Insurance on the High

East Greenwich resident Tempie Thompson has been named executive director of the R.I. chapter of the American Red Cross.

Thompson's association with the Red Cross began 20 years ago as a volunteer. A few years later, she accepted a full-time staff position in Massachusetts. Most recently, she served as the volunteer partner to regional leadership where she worked side-by-side with Rhode Island leadership and advised on high-level strategy for the overall operations of the local chapter.

She is actively involved in the planning and celebration of the R.I. Red Cross Chapter Centennial and will also focus on continuing the development of the Red Cross Home Fire Campaign within the region.

Amica Mutual Insurance Co.

Tara S. Costello, of Woonsocket, has been promoted to assistant vice president in the claims executive department and will oversee the claims departments and initiatives in her region.

She began her career at Amica as an associate adjuster in 2004 and has worked in several positions within the claims department, including in the Dallas, Michigan and Baltimore offices.

A 2003 graduate of Vassar College, Costello has also earned five insurance-related designations and two business-related designations.

John L. Strain III, of West Warwick, has been promoted to assistant vice president/director of corporate services in the corporate services department. He will oversee the day-to-day operations of facilities, real estate, distribution, purchasing, mail/scanning operations, print services, security operations and workplace violence.

He joined Amica as an associate adjuster in 1991 and has worked in various positions within the claims, service center operations and human resources departments, including in the Cincinnati and Wellesley offices.

Strain earned a bachelor’s degree in English from Hobart College in 1990.

The Nature Conservancy

Madelyne Cuddeback, of Providence, joined The Nature Conservancy in July as director of philanthropy. She is responsible for managing the philanthropic, corporate relations and communications programs.

Cuddeback’s career has included managing and directing corporate and individual fundraising programs at Brown University, the Boston Symphony Orchestra, the Boston Ballet, the Isabella Stewart Gardner Museum and, most recently, as associate vice president of advancement at Suffolk University. She is a graduate of Brown University.

Philanthropic Educational Organization

Betsy Dake, of East Providence, was elected secretary of the Northeast District Chapter of the P.E.O. Sisterhood during its 24th annual convention in Portland, Maine.

Founded at Iowa Wesleyan College in 1869, the goal of P.E.O. is to provide financial assistance to women in various phases of their educational pursuits.

An environmental planner for the Rhode Island Department of Environmental Management, Dake joined the organization in 2006. She graduated from the University of Mary Washington in Fredericksburg, Va., with a bachelor of science degree in biology and earned a master’s degree in environmental science and policy from Johns Hopkins University.

All State customer claims transperancy

On March 1, 2016, the U.S. Supreme Court held in Gobeille v. Liberty Mutual Insurance Co. that a Vermont law requiring comprehensive claims information to be conveyed to the state’s all-payer claims database was preempted by the federal ERISA statute and could not be applied to self-insured employers or their third-party administrators. Almost immediately, commentators on both sides of the political aisle objected to the ruling, which makes it seem as if nobody won the case. To my way of looking at it, a better conclusion is that nobody lost.

It is important to understand that the vote in Gobeille wasn’t close. Justice Kennedy (writing for the Court) and five other justices found the Vermont law preempted because data collection and reporting are core ERISA functions, and Justice Scalia would have agreed with them had he lived to see the opinion released. Only Justices Ginsburg and Sotomayor dissented, somewhat uncharacteristically defending states’ rights and resisting federal uniformity.

Taking into account both ERISA’s purposes and prior judicial interpretations of the statute, there were good reasons for the Court to resolve Gobeille as it did. My earlier post on the case, written shortly after the oral arguments last fall, explained the legal and political underpinnings and accurately predicted the outcome. It also noted that Congress very rarely opens the can of worms that is ERISA, so that Supreme Court rulings tend to be dispositive albeit incremental. Rather than repeat that analysis here, let me comment on the decision’s implications for transparency.

Several of these objectives are relevant to all-payer claims databases, which have been enacted in nearly 20 states but are uneven in their scope, accessibility, and purpose. Some states with databases are primarily interested in backstopping their regulators and in monitoring public expenditures, particularly Medicaid. With respect to private competition, information about claims and payments based on billing codes tends to be more understandable to corporate payers than to individual consumers, must contain prices actually paid to be useful, and if too current and too easily accessible to providers can facilitate collusion and stabilize prices rather than boost competition. Database laws that don’t include prices, or that grant data access only to government entities or researchers, have little likelihood of furthering competitive goals.

With respect to enhancing provider performance and creating a “learning health care system,” existing databases are far from perfect. Since the 1960s, U.S. health care providers have mainly collected the information they needed to collect in order to get paid. Unfortunately, such claims data presents a skewed version of reality. One can make a strong argument that the critical information for a “learning system” is clinical data, particularly the subset that can be used by providers to deliver care more cheaply, quickly, and reliably. This information may be more accurate and more useable if providers themselves, rather than the payers and employers who challenged Vermont’s law, are responsible for collecting and reporting it. Similar observations can be made about information that bears on the social determinants of health, very little of which is reflected in paid insurance claims.

What does this have to do with the Gobeille decision? Our patchwork system of health insurance has always involved a variety of overseers: HHS/CMS for Medicare and some of Medicaid; the U.S. Department of Labor (DOL) for employee benefit plans; and states for Medicaid and non-ERISA insurance coverage. Self-insured employee benefit plans became widespread in large part because ERISA prevented states from regulating them, and the Department of Labor was not a strong presence in health coverage before the ACA.  Therefore, a court decision holding a state law preempted by ERISA meant that nothing replaced it. That was the so-called “ERISA vacuum,” and if Gobeille had been decided in such an environment the result would indeed have been to chill important data experimentation at the state level.

Things have changed. The ACA made a real effort to link the previous silos of insurance oversight into a more coordinated whole, and the Gobeille decision reinforces that commitment. Today, one can expect the now more engaged U.S. Department of Labor and the newly insurance-savvy HHS to work together, and with states, to systematize the collection of claims data (and hopefully clinical and population health data) and to learn from it. Because of the Supreme Court’s ERISA ruling, Vermont and other states can’t go it alone, with the risks and costs that such variability might create. But they can expect to work collaboratively with the feds on approaches that will serve both regional and national goals. Out of many, perhaps we are becoming one.

GEICO policy upgrades

Nels Johnson called GEICO and saved a lot more than 15 percent on his car insurance.

Unfortunately for the Ozaukee County man, he didn't notice the savings were because his Mercedes convertible was only covered for damage it might sustain while in winter storage --- until he crashed months later and GEICO rejected his claims for some pretty big bills.

Johnson tried to argue that an agent's remark, "We can take care of that," amounted to a contract to add liablity and collision coverage for his sports car when he started driving it again in April, but the Court of Appeals on Wednesday found no basis for that conclusion.

According to the opinion:

In February 2012, Johnson called GEICO after notification from his prior insurer that his auto rates would be going up. He wanted to insure his 2003 Cadillac Escalade and his 2005 Mercedes Benz SL55 AMG convertible, which he said he only drove in the summer.  The agent said, "We can take of that."

But Johnson never called to specify upgrading the coverage, and later said he didn't understand the four declarations he got that showed only comprehensive coverage, and a bill of only $86.50, for the Mercedes, as meaning it only had comprehensive coverage. When Spring came, he put the Mercedes back on the road.

In October 2012, he was involved in a crash. The other driver suffered some injuries and Johnson's car sustained  significant damage.  He filed a claim with GEICO was surprised to learn he wasn't covered.  In January 2103, he sued Geico for breach of contract, negligence, reformation and bad faith.

But Circuit Judge Paul V. Malloy granted summary judgment to GEICO, finding the agent's statement, "We can take care of that," ambiguous, and hardly a clear promise to automatically upgrade coverage for the car in April.

"At most, the evidence shows that GEICO would be willing to accommodate Johnson," the Court of Appeals found.

Further, Malloy and the appeals court noted GEICO's several written notices to Johnson, prior to the crash, clearly showed the Mercedes had only comprehensive coverage, with dashes in the spots where the declarations showed various dollar amounts for the full coverage on the Escalade.

Johnson owns Dreamscape Transport, a trucking company in Saukville.

In short, the court found Johnson didn't show enough to suggest that a prior oral agreement, "a meeting of the minds," that should have been incorporated into the final policy, and so summary judgment for GEICO was appropriate because no reasonable jury could conclude there was an agreement to automatically increase the coverage.

Insurance choice or need

Today, virtually every industry is ripe for disruption. The $3.7 trillion insurance industry is no exception. In many ways a perceptually commoditized business, those companies that win – like the famously customer centric USAA – are those that create differentiation through the experiences they deliver, and the ways their customers feel as a result.

Yet USAA and a handful of others like it are the exception. As most established companies tend to move slowly to use their current size, information and resource advantage to better serve their customers, smart entrepreneurs and the start-ups they run are attacking the insurance business with innovative customer experiences that drive value and solve problems.

The fact is, the insurance industry hasn’t much evolved since the concept was first introduced in the late 1700s. Here are five ways that innovations in customer experience are changing business and challenging the status quo for insurers and their customers.

• Pay-as-you-drive, usage-based auto insurance policies reduce insured costs, and insurer risk. Most car insurance policies charge you based on age and history. Now, the distance you drive – and how you drive – can result in lower premiums. Zubie is working with Progressive Insurance to put recording devices in your car, while Censio uses an app to collect much of the same data. A bonus? Some of these can tell you when your car needs attention as well.

• Digital insurance manager’s help you manage all your policies (and will sell you insurance as well, if you want…). How many insurance policies do you have? While I can’t make an accurate guess, I’ll venture 10 or more. Between life, auto, health, umbrellas, property and more… it’s a lot. And I’m not alone. Now, startups like Knip and FunctionFox make it easy to manage all your policies, from you smartphone. And if you need more? Hey, they’re brokers too…
• Video-enabled doorbells discourage burglars and lower homeowner premiums. A motion detector records who comes to your porch – and immediately saves it to the cloud. American Family Insurance customers who use the Ring system get a 5% premium savings, and a deductible refund if a burglary occurs. Vivent lets homeowners know if a window is broken, for example – and gives Liberty Mutual customers discounts when the install it.
• “On-demand” insurance provides mobile-powered, micro-insurance coverage only when consumers need it. Do you need all your insurance policies to be active all the time? Of course not. For years, we’ve been able to buy travel insurance as needed, covering airfare or hotel fees if something went awry. Now, Companies like Metromile offer “revolutionary pay-per-mile car insurance for the modern driver.” In other words, customers are going to be able to pay for insurance as they need it, and only when they need it.
• Property and auto-insurance claims made easier and more enjoyable (and virtual).Let’s face it. For most of us, when we deal with an insuarnce adjuster it’s after something bad has happened. That’s why companies like SnapSheet see an opportunity to for a true mobile claims solution, enabling customers to settle the claim virtually. Results? Exceptional customer experience – while faster and easier for adjusters as well.

Every one of these companies, services and products exist for a single reason: they have been designed to eliminate an existing customer pain point. At heart, that’s what customer experience improvement is all about: finding and removing those areas where friction adds up to wasted time or frustration – like in the examples above.

This article is the first in a series I plan to publish irregularly over the next year or so, building on the ideas published in the 2012 book Smart Customers, Stupid Companies. They’re also built around the knowledge we’ve gained working with companies around the world to improve customer experience.

So stay tuned as we look at experience innovation across the banking, retail, B2B and healthcare sectors among others in the months to come. Thinking up ways to change “how things are done” is a blast. In that spirit, I hope you enjoy thinking about ways these kinds of things could apply to your business – and to your customers.

State Farm Law Suits

The owner of a downtown Belleville building that burned to the ground in May 2010 is arguing at trial that he should be paid an additional $1.6 million for property loss and $1.64 in punitive damages from State Farm Insurance Co.

Represented by Penni Livingston of Fairview Heights, Ronnie Phillips sued in 2012 claiming he was unable to rebuild at 205 East Main St. because payment of his policy was insufficient, and since he was not able to rebuild, he lost rental income.

He further claims that total square footage of the insured property at 205-207 East Main had been miscalculated, an error that later resulted in the "reformation" of his policy.

Phillips, who testified on Wednesday, has been paid a total of $823,000 for the loss, which includes $87,000 for lost income, according to testimony. He was originally paid $436,000, until the square footage error was detected.

In an amended complaint filed less than two weeks before trial began, Livingston wrote that a reformed policy should reflect replacement costs as high as $2.7 million, and no lower than $2.414 million.

"Plaintiff asks this Court to enter a judgment against Defendant consistent with the verdict of 12 jurors speaking in one voice in the amount proven at trial and expected to be at $2.414 million minus payments made for building losses, exclusive of other losses paid...," she wrote.

St. Clair County Associate Judge Christopher Kolker is presiding over the trial which got underway on Monday. 

State Farm, represented by Michael Bedesky and Martin Morrissey of Belleville, argues that Phillips' consumer fraud and common law fraud claims are not actionable.

Bedesky wrote that after the measuring error was discovered, the loss was ultimately re-calculated and additional monies were paid.

"Although Plaintiff attempts to claim his alleged criticisms of State Farm constitute 'misrepresentation' they do not set forth a factual basis for an ICFA (Illinois Consumer Fraud Act) claim," he wrote.

He further argues that consumer fraud requires "much more than merely promising to do something and failing to follow up on that promise...[T]he Illinois Supreme Court has held that the ICFA does not apply in cases where a defendant has made an 'honest mistake.'"

Bedesky also states that Phillips' common law fraud claim lacks specificity and particularity.

"What the complaint does allege is that Plaintiff received the full policy limits which he purchased for 205/207," he wrote. "Later, after the underwriting mistake was discovered Plaintiff received additional monies on the reformed policy. Although Plaintiff characterizes State Farm's activity as 'fraud' the actual facts contained in the complaint do not allege an intentional misrepresentation of any kind."

He also wrote that Phillips' claim for punitive damages fails to rise to the level of "gross" fraud or other circumstances of malice or willfulness.

On Wednesday, State Farm field underwriter Stephanie Stover also testified until 4:45 p.m. when Kolker adjourned for the day. Another six witnesses are expected to testify before the sides rest.

Closing arguments could take place as early as Friday, or into next week.