bite of garlic and spice) and Passion Fruit Chicha Morada.

Beau Thai Voted D.C.’s best Thai (casual spot with the best drunken noodles).

Jaleo Great Spanish tapas and the perfect G&T.

All-Purpose Pizzeria Go-to spot for gourmet pizza and a glass of wine.

Etete or Chercher Where to dine on D.C.’s great Ethiopian cuisine.

BToo Contemporary Belgian with mussels and waffles.

Barcelona A happening cocktail place with a fire pit on the patio.

San Lorenzo Superb veal cheeks & polenta.

Tryst Best coffee and casual atmosphere with live music in the evening.

Bistro Boheme Authentic Eastern European cuisine.

Doi Moi Modern take on Asian favorites; anything with caramel fish sauce is a must.

Tabard Inn Drinks in front of the fire in the old hotel lobby or dinner in the back.

Estadio Spanish tapas, wine or Europe’s football—you choose.

SEI Best happy hour specials featuring the freshest sushi.

Tune Inn Hands down the best dive bar on Capitol Hill for reasonably priced beer and late night, greasy eats (they have tater tots!).

Indigo Hidden gem in NoMa that may have the best and most affordable Indian food I’ve ever had (don’t tell Rasika).

Biergarten Haus The most dog-friendly establishment in D.C.!

Trusty’s Another hidden gem on Capitol Hill that has the best burgers, board games and craft beer (a Hipster’s paradise).

Rasika For something unique—fried spinach and black cod.

Jack Rose Best bourbon spot.

Oyamel Best ceviche.

Chez Billy For dinner followed by Bar Au Vin by the fire…best date night.

Le Diplomat BEST brunch EVER.

Trump Old Post Office Excellent whiskey and Kansas City steak. And don’t miss the maple-encrusted bacon on a clothesline.

Martin’s Tavern (Georgetown) John Kennedy’s old digs—a historic haute pub that never got old.

Our readers are on the road a lot. What should they look out for?
It’s all risk/reward, you know. In this case it’s risk/convenience. I travel half the year and go to some pretty obscure places. I travel with a lot of computer equipment. So I spend significant time before each trip thinking through what electronics I’m going to bring. And then I think what happens if they get lost or stolen and what the likelihood is that is going to happen.

So if I’m going to Toronto, I don’t worry about it. If I’m going to Beijing, I worry a lot. China’s government is known to have programs to explicitly attack and hack almost any digital device that any foreigner brings in. They don’t want the money. They want the information.

When I went to Beijing this year, I took a second laptop with me. I scrubbed the laptop before I did anything with it. I formatted it, reinstalled the operating system—didn’t put anything personal on it. Everything I needed that was personal I kept on an encrypted hard drive I plugged in when needed. When I got back, I tested the laptop, and it had at least three malware programs that had been installed by somebody at some point while I was in Beijing.

Would they do that remotely, or do you think they got access to your computer?
Who knows? There’s a thing called an evil maid attack. Figuratively, if a maid in a hotel gets five minutes with your computer, you’re screwed. There isn’t a computer in the world that a good hacker couldn’t crack if they get their hands on it for five minutes with nobody looking.

What about leaving it in the hotel safe?
All hotel safes are made by a couple of manufacturers. There’s master key codes to get into them. Half the people in the hotel know what those are. Some of them have little holes in the back that you can press a paperclip in and make the door pop open. Because every couple of hours some guest is forgetting the combo for their safe, all the staff people need to be able to pop the safe open. It’s not secure.

The best way to protect something is to encrypt it—or just don’t bring it on your trip at all.

You also have to worry, depending on your nationality, coming back into the United States. ICE has a renewed interest in taking people’s computers and phones and downloading the contents, looking for who knows what. They’ve even done this to some Americans. This has happened at the Canadian border on many occasions recently. And there are a lot of cases in court right now challenging this.

Even if you’re American, if you have an iPhone with a bunch of encrypted junk and you cross the border into the United States, in theory these guys can grab your phone and try to force you to unlock it. And there are devices that will enable them to read it even if you don’t cooperate.

In Russia you should expect someone to try to take your data. I think that’s true in most countries. I would even worry about France.

At this point, if you’re travelling internationally, I think you should assume anything digital you have on you is probably going to get read. If you don’t want it read, encrypt it.

With Apple laptops, you can encrypt the whole hard drive pretty easily. If you encrypt the hard drive, it’s pretty solid. If they have a really good reason to go after you, they’re going to have to get your password to unlock it and at least you’ll know.

Wi-Fi is another big problem. One of the biggest scams in the world today is free Wi-Fi. Airport free Wi-Fi, coffee shop free Wi-Fi. There’s a device—I actually have one—called a Pineapple, which costs about $150. A Pineapple is totally legal in this country. You plug it into your laptop, you go into an airport or hotel, and it allows you to create a fake Wi-Fi network.

You can pick a name for it. So let’s say you’re in a Marriot Hotel and you create a Wi-Fi called “Marriot Guest Network #2.” Everybody will start seeing that. They’ve got the password from Marriott Guest Network, so they just assume it’s an extension and they type in the password. Since it’s a man-in-the-middle thing, everything you type in goes into that, and then it passes it through to wherever you were trying to go, like Amazon or your personal web account or your bank.

So if you type in your password to get into some website, a Pineapple has copied it?
Yeah. It’s very common. It’s used all over the world. I doubt there’s an airport in the world where there isn’t somebody doing that. It’s just so common. If you see free Wi-Fi anywhere, you should be very skeptical. Try very hard not to use it if you care about what’s in your computer and what you’re typing.

When I got back, I tested the laptop, and it had at least three malware programs that had been installed by somebody at some point while I was in Beijing.

If you’re surfing the internet, does that leave you vulnerable?
There are things that could be left on your computer if you click certain things. You know they talk about phishing and spear phishing with your emails. There’s stuff like that on websites. Each time you go from page to page, you’re essentially clicking a link. The way browsers are implemented is you’re actually running a small program. So it could be malicious code that tries to install a back door, a Trojan, a virus, a worm, something on your computer. You probably wouldn’t know. In theory, just even browsing could get you nailed. In practice, probably not, but you might.

I would guess at least one of every six computers is hacked and nobody knows. The hacker that put something on there isn’t ready to do anything with it. Or they just nailed a million computers at once and may turn them into a bot net. Or they may start pulling information out next Tuesday at 1 a.m. You just won’t know.

Is that the smart way hackers do it? They go in, don’t let you know, and they’re just taking your information.
The smart ones.

Because they can use that data later?
I got a call from a friend of my sister. She had just gotten an email that was addressed to her by name, and in the subject line it had a password that she used for a lot of her accounts. It said, “Hi, I know your password is blank, blank, blank.” And then underneath it, the text of the message says: I know you’re looking at porn. I took over your computer’s camera and I have pictures of you looking at porn. If you pay me $2,000 in bitcoin, I won’t tell everybody. And by the way, I downloaded your address book. I know who all your friends and relatives are, and I’m going to send them copies of pictures of you looking at porn on your computer unless you pay me.”

She was terrified. That’s called spear phishing because it’s targeted. It looked personal. I talked her down off the cliff and explained what it was. Then I went back and looked in my junk folder, and I had the same email. And it had one of my old passwords.

The theory used by hackers is that most people, if they use a password on this system, may use the same on another site. The truth is most people do. We need so many. I mean, I must have 500 passwords. Most people have at least 50 or 60, and when you have all these passwords you can’t make them up and remember them. Hackers can programmatically go after that.

To protect yourself, there is something called a password locker. You pay an annual subscription, and it encrypts your passwords so you get one master password and you use that to unlock each of the other passwords.

Of course, the problem is if you allow somebody to get your master. Now they have all of your passwords. So that goes back to my original point that there is no absolute security. These are mitigation strategies. Everyone should absolutely use one of these password lockers.

What about your cell phone when you travel?
Depends what you think is a risk, right? There is a device called a Stingray, and this is a problem in Washington, D.C., where we are. A Stingray is a fake cell phone tower. You can build one for a couple thousand bucks, or you can buy a really good one for $100,000.

A Stingray is not a tower; it’s just a box. The way cell phones work is your phone signal goes from cell to cell to cell. It just hands it off. If you walk down the block, you’re probably going to go through three different cells without even knowing it. There are probably 20 cell phone towers my phone could see right now. You put a Stingray down, anywhere, and it looks like one of those towers to your phone. So as you walk down the street, you may very well connect to that Stingray instead of a real cell phone tower.

It’s another variation of the man-in-the-middle concept. So now everything you type is going through that Stingray, which is then going out to the real internet. So if you use a password, guess what? They just got your password. If it’s a voice call, they got your voice call, they’ve got your text messaging. This is very common in congested urban areas like Washington and New York.

The reason this is so common is because law enforcement started using this and when citizens wanted to go to court and stop it, the government stepped in and protected their ability to use it. They want to do it without getting a warrant or a subpoena, which has allowed the industry to thrive. Everybody in the world has these things. I doubt there’s a single government that doesn’t have Stingrays.

This is one of a traveler’s biggest vulnerabilities. I don’t think the average person could tell. As a consequence, you have to assume anywhere you are in the world, anything you’re saying on a cell phone, anything you text, has been taken by somebody and looked at. So that’s a pretty big risk.

Another kind of risk is “snarfing.” This relates to Bluetooth. Bluetooth is a horrible protocol from a security viewpoint. The only saving grace for Bluetooth is its short range, but if somebody gets within 20 or 30 feet of you, it’s not impossible to use Bluetooth and go onto your phone and steal everything. That’s why it’s called snarfing.

Just by being close to you?
Yeah. You read a couple of years ago about celebrities whose nude selfies were published online. That’s how a bunch of them were caught. These guys would sit with snarfing equipment—something that looks like a laptop with a gadget stuck in a USB port. They’ll be sitting outside a movie premiere or the Oscars where you know a lot of celebrities are going to walk by. They just stand there and have this thing in a little bag, and as [the victims] walk within range, this thing is going to attack the Bluetooth on their phone and very likely will get in and take everything on their phone. That’s a pretty big risk.

There are special phones sold that can protect against all of these things. They’re expensive.

I would guess at least one of every six computers is hacked and nobody knows.

What about using your hotspot on your phone if you’re in a hotel? Is that any safer than hotel Wi-Fi?
It’s better than the Wi-Fi in the hotel. It’s not great, but it’s better.

Could someone still steal everything on your phone?
Not with a hotspot. The way the hotspot works is it’s got two connections: one cellular, going out, and one Wi-Fi going to you. The Wi-Fi is your Wi-Fi. Presumably you know what it is, so you don’t connect to anybody else’s Wi-Fi. But on the cellular side you’re still vulnerable to Stingrays picking up anything on your call. So you’ve got some protection.

If you’re doing something that’s potentially very lucrative and you’re a good target for industrial espionage, bottom line is just think long and hard about putting it on any device that’s out of your control. Don’t allow anybody physical access to your phone or laptop. Minimize the amount of interconnectedness you do. Use your own cell phone hotspot if you have one.

What about airline Wi-Fi?
Airline Wi-Fi uses GoGo. You connect, and then a popup comes and tries to make you pay or put in a password. All of it is open Wi-Fi. It’s basically a legitimized man-in-the-middle attack. They create a fake internet just like in that hotel. So on airlines, you can actually leave the popup and then go underneath and look at your email, even if you haven’t paid for it.

What is your vulnerability at 35,000 feet?
It’s enormous. I mean, you’re up there physically, but your internet traffic is going through this fake internet thing. If you use it too much, you’ll find sometimes your icons get taken over. All of a sudden a program that has an icon is replaced by the GoGo icon. It’s putting this crazy stuff into your computer.

From your perspective, you’re just browsing. But you’re not really, because the program is doing a bunch of complicated things so they can be sure they’re charging you for it. If they weren’t, it would just be a straight pass-through, and you’d be a lot safer. Because they want to make sure you don’t get it for free, they take over part of your computer, which makes you vulnerable.

Vulnerable to other passengers on plane?
There’s a thing called packet sniffing. It’s a software gadget. The most common is called Wireshark. It’s free, and it’s legal. If you run this thing on any network, it will show you every packet that goes across the network.

So I can be sitting three rows behind you in an airplane with this packet sniffer—
And you’ll see everything I’m typing that comes across the network.

I’ve got a couple of hours on a plane and want to look at my corporate financials. What’s my risk?
If you’re just looking at it, you’re a lot safer.

But if somebody emailed them to me?
Then you’re not safe.

Same with the sniffers three rows behind me?
Yeah, they got you. But they can get you through Bluetooth, anyway, or maybe some other way. All email is basically—I hate to sound paranoid about this—but you should assume all email is monitored by someone.

The National Security Agency grabs every piece of traffic on the open internet it can get its hands on—every single email anywhere in the world. They capture and store it in a place in Utah at a data mountain facility called Bumblehive. This is well known. And they’ve been doing this for at least six years.

But they don’t necessarily look at it all?
No, they don’t.

But if it contains pejorative words, they check it right away?
Yeah. It’s a program that used to be called Echelon. It’s a classified NSA program. They’ve been doing this for almost 10 years. It will only go to a human being’s attention if you say words that somebody cares about, like Putin or atom bomb and North Korea or whatever words they care about.

Holtzman is president of Global POV. david@globalpov.com

Life insurers are beginning to link premiums to fitness and health data in an effort to extend the longevity of policyholders.

John Hancock, one of the oldest and largest life insurers in North America, announced in September 2018 that it would stop underwriting traditional life insurance and sell only interactive policies that track fitness and health data through wearable devices and smart phones. The insurer, which is owned by Canada’s Manulife Financial Corp., is applying the interactive life insurance model to all of its life coverage.

Under the program, policyholders receive premium discounts if they hit exercise targets that are tracked on wearable devices, such as a Fitbit or Apple Watch. In addition, policyholders who log their workout information and healthy food purchases in an app can receive gift cards for retail stores and other perks. To encourage use of the fitness apps, John Hancock is giving individuals who purchase policies reduced-price or free Fitbits and Apple Watches.

Consumers still have the option of not logging their activities to get coverage even though their policies are being packaged with the interactive program, known as Vitality, which John Hancock has already been using in South Africa and Great Britain. However, if the Vitality program is not used, the policyholder will not receive any of the offered benefits.

Company officials said it is too early to determine whether John Hancock is paying fewer claims because of the Vitality program, but that data collected so far for policyholders worldwide suggest they are living considerably longer than the rest of the insured population.

In addition, SCOR Life & Health Ventures (the strategic investment arm of SCOR Global Life) and TransAmerica Ventures (corporate venture capital arm of the Aegon Group and TransAmerica) recently announced they are making seven-figure investments in iBeat, a health tech company that makes the Heart Watch, a cardiac monitoring smart watch that detects if a person has stopped breathing and summons emergency help.

Officials from iBeat said the company will use the investments to advance product marketing and expansion for the Heart Watch and to offer the Heart Watch to the companies’ policyholders.

“It’s invigorating to see life insurers recognize the value in investing in technology that advocates for longevity,” said Ryan Howard, founder and CEO of iBeat.

While the incumbents clearly think this is the future of life insurance, it has yet to be determined whether this approach will be successful. True Blue Life Insurance recently conducted a survey to determine which demographic would be the ideal target for these types of life insurance products.

The company found that 77% of respondents were uncomfortable having their insurance premiums fluctuate based on their yearly physical results and that 70% of those 18-24 years old were uncomfortable with it. They also found that 59% of respondents are not willing to wear a fitness tracker that reports to insurance companies, even if it means potentially receiving a better premium. And among the 18-24 demographic, 54% of respondents were unwilling.

That being said, “What we ultimately found was that the 18-24 demographic was the most comfortable with the parameters of these ‘interactive policies,’” the company noted in its report. “Interestingly enough, they are also the demographic least likely to purchase life insurance.”

Using wearable devices to track employee fitness is not a new concept. As long as a decade ago, pre-Fitbit, some employers were using pedometers to track the number of steps their employees took every day and launching fitness programs in hopes of cultivating a healthier workforce.

“If anything, wearables continue to gain popularity,” says Deb Smolensky, NFP’s vice president and global leader for well-being and engagement. “We’ve seen an interest long ago with your basic Fitbit and wanting to track steps. That has exploded over the last four or five years into primarily a personal tool for any type of health monitoring.”

That monitoring might include how many steps an employee takes each day or how many hours of sleep the employee gets at night or even medical data such as the employee’s heart rate and glucose level. Taken collectively, such an accumulation of personal data has changed the definition of employee wellness.

Of course, a key component in the evolution of tracking employee wellness is the ubiquitous smart phone. When you take the ability to monitor and collect data on all different markers of your health, then house that data in a phone with apps that allow you to send that information to others, your wellness becomes much more actionable.

“As a practical matter, we all wear a wearable device today known as your iPhone,” says Robert Hartwig, a professor of risk management at the University of South Carolina. “It knows where we are, it knows where we go, it monitors how much we walk and it has a good sense of what we eat. So there is a potential convergence of technology over time of wearable devices in the workplace and other devices developed in the world of healthcare. All may converge to personal devices we all carry with us everywhere.”

Experts view consumer access to medical records via mobile devices, although still in its infant stages, as a logical next step in the health app revolution.

Changing Motivation

The number of employers offering benefits packages using health tracking devices is huge and growing annually. Mercer recently partnered with the Health Enhancement Research Organization in a study of well-being best practices that included around 2,000 employers. Of the employers completing the survey, 60% reported using a tracking device. “That may be high, but probably somewhere between 40 and 60% have something in place,” says Steven Noeldner, a health management consultant for Mercer.

In addition to using trackers, employers are increasingly using app-based digital platforms to deliver wellness benefits to their workers. Through apps, employees can engage in everything from tracking fitness goals to competitive challenges with co-workers or management officials.

As a practical matter, we all wear a wearable device today known as your iPhone. It knows where we are, it knows where we go, it monitors how much we walk and it has a good sense of what we eat.

Robert Hartwig, professor of risk management, University of South Carolina

For most employers, the original goal of fitness trackers was to cut double-digit increases in healthcare costs. While a healthier workforce certainly would seem to be a factor in controlling healthcare claims and overall healthcare costs, it was difficult then—and is difficult now—to actually prove that link.

And a far different reason than cost control is now motivating many employers to offer a robust employee wellness program: the desire to attract and retain a high-quality workforce in a tight hiring market.

“We are seeing these programs today more as a talent and retention tool than in the past,” says Kimberly George, a senior vice president and healthcare advisor for Sedgwick, a third-party administrator for self-insured companies. “If an employer has an attractive benefit package, today it includes some sort of digital platform focusing on the needs of employees. An employer or health plan or companies supporting those benefits are not going at it for just one angle—cost containment. It is the way benefits going forward are going to be.”

“Does a free Fitbit make me more inclined to go to that company?” muses Smolensky. “I’m not so sure. But if the employer cares about me with a whole suite of benefits—my health, my family’s, my training—and cares about me as a person, that human element is very important in helping me to determine whether to take that job.”

For employers, Noeldner says, one of the primary motivations behind wellness programs is simply to engage their employees. “We know that employees engaged in well-being are more engaged with the business and their performance is enhanced,” he says.

Some employers offer free tracking devices and provide financial compensation if an employee achieves certain fitness goals. Others find the challenge of competition, with individual co-workers or teams or even company executives, often gets more employees involved.

“The biggest challenge is educating the workforce as to what is available and then getting them to use it,” George says. “Most of the time we have found that providing financial reimbursement in the benefit space isn’t necessarily driving greater success. The apps that are offering motivation cues—recognition of miles or goals—those tend to be the apps that people stick with and use. If somebody’s not motivated to change, an app is not going to make that happen.”

Cost and Quality Challenges

But, as is the case with wearable devices in the workplace, there is little hard evidence that health apps are actually bringing about the promised results.

“The acceptance of these types of applications is growing,” says Zack Craft, vice president and national product leader at One Call Care Management. “It is exciting but difficult because multiple companies are putting up apps. These kind of health apps need to be validated. A lot of companies are coming in, and there is value around them, but the concern is: is that value of using health apps actually going to improve patient care or quality of care?”

Most of the time we have found that providing financial reimbursement in the benefit space isn’t necessarily driving greater success. The apps that are offering motivation cues—recognition of miles or goals—those tend to be the apps that people stick with and use. If somebody’s not motivated to change, an app is not going to make that happen.

Kimberly George, senior vice president and healthcare advisor, Sedgwick

Risk-management experts say mobile health will make its biggest impact from its capability to monitor a person’s blood sugar level for diabetes or other serious medical conditions, such as heart disease or autoimmune diseases.

“Some of the greatest benefits are likely to occur on the health insurance side of the business because of the fact that continuous monitoring of chronic medical conditions, and preventing those conditions from spiraling out of control, would have immediate and demonstrable benefits,” Hartwig says. “For instance, an individual who is diabetic and monitoring their blood sugar and their weight constantly, to the extent that these things could be monitored over time, could make doctors aware and help make adjustments.

“We know for a fact that an individual who is obese takes much longer to return to work and workers compensation costs could be several times more than for a healthy individual. Individuals in the workforce who have chronic and controllable and oftentimes preventable conditions, such as obesity and diabetes, account for a disproportional share of workers compensation costs.”

In addition to the difficulty of evaluating medical outcomes, there is also a cost barrier for many employers. Although companies of all sizes are involved in the well-being revolution, some employers are struggling with how to meet employee needs, because overall healthcare costs are still rising and the mobile health platforms are not cheap. The National Business Group on Health reported in August that annual per-employee benefit costs are expected to rise 5% in 2019, reaching $14,800, of which employers generally cover around 70%. And it costs employers an estimated $500 to $600 more per worker for employee engagement and well-being.

“While wellness and physical activity and nutrition and stress management are all still important initiatives for all employers of every size, it is difficult to prove that they will result in saving money on healthcare spending,” says Kyle Anthony, director of the human capital practice for Oswald Companies. “This has more and more people wondering if all the time they spent on wellness initiatives is worth it. There is an ongoing struggle to reconcile the relationship between wellness and healthcare costs.”

Smolensky agrees. Cost is an issue, she says, for employers who work with NFP, which she describes as “midsize market companies, not Fortune 500 companies.” While some want to “do the right thing,” she says, others would rather manage their medical expenses. “They are asking us what type of carrier system is providing support so they don’t have to spend money elsewhere,” she says.

Of all the sectors involved in mobile health services these days, insurers are the least likely to have the suite of digital wellness options employers are seeking.

“Major insurance carriers all do have something you would put in the category of wellness or care/condition management,” Noeldner says. “It is often built within, and they manage it themselves. Are they leading the charge? Probably not. But more are extending themselves and recognizing that their clients are interested.”

“If carriers are not in the business of well-being,” Smolensky says, “a lot of times they do not meet the mark in being robust or technologically innovative or engaging, so we come in and help our customers find a way to meet their goals.”

Booming Market

Does a free Fitbit make me more inclined to go to that company? I’m not so sure. But if the employer cares about me with a whole suite of benefits—my health, my family’s, my training—and cares about me as a person, that human element is very important in helping me to determine whether to take that job.

Deb Smolensky, vice president and global

Budgetary concerns notwithstanding, it is hard to imagine the trend will reverse. Millennials are now the largest generation in the workforce, and they are more health-conscious than their Gen X counterparts. And because they grew up online, they have an expectation they will have programs tailored specifically for them, which is what a digital platform of apps addressing well-being and wellness does.

The market for mobile health services is huge. A recent report by Market Research Engine estimated the global market for various healthcare apps and technologies will be $59 billion by 2020 and around $104 billion by 2022. According to the report, the market includes product lines such as blood pressure monitors, blood glucose meters, chronic care management, healthcare and fitness apps, women’s health monitors, diabetes monitors, various forms of motion trackers, ECG monitors, pulse meters, sleep apnea monitors, digital skin sensors, and weight-loss, fitness and nutrition apps. A 2015 article in Employee Benefit News estimated there were 40,000 available health-related mobile apps, and that was three years ago.

The potential for growth in the mobile health arena is so great, George says. “Everyone is trying to find their play with this.”

Some brokers have created alliances with various digital health tool providers to serve their clients, and some employers are hiring their own health advisors and setting up the systems themselves. Others are using brokers, consultants or third-party administrators to identify vendors that will provide the apps to meet their goals and handle the data that is collected.

At present, the most popular well-being programs involve motion tracking, fitness and weight control, areas that focus on physical health and personal accountability. But other programs are focused on medical issues such as diabetes, mental health and stress.

“Both are huge topics right now, primarily because of the number of people dealing with those conditions,” says Anthony, whose company collects mobile health data for its customers. “Stress is a big factor for a lot of people right now, and diabetes is an epidemic.”

“The medical side is becoming increasingly popular as a way of monitoring one’s own health, own conditions and gaining insight,” Smolensky says. “Those tend to be more complex and expensive based on conditions. It is a condition-management approach versus an overall well-being approach. ‘Mental health’ is the number-one buzzword right now. It replaced last year’s buzz word—'financial well-being.’”

Ben Hackett, a senior director of product management for Accolade, says the opioid epidemic has helped to fuel interest in mental health. Accolade helps employers assist their workers in understanding what benefits are available and finding apps and other medical assistance they need. “There are also challenges around loneliness in a digital world,” Hackett says, “and interest in financial stability. Companies are hiring millennials fresh out of college, and helping people pay down loans is a big component of those programs.”

The Next Evolution

As acceptance of mobile health apps grows, so has the interest in allowing employees to easily access their medical records. Apple is working to bring protected health information (or PHI) to iPhones, iPads and the Apple Watch. Having PHI on mobile devices would give individuals the ability to access, retrieve and share that information without the time-consuming processes of phone calls, faxes and appointments or the physical pickup of records from different providers.

Last year Apple introduced a significant update to its Health app, debuting a feature for consumers to see their available medical data from multiple providers whenever they choose. Working with the healthcare community—a host of hospitals and clinics are making this feature available to patients—Apple created its Health Records based on FHIR (Fast Healthcare Interoperability Resources), a standard for transferring electronic medical records.

Google, Amazon and Microsoft have followed Apple and adopted the FHIR data standard, which means all companies and devices will be able use the same standard to obtain and share medical records and other health information.

“Sharing medical records is still infant and still difficult,” Hackett says, “but Apple is paving the way, and other companies have followed.”

Arvidson is a regular contributor to Leader’s Edge. cheryl@carvidson.com

Trusted Exchange Framework and Common Agreement: The Office of the National Coordinator for Health Information Technology (ONC) is developing a Trusted Exchange Framework and Common Agreement to establish guidelines and principles for how information travels between clinical systems in disparate networks. The goal is to help broaden access to healthcare data from provider-to-provider exchanges of clinical data. In early 2018, ONC released a draft Trusted Exchange Framework for comment. The office also released the United States Core Data for Interoperability, which outlines a road map for the industry that prioritizes which data elements should be released and when.

Quality Payment Program: The Quality Payment Program took effect in January 2017, replacing a formulaic approach to compensating Medicare providers with a system that rewards high-value, high-quality Medicare clinicians with payment increases while reducing payments to those clinicians who aren’t meeting performance standards. The program will require improved patient access to clinical data through application programming interfaces with third-party applications.

The Health Information Technology for Economic and Clinical Health Act: Known as HITECH, this 2009 legislation established the meaningful use of interoperable electronic health records (EHRs) throughout the healthcare delivery system as a critical national goal. “Meaningful use” is defined as the application of certified EHR technology that enables the electronic exchange of health information specifically to improve quality of care. Follow-up reports on successes and challenges must be submitted to HHS. CMS uses incentive payments to and penalties against providers based on their implementation and compliance with standards.

Blue Button 2.0: The CMS Blue Button initiative allows Medicare beneficiaries to download their Medicare fee-for-service claims information. In March 2018, CMS launched Blue Button 2.0, which is intended to improve patient access to and control of health data by offering a developer-friendly, standards-based API that enables Medicare beneficiaries to connect their claims data to secure applications, services and research programs. 

CMS is evaluating regulations that would extend Blue Button data exchange requirements to other contracted Medicare Advantage and individual market qualified health plans. CMS is contemplating future rulemaking in this area to require the adoption of such platforms by Medicare Advantage plans beginning in 2020.

ONC Tech Lab: In 2016, the ONC introduced a Tech Lab to organize and promote specific efforts and projects geared toward improving health IT interoperability, including assisting industry stakeholders in developing healthcare standards and policies to improve interoperability. The ONC Tech Lab is focused on pilots, standards coordination, testing and utilities, and innovation.

She recalled her horror last March at an annual conference sponsored by the Health Information and Management Systems Society.

“If it weren’t for the bystanders and the first responders at the airport, my kids would’ve watched their father die,” Verma said. “In the hours it took to get to my family, I tried to answer questions for the doctors over the phone about his medical history, but unfortunately I had few answers. So I desperately made calls to his doctors back home in Indiana asking if there was any information they had that could help save his life. When I arrived at the hospital, the doctors and nurses still didn’t know what was wrong with him or how to treat him. He had a multitude of tests…MRIs, CAT scans, blood tests, ultrasounds.”

While experts ultimately diagnosed and successfully treated his condition, Verma believes no one should have to endure what she did. And she is now spearheading efforts at CMS to increase consumers’ access to their health data. These efforts are part of a Trump administration policy initiative, MyHealthEData, that seeks to improve patient access to clinical data by improving the systemic architecture in place for consumers’ right to access data.

“Imagine a world in which your health data follows you wherever you go and you can share it with your doctor, all at the push of a button,” Verma said. “Imagine if, in turn, your doctor didn’t have to spend so much time faxing records and staring at a computer during an appointment. Imagine if you could track your medical history from your birth throughout your life, aggregating information from each health visit, your claims data, and the health information created every second through wearable technology.” 

The fact is, individuals’ lack of access to their medical records in emergency situations is just one component of a larger healthcare data challenge. Limits to clinical and claims data sharing, based on proprietary and technical impediments, reduce patients’ ability to be effective healthcare consumers.

Such information barriers also impede efforts to address spiraling healthcare costs, often by limiting competition on quality and price.

Clearer and more comprehensive records will allow consumers to track their healthcare issues, treatments and outcomes more easily. While consumers may not be able to fully interpret their data on their own, data sharing enables third-party applications to aggregate and thus better track the quality and price of care. Data sharing could also inform patients on optimal care choices.

“Software application access to the data will allow consumers to proactively determine which providers provide the best outcomes at the lowest cost through apps that could help aggregate that data on behalf of millions of consumers,” says Ryan Howells, a principal at healthcare intelligence consulting firm Leavitt Partners. Leavitt manages an alliance known as CARIN (Creating Access to Real-Time Information Now through Consumer-Directed Exchange), whose stakeholders represent hospitals, physicians, large payers, consumers and caregivers promoting health data sharing with third-party applications.

“Improving consumers’ ability to make more informed healthcare choices…will enable them to choose high-quality, low-cost providers, thus helping generate large improvements in healthcare experience and associated costs,” Howells says.

Close at Hand

While this may seem like a distant vision, some say it’s closer than we think. Aneesh Chopra, a co-founder of CARIN and president of CareJourney, an open-data intelligence service provider, says that 2019 could be a transformative year for the impact of health data upon the healthcare system—and one that calls for agent and broker actions.

“By this time next year, a new paradigm for delivering employer-based healthcare insurance will take hold in leading markets,” says Chopra, a former chief technology officer under President Barack Obama. “I recognize that such pronouncements might be construed as hype. But there are now three trends that are converging to empower employers in new and amazing ways, and I hope that employees will start to benefit in the next enrollment cycle.”

The trends are as follows:

  • For the first time, there is a movement to standardize the way consumers invoke their right of access to their health information via an application or service they trust.
  • A move to value-based care is driving the creation of clinically integrated networks willing to take on responsibility for total cost of care to help employers and employees manage healthcare costs and help consumers make the best use of their health information.
  • Digital standards for consumer-directed health exchange are on the rise. These standards enable the rapid exchange of digital information between different software programs via the use of a common language and internet architecture. They facilitate the functionality of software applications, such as Apple’s Health app, that can help consumers understand their health needs and evaluate healthcare options at no marginal connectivity cost. 

These three trends, Chopra says, make it possible for consumers to use software applications to access and understand their health records, manage their care, and access value-based medical networks that can help them optimize care and contain costs.

Data Types

There are two key data types of high interest to healthcare stakeholders, notes David Smith, founder of Chicago-based Third Horizon Strategies, an organization that assists healthcare companies in their strategic planning operations.

  • Claims data are submitted by providers and include documents with information on the cost and dates of procedures and billing codes. Payers such as employers, insurance carriers, the government and individuals maintain that information.
  • Clinical data are generated at the point of encounter with a healthcare provider and are captured in an electronic health record (EHR). In most of the country, clinical records are the intellectual property of the healthcare provider that captured and authored the information, such as a doctor or hospital. The technology infrastructure of the resident EHR and the contractual provisions between the provider and the EHR company determine access to these data. 

Both types of data are important factors in good and efficient healthcare. Clinical data can facilitate population health management because it is specific to an individual and contains the detail necessary to optimize care for that person. (For example, clinical data can help providers avoid duplication by sharing patient conditions, treatments and outcomes.)

Claims data can be useful for generating statistical profiles of a population, Smith notes. That can assist underwriters, actuaries and insurers in pricing risk and learning things about populations or geographies.

Any party that stands to benefit economically from eliminating inefficiency or improving healthcare at the same or lower cost should be mining data, says Jon Prince, president of DataSmart Solutions, a data warehousing and analytics company in Helena, Montana.

Imagine a world in which your health data follows you wherever you go and you can share it with your doctor, all at the push of a button.

Seema Verma, administrator, Centers for Medicare & Medicaid Services

Privacy Protections

As we look toward the future of data-driven healthcare, it’s useful to understand the current legislative and regulatory boundaries that govern healthcare data. Traditionally, the limited data sharing that has occurred has been under HIPAA (Health Insurance Portability and Accountability Act of 1996). Within HIPAA, payers can access patient-protected health information to evaluate and pay a claim, says Dawn Paulson, director of HIM Practice Excellence at AHIMA, the American Health Information Management Association. Payers also can access and use data for healthcare operations, including population health management and care coordination, says Jodi Daniel, a partner at Washington, D.C., law firm Crowell & Moring and a former policy director at the U.S. Department of Health and Human Services.

A December 2018 article in Leader’s Edge noted that HIPAA’s Privacy Rule includes provisions that authorize permissible data sharing—and mandate it under certain specified conditions (leadersedgemagazine.com/data).

Scott Sinder, a co-author of the article and The Council’s chief legal officer, says the Privacy Rule allows a carrier to share plan data with the employer sponsor without employees’ consent or authorization but there are limitations. For example, carriers can share summary health data (such as anonymous information on claims history and claims expenses) with employers for premium bid purposes or for modifying, amending or terminating the group health plan.

The Privacy Rule permits carriers to share more granular personal health information with employer sponsors for underwriting purposes and with other healthcare operations, Sinder says, as long as certain anti-discrimination safeguards are satisfied. The Privacy Rule also gives individuals the right to see copies of the information in their medical and other health records maintained by their providers and health plans. As

Leader’s Edge reported: “Employees may extend their ‘right of access’ to their own personal health information to their employer and/or the employer’s broker—as designee(s)—and plans must then provide the information as requested by the employee.”

As data sharing expands to include the exchange of information via consumer authorizations to third parties, the duty to comply with HIPAA requirements will be supplemented by the challenges of addressing data exchange ethical and legal issues outside of a HIPAA environment.

In late November, CARIN released a code of conduct that third parties can follow to ensure their applications are gaining consumer consent whenever they handle healthcare information on behalf of the consumer. The code, Howells says, is designed to help third parties follow industry best practices for securing information outside of HIPAA.

Some software company-specific efforts are also under way. “We have done work to include patient education when patient-authorized applications would share information,” says Sasha TerMaat, a director at Epic, a Wisconsin-based software company targeting healthcare providers. “We work with app developers to identify aspects of information sharing significant to them and make that more accessible to patients than if it was hidden in a 20-page terms-of-use document.”

Howells says he anticipates a new “data-sharing ecosystem” that will enable employees and patients to access their health information under HIPAA. Such access, he says, will empower consumers to share their information with any third party of their choice.

Information Blocking

Privacy isn’t the only issue to consider in increased data sharing. There’s also the matter of overcoming proprietary interests by parties who currently hold and own electronic health records. Many say healthcare providers and payers can limit access to such data to protect themselves from competition and to facilitate relationships with other parties.

In fact, this may be among the hardest challenges to overcome, though a variety of federal efforts seek to prevent this trend, often called information blocking.

The federal Office of the National Coordinator for Health Information Technology (ONC) is required to establish regulations that improve access to clinical information by parties requesting the underlying clinical data. The statute requires electronic health record vendors and hospitals to confirm they are not engaged in information blocking. The Department of Health and Human Services is expected to provide guidance on information that should not be blocked as well as fines to be imposed for information blocking.

The Centers for Medicare & Medicaid Services is moving to require similar data transparency regarding claims from insurers. In her March speech, Verma called upon all insurers to give patients their claims data electronically. She said over the course of the year CMS would reexamine its partnerships and relationships with health insurers to find ways to persuade them to give patients control of their records.

An executive at a data analytics firm says information-blocking concerns are real and addressing them is critical. “When we get information from large payers for our clients, they require in their nondisclosure agreements that we not do anything with the data that would allow someone to determine provider price or quality decisions, which we think they include because the hospitals make them put those clauses in their contracts,” the executive says. “Yet that is the most important reason to be using the data, because a handful of claims drive all the costs. If you can ensure that that 10% of the population makes the right decisions, that makes all the difference.”

Jodi Daniel, of Crowell & Moring, says information-blocking provisions will likely require data holders to release data “for purposes that are good for patients but may not be in the data holders’ best interests.”

Technical Challenges

There are also legitimate technical challenges to data sharing—in particular, setting the standards and frameworks to enable it. There are disparities in the types of data recorded. Not all data with value are recorded, and much that is recorded is captured in different formats.

In the past, common electronic standards that would allow the sharing of different types of information from different types of applications did not exist. However, both public and private sector initiatives are said to be achieving remarkable progress in this area. (For details of public sector initiatives, see the sidebar “Setting the Standards.”)

By this time next year, a new paradigm for delivering employer-based healthcare insurance will take hold in leading markets.

Aneesh Chopra, president, CareJourney

In the private space, Fast Healthcare Interoperability Resources (FHIR), a non-proprietary application programming interface (API) standard for sharing and exchanging health information, is rapidly being adopted as a common industry standard. Several factors are increasing its adoption. The Argonaut Project, launched several years ago, is a private-sector initiative to advance industry adoption of modern, open interoperability standards. Participants in the Argonaut Project are working to rapidly develop an FHIR-based API to help expand health data sharing.

As part of these efforts, Apple has integrated the clinical API standard into its iPhone iOS, including a health record feature within its Health app that was introduced in January 2018. A variety of other tech vendors and providers also support the Argonaut Project, including Cerner, Epic, AthenaHealth, Meditech, Accenture, and McKesson.

A second effort, the Da Vinci Project, is more focused on payers. The project includes Allscripts, Cerner, Optum and Epic on the technology side and many of the country’s biggest commercial payers, including Anthem, the Blue Cross Blue Shield Association, Humana, and United Healthcare. Last August Amazon, Google, Microsoft, Salesforce, IBM and Oracle signed a joint pledge to accelerate interoperability across healthcare by leveraging cloud-based technologies and data standards in pursuit of the common good. 

In October, ONC released a study that found 10 certified health IT developers with the largest market share across hospitals and clinicians use FHIR. About 82% of hospitals and 64% of clinicians use these developers’ certified products, which Howells characterizes as unprecedented in terms of the speed in which an open standard was voluntarily adopted by industry.

The Use of Big Data Is Under Way

As the ability to share data improves, it is important to think about what can be done with those resources. For that, we can look to the health data analysis already under way.

“Scientists, clinicians and others have long recognized that large quantities of health-related data…can be analyzed to detect forthcoming health problems as well as to validate superior interventions,” DataSmart Solutions’ Jon Prince says, noting that such information is already used by employers, insurance carriers, hospitals, and other care providers.

Healthcare analytics companies are leading this research, Prince says, together with some university hospital systems, such as the Johns Hopkins Bloomberg School of Public Health. Some large insurance carriers and consulting firms contract with or acquire analytics units to produce useful information from raw data.

“In short, there is great value to be found within data for the field of public health,” Prince says. “In addition to traditional medical and prescription claims history, supplemental data, such as biometrics, vision scans, routine blood panels and even questionnaires, can have predictive value. A striking correlation, for example, has recently been found between consumer data, such as the FICO score, and health-related behaviors such as adherence in taking prescribed medications.”

The study of health data patterns enables many disease states to be foreseen, permitting early intervention and better outcomes. Data are also used to evaluate quality of care, efficiency of care facilities and providers. The performance of individual plans can be carefully analyzed to reveal cost trends upon which corrective action can be taken.

In broad terms, Prince says, the findings from healthcare data research fall into categories of predictive risk scoring (e.g., identifying individuals in greatest need of immediate intervention), improving traditional diagnosis (e.g., providing doctors with a more complete story on a patient) and recommending improvements in plan design and networks.

In all cases, however, to extract value from research, findings must be interpreted and acted upon by experts, Prince says, and that requires action by brokers. “Brokers must ensure that this interpretive, action-taking component is included,” Prince says. “A complete analytics-care coordination ecosystem consists of more than colorful reports that accumulate in someone’s inbox. Brokers need to ask, ‘Who will act upon the findings at the level of my client?’”

The adequacy of data analysis can produce tension between employers and insurance carriers, Prince notes. “Some large insurance carriers assert that they have all of the above—analytics as well as onboard care coordination,” Prince says. “But experienced brokers know that, in spite of these reassurances, in some cases renewal rates can climb significantly, if not suspiciously. Hence, the trend for plans to migrate from fully insured to self-insured continues, along with the search for transparent, end-to-end solutions that begin with data and culminate in better plan performance, lower renewals, higher reserves and healthier members.”

Insurance brokers today are connecting valuable research to employer plans in a variety of ways, Prince says. “Many of the large consulting firms conduct RFPs on behalf of clients to identify the best total solution that includes analytics and care coordination team action,” he says. “These firms constantly vet analytics vendors, care coordination companies, and others from which an effective ecosystem can be built. Other mid-market brokers may hire and organize internal clinical, care coordination and reporting teams of their own and contract with analytics vendors for the underlying research. Smaller brokers outsource all these functions and are still able to deliver effective, economical products to their clients.”

Today, Prince adds, analytics and care coordination services are quite affordable. “The field is highly competitive,” he says. “The addition of this service to a broker’s product line is vital in a market where differentiation is crucial to a successful sales campaign.”

Driving Value-Based Payments 

As data sharing increases, so does the potential for creating a value-based healthcare payment system.

“We cannot effectively transition to a value-based system,” Verma said last year, “unless we provide to both the doctor and the patient all of the clinical and payment data required at the point of care to help them mutually make a different and better decision than they could have today.”

President Trump last year reinforced efforts to move toward a value-based compensation system through an executive order aimed at improving access to reliable information that consumers need to make informed healthcare decisions, including data about prices and outcomes.

In addition, Sen. Bill Cassidy, R-La., in early 2018 launched a proceeding to learn why consumers cannot compare the cost of care effectively. In September, Cassidy—who is a gastroenterologist—and several Senate colleagues, members of a bipartisan Senate healthcare price transparency working group, introduced draft legislation to protect consumers from surprise medical bills, often termed “balance billing.”

A complete analytics-care coordination ecosystem consists of more than colorful reports that accumulate in someone’s inbox. Brokers need to ask, ‘Who will act upon the findings at the level of my client?

Jon Prince, president, DataSmart Solutions

There are also data-sharing efforts included in existing value-based care initiatives. In the Qualified Entity Program, established by the Affordable Care Act, organizations approved as qualified entities (QEs) receive access to Medicare claims and prescription drug data for use in evaluating provider performance. QEs are required to use the Medicare data to produce and publicly disseminate reports on provider performance approved by the Centers for Medicare & Medicaid Services. QEs are also permitted to create non-public analyses and provide or sell such analyses to authorized users, such as employers. CMS also publicly releases information about providers through the Medicare Compare website.

Brokers Tie It Together

“If I were an insurance broker focused on the mid-market, I’d like to play the role of general contractor to tie these three key general trends together,” says Chopra, referring to the increased standardization of patient right of access and data transfer and the rise of value-based care.

For example, says Chopra, brokers could include a standardized digital form for employees’ right of access to their data in the open enrollment process, perhaps connected to an app. “The employer’s job might be to curate a set of apps under which, under certain terms and conditions, the consumer designates access to health information, starting with claims,” Chopra says. “Apps might be tied to clinical networks, should employers design ACOs, or to a retailer like Walmart, or to tech-focused online service providers like Apple or Google.”

Regarding the value of aggregated data, Howells says brokers can serve as aggregators and educators of consumers and employers. “They can also act as enablers by encouraging consumers to aggregate their healthcare data using their own platform and third-party applications to make more informed decisions regarding their coverage and treatment,” Howells says.

As we look to see what 2019 will bring to this field, experts warn of potential and patience. “This is still the first inning of efforts to unleash the power of data in healthcare,” Smith, of Third Horizon Strategies, says. “Billions of dollars have been invested in capturing clinical data well, but that doesn’t mean that all doctors and hospitals involved in care have access to it, and it doesn’t necessarily translate into the intelligence that may be possible with greater data quality, interoperability and availability, including intelligence that may benefit agents and brokers. Value-based care and fully integrated delivery systems are still the exception to the rule. Still, with as much as has already happened, the potential is very exciting.”

David Tobenkin is a contributing writer. dtobenkin@hotmail.com

From: Joel Wood
Sent: Wednesday, December 19, 2018 10:08 AM
To: Joel Kopperud <Joel.Kopperud@ciab.com>; Blaire Bartlett <blaire.bartlett@ciab.com>
Subject: Happy New Year


Well, guys, let us begin on a note of new-year cheer, recognizing two things—first, that commercial insurance brokerage issues generally aren’t partisan, and second, that while extremes on the left and right continue to polarize our politics, there is a great silent majority in the middle who just want everybody to get along and get things done. Can we hope for this, at least?


From: Joel Kopperud
Sent: Wednesday, December 19, 2018 1:09 PM
To: Joel Wood <JWood@ciab.com>; Blaire Bartlett <blaire.bartlett@ciab.com>
Subject: RE: Happy New Year


That’s absolutely right, Joel. I look at the issues facing our members and I look at the incoming Congress, and I’m feeling pretty decent, considering it’s a divided government and not a whole lot is going to reach the president’s desk. What’s even more exciting, is that this really IS a new Congress! 100 new members total. 66 New Democrats and 44 new Republicans. This is the closest we’ve had to a fresh start in a LONG time!


From: Joel Wood
Sent: Wednesday, December 19, 2018 1:15 PM
To: Joel Kopperud <Joel.Kopperud@ciab.com>; Blaire Bartlett <blaire.bartlett@ciab.com>
Subject: RE: Happy New Year


Yea, right. And so much for all your new fresh Democratic leadership. Your numbers 1, 2 and 3 are all over 78 years old and have occupied their same positions for more than a decade. Hope, change and fresh vision?


From: Joel Kopperud
Sent: Wednesday, December 19, 2018 1:20 PM
To: Joel Wood <JWood@ciab.com>; Blaire Bartlett <blaire.bartlett@ciab.com>
Subject: RE: Happy New Year


Ugh. Look. 40% of the Democratic caucus is female. That’s refreshing. We have a record number of veterans in this Congress. More members under the age of 40 than I can ever remember. This is a new day. They were largely ushered in on the messaging of protecting the ACA and preserving protections for Americans with preexisting conditions (by the way, how many Republicans voted 57 times to repeal the ACA and then ran a poll and magically campaigned on PROTECTING preexisting conditions this time around?). But we all know the driving force behind all this is the president. I don’t know where to begin on that note…but we have front row seats for an amazing, historic showdown.


From: Joel Wood
Sent: Wednesday, December 19, 2018 3:19 PM
To: Joel Kopperud <Joel.Kopperud@ciab.com>; Blaire Bartlett <blaire.bartlett@ciab.com>
Subject: RE: Happy New Year


I’m pushing 60, and so I do wonder who all of these children are who are wandering around Congress. Look, save your “preexisting conditions” crap for your stump speech. The reality is that your party barely outperformed historic trends for midterm elections and Republicans expanded their Senate majority.


Sent from Nine


From: Joel Kopperud
Sent: Wednesday, December 19, 2018 3:28 PM
To: Joel Wood <JWood@ciab.com>; Blaire Bartlett <blaire.bartlett@ciab.com>
Subject: RE: Happy New Year


Ha. I love watching the GOP try to minimize everything that’s happening. Yes, it would have been wonderful to take back the Senate, but nobody expected that to happen, and considering Dems were defending 24 seats—10 in Trump country—they did pretty good. And Pelosi, love her or hate her, is going to be a force. I don’t know who better to navigate the oversite and impeachment pressures while pursuing the people’s business than Nancy Pelosi. And watching Trump mansplain things to her in public settings does not bode well for suburban independent women.


From: Blaire Bartlett
Sent: Wednesday, December 19, 2018 3:33 PM
To: Joel Kopperud <Joel.Kopperud@ciab.com>; Joel Wood <JWood@ciab.com>
Subject: RE: Happy New Year


The people’s business? Pelosi? Even as a woman I find that hard to believe.


From: Joel Kopperud
Sent: Wednesday, December 19, 2018 3:41 PM
To: Blaire Bartlett <blaire.bartlett@ciab.com>; Joel Wood <JWood@ciab.com>
Subject: RE: Happy New Year


Look at their agenda and it’s not far off from ours. Drug pricing, stabilizing individual health insurance markets, reauthorizing TRIA, and reforming NFIP. Yea. And, for better or worse, I understand she’s reinstating pay-go rules, which means that every dollar spent needs to be accounted for. No more borrowing from China. When the last speaker took the gavel, our deficit stood at a little under $500 billion. This year, it will be at $1 trillion because everything was borrowed. So, pay-go rules could work against us in some areas, but restoring order and sanity is—or at least should be considered—the people’s business.


From: Joel Kopperud
Sent: Wednesday, December 19, 2018 3:43 PM
To: Blaire Bartlett <blaire.bartlett@ciab.com>; Joel Wood <JWood@ciab.com>
Subject: RE: Happy New Year


If you’re watching Fox though, this might not come through…


From: Blaire Bartlett
Sent: Wednesday, December 19, 2018 3:47 PM
To: Joel Kopperud <Joel.Kopperud@ciab.com>; Joel Wood <JWood@ciab.com>
Subject: RE: Happy New Year




I do agree that *some* of the issues facing our industry in the next Congress (NFIP and TRIA reauthorizations) should have smoother sailing than in the last two Congresses. However, I will be surprised if the House Democrats will be able to do anything else than reauthorize because they will be so focused on impeaching President Trump. I doubt the president is going to want to work with House Democrats while all of the executive agency staff are getting subpoenaed by House committees. Yet again, we must rely on the Senate...


From: Joel Kopperud
Sent: Wednesday, December 19, 2018 3:52 PM
To: Blaire Bartlett <blaire.bartlett@ciab.com>; Joel Wood <JWood@ciab.com>
Subject: RE: Happy New Year


Speaking of, Joel, how do you see drug pricing legislation getting through Senate Finance and HELP Committees? There’s no shortage of bills being considered in the House—everything from allowing drug reimportation to regulating PBMs and shining light on manufacturing costs. The White House seems open to some of these ideas. Our members have a vested interest in how this plays out. We just have to find the right sweet spot.


From: Joel Wood
Sent: Thursday, December 20, 2018 12:25 PM
To: Joel Kopperud <Joel.Kopperud@ciab.com>; Blaire Bartlett <blaire.bartlett@ciab.com>
Subject: RE: Happy New Year


Perhaps I’m just being a sunny optimist here, but I do tend to think that drug pricing might be one sweet spot, given bipartisan dissatisfaction on the issue. And incoming Finance Chairman Chuck Grassley is an industry critic, as opposed to his predecessor, Sen. Orrin Hatch. But, checking myself, the drug industry is deeply enmeshed here, and all they need to do is continue to stoke the partisan differences. It’s always easier to beat stuff in this town than it is to pass it—that’s the way Madison created our government. We’ve got Congress, not Parliament. So, on that basis, I will now proclaim a premature victory in defeating Democrats thoroughly on the issues surrounding single-payer, Medicare for all, Medicare buy-in. And we shouldn’t let any of these Democrats off the hook who fire up their base promising that stuff.


From: Joel Kopperud
Sent: Thursday, December 20, 2018 1:03 PM
To: Joel Wood <JWood@ciab.com>; Blaire Bartlett <blaire.bartlett@ciab.com>
Subject: RE: Happy New Year


Ha. I was wondering when you were going to go there. Took you long enough. Here’s the deal, and I bet you agree with me. This whole fuss over single-payer and Medicare for all was ignited by the relentless pursuit to repeal the ACA with absolutely no plan in place on how to guarantee affordable coverage and protect preexisting conditions. The irony behind the entire scenario is so ridiculous, considering that even Newt Gingrich supported the key elements of the ACA and a former Republican presidential candidate tested out these key tenets in his home state. It doesn’t matter though, I know. The far left of the Democratic party—now dubbed “the herbal Tea Party”—grew in reaction the original Tea Party’s mindless pursuit of ripping up the ACA. So if we’re holding progressives accountable, then we need to hold conservatives equally accountable for intentionally eroding the markets.


I’m actually heartened, though, that the messaging and policies we’ve been doggedly pursuing with Democrats in last year’s campaign actually seized the day. And that is: don’t throw the baby out with the bathwater. Their job should be to ensure every one of their constituents has equal access to affordable, quality healthcare. Full stop. The ACA sought to do just that by building on employer-provided benefits, and if we allowed the ACA to function, and even worked to strengthen in it, I think most Democrats believe that we could achieve that goal. And, by the way, the 156 million Americans who receive their coverage primarily through one of our members would be left unscathed.


Trying to steer the party to focus on the end, not the means, is clearly a herculean task, but it’s working. The most consistent messaging that ushered in newly elected Democrats in Republican seats was based around protecting preexisting conditions. Which means strengthening the ACA and restoring the individual mandate, CSR payments, and the like. Medicare for All was the not the message that delivered Democrats the majority. To be clear, 64% of the 42 seats Democrats flipped will be held by members of the Blue Dogs or the moderate New Democratic Coalition; only 27% of those seats will be held by members of the Progressive Caucus. And of the 20 seats now held by Democrats but that favored Trump in 2016, 11 are Blue Dog or New Dem members; only three are in the Progressive Caucus.


Sure, there will be efforts to expand Medicare and some members will always see single-payer as the north star, but right now they need to fix what they’ve inherited, and I can tell that Democratic leadership well understands that this means restoring the ACA. And we will stand by them.


From: Blaire Bartlett
Sent: Thursday, December 20, 2018 2:13 PM
To: Joel Kopperud <Joel.Kopperud@ciab.com>; Joel Wood <JWood@ciab.com>
Subject: RE: Happy New Year


Oh…Joel…those anti-Obamacare votes were “messaging” votes…just like all those Democrats who signed onto HR 676, the “Medicare for All” bill, was a message to their base.


You know what keeps me up at night? We have two big programs that need possible reform and reauthorization this next Congress: the Terrorism Risk Insurance Act (TRIA) and the National Flood Insurance Program (NFIP). While NFIP reauthorization seems to never go away, TRIA is a big one.


From: Joel Wood
Sent: Thursday, December 20, 2018 3:05 PM
To: Joel Kopperud <Joel.Kopperud@ciab.com>; Blaire Bartlett <blaire.bartlett@ciab.com>
Subject: RE: Happy New Year


Thank you for your interruption, Blaire, and attempt to steer me away from a head explosion and on to important property/casualty issues. But first, puh-lease, Joel K. Democrats are for socialized medicine because Republicans didn’t like Obamacare? And we should just ignore it and not judge them on it? And we should be heartened that all these newly elected (and newly vulnerable) House Ds are slapping their names on Blue Dog letterhead? I remember when Blue Dogs were Blue Dogs and were willing to defy their leadership to support business-friendly goals. That’s been damn near a decade ago. Name me the issue that caucus is now willing to defy Nancy Pelosi on and vote with Republicans. Just one.


But, OK. I’m breathing in, out, in, out now. I will go ahead and note what Joel K is anxious to say—that despite her liberal, Trump-hating, firebrand reputation, Rep. Maxine Waters (D-Calif.) as chairman of the House Financial Services Committee does not alarm me on any of our parochial issues. TRIA reauthorization will be a big issue next year, and she has been nothing but a supporter on TRIA since day one. Her predecessor, Rep. Jeb Hensarling (R-Texas) tried and largely failed to significantly roll back the program. And on flood insurance, she’s been practical and engaged, and she has superb staff. Weirdly, I think we’re going to have more bipartisanship on that committee, and thus it will totally evade the headlines. The new ranking Republican on the committee, Patrick McHenry (R-N.C.), is and has always been a tremendous friend to us.


And in the Senate, it’s steady as she goes. Sen. Mike Crapo (R-Idaho) remains the chairman of the Senate Banking Committee, and ranking Democrat Sherrod Brown (D-Ohio) is someone with whom we also have had an excellent relationship, even though he frustrates me on his opposition to expanding private flood insurance (essentially by guiding banks to accept non-admitted paper) out of concern for “cherry picking.”


From: Joel Kopperud
Sent: Thursday, December 20, 2018 3:16 PM
To: Joel Wood <JWood@ciab.com>; Blaire Bartlett <blaire.bartlett@ciab.com>
Subject: RE: Happy New Year


We’re going to win so much, you’re going to be so sick and tired of winning, you’re going to come to me and go, ‘Please, please, we can’t win anymore, we don’t want to win anymore. It’s too much. It’s not fair to everybody else.’” And I’m going to say ‘I’m sorry, but we’re going to keep winning, winning, winning…”


From: Joel Wood
Sent: Thursday, December 20, 2018 3:17 PM
To: Joel Kopperud <Joel.Kopperud@ciab.com>; Blaire Bartlett <blaire.bartlett@ciab.com>
Subject: RE: Happy New Year


Your Trump Derangement Syndrome continues to flare up.


From: Blaire Bartlett
Sent: Thursday, December 20, 2018 3:17 PM
To: Joel Wood <JWood@ciab.com>; Joel Kopperud <Joel.Kopperud@ciab.com>
Subject: RE: Happy New Year



This is certainly the case at Washington, D.C.’s new waterfront playground, The Wharf. Happy people are everywhere. Eating oysters. Cocktailing on rooftop bars. Buying a good read at D.C.’s beloved bookshop Politics and Prose. Listening to live music. Playing an oversized game of Scrabble. Roasting s’mores at a fire pit. Just sitting on a park bench taking in the scene along the Potomac River.

Formally known as District Wharf, the revitalized 74 acres of land and water in Southwest D.C. is the most new public space in the city since the redesign of the National Mall in 1902. The Southeast/Southwest Freeway cut the neighborhood of residences and Federal buildings off from the rest of the city in 1970. Except for the bustling Maine Avenue Fish Market (founded in 1805, it’s the longest continually operating fish market in the country), this stretch of waterfront hasn’t seen this much action since the river was the main transportation artery in the early 1800s.

Since the opening of the first phase of The Wharf on Oct. 12, 2017—amazingly right on schedule—it has been packed with both locals and tourists enjoying the many different experiences you can have. A pedestrian walkway along the waterfront provides access to the Potomac River. Cafés front the brick, glass, stone and steel buildings along Wharf Street. Spaces for music—in public squares, on the District Pier, at The Anthem music hall, in bars and small clubs—make for a happening social scene. Parks and piers, where you can tie up your boat or rent a kayak or paddleboard, provide plenty of ways to enjoy the water.

The Council’s annual Legislative & Working Groups Summit will once again be held at the Mandarin Oriental, Washington, D.C., Feb. 11-13. Two years ago, the hotel completed a renovation of the rooms, and it is as elegant as ever. You can walk to The Wharf in less than 15 minutes. To be in the center of the action, check out The Intercontinental Washington, D.C. - The Wharf. The most luxurious of the three hotels at The Wharf (The Canopy by Hilton and Hyatt House are the others), it ranked No. 1 in Conde Nast Traveler’s Top Hotels in Washington, D.C.: Reader’s Choice Awards 2018.

As for dining, the days of Phillips Crab Deck are long gone. The goal was to attract best-in-class chefs and challenge them to do something new. Del Mar, by chef Fabio Trabocchi of the acclaimed Fiola, and Officina, by chef Nicholas Stefanelli of the Michelin-starred Masseria, are both outstanding. There are also plenty of kiosks selling all kinds of food to go and no-reservations restaurants. Savor oysters at Rappahannock Oyster Bar or Southern Italian “street food” at Lupo Marino (think fried artichokes hearts served with aioli). The former is located in a restored oyster shack that dates back to 1912 at the fish market. You can still see fishermen heaping Chesapeake Bay blue crabs into bushels at this open air, floating market, where a new distillery, a market hall and pavilions are in the works.

When you were hired to work in the insurance office, the state’s health plan was in trouble. What was the situation at the time?
The state of Montana employee health plan has 31,000 total lives covered, including dependents, legislators and retirees. It’s the largest plan in Montana, and they hired me in late 2014 with the clear direction to turn the plan around financially. If we didn’t do something drastic, it was projected to be $9 million in the hole in 2017 with the contracts they had at the time.

People were mad because the plan was losing so much money, the governor’s office was looking bad, and employees and unions were angry. Vendors all tended to have a solution. They would say we needed to go with this or that new plan. But there wasn’t any kind of strategy, and data wasn’t available or being used to make decisions or manage contracts.

So how did you begin? What was your strategy to understand where the excess costs were in the system?
I’m an accountant and CPA, and I knew I had to get my hands on the data to see where the spend was. I needed to find out where to target.

I found that 43% of costs were coming from Montana’s hospitals and, of that, 87% was from 11 acute care hospitals, which are the largest in the state. Only 13% were critical access, rural facilities. I also focused on pharmacy, which was 18% of our costs.

The area that was getting a lot of talk in the legislature was on-site health centers, but I realized that was a political issue. It was getting lots of noise and attention but was only about 3% of the plan’s spend.

So you knew where the spend was. How did you move forward from there?
We needed quick results because we are a state agency, so we focused first on hospitals. We could have gotten better rates by narrowing networks and kicking out the high-cost hospitals, but the governor didn’t want to narrow networks.

We prepared a graph using hospital semi-private room and board fees, which are easy to find in the data, from 2012 to 2014. I was able to chart the chargemaster fee and see the allowable costs. It clearly showed that, no matter what discount you get, you are going to follow an upward trend in cost. They control the chargemaster, so they can say they are giving you a better discount but then just raise the price that discount is based on.

If we had, instead, used a fee that is 200% of Medicare during that same time, the prices weren’t as far apart, and they didn’t go up as much, because they were limited to Medicare inflation.

A lot of people understand these chargemaster rates vary pretty dramatically, but there doesn’t seem to be a lot payers can do about it. What was your plan to manage these costs?
What I put in place is what I call contracted reference-based pricing. In the ACA, reference-based pricing is where an employer works directly with a hospital and tells it the price the employer is going to pay for services, and that’s all you pay. But the hospital has no traditional insurance contract with you, so it can go back and charge the member for the balance of the bill the employer didn’t pay. We didn’t want that. We wanted contracts where they would accept payment as a kind of Medicare-plus instead of a discount off of the charge rate.

I put out an RFP and hired Allegiance Benefit Plan Management to do the work. They looked at what our costs would have been for a year’s worth of claims if we’d reimbursed on a Medicare-plus basis. The lowest costs were around 109% of Medicare’s rates, and the highest were 611%. In that 200% range I wanted, there were about four hospitals. I knew I needed to bring the outliers in.

Were the local hospitals on board with your plans?
Four hospitals helped develop a payment model based on Medicare pricing, and a couple others came in as well. When some held out, I asked them what the problem was. Medicare makes adjustments for things like risk, geographic differences and case load. When I asked them why their adjustments were different, I never did get a really good answer. One said it was planning an expansion and needed the money to pay for it.

How did you convince the holdouts to take part?
By July 2016, I had all but one hospital on board: Benefis Health System. They refused to sign, and they went public with their decision. The CEO told the Great Falls Tribune [where Benefis is located] he couldn’t give the state what it was requesting because their largest payer was Blue Cross Blue Shield and he wouldn’t give anyone a better deal than them.

But I kept pushing because this is taxpayer money paying for these benefits. I steered union anger toward that one hospital. I said, ‘OK guys, help me.” Their pay raise was dependent on lowering the benefits, so I posted the phone numbers and addresses of the CEO and CFO and they began putting a lot of pressure on them. After that they signed, and it went into place in July 2016.

You tackled pharmacy as well. What did you do there?
I dug into our pharmacy benefit and analyzed the contract that was through a purchasing co-op. We didn’t have direct contracts with a PBM [pharmacy benefit manager]. We had one with a PBM to adjudicate claims and one with CVS to manage rebates. Then another one for specialty medications and care management for utilization review and another for formulary drugs. There were so many, but I was able to get my hands on only four of those contracts.

The state always assumed we had a transparent pass-through model and there was no spread pricing [which means a PBM pays the pharmacy one price for a drug and charges the employer a much higher price]. Rebates were capped at $20 per prescription, which was low, and the rest went to the co-op or CVS. The spread pricing excess went to the co-op, and there were tons of administrative fees.

So we did another RFP. In our new plan, we get 100% of the rebates, and we can audit that. The new plan also cut out spread pricing on brand drugs.

This seems like a huge overhaul of the normal system. What were your results?
We had significant dollar savings. In the first year, we saved $7.4 million, and that included more than 25% off our total spend on drugs. In December 2017, we were $112 million positive instead of minus $9 million, which was what had been projected. The employees haven’t had any increase in premiums or change in their out-of-pocket expenses.

Did you make other changes aside from the hospital and pharmaceutical contracts to cut back on costs and waste in the system?
I was also able to save in other places by reducing staffing, moving to cloud-based enrollment and getting rid of duplicate wellness contracts.

Members get a premium incentive if they have an annual physical at one of the state’s health clinics. There’s also no co-pay for that visit. That has improved access and is less expensive for us than if they go to a private-sector provider.

Our medication therapy management [MTM] was mostly done by phone or letter before. I worked with an independent pharmacy group and the University of Montana School of Pharmacy to create an MTM program where they did personal outreach. They analyzed our pharmacy data and identified more than 3,000 members who could be targeted for help with the medications. That began in July 2018.

Montana’s employee plan has a lot of purchasing power. How can others with fewer covered lives duplicate your efforts?
They can immediately look at their pharmacy plan, and they’ll get hits there. I wrote up a clear RFP asking for a transparent pass-through with rebates and no spread pricing. They also couldn’t collect fees from other sources and couldn’t sell our data and keep the profit from that. There ended up being two that offered this kind of model, and I just chose the one that was cleaner.

I have seen small school districts that have joined together to create a purchasing co-op. I encourage them to join an employer forum or something similar where they can get access to data, education or training.

And as a small employer, they really have to delve in and ask questions about their contracts. You can’t just look at the reports you are given by a broker or TPA [third-party administrator].

I saw a group in Indiana when I was speaking there once with 700 covered lives, and they have done a lot to manage their coverage. But they have a disruptor. Their HR director who leads the efforts is on top of it all and is calling the shots. She has a large health center nearby and does direct contracting and has saved a lot of money that way.

You really have to get the data and find out what you are paying. You can’t let the insurance company tell you what the repricing of Medicare is. Get an independent entity to see what you are really paying. That’s the first step, and you can do that pretty fast. Most companies could compile the data and turn it around for you within a month. It’s not all that costly. Once you have that, you can start a dialogue with providers. You just have to remember that everyone involved is going to have to give up something.

What about among employees? They knew you were there to make changes. How did you communicate what was happening to them?=
Employees in the beginning were upset and worried they were going to be balance billed for services or that there wouldn’t be adequate provider networks.

We did a lot of communication with employees about what we were doing just because it was causing some anxiety. We focused on working on incentives and helping employees take charge of their own health. We pulled in the vendor who manages our health centers and had a nurse and wellness coordinator involved at the health centers to get people more engaged. The jury is still out on the effectiveness of wellness programs, but it was good to offer them something they could take action on to reduce some of the fear of change.

If you were to ask them about it now, they would probably say they really didn’t know that much about it and they don’t see anything different. You’re probably not going to hear much from your employees. All of the hospitals have had record profits in the past couple of years and are doing just fine, which I was glad to hear.

Anything else you learned during this process?
The system is completely chaotic. I have been shocked at all of the ways people make money in the system. You have to check everything, because you probably don’t know what money is coming back to you and what is not. When everyone has a hand in the pot, you almost can’t follow where it’s all going.

Tell us about the investment by Google’s CapitalG in Applied Systems.
We think it’s really great for our company. We also think it’s great for our customers and the market in general. Google became a minority investor in Applied Systems. The transaction allows us access to the people, the culture, the expertise, and frankly also the technology that Google has as a part of its company. We intend to put that to use for the insurance vertical and for our customer base.

Why does Google invest in larger-scale technology firms? The primary purpose is being able, through the investment, to provide technology to an industry vertical that they care about. Let’s take Lyft, the competitor to Uber. The reason for Google’s investment in Lyft is obviously the core of that app is mapping. They wanted Lyft to utilize their mapping technology. Second, they have the Waymo division, which is focused on self-driving cars. As people look into the future, it’s certainly possible that Lyft wouldn’t be “Bob” pulling up; it would be the self-driving car pulling up. That’s another area of interaction.

For us, you come more specifically to insurance brokerages. Google has great expertise around machine learning and artificial intelligence. Applied is a $400 million company, but it’s still hard at our size to access some of the incredible minds to be able to put that technology to good use. We now have an avenue to be able to do that. To make it real, we had 20 of our top engineers in New York in Google’s office doing machine learning and artificial intelligence boot camp. It’s the same boot camp they put on for their own internal employees. We get to access that because of the CapitalG investment. It’s really great for our company. We think it’s great for brokers.

Why are those technologies important for insurance?
Insurance is a multitrillion-dollar market on a global basis. You have lots of decisions around risk management, risk mitigation and coverage. Those decisions can mean either a profitable account or a super costly account. Making those decisions is based on lots and lots of data inputs. That is perfect for software, perfect for machine learning; it’s perfect for artificial intelligence. Take huge amounts of data and boil it down to an essential answer to the question: should I cover this or not? If I’m going to cover it, how much should it cost?

Very large agencies have a huge book of business, yet rounding out that book of business perfectly is not something any owner or CEO of a large agency would be able to say they’ve done. Machine learning and artificial intelligence can look through that kind of data much more quickly, much more effectively, much more systematically than a person can.

It’s a digital age today. Google is the master at digital marketing. The search engine really controls an enormous amount of flow of traffic around the internet, and that’s relevant to commercial lines and personal lines brokers. People a lot of times go to personal lines around that, selling to a consumer, but I think it’s super relevant in a commercial-lines environment. It’s too early for us really to be able to give specific examples as to what we intend to do.

What technology strategies and initiatives is Applied planning, particularly for Epic?
I would hesitate to give some specific examples this early on. The main categories of interest are machine learning and artificial intelligence. Digital marketing is one for sure. The last thing is a very simple transaction in lots of systems, but let’s not forget Google does it exquisitely well—search. There are many, many searches that happen within Epic, and maybe that’s an area that’s a focus. Epic is the most used broker management system in the world. We have almost 100,000 users live on it, and we intend to put the Google relationship to use for that.

To what extent will Google have access to Applied data?
The agreement specifically calls out that Google has no access to any data—either Applied data or customer data. Zero. Not one data field. The reason is that data is owned by our customers, and we’re not sharing that with anybody. We knew that would be a question. That’s specifically written into the agreement.

Relative to access to Google data, the same is true on the flip side. We really didn’t enter this with the thesis that we were going to leverage Google data for the purpose of underwriting or that kind of thing. It’s more on the technology side. We have enormous amounts of data already that are available to us. That really wasn’t the point of the investment or the partnership.

Applied has categorized the deal as a nine-figure investment. Can you be more precise?
It’s a material investment to us.

What is the attraction in the insurance and brokerage sectors for big tech companies?
First off, if you’re a large technology firm, you have to look for large markets. You need to focus on markets that are sizable, because you want to get your technology into sizable areas so that it moves your needle. Insurance is very large. It’s a very large ecosystem, and it’s not just in the United States; it’s all over the world.

Second, the great thing about Google is it truly is high tech—really great technology and really useful at looking at very large data sets. Based on that simple description, insurance fits that very well—very large data sets and very important questions to answer. They want to put their technology to use in that vertical. They talked to a number of different folks. It’s a great validation of Applied because they can invest in anyone on the tech side.

You saw this with Amazon and Travelers doing their partnership around connected devices and their online storefront. Amazon has to come up with new categories that they’re going to sell products through, and they need something that’s big in order for that to happen.

Do you expect to see more technology companies investing in the industry?
 I do. Frankly, I think that’s good for the market. It brings new opportunities for brokers and for agents. It gives us access to things we wouldn’t have as a stand-alone firm. It’s good for brokers. I think you’ll see more of that. Applied succeeds only if brokers succeed.

Will Applied be seeking similar investments from other large technology companies?
We certainly would consider anything that makes sense for our customers. If we thought there was an angle with another large tech firm that made sense for our customers, we would do that. We did not need the money. We were interested in the technology and the relationship. We were interested in that because we thought it would enable us to be a better provider and better partner for our customers. If another opportunity like that came around, we would seize it.

How do you see the agent and broker business changing with technology?
We obviously are strong believers in the independent agency and brokerage channel. If you look out 10 years from now, the average agency is going to be larger, and it’s going to generate more revenue and be more profitable. That’s been a journey the industry has been on for 40 years. Technology will continue to be leveraged by good agencies to complete transactions better, provide better risk management advice, and ultimately free up people to be good risk advisors and good partners for the benefit of their customer base.

I think you’ll find much more automation between carriers and brokers around the provision of the product. You’ll also see much more digital connectivity between the insureds and the agencies. You’ll find the providing of the policy documents and the providing of financials and the claims information, all of that, to be much more streamlined. The reality is that we’ll have systems that in essence fill that information out for you.

Today, the insurance industry is compared against other experiences outside of insurance. It’s, “I had a wonderful process to open a bank account yesterday. Why is it so painful for me to get my business owners policy?” That’s the call to arms. Let’s make it better.

What’s next?
It’s too early for us really to be able to give real specific examples as to what we intend to do. I would say we will launch things in 2019 that are based upon our Google partnership. We look forward to bringing to bear the partnership for the benefit of the customer base. We think they’re really going to enjoy it and it should be fun. We are hard at work at it already.

As technology transforms the insurance industry, it’s also opening up new avenues for agents and brokers to enhance their client relationships. Brokerage NFP saw an opportunity to address the dire lack of estate planning among Americans with an app developed by Tomorrow Ideas that enables individuals to create a living will on their mobile devices in minutes. NFP’s venture arm invested $1 million in Seattle-based Tomorrow in a deal that expands access to the subscription version of the app, Tomorrow Plus, to more than eight million people served by NFP’s financial services.

The Tomorrow app lets individuals create a will for free, offers a trust as an upgrade, and recommends an appropriate amount of term life insurance.

“It’s a social and visual way to create a will completely for free on your phone, and a percentage of people buy life insurance through the app,” says Tomorrow founder and CEO Dave Hanley. “It turns out that creating a will and filling out a life insurance application have a lot of overlap.”

NFP marks the first distribution partner for Tomorrow’s brokerage and carrier program, under which it will provide the premium version of Tomorrow to customers and offer that partner’s products inside of the app.

Tomorrow is also looking toward voluntary benefits, such as disability insurance, long-term care and group life insurance. The most recent version of its premium app, announced in November, includes free access for spouses and the ability to sync a family’s accounts. The app also allows families to create video “memories” to share with other family members.

A number of insurtechs have set out to make buying life insurance easier online, including Bestow, Ethos, Ladder and Policy Genius. Carriers also have their own efforts, including MassMutual’s Haven Life.

Tomorrow, which already has 10 life insurance carriers on its platform, also counts Aflac and Allianz among its investors.

The Tomorrow app began as an effort to tackle what Hanley calls a huge social problem—the lack of a financial backstop for families to protect themselves. It is particularly an issue among younger families.

It is also an easy-to-use service that can help brokers better engage with their customers.

“It’s a way to enhance your relationship with a customer who might not pick up a phone and is doing this after putting the kids to bed at night,” Hanley says.

Tomorrow’s technology can also allow carriers to add new products more quickly.

“These carriers have lots of customers, but they don’t have much a of customer engagement strategy, especially on the life side,” says Hanley. “While the industry wants to test and wants to get involved in doing something a little outside the box, it’s hard to get all the approvals in place to do something that is completely blue sky.”

So by enabling brokers and carriers to better serve their clients, Tomorrow can simultaneously accomplish its mission of encouraging millions of Americans to finally put together estate and financial plans.

Fortunately, there’s a little painkiller to help: he stands to claim up to $5 million after taxes because of a loss-of-value policy he wisely bought before the season.

Ajay, 25, who helped the Eagles win their first Super Bowl in 2017, was only five weeks and three touchdowns into the new season when he stumbled during pass protection during the second half of the Eagles loss to the Minnesota Vikings. With a torn ACL in his right knee, he played through the injury for the rest of the game. He had surgery several days later, but the typical recovery time from ACL surgery is nine to 12 months, which means he won’t take the field again until training camp in 2019.

The well-dreadlocked London-born running back has been injury prone since his days at Boise State and was wise enough to know how to handle further hurt. Ajayi’s business manager, Josh Sanchez, told NFL reporter Ian Rapoport that Ajayi was “valued as a significant free agent” and decided “to protect him against exactly what ended up happening.”

Ajayi paid an estimated $80,000 to $100,000 for the policy, just a slice of his current annual $1.9 million salary. The final payout will depend on the value of his free agent contract in 2019.

Though injury policies are standard for college football players, they’re relatively new for pros. Last July, Eagles offensive lineman Chance Warmack was the first NFL player to collect on a loss-of-value insurance policy.

Warmack signed a one-year, $1.5 million deal with the Eagles in 2017 and thus bought insurance that would pay out if his second NFL contract paid less than $20 million. Lloyd’s of London announced it would give him $3 million. Unlike pour Ajayi, only his pride was hurt.

How does a busy insurance executive become a competitive open-water swimmer?
If I’m not active, it’s sad for everyone within 100 yards of me. I’m limited in what I can do competitively due to a lot of injuries, so I just got into pool swimming. Then my physical therapist, who I see almost as much as I see my family, suggested competitive open-water swimming.

When do you train?
I go out at 5:30 in the morning three to four days a week to a high school pool in my neighborhood. On off mornings, I do resistance training and aerobic work. I try to take Sundays off.

If I had one night in San Francisco, where should I eat dinner?
I love Kokkari, a Greek restaurant downtown.

What’s your favorite dish?
Everything is great. This is going to sound snotty, but they have great grilled octopus. And they have amazing lamb and sole.

What’s kept you in the insurance business for so long?
The appeal for me is the delight and the challenge of building and helping people in their careers and, more broadly, in their lives. That really has become my life’s work. And there are so many opportunities to do that in this industry. It is one of the most misunderstood aspects about our business.

Helping people in their lives specifically within the insurance industry?
There are so many opportunities and career paths in our industry, and, as a result, we have more opportunities to develop, sponsor and build team members than ever before. I think this requires a more fluid view of leadership, where we shift from the bifurcated lens of 30 years ago, where you lead and develop people in their work lives and their personal lives are this separate, private thing. Our younger colleagues have helped show us that is not the case.

How so?
They want a different level of sponsorship and support for their development and ability to make an impact and be relevant. We’re talking about making a real commitment to the people we work with—who are going to have our jobs tomorrow and who will inherit this company. That’s not work-work, that’s life work.

So you put a big emphasis on company culture?
After people, culture is the most important asset we have at the firm. It’s the filter through which we attract and retain great people, the filter through which we choose not to pursue certain people or some of the acquisitions we consider. Simply put, it’s the behavior and value set that we’ve developed over 100 years that define who we are, who we aspire to be, the kind of people we want, the kind of clients we want and, at the end of the day, the way we behave when no one’s looking.

Any new year’s resolutions?
Mine are always kind of the same. I want to constantly improve in every aspect of my life. That translates to continuing to learn at a faster, more aggressive pace in just about everything. Another resolution is to wrestle a little more successfully with the depth of my love for all things dessert.

What’s the best advice you ever got?
“Fear is the only thing in life that gets smaller the closer you get to it.”

Who told you that?
I don’t recall. I think Christina Harbridge. She is the founder and “mischief” executive officer of a firm called Allegory.

Why is that the best piece of advice?
I think at our core we are wired and taught to avoid fear, concern, doubt, uncertainty. And that avoidance keeps us from learning. These challenges actually teach us the very things we need to know to get better—at everything. Fear is actually an amazing friend. But we’re all built to think of it as a dental visit with no novocaine. You gotta dance with it.

If you could change one thing about the insurance industry, what would it be?
The way we design, build and articulate meaningful and relevant career paths and opportunities for our young and our as-yet unhired professionals. It’s an industry that has infinite possibilities.

Last question: What gives you your leader’s edge?
A combination of a few things: an absolute commitment to being a learner and not a knower, a desire to be wrong in order to get better, and a clarity of vision for our people and our firm.



The Barrengos File
Favorite vacation spot: Anywhere I can be with my wife and kids.
Favorite San Francisco movie theater: Kabuki [1881 Post Street]. They have the comfy first-class airline seats and real food. It’s a pricey movie, but the food’s good and the seats are great.
Favorite director: Martin Scorsese
Favorite Scorsese film: It’s a tie—Mean Streets and The Departed.
Favorite musician: Bruce Springsteen
Favorite Springsteen song: Unfair question. There are over 300, I think. “Jungleland” and “Streets of Philadelphia.”
Favorite author: Eudora Welty
Favorite Welty book: The Optimist’s Daughter
Wheels: BMW 540. It’s a Clark Kent car—low-key on the outside, vroom vroom on the inside.

The preliminary numbers, based on announced deals as of Jan. 2, 2019, have the year finishing with 552 announced transactions. This is just off the 2017 total of 557, but we are very likely to set a new record, as year-end deal announcements continue to flow in.

It truly has been an incredible year. Consider the following sampling of deal activity that occurred in 2018:

  • Sale of two of the largest bank-owned agencies: Key Insurance & Benefit Services (to USI Insurance Services) and Regions Insurance Group (to BB&T Insurance Holdings)
  • Sale of five firms in the top 35 (in terms of annual revenue): Jardine Lloyd Thompson Group (to Marsh & McLennan); Integro Group Holdings (to EPIC Insurance Brokers & Consultants); Hays Companies (to Brown & Brown); Crystal & Company (to Alliant); and Wortham (to Marsh)
  • Initial public offering of franchise-focused Goosehead Insurance
  • New private equity infusions into Hub International (by Altas Partners), Acrisure (by Blackstone), Propel Insurance (by FlexPoint Ford), Navacord (by Madison Dearborn Partners), and Renaissance Alliance Insurance Services (by Long Arc Capital).

Nearly 80% of the announced transactions within the space were completed by independent insurance brokerages, similar to 2017. The majority of these buyers were backed by private equity; this subsegment completed almost 60% of all transactions during the year. The three most active buyers during 2018 were Acrisure (59), BroadStreet Partners (37) and Alera Group (33), all private-equity backed in some form.

More than half of the total transactions during the year involved property and casualty agencies, while the remaining 45% were evenly split between employee benefits agencies and those that have both P&C and employee benefits (multi-line agencies).

We saw valuations increase across all deals MarshBerry was involved in on both the buy side and the sell side. We believe these multiples are above average given the visibility we have on other deal activity. The average base purchase price payment in our database increased by 8% in 2018, with a pro forma EBITDA (earnings before interest tax depreciation and amortization) multiple of 8.58. Maximum valuation potential (maximum earnout) averaged 10.85x EBITDA.

Platform transactions continue to grow in value as well. A platform is defined either as a seller that is a large brokerage or a buyer that is entering a new geography or niche. The selling firm will typically have an ongoing leadership role in the firm. The average base purchase price for a platform increased 7% in 2018 with a pro forma EBITDA multiple of 9.77. The maximum valuation potential (maximum earnout) averaged 12.43x EBITDA. It is important to note that these are averages. We are seeing pricing as high as 11x paid at closing for firms that would barely make the Top 100 listing. These valuations were historically reserved for the national brokerages. However, demand for high quality firms and the need to deploy capital continues to create favorable market conditions for selling brokerages.

Even though private-equity backed brokers continue to lead in the deal count, the three most active public firms—Marsh, Brown & Brown, and Gallagher—played a much more significant role in this year’s domestic activity than in last year’s. The three firms collectively increased their deal count by 47% in 2018. We will have to keep an eye on the volatility of the stock market to see if it has any impact on deal volumes in the short term.

As turmoil continues in the stock market and the Federal Reserve raises interest rates, we continue to hear rumbles of concern in the distribution space. There is general concern over the sustainability of the pace, volume of deals, and valuations that exist. Investors, at this point, don’t appear to have the same concerns. With at least five major private capital infusions into the space in 2018, there are no sure signals that the market is going to slow down.

Additionally, on Jan. 1, 2019, Patriot Growth Partners, led by CEO Matt Gardner, concurrently acquired 17 firms to create the next national brokerage. Patriot is backed by Boston-based Summit Partners.

While the dust is still settling, one thing seems abundantly clear: supply and demand remain robust. Investors are flocking to the distribution space, and many independent firms are still owned and controlled by those from the baby boomer era. Most of the buyers are proclaiming they have very full deal pipelines, and the momentum of a robust 2017 and 2018 is anticipated to continue into and throughout 2019.

Trem is EVP of MarshBerry. phil.trem@marshberry.com

Securities offered through MarshBerry Capital, member FINRA and SIPC. Send M&A announcements to M&A@marshberry.com.

Its system is seen as a touchstone of free, universally accessed healthcare.

Brazil’s 1988 Constitution declared: “Health is a right for all and the government’s duty to provide.” Building upon this ethos, Brazil created the Sistema Único de Saúde (SUS), a single-payer health system exclusively funded through tax collection at federal, state and municipal levels. Governed by the principles of providing a national, fair and full range of healthcare, the SUS supports more than 200 million Brazilians, giving them free access to public health services, offering a wide range of medical treatment and assistance, depending upon their needs.

But does the Brazilian healthcare system really guarantee quality medical services to all who need it? Sadly, no. In theory, the Brazilian model is very efficient; in reality however, the country runs into the same hurdles as its neighbors: hospitals, clinics and laboratories with failing infrastructures, a scarce number of professionals meeting the needs of many, long wait times and underfunding. And Brazil’s difficulties are made more intractable because of its vast territory and massive population.

Working in parallel to the public system is privately funded healthcare, known as Saúde Suplementar—supplementary health. It is used by a quarter of the country’s population, about 50 million people, who also can still use SUS services. Saúde Suplementar is highly thought of in Brazil; it has a better infrastructure than SUS, providing a higher-quality service with shorter wait times. But it’s not a panacea—the private system has its own problems to solve.

On one hand, employers, who fund 80% of private healthcare, are facing difficulties maintaining healthcare as a benefit due to its constant increase in costs. The market may have to make critical decisions in the future in terms of employees’ care and wellness and apply management strategies to avoid a total collapse. In this context, the services provided by brokers and consultancies are in great demand. On the other hand, to Brazilians, a healthcare plan is the most important and desirable benefit a company can provide, which underscores the importance to companies of keeping it.

Overcoming the Barriers

In general, the South American systems all push against the same barriers:

  • Low-efficiency services operating under disease-focused, rather than health-focused, models (most system demands are linked to health recovery, while basic primary care is rarely incentivized)
  • Bad resource deployment with inefficient management and excess bureaucracy
  • Corruption and waste.

While we cannot ignore the need for judicious intervention in the health sector, there are still positive lessons to learn.

The Family Health Strategy in Brazil is an example of good practice in primary care. Under this program, trained community teams support individuals and families with their holistic well-being and enroll them proactively in the healthcare system, which promotes better health and helps prevent future complications. The coverage of the program is universal, but the fact is that not all citizens are being served due to the shortage of healthcare professionals.

Technological advancements are equally crucial positive steps forward. One example is the growing implementation of the Prontuário Eletrônico do Paciente (PEP), Electronic Problem-Oriented Medical Record. PEP logs patients’ medical data and provides a central database for other systems, consolidating information and so improving the quality of medical services. Telemedicine is another example of technology supporting medical care: it facilitates remote care and increases patient trust and speed of service. Although in its early stages, remote monitoring of health data and goal-setting could help bring down the number of unnecessary visits to medical units.

Despite these efforts, adequate funding and an efficient and transparent administration are fundamental to delivering sustainable health services. Although Brazil’s free and universally accessed healthcare is internationally recognized, it shows us a brilliant theoretical model is not enough.

Solving public and collective health problems is complicated. And it’s made more critical when you consider the fact that errors might cost lives and fast decisions can save them. With so many factors to be considered, in order to prevent these models from collapsing, all those with a role in healthcare must work together and have their voices heard.

This is why the role of service mediators—insurers, operators, brokers and consultancies—is so important. Given their position in the market, they have the ability to undertake holistic analyses and propose corrective measures that may mitigate the risks and reduce companies’ exposures in this area. Many types of data, such as medical and administrative information, are available for modeling and evidence-based decision making.

All healthcare players, be they government, private initiative, suppliers or mediators, need to work together for their collective aim: to structure systems for sustainable funding and supply quality healthcare to the population.

Quintão is executive director of employee benefits at MDS Brazil. gustavo.quintao@mdsinsure.com

Now more appropriately referred to as “power skills,” a term coined by Dartmouth University president Philip Hanlon, these abilities tend to be less tangible and are often correlated with the personality traits that determine the way we act and interact with others.

The labor market is increasingly rewarding interpersonal skills. In the past three decades, jobs requiring high levels of social interaction grew by nearly 12 percentage points as a share of the United States labor force. Jobs requiring fewer social skills, including many STEM (science, technology, engineering and math) occupations shrank by 3.3 percentage points. Recent studies from Harvard and Stanford reveal that jobs with high social skill requirements have experienced greater wage growth than others.

Critical Thinking and Creativity

Power skills are not new to insurance, an industry that thrives on attracting and retaining clients and the ability to solve problems. But three trends are driving an increase in their demand.

The nature of work is rapidly changing. Study after study shows that millions of jobs are at risk of becoming automated. Artificial intelligence and other forms of technology will significantly transform the industry in the next three years. Chatbots are increasingly capable of handling routine client service functions from quoting to claims. According to Lemonade, its “AI Jim” can process a claim 316,800 times faster than the top-ranked insurer’s claims department. Similar technology will be adopted for managing simple commercial claims.

With machines capable of doing more routine service functions as well as sophisticated data analytics, smart organizations are reassessing what they look for in the people they hire. Technical knowledge, industry certifications and on-the-job experience aren’t enough. Billionaire entrepreneur Mark Cuban predicted in a recent Money magazine interview that “a liberal arts degree in philosophy will be worth more than a traditional programming degree.” Cuban’s belief is that AI and automation will transform the job market so much that degrees that teach how to think in a big-picture way and to collaborate more effectively with our colleagues will become more prized.

Increasingly, people are valued based on their ability to do what machines can’t do. Machines can produce and interpret data, but only humans have the critical thinking and creative skills to find ways to apply the data to gain a competitive advantage. Only people have the ability to simulate real human interaction. Reading the minds of others and reacting, interpreting social cues, adapting and playing off each other’s strengths are skills that have evolved in humans over thousands of years. The ability to manage these interactions is at the heart of power skills and humans’ advantage over machines.

The pressure to innovate is intense. With more than $2.5 billion invested in insurtech over the past 18 months, innovation is the word of the day. As technology facilitates new ways of doing business and enables insurance buyers to assume greater control, traditional companies are striving to remain relevant and at the forefront of superior customer experience. Meaningful innovation, not just increased efficiency, requires people with power skills that include deep empathy for the customer experience, the ability to think creatively and critically, the flexibility to adapt to new realities and the interpersonal skills to work effectively across department lines to accomplish difficult tasks.

The workforce’s expectations of leadership are changing. Projections indicate that within the next two years millennials and Generation Zers will comprise more than half the workforce. They are more educated, based on undergraduate and advanced degrees, than previous generations, and in many ways they view the business world differently. A company’s culture and reputation for social responsibility, equality, inclusivity and diversity in management are major drivers in choosing a place to work.

These young professionals have little regard for hierarchies and traditional forms of authority. They expect equal access to information and to be involved in company decision making, including how, when and where they work. They anticipate their jobs will be collaborative, interesting and challenging with continuous opportunities for growth.

Millennials and Gen Zers place a high value on the human element at work. They want to feel like they belong, to feel valued and to work in a supportive, culturally compatible environment. According to a 2018 study conducted by Rainmaker Thinking, a firm that monitors the impact of generational change in the workplace, “supportive leadership” and “positive relationships at work” rank as Gen Zers’ top two most important considerations in accepting a job.

In a different job market, leaders had the luxury of expecting employees to adapt to the prevailing corporate culture. Given the high demand for quality people and a limited talent pool, the pressure is on leaders to adjust. That means beefing up key power skills, such as communication, flexibility and emotional intelligence.

Building Power Skills

From small businesses to major corporations, companies are finding it increasingly difficult to hire applicants who can communicate clearly, problem solve, take initiative and get along with co-workers. According to an Adecco Staffing study, nearly half of executives believe that workers lack the power skills necessary to help a business succeed.

Part of the problem is basic power skills are assumed. People figure that, by the time you reach the workplace, you’ve learned to get along with others, be part of a team, communicate your ideas, write clearly and solve problems. Once you enter the business world, especially in a field like insurance, technical training is a necessity, and management and leadership training tends to focus on more advanced skills (while assuming the foundational skills are already in place).

Colleges and universities are rushing to fill the skills gap, but businesses can’t afford to wait. They need the skills now, and the payoff can be significant. An MIT Sloan study found that power skills training in problem solving, communication and decision making yielded a 250% ROI in eight months. Success factors included an overall boost in worker productivity, faster turnaround on complex tasks, and improved employee attendance. A Harvard, Boston University and University of Michigan study showed that training on power skills that included problem solving, self-awareness and interpersonal communication produced real results on metrics such as productivity and retention. The ROI on the skills training was 256%.

Power skills are essential to the way we work today and closely tied to a company’s success. It’s time for power skills to stand shoulder to shoulder with technical skills in every organization’s training and development efforts.

Paterson is executive coach and president of CIM. kpaterson@cim-co.com

I’d argue insurance brokerage has more of an uphill climb though, seeing that insurance doesn’t have a great track record of exciting the most talented candidates. But the best firms figure it out, so to me, it comes down to leadership. Show me a firm with strong leadership, and I will show you a firm that is, in most cases, a winner that attracts and retains talent.

Fortunately, in my humble opinion, the insurance brokerage industry has many strong and effective leaders. This leadership bodes well for the future, in spite of the disruption that is sure to come. However, with leadership comes responsibility. Remember the quote, “Heavy is the head that wears the crown.”

In this spirit, I would like to challenge our leaders to join together and commit to support the practice of civil discourse. When we see the incendiary nature of the ordinary day-to-day discussion that is taking place on both sides of the political spectrum, one cannot help wondering how in the world we are going to move things forward in the best interests of all. I believe that, because of the nature of our business, we are uniquely positioned to have an outsized influence on the entire process.

As you think about our industry, you realize that we cut across every economic sector and every socioeconomic element of our society. Consequently, our ability to influence major issues is considerable. Just think about the nature of the work of The Council’s Government Affairs team and you know this is true. Why should we care? As leaders, I think it is both a moral and practical necessity that we contribute to an environment where civil discourse is both expected and respected.

So let’s start with leading by example. Let’s start at home and at work by encouraging our families and our fellow employees to debate but, more importantly, to listen. At the end of the day, it won’t be a matter of whether we have changed each other’s minds but whether we respect each other’s opinions. If we can achieve that, we will certainly be able to find common ground—common ground for the greater good.

Doing this will, by nature, create honest and open work environments and will open us up to healthy debate, new perspectives and different ideas. That is where we can make our mark as leaders. And that is where we can make our mark in the fight for new talent. The next generation is watching us.

In closing, I’m excited about the year ahead and the opportunity and the responsibility that comes with the position of Council chairman. It will be a meaningful and fun year for me, and I look forward to being of service to you and your firm.

Martin Hughes is executive chairman of the board of directors at Hub International in Chicago and the 2019 chairman of The Council.

If you like to view your political outcomes in color, it was a mixed bag for the Reds (who lost the House but increased their majority in the Senate) and the Blues (who won the House but lost ground in the Senate). So with no clear red or blue wave in sight, many are calling this election the rainbow wave—more women than ever before were elected to all levels of the federal, state and local governments (including at least 121 members of the House, a record), and they included the first Muslim and Native American female members of the House and the first openly bisexual member of the Senate.

But I think the big winner coming out of the 2019 midterm elections was Green, as marijuana legalization advocates may have emerged most victorious. Michigan voted to legalize recreational use, and Missouri and Utah voters legalized medical marijuana. This follows Oklahoma’s June 2018 vote legalizing medical marijuana and Maine’s passage of legislation in May 2018 facilitating the administration of the state’s marijuana marketplace, which was first approved by voters in 2016. In January, Vermont legalized recreational use by legislation, becoming the first state to legalize recreational use outside of the election process.

This means that only four states—Idaho, Kansas, Nebraska and South Dakota—have not yet legalized some marijuana use. The District of Columbia and 10 states—Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont and Washington—have fully legalized.

Vermont does not authorize recreational sales (but you can grow your own). The D.C. statute does authorize sales, but the Republican House repeatedly blocked the expenditure of D.C. budget funds to enact and effectuate a regulatory oversight scheme for such retail activities (Congress has budget oversight over D.C.). One fallout of the Democrats taking the House is expected to be the removal of those impediments, and D.C.’s mayor, Muriel Bowser, already has announced plans to begin the process to permit recreational sales through the promulgation of a regulatory scheme (and the imposition of sales taxes, which is one of the great boons to legalizing states).

Another 23 states—Arizona, Arkansas, Connecticut, Delaware, Florida, Hawaii, Illinois, Louisiana, Maryland, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, Utah and West Virginia—now have full medical legalization regimes in place.

The other 13 states—Alabama, Georgia, Iowa, Indiana, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Texas, Virginia, Wisconsin and Wyoming—have limited medical legalization regimes in place that permit treatment of specified maladies, like epilepsy.

The biggest developments, though, may be coming. In New York, Governor Andrew Cuomo (who once called marijuana a “gateway drug”) has put a process in place that is expected to result in full legalization through legislative action early next year. In New Jersey, one issue that is dividing legislators from Governor Phil Murphy is how heavy the sales tax should be (with the governor’s budget projecting a 25% rate while the most recent legislative proposal specified a 12% tax rate).

Newly elected Illinois governor JB Pritzker also has announced plans to work with the Illinois legislature on full legalization, and many other states, including Connecticut, Rhode Island and Virginia, are actively evaluating legalization through alternatives to legislation. It is only a matter of time.

Or is it? As much as it seems like we are on the cusp of full legalization at the state level, marijuana use and marijuana-related business activities remain (very) illegal under federal law. Former United States Attorney General Jeff Sessions—perhaps the nation’s biggest marijuana legalization opponent—abruptly “resigned” the day after the election, and rumors are rampant in D.C. that Congress will formally vote soon (now that the new Congress is sworn in) to remove any federal prohibitions on marijuana-related activities.

If this does occur as projected, the United States would, in effect, “catch up” with its neighbors to the north and south, which both fully legalized earlier this year (Canada through federal legislation and Mexico by court order). That would open the door to the provision of full banking and insurance services to the fledgling industry. Canadian dispensaries, for example, are having no issues accessing banking services their U.S. counterparts are denied, and the credit card issuers also are embracing the Canadian marijuana economy they continue to shun in the U.S. (because for both U.S. banks and U.S. credit card companies, providing such services is a felony under U.S. law).

Removal of these federal impediments likely would usher in an era when big business starts to take over at least parts of the new marijuana economy, which remains—despite those federal impediments—the fastest-growing sector of our economy overall. So, if you count yourself a member of the real Green Party, your happiest days and your most lucrative opportunities may be yet to come.

Sinder is The Council’s chief legal officer and Steptoe & Johnson partner. ssinder@steptoe.com
Gold is an associate in Steptoe & Johnson’s GAPP Group. cgold@steptoe.com

Big deal, right? But this particular store stands out among the other 80+ Starbucks locations in the District in a way you may not have thought possible. One visit there, however, and you’ll begin to see its uniqueness. The H Street Starbucks has no music playing in the background, very little vocal chatter and baristas taking orders through sign language. 

Located near Gallaudet University, the renowned educational institution for the deaf and hard of hearing, the H street Starbucks enlists the expertise of a staff that is fluent in ASL (American Sign Language.)

Inspired by our December feature, Untapped Talent, I wanted to check out this new ASL Starbucks and learn more from the deaf community. At first glance, the coffee shop looks like any other Starbucks, but a closer look reveals subtle ASL artwork and graphics adorning the walls. Some of the artwork and signs even go so far as to teach customers certain signs for ordering and basic communication in ASL. If you don’t know any sign language, like myself, you are handed a tablet with a writing utensil to submit your order. I received my drink just a minute later when my name flashed on a monitor. My inaugural trip to this new ASL Starbucks was a rewarding experience.

A store like this allows for more connection and interaction between the deaf and hearing communities, which got me thinking about the surrounding community. In another recent Leader’s Edge article, Verna Myers, vice president for inclusion strategy at Netflix said, “If you’re going to have diversity, you’re not going to have effectiveness unless you’ve got the inclusion part. Because if you put a bunch of people together and they’re different but they don’t know how to really work across differences, it’s not going to work.” Echoing her advice, this Starbucks allows for inclusion at the marketplace. This experience didn’t just allow me to interact with the deaf community as a hearing person, but also as someone with Dyslexia, who at times also has a communication barrier.

For more tweets from Zach's trip, check out his takeover on Twitter.

The pudgy, plain, British actor, singer and comedian, who has been hosting The Late Late Show since 2015, was an insomniac’s secret until he suddenly started turning up everywhere. His Carpool Karaoke skits with famous singers flood YouTube. (Grab a hanky before you watch the Paul McCartney episode.) He hosted the Tony Awards in 2016 and the Grammy Awards in 2017 and 2018. It was even rumored he had a bit part in Star Wars: The Last Jedi. Alas, not true.

Predictably, Corden’s overnight ubiquity is backed by 22 years of solid work, and he’s only 40. He has written and starred in British television series, appeared in 30 films, and twice hosted the Brit Awards. He has won 38 honors himself, has starred in three music videos, and even has a role in the video game Fable II.

In Ocean’s 8, he’s a thorn among roses, investigating the jewel theft perpetrated by an all-girl gang: Sandra Bullock, Cate Blanchett, Anne Hathaway, Mindy Kaling, Sarah Paulson, Awkwafina, Rihanna, and Helena Bonham Carter. The setting is the Metropolitan Museum of Art’s Annual Costume Gala, awash in celebrities and designer duds.

Amidst this visual flurry, Corden’s appearance is brief and late in the game. Really, how much of the insurance angle do you want in a sexy heist flick? As he told Movie Extras, with a straight face, “The studio called me and said they were worried this film didn’t have much star power. Eight very talented actresses, but they needed a big star. And I said, ‘Sure, I’ll do it.’”

Just kidding. In fact, as one online fan site noted: “Corden is basically a case study in how to take over Hollywood with almost no one noticing until it’s too late, and that’s kind of impressive. Really, we should all be taking notes.”

Slice is just three years old. A lot has happened since it was founded.
We started three years ago, and that was ground zero. That’s three of us sitting around the dining room table. Our first year, what we were setting out to be was two things. One was seeing if we can reimagine insurance. We’re very big believers in on-demand. It’s an on-demand world, and things are going to be more on-demand and digital. The other was the new economy. We realized the world was shifting. People didn’t imagine cars driving themselves, their houses being shared or things like cyber risk. We thought that, if we wanted to get to where we wanted to be, we’d have to focus on the gaps, and there are lots and lots of gaps in insurance.

Our first year was primarily around testing our hypothesis on how we could change things. We wanted to completely depart from any existing process or system. We did things like imagining there was no application for insurance, because that didn’t make sense. You don’t apply when you hit the buy button on Amazon. We wanted to focus on the customer experience backward, because we’ve entered the age of customer engagement and the insurance industry was still thrusting quote, bind, issue, endorsement—all these arcane transactions on customers that really don’t make any sense for customers.

What became your initial business?
Slice designs and develops its own policies and provides all customer service, including claims. Slice underwrites on the paper of Great Lakes Insurance SE, a member of Munich Reinsurance Group, under a binding authority agreement. In October 2016, we wrote our first policy, which was a home-share policy for Airbnb, HomeAway and VRBO for short-term rental in the great state of Iowa. After the first year, we were very certain it would work, but we were also fairly certain that we can’t scale on our own. You take Airbnb—I think they’re in 191 countries. The largest insurer in the world after 150 years might be in 68 countries.

How did you set out to grow, to scale?
We needed a different model. We thought we could innovate, but in order to scale, we’d have to partner with incumbents. In October of 2017, we went live under the Progressive brand. It’s a very high-volume website. It was a win for us, and it forced us to grow up. That was our second-year goal—product, market, fit. We got into 50 states fairly quickly. We’re in our “scale” year this year, and next year we’re going to work on how we can hyper-scale and get as many products out in as many jurisdictions as possible. That was the reason for our recent $20 million funding.

That was for Slice Insurance Cloud Services. Tell us about it.
We launched Slice Insurance Cloud Services in January of 2018. These are cloud-based offerings that help insurers build on-demand, usage-based products. We had started a beta of it in October of 2017 with Legal & General in the United Kingdom. We thought we’d do maybe three of these relationships in our scale year, but by the end of the first quarter of this year, we could say it’s going to go a lot quicker than we thought. Because of that, we raised more money, so we could go more quickly. The whole hyper-scale is coming quicker than expected.

Does Insurance Cloud Services represent a change in focus for Slice?
When you’re a startup, you come up with a hypothesis, and you test, and you do these things called “pivots.” You try things out, and you decide to do next things. You could plot our trajectory by our past. We used to build policy, claims and billing systems for carriers. We used to build back-end systems for carriers for 12 years, and all three co-founders were doing that. In our last life, we built a distribution platform. For us, it’s just an evolution. From outside, it might look like a pivot.

There’s no way for us to scale on our own. How do you go head to head with somebody who has a $1.2 billion ad spend or a $2 billion ad spend? Our hypothesis was the only way for us to scale and hyper-scale would be to collaborate. If we truly have the innovation and a new way to do insurance—and it performs significantly better than traditional insurance—then the only way to scale it globally would be to partner.

Who are some of your other partners?
We are licensing our ride-share product to a large auto carrier in the United States. We want to show that homeowners and auto and commercial insurance and all property and casualty insurance can be digital and can be brought into the on-demand world.

We’re working on a large pilot in the United Kingdom with a 130 million to 200 million subscriber telecommunications company on embedding a travel accident product. From there, you can draw the trajectory by looking at our investors, like JetBlue and Veronorte, which is Grupo Sura in Central and South America. That’s the model that we’re looking at. We didn’t create the market, but we have something that people are looking for. Our appeal is that insurance will be part of a different experience. It will be part of the mobility experience or the travel experience or the habitational experience.

What does this mean for Slice’s own ride-share and home-share products?
I think we will continue to build our own products. Again, we have less capacity to build products than a top-10 global insurer. If they had our platform, they could build a lot more products quicker. We’re going to continue in the jurisdictions where we’re licensed, the United States and now the United Kingdom. We’ll continue to build and sell product under our own brand or white-label to other brands. We think that’s consistent.

What are some other products you’re working on?
We are doing a cyber product with Axa XL in the United States. That’s important because that shows that we can take the platform and—as long as the product is digital and as long as it meets the experience of Netflix and Uber and Amazon—we can put out a completely different digital product in a very short time frame.

What are the technologies transforming insurance today?
We know that tomorrow’s technology will be exponentially better than today’s. Technology on its own does not sustain competitive advantage for insurers. Removing expense does. In insurance, the product is data and being able to understand that data and understand that risk—that is what insurance is all about. I think data and AI is sustained competitive advantage. And to that point, we’re looking to launch a Slice line, which is our next offering, along the AI/data science side.

How do you see technology changing the role of agents and brokers?
In our previous life, we were online agents. We were licensed in 50 states. It was very frustrating because, when you’re an agent, you have to go out and get all the business and you have all these ancient carrier systems and processes and somehow you have to make it look like a good experience. I say that’s why we created Slice.

I always say if we eliminated the agents, the next day I would open an agency. It would be similar to Amazon opening a bookstore now. It would be a new kind of agency. It would be a base digital agency, and it would have good products that are easy to buy and easy to use. Agencies are going to morph. They will go the digital route as well.

That was the year the movie The Night of the Iguana, directed by John Huston, was released. Filmed on location at a nearby beach in Mismaloya, this tropical slice of the Pacific Coast of Mexico was a star.

As is now legend, leading man Richard Burton and actress Elizabeth Taylor began an affair during filming. As a gift for her 32nd birthday, he gave her a villa perched on a hill in town, Casa Kimberly, and bought the casita across the street for a pool, connecting the two by a bridge modeled after the Bridge of Sighs in Venice. Not only did they fall in love with each other, they also fell in love with Puerto Vallarta, using the villa as a place to escape and entertain friends during their on and off romance and putting the seaside city on the tourist map.

Taylor sold the property after Burton’s death in the 1990s. Hotelier Janice Chatterton bought the two homes, which had suffered decades of decay. She restored and expanded the complex, which opened as the Casa Kimberly hotel at the end of 2015, a luxurious stucco and Mexican tile enclave of nine magnificent suites, each named after one of Taylor’s movies. Most have private terraces that offer sweeping views of the Sierra Madre Mountains, a cascading tangle of lush jungle, and Banderas Bay, a 62-mile stretch of beaches anchored on the north by Punta Mita and on the south by Cabo Corrientes.

Many people who fly into Puerto Vallarta head straight from the airport north to the Four Seasons Punta Mita, where the beaches of the Riviera Nayarit are more pristine. With the opportunity to make memories where Dick and Liz did, you’d be remiss not to spend a few days at Casa Kimberly, an exquisite base for exploring the cobblestone streets and architecture, taking a four-wheel drive tour of the mountains, and boating to Huston’s beach hideaway for a day of snorkeling, kayaking and swimming.

Puerto Vallarta has also become one of Mexico’s top gastronomic destinations, much of the credit due to chef Thierry Blouet. In 1987, this Frenchman fell in love with the city (there’s a pattern here) while working at the Camino Real hotel, when resort fare defined the culinary scene. Seeing an opportunity, he opened Café des Artistes, a nouvelle cuisine French restaurant in El Centro. He was the first to start bringing food in by air: vegetables from Mexico City and the state of Mexico, as well as seafood and imported meats from Guadalajara.

Dining at Café des Artistes and other chef-driven restaurants, like The Iguana and Trio, is a must. However, some of Puerto Vallarta’s best food can be found in the most casual places—Pancho’s Takos for tacos al pastor to go, Joe Jack’s Fish Shack for fresh fish sandwiches and Mexican craft beer, and Café de Olla for traditional fare like queso and chorizo with freshly made tortillas.

What’s to love
Spanish, French, British, Creole, Catholic, Greek and African heritages have shaped everything in Mobile, the oldest city in Alabama. From architecture to cuisine, “Port City” is somewhat of a melting pot. Nearby, you can explore the battlegrounds of Civil War forts, tour the USS Alabama battleship that permanently resides in our bay, go crabbing or kayaking on the delta, or bury your toes in the sand at a beach.

Gulf cuisine
The farm-to-fork movement is a popular shift in many Mobile restaurants like The Noble South, which dishes up Southern classics with a creative twist. But fresh Gulf seafood has always been the heart of Mobile’s culinary scene. It’s as abundant as it is delicious. BLUEGILL Restaurant on the causeway is a great local dive that’s been the pride and joy of our seafood restaurants since 1958. They’re known for their flaming oysters and prime location on the Mobile-Tensaw River Delta. The sunset views are glorious.

Fuego is a Mexican fusion restaurant that has a fun happy hour. They serve a variety of margaritas and local craft beers. The fact they’re located across the street from our office is a bonus.

The Battle House Renaissance Mobile Hotel & Spa. Located in the heart of our revitalized downtown, this historic hotel has been recently renovated. It’s also a short walk to Wintzell’s Oyster House, the oldest oyster bar in town, for fresh Gulf oysters shucked right in front of you.

Don’t miss
Getting out on the water. The Mobile-Tensaw River Delta is the second largest “swamp” in the United States. From fishing to a sightseeing cruise to kayaking and canoeing, there are many ways to roam the waters.

Most people don’t know that Mobile is the birthplace of America’s original Mardi Gras. Originating in 1703, it was revived after the Civil War when Mobile citizen Joe Cain, fed up with post-war misery, led an impromptu parade down the streets of the city. We’ve been carrying on the tradition ever since with parades, colorful floats and flying MoonPies (a locally made graham cracker, marshmallow, chocolate snack).

Side trip
Gulf Shores and Orange Beach are just south of Mobile. The 32-mile stretch of beach has white sugar sand, a laid-back pace and a family friendly environment with plenty to see and do.

This year’s class of scholarship recipients includes 56 seniors and 19 juniors. Of the winners, 34 are female and 41 are male. Frequent majors include business administration, communications, computer science, economics, finance, government, healthcare administration, risk management and insurance, sales, and business marketing.

The Foundation’s Scholarship Program partners with the internship programs of member firms of The Council of Insurance Agents & Brokers. The program exposes college students from across the country to the commercial insurance brokerage sector with the ultimate goal of keeping them in the business after graduation. Of the 125 students who received scholarships over the past two years, nearly 53% have been hired or repeated an internship with a Council member firm.

“Recruiting the next generation of industry leaders is perhaps the biggest hurdle our industry faces, and being able to make a difference in the career trajectory of these students—particularly within the walls of our member firms—is both exciting and rewarding,” says Ken Crerar, president and CEO of The Council.

Students must be formally nominated by the respective brokerages at which they interned, which also must be participants in the scholarship program. Awardees are then determined by an independent committee.

For more information on how to participate in the 2019 scholarship program and nominate interns next summer, please contact Jess Hilb, foundation associate for The Council. 

What do employers need to know generally about mental health coverage and healthcare in the workplace?

Gruttadaro: It’s costly to ignore. Mental health costs employers $200 billion annually. It impacts not only the cost of care but also lost productivity—not coming to work or showing up but working at a subpar level.

Mental health conditions impact one in five employees at all levels of an organization, including the C-suite. We know mental health conditions don’t discriminate based on education level, race, ethnicity or income. And about half of all employees with depression aren’t getting the care they need. This is common in the workplace.

Conforti: We are starting to see both mental health and, more specifically, substance use pop up among employers’ high-cost claimants. I worked with an employer where the care for one member over a three-month period at one treatment facility was $250,000. Those kinds of costs are getting people’s attention.

We also do have a shortage of psychiatrists, and we have for the last five to eight years. We are starting to see that many therapists aren’t joining managed care panels, because they realize they can get paid more on an out-of-network basis. If you look at it broadly, we are seeing an increase in costs and a shortage of good, solid clinicians.

The Center for Workplace Mental Health recently released guidelines employers can use to improve access to mental health services. Why now? Didn’t the Affordable Care Act and federal mental health parity laws improve coverage in this space?

Gruttadaro: The ACA required that all small group and individual market plans that were new had to cover 10 essential health benefits, and mental health and substance use were included for the first time. The federal parity law required parity for medical/surgical care and behavioral health if you offer that coverage.

But we have found from repeated reports and studies that employers and health plans aren’t complying with parity. A Milliman report released in 2017 made it clear it’s not happening with psychiatrists’ payments and network adequacy.

Employers need to be asking why they don’t have an adequate network of behavioral health providers. They should be asking how much insurers are seeking providers to join their networks and if plans are connecting with the local psychiatry and social work associations to recruit providers to insurance networks. Employers also need to know how much they are paying for services and what the criteria are for those payments.

The non-compliance we are seeing could be from confusion and a lack of understanding about how to comply. But this has been an ongoing concern, and we are finally seeing the U.S. Department of Labor and state insurance commissioners looking at compliance and going after those that aren’t in compliance. And employers, if they are self-insured, are liable if they are not in compliance. The buck stops with them.

What should a plan look like that has true parity between medical and behavioral health benefits?

Gruttadaro: In a broad sense, it exists when insurance for mental health and substance use benefits are the same as their medical/surgical benefits. If a plan provides unlimited visits for someone with diabetes, it should do the same for mental health. This includes treatment limits, co-pays and deductibles.

Where employers are getting tripped up is in areas of non-qualitative treatments, like in pharmacy benefit management using step therapies. If they are using that for mental health but not on the medical side, they could be at risk of being out of compliance. Other areas are health plan management criteria, utilization review and when medical necessity is applied more strictly in mental health.

Another area is provider payment levels. The Milliman report found there was a disparity in provider payment levels for primary care doctors and psychiatrists. In the report, primary care doctors were paid 20% more on average than psychiatrists for evaluation and management office visits.

The other aspect is network adequacy. Plan participants shouldn’t be required to go out of network to see a behavioral health provider more often than they do for a primary care or specialty physician. It’s the responsibility of the health plan to ensure network adequacy, because if it is not adequate, [employees] won’t have access to the care they need.

To help employers, the Department of Labor released a set of frequently asked questions that are helpful in describing the qualitative treatment limitations and non-qualitative treatment limitations where there are common violations occurring.

Stigma tends to be a consistent barrier to people seeking mental health treatment. What can employers do to reduce this and encourage use of needed care?

Gruttadaro: The good news is more employers are engaging in workplace mental health and seeing it as an important topic to include when talking about broader health and wellness. They are raising awareness and bringing in speakers to talk about mental health when they have a health fair. It normalizes behavioral health issues as health conditions that are common and also makes it safe and OK to talk more about it. It’s about creating a culture where there are those conversations, and if an organization’s leadership can speak to it, whether it’s personal or a close friend or family member, it creates a safer culture and climate for employees to get the help when they need it.

What do brokers need to know about ways to improve mental health access for their employer clients?

Conforti: Behavioral healthcare tends to consistently be about 3% to 5% of overall spend, and employers may have to end up spending more to ensure employees get the help they need. What we talk a lot about internally is making sure the programs in place are being utilized and set up appropriately. If you have a program but it isn’t communicated, how do you get that information to them? Utilizing more web- or app-based services is important.

Many employers bundle behavioral health with disability in their EAP [employee assistance program], but it generally doesn’t get communicated. They often just offer an 800 number for anyone that needs the service.

There are lots of programs where we integrate vendors, and you have to make sure employees know what programs are in place. If you have an employee who is struggling with sleeping and their Ambien usage is increasing, it might be helpful for them to know they have a cognitive behavioral therapy program online that helps them create better sleep patterns so they get more rest. You have to push through the vendors to make sure people are aware the benefits are there and available, and that is critical.

The other piece is better navigation. When employers have an EAP, wellness program, medical coverage and behavioral health coverage all in different areas, they need to make sure people know where to go to get help. Many times people are going to need help not at noon but at 3 a.m. Employers need to make sure the treatment is accessible and people know how to use it.

They can also offer broad programs like talking about substance use through the lifetime. For instance, a big concern now is kids vaping when they are young. Employers could put information out there about the topic or say they are offering a webinar where people can go online and listen on the topic. They can take what critical, relevant issues are going on and talk about them.

Are there any new or innovative programs out there that brokers or employers are using in this space?

Conforti: Some are doing things like positioning behavioral health clinicians at on-site and near-site clinics. They are incorporating medical and behavioral health in one space and not keeping them separate. That’s something I’ve seen to help increase usage and reduce stigma by having it all there in one location.

Some companies are providing access and navigation services—bringing someone there to help employees wade through the system. I work with one employer that likes to put in specialized programs, and it is paying in the six figures to bring in mental health clinicians to help employees navigate through the system and get the care they need.

There are also home-based services being used. One example is bringing someone to a person’s house to provide something like applied behavior analysis treatment for autism. They are trying to figure out how to keep someone out of the hospital, and there are some enhanced options that help abate crises we see that keep people out of inpatient care.

You mentioned EAP plans. Have those been effective in helping to treat behavioral health conditions?

Gruttadaro: Only about 5% of employees in general are going to access support in an EAP. Employers are looking at more innovative approaches to get people involved with EAPs, including packaging behavioral health around other things like offering caregivers for the aging. They are bundling issues together so people feel comfortable calling and are more engaged and more encouraged to open up.

Conforti: Creating policies and procedures with an EAP has been effective as a resource for people having issues. It allows employees to get help and not worry about confidentiality or termination. Employers can say, “We have this program, and we don’t need to know why you are going. But we just want to know that you are getting help for whatever the reason is that you are always leaving early or you may not be showing up on Mondays.”

One employer I worked with was affected by three suicides in one of its locations, so it enhanced its EAP program around stress reduction and mental healthcare and resiliency. Sometimes [an employer] implements things around a specific problem like that, and sometimes it’s just by trial and error. It depends on what the threshold is in terms of what an employer can and can’t do. And it will look different for various employers. What a hospital will do is going to be different from what you might see at a construction company or a technology firm.

Emelda Sanders interned with Philadelphia Insurance Companies in the summer of 2018. “It is important to understand that there are different levels of deafness, from hard of hearing to profoundly deaf, and that deaf people learn visually,” Sanders says. “Because of this, it is important to create equity in an environment that is mainly designed for hearing people. To create equity, communication access is of key importance. Ideally, have the other employees learn at least some basic American sign language (ASL), and hire qualified ASL interpreters. Along with language, it is also important to have at least a basic understanding of deaf culture…. The invention of technology has made every impossibility possible these days. For instance, deaf and hard-of-hearing workers have access to communication devices like video phones, ZOOM Video Communications for conference calls, email, text messaging, FaceTime, and many other technological communication devices.”

Chrissy Sze explored how Siri and other voice-activated systems help insurance companies during an internship at the Washington, D.C., Department of Insurance, Securities and Banking. She graduates this month and would like to find a job in New York City that merges her RMI major and love for numbers. “I learned that it was not a shame to ask for help,” she says. “There is nothing wrong with that. It is important to follow your heart and try your best as much as you can.”

Jerome Dupuis says he fell in love with RMI after taking an introductory course. Before that, he thought he’d be a stockbroker. He interned with the D.C. Department of Insurance, Securities and Banking, investigating scams and frauds and researching and presenting on cryptocurrency and blockchain technology. “I became really interested in the hands-on of internet research,” he says. “Investigating scams and fraud is never boring. It kept me curious and forced me to dig deeply to find answers. Before this, I thought these issues only existed in fictional worlds, such as movies.” People who work alongside deaf interns, he says, should take initiative “to show them the entire scope of the job. This would allow deaf or hard-of-hearing students to more fully experience the real world.”

Sarah Bakos-Killian, who interned for the World Wildlife Fund for two semesters her junior year, expects to graduate in May 2019. “The most valuable thing I learned from my internship is that risk management principles can be applied to nearly any industry or interest, so there is endless opportunity,” she says.

Jake Grindstaff has had three summer internships: with the D.C. Department of Insurance, Securities and Banking in 2016; with NFP Insurance Agency in 2017; and with Marsh in 2018. “Those internships have taught me so much about myself and the workplace in this industry,” he says. The experience increased his confidence in his work performance, in addition to helping him focus on what kind of job he’s interested in post graduation.

Nabeela Shollenberger spent 10 weeks as an intern in the underwriting department at Philadelphia Insurance Companies. In addition to learning about a great variety of projects, she particularly enjoyed a women’s networking session, and she had the opportunity to get out of her comfort zone and give a presentation to department heads and the CEO.

Montray Roberts was an intern at AHT Insurance in the spring of 2018. He expects to graduate in December 2019 and hopes to explore a variety of careers in insurance, including being a broker and actuary and working in risk management. One of his projects at AHT involved creating a game for the many kids who attend Take Your Child to Work Day so they could learn about insurance.

When the minister opened his sermon by introducing Maguire to the congregation, “Victor leaned to me and said, ‘Stand up now,’” Maguire recalled. “I had no idea what was happening. They told me that there may be some people who wanted insurance after the service. I sat in the back of church that day, writing policies for hours. And that’s how it started.”

Maguire had already realized the deaf community didn’t have access to standard-rated policies, so it didn’t take long for a mutual respect to form between him and his new clients. He had such a flood of business that others marveled at his success. That flood continued for the next 55 years. He established the Maguire Insurance Agency in 1960, then Philadelphia Insurance Companies in the 1980s. Maguire is now 84 years old, and the Maguire Foundation that carries his name has impacted countless lives—including a new generation of the deaf community.

Cloning Saint Joseph’s

Born during the Great Depression into a large family, Maguire moved around a lot due to his father’s job with Met Life. Moving from city to city meant new schools for Maguire. He struggled with his studies and eventually fell behind academically at Niagara University, which he attended on basketball and work-study scholarships. He left school and was conscripted into the Korean War. After two years in Japan with the U.S. Army, he enrolled in Saint Joseph’s University on the GI Bill.

It was during this time at Saint Joseph’s that Maguire’s life would begin to take a new direction. As a senior basketball player, he volunteered to work with athletes from a nearby deaf school. His father, who died unexpectedly of spinal meningitis at age 45 on the night Maguire graduated high school, had also been partially deaf. Before long, Maguire had formed a relationship with the local deaf community.

It was also at Saint Joseph’s that Maguire met Reverend Hunter Guthrie, a noted pioneer in the study of dyslexia. Maguire credits Guthrie with first recognizing that his educational struggles were related to dyslexia. That discovery radically transformed Maguire’s life. After working with Guthrie, Maguire graduated from Saint Joseph’s with a 3.0 GPA.

Forever grateful to the school that helped him finally succeed academically, Maguire has given many gifts to Saint Joseph’s over the years. One of the most significant is the Maguire Academy of Insurance and Risk Management, which supports the school’s risk management and insurance (RMI) program. The program is an industry leader, graduating 400 students last year. A handful of years back, Maguire had the idea of cloning it.

And while he didn’t quite clone it, in 2015 Maguire’s two passions came together when he helped establish an RMI program at Gallaudet University in Washington, D.C. Founded in 1864, Gallaudet is a private university for the deaf and hard of hearing.


The Gallaudet program, now in its third year, has 38 students, and 19 students have declared RMI as a major. In 2017, a new chapter of Gamma Iota Sigma, the international risk management, insurance and actuarial sciences fraternity, was chartered at the school, with 28 members inducted. December 2018 will see the program’s third graduate, and six more students are expected to graduate throughout 2019.

The program focuses on creating fresh opportunities for students and the industry alike, on changing mindsets, and on providing exposure in a time when the field desperately needs a new source of talent. Maguire calls it “a fantastic success.”

“The idea of teaching insurance to the deaf community seemed like a natural,” Maguire said. “Today, 90% of the communication in the insurance industry is done through the computer. These kids are smart. They can’t hear, but that’s their only handicap. And with a computer, that handicap is overcome.”

He Never Forgot

While Maguire is the vision and support behind Gallaudet’s RMI program, it has taken the work of many to get it off the ground, particularly Jim Bruner. The executive director of the Maguire Academy, Bruner was a member, in the 1970s, of the first integrated class of deaf and hearing students at the Rochester Institute of Technology. The school is home to the National Technical Institute for the Deaf. Initially Bruner gave little thought to what it would mean to have a deaf roommate—but it opened him up to a new world and a whole new language.

But when you leave your comfort zone, that’s where the true growth happens.

Jim Bruner, executive director, Maguire Academy of Insurance and Risk Management

After graduation, Bruner went on to spend 30 years in risk management and insurance in various capacities, including time as an account executive with Wausau Insurance Companies/Liberty Mutual Insurance Companies and area vice president with Gallagher.

But he never forgot.

And in 2015, as an empty nester looking for a new life experience, he found himself living in a dorm with deaf students once again—this time preparing for his new role at Gallaudet. “I wanted to immerse myself in the culture,” Bruner says. “And three years later, here we are.”

“Brokers, insurance companies, we all want diversity and inclusion within the workplace now. It’s a real priority. But deafness has fallen through the cracks. We just don’t think about it. We have an amazing talent pool here that everyone should know about.”

Does it take a little bit of adjustment? Sure.

“But when you leave your comfort zone,” Bruner says, “that’s where the true growth happens.”

Thriving Interns

Once Bruner became executive director of the RMI program, it didn’t take long for him to recognize that industry internships would be an important component of its success. In 2016, he was invited to attend a meeting organized by the District of Columbia Insurance Federation, at which he and Robert Shilling, a representative from the Maguire Foundation, told those gathered about the program.

Stephen Taylor, commissioner of the DC Department of Insurance, Securities and Banking (DISB), liked what he heard. Supporting the effort was an easy decision, Taylor says, especially since it fit with his department’s goals to partner with academia and financial services providers through its Financial Services Academy. “The program has an excellent mission and focus, and, more importantly, it has an amazing advocate and leader in Jim Bruner,” Taylor says. DISB brought on its first intern that same year, another in 2017 and two more this year.

“We found that communicating with the interns was not the obstacle that some may imagine,” Taylor says. “Rather, we found various ways to express ourselves, such as using notes, interpreters and text messaging. What we also found were impressive, driven and outgoing students who would make valuable contributions to any internship program.”

In 2018 alone, 10 students have taken part in industry internships. In addition to DISB, they’ve worked at organizations such as Marsh, AHT Insurance, World Wildlife Fund, NFP and Philadelphia Insurance Companies, focusing on projects like telematics, blockchain, underwriting, policy analysis and wearable medical devices.

“These students are incredibly bright,” says Randy Jouben, a 30-year risk-management veteran who teaches several courses in the Gallaudet RMI program. “They have a desire to do well and to prove themselves. I think a lot of people might look at the fact that they’re deaf or hard of hearing as a negative, when it’s actually not. They’re gifted, imaginative students and have experiences that a lot of others haven’t had. It makes them adaptable. That’s a soft skill that’s hard to teach, but these students have it.”

Immediately Contagious

As the internship opportunities for Gallaudet students have continued to expand, so has student interest in working with brokers, insurance companies and risk management departments—and those entities have responded in kind.

Last spring, Sean Gormley, the director of commercial brokerage at AHT, and Kate Armfield, AHT’s chief operating officer, found themselves visiting the Gallaudet campus to interview five candidates.

These students are incredibly bright. They have a desire to do well and to prove themselves. I think a lot of people might look at the fact that they’re deaf or hard of hearing as a negative, when it’s actually not.

Randy Jouben, risk-management veteran and teacher, Gallaudet RMI program

“It was a very exciting experience,” Gormley says. “A lot of energy came from that initial meeting.” The candidates all brought enthusiasm and confidence, he says, “and it was immediately contagious.” Gormley had no previous experience with the deaf or hard of hearing, and he didn’t know what to expect. “But I was eager to expand what I knew about the community,” he says.

Gallaudet helped prepare the brokerage—a service it offers all host organizations—through a deaf awareness workshop. A dozen or so AHT employees attended, along with Montray Roberts—the inaugural intern—and several representatives from the university. The workshop offered insight into the deaf and hard-of-hearing experience, as well as practical suggestions for overcoming barriers both perceived and real. Take, for example, communication.

“Our work is so oriented toward technology that it really wasn’t a hindrance,” Armfield says. “Having worked around that, I think we would be game to have any kind of intern now, whether hearing impaired or a blind person. It was a real game-changer for us in terms of how we can bring on more talented people.” It simply came down to accommodating people with different needs.

At Marsh, meanwhile, Charmaine Davis, a senior vice president and Gallaudet board member, was having learning experiences of her own.

“The nature of the work we do, it’s about high expectations and constantly delivering,” she says. Working with the interns, however, she found that she had to stop and slow down to interact—and to think about how she communicates with others.

One of the things that surprised her was how many of her colleagues took an interest in the interns. Some had hearing challenges of their own. Others had family members who were deaf or hard of hearing. “They were so engaged, having the students here,” she says. One colleague in particular learned enough sign language to invite the first two interns to lunch and carry on a conversation. Charmaine says she knew “a little bit” of sign language and the interns appreciated any attempt she made to use it. The company also displayed presentations on video screens and made use of instant messaging.

“They never seemed to be frustrated with us, even when we were trying to find ways to communicate,” she says.

Marsh has a complex diversity and inclusion program, and Charmaine says the partnership with Gallaudet allows the company to “cast a wider net.” Next time around, however, she says she’d like to see more interpreters available to help out. In some instances, there were workarounds, but it still could be better. “That was a missed opportunity for all of us,” she says. “From a board member’s perspective, we all buy into the mission. We all have empathy because of our personal experiences. Mine is about education, and therefore, there are no boundaries. Anyone who’s interested, I’m on board. I’m so privileged to be a part of people who are so passionately devoted to this community.”

Two-Way Learning

Aside from the direct lessons on underwriting, risk management, analysis and the like, the Gallaudet RMI program offers one other decidedly distinct element: a deaf insurance broker teaching classes. Gary Meyer, who also has 30 years of experience, believes he may be the only deaf insurance broker in the property and casualty business. He is vice president of DHH Insurance Agency, which he founded in 1996 (in 2005 the company became a division of C.H. Insurance Brokerage Services). DHH Insurance has provided insurance programs to the deaf and hard of hearing population since its start. Meyer met Maguire when his company approached Philadelphia Insurance Companies about setting up a national initiative to provide professional liability insurance for sign language interpreters, and the men became friends.

In pulling the Gallaudet program together, Maguire asked Meyer if he’d be willing to serve on the board and offer consultation. “We were always keeping in mind that someday I would be an instructor at Gallaudet, and now I am,” Meyer says. Video conferencing software allows him to teach remotely from Rochester, New York.

“I provide direct communication with the students,” Meyer says. “By that, I mean, it’s not relayed through an interpreter. It’s from me, right to them. Most deaf individuals would prefer direct communication. There’s a personal relationship that can be built that way, and wanting that is a very common feeling in the daily lives of deaf people.” He believes it makes an impact that he’s able to understand how deaf students think and to understand the culture. He says it’s also important to be able to be a positive role model for the younger generation.

While the students are learning from the instructors, the instructors are learning from them.

“I normally confuse people who ‘can’ hear me,” Jouben says. “When the interpreter is there, I have to slow down. I have to be conscientious. I’ve learned to pick up when there’s an understanding gap.” And that, he says, has transferred over to conversations with all people. “I know that people don’t understand me when I talk about risk management and insurance,” he says. “Now, I’m more cued in to the visual cues that people have lost my train of thought. I also am adapting to the usage of particular words, words that have multiple meanings.” 

Continuing the Relationship

Most deaf individuals would prefer direct communication. There’s a personal relationship that can be built that way, and wanting that is a very common feeling in the daily lives of deaf people.

Gary Meyer, vice president, DHH Insurance Agency

At Philadelphia Insurance Companies (PHLY), where the deaf community has richly been woven into the organization’s history, the partnership with Gallaudet began in 2015. There were two interns that year, placed within a larger 10-week summer program that typically brings 40 to 50 interns. Each year since, PHLY has brought in two more.

Laura Boylan, vice president of human resources, says the first year in particular was “a learning experience all around—for us, for Gallaudet and for the interns. We had done all of the research and homework and felt like we had the tools and resources in place to help them be successful in their internships. What we didn’t really factor in was that the students didn’t have any work experience in an office environment. The beautiful piece of that is we were open with one another and candid. We learned as we were going along together.”

The story of how the company started has long been emphasized among employees, she says. “And knowing we’re able to continue that relationship with the community of people that Mr. Maguire started the company on, to say that is a feel-good story seems underwhelming,” she says. “But it goes along with what the people here would expect us to do. The core values that shaped us back then still shape us today.”

As for Maguire, he’s still shaping the younger set, too.

Consider Emelda Sanders, who expects to graduate from Gallaudet in December 2019. As an African hard-of-hearing woman, she says, “I had lost all hope in obtaining a meaningful career.”

But then, opportunity arose. She spent the summer of 2018 with PHLY and found the experience very inspiring. In one pivotal moment, she met Maguire and his daughter, Megan Maguire Nicoletti, who is trustee, president and CEO of the Maguire Foundation. They encouraged Sanders to stand strong and believe in herself and to know that she could make her dreams come true.

“The diverse group of people I worked with encouraged me to be creative, motivated and innovative,” she says. “I am especially thankful for my supervisor and mentor, who were supportive role models. Our team collaborated in designing a new product for a competition, in which we took second place.” PHLY’s summer associates team up to revamp products that PHLY writes and then make presentations to senior leaders.

Her team’s diversity, collaboration and mutual respect was its strength, she says, and that wasn’t the only positive aspect of the experience. “All levels of management and employees were approachable and treated each other professionally, equally and respectfully. When I continue with my career in RMI, I would like to emulate these skills, because it felt like a place where everyone can grow and it contributes to the company’s success.”

Soltes is a contributing writer. fionasoltes@aol.com

You’re retiring after 15 years of running Leader’s Edge. What was your vision when you and Ken Crerar first created the magazine, and do you think that you’ve achieved it?
I’ll answer the second question, first. Yes, I think we have. Ken used to send me notes when I was editor in chief of IA magazine, Independent Agent. And he liked what I did there, so he hired me to create a whole new magazine for The Council.

We had a lot of discussions and found right away there was no publication in this niche. I mean, it seemed kind of silly. There were probably 20 insurance business magazines at the time, and not a single one targeted commercial insurance brokers.

So we sat down and started talking about what we could do and do differently. Because with 20 or so magazines out there, we had to be different or we’d never get noticed. And that was a big concern of ours: how do you step into a field that’s already loaded with publications?

So we created Leader’s Edge to be really smart, visually pleasing, and totally about our members. It wasn’t about The Council.

We didn’t want to bore our readers, which a lot of the established publications did. So we decided to try something daring. I give Ken a lot of credit for doing this because we ran into a few obstacles along the way, but he stuck with it.

Leader’s Edge is visually different from everything else, and content too. But the first thing you do is you see it. What gives you your inspiration for the design and the way it looks?
I like it to look more like a consumer magazine. We have really long art meetings, as you know, to try to come up with cool ideas to visualize a story. Ask yourself this question: how in the world do you visualize insurance? I mean really, the whole idea is crazy. And yet, for 15 years, we’ve managed to do some really interesting things to achieve that. It’s not easy. We have stories that are very, very difficult to visualize. And so you use a lot of imagination. You find some really good designers, and you just put your heads together and throw stuff around, throw it up against the wall, and you see what sticks.

You are being honored as a game changer this year. Can you talk about what that means and also how you see Leader's Edge in that role, as well?
Well, it’s a real honor. There’s no doubt about that. I think I’m a game changer because Leader's Edge is a game changer. It really is just a lot different from all the other publications. One of the nicest compliments we had as a publication was when our competitors started to copy us. And several have over the years. So, yeah, it’s a very nice honor. But Leader's Edge is really the game changer in the industry. It’s a first. The industry never had anything like it before.

Alright, now some fun questions. What was your favorite piece over the years? Favorite article?
Oh, that’s difficult. Early on, we did some investigative stuff, which is fun, about some of the regulators. Actually, the recent Q&A we just did with Vernā Myers I thought was fascinating.

Favorite cover?
There’s a story behind the covers. It’s indicative of the evolution of Leader’s Edge. We did a story about insuring body parts. It covered hand models, surgeons, actors and all types of people who insure different body parts because they rely on them in their profession. It was a fun story. So our creative director at the time, Ted Lopez, came up with this art, which was a pair of women’s legs in fishnet stockings, upside down, covering the table of contents.

We were very much a visual magazine, but we were still a little bit conservative back then. And when Ken saw that, he said, “That’s the cover.” And that sort of opened up, “OK, we can do a lot more with the magazine, as far as covers go.” So then we did. We started really pushing the edge on covers. Sometimes, too far, and they didn’t get published.

But one of my favorites was actually before the “legs” cover. The story was about benefits for aging baby boomers and the headline read “Aging of Aquarius.” We had a bunch of elderly people on the cover, and they were all women. My boss at the time, Barbara Haugen, said you can’t put just a bunch of hippie women on the cover. It was sexist. But we loved the art. So Ted put a beard on one of the women, so it looked like we had three women and a man on the cover. And you couldn’t tell he was a she. And they were all dressed in tie-dye and head bands. It was a classic.

There have been so many good covers. Another one of my favorites was about drones. We used a takeoff on a movie poster of Alfred Hitchcock’s The Birds, and in place of birds on the cover, our creative director Brad Latham put hundreds of tiny drones. I really love that cover.

Is there any specific issue that has been your favorite to cover?
I guess it would be regulation. Our industry has a history of coping with a lot of shady regulators. I’d love to do more on that. It’s just so hard to dig into it and find it, but it’s out there. And that probably comes from my background of being an investigative reporter. I love the challenge.

What has been your biggest regret over the 15 years?
I always wanted to do a big takeout on the NAIC and just really dig into what’s behind the NAIC, but that would take about a year’s worth of work.

Biggest lesson learned? And this will be helpful for me.
Biggest lesson learned. Oh, jeez. Well, I guess it’s this. No matter how hard you try, it’s never going to be perfect. And so work to make every issue a little bit better than the last one. You can’t do it all at one time.

I think that’s great, and I was going to ask you: what would be some advice for me? And I’ll take that.
Yeah, I think I just gave it to you.

So tell us what you’ll be up to come January.
Well, I write novels. I love to write thrillers. I’ve written three so far, that have been published. The first one, Naked Ambition, became a bestseller, which was nice—and shocking. The sequel, Naked Truth, was just published in September. I’m working on my fourth thriller, now. It’s a stand-alone. The working title is Borderline. It’s for my agent who has been bugging me for a long time to do a stand-alone. That’s due next summer, so I’ll be busy this winter.

I want to write a lot of books. Probably not all novels. Because writing novels means you sit alone for hours and write. I’d like to write some non-fiction books where I have to actually go out and play reporter again.

Well, we’ll look forward to what’s to come and maybe even a little more writing for you at Leader’s Edge?
Totally possible. After a few months’ vacation.

Tell us about yourself.
I had been teaching French and planning to be a professor, and I entered a program that was kind of experimental at the time to rehabilitate humanists and turn them into functioning business people. I interviewed with various firms in the business world of which I knew nothing and wound up going to Johnson and Higgins. Basically, they seemed like very good people. I had no idea what insurance brokers did.

I did lots of things at J&H over the years and eventually moved in 1992 to France. Having taught French at one time and being pretty good at it, it paid off. I wound up in Paris for four years with J&H. When I came back, I became international practice leader. We were acquired by Marsh. I went to HRH, which was bought by Willis.
So how did that bring me to WFII? I talked with people at The Council somewhere around 2002 and became one of their representatives at WFII.

How did you become chairman?
I’ve been around a long time, so sooner or later they were going to get to me. The chairmanship rotates among five regions of the WFII. It was our turn.

Where is WFII on opening new markets and the effects of Brexit?
Expanding into new markets is always very much on the agenda, specifically liberalization, so brokers can freely operate once they get licensed.

Brexit may be an issue because freedom of services where brokers could easily move around the European Union is potentially going to be much more challenging. The large brokers are already situated in and out of the new EU. But it’ll be interesting for other brokers. And we have many small broker members who are represented by the WFII. So Brexit’s an issue.

What about trade issues with the Trump administration?
The answer is potentially yes. There’s been a lot of discussion about border adjustment taxes, taxes on reinsurance and potential retaliatory trade barriers. We’re throwing up as many barriers as other countries are, but we could be facing some headwinds.

In the overall trade picture, insurance intermediation is collateral damage. But that doesn’t discount the importance of the insurance and broking function to make markets and provide crucial services to the global economy.

WFII seems like the only organization that can deal on a global basis with opening new markets. True?
We’re the only organization that lobbies on an international level for opening new markets. Plenty of private companies do too. We are all pressing for further liberalization in India, which is not a new market but which is certainly one that has been evolving. But WFII is not going to change it on its own.

There are countries that tend to be more challenging than others. I think we’re an influencer and an enabler and not unimportant, even if we’re not terribly well known.

What do you face when you want to expand into a market?
Who must get licensed. That has changed over time. You could be licensed to operate in this country or in that one, but you couldn’t necessarily be licensed to operate everywhere.

There are countries where our members are very welcome. Some countries love to have new brokers. Many in Africa are more than happy to have more brokers.

Then there are the unofficial things. What kind of informal hurdles are there? How fast do the authorities move? What are you allowed and not allowed to do?

We want a level playing field so intermediaries already in country don’t have any advantage over the next broker entering.

Is that always a problem entering a new market? Are regulators always looking out for the locals?
Historically, yes. It’s been a problem. I won’t say it’s a problem everywhere, and it’s less of one today. There are countries where our members are very welcome. Some countries love to have new brokers. Many in Africa are more than happy to have more brokers.

But, remember, the regulator’s job is often a mix of things. It protects consumers. It is insuring the health of the insurance industry in a given country. So inevitably you could run into some challenges. There are examples in the past where markets have been a little protectionist—either for brokers or insurers—in continents such as South America and Asia.

What do you see as some of the new emerging markets or potential growth markets in the next decade?
Certainly India, which has liberalized a lot of components of its market such as rates, policies and allowing in more insurers. The same for brokers. Originally, there were no brokers. Then a broker could establish itself. Then foreign brokers were allowed with a 26% ownership investment and 74% local partner. Now that’s changed to 49% foreign ownership. The 51% can still be a challenge. But India is focused on a long-existing and thriving insurance market.

It’s obviously a big country, and everyone wants to be there. But you could be present there in a bigger way no matter what size you are now—whether you have two people or 2,000—if all of the hurdles are removed. We need to remember it’s a process. At various times the winds blow a little more nationalist and a little bit more liberal.

Everyone talks about the continent of Africa, which is 54 countries. So it’s a matter of picking and choosing. Brokers have—the larger ones—advanced and retreated. They’ve bought into more businesses and then sold off some.

The Middle East is another focus. Saudi Arabia. UAE. Qatar is now problematic, given the political tensions in the area. That’s another area where there’s a lot of local control and the local regulations have been tightened on insurers and brokers in recent years. Saudi and the UAE, being the biggest economic engines there, are an area of focus. Those are definitely on the radar.

Then there’s always Asia, where things can always improve—and they have a lot. And, remember, China and Korea have been steadily liberalizing over the past couple of decades.

What is WFII’s biggest future challenge?
There are three things. One is regulation for principles, which are promulgated by international organizations. We’re in favor of the principles and in favor of the principles being explained with some guidance. But when they get too prescriptive and grab onto an idea and send out a model for everyone—that’s an ongoing concern.

The second is the level playing field, particularly with respect to new kinds of entrants. Think about insurtech in its broadest sense. Let’s say we have a firm that brings insurtech solutions to the intermediary space.

We’re in favor of the principles and in favor of the principles being explained with some guidance. But when they get too prescriptive and grab onto an idea and send out a model for everyone—that’s an ongoing concern.

Let’s make sure that firm plays by the same rules as do the established brokers or agents in that space.

The last one that is an ongoing concern is regulatory concern about life insurance. Regulators should not mix up a property/casualty and a life insurance with no investment component. That’s been the subject of discussion here in the U.S. and around the world.

Where there is an investment component, there’s the potential for greater risk to the consumer. So there is sometimes a commingling by regulators where they feel everybody should be regulated exactly the same.

We’re very, very concerned about FATCA. Does that apply to property/casualty or not? It shouldn’t. It’s a different kettle of fish.

Where do you think brokers will be disintermediated in the future?
It’s always a subject of discussion. The members of WFII who are closer to the personal lines and small commercial spaces have a greater concern than others. There has been an expansion of the direct market and online insurers in developed countries, which has been a trend for some years. It’s definitely in personal lines and in some low-end commercial.

Certainly in the lower end of the market I could see technology continuing to enable that. I don’t know how much disintermediation there is going to be as you move up market. If we looked out decades, I’d say we’ll probably have robo brokers 30 years from now. But who can accurately predict anything 30 years from now?

There may be some interesting experiments that really do pay off and change the nature of the market in terms of capital. Capital’s got to play by the same rules too. There ought to be a level playing field for capital, just as there is for conduct and intermediation and licensing and the rest. So I could see that perhaps changing some components of the market.

But I don’t see any reduction in intermediation in the near future as you move higher in the market. I see a whole lot more professionalization. Everybody knows professionalism, advice, service are really important.

They’re more important, in many cases, than the transaction and the delivery of the product.

Where does Blockchain stand with WFII?
It’s definitely on the agenda. It has been a subject of discussion. AIG made some noise about the first multinational contract, and there have been marine contracts done with blockchain. My own specialty has been multinational programs. And I can see a real benefit for them.

It’s definitely better than a bunch of marked-up pieces of paper or marked-up binders or cover notes. Revisions will be memorialized too. And everyone will be able to see it. Right now it’s kind of an expensive proposition. We’re still working on it. So even though it’s supposed to be frictionless, there’s still a lot of grinding of the wheels at this stage.

How long do you think it will take to implement into daily use?
I wouldn’t be surprised in five years if we didn’t see a notable increase. It would start among large companies.

Blockchain is good for complicated contracts. So there’s a lot of work that’s being done. One of the big things about multinational programs is doing it right, on time and with contract certainty. With an efficient, well understood blockchain convention and mechanism, we can do this.

Jensen is a managing director in Global Services and Solutions at Willis Towers Watson.

Defining Business Acumen

Thom: Almost a decade ago, I interviewed for my first human resources business partner role. In my interview, I was asked this question: “How would you rate your business acumen, and how do you plan to apply it to this role?” After spending hours preparing for this interview, I was ready to answer questions on advising managers on recruiting, employee relations, compensation practices and talent development. I hadn’t thought about business acumen. Not surprisingly, I didn’t get that job.

Fast forward to the present and studying to take my insurance licensing test. My 10-year old came downstairs and said, “Hey mom, why are you studying this when you don’t sell insurance?”

What was missing from my answer 10 years ago was an understanding of why business acumen matters. Business acumen is defined as keenness and quickness in understanding and dealing with a “business situation” in a manner that is likely to lead to a good outcome. In a study on Business Acumen and Strategy Execution by the Economist Intelligence Unit, “65% of surveyed leaders agreed that insufficient business acumen limits their organization’s ability to realize strategic goals to a strong intent.”

McDaid: Business acumen doesn’t just mean “having a head for business.” It is the ability to use experience, knowledge, perspective and awareness to make sound business decisions. When business acumen is well-developed, you can make better decisions because you have better judgement. You think strategically about your ecosystem and can leverage this information for success both today and in the future.

Broker Business Acumen Improves Client Service

Thom: After nearly 20 years working in roles involving employee experience, my success or failure at effectively influencing people strategy is my understanding of the industry. It’s a key piece of the puzzle in any role, at any level of an organization.

Our stakeholders in business need us not only to deliver what we sell but also to bring forward business solutions with effective business acumen.

Here are some questions to ask yourself if you want to determine whether you are consistently demonstrating business acumen to your clients to deliver a value-added consultative experience.

  • Do you understand the key financial drivers for their line of business?
  • What are the organization’s growth goals for the next five years?
  • How do the risk management decisions the company makes impact whether or not the company meets those goals?
  • What are the key obstacles in the market to achieving their revenue goals?

McDaid: Here are just a few tasks that strong business acumen will allow a sales professional to perform:

  • Plan and execute customized engagement strategies based on specific business context
  • Build trust because of the strong understanding of the customer’s business priorities
  • Obtain important information quickly by knowing the right questions to ask
  • Identify challenges, problems and pain points
  • Have relevant, insightful and meaningful business conversations
  • Act as a true collaborative partner when building solutions to pain points

Without business acumen, it is more difficult for sales professionals to keep their pipeline filled, because they lack the knowledge needed to discuss trends and issues facing prospects. It becomes more difficult to keep the conversation moving forward and the prospect moving through the funnel. With customer-centricity becoming the predominant factor on the emerging business landscape, business acumen becomes as important as sales acumen.

David Fisher, a speaker, coach and author, offers in a Hubspot post another interesting perspective on why business acumen is important to sales. In the past, producers were “lone wolves.” They hunted alone, bringing home their kill and tossing it over the fence for the service folks to handle. However, the interconnectedness of business today invalidates that model.

To be truly effective, producers need to operate within the big picture of their firms. They need to have impact today and consider how what they do can benefit their organization in the future. Business acumen will allow them to do this. It will allow them to become better internal collaborators because they understand how what they do has an impact on other departments within the firm. Strong business acumen allows sales professionals to see the interconnectedness of all the departments and the impact their piece of business has on everyone.

Thom is vice president of human resources for the Harry A. Koch Co. megan.thom@hakco.com

McDaid is The Council’s SVP of Leadership and Management Resources. elizabeth.mcdaid@ciab.com

You played football and lacrosse at Middlebury, and now you compete in the Ironman endurance race. Why Ironman?
I’ve just always wanted to do an Ironman. [Editor’s note: For the couch potatoes among us, that’s a 2.4-mile swim, followed by a 112-mile bike ride, then a 26.2-mile run. Yes, a marathon.] I’ve done one full and one half Ironman. I did Florida as a half first, then Houston the full after that. I’ve probably run eight marathons.

I’m already out of breath.
I tell people to forget the Ironman for a second. Doing a marathon is a great learning experience for any businessperson. If you really want to run a marathon, it’s months of preparation, training and nutrition.

Why is the marathon such a great learning experience for businesspeople?
Because you have to start at an actual event and work backwards and do your training progressively. To me it’s a skill—it’s long-term planning and execution—and a lot of business people don’t have it.

What lessons have you taken from your Ironman experience that could be applied to your business experience?
It’s perseverance. It’s the idea that anything’s possible, so you should think big. One of the things I try to teach our people is just expanding their mindsets.

What’s next?
I ran the Boston Marathon two years ago. Some people tried to talk me into running the New York Marathon again. I’d like to do a Tough Mudder.

How do you manage your time?
I will tell you I am not perfect by any stretch. You’ve got to look ahead and say, “OK, I’m flying to Germany on this day, so I’m not going to be training, so I have to move it around.” You use your time as wisely as possible, but you have to dedicate time for training. Time management is another critical business skill.

How did you get into the insurance business?
It’s a long story. I was going to be a football coach coming out of college. After my sophomore year, I was on a family vacation on a dude ranch in Montana. I really didn’t want to be there. I was kind of a naïve younger college student. I was sitting at the back of the pack—we were herding cattle or something—talking to an older gentleman. At the end of trip, he said, “You should come work for my company next summer.” His name was Ted Blanch. I asked, “What do you do?” He said, “Reinsurance.” And I said, “Oh my god, that sounds horrible.” Lo and behold, over the next year or so, I learned more about the business. The next summer I needed to get a job, and I worked at the E.W. Blanch office in Minnesota for six or eight weeks. Then they offered me full-time job. Along the way, I managed to burn Ted’s house down that summer.

How did you manage that?
I was staying in a house on his property. There was a bird’s nest on top of a floodlight that caught on fire and burned the place to the ground.

I’m guessing he wasn’t happy.
No, but a number of years later I ended up as president of E.W. Blanch.

Where did you get your entrepreneurial streak?
When I was in high school, I had my own landscaping business on the side.

What was the appeal of being a business owner?
I had this insatiable appetite to win and be successful—and I’d say, around that, build great teams. And thankfully I’ve been surrounded with really great teams over time.

That insatiable appetite has worked out for you.
Early in my career at E.W. Blanch, they sent me to Philadelphia to work for this guy who was a big hotshot but who ended up leaving shortly after he was hired. I’m 26 or 27 years old, and I’m down in Philadelphia by myself. I wrote a business plan that said I was going to produce the Cigna reinsurance account. I faxed it in, and they thought it was the funniest thing they’d ever seen. A year later, we had the Cigna account. I got a good laugh out of that when it was all said and done.

How would your co-workers describe your management style?
I’d say loose but amped. I can get very, very involved when I have to. I want them to show me the intensity with which they’re going to attack our goals. My challenge is to help them realize their full potential.

If you could change one thing about the insurance industry, what would it be?
Inertia. The fear of change. I think there’s always a lot of talk about it, but I’m not sure there’s enough action around it, including by ourselves. I’d like to see more action around change.

Last question: What gives you your leader’s edge?
Building and working with great teams of people.



The Fox File
Favorite vacation spot: Bahamas.
Favorite movie: Gladiator
Favorite actor: Russell Crowe
Favorite author: Tim Ferriss (The 4-Hour Workweek, The 4-Hour Body, The 4-Hour Chef, Tools of Titans, Tribe of Mentors)
Favorite musician: Bruce Springsteen
Favorite Springsteen song: “Born to Run”
Wheels: GMC Denali pickup

But they did anyway. And three of the four deals had public brokerages as the buyers, proving that, in spite of all the private equity flooding the insurance market, the large industry players are staking their claim. After nearly a five-year cycle of private equity dominating deals, we are seeing that public brokerages are back in a big way.

Brown & Brown bought The Hays Group in early October and a couple weeks later announced an 11.6% increase in quarterly revenues. A month earlier, in September, Marsh & McLennan Companies acquired Jardine Lloyd Thompson Group. In the second quarter, Alliant Insurance Services bought Crystal & Company. Not to be outdone, Arthur J. Gallagher & Co. has been very active in the merger and acquisition space and just announced its 6.3% organic growth, which is notably strong. This shows that not only are the big guys growing through acquisition, they’re also investing internally to help drive high performance. 

What does that mean for everyone else?

Are you watching from the sidelines as the big guys get even bigger, wondering when it will be your turn? Are you wondering if you should sell now and cash in on the record high valuations? Should you cash out right now?

A client recently asked me that question. He’s the owner of a successful high-growth firm with plans for perpetuation. The record M&A deals—the flurry of activity happening in the last five years—had him second-guessing whether his original strategy was the right answer. “Tell me why I shouldn’t sell,” he said to me—a request that, honestly, I had never received before.

In my opinion, owning an insurance brokerage is the greatest investment in the history of mankind, and that hasn’t changed, I told him. With reliable recurring income and low capital requirements, we believe you can’t beat investing in this industry. (Look at all the PE-backed players that continue to enter the market for that very reason.) He had dedicated resources to building a bench of talented people, and he was focused on organic growth. He had no reason to sell if he didn’t want to.

Owners sell to transfer risk. Owners sell because they’re bored with the business and are ready to get out. They sell because they have worked hard their entire career and want to cash in on record valuations. They sell if they feel like they can’t or won’t make the necessary investments in their businesses to continue growing at a highly profitable rate—if they can’t compete, they sell.

Where do you stand? 

Just because everyone around you is getting bigger doesn’t mean you should stop trying to get better. Your insurance brokerage provides jobs that improve families’ quality of life—it offers services that protect what people care about most in life. But to continue doing that, we believe, you’ve got to commit to developing talent, driving profitability, adopting technology and creating a culture that attracts the next generation of insurance producers, support staff and executives.

What this means is there’s opportunity either way you decide to go. Buyers are hungry. But if you’ve got the appetite to grow a sustainable, successful business, to us, it appears that there’s a promising future ahead.

Market Update

The M&A market within insurance distribution continues to mirror that of the domestic private equity scene. According to PitchBook, U.S. private equity firms invested $508.8 billion across 3,501 deals in the first nine months of 2018. Deal making has increased, median deal values are on the rise, and multiples paid remain at elevated levels. These are all similar trends we continue to see in the insurance distribution space.

Year to date through October 2018, there have been 438 total announced transactions, with the addition of 46 new deals. This marks the second month in a row with more than 40 announced transactions, and retroactive announcements continuing to come through. The gap between deal activity in 2018 and a record-setting 2017 continues to close, as the deal total is only 6% lower year to date compared to the same time period in 2017.

Acrisure has taken the lead among top buyers, announcing an additional four transactions, bringing its total to 30 deals so far in 2018. BroadStreet Partners and AssuredPartners are close behind with 29 and 28 year-to-date 2018 transactions, respectively.

After the announcements of Marsh & McLennan Companies’ acquisition of Jardine Lloyd Thompson Group and American International Group’s acquisition of Glatfelter Insurance Group in September, the October headlines continued to buzz with the announcement of Brown & Brown’s agreeing to acquire Hays Companies. Hays Companies was ranked 22nd on the list of the 2018 100 largest brokerages of U.S. business ranked by 2017 brokerage revenue generated by U.S.-based clients. This transaction is expected to close later in 2018. Additionally, Ed Broking Group announced its agreement to sell to New York-based BGC Partners. BGC also acquired Besso Insurance Group in 2017. The two acquired firms will make up a large part of BCG’s insurance vertical that will be led by Ed group CEO Steve Hearn.

Trem is EVP of MarshBerry. phil.trem@marshberry.com

Securities offered through MarshBerry Capital, member FINRA and SIPC. Send M&A announcements to M&A@marshberry.com.

As we close out 2018, we must start the process of thinking (differently) about the new year ahead. I’m always struck by organizations that want to improve their end results but are not willing to change the way they do things. It’s time we change that way of thinking, particularly when it comes to solving one of the industry’s most looming challenges: the talent crisis. We need to quit just talking about it and finally start acting on it.

According to our recently released Q3 2018 market index, “recruiting and developing talent” remains among the top organizational priorities for your firms. We all need talent to remain competitive, so I know the challenge in front of us is not from a lack of trying to recruit the best and brightest. But perhaps we need to look beyond the obvious and explore other pools of candidates who may have the attributes but not all the skills or the confidence to apply.

Whether it be persons with disabilities, veterans who have been out of the workforce for an extended time, stay-at-home parents, freelancers in the gig workforce, or other untapped groups of professionals, there are thousands of skilled and experienced individuals who could turn the tide in our respective organizations if only given the chance.

And that brings me to our feature on Gallaudet University’s risk management and insurance program, which is creating new opportunities for both students and the insurance industry by providing exposure to an impressive source of talent eager to join our industry. Located in Washington, D.C., Gallaudet is the premier institution of learning, teaching and research for deaf and hard-of-hearing students. As Gallaudet’s RMI program (led by a former Gallagher vice president) has grown and internship opportunities for students have expanded, so too has students’ interest in the brokerage business. I highly encourage you to read the story.

A few years ago, the global tech company SAP set out to tap into the abilities of a very talented yet underrepresented segment of the workforce—individuals on the autism spectrum. Finding success, SAP’s now internationally recognized program, Autism at Work, employs more than 140 individuals in 12 countries.

Then there’s the Starbucks on H Street NW (just a few blocks from Gallaudet), which opened its first “Signing Store” earlier this year for the deaf and hard of hearing. Of the location’s 25 employees, 19 of them are deaf, and the other six are proficient in American sign language.

Similar examples are all around us. And it makes sense—hiring talent with different viewpoints, experiences and intellectual skills fosters diversity, and study after study has found that diverse businesses tend to perform better.

Among other things, the challenge of leadership is to be bold. As we dive into 2019 with fresh ideas and (hopefully) some creative, out-of-the-box thinking, remember that, while keeping up with changing business models is hard, it shouldn’t be scary. There are populations out there poised to make an impact on our industry, and the opportunity for organizational growth from these efforts may far exceed your expectations.

There’s a lot of talent out there. Go out and get it.

I think, though, that that question effectively was whether or not the issuing carrier and the placing broker are both entitled to use the data for marketing purposes. And the historical industry answer was that only the broker could use the data for those purposes, and that practice was memorialized in some state laws and in contracts.

But, of course, the carriers could and did use that data for non-marketing internal purposes and in communications with brokers on renewals. And, of course, the policyholders always had the right to use their data for whatever purpose they wanted to irrespective of those statutes and contractual agreements.

The current “big data” world actually adheres to this historical practice: whoever has data in their possession can use it for any purpose whatsoever unless there is a regulatory or contractual prohibition on doing so.

There are, though, more and more regulatory impediments to using some data, especially data that relate to individuals and not commercial enterprises. The emerging view is that not only do individuals “own” their own data but they can also direct anyone who has certain data related to them to delete it under their “right to be forgotten” (see California and the European Union).

Some of these same laws may, however, actually offer tools for helping resolve the problems some businesses (and their brokers) have been confronting in terms of gaining access to and using their group plan data.

In other words, how can we make sure brokers and employers get the information the law permits them to receive? And once you have the data, what can you do with it?

Brokers have been agitating for greater access to meaningful health data for themselves and their employer clients. More access, we think, would allow brokers and employers to comparison shop, develop tailored benefits and tools for employees, and ultimately help control costs. The good news is that the Health Insurance Portability and Accountability Act’s Privacy Rule in place today, when properly leveraged through business arrangements, allows you and your clients to get the data and use it to satisfy these objectives.

The Privacy Rule restricts information flow from covered entities, like carriers, to non-covered entities, like brokers and employers. The Privacy Rule, however, also includes provisions that authorize permissible data sharing and mandate it under certain specified conditions.

First, the Privacy Rule allows (but, critically, does not require) a carrier to share plan data with the employer sponsor without employees’ consent or authorization, but there are limitations on what information may be disclosed and how it can be used. The rule, for instance, permits carriers to share summary health information with employer plan sponsors for purposes of getting premium bids from insurers or modifying, amending or terminating the group health plan.

Such summary information includes anonymized information on claims history and claims expenses. Going a step further, the Privacy Rule permits carriers to share more granular personal health information with employer sponsors for underwriting purposes and with other healthcare administration/operations, provided certain anti-discrimination safeguards are satisfied.

Second, the Privacy Rule requires carriers to share personal health information if it is directed to do so by an individual in accordance with its requirements. It appears that nothing in the Privacy Rule prohibits employers from conditioning plan participation on the providing of such designations by participating employees. Employees may extend their “right of access” to their own personal health information to their employer and/or the employer’s broker—as designee(s)—and plans must then provide the information as requested by the employee. This avenue does not place restrictions on how the recipient may use the data as long as HIPAA’s anti-discrimination rules are followed. But it is likely an easier sale to plan participants if the authorization limits recipients to using the data for purposes related to underwriting and quality/value of care.

HIPAA acts as a federal floor for privacy protections, so states are free to create their own data-sharing structures provided they do not conflict with any of the HIPAA protections. Some states, like Kentucky and Indiana, have given large-plan sponsors the right to obtain relatively robust data directly from plans. It may be well worth our while to encourage other states to move toward this model.

Despite what current law allows in terms of data sharing with employers, several Council members report having difficulty obtaining—for themselves and/or their clients—useful information from carriers. This may be more a matter of how you structure your business relationships than of legal obstacles.

Here are a few suggestions to help you make the most out of the tools we have under the law:

  • Turn the Privacy Rule’s “may share” approach for non-employee-authorized data into a “must share” by having the employer contractually require the carrier to share all information permitted by HIPAA (e.g., PHI for underwriting purposes).
  •  Encourage your clients to write employee HIPAA authorizations and/or designations into their employment contracts so that, as a general matter, the employer sponsor (and/or the broker) can receive health information.
  • To the extent you are interested in obtaining the health data, consider writing into your own client contracts requirements that the employer share the data and/or provide a way for you to get the data directly based on employees’ consent.

Sinder is The Council’s chief legal officer and Steptoe & Johnson partner. ssinder@steptoe.com

Jensen is a senior associate in Steptoe & Johnson’s GAPP Group. kjensen@steptoe.com

Gold is an associate in Steptoe & Johnson’s GAPP Group. cgold@steptoe.com

Even the best chief information security officers are evaluating their programs against current threats and beefing up.

Many companies, however, have inadequate cyber-security programs and are not prepared for multipronged attacks or those that could create significant business interruption. For example, in nearly every cyber-risk assessment we conduct, the two lowest-scoring areas are incident response and business continuity/disaster recovery. In addition, many organizations have not identified mission-critical functions, do not have current or adequate inventories of their applications and data, and have not assigned ownership to these assets. When trouble hits, these gaps make for a pretty hot mess.

So it’s a two-pronged problem: an organization must first understand its assets and what they are used for and then understand the types of attacks that could hit them. When an organization has not paid attention to its assets, chances are it is clueless about its threat environment, its preparedness to counter an attack, and its ability to keep functioning.

Engage Business Units

Internally, many organizations still tend to view IT and cyber security in a silo and try to be involved as little as possible with them. They just want the systems—and business—to keep running. That attitude ignores the accepted best practice that business units should “own”—and be responsible for—the data and systems they use to perform their business functions. Business owners should approve access to their applications and data and authorize a system to operate, thereby taking responsibility for the risks the system and data bring to an organization. This is how risk management is spread across an organization.

In reality, however, managers somewhere in the organization usually request access to applications or data for new hires and send the request to IT, which then implements access. Business owner approval is not a common practice.

If business owners are not engaged in controlling access to their systems and data, they are likely not very involved in what happens during incident response or disaster recovery. Thus, a major incident sends IT and security teams scrambling to identify critical applications, their dependencies and the business functions that have been affected.

Test Your Plans

Well developed disaster recovery plans, based on an analysis of the impact on business, are an essential element of cyber-security programs, but they must be tested. Consider the company whose IT team confidently told management it did not need to pay a ransom because the company could simply restore the data—except that the company hadn’t tested its plan and ended up losing six months of data. Or consider the companies that thought they had it made in the shade with constant replication from one site to another, enabling them to switch to the alternate site at any moment. Those companies forgot about ransomware, which ran through their systems encrypting all their data—and their replicated site data (because they forgot about needing an offsite backup).

New Threats

Now, consider the new threat environment, which utilizes the treasure trove of NSA cyber tools and zero-day exploits that were released in 2016 by the hacking group Shadow Brokers. Portions of these were used in the severe WannaCry, Petya, and NotPetya attacks in 2017. Projections on 2019 cyber attacks continue to list malware, ransomware, botnets, denial of service, website “drive-by campaigns” (which infect when you visit a website), phishing attacks, and advanced persistent threats (malware that lurks inside your system and stealthily attacks).

The exploitation of internet of things devices has been behind several of the worst cyber attacks in the past couple years, such as Stuxnet (and its offspring), which attacked programmable logic controllers in industrial control systems, and the Mirai botnet and similar bots, which attacked IoT devices and used them to cause huge denial of service attacks, shutting down major websites and turning off heating in buildings.

Expect more IoT attacks in 2019.

An estimated 23 billion IoT devices are connected to the internet now—everything from appliances to thermostats to building monitors and controls—with growth expected to reach 31 billion by 2020. Many of these devices are not patchable, were not built with embedded security, and are not included within the inventories of hardware in many cyber-security programs.

In 2019, we also will see more “clickless” attacks that exploit vulnerabilities in out-of-support hardware and software, such as WannaCry and NotPetya. This type of malware presents a major risk to the many organizations that have hung on to old equipment and applications.

Dmitri Alperovitch, co-founder and CTO of CrowdStrike, investigated and brought to light some of the most serious cyber-espionage attacks. Regarding the current threat environment, he said: “CrowdStrike research indicates that on average it takes an adversary one hour and 58 minutes to break outside of the initial point of intrusion and get deeply embedded into the network. This means that the best organizations should strive to detect intrusions within one minute, investigate within 10 and eject the adversary within the hour to stay ahead of the threats.” That’s a tall order, but it underscores the severity of attacks we are facing in 2019.

When organizations consider their cyber coverage in 2019, they would be well advised to think beyond breaches of personally identifiable information and look under the hood to see if some of the basics in their cyber-security program—such as asset inventories, incident response and business continuity and disaster recovery—are well developed and tested. The threat environment sets the pace, and companies that do not keep up with mature cyber-security programs and test their data recovery capabilities will be the easiest targets and suffer the biggest losses. Brokers and agents will do well to help their clients assess their vulnerabilities and the maturity of their cyber-security programs and develop a coverage plan to match.

Westby is CEO of Global Cyber Risk. westby@globalcyberrisk.com

Do you see any notable shifts or surprises over the last 18 months regarding commercial insurtech investment trends?

What has surprised us is how little activity commercial insurtech has seen, relative to personal lines. Our analysis, based on CB Insights data, shows that over $1 billion has been invested in companies that are addressing commercial insurance since 2015, which equates to roughly 10 percent of total insurtech investment. What does that mean? Regardless of how you slice it, commercial insurtechs have been woefully under-financed relative to insurtechs addressing personal lines, distribution, and other areas. As a result, commercial insurtech is heavily under-penetrated relative to the broader insurtech movement. Even existing commercial ventures have been concentrated in more obvious areas like distribution and auto. In fact, since 2015, those two categories account for over half of commercial insurtech funding to date. Very few startups are looking at more complex areas. This has to—and will—change.

XL Innovate portfolio companies—Cape Analytics, Pillar Technologies and Windward—all share the capability of transforming real-time data into risk management insight on properties, construction sites and maritime operations respectively.  Do you see brokers as a channel to deploy these tools in addition to insurers?

Absolutely. Brokers cannot be satisfied with the status quo and will need to continue to integrate new technologies into their offerings in order to add value to the end client. Brokers can leverage this wave of technology to differentiate themselves in the market and prove they have their finger on the pulse of insurtech. For the broker, the customer is the centerpiece and insurtech is a vehicle in which to ensure that centerpiece remains a client.

Embroker, a digital commercial broker, is obviously of keen interest to Council members. Three years into the company, what aspects of Embroker and their value proposition to customers has XL Innovate, as an investor, most excited?

Where do I start? We think Embroker has a huge lead in dealing with larger, more complex customers and larger more complex insurance products—something competitors in the market don’t have experience with. Embroker also recently launched a customized digital insurance product through their new digital Startup Program. Their new program, which includes D&O, EPLI and fiduciary liability insurance, allows customers to buy complex coverages directly online, without paying brokerage commissions and policy fees or dealing with archaic manual underwriting processes. What took startups at least three weeks, takes 60 seconds with Embroker. That’s pretty cool.

Plug and Play is currently working with over 10,000 startups across 14 different industries, with a keen focus on the insurance sector. The company is known for their unique investment approach, one that relies on a constructed “ecosystem” of insurance industry incumbents and established corporations to provide startups with guidance and insight while giving incumbents/traditional players an inside look at which insurtechs are truly proving value in their space.

Check out our interview with Plug and Play’s Ali Safavi, global head of insurtech.

With over 150 registrants, Broker Age saw a very mixed bag of attendees, including 25 attendees from brokerages, 11 of whom are Council members. The majority of attendees were from the insurtech community—over 50 attendees came on behalf of 30 insurtech companies. Outside the conventional insurtech and incumbent space were VC and consulting firms and NAIC representatives.

At Broker Age, Brent Rineck, CIO of ABD Insurance and Financial Services, Aon’s managing director of treaty reinsurance Chris Gallo, Joshua Rockoff from insurtech firm Omni:us, and Kevin Morreale, chief sales & marketing officer of American Modern Insurance Group participated in a panel on how brokers will stay relevant in a world inundated with new technologies.

One of the biggest themes that came out at the panel was how technology introduces efficiencies and adds value for the client. Rineck, for example, delved into the history of the ABD team, whose success—it’s only 6 years old yet one of the top 50 brokers in the U.S.—he ascribed to the fact they built their architecture from the ground up to streamline processes that were historically quite time consuming and improve the customer experience.

Rockoff, too, leaned into the theme of efficiency, describing how his company can transform unstructured data into structured data: “Instead of spending 30+ days getting the info in our back office systems, we can do it in a matter of minutes, allowing brokers to spend more time focusing on customers.”

However, most brokers, the panelists agreed, don’t want to change because there is no incentive. “Human beings are the killer app,” according to Gallo, especially in the large commercial space. “Aon can use tech and solutions to improve product for the consumer, but the human team will be there for the large transaction.” So if brokers still need that face-to-face contact, technology will play the support role.

Because, Rockoff said, “the purpose of technology is to give brokers tools so they don’t have to change. Technology allows brokers to become more efficient without having to completely rehaul the way they do business.” And efficiency is all the more important nowadays, when the idea that “time is money” is so pervasive. The role of the broker will not become irrelevant, but they can become irrelevant in terms of competition if they cannot add a competitive advantage by adopting enabling technologies.

You have just experienced a microaggression and you question whether you handled it properly. After all, was your boss trying to make an innocent joke and out of ignorance used hurtful words and expressions, or was it intentional? Should you have confronted your boss or just let it lie?

Everyone has experienced this type of microaggression at one time or another. Some minorities, especially, have experience it quite frequently. And almost everyone is guilty of expressing this behavior at one time or another—whether intentional or not.   

That is why the insurance industry has launched “Dive In, The Festival for Diversity & Inclusion in Insurance,” in an effort to improve diversity in the workplace. The insurance industry is notorious for its lack of diversity, and executives want to change and create a better working environment for everyone. They also fear business will suffer if they do nothing, and if they do diversify, it will open new business opportunities all across the industry.

The Council sponsored a meeting in its Washington, D.C., headquarters on Sept. 25 for industry professionals. Speaking at The Council’s event were Jeffrey Smith, of Jennifer Brown Consulting, and Jacquline Morales, of Legal & General America. The Council event was one of more than 50 events in 27 countries. The first event was held in 2015 in London and the sessions since then appear to be having an effect. This year a survey of insurance professionals in London found 52% responded favorably to the diversity and inclusion culture. That was up from 21% just last year.
Explaining how microaggressions should be handled. Smith and Morales admitted how difficult the issue is to deal with and how uncomfortable it makes employees. Yet not dealing with it, they agreed, was not the answer.

Microaggressions, they explained, may be small in nature but have a big impact on work, mood and even an employee’s health, especially if they have been bombarded by a lot of microaggressions in the office during their careers.

“Your identity is being attacked,” Smith said.

Dealing with microaggressions from other employees can lead to “covering,” where employees actually change their behavior to deal with the onslaught. This can result in minorities barely acknowledging each other in large office gatherings that include many of their white male colleagues. Shockingly, 53% of employees said their bosses expected them to do this. As a result, employers struggled to get 50% of their workforce to be committed to their organization.

To deal with this, Smith suggested employees learn inclusion behaviors to make others in the office feel welcomed, valued, respected and heard. When another employee makes them feel uncomfortable because of their aggressive behavior, the worker should confront the aggressor without blaming them. Instead, Smith said, they should explain how their hurtful language made them feel.

Morales said employees should not let themselves become victims of microassaults, where an employee says something inappropriate and then says they were just kidding. The insults are either based on ignorance and innocence, or deep-seated prejudices, she said. Either way, you need to address it.

She suggested the employee ask their colleague to repeat the hurtful words they just said. That puts them on the spot and may force them to become more aware.

She said if you are a perpetrator of microaggression, own up to it immediately and apologize so you can move on. If you are a bystander and witness it, speak up. “Silence,” she explained, “is an endorsement.” 

They also touched on restrictive company cultures and hiring. Hiring someone who “fits the culture,” Smith said, “is a cop out.” He explained it’s a lazy boss’s way of not having to deal with diversity and inclusion. Many bosses, he said, tend to hire someone just like themselves, and consciously or unconsciously limits diversity in their office. Numerous studies, he said, have shown the more diversity and inclusion there is in an organization, the better it does.

Now known as the Seaport District, it’s the fastest-growing neighborhood in the city. GE, PwC and Reebok set up shop here. Luxury condominiums are the priciest in town. New boutique hotels like The Envoy Hotel are opening, and established destinations, such as the luxurious Boston Harbor Hotel, have undergone renovations. New restaurants, including the modern seafood eatery Lola 42, have garnered good reviews, and the party never stops at waterfront watering holes such as Legal Harborside and Lookout Rooftop.

With cranes towering over the entire scene, there’s more of everything to come. So if you’re attending a conference at the Boston Convention and Exhibition Center or Seaport World Trade Center, both located here, you’ll have plenty of new places to stay, eat, drink and shop over the years to come.

Yet despite the harbor setting, with all of the shiny new skyscrapers and contemporary architecture, it doesn’t feel a lot like Boston, one of America’s most historic cities. If you want to soak up history when you walk down the street, stay at a place near Boston Common, the beginning of the Freedom Trail or close to the Federal-style row houses lining the narrow streets of Beacon Hill. Even in Boston’s oldest neighborhoods, hotels have been reinventing themselves, and new restaurants are popping up. The classic-meets-modern mash-up is giving buttoned-up Boston a new vibe.

The Ritz-Carlton Boston Common, one of the city’s most luxurious hotels, and Nine Zero, one of the first design-forward hotels, have undergone multimillion-dollar renovations. Both redesigns reflect a modern colonial design aesthetic, using traditional materials—wood, metals and leather—in contemporary interpretations of the furnishings and décor.

While Boston’s dining scene hasn’t received the acclaim of cities like New York and San Francisco, there are restaurants here that can compete anywhere. In 1998, self-taught chef Barbara Lynch raised Boston’s culinary profile when Bon Appetit named her first restaurant, No. 9 Park in Beacon Hill, one of the “Top 25 New Restaurants in America.” Twenty years later, Lynch has compiled eight restaurants in her BL Gruppo hospitality empire, as well as Stir, a demonstration kitchen and cookbook store, and three James Beard awards. Many of Boston’s rising-star chefs and hospitality industry professionals have honed their skills under her guidance. One, Colin Lynch (no relation), opened his coastal Italian eatery, Bar Mezzana, in the South End in 2016. It has become one of the hottest restaurants in town.

Will we ever see equality of the races in the United States?
We can end it if each person decides they are going to do something about it, including teach their kids. Some of us are teaching our kids, but some of us are not. And even worse, some of us are teaching our kids to hate and to bully.

In this difficult political season, which I hope was just a season, our behavior, no matter what side you’re on, is problematic for the young people. They are seeing something that they should not be emulating.

Do you think that’s going to cause a shift in politics and public discourse?
I hope. I’ve seen so much hope in the younger generation. I also know that the younger generation was in Charlottesville with the tiki lamps. We keep asking, “Why hasn’t this changed?” I don’t think parents and schools are doing enough to educate people and to teach the truth about structural racism.

Debby Irving, in her book Waking Up White, does an incredible job as a white person talking about what she realized about what whiteness means and what she was taught growing up. And she has some really great resources on her website, too. And then there’s A People’s History of the United States by Howard Zinn.

I think education has to go deeper. What do we do with our children? They’re getting backlash from other children. A woman told me her two sons, who are in their late teens, asked her, “Why do we have to pay for what other men did?” and “Why do girls get more than we get? It’s not our fault.”

You’re going to have to break down patriarchy for them. It’s not going to be enough to treat people nice. We need the architects of new systems. If you don’t understand the way the system works and you can’t make the connections, you really can’t be an innovator in this space. We need kids to be innovators.

Wealthy people also have to learn to do that. Like when your kid goes, “We live in the best neighborhood,” you’ve got to be able to say, “Yes, I wish everybody got to live a life of dignity the way we do.”

So when they say, “I don’t like that person. They’re brown,” you have to say, “Do you know where that comes from?”

We haven’t wanted to have those conversations because we’ve been deeply in denial. We have to get out of denial. We’ve got to learn language. We’ve got to read. We’ve got to watch, and then we’ve got to be able to translate it to our kids.

Equality really talks about sameness. Equity talks about giving people an opportunity—not just the opportunity but positioning them, taking into consideration what more it will take for that person to get the same opportunity that someone else does.

Do you think money always triumphs?
You know what always triumphs? Rationalizations. People have their own best interests in mind, and they have not realized we are all connected, that none of us are going to make it unless all of us do. People actually think they can build a high enough fence, they can move far enough away, or they can displace people from neighborhoods because they have the power to do so and that will keep them safe and secure.

This is about the “isms” versus prejudice. Prejudice goes back and forth between you and me. But the “ism” is about power. So if you give the advantage to the same groups of people over and over again, they cement that advantage into power, into opportunity, and consequently, they are positioned to make the decisions that benefit themselves and everyone else.

What else are you working on?
I’m really focused on four things right now. I am focused on consciousness, which is people getting a better idea of what actually is true.

I’m thinking about curiosity. Culturally curious is also a different way of being in the world than culturally judgmental.

I am really looking at courage. It takes courage to face what you don’t know. Like it takes courage to trust somebody.

The last piece is compassion. It’s kind of the highest form of love. And I feel like we need compassion towards ourselves as individuals. There are reasons why we don’t know what we don’t know and ways that we are complicit and ways that we don’t want to think.

We also have to be compassionate to others, which means that we’ve got to let people apologize to us. We’ve got to care deeply about somebody up in North Dakota who we’ve never met. Or on the borders, who are fleeing persecution. Like we also have to be compassionate towards people who are so discouraged that they don’t mind hurling epithets at other people. What motivates people to be haters?

Isn’t it weird to have compassion for haters? I heard someone say, compassion is the ability to love those, to understand those, who don’t understand. I mean that’s the true test.

Roth wrote about being Jewish, midlife crises, alienation and general disillusionment. Nobody ever accused him of frivolity.

On the other hand, his father Herman Roth was lively and endearing, with a celebrated gift for remembering and recounting colorful anecdotes about Newark, New Jersey, where he lived all his life. Herman was a first-generation immigrant who left school at 13 to work in a Newark factory. For most of his life, he was employed by Metropolitan Life; he started out as a door-to-door insurance agent and retired as a district manager in 1964. It was a creditable climb for a man who often felt passed over because of his religion. His son Philip once described him as a cross between Captain Ahab and Willy Loman.

Any modicum of fame Herman gained was from the 1991 memoir Patrimony, which Philip wrote while watching his father die from a brain tumor, a struggle that ended in 1989. He follows the timeline of his father’s impending death with curiosity, anxiety and love. Patrimony won Philip Roth the National Book Critics Circle Award in 1991.

Philip Roth learned much and wrote often about death, but in Patrimony he learns a lesson about insurance as well. He writes of fearfully approaching his father with a living will to read and sign, terrified of further depressing a man so close to the end of his life.

“How could I have forgotten that I was dealing with somebody who’d spent a lifetime talking to people about the thing they least wanted to think about?” he wrote. “He used to tell me: ‘Life insurance is the hardest thing in the world to sell. You know why? Because the only way the customer can win is if he dies.’”

Who is Vernā Myers?
I grew up in Baltimore, which is significant in the sense that I was gone for 32 years and I made a conscious decision to move back home. I went up to high school here and then left to go to college in New York. Then I went to law school in Boston. I got married, had a baby and was practicing as a lawyer.

I ultimately started working on diversity and inclusion. I was first an executive director of an organization that dealt with diversity in the legal field, and then I worked for the attorney general of Massachusetts as his deputy chief of staff.

Finally, I went out on my own and created my own consulting business, mostly for legal professionals. It guided them on how to create more diverse and inclusive workplaces.

Was working on diversity and inclusion a conscious decision or a job?
I graduated in 1985 from Harvard Law School. I went to my law firm, and I was the only black person they had ever hired.

Pretty typical?
In Boston, I was actually pretty shocked by it. I had no idea I would be breaking the color line in 1985. It seemed strange to me. Nevertheless, as law firms go it was a fine experience. But, little by little, I started to think that it wasn’t the best environment for me.

How long have you been consulting?
Twenty years.

It must be working.
Well, that’s a good question. I have enjoyed what I’m doing. I never knew it would become something this essential to business. I was always a little worried it could be a flash in the pan. But it just keeps evolving into something that is really important and not just an issue.

Have you seen a change in the last two years since Trump was elected?
That’s a good question. We just put out a white paper about five rules for meeting inclusively in a politically tough time. I’m in companies usually—almost always—where the leaders have said, “Come make us better.” So they are acknowledging there’s some strife, there’s discord, and maybe people are saying things.

One of the most difficult things is to get people not to say bad things about Trump in the workplace. In some workplaces, if you support Trump you’re like persona non grata. And that’s not fair.

It’s not OK to insist a person have a certain political leaning. People should be able to believe whatever they believe. What you say and do in the workplace is a different story. As a leader, you have to demand—if you say you’re into inclusion and diversity—that diverse voices be heard but that they be delivered in respectful ways. Bias is not tolerated.

This is important if people are going to figure out how to work well together. The workplace is kind of the last place where diversity has an opportunity to flourish. One thing that really works well for people with differences is to have a common goal, to work on something together.

In many cases, people leave work and they go to their silos, to neighborhoods where they are well represented. Many people do not live, and have never lived, in any kind of integrated neighborhood. Still, in the United States, there are very few. So the workplace becomes a place where we have an opportunity to teach people, for people to become aware, to get closer and face their discomfort instead of getting uncomfortable.

So how do you create that kind of environment where we don’t all agree but we agree to be kind and respectful and inclusive? Where we agree to let go of assumptions and biases and stereotypes against people? It’s a hard balance, but it’s something leaders have to figure out how to do.

We all basically think of ourselves as good, moral people, but you talk about taking that next step to recognize what we are missing.
I’d like to see us go deeper. But to go deeper you have to have more skills. Because if you try to go deep and you don’t know how to talk and if you don’t have awareness about other people’s backgrounds, you can blow it up. The only way I think people go from being, like, “nicey-nicey” to authentic is for you to take risks.

You’ve got to decide that everybody’s culture is valid, even though you may not agree with everything. Your culture is not superior. That’s a hard thing for people to do.

But it has to be mutual. People have to learn basic cultural competency skills. You’ve got to decide that everybody’s culture is valid, even though you may not agree with everything. Your culture is not superior. That’s a hard thing for people to do. Once you do it, you talk differently, you’re more curious, you ask questions.

Notice your own biases. That’s an important skill, to be able to see your own cultural lens. There are certain kinds of skills and competencies that enable us to be more authentic, but people have to want to do it and it has to be mutual and it has to be modeled. It’s just not easy.

An example?
I used to take the train into Boston, and there was a fellow passenger who was blind. Every day he was on the platform, and no one says anything to him. Never says anything. Because they think he can’t see them. So you just go on acting as if he doesn’t exist.

My blind friend said people talk to his dog but they don’t talk to him. Because people know dogs but they don’t know blind people. Can you imagine how discounting that is? You’re like “Hey, doggie, doggie,” and then there’s a person, a human, with the dog, but you only talk to the dog.

We’re scared of what we don’t understand or know.
We don’t know. We are going to make mistakes, constantly. Stop expecting and pretending to know. Even with race, there are reasons why we don’t know stuff. It’s not because we’re bad. It’s because—and I’m not a conspiracy theorist—but people of power have decided whose story to tell and how to tell it.

So let’s not talk about it. Let’s not talk about the GI Bill. Let’s not talk about American Indians. Let’s not let people know that we basically made Chinese people work for free to build railroads.

I was in Montgomery, Alabama, where my friend has created the Legacy Museum. It’s amazing. It’s very sad and also amazing what he’s doing. But I did not know as much about the domestic slave trade. I knew about Triangular Trade that brought slaves to the U.S. But I didn’t know about the domestic slave trade in the U.S., where our country decides, after the international slave trade is abolished, to continue to trade slaves within the U.S.

So we couldn’t get more slaves, anymore, but we sold them up and down the East Coast and the West. We made them build railroads so they could be transported. We pulled a bunch of free black people from the North and sold them.

So a lot of times the conclusions that people put together about race and about culture and about black people, about Hispanics, is devoid of a lot of facts. And so we pretend to know. We pretend to be cool with stuff. But if we really knew, we would be devastated. And that’s why there’s this whole movement. People are just starting to see what is real about our country.

I got to college and went to the bookstore, and there were like three rows of novels and science and political theory written by black people I didn’t even know existed.

I didn’t even know about the Harlem Renaissance. I didn’t know anything. So it’s not just white people who don’t know. Black people don’t know. And it influences their sense of self.

So stop pretending to know. If you pretend to know, then you don’t get curious and you don’t ever know and then you’re just trying to hide your ignorance all the time. And then there is the idea of apology. So when you make a mistake, learn to apologize. Don’t hide behind your intent.

The other really huge thing is that—and this is happening a lot in the workplace—people make mistakes, they say the wrong thing. They say something like, “For a mother, you’re doing an incredible job.” Or they say, “You should be really happy to get this promotion. You must have been really surprised.” And they’ll say that to a black person who has been working their tail off and thinks of [himself] as very deserving.

Or they’ll say things like, to an Asian American, “Your English is really good.” But that person grew up in Jersey. It’s like, “Why do you think every Asian person is foreign? They’ve been here for a long time.”

So when someone replies, “That’s offensive,” they say, “Well, that’s not what I intended.” Which is legit, but it takes away an apology. Or they say, “Sorry, that’s not what I meant. You took that wrong. You’re overly sensitive.” That takes away from the apology.

In many cases, people leave work, and they go to their silos, to neighborhoods where they are well represented. Many people do not live, and have never lived, in any kind of integrated neighborhood.

You have to be more interested in the impact of what you’re saying than your intent. Mistakes are OK, because if people are constantly like, “I don’t want to make a mistake,” it really means they don’t interact. Because you can’t hear what’s wrong. You don’t know what you’re missing. You can’t see how people are doing things differently.

Go somewhere and make yourself a minority. Stay engaged. Start the dance of engagement. You purposely create friendships. You purposely go to different parts of town. You purposely read books about other groups. You engage.

There is a story about an Asian kid working at a law firm who came into a cafeteria, and one of the partners says to him, “OK, you need to stop right now what you’re eating and you need to go. You need to do this, and you need to do that.” The kid is like, “I have no idea who this is or what he’s telling me to do.” So he doesn’t say anything. He tries to figure out who the guy thinks he’s talking to. When he does figure out the guy who the partner thought he was talking to, he calls him and says, “Look, man, I don’t know what’s up, but there’s something happening on your matter and you better figure it out.”

That guy then calls the partner and says, “Look, no big deal, but I think you thought you were talking to me in the cafeteria. Can you tell me what I need to do?” The partner is mortified. After the deal, the partner never works with that guy again.

That’s the disengagement that happens because people are so mortified that they’re human and they made a mistake. Instead, you should be like, “OK, man, you know what? My bad. Can we go to lunch? I owe you this.”

Basically you’ve been working with a person who you haven’t been paying attention to. Now you really need to dig in instead of pulling back.

Basically, he doubled down instead of making things better.
Yes. I call that adding insult to injury. Many organizations I’m involved in, the power brokers at the top are white, male and straight. If they decide they are so uncomfortable because of some mistake they made, they ruin your opportunities. So you must find somebody else to work with or you’ve got to tiptoe around this person because they’re tiptoeing around you. It doesn’t work well.

Diversity and inclusion are good from a moral sense. From a business sense, how do you make that case?
It’s interesting, because for me the business case, or rationale, is multifaceted. I don’t care which reason is most compelling to you. There are so many. You’ve just got to find one. For example, we feel fairly certain from every study that groupthink cannot be broken up by people who think the same.

The whole concept of competitive edge is based a lot on a company’s ability to come up with a different product, a new way of doing things, some kind of innovation, a different framework, or whatever. That requires diversity of thought. Diversity of thought is very closely linked to diversity in life experience.

It’s how you solve problems. So you might have a super technical problem, but you can get a janitor who knows nothing about the field who understands something about how plumbing works who can help solve a technical problem.

Businesses have found when they started doing open-source stuff—trying to solve certain problems—some of the people who came up with the best solutions weren’t in the field. So you’re applying a different approach to solving problems.

Team effectiveness is another argument for inclusion. If you’re going to have diversity, you’re not going to have effectiveness unless you’ve got the inclusion part. Because if you put a bunch of people together and they’re different but they don’t know how to really work across differences, it’s not going to work.

So once you decide you want diversity, then you’ve got to go for inclusion. A lot of our companies have clients that are steadily changing. So if you’re going to come up with a product, how are you going to relate well to a diverse, larger-society customer base? How are you going to do that if you don’t have people within your system who think like or have a similar experience to those who you’re trying to serve?

There are now enough companies that have made enough mistakes and now recognize they need other people informing them on a lot of their decisions. It’s not necessarily about that kind of book intelligence. It’s about the ability to see things differently.

So who is going to make a difference in our business? We don’t understand what’s changed. You are especially vulnerable if your business fails to have inroads, doesn’t have networks and doesn’t have the right language.

You have to believe you’ve been missing something. But it’s hard to believe you’re missing something when you’re doing well.

Does it really matter for people to have someone who looks like them sell them insurance?
Some clients would like to have someone who thinks like them. When you’re girlfriends with the person you’re doing business with, it can’t hurt. I started to realize that’s why men don’t want us to change things. Because it’s not just that they are doing business with each other; they become friends and they trust each other. Their kids go to the same schools, and they hang out and they do whatever. It makes doing business and working so much more fun.

Our business is based on trust.
If your social and business professional circles are really small, then you actually think there’s only one option of the kind of person who you would trust. But if you have a much broader base, you would see that isn’t limited to race or gender. It’s just a different possibility for a relationship.

But it is also true that I feel like in some situations—like insurance, banking and medicine—people of color are suspicious, and they have good reasons to be suspicious. There are all these studies now on how doctors treat black people differently than they do white people—and not as good. There are ways in which black people have been taken for granted and taken advantage of when it comes to insurance.

So, in many cases, having someone who has a similar background as you gives that person the benefit of the doubt. But they also may tell you things that make you feel more comfortable. They understand your life in a particular way. It’s a certain kind of way people get to relate. If you’re in the trust business, I think it’s important.

The problem is we’ve advantaged one group. You’re limiting your talent base, but you have to believe that. This is the hardest part, I think, for super successful companies. You have to believe you’ve been missing something. But it’s hard to believe you’re missing something when you’re doing well.

Our industry has a lot of success. How do you get people who are using their own networks, working with people just like them, that they’re comfortable with, to look beyond? How can they be compelled to recognize they are missing something?
They have to see the writing on the wall. That majority will turn into a minority. That’s just the truth. The world has shifted. So how well are they going to be able to do down the line?

Maybe it takes a situation that doesn’t work well for you to notice. There was a case where a guy had been selling insurance to a family forever. The husband died. He thought he’d keep the client. The wife said no: “For 25 years you’ve never even looked at me in these conversations. You’ve never listened to me. I will be getting a new agent.”

That’s the kind of stuff where people start to realize. They made assumptions that they’ll always have this opportunity. More interracial families are happening every day. So now you start telling jokes to a man and he has black children. Or you start saying something, and he’s gay or he has a transgender daughter. That’s going to be a problem.

Those kinds of things make people realize they must make change. But, quite frankly, you must get there on your own in your own life experiences. Leaders have to decide it’s important to the company.

The insurance industry struggles to attract young people—even white young people.
On the recruitment side of things, I think, one is that we’re often looking for ourselves. Which is to say we think we’re looking for excellence, but what we’re really doing is hiring according to preference. So it’s who we prefer to work with, who we think is a fit, who we think—and usually fits—are people who are like us.

Fits our company culture.
Yes. Now, if your company culture has been monocultural for a very long time, it is unlikely that you will see yourself in someone who looks different. If you do, that person will come in and be successful.

You’ve got to get in the door first. Which means that I’m always telling people, “Look at your criteria. Make sure it’s not you and your gut that you’ve identified as the competencies a person should have.”

Then don’t over-hire. Don’t find somebody with an MBA if all you need is a BA. This happens a lot if you’re an outsider or come from a different racial background. They ask, “Are they really smart enough?” So your new hire will have an MBA…yet you just hired a white person who has only a BA.

We need standards, but we need to be suspicious of what you call standards. For example, if someone doesn’t have on the right clothes, can’t you just tell them? Instead, you’re going to be like: if you fit here, you would know you don’t have on the right clothes.

Isn’t that a boss’s insecurities? “I don’t know you well enough, and I don’t know your culture well enough.”
You can make mistakes in this regard. However, if you see a person with promise and potential, we usually give them the hard stuff as well as the praise. If that’s what you do with everybody, don’t not do it with someone who’s different. You may need to do more to make sure that person understands you’re not acting out of bias. You may need to make sure that that person gets what they need. Really offer support and feedback.

A lot of people just don’t know the workplace. They’ve been excluded for a really long time.

When we start talking about privilege, lots of people just get freaked out. They think I’m saying they didn’t work hard. Like, yeah, you worked hard. But those ladies who are at the bus stop at 6 a.m. and are working three jobs—they’re working hard, too.

So it’s a problem that perpetuates itself for lack of diversity?
It’s hard to get started if you don’t have diversity. People have lots of potential. They may not come in the perfect package right now. And certainly if you want to really work on diversity and inclusion, you’re going to have to see through the packaging and help make some adjustments. Because, quite frankly, all of us had people to help us make some adjustments.

What about those who can’t make the connections because of their privilege?
That has blown my mind, to see really intelligent people not be able to make those connections. I don’t know if it feels too destabilizing. When we start talking about privilege, lots of people just get freaked out. They think I’m saying they didn’t work hard. Like yeah, you worked hard. But those ladies who are at the bus stop at 6 a.m. and are working three jobs—they’re working hard too. And you have to ask yourself, how well were you positioned to take advantage of your hard work? It’s not whether you worked hard. It’s about no matter how hard my father worked, up until 1957 he was not allowed to be a firefighter. It didn’t matter how brave he was.

Or to get an education.
Or to be a lawyer. I mean women couldn’t even go to Harvard Law School until 1953. It didn’t matter what an incredible jurist they would make. Women weren’t even allowed to vote until the last century. My father couldn’t get a job that your father could get. This stuff is all iterative. Consequently, my father, who was discriminated against getting many good-paying jobs, today struggles financially at 92. That means my generation must help him. That puts my generation at a disadvantage.

So when people ask why black people can’t get it together, remember this: in Baltimore, free men who were working on the docks and making great money used it to buy a house and to take care of their kids. So we’re working on the same docks, but my money is going to buy my relatives out of slavery. These are not the same worlds. We are not on the same platforms.

How do you answer the argument that slavery was 150 years ago? By now blacks should be equal, or they should be able to stand on their own two feet? I hear those arguments all the time.
Go back as recent as 1950 and the ’60s. Let’s just go to Jim Crow. In Isabel Wilkerson’s book The Warmth of Other Suns, she explains why six million black people moved out of the South over a period of years to escape discrimination. People say blacks are not immigrants, but they are.

They were looking for more opportunity and looking for safety, because they were being lynched. And those are either our fathers or our grandfathers, right?

Black teachers made something like $10 a month. White teachers made 10 times that. All you’ve got to do is add up the decades of that money, which is why there is still just a huge financial gap.

People don’t know that, when you came back from the war as a black doctor, you still could not practice medicine in the South. You had to go all the way to California. That’s why there are some wealthier black folks on the West Coast. Most black people grew up in the South. So that is where the oppression remained.

How do you make up for hundreds of years of not having opportunity?

How do you deal with that on a personal level?
I feel like I am the beneficiary. As a beneficiary, I can’t afford to be mad.

Why can’t you be mad?
I can be mad as a feeling but not as a way of being or in the way of just carrying myself in life. There are some people who I don’t begrudge if they’re pissed. They’re at bottom. I’m not at bottom. I managed through a lot of people’s sacrifice to be here. So I need to put all my energy into making it better for others.

I don’t want to take on—no one can take on—all this injustice internally. Sometimes I’m just like bewildered. Sometimes I’m not. But those are emotions I give myself a very short time to dwell in. There’s just too much work to do.

What about people who say, “I didn’t own slaves. It’s not my fault.”
No, it’s not your fault. This is not about who’s at fault. The question is how comfortable are you living in a world with such deep inequity? Today. Right now. In this space. That’s all I want to know.

It might be helpful for you to go back and think about the ways you’ve been positioned. I just need you to have some compassion. They just don’t know exactly what they should do. That’s my audience. My audience is not people who want to keep their eyes closed and want to keep themselves safe and cordoned into their way of seeing the world. They want to understand. So you’ve finally hired the diverse workforce. Now you don’t know what to do with it.

Walk a CEO through this. What’s next?
Most CEOs are asking me: “Is there something wrong with our culture that we have people come but they’re not having a good time?” Your culture reflects. There are aspects of your culture that’s very good, but it reflects a very singular, narrow kind of monocultural way of being.

There are lots of cultural differences that people bring. Even people right now who pretend that they’re having a good time in your company—they might actually benefit from you thinking about how to make that culture much more inclusive.

It’s about no matter how hard my father worked, up until 1957 he was not allowed to be a firefighter. It didn’t matter how brave he was.

What that means is people are coming into the environment, they feel welcomed, they feel like they belong. They’re expected to be good. They’re respected in how people use language and in the policies and the practices, like what holidays you’re celebrating or what food you serve.

I was just talking to a client about where they choose to have business outings, on what dates, whether they’re accessible for disability, is it a part of town that people feel safe in? Certain people do, other people don’t.

Is your system set up so the only people who get heard are those who are boisterous and aggressive? Or do you have the kind of skill to conduct a meeting where you actually are hearing from people with different personality types?

Or maybe you’re dealing with a person who’s from a deferential culture. Maybe they’re not going to interrupt, because they’re showing deference to you.

Are you the type who insists if someone has a conflict they come directly to you? There are other types of communication styles that are indirect, or there are less emotional styles or more emotional styles. This is the work of creating an environment where people of different backgrounds can thrive. It means you have to pay attention to the ways in which the institution that’s been working well for you is not necessarily going to work as well for others.

And it’s about mutual adaptation. What I have noticed is the people who are new to the workplace or who are underrepresented in it or are historically excluded, they know a lot more about adapting. So they know how to tolerate difference. But the group that is in the majority, that haven’t had to make adjustments, are not very skilled.

You’ve described whites as having this rugged individualism trait whereas blacks are more team oriented. The big thing now is changing office environments to promote teamwork. It seems like that would fit right in with inclusion.
The real question is what’s in the water? Is it still the individual who comes up with the brilliant idea on their own? Are they still more valued? If I want to go down the hall and ask someone what they think before making a decision, is that going to be used against me?

Cultures can change the structure. You can change how pretty the offices are, but the embedded value is still individualism. Many people, no matter what culture they ultimately come from, have learned the trick of individualism. They have been convinced that’s the only way to get ahead. Now people are talking about soft leadership or emotional intelligence. That goes to the idea of how you involve people in your conversations and decision making. It’s a very powerful skill. But again, it’s about how much it’s valued. And is it going to be valued the same if it comes from a majority person or a minority person?

You’ve cited victims of Hurricane Katrina in New Orleans. A photo in the newspaper of blacks finding food noted they were looting. A similar photo of whites noted how smart they were to find food.
We don’t even know we do that. We see people on the street and we see them in a predicament and we make a whole story up about them, depending on what they look like.

Teamwork and countless meetings can take a lot more time to accomplish something. Talk about that.
I was reading the book Essentialism. It’s really interesting. The author is an essentialist, which means he only spends time doing things that he thinks are productive. For example, he says something like, “This is not going to be a good meeting for me. I’m only going to stay for 20 minutes because I have better things to do.” He believes if the workplace allowed people to be responsible and professional and do only what is best for them, we would have more productive workplaces.

I’m such a non-essentialist, this book was such a challenge for me. At first I thought he’s awfully selfish. But by the time I got to the end, I realized what he was saying.

He’s trying to be productive.
Not only that. He believes he has a calling to do something no one else but he can do. He believes this is true about everyone else as well. He says too many of us are wasting our time trying to make people happy and we’re not getting to the core aspect of who we are and what we were meant to do and to give to the organization.

He has some really good techniques. He was talking about, if you’re trying to solve a problem, most people are going to attack the biggest part of the problem. He says no, solve the smallest pieces of the problem that you can. Go for the thing you can fix first. Never occurred to me, but it makes sense.

I talk about introversion and extroversion a lot. I talk about different communication skills. I talk about deference. I talk about conflict management. All the things that I know are influenced by culture.

Culture’s a big idea. It’s not just about ethnic background. It’s about your values, your personality, what you think is beautiful, what you grew up understanding and ways you have changed who you are based on that.

Helping people to see themselves as cultural beings is a lot of my work. If you think you’re just normal, you don’t understand a lot of your decisions and judgments. Your social circle is based on your culture.

People say, “I love culture. I wish I had one.”

You have a culture, and it’s shaping everything you do. If I can get people to see that, then they start getting more suspicious, more conscious and more curious. And if they can do that, they let new ideas in. And that makes their world shift.

You just have to know where you are. You’ve got to be willing to be wrong. You’ve got to be willing to examine your background. You have to be willing to say you’re sorry. As long as you do that, you can build some really powerful, authentic relationships.

As a boss, how do you relate to a person who is different from you?
This person may feel isolated. So you ask yourself, “How do I get to know this person as an individual? How do I build a relationship with this person?” You bring no assumptions but also are clear you are open and interested in hearing anything about what difference might mean for this individual.

Don’t say, “Hey, you’re black. Is it different?” Instead, say things like, “Hey, I grew up this way and blah blah blah, and I really think this, and I really like this. What are you interested in?” The relationship is important because you’re trading information. You share who you are, and you’re asking them to share, just like any other relationship. And you start to build trust.

The second thing is, you start to make sure that it’s clear to that person that you’re invested in them. You’re going to make a mistake at some point, but the fact you’ve shown your commitment, the willingness to listen, that will smooth out your mistake.

So then one day you’re out late at night, and you say something like, “Well, black people really seem like this.” The person looks at you. You notice they’ve got a different face. You’re like, “What? Did I just step in it?” They’ll say something, and, depending on your response, you’ll be giving them a cue you’re either up for the difference or you’re not.

You just have to know where you are. You’ve got to be willing to be wrong. You’ve got to be willing to examine your background. You have to be willing to say you’re sorry. As long as you do that, you can build some really powerful, authentic relationships. And it won’t be with everyone and you cannot make everyone happy and you cannot make decades of injustice go away.

First there was pressure from New York Gov. Andrew Cuomo and Maria Vullo, New York’s financial services superintendent, on the industry to dump the National Rifle Association as a client—even fining brokerage Lockton Affinity and insurer Chubb for selling and underwriting an NRA insurance policy.

Now, insurers are being asked to take sides on the climate change debate. It began with an epiphany, the realization that all fossil fuel companies shared a common feature—they bought property and casualty insurance. What if their insurers could be pressured to no longer underwrite the companies’ risk exposures or invest in their securities? The answer was obvious—the companies would flounder. 

It was a brilliant concept, one that its originator—The Sunshine Project—has since set in motion. In July, the San Francisco Board of Supervisors became the first municipal body in the United States to call upon insurers to stop insuring and investing in the coal, oil and tar sands industries. The board also urged the city and county of San Francisco to screen insurers’ underwriting of and investments in these industries and to formally cut ties with those carriers that did not comply with its wishes. 

“Cities have nothing to gain from collaborating with insurance companies that prioritize dirty energy companies over communities,” said Aaron Peskin, a San Francisco supervisor, in announcing the decision.

The decision was a major early victory for The Sunrise Project, the Australia-based organization that devised the idea of using the insurance industry as a battering ram to clear the world of harmful emissions produced by oil, coal and other fossil fuel businesses. “Pretty much any business in the world, if they don’t have insurance, they can’t operate,” says Ross Hammond, Sunrise Project’s senior campaign advisor in the United States.

For people fretting that humanity is at the brink of extinction from global warming, the modus operandi of The Sunshine Project is a stroke of pure genius, and it has arrived just in time. For insurance leaders, even those who support a transition away from fossil fuels, there is concern that using the industry as a blunt instrument to achieve political aims sets a potentially dangerous precedent. “It is not the role of insurance to steer politics,” says Jochen Körner, the executive managing director of specialist insurance brokerage Ecclesia Group, headquartered in Germany.

Nevertheless, Körner concedes he is conflicted on the subject. “On the one hand, I endorse the aims of the San Francisco resolution because we brokers and insurers can be enablers [of The Sunshine Project’s goals] by shutting down the support system for fossil fuel companies,” he says. “This can be a quicker way to ban coal and tar sands than through politics.”

On the other hand, Körner adds, “If insurers are the means to a political end, where does it stop? Who decides what is right and what is wrong?”

Körner is not alone. “The burning of fossil fuels is a concerning issue, but requiring property and liability insurers to abandon a multibillion-dollar business like the energy industry and to limit the diversification of their investment portfolios is bad public policy,” says Robert Hartwig, a professor of finance and co-director of the Risk and Uncertainty Management Center at the University of South Carolina.

In Hartwig’s view, if the Sunshine Project’s approach were taken to its extreme, the insurance industry could be compelled not to insure or invest in other industries deemed socially unacceptable. “There are people opposed to logging companies, pharmaceutical companies, tobacco companies, businesses that make pesticides and herbicides, airlines that produce high emissions, and cars that do the same,” Hartwig says. “Do we ban insurers from insuring or investing in these companies, too?”

Governing Issues

It’s possible, of course. According to the Environmental Protection Agency, the U.S. transportation sector produces more greenhouse gas emissions than the burning of fossil fuels for utilities. If insurers can be politically compelled to forsake the energy industry, automakers and airlines may be next.

Hammond has a different opinion. “Scaling a social movement that results in a healthier planet is a very good thing,” he said. “Insurance companies are investing in and insuring the very industries which are making climate change worse. If insurance companies want to protect us from catastrophic risk, they must break ties with the fossil fuel industry.”

In other words, insurers and reinsurers that continue to underwrite and invest in fossil fuel companies are directly contributing to a future in which they will experience more severe property catastrophe losses. Dump them, and losses will eventually moderate.

Cities have nothing to gain from collaborating with insurance companies that prioritize dirty energy companies over communities.

Aaron Peskin, supervisor, city of San Francisco

That might be a pretty enticing argument if the decision were left up to individual insurers. For years, organizations like the American Sustainable Business Council have advocated that companies voluntarily divest from fossil fuels and invest instead in low-carbon alternatives. The Business Council’s DirectInvest campaign asks companies to sign a pledge to this effect and lists the names of the top 200 oil, gas and coal companies.

But that decision belongs to the companies themselves. In San Francisco, government is calling the shots.

The Sunrise Project sees nothing wrong with this scenario. “Insurance companies are supposed to protect us from catastrophic risks,” the organization states. “Yet when it comes to the largest threat to humanity—climate change—many insurers are fueling a dangerous future through their investments in and underwriting of fossil fuels.”

In their corner is California’s insurance commissioner, Dave Jones, who wants insurers to voluntarily divest from thermal coal investments. Jones’s position is that these investments will experience a precipitous decline in value as the world shifts to renewable sources of energy. Jones has directed that the state insurance department maintain a searchable database of insurers that have invested in oil, gas and coal companies. This is all part of his Climate Risk Carbon Initiative, which was designed to provide the public with information on potential financial risks caused by climate change that California insurance companies face as a result of their exposure to investments in fossil fuel.

Not surprisingly, the initiative was met with virulent opposition in coal- and oil-producing states such as Oklahoma and Kentucky. In June 2017, nearly a dozen state attorneys general threatened to sue Jones for violating the Commerce Clause of the U.S. Constitution, arguing that by targeting energy companies, employment in their states will suffer. (One in four Oklahomans works in the energy industry.) “This initiative is misguided as a matter of policy, questionable as a matter of law, and inconsistent with the principle of comity among the United States,” the group maintains, promising legal action unless Jones relents.

Jones subsequently replied in a statement that he was “undeterred.” In May 2018, as the litigation threats from the 12 state attorneys general hovered above the department, Jones launched the nation’s first-ever stress test of climate-change risks on insurer investments in fossil fuels. Initial findings indicate that insurers in the state have more than $500 billion in fossil fuel related securities issued by power and energy companies, including $10.5 billion invested in thermal coal enterprises.

The California Insurance Department did not reply to requests for an interview with Jones. Leader’s Edge also reached out to the National Association of Insurance Commissioners, the organization representing state insurance departments, for its perspective on the subject. Spokesperson Erin Yang replied, “Unfortunately, it is not an insurance regulatory issue that the NAIC has taken up.”

Hartwig calls this position untenable. “Regulators are required to ensure the financial solvency of insurance companies,” he said. “The industry is one of the largest institutional investors on the planet. By limiting their ability to invest in the energy industry, this reduces the diversification of their investment portfolios. A less diverse portfolio is a risker one. … Ultimately, this will lead to higher insurance rates for people and businesses.”

Although Jones has called for insurers to voluntarily divest from coal and other fossil fuel companies—he’s issued no such mandate—industry groups like the Property Casualty Insurers Association of America (PCI) likened Jones’s position to calls for a boycott. “Politicians have every right to express their desires and set their own policy,” says David Kodama, a PCI assistant vice president. “It’s our role to inform them about the potential ramifications of their decisions.”

Like other insurance industry participants and watchers, Kodama believes the ramifications of San Francisco’s efforts could be precarious. “Our concern is that the Board of Supervisors’ decision will become a template to push a social agenda against companies in businesses that groups of people dislike,” he explained. “It could be used as the model to fight against companies that make certain chemicals, tobacco and e-cigarettes. I could see it used against marijuana businesses, abortion clinics, casinos and adult entertainment enterprises. All of these businesses buy insurance.”

He also disapproves of limiting insurer investments. “The inference is that insurers should invest in green companies providing sustainable and renewable energy instead of oil and coal companies,” Kodama says.

“But what if these investments are less secure and more speculative in nature? That would jeopardize the stability of insurers’ investment returns, to the detriment of their policyholders.”

Hartwig agrees. “Some environmental advocates believe the future will involve the massive storage of energy in industrial batteries, but the environmental consequences of these activities are becoming clearer,” he says. “Could this result in insurer prohibitions from investing in companies that make electric cars? What about other zero carbon energy technologies like hydroelectric dams that impact fish and wildlife or wind turbines that kill birds? Once you go off in this direction, there is no end in sight.”

His point is obvious: under such a scenario, insurers would be required to restrict their investments solely to politically correct companies. Körner provides another unsettling scenario. “If insurers and reinsurers don’t assume coal mining and coal plant risks, the government may need to provide insurance,” he says. “However, no government is equipped to underwrite coal-related risks. If losses exceed premiums, taxpayers will be on the hook. … The government is never a good risk-taker.”

One need look no further than the federal government’s National Flood Insurance Program for an example of how not to underwrite U.S. flooding risks; the program has been in the red since Hurricane Katrina struck the Gulf Coast in 2005.

If insurers are the means to a political end, where does it stop? Who decides what is right and what is wrong?

Jochen Körner, executive managing director, Ecclesia Group

Taking the Pledge

Despite these concerns over government overreach, many of the world’s largest European insurers and reinsurers are doing what The Sunshine Project, Commissioner Jones and the San Francisco Board of Supervisors have urged. Swiss Re, Zurich, Allianz, Aviva and Axa have decided to no longer underwrite and to divest from coal companies, according to a recent report by an organization called Unfriend Coal. In August 2018, Munich Re joined them. Altogether, the insurers have divested about $23 billion from coal companies.

“Climate change generates enormous economic and social risks,” says Oliver Bäte, CEO of Allianz. “It is already harming millions of people today. As a leading insurer and investor, we want to promote the transition to a climate-friendly economy.”

And the insurer doesn’t see the move as detrimental to its bottom line. “We are convinced that our approach will further improve the risk/return profile of our portfolio in the long term and that we will strengthen our position as a forward-looking investor,” says Günther Thallinger, a member of the board of management of Allianz who is responsible for investments and environmental, social and governance criteria. “As a long-term investor, we want to shape the change to a climate-friendly economy together with our clients. We will thus also strategically develop our investment opportunities in new technologies.

“It is important to limit global warming as quickly as possible. This will only succeed if business and politics pull in the same direction.”

It is not clear if these commitments by the foreign insurers and reinsurers also apply to their business in the United States, Hammond says. However, last summer Swiss Re announced it would no longer provide reinsurance to insurers with more than 30% thermal coal exposure.

No U.S. insurer has made such commitments. “The big gaping hole is the United States,” Hammond says. “Even though the coal industry is pretty much in a terminal decline, there are still plenty of coal-fired plants in the U.S. and plenty of proposals in the Powder River Basin and in Appalachia for more coal mining. Our goal is to get U.S. insurers to do what European insurers have done and are doing.”

Hammond is confident The Sunrise Project will prevail. In July, the group sent a letter to 22 insurers asking them to voluntarily stop underwriting and investing in fossil fuel companies. Among the companies receiving the letter are such large insurers as AIG, Liberty Mutual, Berkshire Hathaway, Chubb, Nationwide and The Travelers Companies. “We need a U.S. company to get out in front of this,” Hammond says. “Axa apparently got a lot of pressure from the French government to do something on climate change, given the Paris Accord. We’d love to see a big company like AIG take the lead on this here.

“This is an extraordinary opportunity for the industry to make a huge difference—a chance to make a mark when nothing positive is going to happen at the federal level,” he says.

At present, Hammond is doing outreach in other U.S. municipalities to consider initiatives similar to the one issued in San Francisco. He also recently visited Silicon Valley to discuss The Sunrise Project’s goals with large technology companies.

“We’re hoping that companies like Google and Facebook that already have done quite a bit on climate change will start a dialogue with their insurers—if they want to keep their business, they’ll need to distance themselves from the fossil fuel industry,” Hammond says. “Changing insurance companies is not a big deal.”

He’s also targeted the cities of New York and Los Angeles as likely to follow San Francisco’s lead in breaking ties with insurers of coal, oil and tar sands companies. “Both cities that have already taken actions on climate change,” he explains. “We want them to put their insurers on notice that these are their expectations going forward.”

Crossing the Line

Certainly, the overarching ambition of The Sunrise Project is clear. It wants coal, tar sands and other fossil fuel companies to fold up their tents for good, by whatever means necessary. Without insurance and insurer investments, the organization figures the companies cannot survive, and it’s probably right.

Some would agree this is a good thing. The question is whether the property and casualty insurance industry should be the means to such an end.  

The industry is one of the largest institutional investors on the planet. By limiting their ability to invest in the energy industry, this reduces the diversification of their investment portfolios. A less di