My career became my hobby at a (relatively) young age.
I found my way into insurance as a licensed salesperson for Northwestern Mutual when I was a junior at Penn State University. Like most people, I did not begin my career with an objective of finding a pathway into the industry. In retrospect, though, I am very happy that I found my way into insurance. I feel like I am in good company.
Over the years, I have wondered what steps our industry could take to draw more talent into its ranks. In 2016, a group of industry participants started an awareness campaign about insurance industry careers. February is now #insurancecareersmonth.
There are a few reasons I love the insurance industry.
- Broadly, the industry itself is quite varied and large; I think it is very interesting to think about the ecosystem of insurers, distribution strategies, market segments, and suppliers in the context of a) how important insurance coverages are to a well functioning business, household, and society, and b) how fast the world is changing as a result of emerging technologies and coincident ability to create advantage from big data (brief blogpost here).
- Narrowly, there is opportunity to get very focused and competent in niche areas of the business; Recently, for example, I have been investing a lot of time in the component of employee benefits programs dealing with pharmaceuticals (brief blogpost here).
- Finally, I really like some of the ideas shared by Scott Galloway on strategic decision-making for careers. Among Galloway’s thoughts is the idea of seeking to be remarkable by “[developing] not just one area of expertise, but two skills that don’t always naturally go together.” There is great opportunity in the insurance industry to bring technical expertise and quantitative talent matched with interpersonal skills and network.
There are many paths to successful careers in the insurance industry: actuarial certification, sales, marketing, product management, and claims, to name a few. Here are some thoughts that overwhelm my thinking at times, not just during the time I am working, but also when I wake up, ride my Peloton, and walk the dog. This type of semi-obsessive thinking is what happens when your industry is also your hobby.
Cost variation in healthcare
The cost, access, and quality of health care are major issues in our society, driving budgets and strategy considerations for policymakers and commercial businesses. By some definitions, American healthcare may be the single largest marketplace that exists (from a global perspective). From a price discovery perspective, this market can be quite confusing and difficult to contextualize. Recently, I spent time just reviewing Medicare data on variation within States.
Take a look at the thread above and, if you are interested, consider going deeper with a look at Zack Cooper’s research. Questions arise, for me, about apparent implications to leaders at employers, hospitals, insurers, and regulators, especially if these data correspond to variation beyond Medicare. Which they do. For example…
Hospital transparency
The Trump Administration made an executive order in 2019 requiring improved disclosure by hospitals about costs arising from their services. CMS posted the following:
Make public their “standard charges” (defined as two types of charges: gross charges and payer-specific negotiated charges) for all items and services provided by the hospital. Make public standard charges on the Internet in a machine-readable file that includes additional information such as common billing or accounting codes used by the hospital (such as Healthcare Common Procedure Coding System (HCPCS) codes) and a description of the item or service. This provides a common framework for comparing standard charges from hospital to hospital. Make public payer-specific negotiated charges for common shoppable services in a manner that is consumer-friendly. From: https://www.cms.gov/newsroom/press-releases/cms-takes-bold-action-implement-key-elements-president-trumps-executive-order-empower-patients-price
Here is a Twitter thread I posted last month, as some of the data started posting to health systems’ websites:
I have looked at roughly a dozen hospital’s approach to implementing this rule. Some post, per PSU above, in a JSON file format; Others post Excel files to their sites. I have also seen files posted in TXT and XML formats.
Ultimately, as a benefits consultant, it is interesting to consider how we might evaluate variation of this data across providers (so patients can make choices about from whom to purchase services) as well as networks (so employers can make choices about with whom they would like to contract for reimbursement terms at said providers.)
By having the ability to extract, transform, and load this data, and then evaluate and visualize, an insurance professional can be positioned to deliver insight to clients (or internal stakeholders). This can be additionally challenging when, rather than simply “posting” data, a provider posts via third-party services. Here is an example of a snip of code that I wrote that, in context of other code, can systematically automate the clicking of boxes and submission of data to the website and grab the resultant tables with procedure detail, gross charge, and network allowed amount.
Here is an example of (anonymized) data from two hospitals for three procedures across three networks. I think the data is quite interesting; The allowed amounts are actually higher at the hospital with the lower gross charges!
When your career is also your hobby, tinkering with solutions to issues like this, including attempting to learn new skills to solve problems, is energizing… The insurance and health care spaces are interesting puzzles.
If you like data and technology…
Earlier in my career, part of our (/my) value prop included providing investment advisory and financial services to clients. One topic I wrote about last year was an effort I made to replicate a program to demonstrate “sequence of returns risk” in a manner that coincided with a software platform I had previously licensed (brief blogpost here).
Last week, I was thinking about these issues of cost variation and price transparency and how I might model financial impact of solutions. I wondered, as a thought experiment, whether I could create a program to generate random data based upon assumptions and constraints, and therefore grapple more directly with possible strategies with these fictional “groups”.
I spent time yesterday working on this and landed on a model that included assumptions including: membership (including number of contract holders, spouses, and dependents) and risk classification (including four risk categories, associated PMPM costs, and alternative probability density functions for random number generation). I am conflicted about the number of clusters I chose and am certain the pdf assumptions I made are not good. These will be adjusted!
Based upon this initial model, I can create simulations of renewals and “flex” underwriting assumptions and discretion. Here is an example of a preliminary output/format.
I imagine extending this model and creating functions that model “if-then” scenarios to support decision making around strategies to 1. incent patient behaviors based upon legitimate choice about providers for hospital services, 2. optimize employer choices across funding of premiums and choice of plan design given budget constraints and employee preferences, and 3. change financing, such as transition to self-funded models and risk management with stop-loss insurance.
Investment
As you learn about the insurance business, it seems to me that it translates well to informed investing disciplines; There is quite a bit of opportunity in the insurance industry from an investment perspective. I am interested in the financial and strategic aspects of our business both as a participant and investor. Here are a few firms I have looked at recently as possible investments.
I enjoy getting notes from people that read my blog posts. It is particularly rewarding to engage with fellow insurance professionals. Aside from enjoying the interesting strategic and business issues that arise in the insurance industry, and within my roles therein over the years, I have found a lot of personal satisfaction in the relationships I have been fortunate to build. As much as the business is centered on matters of risk, data, and finance, it is also very much a relationship business. I hope this month’s efforts by the folks leading the Insurance Careers Movement lead to people opting into our industry during 2021! Perhaps there will be blogposts, like this one, written by some of those folks in 2041…
Here are a few photos from the past twenty years that I really enjoy. The talent and quality of the folks included in these photos is really special. Included in these photos are many great professionals and friends, some of whom I still work with every day, and many whom I remain connected. (To those with whom I have lost touch, I hope we reconnect soon…)
There are many things I love about the insurance business; The best thing about the insurance business is the opportunity to build relationships with great people.
