Column: Roger's Soapbox

Dreams of Solvency

By: | February 22, 2016 • 2 min read
Roger Crombie is a United Kingdom-based columnist for Risk & Insurance®. He can be reached at [email protected]

Knock me down with a feather. Solvency II, as widely discussed and rarely seen as Bigfoot, finally became law on Jan.1.


Solvency II, nicknamed S2, is the nom de guerre of European Union Directive 2009/138/EC, a set of pan-European insurance solvency and governance regulations. The directive is the work of the European Insurance and Occupational Pensions Authority (EIOPA), which would be the worst name for a blues band ever.

S2 has more of a ring. It’s one of those European laws where each country enforces its own citizens’ behavior until something goes wrong. Then everyone shrugs their shoulders and walks away with their heads held high and occupational pensions intact.

That’s how it seems to work with most big European laws, such as state solvency, immigration, borders: sweet dreams and flying machines, in pieces on the ground.

The history of S2 is one of false starts, unworkable ideas and opt-outs that may already, via the inexorable passage of time, have produced an increase in the solvency standards of the major insurance and reinsurance companies operating in the European theatre.

The directive is the work of the European Insurance and Occupational Pensions Authority (EIOPA), which would be the worst name for a blues band ever.

The key to S2’s history is in the directive’s number: 2009. It was then that European regulators first presented the idea of uniform insurance regulation across Europe, despite the fact that uniform anything in Europe has proved elusive. (Like many, I am perforce a European, but would rather not be.)

S2 was a consequence of the Great Recession of 2007-08. In short, having decided not to punish the bankers or almost any of the others who caused the whole mess, Europe vowed to make those who sell insurance within its borders uphold a new series of solvency, risk management and accounting standards.

The insurers hadn’t done anything wrong. They’re built to last.

Quite a few of them are not too big to fail, but too well-managed to fail.

S2 was set to be introduced, I forget exactly when, so let’s be charitable and say 2012, then 2013, then 2014, and now it’s finally happened.

S2 is one of those processes which doesn’t put an end to anything, or even really a start. Insurance companies already knew they needed serious capital reserves and robust administrative systems. That knowledge is something you pick up after a few years on the job.


Looking ahead, two main questions arise.

First, what terrible omission will bring the whole thing into disrepute? It might be in the captive world, which was carved out of S2 as if it wasn’t really insurance at all, which won’t be an easy argument to make to the IRS.

Second, will it work? Will the complex solvency ratios and operational rules and regulations actually stand the industry up when the next Great Recession blows into town?

Or will S2 prove inadequate to the task? We can only wait and see.

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.


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.


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]