Applied Underwriters Fined $3 Million Over EquityComp Program


The State regulators continue to clamp down on insurers that use side agreements (aka Program Agreements) for large deductible/loss sensitive programs that are not properly filed with the various Offices of Insurance Regulation. Florida, New York and California have been particularly active in this realm, with Illinois specifically writing a white paper on the overall large deductible topic and PEO that I spoke on a few years ago … .

Additionally, the National Association of Insurance Commissioners (“NAIC”) has been very active in the enforcement of side agreements… “One significant forms-related issue is that there are sometimes agreements outside of the insurance contract–that is, they are not specifically referenced within or attached to the insurance contract— established between the insurer, the employer and perhaps a TPA or another party. This is an issue because insurance laws typically require the filing of the policy forms and accompanying endorsements used to write workers’ compensation insurance.” This definition from their white paper “Workers’ Compensation Large Deductible Study”, first published in 2006.

Bottom line is that there is a marked increase of enforcement on the state level of non-approved side agreements and I would anticipate more carriers being called out for their lack of proper filings and having approval to use the side agreements applicable to their large deductible/loss sensitive offering(s).

From our friends at …

The New York State Department of Financial Services has fined Applied Underwriters $3 million for offering workers’ compensation insurance bundled with side agreements that weren’t filed with or approved by the department.

In announcing the fine on Thursday, DFS said the bundled programs were sold under names including EquityComp and SolutionOne. The products, sold in New York from 2010 through 2016, included guaranteed-cost workers’ comp policies issued by Continental Indemnity Co., an Applied subsidiary, along with a “reinsurance participation agreement” that employers were required to enter into as part of the program, according to the department.

DFS said the RPAs involved complex cost calculations that were presented to employers in a misleading way. 

“Under the formula, policy fees could rise rapidly with the first few claims to levels substantially higher than what would have been paid under a typical linear retrospective model,” DFS said.

In fact, the non-linear model was unique enough that Applied received a patent for it in 2011, according to DFS.

Financial Services Superintendent Linda Lacewell said Applied Underwriters had been “illegally operating outside of the department’s oversight to sell a complex product to hundreds of New York small and medium-sized businesses.”

Applied Underwriters on Thursday said it was pleased to have reached a settlement with DFS after the matter had been under review for three years.

But Jeffrey Silver, general counsel for Applied Underwriters, denied any wrongdoing by the company.

“There was no wrongdoing on our part whatsoever, but there were filings that the department thought should have been made,” Silver said in a statement provided to WorkCompCentral. “The nature and structure of the program was disclosed to participants who were large employers, and the participants were advised by their insurance brokers and other professionals.”

In the statement, Silver described Applied’s loss-sensitive program as a captive insurance program, which he said is covered in New York by a separate captive insurer law. The program gave businesses an incentive to improve their safety, he said, and a “significant number” of EquityComp participants did expand their safety programs, leading to lower workers’ comp costs.

The New York DFS launched its investigation of Applied Underwriters in December 2015. The company voluntarily stopped offering the side-agreement program in New York after the probe started. Under a DFS consent order, Applied won’t offer any equivalent side agreements and will file any future products with the department for approval. In addition, Applied won’t enforce any arbitration provisions in contracts with New York employers.

The fine comes as a sale of Applied Underwriters, which is owned by Berkshire Hathaway, is pending. The agreement with DFS removes a possible obstacle to approval of the sale by the state of New York, Applied said through a spokesman.

The New York Post reported last month that the Applied Underwriters buyer was Bahamas-based United Insurance Co., which planned to acquire Berkshire’s 81% stake in the company, along with shares of the company owned by two executives. The Post cited a filing with the California Department of Insurance as the source of its information.

The Applied Underwriters spokesman said on Thursday that the Post’s report was inaccurate and incomplete, but he declined to provide information on the buyer.

A quarterly filing provided by CDI stated that Berkshire Hathaway entered into a stock purchase agreement this year with United Insurance Co. to sell its 81% interest in AU Holding Co., the parent company of Applied Underwriters, and that United had also agreed to acquire Sidney Ferenc’s 7.5% interest in AUH. The stock purchase agreements were assigned to Steven Menzies, who owns 11.5% of the company, according to the filing.

Berkshire Hathaway confirmed in February that it was selling Applied Underwriters, saying at the time that part of the reason for the sale is that AU competes with other workers’ comp insurance companies that Berkshire Hathaway fully owns. A spokesman wouldn’t comment at the time on whether controversy over Applied’s EquityComp program contributed to the decision.

Regulators in New Jersey have also been investigating Applied Underwriters, the New York Business Journal reported. Regulators allege that the company “marketed and sold an unapproved workers’ compensation program with impermissible retrospective rating,” according to a New Jersey Department of Banking and Insurance filing.

Applied Underwriters declined to comment Thursday on whether states other than New York were investigating its EquityComp program, or to say in which states the company still offers the program.

The Applied Underwriters website continues to list EquityComp as one of its programs, “designed for companies with premiums in excess of $250,000 that seek flexible risk financing.”

Sedgwick to Acquire York Risk Services Group

-From our friends at

The list of quality TPA’s continues to consolidate. As a huge fan of the former F.A. Richard which was bought by York, I see this as unfortunate –

The largest third-party claims administrator is about to get bigger: Sedgwick on Monday announced it is acquiring York Risk Services Group.

York has nearly 5,000 employees in more than 60 offices across the U.S., as well as an international presence, the companies said in a news release.

With the acquisition of York, Sedgwick will grow to almost 27,000 employees.

The closing of the transaction is subject to customary conditions and regulatory approvals. Terms of the acquisition weren’t disclosed.

In July 2014, Canadian private equity firm Onex Corp. reportedly paid $1.33 billion to purchase York.

Sedgwick and York both provide workers’ comp third-party claims administration, in addition to an array of other services.

“There is a strong strategic fit between Sedgwick and York,” said Judy Molnar, Sedgwick’s vice president of public relations. “The two companies offer complementary services and geographic footprints.”

For example, Molnar said, York has expertise in servicing multi-policyholder programs for insurance carriers and risk pools, as well as public entity clients and alternative workers’ compensation plans under the U.S. Longshore and Harbor Workers’ Compensation Act and Defense Base Act. In addition, York’s managed care offerings, and medical bill review in particular, will augment Sedgwick’s offerings, she said.

ranking based on 2017 gross revenue placed Sedgwick as the largest TPA, followed by Crawford & Co. and its Broadspire company. Among TPAs providing multi-line services, York ranked third-largest.

Joe Paduda, principal of Health Strategy Associates and author of the Managed Care Matters blog, said the acquisition isn’t surprising.

“This industry will continue to consolidate for the foreseeable future,” Paduda said.

Paduda described the impact of the York acquisition as neutral for the work comp industry. Although the acquisition will reduce the number of TPAs, “there is still plenty of competition,” he said.

But to some, bigger isn’t necessarily better. 

Frank Pennachio, co-founder of Oceanus Partners, a consulting firm for insurance companies and agencies, said Sedgwick’s increased size would increase its bargaining power with medical providers. And if provider reimbursement is squeezed, that could adversely impact injured worker care, he said.

“Can you just say ‘no’ to Sedgwick and York and still be a viable practice?” Pennachio asked.

A benefit to Sedgwick of the acquisition is the elimination of a rival for attractive accounts, Pennachio said.

On its website, York touts its 15-year relationship with Walmart, the world’s largest retailer.

“Every year, we have to re-earn our partnership by demonstrating we go beyond claims administration for workers’ compensation,” York said in a blog post.

York has made a number of its own acquisitions in recent years. In July 2018, York announced it had acquired the third-party administration business of Key Risk Management Services, a member of the W.R. Berkley Corp.

In 2014, York acquired Houston-based American Claims Services Inc. and Risk Management Planning Group, or RMPG, a New York-based provider of workers’ comp claims and risk management services. Also that year, York announced the acquisition of Bickmore, a Sacramento, California-based risk management and actuarial consulting firm that manages group self-insurance programs and association group programs.

“For many years York was the acquirer of TPAs, and now they are being acquired,” said David Donn, chief executive officer of Donn & Co., a San Francisco-based consulting firm.

Donn said the five years since Onex acquired York seemed like a reasonable time for turning over the investment. He predicted that York’s medical management services would soon fall under the Sedgwick umbrella and be rebranded over the next few years.

Sedgwick has gone through a recent ownership change of its own. In December, The Carlyle Group completed its acquisition of a majority ownership of Sedgwick from KKR and other shareholders. The transaction was valued at about $6.7 billion. Funds managed by Stone Point Capital LLC and Caisse de dépôt et placement du Québec, along with Sedgwick management, remain minority investors.

Happy Independence Day!

July 4, 2019 marks America’s 243rd birthday!

Fireworks and freedom: That’s what America does on the Fourth of July to celebrate the country’s birthday, established with 56 founding fathers’ pen strokes on the Declaration of Independence in 1776. We also eat a whole lot of hotdogs: 150 million in total. We make a toast or two to freedom and good old Uncle Sam, shelling out more than $1.6 billion on July Fourth beer and wine. And we travel, with nearly 47 million of us planning to venture 50+ miles from home this year.

Have a safe and happy 4th of July!

Image result for happy 4th of july pictures

Scooter Riders Advised to Avoid Insurance Pothole

More on the scooter fad from Insurance Journal…specifically, what’s not typically covered when a rider causes an accident.


We’ve all seen reports about head injuries, traffic accidents and even deaths that electric scooter riders have suffered as the popular new mobility option has pushed onto the streets in more than 100 cities worldwide.

Despite the dangers, riders are exposing themselves to liability and are most likely not insured for the damages they may cause.

A rider’s personal health insurance — if he or she has it — could help defray the cost of their own medical bills in case of an accident.

But it’s another matter entirely when a scooter rider hits and injures a pedestrian, damages someone’s property or causes a car accident. The rider may be held responsible, and most insurance policies will not cover those expenses.

“Under the standard insurance policy, there’s most likely a pretty significant gap in coverage,” said Lucian McMahon, senior research specialist for the Insurance Information Institute. “Even if the odds are low, it doesn’t mean that something bad might not happen, and owing people money or compensation for injuries that you caused them can get very, very expensive, perhaps even ruinously so.”

The two largest scooter companies in the U.S. — Bird and Lime — generally place the responsibility for accidents on riders by listing in their rental agreements that riders relieve the companies of liability. Customers must agree to those terms to ride.

Bird says riders are fully insured for anything that might happen as a result of a faulty Bird scooter. Lime says its insurance policy offers at least $1 million in liability coverage for each covered claim, but there’s no way to know whether a claim is covered until an investigation is done, and each claim is unique.

Despite the scooter companies’ liability insurance, experts say responsibility for damages is likely to fall on the riders’ shoulders, because of the terms and conditions users agree to when they download the app.

“These are such new modes of transportation that the courts have not weighed in on any of this,” said Bryant Greening, attorney and co-founder of LegalRideshare, which represents clients injured in ride-hailing or shared scooter accidents. “Generally speaking, these waivers of liability hold up in court, but we’re going to have to see what happens as more and more of these injury cases are brought and are litigated.”

Electric scooter riders might think their auto insurance would kick in to cover an electric scooter accident, but automobile insurance generally doesn’t cover vehicles with less than four wheels. And homeowner’s or renter’s insurance may cover an accident that occurs on a traditional bicycle, but it does not cover motorized bike or scooter trips.

“Once you motorized that scooter or that bike, then the equation changes,” said Bob Passmore, assistant vice president at the American Property Casualty Insurance Association. “More likely than not, most people’s home liability or their renters’ liability probably aren’t going to provide coverage for that.”

So what can scooter riders do to protect themselves? Experts suggest calling an insurance agent to ask how to get coverage. If you have a homeowner’s or renter’s insurance policy, you may be able to add an `”umbrella policy,” which can cover more scenarios and include higher limits for coverage than typical homeowner’s or renter’s policies.

For example, State Farm offers a personal liability umbrella policy that the company said may cover an electric scooter driver’s liability for damages they cause, but all claims are investigated based on their own merits. Allstate offers an umbrella policy to customers that have a qualifying auto or property insurance policy. The umbrella policy doesn’t specifically state that it covers electric scooters in promotional materials, but there is a “recreational vehicles” category.

Nationwide’s policies do not provide liability coverage for losses arising out of the use of shared electric scooters. The company says it supports shared mobility options and believes the devices should be governed by common-sense regulation that emphasizes safety and protects all road users. “When that is in place, insurance covering the operation of a shared mobility device should be provided directly to the consumer by the device provider,” Nationwide said in a statement.

“Read your policy and talk to your insurance agent,” Passmore said. “There’s certainly some issues that need to be worked out.”

Voom, an Israeli company which offers on-demand insurance for drone operators in the U.S., plans to roll out per-ride insurance that covers electric scooters and is targeting riders and providers as potential customers.

“My partner being a scooter owner, and me being a scooter sharing rider, we kind of realized, who is insuring those things?” said Ori Blumenthal, co-founder and CTO of Voom. “If you go to all the scooter sharing companies and you look at the terms and conditions, you actually take responsibility and liability for everything that may happen.”

Riders in the U.S. took 38.5 million trips on shared scooters last year, according to the National Association of City Transportation Officials. Within a few days of Chicago’s recent electric scooters launch, LegalRideshare got calls from injured riders asking for help.

If a rider causes a car crash, he or she could be badly injured and still be held financially responsible for damages to the car, Greening said. If the rider injures a pedestrian, the rider could be responsible for the pedestrian’s medical bills, lost wages and pain and suffering. Many shared electric scooter riders are riding scooters for the first time, increasing the chance of injury, Greening said.

“They don’t think to themselves, `boy if something goes wrong here I might be on the hook for thousands and thousands of dollars,”’ Greening said.

The Age of Continuous Connection

New technologies have made 24/7 customer relationships possible. It’s time to change your business model accordingly.

By Nicolaj Siggelkow and Christian Terwiesch


A seismic shift is under way. Thanks to new technologies that enable frequent, low-friction, customized digital interactions, companies today are building much deeper ties with customers than ever before. Instead of waiting for customers to come to them, firms are addressing customers’ needs the moment they arise—and sometimes even earlier. It’s a win-win: Through what we call connected strategies, customers get a dramatically improved experience, and companies boost operational efficiencies and lower costs.

Consider the MagicBands that Disney World issues all its guests. These small wristbands, which incorporate radio-frequency-identification technology, allow visitors to enter the park, get priority access to rides, pay for food and merchandise, and unlock their hotel rooms. But the bands also help Disney locate guests anywhere in the park and then create customized experiences for them. Actors playing Disney characters, for example, can personally greet guests passing by (“Hey, Sophia! Happy seventh birthday!”). Disney can encourage people to visit attractions with idle capacity (“Short lines at Space Mountain right now!”). Cameras on a various rides can automatically take photographs of guests, which Disney can use to create personalized memory books for them, without their ever having to pose for a picture.

Similarly, instead of just selling textbooks, McGraw-Hill Education now offers customized learning experiences. As students use the company’s electronic texts to read and do assignments, digital technologies track their progress and feed data to their teachers and to the company. If someone is struggling with an assignment, her teacher will find out right away, and McGraw-Hill will direct the student to a chapter or video offering helpful explanations. Nike, too, has gotten into the game. It can now connect with customers daily, through a wellness system that includes chips embedded in shoes, software that analyzes workouts, and a social network that provides advice and support. That new model has allowed the company to transform itself from a maker of athletic gear into a purveyor of health, fitness, and coaching services.

It’s easy to see how Disney, McGraw-Hill, and Nike have used approaches like these to stay ahead of the competition. Many other companies are taking steps to develop their own connected strategies by investing substantially in data gathering and analytics. That’s great, but a lot of them are now awash in so much data that they’re overwhelmed and struggling to cope. How can managers think clearly and systematically about what to do next? What are the best ways to use all this new information to better connect with customers?

In our research we’ve identified four effective connected strategies, each of which moves beyond traditional modes of customer interaction and represents a fundamentally new business model. We call them respond to desire, curated offering, coach behavior, and automatic execution. What’s innovative here is not the technologies these strategies incorporate but the ways that companies deploy those technologies to develop continuous relationships with customers.

Below, we’ll define these new connected strategies and explore how you can make the most of the ones you choose to adopt. But first let’s take stock of the old model they’re leaving behind.

Buy What We Have

Most companies still interact with customers only episodically, after customers identify their needs and seek out products or services to meet them. You might call this model buy what we have. In it companies work hard to provide high-quality offerings at a competitive price and base their marketing and operations on the assumption that they’ll engage only fleetingly with their customers.

Often what matters most to customers is the amount of energy they have to expend.

Here’s a typical buy-what-we-have experience: One Tuesday, working from home, David is halfway through printing a batch of urgent letters when his toner cartridge runs out. It’s maddening. He really doesn’t have time for this. Grumbling, he hunts around for his keys, gets into his car, and drives 15 minutes to the nearest office supply store. There he wanders the aisles looking for the toner section, which turns out to be an entire wall of identical-looking cartridges. After scanning the options and hoping that he recalls his printer model correctly, he finds the cartridge he needs, but only in a multipack, which is expensive. He sets off in search of a staff member who might know if the store has any single cartridges, and eventually he locates a manager, who disappears into the back of the store to check.

Much time passes. When the manager at last returns, it’s to report regretfully that the store is sold out of single cartridges. Because he has to get his letters done, David decides to buy the multipack. He grabs one and heads to the checkout counter to pay, only to find himself waiting in a long line. When he finally gets home, an hour or two later, he’s not a happy guy.

We find it helpful to break the traditional customer journey into three distinct stages: recognize, when the customer becomes aware of a need; request, when he or she identifies a product or service that would satisfy this need and turns to a company to meet it; and respond, when the customer experiences how the company delivers the product or service. At each of these stages, David suffered a lot of discomfort, but at no point along the way did the toner company have any way of learning about his discomfort or alleviating it. Company and customer were poorly connected throughout, and both parties suffered.

It doesn’t have to play out that way. Each of our four connected strategies could have helped improve David’s customer experience at one or more of the stages and helped the company strengthen its business.

Let’s explore specifically what each strategy entails.

Respond to Desire

This strategy involves providing customers with services and products they’ve requested—and doing so as quickly and seamlessly as possible. The essential capabilities here are operational: fast delivery, minimal friction, flexibility, and precise execution. Customers who enjoy being in the driver’s seat tend to like this strategy.

To provide a good respond-to-desire experience, companies need to listen carefully to what customers want and make the buying process easy. In many cases, what matters most to customers is the amount of energy they have to expend—the less, the better!

That’s certainly what David wanted in his search for a toner cartridge. So let’s imagine a respond-to-desire strategy that might serve him well in the future.

Say that upon realizing that he needs a replacement, David goes online to his favorite retailer, types in his printer model, and with just a click or two makes a same-day order for the correct cartridge. His credit card number and address are already stored in the system, so the whole process takes just a minute or two. A few hours later his doorbell rings, and he has exactly what he needs.

Speed is critical in a lot of respond-to-desire situations. Users of Lyft and Uber want cars to arrive promptly. Health care patients want the ability to connect at any time of day or night with their providers. Retail customers want the products they order online to arrive as quickly as possible—a desire that Amazon has famously focused on satisfying, in the process redefining how it interacts with customers. Years ago it set up a “one click” process for ordering and payment, and more recently it has gone even further than that. Today you can give Alexa a command to order a particular product, and she’ll take care of the rest of the customer journey for you. That’s responding to desire.

Curated Offering

With this strategy, companies get actively involved in helping customers at an earlier stage of the customer journey: after the customers have figured out what they need but before they’ve decided how to fill that need. Executed properly, a curated-offering strategy not only delights customers but also generates efficiency benefits for companies, by steering customers toward products and services that firms can easily provide at the time. The key capability here is a personalized recommendation process. Customers who value advice—but still want to make the final decision—like this approach.

Coaching behavior works best with customers who know they need nudging.

How might a curated-offering strategy serve David? Consider this scenario: He goes online to order his toner cartridge, and the site automatically suggests the correct one on the basis of what he has bought before. That spares him the hassle of finding the model number of his printer and figuring out which cartridge he needs. So now he just orders what the site suggests, and a few hours later, when his doorbell rings, he’s had his needs smoothly and easily met.

Blue Apron and similar meal-kit providers have very effectively adopted the curated-offering strategy. This differentiates them from Instacart and many of the other grocery delivery services that have emerged in recent years, all of which are guided by a “you order, we deliver” principle—in other words, a respond-to-desire strategy. The Instacart approach might suit you better than spending time in a supermarket checkout line, but it doesn’t relieve you of the burden of hunting for recipes and creating shopping lists of ingredients. Nor does it prevent you from overbuying when you do your shopping. Blue Apron helps on all those fronts, by presenting you with personally tailored offerings, creating an experience that many people find is more convenient, fun, and healthful than what they would choose on their own.

Coach Behavior

Both of the previous two strategies require customers to identify their needs in a timely manner, which (being human) we’re not always good at. Coach-behavior strategies help with this challenge, by proactively reminding customers of their needs and encouraging them to take steps to achieve their goals.

Coaching behavior works best with customers who know they need nudging. Some people want to get in shape but can’t stick to a workout regimen. Others need to take medications but are forgetful. In these situations a company can watch over customers and help them. Knowledge of a customer’s needs might come from information that the person has previously shared with the firm or from observing the behavior of many customers. The essential capabilities involved are a deep understanding of customer needs (“What does the customer really want to achieve?”) and the ability to gather and interpret rich contextual data (“What has the customer done or not done up to this point? Can she now enact behaviors that will get her closer to her goal?”).

Here’s what a coach-behavior strategy for David might look like: Perhaps the printer itself tracks the number of pages it has generated since David last changed the toner and sends that information back to the manufacturer, which knows that he will soon need a new cartridge. So it might email him a reminder to reorder. At the same time, it might encourage him to run the cleaning function on his printer—a suggestion that will help him avoid later inconveniences. Coached in this way, David will have his new printer cartridge before the old one runs out; he’ll lose almost no time in replacing it; and he’ll have a clean printer that performs at its best.

To implement coach-behavior approaches well, a company needs to receive information constantly from its customers so that it doesn’t miss the right moment to suggest action. The technical challenge in this sort of relationship lies in enabling cheap and reliable two-way communication with customers. Traditionally, this had been difficult, but it’s getting easier all the time. The advent of wearable devices, for example, allows health care companies to hover digitally over customers around the clock, constantly monitoring how they’re doing.

Nike’s new business model incorporates coach-behavior strategies. By making its customers part of virtual running clubs and tracking their runs, the company knows when it’s time for their next workout, and through its app it can offer them audio training guides and plans. This kind of timely and personal connection builds trust and encourages customers to think of Nike as a health-and-fitness coach rather than just a shoe manufacturer, which in turn means that when the company’s app nudges them to run, they’re more likely to do it. This serves customers well, because it keeps them motivated and in shape. And it serves Nike well, of course, because customers who run more buy more shoes.

Automatic Execution

All the strategies we’ve discussed so far require customer involvement. But this last strategy allows companies to meet the needs of customers even before they’ve become aware of those needs.

In an automatic-execution strategy, customers authorize a company to take care of something, and from that point on the company handles everything. The essential elements here are strong trust, a rich flow of information from the customers, and the ability to use it to flawlessly anticipate what they want. The customers most open to automatic execution are comfortable having data stream constantly from their devices to companies they buy from and have faith that those companies will use their data to fulfill their needs at a reasonable price and without compromising their privacy.

Here’s how automatic execution might work for David. When he buys his printer, he authorizes the manufacturer to remotely monitor his ink level and send him new toner cartridges whenever it gets low. From then on, the onus is on the company to manage his needs, and David is spared several hassles: recognizing that he’s low on toner, figuring out how to get more, and buying it. Instead, he just goes about his business. When the time is right, his doorbell will ring, and he’ll have exactly what he needs.

If someone wearing the bracelet slips and is knocked out, it will summon help.

The growing internet of things is making all sorts of automatic execution possible. David’s printer cartridge scenario isn’t just hypothetical: Both HP and Brother already have programs that ship replacement toner to customers whenever their printers send out a “low ink” signal. Soon our refrigerators, sensing that we’re almost out of milk, will be able to order more for delivery by tomorrow morning—but naturally only after checking our calendar to make sure we’re not going on a vacation and wouldn’t need milk after all.

Automatic execution will make people’s lives easier and in some cases will even save lives. Consider fall-detection sensors, the small medical devices worn by many seniors. Initially, the companies who made them did so using the respond-to-desire model. If an elderly person who was wearing one fell and needed help, she could press a button that activated a distress call. That was good, but it didn’t work if someone was too incapacitated to press the button. Now, though, internet-connected wearable technologies allow health care companies to monitor patients constantly in real time, which means people don’t need to actively request assistance if and when they’re in distress. Imagine a bracelet that monitors vital signs and uses an accelerometer to detect falls. If a person wearing the bracelet slips, tumbles down the basement stairs, and is knocked unconscious, the bracelet’s sensor will immediately detect the emergency and summon help. That’s automatic execution.

We’re excited about automatic execution, but we want to stress that we don’t see it as the best solution to all problems—or for all customers. People differ in the degree to which they feel comfortable sharing data and in having the companies serving them act on that data. One family might be delighted to receive an automatically generated personal memory book after a visit to Disney World, but another might think it’s creepy and invasive. If companies want customers to make a lot of personal data available on an automated and continuous basis, they will need to prove themselves worthy of their customers’ trust. They’ll need to show customers that they’ll safeguard the privacy and security of personal information and that they’ll only recommend products and services in good faith. Breaking a customer’s trust at this level could mean losing that customer—and possibly many other customers—forever.

A final important point: Given that companies are likely to have customers with different preferences, most firms will have to create a portfolio of connected strategies, which will require them to build a whole new set of capabilities. One-size-fits-all usually won’t work.

Which Connected Strategies Should You Use?

Respond to desire Customer expresses what she wants and when Fast and efficient response to orders Customers are knowledgeable Customers who don’t want to share too much data and who like to be in control
Curated offering Firm offers tailored menu of options to customer Making good personalized recommendations The uncurated set of options is large and potentially overwhelming Customers who don’t mind sharing some data but want a final say
Coach behavior Firm nudges customer to act to obtain a goal Understanding customer needs, and ability to gather and interpret rich data Inertia and biases keep customers from achieving what’s best for them Customers who don’t mind sharing personal data and getting suggestions
Automatic execution Firm fills customer’s need without being asked Monitoring customers and translating incoming data into action Customer behavior is very predictable, and costs of mistakes are small Customers who don’t mind sharing personal data and having firms make decisions for them


Earlier, we mentioned that we like to think of the individual customer journey as having three stages: recognize, request,and respond. But there’s actually a fourth stage—repeat—which is fundamental to any connected strategy, because it transforms stand-alone experiences into long-lasting, valuable relationships. It is in this stage that companies learn from existing interactions and shape future ones—and discover how to create a sustainable competitive advantage.

The repeat dimension of a connected strategy helps companies with two forms of learning.

First, it allows a company to get better at matching the needs of an individual customer with the company’s existing products and services. Over time and through multiple interactions, Disney sees that a customer seems to like ice cream more than fries, and theater performances more than fast rides—information that then allows the company to create a more enjoyable itinerary for him. McGraw-Hill sees that a student struggles with compound-interest calculations, which lets it direct her attention to material that covers exactly that weakness. Netflix sees that a customer likes political satire, which allows it to make pertinent movie suggestions to her.

Second, in the repeat stage companies can learn at the population level, which helps them make smart adjustments to their portfolios of products and services. If Disney sees that the general demand for frozen yogurt is rising, it can increase the number of stands in its parks that serve frozen yogurt. If McGraw-Hill sees that many students are struggling with compound-interest calculations, it can refine its online module on that topic. If Netflix observes that many viewers like political dramas, it can license or produce new series in that genre.

Both of these loops have positive feedback effects. The better the company understands a customer, the more it can customize its offerings to her. The more delighted she is by this, the more likely she is to return to the company again, thus providing it with even more data. The more data the company has, the better it can customize its offerings. Likewise, the more new customers a company attracts through its superior customization, the better its population-level data is. The better its population data, the more it can create desirable products. The more desirable its products, the more it can attract new customers. And so on. Both learning loops build on themselves, allowing companies to keep expanding their competitive advantage.

Over time these two loops have another very important effect: They allow companies to address more-fundamental customer needs and desires. McGraw-Hill might find out that a customer wants not just to understand financial accounting but also to have a career on Wall Street. Nike might find out that a particular runner is interested not just in keeping fit but also in training to run a first marathon. That knowledge offers opportunities for companies to create an even wider range of services and to develop trusted relationships with customers that become very hard for competitors to disrupt.

We can’t tell you where all this is headed, of course. But here’s what we know: The age of buy what we have is over. If you want to achieve sustainable competitive advantage in the years ahead, connected strategies need to be a fundamental part of your business. This holds true whether you’re a start-up trying to break into an existing industry or an incumbent firm trying to defend your market, and whether you deal directly with consumers or operate in a business-to-business setting. The time to think about connected strategies is now, before others in your industry beat you to it.

Avoid a Workers’ Comp Disaster With Smart Electric Scooter Limits for Employees

See below from our friends at XMI PEO regarding the recent electric scooter fad. Interesting times!

Move over, Uber. Electric scooters are the latest transportation fad popping up in cities of all sizes. Urban commuters across the country are zipping around on these devices, utilized by a smartphone app and rented by the minute.

While e-scooters offer an easy and sustainable way to get around, their fast popularity is already sparking concern for businesses whose employees are using them on company time. Whether an employee hops on a scooter to make a customer delivery, run an office errand, or meet with a client across town, riding these devices on the clock exposes companies to workers’ compensation risks that they may never see coming. And with more employees using scooters to commute to and from work, the lines of liability can get murky.

Scooter operators typically require users to sign waivers absolving the manufacturer of any responsibility should an accident happen. In case of a serious injury, however, these waivers are usually not worth the paper they’re printed on. Nonetheless, if an employee is injured on a scooter while conducting what’s considered to be company business, the employer could end up with a hefty workers’ comp claim. Worse yet, the business could get slapped with a tort lawsuit if an employee injures someone else or damages their property while riding a scooter.

Scooter accidents on the rise

How likely are these scenarios on a vehicle that goes less than 20 miles per hour? The chances are fairly high if you consider the spike in emergency room visits for injuries such as broken bones and concussions caused by scooter-related accidents. Few people who ride the scooters wear helmets or have much experience operating one. A recent study by UCLA found that only 4 percent of Los Angeles scooter users wear helmets. Combine that with hectic pedestrian and roadway traffic and distracted drivers, and the odds are ripe for a collision.

“Anytime you give someone a task that involves operating some kind of vehicle, something is bound to happen—it’s just a matter of time,” says Gordon Berger, a law partner with Atlanta-based FisherBroyles LLP, which advises XMI on labor and employment issues.

“Like any emerging technology that can be used as a means of transportation during work, employers have a responsibility to make sure employees understand what safe and practical use would be,” Berger says.

Employees and electric scooters

So, what’s the best way to handle employees using scooters during work hours? There are several routes you could take, but if you want to protect your company from being held liable for potential accidents, you need a clear-cut policy on what’s acceptable for their use.

First of all, decide if you want to give employees the option of using scooters. You could put a disclaimer in your employee handbook stating that you don’t recommend or approve their use during work hours or for business-related activities. That puts the onus on employees, who could face disciplinary action for violating the policy.

“Reinforcing the way you feel about your employees using these types of vehicles through company policies, payroll stuffers and email is the best way to protect yourself,” says Paul Hughes, CEO of Libertate Insurance, an Orlando-based property and casualty insurance provider. “You can’t be with them every minute of every day, but you can document how you expect them to act and enforce it as best you can.”

Proceed with caution—and scooter safety guidelines

If you want to give workers the freedom to use scooters, it’s best to set some safety parameters, such as requiring them to wear a helmet and learning how to operate one first. You may even want to restrict when and where they can use scooters or how fast they can drive them. It’s also wise to ban their use of cell phones, headphones or other devices while maneuvering scooters through busy streets.

“It’s possible to come up with a happy medium that allows employees to participate in this new technology, while limiting their use of it in ways that don’t seem sensible or safe,” Berger says.

The History of Father’s Day

I am fortunate enough to have 3 men I call dad. I won’t go into why but my love for the dads in my life prompted me to dig into the history of Father’s Day. Ironically, Fathers’ Day was started by a woman, Sonora Smart Dodd, who was perplexed as to why fathers weren’t celebrated to the same extent as mothers on an annual basis. In her opinion, her father who was a widower and raised 6 children on his own definitely deserved acknowledgement. And, so it began…this wonderful day that praises the many biological dads, step-dads, men (and women) who are raising their children to be, at the most basic of levels, good people.

From all of us at Libertate, here’s to you Dad!

Click here for more information on this wonderful day.

History Repeats Itself, Are You Prepared?

The organization of exposure performance for a PEO is found in its ability to predict and benchmark against the historic results of peers and the industry as a whole. Historical performance is a metric a lot of people lose sight of. We tend to look at current, or maybe past year performance most often, but come time to forecast losses, promulgate a mod or re-price our business 3, 5, 7, or even 10-year performance comes into play.

We’ve seen time and time again from PEO’s that come time for actuarial review, they are misunderstand or are even surprised with the numbers they are presented. RiskMD bridges the understanding of potential issues within a given portfolio of business entirely. On the fly, you are able to create an accurate Loss Development Triangle with corresponding link ratios for multiple measures. From total incurred, to ‘Loss Time Only’ incurred claims, you can create an accurate triangulation based off your data, for any development interval you would like!

A loss triangle and its corresponding link ratio are the primary methods in which actuaries organize claim data that will be used in an actuarial study. The reason it is called a loss triangle is that a typical submission of claim data from a client company shows numeric values forming a triangle when viewed. The triangle allows you to track loss data at set valuations (development periods) so you can see development from valuation to valuation. The difference between each valuation is known as the link ratio. True development is represented typically in a pure dollar figure, where as a link ratio is represented as the growth between periods.

Within RiskMD you can view a plethora of Loss Triangles. The first selection you need to make is whether you want to organize your triangulation based on accident or policy year. We have taken into account that not all our clients have the same effective dates, so we give you the option to select your program effective date. The next thing you need to think about is what type of triangulation you would like to look at? Below is what’s available in RiskMD:

Total Incurred – A pretty standard triangulation, a measure of development for total incurred (total paid + total reserved)

Total Paid – Measure of development for total paid

Total Reserve – Measure of development for total reserves

Med Only – Measure of development for total incurred if the claim is marked ‘Medical Only’

Lost Time Only – Measure of development for total incurred if the claim is marked ‘Indemnity’

Medical Paid – Measure of development for all medical paid

Medical Incurred – Measure of development for all medical incurred (medical paid + medical reserved)

Indemnity Paid – Measure of development for all indemnity paid

Indemnity Incurred – Measure of development for all indemnity incurred (indemnity paid + indemnity reserved)

Number of Claims – Measure of development for claim count. Will show outliers for claims reported late

% Closed Claims – Measure of development to show your claims closure rate and number of claims still open in correspondence to the accident or policy year it occurred in

Example dynamic Loss Development Triangle

RiskMD worked with a pricing actuary who has been in the field for the past 20+ years to create this dynamic model. Powering the visualization is YOUR data. No matter if you want to see the development on a month-to-month basis, or on an annual development, as long as RiskMD has the data, the visualization can be rendered.

Knowing that, if you are having issues producing year end reports, or if you want to stay ahead of the game and know where you sit prior to your next actuarial study, contact us today! We will get you squared, or need I say triangled away!!