Wearable Tech, Automated Vehicles Dominate Insurance Horizon

Imagine sitting at your desk writing a quote for an insurance policy and suddenly the lapel of your coat begins angrily buzzing, snapping you out of a daze and causing you to quickly straighten up and become alert.

The midday slump is in danger of becoming extinct.

The insurance industry is preparing to deal with the myriad uses of wearable technology in the workplace – ergonomic improvements, keeping workers from sitting too long, monitoring location.

This technology, automated vehicles, and drones were topics of several sessions last week at the annual RIMS conference for risk management and insurance professionals in San Diego, Calif.

Count wearable technology as of one the fastest growing sectors. By 2025 the wearables industry is expected to grow to $70 billion, up from $20 billion in 2015, said Zack Craft, vice president of rehab solutions for Jacksonville, Fla.-based One Call Care Management.

And the number of wearable technology units made – not just Fitbit and Jawbone, but wearable technology in fabrics, GPS, exoskeletons – is expected to increase from 40 million units currently to 411 million units by 2017, according to Craft.

He was speaking with Felicia Amenta, the workers’ comp program manager in San Diego County Schools Risk Management, in a session titled “The New Game Changer in Managing Worksite Health: Wearable Technology.”

“They’re looking at technology on every part of the body,” Craft said.

He cited a poll his firm conducted that showed 76 percent of respondents said they would use wearable technology if it were prescribed by a doctor, and 68 percent said they would wear it if asked to do so by an insurance company.

One wearable device will help employees, and their supervisors, track their posture to promote improved ergonomics. The Lumo Lift, a posture coach and activity tracker, is an anti-slouch device that detects if a worker isn’t sitting upright, or is sitting too long. It could also let a supervisor know that an employee isn’t being ergonomically safe.

Craft and Amenta believe the device holds great promise in the workers’ compensation space, including helping to reduce co-morbidities like obesity and diabetes by getting people up and moving more often.

Getting people moving is the purpose of activity trackers like the Fitbit wrist device, which gives a user details on steps walked, stairs climbed and, on some devices, heart rate.

According to the poll cited by Craft, 71 percent of respondents use an activity tracker, and 44 percent believe it improved their health, while 70 percent said they would be willing to share that information with a carrier to reduce their premium.

Beyond better health and posture, these wearable devices could help ensure compliance with doctors’ orders, such as making sure an injured worker is walking enough during the day to improve recovery, or not walking too much, or that a post-surgery patient is up and moving in the days following the procedure.

“That’s where we see this technology adding to the protocols in the workers’ comp program,” he said.

He added, “For every dollar you spend on wellness, there’s a $3.80 return on that.”
Automated Vehicles

A little cool water was thrown on all the hot talk over automated vehicles and how they will reduce losses – and soon disrupt the auto insurance industry.

Jonathan Charak, associate vice president in business performance management and execution at Zurich North America, and Kay Wakeman, a research analyst at the Highway Loss Data Institute, held a session titled “Risk Management in the Driver’s Seat: Navigating the World of Automated Vehicles.”

According to Charak, automated vehicles aren’t guaranteed to reduce losses, and that’s because of the equipment itself.

He challenged the premise that there could be fewer vehicles on the road once the technology gets to what’s called level 4 vehicles – where cars essentially drive themselves – because those vehicles will be on the road for longer, as they could conceivably drop off a driver and go pick up someone else.

This changed vehicle behavior, he said, will have implications for auto insurance rates.

He also addressed the prevalent thinking that autonomous vehicles will be safer.

Among the new risks autonomous vehicles may bring could be increased distraction from drivers who increasingly rely on automation and divert their attention from the road, or a less active driver falling asleep.

Wakeman discussed research efforts into autonomous vehicles being conducted by his institute, which uses roughly 3 billion data points per year. These data points are gathered from the roughly 10 million vehicles in its database that are supplied by its many carrier members.

She offered a good news/bad news outlook for automated vehicles.

“We’re seeing a reduction for PDL [property damage liability] and claims frequency across the board,” she said.

However, they are seeing a rise in severity. Blame that on the technology itself.

She compared two different breaking technology systems to make her point.

Losses from crashes of vehicles equipped with a camera-based braking assist system were compared with losses from a radar-based braking assist system.

The camera braking system reduced average losses by $80, while the radar braking system increased them by $355. That’s because the camera system is installed in the passenger compartment, while the radar system is installed in the front end, where it’s often damaged and it drives up the loss, she said.

Research on another automated feature being currently used in vehicles, adaptive headlight technology, shows promise.

“When it came to PDL and claims frequencies, we’re seeing a lot of benefits of these adaptive headlight systems,” she said.

However, claims severity was also up, she added.

Smart headlights, it seems, are expensive to replace.

As autonomous vehicles start becoming the norm in new vehicles, Charak advised a cautious approach to pricing the risks.

Pricing policies too low could encourage rapid adoption of autonomous vehicles and flood the road with these cars and cause safety concerns. Pricing them too high could discourage the adoption and development of the technology.

“Either way it’s going to be disastrous for insurance companies if we don’t get the prices correct,” he said.

During an aviation industry session Jeff Hollingsworth, risk manager for the Port of Seattle, William Walsh, with Cozen O’Connor, and Steven Whitlock, senior vice president, AirSure Ltd., discussed changes in the state of the insurance market affecting the aviation industry and lessons learned from recent aviation claims.

Hollingsworth talked about the lessons now being learned in what is known as the Sea-Tac Afoa case, in which airport worker Brandon Afoa was crushed at Sea-Tac Airport between a large tug and a loader.

A King County Superior Court jury recently ruled that the Port of Seattle, Sea-Tac Airport’s owner was liable for 25 percent of a $40 million verdict in the injury case. The ruling is being appealed.

A session titled “Technology Industry Session: New Risks and Seizing Opportunities” became an idea exchange between the audience and speakers John Schaefer, director of Lam Research Corp., Holly Daley, senior vice president of complex risk and technology at Willis Towers Watson, and Leslie Lamb, director of global risk management at Cisco Systems Inc.

Daley used the story of the elevator to set the tone of the session.

Elevators had been operating in New York for more than 50 years, and had operated safely with professional elevator operators at the helm, by 1945, when elevator operators in the metropolis went on strike. The strike shut down thousands of buildings.

Elevator makers at the time were aware that the elevators could be operated by passengers themselves, but the public was skeptical over safety and were unlikely to embrace a new DIY elevator ride era, Daley noted.

So some of these companies took out advertisements showing grandmothers operating elevators themselves, and they eventually installed a communication system in elevators along with an emergency stop button.

“That’s what totally convinced people they could do this themselves,” she said, comparing that story to a major technological change we are on cusp up today. “This is like what’s going on with automated vehicles.”

A new report published jointly by Marsh and RIMS , and released during the conference, shows worries about cyber attacks are high among risk management professionals

The 13th annual Excellence in Risk Management report shows a majority of respondents to a survey (61 percent) cited cyber-attacks as the likely source of their organization’s next critical risk. That was followed by regulation, which was cited by 58 percent of the respondents, and talent availability, cited by 40 percent of the respondents.

The survey also shows nearly half of respondents said that forecasting critical business risks will be more difficult three years from now, while 26 percent said it would be the same.