President Donald Trump’s 2018 budget proposal includes a paid family leave insurance program for workers in the United States. Under the president’s proposal, states would be allowed to design the paid leave program for their own jurisdictions as long as the benefits meet minimum standards. This means that some states may have a lot to consider when preparing for a new insurance program, such as funding methods, administration, and specific benefit design features. The article “Paid family leave in the United States” by Paul Correia offers some perspective.
Milliman Chairman Ken Mungan is moderating the discussion “Chief Investment Officer Panel – Searching for Yield” at the ReFocus Conference 2017 on Monday, March 6. Panel participants will address the challenges of investing in a low interest rate environment and offer their perspective on strategies that can be employed.
ReFocus 2017 is a global conference for senior-level life insurance and reinsurance executives. It is sponsored by the American Council of Life Insurers and the Society of Actuaries. Milliman is also a sponsor of this year’s conference. ReFocus 2017 is scheduled from March 5-8 at The Cosmopolitan of Las Vegas. To view the entire conference agenda, click here.
Innovation is changing the insurance industry landscape. To remain viable, traditional insurance companies must transform their business models to meet new data and consumer expectations. The Milliman Impact article “Disruption or innovation: A digital future for insurers” explores some technological advances that are opening up the market to new players and challenging insurers to augment their approaches.
Blockchain technology may offer insurance companies the security that they have only dreamed about. The technology’s security components enable users to quickly identify whether a stream of data can be “trusted” for accuracy or not. In their article “Blockchain: An insurance focus,” Milliman’s Michael Henk and Robert Bell explain the basics of the technology. They also explore the benefits and limitations that blockchain could have on insurers.
Here’s an excerpt:
Blockchain technology also has the potential to limit fraudulent claims. False billings and tampered documents are less likely to “fall through the cracks” if the data is decentralized and immutable, which will reduce the amount of erroneous claims payments. Utilizing this technology will enable insurers to lower their loss adjustment expenses and pass on that savings to consumers in the form of lower rates. Furthermore, if this technology becomes widely used, it can help mitigate identity theft and other cyber liability losses.
Identity theft is the fraudulent acquisition and use of a person’s private identifying information. Usually this is done in order for the perpetrator to realize a financial gain. Because the data is encrypted at the financial transaction level, the technology minimizes the amount of identifying information available in the blockchain, thus minimizing the risk of identity theft.
The encryption protocol utilized by the blockchain technology has the capability to limit cyber liability as well. Cyber liability is the risk that personally identifiable information will be compromised by a third party storing an individual’s data. Current practice is to store this data in a central location with software to protect against hacking. With this technology, it enables data to be run and stored based on the current blockchain without unencrypting the underlying data because the chain itself can be independently verified through separate nodes….
…As with any emerging technology, these potential benefits do not come about without a few potential limitations, in addition to the security concerns discussed above. The most problematic of the limitations is scalability. In order for the insurance industry to utilize blockchain technology, it would take a remarkable amount of infrastructure.9 Currently, blockchain technology is limited by the amount of computing power available. In order for data to be decentralized, each node must be able to process the requisite data for each transaction for a growing number of participants. While smaller blockchains are currently successful with a limited number of participants, the insurance industry has a much larger population of participants that will need to have their data validated in a timely manner. This will mean not only more storage space, but also enough computing power to quickly be able to validate each new transaction or data point.
Enterprise risk management (ERM) is evolving, and as insurance companies have moved through time, there has been greater ability to control information in a more sophisticated way. This video featuring Milliman’s Tony Dardis provides more perspective.
To learn more about Milliman’s ERM services, click here.
Michael Culligan is the practice leader for Milliman’s Dublin practice. He manages a team of 35 consulting actuaries. While management issues take up a large portion of his workday, what Michael enjoys the most is working with clients. A recent Finance Dublin article chronicles a day in his professional life.