Peter Rousmaniere wrote an excellent piece that appeared yesterday on this site, addressing the challenge of digitizing our industry. Specifically, he informed us that, while the “American economy is 27 percent digitized”, only 10 percent of the property casualty insurance industry has reached that point. With estimates, according to Rousmaniere, that up to 43 percent of the economy would be digital by 2025, our industry clearly has a long way to go.

Peter made two points specifically that resonated with me, as my experience in the industry confirms his observations. He indicated that the main drivers of computer innovation in workers’ comp were:

      1. The attentiveness by top executives, and
      2. Their support of innovation at the lower levels, where the essential knowledge of how things work resides.

Previous surveys have shown a potential disconnect between executives in the C suites and the reality of the technology systems they think they have. Top executives who are either not immersed in the process, or who do not understand the day to day demands of the work they are planning to streamline can severely hinder an organizations efficiency efforts. As Rousmaniere pointed out, some of these issues exist “partly because the C suite remains ambivalent”. He also notes that “The biggest barrier to digitization in workers’ comp is not the technology but the frailty of vision and the absence of urgency at the top.”

Similarly, our entire industry’s tendency to risk aversion, the natural result of the nature of our business, hampers our ability to grow in this area. Sales people in the technology sector of workers’ comp will tell you that the sales cycle is very, very long. It can literally take years for some parties to review, analyze, assess and commit to a new technological process. And the irony is, all that planning my not ensure a smooth transition, or even success at any notable level. If the process did not include enough of the “ground workers” who toil on the front lines and the top executives were not fully engaged in the review, bad things may happen as a result.

There are some notable cases of epic failure regarding technology rollouts that can be traced back to that toxic formula.

One personal observation I’ve had over the years, that I believe also inhibits positive progress in this category, is that many of the larger insurance players are so heavily compartmentalized that their divisions barely know each other, yet alone speak freely and work seamlessly together. There appears, at times, to be so much structure in place that the internal negotiations and navigation are so cumbersome that innovation is choked off at the door. Claims departments must “negotiate” access to systems and information controlled by Business Development or Underwriting. Marketing must consult with Legal and other divisions to coordinate efforts. And no one wants to work with IT, because IT is always too busy incorporate whatever issue is brought to them (in the early years of our data and forms services we used to joke that IT is where “our deals went to die”. That has fortunately changed in recent years). These heavily siloed divisions risk becoming mini fiefdoms, where some will toil to protect their turf rather than cooperate with other segments of their company. It is an environment that does not foster innovation, and can severely inhibit technological improvements.

Rousmaniere made a final valid observation, when he wrote, “The challenge of many organizations is how to hire and foster computer-related innovation among the lower levels of the organization.” Successful tech development and adoption must be led from an active and engaged C-Suite, but will be driven by an empowered and knowledgeable team in the trenches. That is the formula that can cure the malaise enveloping our efforts on the digital frontier.


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