Last month (June Issue) our image-smashing columnist explored how the flat world described in Tom Friedman's best seller, The World Is Flat, might affect the world of claims. One writer even suggests allowing “self-handling” of much of the claims process, at least the “linear” parts that technology can handle. That leaves the rest of us to do the thinking parts. Additionally, some technology allows machines to think for themselves. So, what do you think?

In the 21st century's flat world predicted by Tom Friedman, national borders will become less important, something this writer who is exploring the future believes. Friedman even cites one 19th century writer as predicting the type of international “all for one and one for all” society a flat world can create — no, not the Three Musketeers of Alexandre Dumas, but the Communist Manifesto of Marx and Engles. A workday will not be limited to only nine to five, but will function on the basis of an around-the-clock 24/7/365 cycle where what doesn't get finished by 5 p.m. in Peoria will be completed by 10 a.m. in Kuala Lumpur and be back on the desk by 8 a.m. in Peoria. The bulk of business will be intangible, existing in cyberspace where computers do all the grunt work. Corporations will be international, and everyone will reap the profits. Well, maybe. Maybe not….

In such a world, physical things will be built by robots, packaged on automatic assembly lines by machines, loaded into intermodal containers and hauled on an automated transit system to loading docks where more machines will mechanically transfer them to a computer-guided transoceanic cargo ship. It will self-navigate itself to some other continent using some new form of energy we don't currently know about. There the containers will be automatically unloaded onto railcars that will be hauled to regional distribution centers for delivery to local customers, whose bank account will be automatically debited for the costs. The role of the middleman will disappear in such a system. Well, there might be a token human aboard the ship or the railway train, but the rest will operate by computer and bar codes. Even humans will have bar codes, showing their identity, medical records, and maybe their last will and testament encoded on a computer chip and imbedded in their hind ends.

And what will the rest of us do? New guidance systems in automobiles are already predicted to make almost all accidents preventable. The computers, utilizing global positioning systems, will detect potential collisions and automatically apply brakes or make turns to avoid an impact. If one does occur, the vehicle's airbag system will automatically report the accident to the police and the insurance company. The car's computer will automatically detect what parts are damaged, so that the vehicle can be taken to the shop and the shop will have the parts ready for replacement. The driver will be back on the road in an hour.

Science fiction? Not really. Some appliances have already been programmed to notify the manufacturer if they develop a problem. Automobiles may soon do the same. It is already in the realm of possibility that our cars may soon be able to fib on us. That's what happened when the van carrying the Governor of New Jersey crashed, and the black box said that it was traveling at 91 mph at the time. Plus, the governor wasn't wearing his seat belt; hence, he paid a hefty fine for that failure.

Currently there are devices that allow those with electronic “keys” to pass through toll-road lanes that automatically identify the vehicle and charge the toll to the owner's credit card. Simply equip every vehicle with such an electronic identifier and put sensors above the freeway or at intersections, and the need for the traffic cop disappears. The sensor would automatically record who exceeded the speed limit or ran a red light, identify the owner and send a summons by mail. If the owner wants to challenge the charges, that could be arranged. Otherwise the system would automatically debit the owner's credit card account that would be required to be filed with the driver's license.

Automatic Risk Management

Science and technology, it is said, doubles what is known or is possible every five years. Soon that may be reduced to a shorter period of time. With science and technology we live in a much smaller and flattened world where commercial interests will trump personal interests. Medical science might be able to allow us to live several decades longer than is now possible, but population growth and the problem of retirement funding might make that an unwelcome advance.

America is already falling behind much of the world in education. Fewer of our best students are able to afford a university education, and public schools have been marginalized and rendered mediocre by governmental mistakes and mismanagement. The “no child left behind” idea of standardized tests has resulted in a nation of “no child left with an education.” This has resulted in a two-strata society: the elite, who can obtain and pay for the education necessary for survival in a 21st Century flat-world, and the vast masses of those who can't afford it and who are barely literate, with a dwindling number of folks in the middle. CNN's Lou Dobbs isn't the only one who thinks that the world has declared war on the middle class.

The 20th Century jobs of middle-class Americans, including many of those in the insurance claims industry, may soon disappear. Why send an appraiser to see the damage? Simply have the insured take a video of the damage and send it in, or do it automatically on his photo-phone. The computer will assess the monetary value and generate a financial transaction. In ten minutes the claim that used to take thirty days to resolve is settled–on a 24-hour basis. The computer can do it in India as well as in Topeka.

Science and technology can eliminate much of the loss. Like the accident-free car, our homes of the future will be computerized. The built-in detection systems will sense when it's cold enough to turn on the heat so the pipes won't freeze. The system will automatically detect when a tree has grown tall enough to become a wind or fire hazard to the structure. Built-in flame-suppression systems will emit halon or other fire extinguishing chemicals or shut down electrical systems so that fires do not occur. A burglar might encounter an automatic Mace dispenser. The technology to do these things is already available.

New Methods for New Hazards

While fire, flood, wind, and other calamities with which adjusters are familiar will undoubtedly continue in the flat-world of the future, constantly challenging science and technology to find new ways to prevent or reduce damage and down time, changes in world dynamics will bring new perils and hazards. What will be the results of global warming on the flat world?

Logically, even at present there should be no problem if there is a famine in Africa, an epidemic in Asia, or flooding in Europe, because aid can be sent immediately and people can transfer in a borderless flat world. But the world is not logical. All of that will not happen because of politics, because of religion, and because of “rights.” Property rights–corporate rights–will always trump human rights. They always have, from ancient times until the present. Altruism is not a national or international priority in our present world; economic greed, or just simple survival, is.

Competition for Food and Energy

While parts of the world that have accepted the flat-world concept of the 21st Century may be able to absorb small migrations and climate changes, vast parts of the world will not. America will have to compete for energy, and perhaps even for food, with the developing world. Science and technology can help–replacing our reliance on coal and oil with atomic energy, using desalination to irrigate the dry Midwest and West, piping flood waters to the deserts to replenish water supplies–but all that will require new ways of doing things.

Coal and oil can be doubly problematic. Both can “run out,” unreplenishable. Further, they are pollutants, adding to the global warming problem. Atomic energy is much cleaner, and to a certain degree, the necessary raw material is in good supply. But it also has a downside: disposal of the spent nuclear fuel, or its potential spillage on the way to storage. Wind and hydroelectricity are good energy sources, but neither is plentiful enough to be of permanent long-term value. We would have to dam every river in the nation to produce enough hydroelectricity to replace what our fossil-fuel plants will need to produce by 2020–and that same bottomland is needed for agriculture and development. We must therefore continue to worship that double godhead of science and technology to solve our problems.

An Atomic World at Last?

In Europe, France is already an atomic nation, with very little non-atomic energy being produced. That electricity source powers its 357 mph LTG railroad trains. It powers the factory where they build 550-passenger jet aircraft. It lights up the City of Light, and the French sell the excess energy to their neighbors. But then comes politics: we don't want just any old nation deciding on its own to become “nuclear.”

If America had 350 mph trains, would we give up our SUVs to ride them? If we use all our corn to produce ethanol so that cattle feedlots can't afford corn any more, will we be willing to give up our T-bone steaks, Big Macs, Whoppers and barbecue? America already imports a large percentage of our food. We're no longer the world's breadbasket. But as our flat world unravels, perhaps more middle-management-level people–even those in the insurance industry–will end up returning to the farms to work. Who knows!

A 21st Century Flat-World Claims Industry

One large independent claim adjusting and risk management services firm is international, with offices on every continent except Antarctica. International insurers and corporations have come to it for servicing claims on a worldwide basis. It has learned to adapt to the needs of its customers, wherever they may be, and whatever they may need.

For the multitude of insurance claim representatives, both adjusters and attorneys, “customer service needs” generally take second place to the necessity of keeping up with the work flow and handling each individual claim as quickly and as efficiently as possible. We can call it “customer service” if we want, but the reality is that a good number of the customers might well call it something else besides “service,” especially when they have to wade through the typical telephone menu and be connected to someone's “mail box” in order to leave a message.

Once upon a time (pre-1970s) adjusters had a secretary or “administrative assistant,” as they eventually were called, who, if the adjuster was busy on the phone or out of the office actually inspecting the claim and visiting with an insured or claimant, would not only take a detailed message, but would assist the customer with whatever the call was about, having access to the adjuster's file. As the secretary would probably have transcribed the adjuster's reports, she (and a few he's) would generally already know something about the claim and could often assist the customer without having to have the adjuster call the person back.

That happens occasionally–although perhaps rarely–in today's claim office environment, but it is not a secretary or assistant who performs the task, but a supervisor or unit manager who has online access to the file information that the adjuster has put into the system, not by dictation, but by typing in the stuff himself. So yes, there are still ways to actually speak with a human being about a claim without having to play “phone tag,” but it is a frustrating step for the customer to be able to do that.

Someone recently supplied over the Internet a set of numbers that could be “punched” when encountering a phone menu in order to reach a live human being. It used to be “0,” but that rarely works any more. Now there is a special secret code, like “007*1,” needed to get a human on the line. But even then it ends up being someone with an accent we can't understand, or who has no idea what we're talking about and who connects us with someone's “voice mailbox.” (Ahh, nuts! Let's just hire a lawyer to write them a letter! And next year we'll buy our insurance elsewhere.)

Long-time readers of this column know that your Iconoclast is a railroad buff. He writes about trains often, and has compared the railroad industry to the insurance industry. There are many parallels. One is that whether one is a shipper, relying on the railroad to get the cargo from point A to point B quickly, or an insured trying to get a vehicle fixed, or a claimant trying to get a medical bill paid, the common “F-word” is “faster.” Slow rail service almost sank the industry fifteen years ago. It learned a lesson of lost income, and changed. Slow and inefficient service will sink the insurance claims industry if it fails to meet the customer service needs as well. In Tom Friedman's flat world, what we fail to provide here in the United States, some twenty-something in a foreign land will take over and do for us, like answering the phone by a real human being. In last month's column we cited Brian S. Cohen's idea of the “self-handled” claim. That, in combination with the phone service that can be provided from elsewhere in the world, might well put American adjusters out of business. Pleasant thoughts for the summer!

Ken Brownlee, CPCU, is a former adjuster and risk manager, based in Atlanta, Ga. He now authors and edits claim-adjusting textbooks.

Special Reports /

The Flat World of Claims - Part Two

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