Construction is inherently risky. Large projects, lots of stakeholders, expensive heavy equipment, and dangerous work characterize the industry. More recent trends — like the ongoing labor shortage and the introduction of new technologies amid increased demand in a booming economy — means managing a project’s risks is more complicated than ever.
Total spending in engineering and construction in the U.S. will be up 6 percent by the end of 2018 over 2017, according to construction management consulting firm FMI. The industry as a whole hit 5 percent growth this year. At the same time, though, rising costs of materials drive up the value of property claims, and relentlessly increasing healthcare costs make workers’ compensation coverage more expensive. Managing increased demand amid tightening cost constraints creates opportunities for error.
Several carriers over the past few months have exited construction rather than deal with the complexities. AIG has exited the NY construction market as have a few other domestic carriers. Many are now evaluating their commitment to the construction market.
“The construction industry is moving fast, and the demands on our customers are significant,” said Andrew Robinson, Senior Vice President, Primary and Excess Construction, Starr Insurance Companies. “To serve this sector, you need the technical knowledge to speak with clients on their level, you need to be swift and responsive, but most importantly, you need to listen.”
An emphasis on relationships — in combination with in-house Loss Control and Account Management staff and a suite of both primary and excess products — helps the underwriters at Starr stand out from their competitors. The insurer’s flat management structure and status as a privately-owned company also position it to respond more efficiently to the construction industry’s rapidly changing exposures.
The following three case studies demonstrate how Starr’s collaborative approach helps clients overcome critical challenges at a time when many underwriters are having difficulty managing the complex long-tail exposures inherent to construction risks:
Transparent communication from the beginning sets the stage for an open and trusting relationship. Large carriers tend to have a predefined, institutional approach to insuring a new project that emphasizes the insurer’s expertise and resources over the project owner’s.
“That works for some folks, but it doesn’t work for a lot of our clients,” Robinson said. “So we integrate the insured’s preferences, processes and culture into our solution.”
Many insurance companies may make similar claims, but Starr’s flat structure enables its Construction underwriters to sidestep much of the bureaucracy that stymies legacy institutions and work with clients more nimbly. Robinson described how the company’s approach of listening first won over a recent new client.
“A prospect came to us who was unhappy with their carrier’s claims practices. So we mustered all of our service folks and had a three-city, eight-person conference call — the client, the broker, and our team,” Robinson said. “As you can imagine, everyone on a call like that is there for a reason and has their own vested interest in the outcome. You would expect everyone to want to get their two cents in. But that’s not what happened.”
Robinson knows that in the end, his business is about how the claim is managed. So he made sure that Starr’s head of claims engaged the prospective new client’s risk manager directly. They ended up talking for 45 minutes (while everyone else kept quiet) discussing the client’s claims challenges and what they expected of a carrier, exchanging claims-handling philosophies, establishing mutual expectations around what Starr and the policyholder could deliver, and where third-party services might be needed.
“There was a shared sense of ‘we’re in this together,’” Robinson said. “Ten minutes after the call, the risk manager told us he was all in with us. It was the first time he felt that his insurer was his partner and actually cared about what he had to say.”
Commitment to lasting partnerships also requires an appreciation of the performance of a company’s risk management program over the long term. When a six-year client of Starr’s came in for their renewal meeting just one month after a severe claim involving a fatality, the company’s CEO expected the worst.
“The CEO came to the table looking ashen and said he could barely sleep because he was convinced we were going to ‘jack up’ his premium. Soon after we walked in, he asked ‘What are you going to do to us?’” Robinson said. “We told him, ‘Yours was a well-run, well-managed company before the claim and that hasn’t changed. We’ve had a good relationship over the past six years. Why would one claim change our approach?’ Sometimes, things happen. But one incident shouldn’t completely shake the foundation of that relationship.”
The conversation pivoted away from the claim and focused instead on what projects the company had in the works for the upcoming year.
“Our relationships mean a lot to us,” Robinson said. “We can’t be reactionary, because we know our clients have a lot of other options out there. There’s a reason they stick with us year over year and that’s why our client retention rate is 90 percent.”
The advantages of the Starr platform are best demonstrated when it comes to solving particularly tough market challenges.
In construction, project owners increasingly opt not to package every policy together, but nonetheless want to ensure that their coverages are unified and gap-free. While some carriers offer a GL-only primary product customized for single projects, none could offer companion excess coverage that seamlessly aligned with the primary program.
“We listened to what our brokers and clients were asking for, which was essentially combined primary and excess coverages that they could obtain from a single carrier. A one-stop shop solution,” Robinson said.
Building a new primary product that would click with existing excess coverage was no easy feat. Underwriters and claims professionals had to come together to shape coverage that would fulfill client demands without jeopardizing Starr’s bottom line. But despite differing perspectives, the team got it done.
“We knew we had to get this done for our clients, so we put our heads down and went to work. Because of our leadership position in the excess construction market, and because we have the technical underwriting expertise, we can now offer up to $12 million in concurrent, customized coverage,” Robinson said.
The new controlled insurance program — aptly named Starr CIP Enterprise — is offered exclusively through a distribution channel of 40 wholesalers. Since its launch earlier this year, it has received immediate and immense favorable reviews. Starr, within three months of launching the product, had 120 submissions and had bound four primary and excess deals totaling $4 million.
“We were able to assemble this coverage and bring it to market within a few months in part because of our flatter corporate structure. Larger institutions typically find it harder to push new products through on tight timeframes because there are simply more people and processes involved,” Robinson said.
All of these characteristics — communication, trust and responsiveness — are products not just of scale and technical expertise, but of Starr’s culture of collaboration.
“Everyone here is willing to roll up their sleeves and work together to get a job done. We’re all governed by the mission of providing what’s best for our clients,” Robinson said. “There’s that sense that, when you pick up the phone and ask for help, the person on the other end will drop what they’re doing and contribute to the process.”
That culture has contributed to Starr’s low turnover rate. The construction division staff hasn’t changed much for the last 10 years. That translates into a consistent customer service experience for clients.
“If you’re a client of ours, you’re talking to the same person any time you have a question,” Robinson said. “In the dangerous world of construction, you want stability, continuity and consistency from the people who are supporting you and your projects.”
To learn more, visit http://www.starrcompanies.com/insurance/constructionoverview.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Starr Companies. The editorial staff of Risk & Insurance had no role in its preparation.
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. &