2016 Risk All Star: Carlos Dezayas

Freeing Cargo From Captivity

Kraft and Heinz announced their merger in the spring of 2015, around the time of Heinz’s May 1st renewal. The impending marriage spurred Senior Manager of Corporate Risk Management Carlos Dezayas to rejigger his insurance portfolio ahead of the acquisition’s finalization.

“We were looking for the most efficient structure for the combined program so that everything would be in place on day one of the merger,” Dezayas said.

Carlos Dezayas Senior Manager, Corporate Risk Management, The Kraft Heinz Company

He found that the Kraft Heinz cargo program was sorely in need of an overhaul.

“The cargo program was run through our captive, with a $25,000 retention held at the business unit level and a $225,000 retention at the captive. The problem was that we only had captive licenses in the EU, U.S., Canada, Australia and New Zealand,” he said.

This meant that import/export operations from countries such as China, Japan, Korea, Costa Rica and Brazil were vulnerable. Whenever a claim breached the local deductible but not the captive deductible, it was difficult to get cash into those countries to make claim payments; large cash infusions were subject to a variety of local taxes.

Heinz also could not collect premium from the unlicensed countries.

“Essentially we were overcharging the business units in the licensed countries to make up for the fact that we could not charge any premium from the unlicensed countries,” Dezayas said.

Advertisement




Working with Marsh broker Herman Brito, Dezayas removed the cargo program from the captive structure, retained the local business unit deductibles and established locally admitted policies written by AIG.

The move was atypical — most companies don’t move from a captive to a fully insured plan — but it paid off.

“A year and a half down the road, this seems to be a more stable structure for us,” he said.

“It has allowed the business units to be comfortable knowing we have the coverage in place and that their claims will be paid. It also creates more visibility and transparency across the entire program, which is what senior management expects from their insurance portfolio.”

“[The new program structure] has allowed the business units to be comfortable knowing we have the coverage in place and that their claims will be paid.” — Carlos Dezayas, senior manager, corporate risk management, The Kraft Heinz Co.

In addition to increasing efficiency, the new non-captive structure also means Kraft Heinz can collect premium from every business unit while shifting administrative and claims management expenses away from the captive.

Brito, assistant vice president at Marsh, and a 2016 Power Broker® winner, praised Dezayas for his willingness to tackle a project outside of his area of expertise.

“Carlos came from a strong insurance background, but not particularly in marine. When we were undergoing our renewal strategy, he quickly familiarized himself with marine terminology and set out to learn the latest and greatest in the marine world — not an easy task,” Brito said.

“He took the time to walk through the policy language with me and ask the right questions. He was willing to put his trust in Marsh when we discussed changing the captive structure for cargo and was always extremely responsive.” &

_____________________________________________

AllStars2016v1oRisk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, perseverance and passion.

See the complete list of 2016 Risk All Stars.

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

Advertisement




But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

Advertisement




Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

____________________

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

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]