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< Previous8 | INSIGHTS | Winter 2024 IMAGINE A CROSSFIT GYM with a hookah lounge and pizza buffet. That captures the cognitive dissonance claims professionals face in today’s work environments. In the high-stakes world of nuclear verdicts, claims representatives aren’t paper pushers. They’re cognitive athletes facing Olympic- level mental challenges daily.1 From medical jargon to legal principles to the going price of building materials, today’s claims professionals need the mental agility of a chess grandmaster and the endurance of an ultra-marathoner. With that in mind, are we asking too much of them? Let’s reframe and reexamine their role in response. Claims Professionals Strive for the Gold In the realm of cognitive athletes, claims professionals are top tier. To fulfill expectations of fluency in coverage, liability, and damage assessment, they develop diverse skills, such as interpreting insurance policies, determining and apportioning legal fault, evaluating injuries, understanding medical terminology, and assessing property damage. The range of topics and subject matter domains within the claims field is daunting.2 And in reality, no one can ever master them all. Employers expect claims professionals to assimilate large volumes of material— medical, legal, investigative, and damages documentation; settlement demand packets; lengthy defense attorney evaluations; applicable court rulings; and state unfair claim settlement practices regulations—and make sound decisions on coverage, liability, and damages. Often, expectations call for claims professionals to digest, analyze, and act on this information tsunami under tight, time-sensitive deadlines. Claims professionals do not tighten widgets. They are knowledge workers. Each claim file is unique, with its own complexion of circumstances and features. Accordingly, effective claims professionals must analyze and assimilate large chunks of information and then alchemize that data into decisions driving case defense, evaluation, and resolution. Data entry is another task that’s increasingly absorbing the limited time of claims adjusters. But in today’s increasingly technological world, more computing power and an emphasis on claim analytics create new imperatives around this task. The more data points insurers gather, the better those insurers’ predictive abilities are in forecasting future losses, setting prices, etc. However, somebody must transfer this data into computer systems. Increasingly, that somebody is the harried claims adjuster, who’s already struggling to manage a caseload of 100 to 300 files. Time spent entering data is time claims professionals cannot use to investigate, evaluate, or negotiate—in other words, time stolen from fulfilling their core responsibilities. Space Needed for Deep Work Claims professionals need breathing room for “deep work.” Georgetown University Professor Cal Newport defines this as “professional activities performed in a state of distraction-free concentration that push your cognitive capabilities to their limit.” He adds that “these efforts create new value, improve your skill, and are hard to replicate.”3 Deep work is cognitively demanding and requires uninterrupted concentration, typically in 60- to 90-minute chunks. How often are these conditions available in typical claims offices? In a word, rarely! Consider the following, likely all-too- familiar, scenario: You enter the office with your morning to-do list. You’ve reserved time for meetings, diary file reviews, and calls. However, your day is quickly hijacked by email requests from clients, brokers, attorneys, insureds, claimants, vendors, peers, one or more of your reports, and/or your supervisor. Abstract This article reframes the claims professional’s role as that of a cognitive athlete—facing complex mental challenges in today’s high-stakes insurance environment. It explores the cognitive demands thrust upon claims adjusters, such as through “deep work,” and how obstacles presented by modern office environments, such as email overload, inefficient meetings, open office layouts, and heavy caseloads, can hinder their cognitive capacity. Strategies to offset these obstacles are considered as part of an overall effort to create work environments that respect and optimize claims professionals’ intellectual capabilities.You spend most of the day answering emails and ad hoc requests, feeling more like a firefighter than a claims professional. Email lets other people try to make their priorities your priorities. But wait, there’s more. An impromptu client or broker meeting requires your urgent attention. New claim assignments clamor for attention. The phone rings incessantly, and your computer pings, alerting you to new emails and texts. The phone’s red light signals the arrival of new voicemails while you are on back-to- back Zoom calls. Taking a deep breath, you notice it’s 6:37 p.m. Surveying the wreckage of your initial tasks list, you’re dismayed to realize you have checked nothing off. No doubt about it: You were very busy. But how much real work did you accomplish versus reactive firefighting? This scenario is a common, recurring one for claims— and frankly many other—professionals. At the other end of the work spectrum, allowing for the opposite of deep work, is the hyperactive hive mind. Newport describes this highfalutin’, academic- sounding phrase as follows: The hyperactive hive mind refers to a collaborative work culture characterized by constant, real- time communication and frequent interruptions, typically via email, instant messaging, and meetings, which can lead to decreased productivity, increased stress, and difficulty in focusing on deep, meaningful work.4 Many offices default to such hyperactivity, with knowledge workers spending an average of 127 hours per year regaining focus after being interrupted by meetings and other distractions.5 Accordingly, this default mode wreaks havoc on accomplishing important goals and thwarts progress on quality investigations, evaluations, and claims negotiations. Today’s claims professionals need the mental agility of a chess grandmaster and the endurance of an ultra-marathoner “ ”10 | INSIGHTS | Winter 2024 Claims representatives, in turn, may find that their workdays feel like a bad arcade game, where stress replaces fun, as the protagonist (them!) must successfully react to external stimuli attacking from multiple directions. In this task-oriented version of Whack-a-Mole, no sooner do claims reps answer one demand than others surface. Claims professionals dare not neglect emails or phone messages, lest peers, bosses, and clients see them as slackers—and their own gnawing angst over what lurks in their inboxes and voicemail queues overtakes them. Being branded Not a Team Player is a career-killer. That leaves them with two choices. They must either complete their “real work” in dribs and drabs, via scraps of interstitial time scavenged from the busyness that their hyperactive hive minds impose. Or they can extend their workday by starting work early, during quieter hours, or bringing materials home (or logging in remotely at night). The elephant in the room: There’s too much on most claims professionals’ plates to do everything at a high-quality level, especially when corporate management tells staff, “Do more with less.” Dutifully, claims professionals do more, but are often forced to apply the “with less” portion of that mantra to quality.INSIGHTS | Winter 2024 | 11 Cloistered Monastery or Emergency Room? If claims professionals are cognitive athletes, many work environments degrade their ability to accomplish substantive, mentally demanding tasks. Bad-faith plaintiffs’ attorneys and even some claims textbooks seem to assume that claims professionals work in monastic solitude— cloistered and able to concentrate on one file at a time. That, of course, is a fantasy. In real life, claims professionals’ ecosystems are less like cloistered monasteries and more like emergency rooms. The average American office worker receives approximately 121 emails and sends about 40 emails daily.6 While no known study has drilled down to quantify this data for claims professionals specifically, their experience likely falls within this realm, if not higher. As in many office settings, once email entered the Claims Department, it rapidly metastasized, becoming the default communications mode. It is much easier to delegate tasks by emailing a colleague than by walking down the hall, entering their workspace, and asking them to do something. But each email is an interruption. As such, it degrades cognitive capacity. According to McKinsey Global Institute’s research, 28 percent of an employee’s workweek is spent reading, composing, or responding to emails.7 For the average full-time American worker, this amounts to approximately 2.6 hours spent on email daily.8 Claims professionals try triaging incoming emails, pondering whether they warrant an immediate response or can be deferred. But just making these decisions demands thought. A wrong choice could be the difference between a claim progressing smoothly or triggering a breach of contract or bad faith lawsuit. Exacerbating this risk are the accompanying heavy caseloads. Claims professionals often carry open file inventories that exceed their ability to service each case to avowed corporate standards. The cognitive juggling act of matching incoming mail to files, returning calls, and documenting significant claim developments leaves mental bandwidth for little else. Office Layout, Design, and Meeting Culture Open floorplan designs are a common office layout style for many claims departments. In such arrangements, rank- and-file claims professionals lack private offices and toil in workstations or cubicles. Welcome to Dilbertville! Nevertheless, meetings continue, sometimes simply because they’re comfortable and familiar. That’s why, in some office cultures, you may hear: “It’s Monday morning, and we’ve always met on Monday morning. So we’ll continue to hold a department meeting every Monday morning!” Strategies to Enhance Cognitive Capacity Now that we’ve identified the problem and factors leading to it, it’s time to discuss ways to address it: • Email triage—Unsubscribe from unnecessary mailing lists. Limit “cc” recipients to essential decision makers. Consider phone calls or in-person discussions for complex topics. • Meeting optimization—Reassess meeting frequency and necessity. Cancel redundant or habitual meetings. Start meetings on time and set a firm end time. Circulate agendas in advance. • Workspace improvements—If private offices aren’t feasible, provide ample quiet, sequestered workspaces for focused tasks. Consider offering remote work options. • Account for professional development— Offer continuing education (CE) opportunities through reimbursement programs and in-house training. Provide caseload relief for adjusters engaged in approved job-related education. • Caseload management—Regularly assess and optimize individual caseloads based on adjuster experience, capabilities, and case complexity. Ensure fair distribution of assignments. Periodically reassess non-caseload tasks and special projects. • Support staff utilization—Provide sufficient support staff to handle administrative tasks. Delegate any non- core responsibilities (e.g., photocopying, scanning) to maximize adjusters’ focus on deep work. These strategies can enhance the quality of claims handling and create work environments where cognitive athletes can truly flex their mental muscles, free from the distractions of the corporate world’s metaphorical hookah lounges and pizza buffets. Optimizing claim professionals’ cognitive capacities isn’t just about boosting efficiency. It also involves respecting the mental prowess of the industry’s unsung heroes and creating environments where they can excel among the industry’s intellectual athletes. 1. The limited focus of this discussion in no way aims to denigrate the cognitive demands or intellectual capacities of underwriters, actuaries, policy drafters, insurance brokers, etc. Admittedly, after spending over 47 years in the insurance arena, I approach this topic with a claims-centric perspective. 2. For a comprehensive understanding of the subject matter knowledge that modern claims professionals must possess, I recommend reading Introduction to Claims by Robert J. Prahl, First Edition, 1988, Insurance Institute of America, pp. 14-17. 3. Cal Newport, Deep Work: Rules for Focused Success in a Distracted World, Grand Central Publishing, 2016, p. 3. 4. Cal Newport, A World Without Email: Reimagining Work in an Age of Communication Overload, Portfolio/Penguin, 2021. 5. Hannah Taylor, “Time Management Statistics: Understand Where Your Workday Goes,” runn, April 30, 2024. 6. André Spicer, “How Many Work Emails Is Too Many?” The Guardian, April 8, 2019. 7. PPM Express, “How Much Time Do Your Employees Spend on Checking Emails?”, October 19, 2023. 8. Matt Plummer, “How to Spend Way Less Time on Email Every Day,” Harvard Business Review, January 22, 2019. 9. Shani Harmon, “The Problem Isn’t How Much We Work—It’s How We Work. Period.” Forbes, November 9, 2023. 10. Hannah Taylor, “Time Management Statistics: Understand Where Your Workday Goes.” 11. Iryna Viter, “Unproductive Meetings Under the Microscope: Statistics That Demand Attention [+Infographic],” runn, February 9, 2023. These office layouts aim to be egalitarian and foster so-called flat organizations. They also save money by squeezing in more employees per square foot rather than incorporating multiple private offices into the workspace footprint. “Collaboration” is a corporate watchword, and the claims arena is no exception. By garnering multiple perspectives and maximizing objectivity, roundtables, for example, are useful for evaluating claims, assessing reserves, making decisions to accept or contest coverage, and deciding whether to take a case to trial or attempt settlement. Even the best claims person can become so close to a file that they lose perspective, making such collaborations and meetings useful. However… …on average, knowledge workers spend more than 25 percent of their workweek, or over 11 hours, in meetings.9 For executives, this figure jumps to over 50 percent.10 And it surely goes without saying that not all meetings are productive. In fact, only 11 percent of workers feel that all their meetings are productive. Sixty-five percent of senior managers find that they interrupt their workflow, with 79 percent considering them unproductive and inefficient. And an astonishing two-thirds of professionals believe that excessive meetings prevent them from making an impact at work.11 For example, meetings gobble up time that claims representatives could otherwise spend supervising or supporting their staff. BY JESSICA ELDRIDGE AND GEORGE PLATSISUnlike other types of insurance coverage, cyber insurance changes quickly as it tries to keep up with fast-changing threats in an ever- evolving industry. Insureds, in turn, are challenged to maintain pace. Before purchasing a cyber insurance policy, insureds need to understand the coverages of their policy. One of the best tactics for doing so is to consult with professionals such as brokers, counsel, and insurer representatives as appropriate. To help with this effort, organizations should consider these questions: • Does the policy’s liability coverage fit your organization’s unique needs and risk posture? • What are the limits of coverage, in terms of both dollar amounts and the areas afforded coverage? • What types of exclusions could affect a claim? Be extremely mindful of all the areas you operate in, as your organization could be affected by more external events than you realize (for instance, geopolitical conditions). • How does the policy define the recovery and restoration periods? • What do restored operations look like? Does the policy cover the necessary costs to get your operations to the same pre-incident state? • What constitutes an upgrade? Do you have coverage for upgrades? And how might end-of-life and end-of-service considerations influence a claim? • Which endorsements should be added to help recover after a cyber incident? • Have you discussed the support resources covered under the policy? For instance, are you required to use specific vendors for response activities, or do you have latitude to choose them? Understanding the Actual Coverage Policyholders lacking a full grasp of various coverages should seek assistance in determining what policy and limits fit their organization’s needs. For example, if a company assumes that its policy will reimburse all damages up to the coverage limit, it may ultimately encounter a significant pitfall. Furthermore, even when an organization believes it has an appropriate policy, an errors and omissions (E&O) policy could be a worthwhile addition. Answering these questions can help ensure that any potential coverage gaps are eliminated: • Is the existing coverage for directors and officers (D&O) appropriate? • Do any other types of insurance apply or help to fill gaps? For example, does your property policy include any provisions for cyber coverage, or is there an exclusion? • What defines reputational harm, and how is that calculated? • Is there coverage for an extended period of indemnity? • What defines a waiting period? Would losses begin after a specified waiting period or as of the incident date? • How is “extra expense” defined? For what time frame is the extra expense covered? Additionally, with increased integration of information technology (IT) into operational technology (OT) environments—especially in select industries—an incident that originates as a cyber event could very well end up causing physical damage, which means When companies suffer a cyber incident, they often look to their insurance policy and other external resources in place, such as incident and crisis response services, to help them resume normal operations. But what happens when policyholders do not fully understand the scope and limits of their coverage? Or when they have trouble navigating through an insurance claim? This article poses a series of questions to help insureds think through common issues and avoid difficulties that can materialize during the cyber claims process. It then presents several strategies to help organizations navigate this process and reduce their risk posture. property insurance could come into play. However, an insured’s property policy typically contains an exclusion or lower policy limits that the policyholder needs to be mindful of. Quantifying Financial Impact When a claim or proof of loss is submitted to an insurer, a numerical value is always attached. But can that amount be substantiated? Quantifying post-incident financial impacts requires supporting documentation and sound thinking, in part through consideration of these questions: • Can claim calculations be independently verified by outside professionals, such as forensic accountants? • Can claims activities be validated as necessary and reasonable by technical experts or other outside professionals? • Does a process and procedure exist to track expenses post- incident in real time or nearly real time? If not, reconstructing expenses, even with supporting evidence, can slow down the claims process. • Has the organization performed a pre-incident business impact analysis? If so, when was it last updated, and were financial changes over time considered? • Has the company performed a cyber-related disaster-recovery exercise? • Can the financial impacts be categorized—for example, lost business income, lost earnings, lost customers, lost production, reputational effects, and so on? • Have sales been delayed or lost? What is the actual loss sustained? • Did the organization incur extra expenses, and/ or did variable expenses decrease during the interruption period? Also remember that the period of indemnity—the period of time for which indemnity is payable under a business interruption policy—will affect the overall amount of damages, making it one of the most critical components of quantifying the business interruption loss. Some questions companies can answer to help define the period of indemnity are: • What systems were affected? • What were the specific functions of those systems? • How do those functions affect the business and its ability to generate sales/net income? • What was done to mitigate the downtime or impact to the business during remediation? • Are there technical alternatives to expedite recovery? • What issues may have transpired during the recovery? • On what date was the remediation complete? Aligning the Policy and Incident Response Plan Misalignment between the policy and an organization’s incident response plan may generate challenges during the claims process. The greatest gap is having no incident response plan at all. But assuming one exists, it is useful to ask the following questions: • What does an incident response plan look like at your organization? • Are the appropriate stakeholders, roles, and Misalignment between the policy and an organization’s incident response plan may generate challenges during the claims process INSIGHTS | Winter 2024 | 15 Many organizations underestimate the financial impacts of a cyber event responsibilities identified? Keep in mind that if the plan calls for hiring an external public relations or crisis communications firm, the policy may cover those costs. • Does the policy include any technical or notification requirements that need to be met to ensure that coverage remains in effect? • Have you considered what actions to take to keep operations going if you were restricted from accessing financial and other critical data? Offline and cold-storage immutable backups are possible solutions. • What is the recovery plan to minimize financial exposure? • Can technical and business teams work together to perform damage analysis? Managing Policies Not Tailored to Unique Business Needs For even the most prepared organizations, the risk of something falling through the cracks exists. To help mitigate this risk, organizations can avoid adopting a one-size-fits-all policy. Questions to help tailor the policy to your needs include: • Are industry-specific considerations accounted for? • Do coverages and policy language align with your business needs, risk profile, customer profiles, and data? • Does your industry earn revenue through fixed-fee contracts? Would this lost revenue correlate only with a delay in sales? When do you earn and record revenue? Is this outside the period of restoration? Be aware that insurance policies and coverages may differ by sector (such as manufacturing, retail, and healthcare) and are often driven by industry norms and requirements, making it vitally important to ensure that a policy meets an organization’s unique needs. Reducing “Gray Zone” Language Having, or even finding, the answers to all relevant questions is particularly challenging, because, as the saying goes, “You don’t know what you don’t know.” Therefore, within your own organization and with professionals in the field, seek precision in language and understand definitions, remembering that even the “ands” and “ors” will make a difference. INSIGHTS | Winter 2024 | 17 Next >