Author: rockandbloom

What To Expect In 2024

Home • (Page 3)

Paul Martin and Colin Rooke discuss what to expect in the insurance industry for the new year.

Listen to the full podcast here, or read the transcript below.

Paul Martin:

Welcome to Risky Business Commercial Insurance with Butler Byers. I’m Paul Martin, the host of this program, and joining me as always, Colin Rooke, the Commercial Risk Reduction Specialist with Butler Byers. And Colin, it’s that time of year. We’re entering a new calendar year, and it takes a few weeks into the new year when we start to get the numbers and the summary on what happened in 2023, are we starting to see those numbers trickle in and get a bit of a flavour for what was 2023 for the insurance industry and what’s that mean for all of us who are in business and need to buy the coverage?

Colin Rooke:

Yeah, we’ve talked quite a bit about how 2023 looked, and certainly, I mean, if you look at Canada large catastrophic losses, we’ve talked about it on the show that I believe 2023 was the second worst year on record. However, although that certainly does impact the insurance market from a global perspective, and this really does pertain to more to commercial insurance than it would residential. But on a global perspective, claims have been pretty low and returns are improving. And so as a result, we’re seeing in the industry more capacity released, so about 20% more capacity coming out of Lloyd’s of London or London itself. And then on the reinsurance side, so that’s the insurance of the insurers are buying more capacity there as well. So if you follow the show for the last three or four years, I have spent a lot of time explaining why the rates are so high and referencing reduced capacity, unwillingness to deploy capital.

They’re saying there’s no benefit to me, claims are out of hand and returns are low, and so we’re going to keep that money. And that capacity has been a term that every single broker, broker around the world I’m sure has been hearing and using frequently with their clients is capacity. I don’t have any capacity. I can’t find capacity. And as the risk gets more complex, as you look into specialty lines, excess liability layers or towers they call them, it just gets worse. I mean, trying to build a hundred million liability for a client was darn near impossible. And again, it’s capacity. It’s capacity. And so we’re looking at reinsurance renewals, and reinsurance renewals really are the telltale sign of what the prediction is for the upcoming year. And so it’s, again, insurers buying insurance on their book. And if the pricing is going through the roof, which it was in 2023, and in 2022, you’re going to see rates go through the roof.

Why? Because there’s not enough in-house capacity, meaning the insurance companies, they don’t have enough internal funds to back their book. They’re buying reinsurance, so insurance for large claims. And as that price goes up, so does your premium. And so on a global perspective, and certainly in North America, we are seeing reinsurance renewals are decreasing. But the interesting thing about this report is capacity has gone up, reinsurance capacity has gone up, and yes, reinsurance renewals have lessened, but not for everybody. In fact, not for most, but just overall it’s down. And so you think, well, why is that and why would some insurers bear better than others? And that’s really the lesson of today’s show. So there are savings on reinsurance, meaning there are savings out there for a lot of policy holders, certainly in the property space, not all lines of business, but certainly if you’re just looking at property insurance, there is room to move.

But the industry was very quick to reference that. Those that had a diversified book with proper risk management plans that are keeping track and working through claims and working on mitigation techniques, keeping loss ratios manageable, they are seeing premium relief. So you think about it, you’ve got insurance company putting in the work, steering their story, how they’re going to get better to the reinsurance market. The reinsurance market is now listening, and they’re saying, we can give you a renewal that’s less than what you’ve seen in years, in fact, lesser than your competition. Then on the flip side, they’re going to those that are saying claims are out of control. We don’t see those coming down. Proper risk management protocols are not in place, and the book is not diversified enough. Those insurers are getting, I don’t really have a better term than walloped, meaning they’re just sizeable 50, 60, 70% increases. So the industry itself is rewarding those putting in the work and punishing those that aren’t at the highest level, the reinsurance side.

Paul Martin:

It’s kind of music to the ears to hear that there is some premium relief in the year ahead. But as you’re very quick to point out, it’s not for everyone. And when I’m hearing this, what do I hear as a buyer? I hear lower, lower. I don’t hear all the caveats that are attached to it. So let’s focus on that for a second. And as a buyer, obviously I want to be in that getting the lower rates with the better coverage and all of that stuff. So what do I need to do to qualify or to get myself into that elite of the elite, if I can use that terminology?

Colin Rooke:

Yeah, it’s a good point. And what I’m not trying to suggest is you say on this show there are lower rates out there. I should immediately remarket and try to find the insurer that has lesser rates. It is not going to work in this case. What you need to take away from this is say, okay, so the insurance companies that understand proactive risk management that are telling proper stories themselves and have favoured or weathered the storm better than their competition, they have more flexibility, but they only have that flexibility because they’ve been placing insurance the right way. So those companies have room to move, but they’re not going to move for everyone. They are going to also in turn be looking for businesses that are looking to place insurance the right way, and that involves face-to-face delivery of the story. So we’ve talked about the art of storytelling at Butler Byers Insurance and why building relationships and really selling the risk matters so much, and how do you do that?

You explain where the business was, where they are now, where they’re going. We talk about new and emerging risks, and we talk about education and the approach our clients are taking to better prepare themselves. We talk about deductible management and their view on claims. We talk about educating the staff from employment practices perspective or cyber liability perspective. And so to answer your question, what can we do? Get your story straight, work on your relationship you have with the insurance market, and if you’re one of the lucky, there is a ton of room to deviate, probably more than you’ve seen years and years, but for the right story and the right plan.

Paul Martin:

Well, you’ve tweaked that age old adage that is the harder I work, the luckier I get because you used the word lucky and I want to explore that a bit, but we’ve got to take a bit of a break, so hold that thought. We’ll come back to that, Colin. You’re listening to Risky Business Commercial Insurance with Butler Byers, I’m Paul Martin. We’ll be back after this.

Welcome back to Risky Business Commercial Insurance with Butler Byers, Paul Martin here, and joining me, Colin Rook, the Commercial Risk Reduction Specialist at Butler Byers. Just before the break, Colin, we referenced that old adage about the harder I worked, the luckier I get, and I think you used the word lucky in saying that people who obviously are trying to be budget conscious or trying to figure out how do I get more for less? And you’re saying it’s not out there for everybody, but it is out there for some who are willing to do what it takes to get it. So let’s talk about that and doing what it takes to be in that small group of people that may see some benefit this year in terms of perhaps lower rates or better deductibles or better coverage. What do we need to do to get them there? And I guess I’m alluding to something we talk about fairly frequently in this program, which is your step-by-step programs.

Colin Rooke:

So if you’re saying, okay, well, how do I take advantage of room to move amongst insurance companies that haven’t been profitable for a while have seen their own costs increase, but now they have room. These are the ones that learned their lesson. They took drastic measures, and in fact, I would argue these are the companies that were the leaders in refusing to write certain lines of businesses. They’re the ones saying as a whole, this group is bad and we’re not going to renew. And they may say, okay, there are some diamonds in the rough out there. We are prepared to look at these high risk categories, but we need to know everything and we need to know everything because our reinsurance needs to know everything. The industry itself is telling the insurers that you have to leverage relationships that you have to tell your story. And so if we can’t pass that story along, if you can’t find someone that really understands the why behind the businesses that you are working with and it has the ability or a new approach to selling that risk, these credits aren’t going to be available to you.

There are certainly people out there that through no fault of their own will see less lessened increases, but again, if we’re really talking about going the other way, taking advantage of some relief and additional capacity markets that have said not a chance to your business for years that may look at it again, we need that proper proactive plan. You need to be working with someone that could sell your business in a way only the owner or the management team could. And that involves skipping the typical application, spending time with the broker, talking about everything, educating both yourselves and those around you in order to sell yourselves effectively to the insurance market.

Paul Martin:

It almost, I don’t think it’s humorous, but it really peaks your, it catches your ear when you say one of the primary tools is storytelling is you got to be able to tell your story, and a that means start with having something to talk about. So you’ve got to actually have some action or facts or something that you can then craft into a narrative that an insurance company can hang their hat on. But historically, I would say that is not the way most people have the impression of the way insurance industry works. It’s mostly about, it’s a financial play, not certainly not a storytelling play, but you’re saying no, this is about your ability to explain why you’re different.

Colin Rooke:

Yeah, I need to stress that working with the broker, there’s always an underwriter. I mean, for outside of small, simple commercial, you have a human being that is making a judgment call on your company, and they have their own book to manage. They have their own loss ratios to manage, and they are compensated based on the performance of their book, and they have room to move and they have room to expand, and they have larger premium quotas they need to hit. And the best way to do so, and to grow in a low risk fashion is to hunt for best in class. And it’s a term that every single marketing rep in the insurance industry uses best in class, best in class, but we know that they don’t stick to their guns. We know that they can’t only insure best in class, but what they can do is reserve the rate deviations, reserve the broadest coverage, reserve the deductible relief, and write down to their approach to claims.

They can do that for those that truly are best in class. But if there’s no vehicle to explain that, if you’re just relying on your broker to say, oh yeah, they’re good, no claims in the last five years, or I know them personally, it’s not good enough because every broker’s job is to place their client somewhere and the insurance market knows, but they all know when they truly uncover a real best in class example. The problem is getting that information out of them, and so you have a conversation around risk if you approach it the right way, put together a plan that is agreeable to both parties and you understand that your company’s being presented to the insurance market. That’s how you can open doors that have been closed for a while. That’s how you can get an underwriter excited about the prospect of adding your company to their book of business

Paul Martin:

In the beginning of 2024. There’s no better time than now to do that because there is on the edges and marginal amounts, some increased capacity available where there are wins to be had if you are one of those very select customers that can qualify for that win.

Colin Rooke:

And you actually made a really good point without, I don’t even think it was your intent, but February, March renewals are probably the best, especially in a good year, some of the best times to have your insurance renewal because it’s a new year, the underwriters haven’t used any capacity yet. It gets a lot more challenging October, November, December. Whereas you ask any broker, when are your busiest months? And they’re going to say, October, November, December. And so we can maybe say that for a different show, but there’s certainly a strategy around when you renew. And so for those listening saying, I’m up in March, I’m up mid-February, great timing for you because there’s more room, whether you look at moving markets or even staying within, but it’s a new year. The mistakes of the past have been wiped away, so to speak.

Paul Martin:

Sounds like another book for Malcolm Gladwell. But listen, we’ve got just a minute left. So put it to you this way. If you had to give advice to a business owner or someone managing a business, what would be your objective for 2024 on the insurance front? What should I be thinking of as my objective this year?

Colin Rooke:

I mean, if we’re thinking working on best in class, it’s really thinking about new and emerging risk and what you’ve done. So cyber liability, cyber crime is not new and emerging anymore, but do you have a plan? And if you have a plan, who knows that plan? And so with all things risk related, do you have a plan? And if there is a plan in place, are you sharing that plan? And so if you need help working on it, reach out to one of us at Butler Buyers and we’ll take care of that for you.

Paul Martin:

Colin, as always, very insightful and very interesting. Thank you for this. You’ve been listening to Colin Rooke, Commercial Risk Reduction Specialist with Butler Byers. I’m Paul Martin. Thanks for joining us for Risky Business. Talk to you next time.

Underwriter Shortage

Home • (Page 3)

Paul Martin and Colin Rooke discuss the underwriter shortage happening in Canada.

Listen to the full episode here, or read the full transcript below.

Paul Martin:

Welcome to Risky Business Commercial Insurance with Butler Byers. This is Paul Martin, the CKOM business commentator. Joining me today, Colin Rooke, commercial risk reduction specialist with Butler Byers. Colin, this is going to sound a bit like a common refrain, but we have baby boomers retiring and not as many people coming up behind them in every silo or work category, and as a consequence, we’re starting to see shortages particularly of experienced people, but people just plain simple headcount in many job categories and insurance is not immune to this. You’ve got lots of veterans who are calling it a career and we don’t have the requisite number of people to replace them. Is that a fair observation?

Colin Rooke:

Yeah, absolutely. There’s a lot of industries out there that are obviously struggling for people and insurance employs about 60,000 people across Canada. And just on the insurer side, actually, I’m not talking brokers or suppliers, and so certainly not immune. And we are inundated with articles about the shortage of claims handlers. And again, they’re not even in that 60,000, but there’s a lot of talk around commercial lines, underwriters, so very, very specific to commercial lines, underwriters. And not to take anything away from personal lines, but on the underwriting side. So not talking about your broker’s ability, but on the underwriting side, personal lines is easier to do and it’s easier because it’s more of a blanket approach. You can get quotes in a 5 to 10 questions answered and a lot of the information is already supplied. So commercial is particularly difficult. We’ve talked about our process, we’ve talked about our risk reduction workshops and our plans and the point of those plans.

So we can tell a story to the market. And the reason why we do that is because if you’re a commercial client that doesn’t fit into a very narrow box, a package, your account is going to be individually underwritten by an individual. And so that means a real human being is asking real questions. They’re putting in their own info into the system, their own take on the risk. They have questions they need answered, and the experience of the commercial underwriter is key because if they don’t know what questions to ask or if they don’t have experience in the industry, it’s not going to work out well for the client that we are submitting an application to. And so when you hear stats that eight, almost 9% of all commercial underwriting staff, or sorry, senior commercial underwriting staff intends to retire in the next three years and the mass exited over Covid at the senior level just saying, you know what?

It’s been a good career. We’re all working from home. I’m just going to call it a career. It is more important than ever that your submission, your story is told. The submission is top-notch. So we talk about top of stack submission, and that just means we present a client in a way that the underwriter wants to get to it first. And we do that simply because, and as evidenced by the fact that we are inundated with these articles, commercial lines, underwriters are out of time, they’re overworked, there
are new entrants into the industry, but you now have a 35, 40-year-old veteran trying to train someone who just joined no experience right out of school. They don’t have the time for the crap, they don’t have time for the subpar risks, I’ll say. And so you aren’t going to get what’s owed to you. There is no asking for a favour. These people are overworked. They were overworked throughout covid, and they’re overworked now. And your submission matters.

Paul Martin:

That’s a very valid point because it takes us to one of the underlying themes that we’ve had in this show over the past few years, which is when you are making an application to get commercial insurance coverage, it’s pretty straightforward when you’re in business, and this is who we’re talking to, business people here. So if you’re a business owner or a manager, listen up. You know how you prefer to deal with your favourite customers because they get what you’re doing. I mean, what you want to be is a better customer of the insurance company so that they will treat you better, give you better rates, give you better terms, whatever, answer your questions. And that the underwriter who you’re talking about, maybe we should just be clear about what that role is, but that’s the actual adjudicator who will field your application from your broker and make a decision about yes or no on coverage. And then if yes, here are the terms. Is that correct?

Colin Rooke:

Absolutely. So they are the final say as to whether or not you get terms and insurance companies do not have to quote you. It is totally up to the underwriter.

Paul Martin:

So we’re back to that point of how do you become a better customer of your supplier of the insurance company? And we’ve argued on this program, and you most articulately of anyone I’ve ever heard, say, if you want good insurance coverage, give them a good story and give them the information. So make it easy for them to make a decision in your favour. And you’re saying right now they don’t have time to get a cup of coffee, never mind train the next generation. So they’re grumpy, they’re overworked, they’re probably not. They’re looking for the easy files. And how do we, what’s Butler Byer’s slogan “Insurance made easy”. Well, how do we make this easy? That’s your point here, I think.

Colin Rooke:

Yeah, it’s a really good point. The easy file. And you have to say, okay, what is an easy file? So you’ve got one individual with 350 submissions all for the upcoming months sitting beside the desk, and they do have to siphon through, sift through and determine what are they going to work on? Well, how do we make your submission glow? And it’s the approach of we narrow down the markets to a very select view. We make personal phone calls to the market to say, we have this fantastic risk that we’re going to send your way. You have a few minutes to hear the backstory. And then we determine then and there if they want the risk. So already they’re looking for it. If they say I do, that means there is a ton of submissions that aren’t going to get a look.

And so we already have a leg up by having that conversation. Then we say, we are going to make your life easy. We’ve done a detailed assessment on the client and most of the questions you are going to have for us about where the client was, where they are now, where they’re going, all the factors that are going help you to determine whether or not you want this risk. It’s already been answered, it’s already been presented, we already know you’re interested. That’s how your submission stands out. And
unfortunately the rest remain. So if you’ve ever been through a traditional remarketing exercise and the broker says, we went to all your markets, but we only received three quotes, well, that broker could have 30, 40, 50, 60 contracts and it just means all the rest did not ever get to it because they never saw any incentive to do that.

Paul Martin:

You didn’t make it easy for them. Their files were the pile in their desk was too big. And they looked at it and said, that’s not an easy one. Too much work. I got too many others to do here. And so when you go back to market and you’re hoping to effectively remarket, and I’ll see if I can find a better rate from a different company, that’s getting harder to do when there’s fewer people that will actually have the capacity to take a look at your file or your application.

Colin Rooke:

And that’s a really good point as well. So you’ve got new applications or you’ve got even a remarket and without additional info, the underwriters, they’ve all been burned thousands of times, thousands and thousands of times where they quote, and there’s no fish on the line, no new business. And frankly, our industry is really bad for never getting back to underwriters ever. So they send out a quote and you just go silent. And the underwriter knows, I guess I didn’t get it. And so you have overworked mid-market commercial underwriters that are saying, I’m already skeptical. Because often the quoting itself is an exercise to price check the existing market. And so again, you’re in this position where they may not put the effort in if you have the appropriate submission, if you have the appropriate story and the appropriate approach, you can explain why are we looking to move it, what went well, what didn’t go well, and why we think the new market is a better fit. And again, we’re adding excitement to the possibility of this prospect moving to that insurer, but the old way cannot work moving forward. There is such a talent gap in the middle. And again, certainly for mid-market. So larger enterprises, more than 50 employees, that type of thing, you might have operations in different provinces or one company that’s involved in different lines of business, US sales, international sales, that takes expertise. And so again, for those remaining in the industry that know what they’re doing, you have to make it easy for them.

Paul Martin:

Alright, Colin, we’ve got to take a break and I want to pick this up for just a minute or two after because you’ve left me with a couple more questions. You’re listening to Colin Rooke, the Commercial Risk Reduction Specialist with Butler Byers, this is Risky Business. We’ll be back after this break.

Welcome back to Risky Business Commercial Insurance. Paul Martin here, your host. And joining me is Colin Rooke, the Commercial Risk Reduction specialist with Butler Byers. And just before we get off this topic, Colin, just a couple of thoughts that came from before the break that you left me with. I mean, we’re really in a situation where you’ve got a much tighter supply growing demand and you have to figure out how do I make myself look appealing enough that an underwriter who probably feels a little bit used anyway because you’re just price checking, how do I move to the top of the parade? One of the things you talk about is your step-by-step risk reduction plans and that this is a tool that’s for free to any business owner that contacts you, that you will give them the guide on how to actually fill out the forms and make themselves look more presentable.

Colin Rooke:

Absolutely. And like I said, if you want the credits or discounts or to open up doors that previously weren’t open, you have to do more. You have to show the market what you are doing to become a better customer of the insurance market. Why are you a good risk? The forms, the submissions, the typical submission that the insurance companies generate themselves, so they generate the form and yet the form doesn’t work for them. But there’s no changes to the forms and they all do it. There’s not any one company, and it’s not the broker’s fault. I mean, they’re passing on the forms that were sent to them, but they don’t work. There’s not enough there. And when you’re overworked, you don’t have time to call the broker back and say, “Hey, Paul, the broker, I’m interested in this risk you’ve presented. But as you know, the forums don’t tell any of the story. Do you have time to go through with me?” They don’t have time to do that. They may want to. So you have to present it to them. It has to go to them or they’re not going to reach out.

Paul Martin:

Well, I guess it’s in the hands of the insurance buyer to be your own best friend here. I mean, do the work you can improve your chances, you’ll get a better outcome. And I suppose also, you’re listening to this and you’ve got kids that are graduating from high school and wondering about career options. Here’s a place where there’s shorter people.

Colin Rooke:

Yeah, absolutely. They will train. It’s a great industry, especially if you love to travel. I mean, you could work anywhere in the world depending on the insurer and obviously I love it. But yeah, you’re right. Great point. If you’re listening to this or if you’re a parent with children, have a look. In fact, reach out to me. I can help connect you with insurers if anyone’s interested in a career in underwriting.

Paul Martin:

Yeah, my guess is high school guidance counsellors have probably not got this one on their list, so you have to get it from us here. Yeah, I agree. Anyway, listen, we’ve got four or five minutes left before we have to, we run out of time. And another topic I wanted to talk about, I think there was a report that came out the other day that sort of lists stolen vehicles and you’ve got that ranking, sort of one of the most vehicles most likely to be stolen. And yeah, it’s not really necessarily a commercial topic, but it’s an important one nonetheless.

Colin Rooke:

So every year around this time that we get a summary of all the claims from the previous year. And if you’re wondering, okay, why am I discussing 2022 at the tail end of 2023? It’s because it can take that long to pay out the claims. So then they don’t have accurate data until the year is almost over. But it is funny. So I really like these stats, but if you drive and it gets very specific, so it’s not just a global, the Honda CRV, it gets right down to the year. But if you drive a 2022 Honda CRV, hopefully you’re parking in the garage because it’s the number one most stolen vehicle in Canada and there’s 5,620 of them, and that’s 1.2% of all CRVs of that year on the road were stolen. And so again, I don’t really have any great advice on what you can do, but I make sure you’re watching for those. But another really interesting statistic is, and they’re number eight on the list. So the way they’re ranked is overall amount, but I like the percentages. So if you have a 2020 Range Rover a Land Rover Range Rover 2020, 4% were stolen last year.

That a crazy, that’s a lot. That’s a lot. You’re standing around with a group of your Land Rover friends and you’re at some cars and coffee Land Rover Edition. Well, a lot of those are going to go missing in the year. And like I said, these stats are just kind of fun. A lot of Toyotas, a lot of Hondas. And another thing to note is each and every one of these vehicles can typically be stolen in under 15 seconds. I don’t know how they do it, but it takes about 15 seconds. So with these stats, with the most stolen cars, we also get. the least stolen cars. And really interesting, almost all of the least stolen cars are EVs, which I just find really interesting. Now, you could say, well, maybe there’s less on the road, but that can’t be it they, they’re clearly also hard to steal.

For example, the Chevrolet Volt was one of the least stolen vehicles in Canada, in fact, yeah, it was the least stolen vehicle in all of Canada. But Hyundai Ionic seven thefts, and that’s number nine. I think the Bolt had one in total. And so kind of neat that if you are driving an EV, I don’t know if that means you’re parking in the garage because you’re charging at home or the tech just, maybe there’s a mobilizer. The tech’s pretty good, but looks like you don’t want your car to go missing EV if you do drive a Jeep Wrangler, a Chevy Silverado, a Range Rover, Honda Civic, and certainly the CRV.

Paul Martin:

Well, I’m guessing that what do thieves do with these vehicles? They don’t just use ’em for a joy ride. They chop ’em and sell ’em to somebody who’s going to move them to Nigeria or flip ’em for parts or something. So there’s no market for parts for electric cars yet because there isn’t enough of them on the road. My guess is if you’ve got an EV, you’re probably going to see that increase as time goes by when there’s an end user form at the other end.

Colin Rooke:

Good point. There’s less parts less to take out. Huge batteries, difficult to ship, way too heavy. So we have a really good point.

Paul Martin:

Well, Colin, I’m always intrigued by this stuff, and for a car guy, you probably enjoy these stats. They probably are something you look forward to, but I want to thank you for that and for the insights on where we are in terms of just HR and human resource support in the commercial insurance industry. It’s something that probably most of us don’t think about. You’ve been listening to Colin Rooke, Commercial Risk Reduction Specialist with Butler Byers. I’m Paul Martin, this is Risky Business. Thanks for joining us and we’ll talk to you next time.

Imposter Syndrome and Bullying in the workplace

Home • (Page 3)

Paul Martin and Colin Rooke dive into what is imposter syndrome and the effects of workplace bullying.

Listen to the full episode here, or read the full transcript below.

Paul Martin:

Welcome to Risky Business Commercial Insurance with Butler Byers. This is Paul Martin, your host and business commentator on CKOM Radio. Joining me as always, Colin Rooke, the Commercial Risk Reduction Specialist with Butler Byers.

Colin, today we’re going to talk people matters. It’s interesting, the state latest stats that we’ve been looking at, Saskatchewan continues to have, the employers here have the hardest time filling jobs. We have as a percentage, the highest job vacancy rate in the country. You’re seeing it decline in other parts of Canada as the economy slows down, particularly in Ontario. But out here where the economy’s still chugging along pretty good. We still have one in 20 jobs that is, there’s just nobody to fill them. So employers are dealing with HR issues every day, all day. It’s really hard because you’ve got orders, you don’t have the people to fill them. And sometimes we might just do that old mirror test, right?

Are they breathing? Can they fog a mirror? We’ll hire them. And that can lead to all kinds of problems from a business management perspective. But interestingly, this also has implications for the insurance industry and for your coverage and the way that you as a commercial insurance broker come to the client and say, here’s my perspective on it. So let’s talk about that. And when you are talking HR issues with a business owner, A, how do you approach it? And B, what are the topics that are coming up these days? What are they raising with you and what are the employees saying, for example?

Colin Rooke:

Yeah, that’s a really good point. You talk about job vacancy, high turnover, what does that have to do with insurance? Is Ryan Warner joining us to talk about the benefits plans and no, that’s not it. But when we’re thinking of property casualty insurance program and high turnover, I mean, if you think about it, the more turnover you have, the less experience you’re going to have in the organization, whether it’s at all levels. And then you take, for example, a large auto fleet and you’ve got regular turnover. And so you are forced to put inexperienced people behind the wheel. And maybe they, again, due to turnover or some of the two topics we’re going to talk about today, they haven’t had a great go with the company. They’re may be afraid to ask questions. And again, not experienced, not feeling comfortable, but they want to perform the work and they want to keep this job.

And so what matters to the insurance company is are your people being properly trained? The policies and procedures that we are sharing with the insurance market as a result of our risk reduction work, are they truly being adhered to? Because if people are leaving as quickly as they can learn it, and the focus of the organization is to replace those positions, are they really spending the time making sure policies and procedures are being implemented and followed? And that’s a really good question, and I would argue, no, they probably aren’t. And even if they are following those policies and procedures, again with a relatively new staff with an organization that’s high turnover, how experienced are these people really?

So we’re going to talk about two topics. One is imposter syndrome, which is it’s really turned into a buzzword lately. It’s not a new term, but it’s something that people are talking about pretty regularly. And we want to talk about what is it, how do you identify it, what are the costs and what can you do to turn things around? And then very similarly, workplace bullying. So what is it? I think that’s pretty selfexplanatory, but what are my costs of ignoring this? How is it going to impact the company at the end of the day? And it does lead to things like turnover, which ultimately is going to impact the performance of the company from an insurer’s perspective. It’s certainly going to increase the likelihood of claims among other things.

Paul Martin:

Well, isn’t that interesting that I think for the most part, when business owners who are generally their head is full of a lot of stuff, that when the word insurance comes up, they think about covering my buildings or maybe business interruption. And that’s kind of the end of the creativity of the thought process. And I think the point of the show and why we do this is to broaden that horizon a little bit. And I’m reasonably confident that most business owners would not see losing a junior employee as something that an insurance company would care about.

Colin Rooke:

Yeah, and if it’s one, they probably don’t really nothing to report here. If it’s a lot, they do. And if you don’t think that they’re taking that into consideration, turnover, average tenure with the company, average age of the workforce, you’re wrong. Underwriting is just not that simple. There’s a lot of factors that go in, especially as the company grows or the size of the account grows. Once you get into the mid-market, and we’re talking sizeable insurance premiums, everything is under the microscope, especially when there’s claims. There could be listeners today that are saying, I’ve never really had that problem. And if you are someone that’s subject to luck and there’s been no claims where someone’s really looked into turnover and looked into absenteeism and productivity and you haven’t been questioned, then maybe consider yourself lucky. But when you see frequency and severity of claims increase, they start asking these questions and they need to know that you have answers and that you’ve planned for this and that you are internally addressing it or insurance coverage. One, well, the cost is going to increase exponentially, but it might not be there at all.

Paul Martin:

Well, let’s start to dig into these. Let’s talk about that first one you flagged, which is imposter syndrome. And it’s a cool sounding term, but in the research I’ve done on this says about half of senior executives in America would put their hand up if they were asked, have you ever suffered from imposter syndrome? I mean, that’s an astronomical number for people in positions of authority. So maybe jump in and just talk about what it is. What is imposter syndrome and why does it affect people? What difference does it make to them? How does it impair their performance?

Colin Rooke:

Yeah, certainly at a high level, really it’s applicable to those people inside the organization that have had usually fairly good success, but they are constantly fearing or doubting their abilities and they think they’re going to be ultimately exposed as fraud. And the long-term result of that is reduced productivity and overall career growth, and then growth of the organization. So again, you’ve got someone that maybe they’re high performing to you, but on the inside there’s a ton of self-doubt, and that really turns into a cultural issue. And the result of not paying attention to those that are potentially suffering from imposter syndrome and as you mentioned, could be up to 50% of executives, it is going to turn into employee turnover, higher rates of absenteeism, lower engagement, and it is going to impact the bottom line. So for those that aren’t really familiar or haven’t given this much thought, everybody has, people like this at work and the stats say that women are slightly more likely to have imposter syndrome than men.

But it’s the perfectionist at work. It’s the expert, the one the know-it-all that is actually concerned. They don’t know it all. It’s the soloist, the one that feels pressure to handle things alone and not work as a team and as a result is underperforming. It’s the natural genius. So the person that if they can’t get it right on the first try, they just, they’re crushed on the inside. And everyone has this, the superhuman, the person that says yes to everything, takes on all the projects, works day and night, but ultimately really doesn’t. The jack of all trades, master of none person inside the office need to watch for these people. And it’s important to have an understanding of how they are feeling on the inside, or at least suffering from self-doubt as a result of their perfectionism, which ultimately leads to procrastination, decreased productivity, and so on and so forth. Psychological safety is a concern.

Paul Martin:

Really quite remarkable. And we’ve got to take a little break, but I want to come back and explore this because just think about this during the break, is that if you’ve got people in positions of authority, the last thing you want them suffering from is insecurity because they have to make decisions and you don’t want them insecure about doing that. Alright, we’ll come back and talk about that in a moment. You’re listening to Risky Business Commercial Insurance with Butler Byers. We’ll be back after this break.

Welcome back to Risky Business Commercial Insurance with Butler Byers, Paul Martin here, and joining me, Colin Rooke, Commercial Risk Reduction Specialist with Butler Byers. Colin, before the break, we were talking about imposter syndrome and how debilitating it can be, and sometimes it’s not particularly visible. In fact, those who might suffer from it are really good at pasting on an impression or a facade of confidence and success. But really underlying this, some insecurity. And I just raised the notion of whether or not that might impede their ability to make decisions, for example.

Colin Rooke:

Yeah, it does. And I said before the break, it really does come down to the corporate culture, and we say all the time, language drives culture. And so as impactful as imposter syndrome can be with a few changes to behavior, it’s really easy to right the wrongs and minimize the impact or reduce the frequency and severity of the impacts of impostor syndrome. And there’s just simple tools like mentorship program. So encouraging support systems really focus on providing learning and development opportunities inside the organization that will lead to employee growth. And if you think about that as an example, if inside your culture you are expected to know everything, that’s where imposter syndrome sort of lives. I’m supposed to know everything I don’t feel like I do, and now I’m feeling paralyzed. So provide learning opportunities as often as possible.

And check-ins, 1-on-1’s, how are you doing, Paul? Is there anything? What’s going well? What’s not going well? Really easy to do. Few do it work on having a culture of recognition, celebrate the wins. And then lastly, focus on failure as a learning opportunity. So if you have a culture of we don’t make mistakes, everything goes right a hundred percent of the time, it does lead to imposter syndrome. So talk about the failures and what people can learn from those failures. Very easy to address. An engagement survey can help you with this, but really worth noting and paying attention to.

Paul Martin:

Most interesting. Now, the other topic we wanted to touch on is bullying in the workplace. And that I guess historically has kind of been the thing you talked about on the schoolyard rather than in a work environment. But lately we have been talking about this a lot and I’m gathering it’s caught the attention of the insurance industry too.

Colin Rooke:

Yeah, it’s really part and parcel with imposter syndrome and it’s particularly prevalent. So the research shows that 37% of Canadian workers have been bullied or felt bullied in the workplace, and that’s across multiple jobs as well. And it’s not specific to any one industry. And so I think we all know what bullying is, but it’s causing physical or emotional damage or harm to a person, or in this case an employee. And ignoring this problem or not having an idea of people are being mistreated or targeted by jokes or mocking or even things like unrealistic expectations or employees talking negatively about other employees and up to and including cyber bullying. It is all sort of caught under that workplace bullying headline. And so I think it’s pretty self explanatory, but if people aren’t feeling great about work, productivity is going to decrease. You are going to see those calling in sick more often.

So increased absenteeism, which is something that we cover in our risk reduction workshops, high turnover as we discussed earlier on in the show. And again, very similar to imposter syndrome and bullying as well. And then I think what a lot of workplaces don’t think about is reputational damage. So they may not tell you they’re being bullied, but they’ll certainly tell other people in their household, in friends, family, and when they leave you, they’ll tell other workplaces how awful it was. And if you don’t realize the ramifications of that negative press being out there, you don’t want to be known as a terrible place to work. I don’t think anyone does. But if you’re not working to raise awareness about bullying, determining the prevalence of the bullying inside the organization, talking about it, coming up with procedures and training, talking about a zero tolerance plan internally, and then ultimately leading by example, right from the top, if you’re okay with bullying, it’s never going to go anywhere. And so it’s really important to work to identify is this an issue? And I touched on it before the break, but employee engagement surveys are an excellent way to determine whether this might be happening in the workplace. People will tell you if written correctly, what they think about work and how work flows, and it’ll come up, I really dislike my supervisor or this and this has been happening to me. The training isn’t good, et cetera, et cetera. I’m subject to teasing. And so start there.

Paul Martin:

And having an employee or an engaged workforce or employee group, I guess the insurance industry looks at that favorably too, because your company should perform better and it attracts better talent. Well, I remember in a previous show we talked about it, something as sort of mundane as this kind of a reading that the engaged employee is the one who’s going to walk by the coffee shop and notice that the burner’s still on and the pot’s on it on a Friday afternoon and turn it off, rather than saying, that’s not my job, and just move on and you end up with a fire on the weekend or something. It’s a very simple metaphor or descriptor, but it drives home the point of why insurance underwriters are actually interested or care about engaged workforce. I mean, obviously business owners should be simply for productivity, but this has ramifications that ripple out well beyond just the fact of productivity and output.

Colin Rooke:

It’s a really simple metric, but you can look around the office and you can tell without the engagement survey people, are people engaged when it’s icy out? Did someone already grab the salt or scrape the snow before anyone got there? Or is it still just being walked on when you arrive? Again, the unplugging of the coffee pot racing back in to turn on the light, double checking that the alarm is on, every organization can pick out those little gems that will say, you know what? I think we’re doing okay, or at least some of the time, but it’s really important to have an idea. And we’ve talked about quiet quitting on this show, and those employees are living in the realm of disengaged and they’re not doing anyone any favors because they aren’t leaving. But then we’ll do just the bare minimum to remain employed, which I would argue is not the goal of most, at least listening to this show.

Paul Martin:

Colin is always very insightful and you always broaden the horizons on this show about the nature of things that business people should be thinking about when they’re discussing or just contemplating the notion of their insurance coverage. You’ve been listening to Colin Rooke, the Commercial Risk Reduction Specialist with Butler Byers. I’m Paul Martin, this is Risky Business. Thanks for joining us. We’ll talk to you next time.

Benefits Update with Ryan Warner

Home • (Page 3)

Ryan Warner joins Paul Martin and Colin Rooke for a mid-year catch up on benefits plans.

Listen to the full episode here, or read the full transcript below.

Paul Martin:

I got to get a clock. Welcome to Risky Business Commercial Insurance with Butler Byers. This is Paul Martin, the host of the show, and joining me in studio today, Colin Rooke, the commercial risk reduction specialist with Butler Byers. And also we’ve got joining us, Ryan Warner, who is a specialist in the area of benefits plans. And since we are, for the most part, targeting this at the commercial side of insurance, Warren… or sorry, Ryan, it’s very timely to have you come in and join us because that’s pretty much all you ever do is deal with HR departments and companies getting benefits plans in place.

And so Colin, I think you wanted to kind of do a mid-year catch up on this and just sort of say what’s going on in the world of benefits plans. And Ryan, we haven’t talked to you for I would guess three or four months or something. So it’s pretty timely to come back. Now there’s a couple of things that are capturing leading the news stories these days, the newscasts, so maybe we’ll just dive into those right off the hop. And those are things like inflation, so is inflation doing anything to… what are you hearing in that? And I guess really just generally, what are business owners asking you right now? When you go talk to your clients or prospects, what are the questions, Ryan, that they’re throwing at you? What’s top of mind for them right now?

Ryan Warner:

Well, thanks for having me first of all. Yeah, I mean there’s a lot of, I would say waterfall effect with inflation and the cost of everyone’s goods and business rising inherently, services that folks claim through their benefit plans are seeing everything from the paper they put in their printer to the cost of keeping the lights on. Everything seems to be going up, so that just naturally rolls downhill. Ultimately, the patients are the ones that are going to incur it at the end. So yeah, we are seeing practitioners put up the costs of their services. We’re seeing the dental associations across Canada continue to increase the fee guides and medications, certainly not getting any less expensive. And that’s one of the key hot button topics that we’re speaking to business owners all the time about.

Paul Martin:

That leads me to a couple of questions. One is, what causes it? Secondly, what do you do about it? So let’s start talking about the cause. I mean, obviously inflation is, as you said, it’s very insidious. It’s in every aspect of the world. What kind of increases are we seeing on cost of prescriptions, the cost of healthcare related services, everything from, I suppose, dental care to the chiropractor, to the massage therapist? I’m sure you’re seeing all of those. What kind of numbers are you seeing come up with? Are they fitting the 8% or 3% inflation that we hear about?

Ryan Warner:

Yeah, that’s a bit of a loaded question. It’s a little bit all over the map. I don’t know. I can give you one specific answer. Every industry that comes through a benefits plan is impacted a little bit different. I wouldn’t expect to see massage therapists as an example, putting up their fees as much as I have seen dentists putting up their fees. So it is a little bit situational.

Medication wise, I think that’s where we’re seeing over the last several years, not just post pandemic, but the cost of medications just keeps skyrocketing it seems. The cost of the investment of the big pharma that they’re putting in to get a medication to market and the research and development that goes into that, and we haven’t heard the term in a while, but the patent cliffs and the whole idea that a big pharma can come out and release a medication that’s going to do some wonderful thing, but then they charge an absolute fortune for it to recoup all the money that they put in. And no question, they’re trying to make some money too. So it’s challenging for everyday folks and certainly for employers that have to digest the rising costs of premiums from these plans.

Paul Martin:

Yeah, I guess that’s really where this leads me to is if you’re an employer, so you’re a business owner or you’re a manager or CEO of a company and you’re listening to this and what are their responses? Is it just, “That’s the price of cabbage and we just pay more,” or do they say, “No, we got to look at the plan and we got to see where we can cut this thing? Do we start to trim back on benefits?”

Ryan Warner:

There’s a lot of strategy involved. I think some of it is inherently a bit of a philosophical approach of what is the employer capable and wanting to do for their staff. We’d love to cover the cost of absolutely everything and make sure everyone has the medications that they need. And unfortunately, there’s still a cost associated with it. And when we start talking business case and dollars and cents, employers have to make challenging decisions on how they’re going to structure this program. And are they just going to open-end cover it?

I think the larger the employer, the more likely it is they have the budget or the ability to digest some of those high costs. For small to mid-size businesses, I mean, a couple of big ticket medications on a plan can really hurt the long-term sustainability of a premium. So it’s not something that’s going to hit them all at once. And this is more of a technical conversation that we’d need to have, but we can certainly help employers understand how to take on a level of risk they’re comfortable with, work with an insurer to see what an insurer’s willing and able to take on. And then ultimately, there’s the provincial programs that come to play, certainly here in Saskatchewan, you do have a quality program there.

Paul Martin:

Colin, and I haven’t brought you in on this conversation. Maybe you want to jump in. I don’t know if some of the things that Ryan’s been outlining here, if that sparks any questions from you.

Colin Rooke:

No, I think it’s a good update to have just we spent a lot of time on this show talking about the… Well, I mean inflation is a topic that’s top of mind for everyone, and we talk about the impact on commercial insurance and the impact on just global warming and catastrophic losses like the wildfires. So it’s good to touch base with Ryan and just say, “Okay, it’s not all just commercial insurance focused.” We are seeing cost increases on the benefits side. And I guess we’ve touched on this too, but I’d be curious to know more sort of tips and tricks or what can we do about inflation? Any advice Ryan would have for anyone listening, saying maybe I don’t want to decrease the spend, or maybe you’ve got some tips on how to explain the rising costs or how an employer can explain that back to the plan members who are ultimately paying, that kind of thing.

Ryan Warner:

Sure. Yeah. I say, you know what? I think when I’m talking to employers on a day-to-day basis, the first couple things I’m trying to understand from them, and perhaps more importantly trying to help them understand is how these programs are structured, how the cost of a big ticket medication impacts their premiums and what they are capable of stomaching long-term. And then we can help them tailor the program in such a way that, again, I’m talking about a small business owner, it could be really challenging for a small business owner that’s paying someone $50,000 a year to also cover $150,000 medication. So when we’re talking pure business sense, it is a challenging conversation to have. There’s ways to tailor a program with certain providers where you can tie in directly to provincial programs. That becomes a bit of a trying to kick the can to the other team and try to get somebody to pay for it. But this is where we really have to understand each other, how the program works, and what they want to achieve for both their budget and their staff.

Paul Martin:

This raises I guess, some very salient points around that, and I want to dig into them a little bit, but I’m going to digest the $150,000 number first and then we have to take a little break while I’m doing that. So if you don’t mind, just stand by. We’re going to take a short break. We’re going to pop back here and we’ll pick it up there. You’re listening to Risky Business Commercial Insurance with Butler Byers. My guest today, Colin Rooke and Ryan Warner. Ryan is the benefits specialist at Butler Buyers. We’ll be back right after this.

Welcome back to Risky Business Commercial Insurance with Butler Byers, Paul Martin here, your host, and joining me today, Ryan Warner, the benefits specialist at Butler Buyers and Colin Rooke, the commercial risk reduction specialist at the firm. And Ryan, before the break, you tossed out $150,000 as a drug cost that may… is that really a valid number? That is the kind of things employers sometimes are faced with or plans have to figure out how to deal with?

Ryan Warner:

Unfortunately, that can sometimes even be conservative. It’s not out of the question now to see certain cancer medications in the 25 to $50,000 range, you get into rheumatoid arthritis and you can be getting up into the 50 to $80,000 range. Hepatitis C, fantastic cure. There’s a one year treatment program now for someone battling that, you’re looking at about a hundred [inaudible 00:10:35] change. So there’s very, very expensive medications that go well beyond well into the six figures.

And it is challenging. These plans, these benefit plans, if you’re not paying attention, they can pick them up. And that does have a long-term effect. The way these plans are designed, the insurer has a pool, that pool collects from all of their clients across the board, and that pool is set up in such a way to stomach the majority of these claims. However, if you’ve got an employee that has one of those large cost medications, other insurers are going to be less inclined to want to invest in that business, are going to be less inclined to try to attract a client that’s ultimately got sizeable pool benefits.

So it does pigeonhole the client a bit to an extent where they all of a sudden become “stuck” with the existing insurer and let’s call it what it’s the leverage on the company kind of goes out the window and premiums will start to be affected because hey, nobody wants to have those large claims, but they exist and people need those medications. So that’s why it’s so important you tie in properly with provincial plans and speak to drug manufacturers and try to pick up coverage in a variety of places.

 

Paul Martin:

Colin, you were nodding there. I’m just curious, is that something that you bump into in your day-to-day life, that there are companies here in Saskatchewan that will find themselves facing those kinds of challenges?

Colin Rooke:

Yeah, it is. And I think part of our… For example, if we’re working with a commercial client that’s going through our risk reduction program, part of the risk assessment we’ll do is we’ll touch on… we’ve talked about other employee related issues and we will get into the benefits plan overall and really the philosophy around it. So what we’re not doing is talking about plan mechanics, but what are you hoping to achieve with this plan? Is that communicated effectively? Are you aware of all the ins and outs? How good would you say your education is? How much time are you spending educating the employees? Would you say they have a firm understanding of where the cost drivers are? And could the plan members essentially, if I asked them, would they give the same answers back? And so that really starts the conversation around, and Ryan touched on it, does the plan do what you want it to do, really what you think it should be doing?

And also how you tie in the value of that plan back to the employee. So if you’ve got a group of individuals that don’t understand the plan, therefore don’t see the plan value, and then costs are increasing due to drug costs, et cetera, and inflation, you really have an unhappy group. And so education is just so important. So everyone at the table understands where the money goes and why. And for those often younger plan members that say, “You know what? Not for me, I don’t want to spend the money,” the conversation with the high cost drug is just such an important one to have. What are you going to do if this happens to you? And then suddenly you’re a completely undesirable plan member. So education is just so important.

Paul Martin:

There’s one that comes to mind in these conversations. Certainly I’m seeing it in the business news coverage is Ozempic. We’re seeing all of these ads on TV and all sort of stuff that’s popping up as an issue in benefits plans. Ryan, can you walk me through that or is this coverage actually on a story that’s a real story.

Ryan Warner:

Yeah. You know what? This is a challenging conversation. I think there’s two very different arguments that come from completely opposite ends of the spectrum on this one. So I will say the reality of Ozempic initially and the benefits it has for diabetic patients medically necessary is kind of the key ingredient there. The medically necessary folks are going to get it covered through plans. Insurers are really cracking down on the whole weight loss side of things and where it’s not deemed medically necessary.

And that’s the distinction with really any medication is if a benefit plan plan’s going to pick it up, it’s because someone needs it. Now, this is where I guess the argument gets a little fuzzy for me in that… and I’m not going to pretend to be a doctor, I should make that a caveat, but if someone’s taking a medication to improve their overall health and lose weight, is that going to protect them from potentially additional medications down the road? So it’s hard to pull the plug on things that may actually prevent future challenges. At the same token, if it’s not deemed medically necessary, that is the way our system’s set up to prevent folks from getting that coverage.

Paul Martin:

Well, that’s just it with this one, isn’t it? I mean, it’s a diabetes drug, but the byproduct is weight loss and a lot of people have hooked onto it as a weight loss drug even though the diabetic thing has become sort of secondary or ancillary for them. But this has become a very popular drug, hasn’t it? I mean, there’s no doubt, a lot of demand to pay for this one.

Ryan Warner:

It has. Yeah. I mean, off the top of my head, I’m trying to think of a couple other alternatives that are out there. I will say I also believe it’s pretty early days from the information I’ve been seeing where there’s questions around the sustainability of what it’s doing for people on the weight loss side of things. Is it potentially causing other challenges?

I mean, I think about myself and all the healthy eating and trying to be active and going about it the more mainstream route rather than taking the medication. I realize that’s not necessarily doable for everyone, but I can see why it’s become such a hot button item and why the insurers are tiptoeing around how to deal with it. I mean, they’ve essentially put their… drawn the line, so we can’t cover the folks that are not medically required, but I have an argument to say they maybe should.

Paul Martin:

Well, we’re down to just a minute left, and maybe I just want to kind of tie a bow around this thing, and if I’m hearing you, that there’s just simply no substitute for business owners talking to people like you and just engage in the conversation, figure out how the changes… there always are changes, and so what do they mean? Is that a fair description?

Ryan Warner:

I think so, yeah. I think about our role as trying to be on the front line. We’re trying to digest information that they may not otherwise have access to. We have an approach to the strategy that is the living, breathing thing that is a benefit plan, and that’s our role is to help them achieve, as Colin said, what is it they want for their staff and for their business and for their budget.

Paul Martin:

Ryan, as always, very insightful. I want to thank you for taking the time to join us today. You’ve been listening to Ryan Warner, benefit specialist with Butler Byers and also in studios, Colin Rooke, the commercial risk reduction specialist with Butler Byers. Thanks very much for joining us and we’ll talk to you next time.

Deepfakes

Home • (Page 3)

Paul Martin and Colin Rooke discuss the implications of AI on insurance.

Listen to the full episode here, or read the full transcript below.

Paul Martin:

Welcome to Risky Business, Commercial Insurance with Butler Byers. This is Paul Martin, a business commentator on CKOM, and joining me today is Colin Rooke, the Commercial Risk Reduction Specialist at Butler Byers and the star of this particular program that you get to hear very frequently on weekends throughout Southern Saskatchewan.

Colin, I guess what’s old is new again. We’ll get to that part, but this thing called deepfake, it sounds like a movie, a not very nice movie, a sinister movie title, but it’s something we really need to be cognizant of, isn’t it? I mean, this thing is jumping up and biting us in a way that no one would’ve expected. We’ve been warned, AI is both positive and negative and there’s insurance implications to it too.

Colin Rooke:

Yeah, absolutely. The term deepfake comes from deep learning and then fake. Pretty simple. But what it means is it’s the ability to alter images, videos, or recording using AI at such a sophisticated level now using deep learning that it’s almost impossible for even the experts to determine whether or not a video image, audio is fake. It has gotten that good. In fact, they use other AI tools to determine if AI generated deepfakes are in fact fake. Because for the most part, humans can’t tell. It’s a growing problem.

We’ve talked a lot about the evolution of cyber on this show, and it’s really important to talk about this term because a lot of the tools and tips that I have given over the years are almost rendered obsolete. We’ve talked about the prevalence of wire transfer fraud and not working through email. I say pick up the phone or have a video chat if you’re stuck at home due to COVID. Make sure you get a first person message saying, “Yes, go ahead and transfer that.”

Well, now you can’t trust that because what AI does is it learns all the predictive behaviors at such a deep level that it is almost impossible for the person on the other end to tell or to recognize that they are having a conversation with another party that is completely fraudulent despite the fact that they’re watching a video having a call, and during that call, receiving email confirmation.

You’re on the phone. You’re getting emails. You’re like, “Well, I know what Paul Martin sounds like. During that call, Paul Martin is emailing me. Of course, I’m going to go ahead and transfer.” And I’m telling you now that that all could be fraudulent.

Paul Martin:

Getting scary, isn’t it? I mean, how do average people protect themselves is going to be the question that comes up with all of this. But I alluded to at the beginning of the program that what’s old is new again. We’re going to go back to some what we consider to be primitive business practices if we have no choice on this. If we can’t trust the digital world, we have to go back to an analog world.

 

Colin Rooke:

It’ll be interesting to see how the insurance markets look at this. We’ve talked about ways that you can proactively reduce the likelihood of wire transfer fraud. We’ve talked about educating your employees around email phishing scams, and we’ve talked about what spear phishing is, so a very direct targeted approach to one individual rather than a blanket approach. But then if the technology is so good, you can’t tell, you can no longer easily look for the tips or the warning signs of a fraudulent email. Then what do you do?

One of the answers, rather than say, “Look, get someone on the phone before you authorize a transfer,” one of the answers is you get up out of your chair. You walk, you drive, train, you fly to that person. You look them in the eye, explain what you’d like done. Get a physical check from that person and take that physical check to the bank. It sounds archaic, but it is one of the ways to make sure that you are not a victim of cyber crime.

Paul Martin:

What we’re talking about here is leading edge. This is a new threat that’s just starting to manifest itself. I guess it’s been there. If you were really plugged into AI or something, you would’ve maybe understood it. But for those of us who are I’ll call them lay people in terms of the digital realm, this is new to us. A, are you hearing people are getting concerned about it? And B, what are the rudimentary or preliminary steps you’re hearing some people are taking?

Colin Rooke:

Well, just back to the nature of the problem as well, I mean, it’s not even just an internal cyber liability or wire transfer fund issue. Using AI, if you can get video clips… You can get into a social media account. You can find written texts. You can find images. And if you can get some audio, there are now completely false videos from public figures or the would be CEO of companies that don’t exist trying to sway public opinion or trying to receive donations for a cause.

And then you get into issues of legal and regulatory issues and who’s truly at fault here, the company that’s fraudulently being represented, or is it the cyber criminal itself? We are just at the tip of this thing. A lot of people, I think, listening to the show today will not be completely established or well-versed in AI and all the implications, but I guess you need to get there. We talk about training employees. What steps are businesses taking? Well, one, you have to explain what it is. People need to understand what a deepfake is.

They also need to understand AI and it’s capabilities and how it’s evolving further than just, well, it can write a nice note to someone that I don’t want to write, or it may take my research job away because it will comb the internet for me. You got to understand that all the capabilities of artificial intelligence, you got to start there. What is it? And then you have to talk about how it’s changing and the implications of that. You also need to talk to your IT providers to say, “Okay, what is out there? What’s changing?”

If you look at IT from a break-fix perspective, so you’re aware of deepfakes, what is being done to identify that and have that conversation? And from there, if you are a victim of fraud, you need to have a response strategy. What will you do? We’ve talked about PR related risks on this show. What will you do if there’s videos out there of your CEO giving false information to the public at large that did not originate from your office?

Paul Martin:

This has got me thinking about the Hollywood strike. I mean, it’s one of the topics in there. Maybe we could explore that when we come back. We’ve got to take a little break. You’re listening to Risky Business, Commercial Insurance with Butler Byers. Paul Martin here and talking today with Colin Rooke, a commercial risk reduction specialist at Butler Byers, about deepfake, a whole new realm of risk that’s coming at us. You don’t want to miss what we’ve got coming up. We’ll be back right after this break.

Welcome back to Risky Business, Commercial Insurance with Butler Byers. This is Paul Martin, and joining me is Colin Rooke, a Commercial Risk Reduction Specialist at Butler Byers. Colin, before the break, you had mentioned the potential for fake videos and stuff.

As you said that, it tweaked in my mind, that’s one of the issues at play in the Hollywood actor strike is they’re worried about their images being turned into movies and the actors are never really on the site or on the set because there’s so much of their images already online or available, already been recorded, that AI could rebuild them without them ever being there. They’re questioning whether they get paid for that. This is way more real and more in your face than some hypothetical that’s down the road.

Colin Rooke:

Yeah, it’s a very real concern that they would have. If you think about it, if you were to use AI and then… You start with AI. You use an app that would be able to read or analyze the audio of any given show. AI would then be able to replicate or recreate movies using every… The dialect would be exact. It really does raise the question of does the actor who sounds and looks like the completely artificial version of themselves receive any compensation for that movie?

Again, back to the issue of deepfakes, I mean, it’s one thing to sort of… When you see very obviously fraudulent videos on YouTube or Reel, on Snapchat, or you’re on TikTok, it might be, for example, making fun of Donald Trump or Kim Jong Un and Vladimir Putin, but at the core of those videos, those are early deepfakes. Videos created using images, audio of individuals that were never in that room. But now it’s gotten so sophisticated, the experts cannot tell. I know I’ve said that before, but then you think about, okay, the impact on public opinion.

If you can’t tell that a fake video is fake, is it actually fake? Again, back to the nature of this talk and the impact to business, you need to make sure you’re aware of what’s out there. You need to make sure or have some idea of ways that you could be vulnerable. You need to make sure you’re up to speed on your IT, but also your understanding. And then we’ve talked about incident response plans and how they’ve evolved over the years into it really does turn into a PR plan.

You need to work on what your response will be today should you realize you’ve become a victim of deepfakes. Throughout the years in the show, we’ve talked about all these different… Ransomware was the big one, wire transfer fraud. We’ve talked about social engineering, spear phishing. The new and emerging risk that needs to be on your radar is deepfakes and how they can be used to accomplish all of those things I’ve mentioned, all different types of fraud, different scams in a way that’s almost undetectable.

It really is a scary thought, but it’s so important that we are educating our people to at least be aware of the topic so we can all work together and mitigate the risk.

Paul Martin:

I’m guessing you’re talking to business people who are starting to get their head around this saying, “What tactics are they using?” What are you hearing from those you’re talking to?” Are they taking steps to protect themselves or to wind this back a bit?

Colin Rooke:

Well, wind it back a bit is… Again, one of the ways to protect yourself is actually taking a step back in technology. Until the detection is there, until you are feeling like you really understand the nature of the problem, it’s not a bad idea to say, “You know what? Other than maybe a few very trusted accounts, we may need to, again, take a step back and start writing physical checks, especially if it’s over a certain amount.”

I think you might start to see that from the insurance industry as well to say if it’s under 5,000, the insurance companies will pretty well leave you alone. But as the amounts grow, there’s limitations in the policy itself by way of coverage if certain steps aren’t followed. I think you’ll start to see up over a certain amount, they might start asking for more physical solutions.

 

Paul Martin:

We’ve got maybe two, two and a half minutes left in this, and I don’t want to overlook one important aspect of this. As you and I are talking about this, I’m sure the insurance companies are too. Are they starting to change their policies and their wordings to take this into account? What are you seeing from the industry that as a buyer of insurance I need to know?

Colin Rooke:

That’s a good point. The concern that I have is, you’ve got a new risk, and as it becomes more prevalent, the insurance industry will respond and they’ll amend wordings or create all new policies altogether. I mean, 15 years ago, there wasn’t much by way of cyber liability. The first policies ever written are completely archaic today. Where the issue lies is the policy itself.

Because if the industry isn’t working on deepfakes and amending the wording to broaden the definition of cyber crime to include deepfakes, will we have customers or policy holders finding themselves in a position where the loss is excluded? Because quite simply, there’s nothing in the policy language that suggests that it’s included because of how little there is known about that risk.

What I will say is the industry is very good at responding to cyber related threats, and I’m sure they’re working on it, but it is a concern that as AI evolves and technology evolves, are they required to pay? If the technology is so good that no one can verify whether or not the message did in fact come from the person sending it or not, what do you do in this case?

Paul Martin:

Well, this is the stuff that the Elon Musks of the world were warning us about, isn’t it? It’s kind of like the two sides of the coin. It’s like gasoline, it’ll power your car, but it’ll also burn down your house if you don’t use it right. This is a whole new world that we’re all going to have to think about and maybe the resurrection of snail mail. Who knows? Colin, thank you for sitting in on this today and providing us with this insight.

This is a really fascinating story, and I know we’re going to be talking about it more as we go forward. You’ve been listening to Risky Business, Commercial Insurance with Butler Byers. This is Paul Martin. Thanks for joining us and we’ll talk to you next time.