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The Human Element of AI Transformation

Discover ways to effectively navigate through AI transformation. Only 4% of companies say they’re creating real value from their AI investments. The key differentiator is how well organizations manage the human side of implementation. 

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Competing for Technology Talent

Technology talent continues to be in high demand as insurers work to enhance customer experience, increase operational efficiency, personalize their offerings and compete in a quickly evolving environment.

Read our blog post for ways to be strategic and intentional in overcoming this talent challenge and effectively appealing to candidates within the technology space.

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The Actuarial Talent Conundrum

The actuarial profession continues to face a period of drastic changes. From market evolutions— including the introduction of more stringent regulations—to talent transformations, including the increased popularity of science, technology, engineering and mathematics (STEM) degrees, these shifts are having a drastic impact on the supply and demand of actuarial professionals. Explosive Growth in the Health Industry Within the health arena, the changes to, and implementation of, the Affordable Care Act (ACA) have resulted in the health industry emerging as a growing area for career opportunities. In fact, the U.S. Bureau of Labor Statistics expects the overall healthcare sector to add nearly five million jobs through 2022, making it the fastest growing service sector nationwide. Within insurance, the projected addition of 20 to 25 million previously uninsured Americans and the increasingly aging population is boosting the demand for actuaries. In fact, healthcare actuaries are predicted to experience an annual growth rate of 4.5 percent—the highest across all insurance segments. Life Industry Rebounds On the life side, the actuarial practice area is also set for robust growth—driven by the aging population. Life expectancy in the United States has increased from 76 years in 2000 to 79 years in 2014, and is expected to remain at 79 years through 2018. Life insurers are turning to their actuarial staffs to assist in managing the policies of this aging population. After experiencing several years of slow or flat growth, life actuarial employment is predicted to grow at a rate of 3.7 percent annually. Property and Casualty Sees Hiring Increase Currently the largest employer of actuaries nationwide, property and casualty insurers anticipate an increase in actuarial employment through 2020. Having hovered at 3.7 percent in the early 2010s, actuarial growth is expected to average 4.0 percent annually in the coming years. The increased focus on predictive analytics and the embracing of disrupters—including usage-based insurance and telematics—is driving this increased focus on actuarial staffing. Amid this growing demand for actuaries, insurers are facing a unique talent conundrum—an excess of entry-level talent and a drastic shortfall of mid-level actuarial professionals. What is driving this talent shift? What can insurers do to successfully manage the talent realities within the actuarial profession? The Entry-Level Excess Today’s entry-level actuarial candidates face a highly competitive market, with many more individuals desiring to enter the profession than there are employment positions available. Despite competition from other potential career paths, the popularity of the actuarial profession has grown drastically in recent years, driven by its reputation for employability and job security. In fact, within the actuarial arena, the unemployment rate continues to hover between zero and one percent. Throughout the past several years, actuarial employment has grown steadily—averaging around 3 percent annually.  By 2022, the employment of actuaries is projected to grow 26 percent. As a result of this positive employment outlook, students have been flocking to actuarial science programs in droves. In the past five years alone, the number of students participating in these programs has grown 11 percent. The number of first-time actuarial exam candidates is increasing 7 percent each year. As a result, nearly 70 percent of graduates seeking actuarial employment will struggle to find a job—with only the top 25 to 30 percent of graduates gaining actuarial employment upon completing their programs. The Mid-Level Crunch Unfortunately for insurers, there is a distinct tightness within the mid-career actuarial market. Insurance organizations struggle to find enough skilled and qualified candidates to fill their available roles. This is a growing concern as the narrowing in the mid-career market has the potential to flow on to create a problem filling senior actuarial positions. The reasons behind this talent shortage are multi-pronged—an exodus of actuaries from the workforce, a shortage in the number of mid-career level professionals and a skillset mismatch. Analysis of workforce demographics highlight a significant drop-off in the number of actuaries in their mid-to late-30s. In addition, a number of actuarial professionals are being swayed by the vast array of highly quantitative—but non-actuarial—positions available outside of the industry. The rise of data-driven business operations has created a wide-range of functions across industries, providing actuaries with a number of new career opportunities. The result is an exodus of actuarial talent that is unlikely to be reversed. In addition, there is a skillset issue at the mid-career level. Employers are looking for actuaries with a balanced toolkit of leadership, managerial and communication skills. Unfortunately, it is continually difficult to find the right mix of these non-quantitative skills.  In order to combat these growing talent challenges, insurers must focus on promoting engagement and retention at the mid-career level, as well as developing their current entry-level employees. Engagement should be focused on promoting career development opportunities in order to cut down on the number of actuaries that are leaving the industry for non-actuarial roles. Organizations should look into providing interesting project opportunities, mapped out promotion paths and cross-department development opportunities in order to retain mid-level actuarial talent. In addition, employers must develop their entry-level actuaries through additional training and rotational experiences that will give them the background and skills sets demanded of mid-level professionals.  Unfortunately, not all organizations have the time to develop their actuarial talent from the recent graduate level. They have mid-level actuarial openings that must be staffed now. In order to address these immediate needs, many insurers are turning to contract subject matter experts. These individuals offer a unique solution to for organizations in need of experienced actuaries. Partnering with a staffing firm—specifically one with an insurance industry focus—will provide organizations with unique access to a bench of highly-skills professionals that can be called upon to provide a stop-gap while a permanent position is filled or offer hands-on expertise for special projects and assignments. Thanks to the growing interest in the flexibility provided through a contract career, these experienced professionals have the knowledge and hands-on work experience to quickly jump in and get started. Is your organization facing a mid-level actuarial talent gap? What strategies are you implementing to combat this?

The Hunt is On: The Great Underwriter Shortage

The search is on for qualified underwriting talent. Amid a growing number of positive labor trends—including low unemployment rates and positive staffing increases—a number of key insurance functions are feeling the pinch. Underwriting positions, in particular, are becoming more and more difficult to fill. As a result, the war for insurance underwriting talent is heating up. Following the recent recession, the industry has undergone a significant rebound. Unemployment rates have dropped, indicating a return to full employment. Unfortunately, in this movement toward being fully staffed, insurers have depleted the potential talent supply. As the supply of incumbent professionals fails to keep up with the growing industry demand, the competition will only become more fierce.  Insurance organizations are now finding it increasingly difficult to recruit for their open underwriting positions—and that difficulty is only predicted to heat up. Insurers must now focus on what is behind this growing shortage and develop strategies to keep their departments fully staffed. Health Care Reform Leads Push for More Health Underwriters According to the Bureau of Labor Statistics (BLS), the health insurance sector is expected to see relatively high stability and growth in the next 5 years. The introduction of health care reform requiring more people to purchase health insurance paired with an aging population is placing more and more demand on the health insurance market. This greater need for health underwriters comes at a time when the Baby Boomer generation is heading into retirement at a vast rate, creating a diminishing pool of specialized underwriting talent. Aging Population Drives Life Underwriting Shortage A significant portion of the workforce—as high as 25 percent—will be nearing retirement age within the next five years; and the life industry is not immune to this mass exodus. According to the most recent Academy of Life Underwriting (ALU) Life Underwriter Census, nearly 50 percent are over the age of 50. The need for life insurance underwriters is also expected to skyrocket in the coming years. As the large Baby Boomer generation ages, it is predicted that more people will be investing in coverage to provide their families with piece of mind. As life insurers turn toward young professionals and Millennials to help fill the talent gap, they are coming face-to-face with a number of recruitment challenges. Unfortunately, the rate of individuals taking advanced professional designation examinations—including ALU exams— is on a downward trend.  Meanwhile, a lackluster industry image is drawing young professionals closer to careers in industries that are more aggressive in their recruitment efforts and are perceived as more attractive or glamorous.  Property and Casualty Faces High Underwriter Turnover Rates The property and casualty industry faces similar issues as organizations place increased emphasis on underwriting to generate profitability. Currently, the growth rate for insurance underwriters is nearly 6 percent—a number that is only expected to increase. Unfortunately, the incoming labor force is not regenerating talent in this sector. Additionally, according to the BLS, the aggregate estimated turnover rate for underwriters is estimated at 15 percent for the next ten years. Combined with historically low unemployment and growing industry demand, the property and casualty insurance industry is beginning to see a significant shortfall of necessary incumbent talent. It is clear, now more than ever, underwriting professionals for each sector are in high demand but undoubtedly low in supply. Education as the Key to Unlocking the Underwriting Talent Puzzle Developing the new generation of underwriting talent—first and foremost—requires industry efforts to raise awareness of the profession. The majority of recent graduates and young professionals are unaware of the ways in which their current educational backgrounds, job experiences and interests can be applied to positions within the insurance industry, including underwriting. Insurance companies need to develop relationships with local education providers, attend onsite recruitment fairs and step up their internship programs in order to educate the next generation. Life and health insurers should consider targeting students and graduates with a background in life and medical sciences, as it can help reduce the learning curve for medical and life underwriting roles. Property and casualty insurers should focus on recruiting individuals with degrees in business, marketing or mathematics.  Education and outreach is the key to informing today’s young professionals about the wide range of unique and exciting job opportunities available within the insurance industry. It is the industry’s responsibility to promote how successful and fulfilling an insurance career can be. Join the growing Insurance Careers Movement, a grassroots effort to build awareness of insurance as a stable, rewarding and limitless career path and help amplify the industry’s message and reach.  Uncovering Interim Solutions to the Underwriting Shortage Unfortunately, not all organizations have the time to develop underwriting talent from the recent graduate level. They have understaffed underwriting teams with open positions or critical projects that need to be addressed by tenured individuals. In order to fill these immediate needs, forward-thinking organizations are turning to contract subject matter experts.  Partnering with a staffing firm, specifically one with an insurance industry focus, is a great solution for bringing on experienced contract underwriters. Niche firms often have unique access to a bench of highly-skilled professionals that can be leveraged to provide a stop-gap while a permanent position is filled or offer hands-on expertise for a special project or assignment. These experienced underwriting professionals have the knowledge and hands-on work experience to jump right in and get started. Partnering with a staffing firm for a contract professional also allows insurers to maintain control over the development and length of the employment contract, while alleviating the time-consuming task of finding and sourcing potential interim professionals. Employing highly-skilled contract subject matter experts, while simultaneously creating awareness of insurance as an industry of choice to build the underwriting talent pool, are just two ways insurers can start replenishing our diminishing supply. How is your organization dealing with the critical skills gap?

Gotta Catch Em’ All? Pokémon Go Introduces New Insurance Risks

Even if you aren’t playing the game, there is no doubt you have heard its name or seen someone else engrossed in it. With more than 15 million players downloading the popular app, Pokémon Go has swept the nation. It has quickly become a phenomenon that has changed the gaming world in just a few shorts weeks. Gone are the days when gaming kept players confined to their couches for hours on end. With the introduction of Pokémon Go, the outside world has evolved into a virtual reality that everyone wants to explore. While the game has certainly done an exceptional job of motivating kids and adults alike to get outside and play—a rarity today—this positive impact is overshadowed by the emergence of negative outcomes. In their eager pursuit to ‘catch em all,’ some gamers have willingly subjected themselves to grave dangers including walking into traffic and trampling onto private properties. While new gaming advancements have certainly allowed the ground-breaking app to become the marvel it currently is, insurance organizations are struggling to keep up with the new liabilities being introduced. The game has blurred the fine line between digital and physical worlds and has left all parties vulnerable. For example, 28-year-old Steven Cary recently slammed his car into a tree while looking at a special Pokémon on his app. As a result of this and other incidents, the emergence of Pokémon Go has raised a number of liability questions. Who is responsible and whose insurance carrier has to pay in the case of a Pokémon Go related accident or injury? Who covers damaged property caused by players?  PropertyCasualty360.com highlighted the growing liability issues in a recent article. Today’s environment of unparalleled innovation is certainly keeping the insurance world on its toes and inspiring the industry to look at the world and assess risk more creatively. The Pokémon Go craze is just the most recent example of the global era of disruption. As insurers strive to keep up with rapid technological changes and combat these emerging disrupters, focus must shift towards rethinking current talent strategies in order to create a successful and innovative workforce. Today’s innovative organizations need employees who can imagine and employees who can implement; they need employees who are all-rounders and they need specialists to ensure their success in a disruptive industry. What is your organization doing to attract the talent needed to stay ahead of the competition in this age of disruption and innovation?

Rethinking Strategic Recruitment and Selection in Today’s Evolving Market

The insurance industry talent crisis has finally come to a head. Despite years of warning and research, many organizations viewed the talent crisis as a long-range concern on the distant horizon. Unfortunately, they are now coming face-to-face with a real war for talent. The insurance industry, in particular, is feeling the impact of the tightening labor market. Today’s insurance organizations are facing a perfect storm of talent challenges. An aging workforce, impending wave of retirements and a rapidly growing labor gap are creating an unprecedented talent shortage. In addition, the industry is facing a push for increased staffing. This is being driven by a need to fill the growing skills gaps, sheer replacement of critical positions in the wake of turnover and retirements, and a focus on staffing for future organizational goals. Unfortunately, as insurance organizations focus on developing and growing their staffs, the industry is set to face an increasingly challenging talent recruitment market. This growth focus coupled with continued low unemployment and a severe lack of incumbent talent is pushing the insurance labor market over the edge. The need for an industry solution is real and immediate. Amid what is being considered one of the most competitive recruiting environments the industry has every faced, insurers must take a hard look at their current recruitment and hiring strategies. Only those organizations that embrace a new way of thinking about recruitment and selection will be able to find success in today’s talent reality. In our latest edition of Compass, we share insights into recruitment and selection best practices and strategies to enable insurance organizations to weather the growing talent storm.  For insights on the importance of revamping your recruitment and selection strategy along with an update on the insurance industry's talent market, download Compass.

Let the Games Begin: Insuring the 2016 Summer Olympics

A gold medal is arguably one of the greatest rewards athletes can earn in their careers. Many individuals have gone to great lengths to achieve this esteemed prize, embodying the phrase “with great risk comes great reward.” The 2016 Summer Olympics are just a few short weeks away and this year, the reverse “with great reward comes great risk” rings just as true. Risk is at the forefront of this summer’s games due to Rio de Janeiro’s unnervingly high crime rates and various disease epidemics. The usual risks that accompany any large event are amplified by the current state of the city. In order to combat any potential dangers, insurance has become more important than ever. Preparing for more than 16,000 athletes and approximately 600,000 visitors in addition to the city’s 6.2 million inhabitants has resulted in the most heavily insured games in history. From start to finish, insurance will play an integral part in the overall success of the Olympics. Hosting the Games: A Hot Pursuit Hosting the Olympics is an honor sought by a number of cities around the globe. In reality, the competition at the Olympics starts well before the games begin as cities compete to host. What you may not realize is that a bid to host the games requires years of careful and precise planning. Estimations of insurance coverage make up a large portion of the cities’ proposals. Generally, there are three categories where cities expect to need coverage: Construction Insurance: Athletes will be competing in 28 different sports at this year’s Olympic Games. To accommodate each event, Rio is has constructed 18 new venues. As part of the construction bid process contractors are required to purchase insurance to guarantee financing and completion of athletic and non-athletic venues. The insurance costs differ based on contractors chosen, but can amount to more than $100 million. Private Developer Insurance: In order to manage the monumental risk that accompanies a major construction and infrastructure project such as the Olympic Games, contractors must purchase six unique types of insurance plans. Some of these plans include surety and performance bonds, liability insurance, builders’ risk insurance and bid bonds. Each plan protects contractors from different types of ‘what if’ situations from damage to people or property during the construction to overrun costs throughout the build. In recent games, the average cost of construction insurance has totaled $250 million. Organizing Committee for the Olympic Games’ (OCOG) Insurance: The big ticket item in terms of insurance costs for this summer’s games is the plan purchased by Rio to offset the OCOG’s potential risk of revenue short falls. The main area of concern this year is potential losses in ticketing revenues due to event cancellation. The details of this cancellation insurance policy include $400 million in coverage if organizers fail to fill seats. An additional $900 million policy has been placed on first loss basis should the games be cancelled and covers potential liabilities arising from the loss of revenue from broadcast rights and global media transmission costs. A Risky Road to RioThe location of this years’ games has created a number of unique challenges including transportation. Due to growing concerns regarding the Zika virus and the city’s present crime wave, travel insurance sales are at an all-time high. Insurers that had previously estimated sales increases of 13 to 15 percent due to the Olympic Games are instead reporting increases of nearly 60 percent. In addition to travel insurance, many event goers are being urged to consider purchasing a wide-range of insurance products. This includes health policies covering medical treatment for accidents, injuries and illnesses, as well as emergency medical evacuation coverage for situations where the local medical facilities are overwhelmed or unable to provide adequate care. Additional areas of focus include baggage coverage for luggage and personal effects that could be destroyed or delayed due to travel slowdowns and repatriation coverage for remains, in the case of a worst-possible scenario. Protecting the Athletes Insurance is not just limited to the games themselves. In fact, today’s Olympic athletes are often covered by insurance policies. With daily training regimens that often entail pushing one’s body to the limit—and sometimes beyond—athletes need assurances that any damage they may be doing is covered. For members of Team U.S.A., peace of mind comes from the U.S. Olympic Committee (USOC). Through the USOC, athletes are provided access to full health insurance coverage during the games. Unfortunately, the job of an Olympic athlete is extremely high risk and the USOC has a very limited budget to fully cover every team member year round. As a result, many athletes have sought out health insurance in exchange for sponsorship. Kristen Thomas, a member of the women’s rugby team; Madison Hughes, a member of the men’s rugby team; Brad Snyder, a Paralympian para-swimmer; and the entire U.S. rowing team have pursued outside coverage to support them during their Olympic training. An Award Worth ProtectingJust because they have won an Olympic medal doesn’t mean the winners can breathe a sigh of relief. First they need to ensure their recently achieved prize is covered. Up until the 2014 Sochi Olympics, medals were rewarded with no form of insurance. Unfortunately, there have been a surprising number of “misplaced” medals reported throughout the history of the games including snowboarder Shaun White, Dutch rower Diederik Simon, Italian rower Davide Tizzano, and skeleton-racing champion Tristan Gale. Replacement medals generally cost between $500 and $1,200 and are labeled with the word ‘replica’—a stark reminder of what has been lost. This summer, however, winners will take home their prizes with a little more reassurance. Liberty Mutual, the “Official Protection Partner of Team USA Olympic Medals,” will be providing coverage for all medals through 2020. As a result, athletes who lose or damage their priceless medal will be able to replace it at no cost. Although the medals’ extrinsic value can never fully be replaced, insurers are dedicated to providing Olympic medalists with a sense of comfort.      Preparing for the worst to ensure the best possible outcome is the key to any event’s success. All in all, the 2016 Summer Games has estimated more than $2 billion worth of potential risks. Managing this astronomical total includes years of in-depth planning and preparation along with the heavy involvement of insurance. While most people do not typically regard insurance as a player in the games, it is now very apparent the vital contribution it makes.   

Compass 9.3: Rethinking Strategic Recruitment And Selection In Today’S Evolving Market

The insurance industry currently stands amid what is being considered one of the most competitive recruiting environments in history. Only those organizations that embrace a new way of thinking about recruitment and selection will be able to successfully compete. Jacobson shares insights into recruitment and selection best practices and strategies to ensure your organization can weather the talent storm. This edition also includes our regular overview of the industry's current labor market and recent executive-level job changes.

Top 7 Industry Sectors Experiencing Growth

The post-recession recovery has seen monumental growth within the insurance industry. In fact, according to a recent PropertyCasualty 360 article, the industry has added more than 100,000 new jobs in roughly five years. The industry’s historical vitality is helping to make an insurance career more appealing to job seekers looking for stability in the wake of the recent downturn. In addition, our position of continued growth and demand for new talent is a great story to share with Millennials and recent grads looking to enter a thriving industry. As our demand for professionals continues to outpace our supply, there are a number of opportunities that exist industry-wide. Independent Claims-Adjusting Firms: In the past year, independent claims-adjusting firms have seen employment increases of 0.5 percent. With the addition of nearly 300 new employees, the sector has now reached 56,000 total professionals employed. This is a significant growth following the recession years, which saw employment numbers dip below 50,000. Property and Casualty Carriers: Property and casualty carriers have seen a record jump since the recession period. Total sector employment now stands at 519,000 compared to 2010, where employment hovered below 470,000. During the past twelve months, 3,000 new employees have been added to the sector, representing a growth of 0.6 percent. Third-Party Insurance Administrators (TPAs): TPAs have seen steady growth in recent years. Since April 2015, employment numbers have grown by 0.7 percent as 1,300 new employees were added to the sector. In total, there are now 175,000 TPAs actively employed in the insurance industry. Agents and Brokers: Following a dip below 650,000 between 2009 and 2012, total agent/broker employment now stands at 772,800. The addition of 16,500 new employees in the past year represents a job growth of 2.2 percent. Despite predictions that the number of agents is going to shrink, the sector has seen a recent rapid expansion of job opportunities and continues to grow. Life Insurance and Annuity Carriers: Since 2015, the industry has seen life insurance and annuity carriers add more than 12,000 jobs to reach a total of 331,100 employed professionals. Job growth numbers in the past year have reached 3.8 percent and are on the rise. Reinsurance Carriers: Despite a steady decrease in reinsurance employment during the past 25 years, the industry has seen employment grow by nearly four percent. The addition of 100 employees since 2015 has resulted in a total sector employment of 24,700. Health Insurance Carriers: Thanks, in part, to the Patient Protection and Affordable Care Act and other industry regulations, health insurers have been steadily adding jobs in recent years. Employment increases of four percent during the past 12 months reflect the addition of 20,600 professionals. Total sector employment is nearly 540,000. Looking at employment growth, it is clear that insurance is an industry on the rise. For young professionals, recent graduates and others looking for job openings, these seven fields continue to see strong growth. Interested in learning more about the insurance industry talent landscape? Make sure to participate in our upcoming Mid-Year Labor Outlook Study. Register for the webinar to get the latest insights into the state of the insurance labor market.

When Disaster Strikes: Top 5 Questions to Ask Your Temp Staffing Partner

A wildfire that rapidly spreads across state borders, a tornado that cuts across a city leaving broken buildings and homes in its path, an earthquake that topples buildings and injures thousands, or an unexpected hurricane that devastates a coastal area: natural disasters are unforeseen and unpredictable, often leaving a path of devastation and destruction in their wake. If faced with the sudden—and often overwhelming—demand that so often accompanies a disaster situation, is your organization prepared? As the industry enters into catastrophe (CAT) season, your organization should evaluate your current staffing situation and CAT plan to ensure you are prepared for the worst. Following the recent recession, many insurance organizations embraced a “doing more with less” mindset and continue to maintain a “run lean” staffing plan. They are challenged to find the resources necessary when a disaster hits. Sometimes, no matter how proactive an organization is being, resources are simply tapped out in a time of disaster. As a result, disaster situations are one of the most common causes for insurance organizations to turn to interim staff for immediate support and assistance. In order to be prepared for the upcoming CAT season, your organization should begin building a relationship with a temporary staffing firm that can react quickly when the need arises. Research available service providers and ensure that they understand your business well enough to provide efficient and effective talent on an immediate basis. Consider partnering with a boutique firm that has access to a database of insurance professionals and can easily provide your organization with highly skilled temporary insurance professionals ready to jump right in and get started. Make sure to do your due-diligence and vet potential staffing firm partners to ensure they can meet your needs. Here are key questions to ask potential providers: Describe your level of experience with staffing CAT events. Has the firm worked with CAT situations before or are they strictly focused on more general temporary solutions? You want to partner with an organization that has knowledge and experience with CAT staffing and the unique challenges involved. How deep is your talent network? An organization with a deep bench of positions, locations, disciplines and licensures is better able to provide your organization with the breadth of experience needed to respond to CAT event. Having a wide-range of talent in their bench is key to successfully addressing any impending CAT needs. How quickly are you able to deploy people locally and remotely? In times of crisis, you want to be able to react quickly. Policyholders expect immediacy. Make sure your temp staffing partner is able to provide talent who can be deployed immediately, don’t need much ramp-up time, and can jump in and assist in your work. How do you handle employment and travel-related issues? Does the firm conduct background checks and screenings? Will they assist in getting talent to the locations where they are needed? Make sure to have an understanding of the staffing firm’s process before the need for emergency talent arises. Do you provide any type of guarantee? What happens if a temporary employee isn’t working out? What if someone quits in the middle of the project? Your organization should ensure that a guarantee is in place to handle these situations and others that may arise during the course of the assignment. Preparedness is vital to successfully navigating the impending CAT season. The race is on to develop the most seamless response to disasters and having an emergency staffing plan is key. Interim staff provide a unique opportunity for your organization to add qualified, experienced professionals to your team for these unexpected events. Their valuable contributions can certainly make an important and lasting impact in a short period of time.

Are You Ready for Phase Two of HIPAA?

The second phase of OCR’s (the U.S. Department of Health and Human Services Office for Civil Rights) HIPAA (Health Insurance Portability and Accountability Act) is beginning. Building on the HITECH (Health Information Technology for Economic and Clinical Health) Act passed in 2009, the audits have expanded and modified many of the original HIPAA requirements for the privacy and security of PHI (protected health information). As part of this update, HITECH required that OCR establish a program to periodically audit for HIPAA privacy, security and breach notification rules. Initially launched with pilot audits in 2011 and 2012, to date, OCR has reviewed 115 covered entities for compliance. Having evaluated the success of its review mechanisms, the upcoming second phase of HIPAA will expand its audit protocol to both covered entities and their businesses associates. According to HIPAA Standards, these covered entities include health care clearinghouses that process and reformate health information, health care providers that transmit PHI, and health plans—including individual health plans, employer-sponsored group health plans, health insurers and health maintenance organizations. Individuals, organizations and agencies that meet the definition of a covered entity will now be audited to ensure that they comply with requirements to protect the privacy and security of health information, as well as provide individuals with certain rights in regards to their health information. The audit protocol has a set of procedures for documenting everything—from authentication rules and security risk assessments to policies for employee access to PHI—which will be the subject of review. The OCR will be scrutinizing a few key areas in the second phase of audits, which will likely continue into 2017. These key areas include: Breach Protocols: Does the organization have protocols in place for protecting data in the event of a breach? Is there a set policy or procedure for notifying patients, and the general public, after a breach? Organizations should take a good look at their current breach notification policies to ensure that they accurately reflect the content and deadline requirements for notification under the HIPAA standards. Risk Assessments: Have health providers and other covered entities performed a thorough analysis of their potential data breaches and loss risk? Is there a security officer in place to reduce risk? If a comprehensive risk and vulnerabilities assessment has not been recently completed, organizations should initiative a risk review. The results from this risk assessment should be used to create a robust risk management program that covers all necessary action items and outlines a reasonable timeline for completion. Organizational Processes and Practices: Are there training policies that cover PHI compliance requirements? Does the organization have policies in place for controlling and limiting employee access to PHI? All covered entities should confirm that the required HIPAA privacy and security policies are in place and up-to-date and that procedures are in place safeguard all PHI—including verbal, paper and electronic. Employee training should be documented and an inventory of all information system assets, including mobile devices and bring-your-own-devices, should be maintained in order to track potential breach opportunities. All organizations that fall under the HIPAA covered entity designation should be ready to answer these questions. With some forward-thinking, these organizations will be better prepared in case of a phase two audit. In addition, these careful reviews will go a long way in ensuring that vital health information is protected and safeguarded. Is your organization prepared for a potential phase two HIPAA audit? If not, what are your areas of biggest concern?

What’s on the Regulatory Horizon for Life Insurance Companies?

Following the financial crisis and economic recession of recent years, the life insurance industry is taking a hard look at their current vulnerabilities and risks. The resulting regulations will have a significant impact across all functions of the life insurance industry—and this trend of industry regulation is only anticipated to increase. As regulatory changes sweep across the life insurance industry, what must insurers be on the lookout for? Principal-Based Reserving Goes Live: Scheduled to start its three-year phase-in period on January 1, 2017, principal-based reserving (PBR) will impact most new products being issued—there are a few exceptions including final expense products. This relatively new method calls for life insurers to model their reserves based on a set of fundamental principles rather than one-size-fits-all rules. While PBR will not affect existing life insurance policies already bought, it will apply to all product issues after its implementation date. To prepare, insurers need to take a look at the resources necessary to implement this more dynamic approach to pricing, product development and reserving. Work should be done to determine necessary resources, put the right talent in place, and develop models and systems that will ensure they are compliant with the new requirements. DOL Fiduciary Rule Released: In April 2016, the Department of Labor (DOL) put forth a rule that will have a substantial impact on the business models of brokers, advisors and insurance agents nationwide when it goes live in 2017. Created in an effort to overhaul the set of rules governing the financial marketplace, this new rule will cover all financial professionals offering investment advice for retirement accounts that involve qualified money. Advisors and agents must now follow a “fiduciary standard” when recommending investments, putting their clients’ interests ahead of their own. As a result of the new rule, any advisor receiving compensation for making individualized investment recommendations to a retirement plan participant or IRA will be held to a higher standard than what most retirement advisers adhere to today—a lesser “suitability” standard that lets them recommend products that are suitable but not necessarily in their clients’ best interest. Life insurers may now find that their new products, processes and even internal customer service agents may be considered fiduciary and be required to fulfill these new regulatory requirements. MetLife Wins SIFI Appeal: A federal judge ruled that U.S. regulators acted unlawfully when they singled out MetLife for tougher regulatory supervision—designating it a “systemically important financial institution (SIFI)” whose failure could destabilize the economy. The judge ruled that the decision was “arbitrary and capricious” and that the Federal Stability Oversight Council (FSOC) failed to take a detailed look at MetLife’s vulnerability to financial distress and consider the financial impact of designating it a SIFI. This decision is expected to have broad implications for other firms who may be the recipient of the SIFI designation—Prudential recently announced that they would wait until the case goes through the appeals process before determining its next steps, while AIG has remained quiet on its response. Regardless of the results of any appeal, firms are now pressuring the FSOC to be more specific when it designates a firm. In addition, it is predicted that the FSOC will issue new guidance on future designations, hoping to mitigate some of the issues it ran into in the MetLife case. As regulatory changes influence the landscape of the life insurance industry, organizations must remain informed on the growing evolution. Only those who prepare for the pending changes will be able to successfully navigate the new regulatory reality within insurance. What regulation is your organization most concerned for?

The Growing Diversity and Inclusion Mandate

Today’s labor force is experiencing a break-neck evolution. Much as the nation of today looks radically different from that of 1980, so too will the United States of 2050 look very different from that of today. Already, demographic predictions paint a picture of a very different workplace in the near future, as employees “gray,” female professionals outnumber their male counterparts and we transition into a “minority majority” nation. Today’s organizations are now coming face-to-face with an increasingly diverse workforce. This unprecedented and ground-breaking phenomenon has permanently changed the reality of the business world. Further fueling these rapid demographic shifts is increased globalization and connectivity. Together, these trends are the driving force behind the growing diversity and inclusion (D&I) movement. As organizations continue to expand beyond their borders, we can no longer ignore the business case for D&I. As an industry, we must embrace a culture of D&I in order to find success in this new business reality. As we discussed in our latest edition of Compass, the topic of D&I has gone viral and vocal as the focus shifts away from not only gender inclusion but towards all facets and faces of diversity. The call to action is now. The broad-based inclusion of women and minorities across all industries and sectors is now a business imperative—and the insurance industry is no exception. D&I is no longer simply “nice to have.” Today it is a pressing issue that must be a primary topic of conversation within the workplace. No organization can find success in today’s global world without a diverse and inclusive workplace. In fact, diversity has been shown to have an immense impact on organizational success—from increased innovative capacity to expanded recruitment opportunities. Recognizing the importance of D&I in building organizational success, 97 percent of companies have already instated some sort of formal or informal diversity strategy. Unfortunately, despite the strides made in recent years, the insurance industry continues to fall short of embracing D&I in all of its forms. In order to keep pace with the growing changes, insurers must focus on implementing robust programs and policies that support and embrace diversity. The vision of a diverse and inclusive workplace must become a reality. D&I must be the new business priority. It is vital to building a flourishing business strategy, capturing new clients and ultimately succeeding as an organization. Insurers must move beyond just accepting the diversity mandate and instead embrace it, live it, challenge others to join in, and be the forward-thinking and provocative voice in the room. As an industry, this is our opportunity to lead with conviction and collective courage. For insights on the growing call for diversity and inclusion along with an update on the insurance industry's talent market, download Compass.

Compass 9.2: The Growing Diversity And Inclusion Mandate

Today's labor force is rapidly evolving. Already, demographic predictions paint a picture of a very different workplace in the near future, as employees "gray," female professionals outnumber their male counterparts and we transition into a "minority majority" nation. As an industry, we must embrace a culture of diversity and inclusion in order to find success in this new business reality. In this issue's feature article, we share our perspectives on the growing demographic changes and strategies for building a diverse workforce. This edition also includes our regular overview of the industry's current labor market and recent executive-level job changes.