2017 Risk All Star: Courtney Claflin

Captives: Writ Larger

The University of California, a massive institution with 10 campuses and more than 375,000 students, owned a captive but it was just getting started with it. As many large organizations do, the educational system was self-insuring many of its risks. As such, it had yet to take advantage of some of the risk transfer and investment opportunities that mark a more mature approach to captive use.

Courtney Claflin: Executive Director, Captive Programs, University of California

Courtney Claflin, a Minnesota native with decades of experience in insurance, arrived at UC a few years ago and started to change all of that. Forty-five days into his tenure, he laid out a $1 billion plan to house much more of the UC system’s risks in captives.

The board of directors of Fiat Lux, the system’s existing captive, loved Claflin’s plan and greenlighted it. Now they are very happy they did.

Claflin built the captive from four lines of coverage to 25 lines of coverage and is in the process of launching a handful of additional captives.

Instead of paying retail rates for excess coverage above its self-insured retentions, UC can now buy reinsurance at a much lower rate for what is in effect its own robust insurance company.

“By aggregating everything, we’ve got a big surplus position sufficient to create new programs that will make us even more money without having to go back to the University for a capital call,” Claflin said.

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And unlike a bank account or a trust that is typically used as a set-aside for self-insured retentions, the university can now use support from one line within its captive to prop up another if needed.

“The whole idea is that you can put all of these lines of coverage in the captive and they can provide ballast to each other,” Claflin said.

Emboldened by his initial success, Claflin approached the university’s Chief Investment Officer and asked him if he could build an investment portfolio, that could be structured using insurance investment parameters. That effort has also paid off for California taxpayers.

“We’ve created probably $25 million in new money that never existed before,” Claflin said of UC’s insurance-related investment returns.

“By aggregating everything, we’ve got a big surplus position sufficient to create new programs that will make us even more money without having to go back to the University for a capital call.” — Courtney Claflin, Executive Director, Captive Programs, University of California

There’s more.  Governor Jerry Brown informed the state’s educational system executives that they should do more to create synergies and accompanying savings for the state’s taxpayers.

Toward that end, Claflin is working with his risk management colleagues in the California State University System to create a cell captive within one of the new University of California captives.

Initially, the cell captive that UC is offering Cal State will house Cal State’s workers’ compensation program, its biggest line.

But eventually the hope is that Cal State, just like its sister UC, will eventually add additional lines to that captive.

“Cal State’s cell will be a start in that direction to maybe more efficiently finance their own organizational risks too,” Claflin said. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, perseverance and passion.

See the complete list of 2017 Risk All Stars.

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]