Author Archives: drdavidallenbrown

About drdavidallenbrown

Dr. Brown joined the Ferris State University faculty in August, 2013, after several years as an entrepreneur, consultant, and risk management/insurance professional. He designed, launched, and grew a business process outsourcing enterprise serving the risk management and insurance industry, serving several prominent clients such as SPX Corporation, General Motors, Ford, Burger King, City of Tampa, City of Phoenix, and many others. This business was eventually sold to Ebix, Inc. in 2008. He served as a Vice President at Ebix while completing work on his doctoral degree with a specialization in technology entrepreneurship. Dr. Brown has been a commercial insurance underwriter, market research analyst, risk manager, risk management information system consultant, software developer, and entrepreneur. In addition to his corporate ventures, Dr. Brown and his wife Jeannine founded Rivertown Bookstore, a small independent bookseller in their hometown of Portland, Michigan. Dr. Brown and his wife Jeannine have three adult daughters. When not teaching or involved in business projects, Dr. Brown enjoys reading, writing, and exploring the wide open spaces of Wyoming.

My Insurance Career Story

A few days ago, I shared a YouTube video of “JB” from The Insurance Nerdery, along with a brief message to “tell your story,” which also happened to be JB’s main message in his video.  February being #InsuranceCareersMonth, those of us who have built successful careers in this industry need to share our stories more often and more vividly with young people who are trying to find their career path.  So here’s my story.

Like most young people, I wasn’t sure what I wanted to be when I grew up.  I began my college journey as a communications major, having great fun with my own show on the college radio station.  I envisioned a lifetime of playing rock-and-roll tunes on radio stations around the country.  By my senior year at Michigan State University, I had recognized the inherent career insecurity of being a “disc jockey” and had changed my major to “socioeconomics” – a blend of business, economics, and political science.  I began haphazardly interviewing for various business jobs at the MSU career placement office with no idea where I would end up.

One of those interviews was for a commercial underwriting trainee position with CIGNA, who was at that time a property and casualty insurance company.  Before the interview, I had to investigate what an “underwriter” actually did, and when I arrived for the interview I still wasn’t completely sure what the position was all about.  In spite of my insurance ignorance, my potential must have resonated with the interviewer as I won a second interview at the firm’s Grand Rapids office, and later an employment offer.  I accepted the offer, and another unintentional insurance career was launched.

The analytical aspect of the underwriting job was very attractive to me, and I dove into my training enthusiastically.  I developed a few of my own analytical tools as I learned to underwrite commercial property, liability, and workers compensation insurance.  The 1980’s also happened to be the dawn of the personal computer era, and I had developed some basic programming skills which I put to use in my early underwriting career.  That caught the attention of CIGNA managers who had me apply those personal computer skills to a few projects for the regional Director of Marketing and Underwriting Programs.  Before I knew it, I had earned a promotion less than two years into my career and earned a very nice bonus payout from the home office in Philadelphia.  I realized that this insurance career was not only interesting, challenging, and fun – but also lucrative.

In early 1990, I noticed that Meijer had posted a professional risk management job opening in their corporate office.  Curious about the risk management function in a major corporation, I applied and accepted the position.  I was fascinated by the broad scope of risk management which encompassed a multitude of risk control activities throughout the company and also the intricate risk financing and self-administration of liability and work comp claims at Meijer.  I worked on several exciting projects, including several that further honed my technology skills, as I met some wonderful professionals in my time at Meijer.

By the mid 1990’s I was ready for a new adventure, and my inner entrepreneur was beginning to emerge.  I decided it was time to try self-employment by selling my technology skills and risk management and insurance (RMI) expertise as a free agent.  Management Technology Services, Inc. was launched and I found no shortage of work opportunities managing risk management information and claim system implementation projects at several Fortune 500 clients.  I was able to travel all over the U.S. and engage in a variety of projects and interesting work at insurance companies and Fortune 500 risk management shops.

I also picked up a few custom software development contracts along the way.  I developed an audit management system for a large manufacturer, and a vendor compliance management system for a retailer.  The latter project evolved into a business process outsourcing platform that I used as the backbone of my next firm, Periculum Services Group. With Periculum, I was able to establish client relationships with many prominent risk management professionals in some of the largest companies and government entities around the USA, as well as a strategic partnership with a risk management firm based in Sydney, Australia, who proceeded to use Periculum technology in the Aussie marketplace.

I eventually sold Periculum and accepted an executive position with the acquirer, while I simultaneously turned my attention to a bucket list goal: earning my Doctorate in Business Administration.  Shortly after completing my doctoral studies, Ferris State University revived its Risk Management and Insurance academic program and needed faculty to coordinate and teach the program.  Great timing.  Here I am, nearly six years later, thoroughly enjoying this opportunity to encourage young, talented students to create their own RMI career path.

As I look back over my 32 year career, I can see just how fortunate I was to stumble across fantastic opportunities and meet some amazing people and valuable mentors along the way.  Like many, I truly did “fall into insurance accidentally” simply because CIGNA saw raw potential in an awkward but highly analytical 22-year old kid.

I’ve been able to do interesting, challenging, and meaningful work, that has directly and indirectly improved people’s lives.  At the very heart of risk management is the notion of protecting people and property from adverse outcomes.  That’s very noble work in which I take great pride.  I’ve been able to travel to 46 states, and enjoyed overseas travel to some exotic locales such as Udaipur, India and Sydney, Australia.  Although I spent several years of my career self-employed, I never had a shortage of billable client work.  I can testify truthfully that I have never had a day in 32 years when I was “unemployed.”  And at the risk of sounding immodest, this career path has blessed me with ample compensation over the years.  I continue to work today because I want to, not because I have to.

Such is the nature of the RMI career opportunity:  Neverending and varied opportunities, wonderful people, rewarding compensation, and noble work.  Imagine if I had pursued this career path with greater intention and preparation.  What more might I have achieved?  I am excited for the young students that actively seek this career path today.  The possibilities ahead of them are vast.

That’s my story.

-Dr. David Allen Brown

 

Insurance Innovation is NOT an oxymoron

As #InsuranceCareersMonth gets rolling, it is important to recognize that the risk management and insurance (RMI) industry is very active in developing innovations that keep people and property safer and improve the customer experience.  In spite of the stereotypical perception that insurance is reluctant to change and “clings to its paper,” there are some amazing things happening in the industry.  Although the industry continues to require new talent for claims, underwriting, and sales/marketing, some of the hottest RMI career opportunities exist among the science/technology/engineering/math (STEM) disciplines.

Quick example:  Innovation is alive and well at Lansing-based AF Group. (http://www.afgroup.com/news/af-group-investing-in-innovation-with-focus-on-customer-experience/)

Insurance Careers Month

Today marks the beginning of the 4th annual Insurance Careers Month, and it’s going to be an eventful month.  Next week I will be attending two separate events in Lansing, Michigan that are designed to highlight the many career opportunities in the risk management and insurance industry.  Later this month, I’m taking some of my students to the annual MAIA convention in Grand Rapids.  This is going to be fun.  Stay tuned.  #InsuranceCareersMonth

Sour Lemonade

lemonade

We’ve endured an unseasonably hot Memorial Day weekend here in Michigan.  A nice, refreshing drink of lemonade would seem to be ideal for the early arrival of July-like heat.  Right on cue, my personal email inbox included a message from insurtech firm Lemonade this morning, announcing that their refreshing brand of homeowners and renters insurance is now available in Michigan!  Woohoo!

Being a naturally curious insurance geek, I took the bait and began navigating Lemonade’s “easy” process for obtaining a quote.  Indeed, it is easy.  A few clicks and without many mental cycles consumed on my part and I soon had my monthly premium quote.  Then again, loading a gun is easy.  In the case of a Lemonade insurance quote and a loaded gun, the real danger lies in what you do next.  The untrained and uninformed can do great unintentional damage to themselves and others.

Now hold on… Yes, I realize that no one is going to die from obtaining or acting on a Lemonade insurance quote.  The comparison to a loaded gun is purely metaphorical for the financial harm that can result from making naive insurance purchase decisions.  I am admittedly painting an extreme analogy here.  I also should point out that I am no insurtech neophyte.  My resume is replete with RMI technology consulting experience – so I am by no means anti-technology or anti-innovation, especially when it comes to the insurance industry.

So how did my Lemonade quote experience go?  As I said earlier, it was easy.  In fact, it was fun.  The results, on the other hand, were underwhelming and alarming.  After watching the Lemonade engine at work (it took only a few seconds to “crunch the numbers” as it checked various “municipal databases”), I noticed that it rated my property pretty low for fire protection.  And yet, I am only 2.5 miles from the fire station and have a fire hydrant literally in my front yard.  Lemonade also suggested an insurance limit to “reconstruct my home” that I know to be woefully inadequate.  It also suggested a liability limit of only $100,000.  Far less than I currently carry, and truthfully far less than any middle class homeowner should have in this litigious era.  All of this for a premium 75% higher than I currently pay for my much broader homeowners insurance policy with a well known A++ rated insurance carrier.

Yes, I can manually adjust Lemonade’s offered limits upwards, but the cost goes up accordingly.  How many unwitting Lemonade buyers would do that?  Most of the insurance consumers attracted to Lemonade’s simplicity and slickness are likely to accept the suggested limits, implicitly trusting Lemonade’s obviously flawed artificial intelligence to have their best interests at heart.  After all, Lemonade (unlike those greedy legacy carriers) is the insurance carrier with a heart and a social mission, right?  And how do I go about adding my trust as a named insured since the home is actually owned in the name of my trust?  It also looks like I can add my scheduled property (e.g., jewelry, electronics, collections), but it is clearly a more convoluted process.  Over the years, I have invested time in conversations with my insurance agent, asking questions and discussing coverage options in order to assemble insurance protections that fit my unique risk profile.  I have purchased coverages that others have not, and removed coverages that I did not need.  What the general public (and hype-laden insurtech startups) often misunderstand is that insurance is not a commodity and individual risk profiles are not cookie cutter.  You simply cannot automate the nuances away with artificial intelligence – at least not yet.  And Lemonade, for all its slickness, still has a long way to go.

In the meantime, Lemonade’s marketing hype preys on the blissfully ignorant  insurance-buying public (and smartphone-dependent Millennials in particular) who are lapping up (no pun intended) the Lemonade platitudes.   How many others “take the bait” and without having an insurance background as I do, they bought the Lemonade policy and left themselves insufficiently protected with inadequate limits and perhaps inadequate (or unnecessary) coverage?  If my experience is typical for Michigan, then perhaps the overpriced, inferior coverage result will prevent many from buying the Lemonade insurance product.  But perhaps my quote was an anomaly and other Michiganders are out there today, receiving attractive prices from Lemonade and switching their insurance protection without the benefit of any professional insurance knowledge or assistance – except for “Maya” the friendly and spunky automated “agent” in the Lemonade emails and website.  Sorry, Maya – your Lemonade is way too sour for me.

 

Michigan Auto Insurance Reform (maybe)

The Michigan legislature is making another run at reforming the state’s beleaguered no-fault auto insurance law.  Despite the major selling point of no-fault (i.e., lower costs by eliminating most litigation that may arise from auto accidents), Michigan drivers pay the highest auto insurance premiums in the nation.  Why?  Two reasons…

Michigan is the only state in the country that mandates unlimited lifetime personal injury protection (PIP) benefits on every auto insurance policy.  Sounds great, until the bill comes due.  Speaking of those unlimited lifetime medical benefits, if you’ve ever visited a Michigan hospital emergency room with an injury you have likely been asked by the staff checking you in: “Are your injuries the result of an auto accident?”  Why does that matter? Because an affirmative answer means you/your auto insurer will be charged higher prices for the tests and treatment you receive.  The x-rays, MRIs, and whatever other services you receive will be billed at rates that may be 2-3 times more than they would be otherwise.  There are no fee schedule restrictions on what providers can charge auto accident victims.  Sweet deal for Michigan Hospital Association members – not so much for all of us who pay the premiums to cover these inflated charges.

The latest auto insurance reform proposal attempts to reduce the cost of Michigan auto insurance by giving drivers the option to choose a limit on their PIP benefits ($250,000 or $500,000 at last check) or keep the current unlimited benefit.  Naturally, the premium paid will reflect the choice made by each auto insurance consumer.  The reform proposal also places a limit on what providers may charge by capping the fees based on Medicare fee schedules.

Naturally, the hospitals and medical providers are apoplectic about reform that endangers their auto accident gravy train.   There are indignant howls that the reform will leave people with serious brain injuries out in the cold… how cruel, how heartless.  Enough.  Let’s be genuine about this… there will be resources for those seriously injured in auto accidents to receive the care that they require.  Health insurance benefits may kick in after the auto insurance PIP benefits are exhausted.  Medicare or Medicaid will apply in some cases.  Some argue that all this reform accomplishes is cost shifting.  Well, yes.  The cost of caring for seriously injured auto accident victims is going to be paid somewhere by someone.  As a society, Michigan must decide if it wants to continue the current system where the entire cost is borne by drivers and the cost is inflated by the inequitable fee structure of the medical community that is taking advantage of the current system, or have some of the cost be spread among the broader health insurance and social insurance system with some equity imposed upon the fee structure.

This is a political question which is why the lobbyists are out in full force.  That is also why previous reform attempts have died.  Will this one succeed or will Michigan drivers continue paying the highest premiums in the country to subsidize the medical providers with inflated fees? Your guess is as good as mine.

Here We Go Again

Well it was a nice lull while it lasted.  For better than ten years following the chaos caused by Katrina and other mid-2000s hurricanes, North America has enjoyed pretty tame hurricane seasons, with the notable exception of Superstorm Sandy in 2012.  Then along came Harvey last month.  Now we’re staring down mega-hurricane Irma about to descend on Florida.  As if two major hurricanes in only two weeks isn’t bad enough, Jose lurks out there in the Atlantic though it looks like we may dodge that bullet.  All of this and we’ve still got more than a month left in the hurricane season.

Cue the media hysteria.  I realize that we live in the era of the 24-hour news cycle, and Jim Cantore would be an utterly lost soul if he weren’t firmly ensconced at ground zero of every major storm.  We’ve had never-ending 24-hour coverage of Harvey’s development, Harvey’s landfall, Harvey’s aftermath, Irma’s development, preparations for Irma, and we’ll be hearing about Harvey and Irma for the next several weeks.  I do not intend to minimize the human tragedy of these storms, but I am wary of the indictments that will inevitably flow from all this media hype.  We’re already seeing it…

Predictably, climate change is already being linked with the current roster of storms, such as in this doozy of an article from Newsweek.  The article relies on alleged climate data manipulator Michael Mann.  I hope all of you Florida evacuees heading north on I-75 realize that you’re setting the stage for the next Irma as your internal combustion engine idles in the traffic jam.  Talk about a Catch-22.

The Wall Street Journal recently highlighted hurricane deductibles as the reason that many hurricane victims will find themselves shouldering 1-2% of their hurricane loss.  The slant of the article (and others like it) portrays insurers as greedy companies looking to stick it to their policyholders at every turn.  Let me see if I have this straight.  My beautiful Florida home suffers a $500,000 hurricane loss, and I’m distraught that I have to cover $10,000 of that loss out of my own pocket before my insurer covers the remaining $490,000?  Sure, $10,000 is a chunk of change, but would I have really wanted to pay the actuarially-mandated premium to have hurricane insurance with first dollar coverage (assuming I could even find such coverage)?  Nope.  Even a $10,000 hurricane deductible is a fair price to pay for living in a beautiful coastal home in paradise.  Or at least it should be.  The hurricane deductibles were a necessary component to keep the private hurricane insurance market from evaporating after Katrina thus giving us yet another incarnation of the notoriously underwater (pun intended) National Flood Insurance Program.  NHIP anyone?

Speaking of flood insurance.  There are also hundreds of articles and reports on the uninsured and underinsured flood losses from Harvey, and more will follow from Irma.  Yes, the NFIP is woefully outdated and in debt.  Even for the minority of homeowners and businesses who purchase flood insurance, the program limits (e.g., $250,000 on a home’s structure, no business interruption coverage at all for businesses) leave many underinsured.

Although a certain amount of media attention is helpful in calling attention to problems that need solving, I fear that what we have in most of today’s media hype is politically motivated hyperbole that exploits the actual victims of these natural disasters in order to advance an agenda (e.g., climate change, anti-capitalist, etc.) It would be nice if we could just tone it down a bit and focus on genuine problem-solving instead of slanted accusation.

In the spirit of genuine problem-solving, insurance guru Bill Wilson recently blogged about the concept of mandatory flood insurance coupled with strict loss control.  Is that an idea whose time has finally come (or perhaps is long overdue)?  The logic is compelling, but then we’d better be prepared for another batch of media reports on how outrageously expensive mandatory flood insurance has become, how unfair the tax penalties are for those who can’t/won’t buy mandatory flood insurance, how onerous are the loss control requirements, and how the flood insurance exchanges are suffering from unexpected losses and need to be taxpayer-subsidized, and the whole flood insurance system is in a death spiral.  Sound familiar?

My sincere thoughts and prayers are with you Florida, and Texas.