8 Issues to Watch in 2024
1.) Machine learning/AI and how it affects us
When thinking of machine learning and AI, companies must have a plan before investing in any type of machine learning and AI platform. Is your company patient enough to see this plan through? Or does the C suite need to see ROI first? Is there at least a basic understanding of what’s out there?
For example, between artificial intelligence, machine learning and deep learning, do most people know.
The difference? Generative AI vs Conversational AI? Narrow vs General AI? LLMs, GANs, and GPTs?
There is a lot to unpack in ML/AI/DL 101 alone. These come with three main speed bumps upon implementing. There are three risks to look out for in 2024 concerning Machine learning, AI, deep learning:
- Lack of transparency: Machine learning models can be complex and challenging to interpret. This lack of transparency can be problematic when explaining decisions to stakeholders, regulators, or customers. Understanding how a model arrives at a particular decision is crucial for accountability and trust.
- Bias and fairness: Machine learning algorithms can inherit biases from the data on which they have been trained. This can lead to discriminatory or unfair results, which can have legal and ethical consequences. Monitoring and mitigating bias in machine learning models is crucial.
- Scalability and resource requirements: As machine learning models become more complex and data-intensive, they often require significant computing resources. It is vital to ensure that your organization has the infrastructure, expertise, and budget to support the scalability of machine learning initiatives. Failure to do so can lead to inefficiencies, project delays, and increased costs.
2.) Cyber threats/ Privacy
Stemming from limited historical data for pricing, lack of a good definition of “cyberterrorism,” and the ever advancement of attacks all lead to ambiguity regarding what is covered under cyber insurance policies. Thus leading to a disconnect between insurer and insuree.
Privacy and Data Security are another challenge because machine learning often relies on large datasets, and handling sensitive customer or employee data can pose significant privacy and security risks. Unauthorized access or data breaches can lead to legal and reputation damage.
Keep in mind relief may be on the way, The Federal Insurance Response to Catastrophic Cyber Incidents taskforce has met to address this and set a date of “FY(fiscal year) 24” for the implementation of a nationalized cyber attack insurance incentive for insurers or “cyber insurance backstop” because of the aforementioned difficulties covering cyber attacks and the high cost of stand alone programs for business.
The benefits of this cyber insurance backstock initiative would possibly include:
Enhanced Affordability
Making cyber insurance more accessible to businesses by potentially lowering premiums and the overall cost of standalone cyber insurance programs.
Improved Coverage Scope
Encouraging insurers to offer broader coverage options, including for catastrophic cyber incidents that may have been previously excluded or prohibitively expensive.
Market Stabilization
Stabilizing the cyber insurance market by providing a safety net that can absorb some of the financial risks associated with large-scale cyber attacks, thus encouraging more insurers to participate in the market.
3. Importance of mental health and how that affects your employees.
Mental health is at the forefront of most people’s minds as celebrities and athletes have made it culturally “cool” in 2023 and 2024 to come out and talk about it such as: Dwayne Johnson, J.K. Rowling, Kristen Bell, and Kevin Love among many others. As with pop culture, this has a trickle down effect into our workplace.
So, here are six helpful areas of focus to form a healthy workplace with your team members mental health at the forefront:
- Corporate culture: The corporate culture defines the social and professional environment of a business organization. It encompasses the values, behaviors and beliefs that determine how employees interact with each other and with management. A positive corporate culture can improve employee morale, increase productivity and contribute to overall job satisfaction.
- Collaborative work environments: Collaborative work environments encourage teamwork and collaborative problem solving among employees. This approach fosters a sense of community, leverages diverse skills and perspectives, and can lead to more innovative and effective solutions. Collaboration also helps to build closer relationships and improve communication within the team.
- Communication: Effective communication in the workplace is critical to the smooth running and success of an organization. This includes a clear, concise and open exchange of information that helps to avoid misunderstandings and ensure that everyone involved is on the same page. Good communication also helps to increase employee engagement and connection.
- Inclusion: Inclusion in the workplace means creating an environment where all employees feel valued and included, regardless of their background or identity. An inclusive workplace promotes diversity, supports each employee’s unique needs and perspectives, and fosters a culture of respect and belonging. Inclusion can drive innovation, improve employee engagement and strengthen the company’s reputation.
- Appropriate workload: An appropriate workload is important to prevent burnout and maintain a healthy work-life balance. This includes assigning tasks and responsibilities that can be accomplished within a certain time frame without overwhelming the employee. Effective workload management can lead to greater job satisfaction, less stress and higher productivity.
- Recognition: Recognizing and appreciating employees for their hard work and contributions is critical to morale and motivation. Recognition can come in the form of praise, rewards, promotions or public acknowledgement. It validates the employee’s efforts, fosters a positive work environment and can lead to increased loyalty and productivity.
4.) Remote work vs hybrid vs full in office/Gig Economy/Full Time vs. ICs
Some issues to consider are culture and as iron sharpens iron in the sense of team members learning from each other are hindered in a remote setting. Not to mention home vs. business insurance. What if company equipment is destroyed in a home office by an employee? Who pays for this?
Relating insurance to financial planning for your gig economy workers becomes a topic of conversation around occupational accident coverage programs. For example, in cases of work-related accidents that occur while employees are working remotely from home, it is essential for both employers and employees to establish clear responsibilities regarding liability.
In addition, training and setting expectations upfront, are key elements to ensuring productivity, accountability, and success for remote work.
5.) Elections and how they impact us I love this one but not sure how to position it
Most of us know that federal elections get more attention in the media, social, and in conversation with our friends, Vis-à-vis you probably know the presidential candidates by name, but do you know the name of your governor?
These local governors will have more of a direct impact on your work and everyday life. Starting with:
CA – Allstate, Farmers, and State Farm have decided to discontinue offering homeowners insurance in California. This decision is attributed to the escalating expenses associated with increased natural disasters.
Will California continue to overhaul its insurance regulations due to increasing climate disasters, particularly wildfires?
For example, seven of the top 12 insurance companies have reduced their presence in California. CA is losing big business. The reform includes allowing insurance companies to use forward-looking climate models for risk assessment. Premiums will most certainly go up as a result.
NY – Automed UR Review – system implemented
6.) Talent drain in WC
The U.S. insurance sector is grappling with a substantial skilled labor shortage. According to forecasts from the U.S. Bureau of Labor Statistics, the industry may experience a loss of approximately 400,000 employees due to attrition.
Only 25% of employees in the insurance industry are under 35 years old. Recent research by ACORD indicates that a mere 4% of those born from 1981 to 1997 are considering careers in insurance, and they are projected to make up 75% of the workforce by 2025.
How are we going to make up for this? Attract top tier talent?
7.) Medical Inflation
The expected rise in healthcare costs and the reduction in provider fee schedules by CMS pose significant concerns for the healthcare industry. These developments could impact the quality of care and patient outcomes, highlighting the balance between cost management and healthcare delivery standards.
For example, according to Reuters, employers are likely to see healthcare costs jump to 8.4%. With life expectancy increasing, labor costs, supply costs as a few examples of catalysts.
CAT claims have become less frequent but more expensive over the years, with the advent of medical advances driving survivability. According to Mercer, we are now seeing CAT claims of $20 million or more as more common than let’s say 20 years ago.
Fee schedules have mitigated medical inflation in part for us in Workers’ Compensation. However, according to CMS, providers had their fee schedules reduced by 1.25% in CY 2024 despite rising medical costs.
What type of effect will that have on quality of care? On patient outcomes? On priority?
8.) Climate Change and Insurance
According to climate.gov, damages from the 2023 disasters totaled $92.9 billion in cost for The United States, from 28 separate events. 28 being the most frequent since 2022 with 20 events.
Climate change intensified weather events caused $360 billion in global economic costs in 2022, of which only about 40% ($140 billion) of these costs were covered by insurance, with private insurers paying $125 billion and public entities $15 billion, according to Ruerters.
With (FEMA) flood maps being outdated, populations expanding into dry forest areas as deforestation continues, along with global depletion of grain, and companies starting to not cover disaster prone areas, one wonders what the future holds to try and combat these great expenses and dangers.