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2018 Power Broker

Health Care

Bankable

Giselle Lugones, CPCU, AAI
Executive Vice President
Aon, Miami

A South Florida nonprofit had been with the same broker and an insurance pool for decades when Giselle Lugones suggested it would benefit from a stand-alone insurance arrangement.

With 20 health care facilities — including long-term housing for the elderly, hospices, acute rehab — each with different risks, “we had lots of insurance issues,” said its CFO.

Lugones found a purchasing coalition that saved $1.5 to $2 million “on the low end.” She streamlined policies, which had been “all over the place.” She tied each facility’s policies into the primary policy and facilitated renewals, filing claims and reimbursements.

“You hire a consultant to bring you ideas and thoughts,” the CFO said, “not just sell insurance. Whatever she tells you, you can take it to the bank.”

Another client, Baptist Health System, wanted “the best of the best” health care, handled ethically, said Julia Hyett, director of risk management and insurance, BHS.

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Lugones performed a thorough audit, isolating the very different risks for its physicians and hospital programs. She marketed the physicians’ programs and obtained a new partner, saving six figures. She diversified the program with global reinsurers.

And she identified holes in the program specific to regulatory and cyber coverage. Her foresight and strategic thinking informed the process, Hyett said. “She made a proactive assessment, and she put the right tools and resources in place in case we ever do have a bad situation.”

Knows His Stuff

Alex Michon, ARM
Executive Vice President
Lockton, Sacramento, Calif.

A publicly traded pharma company had an “interesting” technology it wanted to spin into a separate company. If a spinout is friendly, it’s easy to insure, said its CEO, but if not, disputes over risk and intellectual property issues can erupt in lawsuits between stakeholders.

The CEO’s first call was to Alex Michon. The spinout got hostile and Michon, mining his deep knowledge of health care and pharmaceuticals, “navigated the treacherous waters” of potential lawsuits, the CEO said.

The spinout succeeded without lawsuits, went public and sold itself, and the company got its technology back. “We came out looking like a bright, shiny penny,” said the CEO.

The California Medical Association, a physicians’ advocacy non-profit, recently undertook a new business venture to help small group and solo practitioners remain independent while transitioning to value-based care.

CFO Lance Lewis knew the organization would have a new set of risk exposures and insurance needs. Michon gave Lewis confidence: “He asked the right questions and put together the right coverage forms,” he said. “Alex didn’t miss a beat.”

Change.org recently went through changes including a brand-new board of directors whose members were concerned about the tail on their D&O policy, said Alexis Stowers, corporate paralegal, Change.org.

Michon, Stowers said, had the tenacity and patience to explain the coverage repeatedly, because the board was unable to meet at the same time.

“They wanted to hear directly from the broker that they were covered even after their terms ended,” she said. “He spent the extra time to put them at ease.”

Packaging Innovation

Lee Newmark
Area Senior Vice President
Gallagher, Rolling Meadows, Ill.

In addition to consolidating its physicians’ groups, streamlining processes, obtaining good discounts and convincing carriers to bring additional physicians groups under its policy, Lee Newmark also averted a significant lawsuit against Radiology Subspecialists of Northern Illinois, said Dr. Joseph Persak, the organization’s co-president.

The prospective plaintiff wanted compensation, not a lawsuit, Persak said, and his organization wanted urgently to avoid a lawsuit.

Lee’s unexpected solution: Approach the carrier to settle out of court before the lawsuit was filed. This move “made everybody happy,” Persak said. “It was super out-of-the-box thinking.”

Facing renewals for its medical malpractice insurance, Ramapo Radiology, a radiology practice collective, had a question: If carriers viewed members as a single entity rather than individual practices, would that reduce premiums, saving money and fueling growth?

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“We thought it was a good idea, but we didn’t know if carriers would agree,” said Lee Turner, chief operating officer, Ramapo Radiology. It was a heavy lift, but because of the way Newmark sold it, several carriers bid on the collaborative group.

Next on Newmark’s agenda for Ramapo, pitching “a risk retention situation with different forms of insurance,” Turner said. “We’ll all have skin in the game.” With risk spread, premiums will fall.

The idea originated with the collective, but “Lee made it his own and sold it to carriers. He knows how to package innovation to his industry.”

Working It Out

Randall Nukk
Area President
Gallagher, Rolling Meadows, Ill.

Where most people ask “why do something,” Randall Nukk asks “why not?” said W. Stephen Minore, MD, president/CEO of an Illinois anesthesiologist group, paraphrasing Einstein.

A fierce advocate for his clients and prone to challenging the status quo, Nukk arranged the abandonment of the waiting period before new practitioners are covered. Now they’re insured the moment their contract is signed — which is an important recruiting tool, since Illinois is the “risk capital of the world for malpractice.”

“Whenever he’s presented with a hard stop, he figures out a workaround,” Minore said.

Kenneth Tuman, MD, president and chairman, University Anesthesiologists, got a taste of the Nukk problem-solving chops when he asked what the group could do for its 43 physicians and three certified registered nurse anesthetists.

Taking advantage of the group’s “great track record” and low loss ratios, Nukk proposed a profit-sharing plan to carriers in which they returned a percentage of premiums paid if claims fell below a specified threshold.

That worked well, and at renewal, Tuman asked the same question again: What more can we do for the group? Nukk negotiated — and got — a tiered system where the group got back a larger percentage of premiums when claims were lower. He negotiated a higher profit sharing rate at the same time.

“He innovated a great program, then tweaked it to make it even better,” Tuman said. “This is original.”

The Spark

Jodi Rittman
Vice President
Marsh, Southfield, Mich.

The Cleveland Clinic is a large health care system in hurricane-prone South Florida. Because of its deductible structure, it held a $19 million windstorm exposure in one hospital.

It was adding buildings, and the carrier tried to combine the sites into one location, further increasing the deductible, said Aaron Bunner, the system’s assistant director of enterprise risk and insurance.

Marsh’s Jodi Rittman organized a site visit with the carrier so that the underwiting team could see the site’s layout and distance from the coast with their own eyes.

It was a “fantastic outcome,” Bunner said. The underwriter agreed to reduce the $19 million deductible exposure to a $7 million cap at no extra charge.

For another large health care system with wind exposures, Rittman suggested a deductible buy-down placement, which would  require certain changes to physical structures.

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The system’s director of risk finance said Rittman lit the fire under the project, establishing a work plan and timelines. “She knew what to do based on her insurance knowledge and experience with other placements in this part of the country.”

The same organization recently suffered a malware attack affecting a significant portion of its systems and networks, which, ironically, was covered under its property rather than its cyber policy.

Rittman “ripped apart” the property policy, which had just renewed, to help the organization understand which coverage was available and how it would respond to the loss. “It was extremely helpful,” the director said.

Takes It Personally

Gerald “Yank” Stoll
Vice President – Healthcare Division
HUB International, New York

Priority Healthcare Group specializes in taking over distressed nursing homes, whose history of mismanagement and losses can rattle carriers into sky-high premiums and even loss of coverage.

In one acquisition, the prior owner failed to hand over the policies, forcing the company to struggle through a manual reboot.

In a lemons-to-lemonade move, HUB International’s Gerald Stoll presented the new, responsible owners at renewal as an opportunity rather than a liability.

He compiled financial data such as pro formas and located financials for prior ownership, payroll and historical data, then guided owner and managing partner Akiva Glatzer through implantation of an aggressive risk management program that emphasized training, education, compliance and sharing best practices.

At last analysis, losses were down 80 percent over the prior year. “He’s not just about selling policies,” Glatzer said. “He’s a full business partner. He takes our success personally.”

Steven Friedman, chief administrative officer, Caring Health Systems, considers himself a realist. He feared a major claim against his company fell outside coverage parameters, and he expected a significant increase in renewals or even reluctance on carriers’ part to offer insurance.

But Stoll found policy language that led a carrier to honor the claim, and then the renewal came in with an aggressive quote despite the claims history.

The same diligence pertained when a facility failed to send a claim to a carrier. “Gerald found language that included coverage for the claim anyway. He always comes through.”

Finalists: 

Leanne Gallagher
Senior Vice President
Marsh, Philadelphia

James O’Dell
Executive Vice President
Willis Towers Watson, Nashville, Tenn.

Mary Pulley
Managing Director
Aon, Indianapolis, Ind.

Ryan Roberts
Principal, Vice President
Parker, Smith & Feek
Bellevue, Wash.

Cameron Spearman
Client Executive/Risk Management Consultant
NFP Property & Casualty Services, Santa Ana, Calif.

 

 

 

 

 

 

 

 

 

More from Risk & Insurance

More from Risk & Insurance

Insurtech

Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”

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“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.

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“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?

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“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.