Four members of the Novarica Research Council special interest group for Workers’ Compensation met in mid-November, at a meeting hosted by Builders Mutual in North Carolina. A summary of key topics of discussion is below:
Cybersecurity There was general consensus that the best overall security strategy was containment and damage control. Insurers understand that attacks are inevitable and even the best systems won’t stop every incursion, but are taking steps (such as working in virtualized environments) to prevent potential breaches and quickly detect and neutralize them if and when they do occur. Common tools and services included LogRhythm, Dell Secure Works, IDS, MX Logic, Webroot, NovaFour, Open DNS, and Websense. Training is an equally important element, as unaware employees may open infected emails, documents, and flash drives.
Core Systems Replacements Participants agreed that it’s important for carriers to realize that core system replacement projects aren’t IT-only initiatives, in execution or in implementation. One carrier was able to bring up 13 states in two years by sequestering SMEs from IT and business units as an integration team, going so far as to locate their common workspace away from other employees. Not only was this approach effective, it eased adoption and training, as each BU had its own ambassador to explain the decisions that led to end-state functions and processes.
As that carrier’s CIO pointed out, vendor engagement is also a crucial success factor for CSR projects. While this CIO recommended that insurers should lean on vendor expertise, it’s also important to ask vendors to push back. Vendors are typically willing to implement anything the insurer requests, but a good vendor partner will feel comfortable saying “no” to unnecessary configurations. Another CIO agreed that OOB functionality is often best preserved, but for truly unique products, customization may be necessary. And clarity of requirements is crucial for effective projects, something carriers should plan sufficient time to execute well.
Predictive Analytics Carriers are using a small assortment of services and systems to develop and launch predictive analytics, including Deloitte, SAS, Valen, and EagleEye (now Guidewire Predictive Analytics). For this group, the activity is largely focused on renewal scoring, and carriers are only beginning to pivot to new applications like premium audits and new business. Surveys show that Workers’ Compensation carriers are more likely than other insurers to apply predictive analytics towards claims severity and fraud detection, though this trend was not reflected in the meeting group.
Carriers made the critical distinction between building a PA model and executing it. Regarding the former, carriers underscored the need to track and audit predictive model performance over time, confirming that a model has made a correct predictions and allowing them to adjust and “train” the model to make more accurate predictions in the future. Especially for smaller insurers who have strong community ties, there is a reluctance to leverage predictive models if it means eliminating human workforce. It’s important in those cases to tie any predictive model-based automation directly to growth goals rather than efficiency/cost-cutting goals.
Millennials Carriers’ most common frustration with Millennials came from the hiring process, which highlighted larger divides between how workers find jobs and the sometimes formulaic HR job descriptions and hiring processes. CIOs considered how best to match an employee’s particular talents with the correct level in a corporate hierarchy and salary structure, which often don’t support flexing job responsibilities to suit employees. As an example, even if an internal role is classified as “IT Specialist 1,” the externally facing job listing needs to have a more compelling title and description that is tailored to the desired applicant.
But carriers also grappled with communicating internal attitudes of company loyalty and upward mobility to a generation which largely believes companies won’t be loyal to employees. One CIO mentioned that recruitment at local colleges had been fruitful, but it can be a long branding effort.
One carrier highlighted their positive experience with PredictiveIndex.com, an online analytic service that highlights matches between job prospects and open positions. Employers and applicants each complete brief surveys (which consist of one-word descriptions of a position’s responsibilities and the type of person who would succeed), and the system returns matches that are extremely accurate.