2017 Power Broker

Nonprofit

Keeping Schools’ Missions at the Forefront

Brandon Cole, CPCU, CRM, CIC, ARM-P, RPLU, CISR, AINS
Area Vice President
Arthur J. Gallagher, Irvine, Calif.

School clients count on Brandon Cole to provide them the risk management education they need to perform their missions.

Oakland, Calif.-based Thrival World Academies, a new nonprofit, was designing a program to provide publicly subsidized education abroad to racially and socio-economically diverse students. “Since we were in our design phase, many aspects of our program shifted during this period, and Brandon supported us through all of these shifts,” said Executive Director Emma W. Hiza.

“He helped us to understand our insurance needs, to get quotes and ultimately bind all of the liability — domestic and foreign,” she said.  Cole also “has participated in meetings with the school district where we are working to help us discuss shared risk and negotiate with their insurance officials,” Hiza said.

“Without the insurance coverages that Brandon supported us in obtaining, we would not have been able to launch this fall.” she said. “His consistently quick response time has been critical to our success.”

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At the Brooklyn Prospect Charter School in Brooklyn, N.Y.,  Cole not only  provided guidance on travel insurance options when students studied abroad but also ensured that the institution managed the risk of taking students outside the country, said Hillary Prince, director of finance. “We’ve since had three international trips, and everyone came home safely, so that’s priceless,” she said.

Streamlining Coverage on a Budget

Jason Helfert
Vice President
The Horton Group, Orland Park, Ill.

Nonprofit organizations count on Jason Helfert for much more than placing insurance.

CSF Illinois, an agency that supports children and adults with disabilities, tapped Helfert for help completing a merger with another organization.

“As one would suspect, the merger process is complicated, especially in our industry,” said Chief Executive Officer Mary Pat Ambrosino. “We must deal with private business factors, state issues and family issues, sometimes concurrently. While our organization went through a complicated, lengthy process, Jason Helfert helped us navigate every insurance issue that needed to be addressed with ease.

“Knowing that our organization did not have to worry about a lapse in coverage put our minds at ease, smoothing the transition period,” Ambrosino said, “Further, our costs remained relatively the same, and Jason had no monetary incentive for consolidating two existing coverages into one.”

Another nonprofit faced climbing workers’ compensation claims and costs. Helfert aided the agency in establishing a board that meets regularly to review accidents and recommend changes in policies and procedures to prevent future accidents. The board consists of agency staff and experts from Horton and the agency’s insurer.

“In the last fiscal year, our costs were almost 20 percent lower than the previous year, when we did not have the review board,” an agency official said.

Finding an Insurance Structure That Works

Ken Porter, ARM
Principal
Porter & Curtis, Media, Pa.

Ken Porter’s church clients depend on his sophisticated approach to their insurance needs.

An independent consultant noted that a mutual client was not confident in the claims information a third-party administrator provided, largely because the client had a “less-than-centralized approach” in managing its various entities, including schools, churches and charities.

Porter worked with the client’s legal team to jettison the disjointed insurance arrangement and beef up its general insurance and misconduct insurance trust. “He arranged for excess insurance of varying amounts, depending on the exposures presented, and utilized an independent casualty actuary to set up appropriate funding for losses and expenses of the trust,” the consultant said.

“The trust structure should also help to keep the client’s other assets from being subject to attachment in the event of lawsuits. There should be savings in the future due to reinsurers potentially becoming involved because of the more formal trust structure.”

The client’s risk manager noted that the trust arrangement means the client no longer needs to purchase costly misconduct coverage and can direct the savings of several hundred thousand dollars to the trust. “We have been able to now conduct actuarial studies on the program as well as to have clearly defined financial accountings of each trust account” that is distinguishable from the general operations, the risk manager said.

Focusing on Cost Control

Bill Powell, ARM
Area Executive Vice President
Arthur J. Gallagher, Itasca, Ill.

Nonprofits count on Bill Powell to help rein in overhead costs.

A large social services agency with a stratospheric 140 percent workers’ compensation loss ratio faced skyrocketing insurance premiums. Powell took over the account and first ensured that the agency’s claims were reserved and handled properly. Then he initiated loss-projection studies and an experience modifier analysis.

Facing a nonrenewal from the incumbent carrier, Powell marketed the program to more than a dozen insurers, investigating first-dollar as well as self-insured options.

After the agency selected United Heartland as the insurer, Powell worked with the carrier to provide the agency enhanced loss control assistance. That included monthly safety meetings and disseminating regular safety and loss control flyers to employees. In 2016, when it faced budget problems because of its state’s own budget woes, the agency’s loss ratio plummeted to 25 percent, resulting in a 25 percent premium reduction.

“We were getting priced out of the traditional insurance market and were facing the possibility of being forced into a risk pool,” an agency official said. “Once we were able to partner with United Heartland, the impact to our risk management program and claims was almost immediate.”

Another client, a Midwestern university, realized a 2 percent reduction in overall premiums. That “was testament to Bill’s [marketing] strategy,” one school official said.

No Project Too Big or Deadline Too Tight

Chris Schwyter
Senior Vice President
Willis Towers Watson, Radnor, Pa.

Chris Schwyter handles issues large and small for clients.

As Villanova University began a $300 million expansion project, it faced risks related to its proximity to the community and a major roadway. Risk management also inherited professional liabilities for design architects and engineering work and other risks stipulated in the contract of the appointed general contractor. Plus, the local township also had collateral requirements for site improvements, said Director of Insurance and Risk Management Ashlie Docktor.

Schwyter’s team “secured protection for Villanova with project-specific coverage for professional liability and environmental liability,” Docktor said. He also assisted in negotiations with the contractor to set worksite safety protocols and transfer some risks back to the contractor or subcontractors. In addition, he placed site-improvement bonds to meet the township’s requirements, Docktor said.

“We increased our protection for the construction project for professional and environmental liabilities and saved considerable money in the switch from letter-of-credit collateral to the surety bond,” Docktor said, “More importantly, the solutions allowed Villanova to proceed on schedule without delay.”

Schwyter helped another university client update its enterprise risk management program by providing resources that helped risk management engage senior management, the client said.

Proactively Tackling Liability Risk

Derek Symer, CPCU
Principal
AHT Insurance, Leesburg, Va.

When a federal jury determined The Hotchkiss School in Connecticut must pay a $41.5 million damage award to a former student who contracted a debilitating tick-borne disease on a school trip to China,  the ruling caught the attention of The Alexandria Country Day School five states away in Alexandria, Va.

Alexandria’s business manager, Robert Powers, was concerned that the case might mean his private day school’s own liability coverage was insufficient. Powers immediately contacted his broker Derek Symer for a solution.

Symer negotiated a “sufficient coverage increase that did not substantially impact [the school’s] budget,” Powers said.  For the next fiscal year, Symer found “more robust coverage — at a cost reduction,” he said, providing much needed relief to a stressed budget.

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With all of their school clients, Symer and his team at AHT Insurance have made a priority of discussing duty of care — both in terms of buying insurance and running workshops on how to mitigate the risk.

Another client, the Maret School in Washington, D.C., wanted to help parents with student-busing assistance without shouldering additional liability.

“Derek’s guidance was quite helpful,” said Darwin Walker, Maret’s assistant head of finance and operations. “Derek’s solid advice enabled the parents and the school to find a workable solution” that relieved the parents of a huge logistical burden while avoiding additional school liability.

More from Risk & Insurance

More from Risk & Insurance

2017 RIMS

Resilience in Face of Cyber

New cyber model platforms will help insurers better manage aggregation risk within their books of business.
By: | April 26, 2017 • 3 min read

As insurers become increasingly concerned about the aggregation of cyber risk exposures in their portfolios, new tools are being developed to help them better assess and manage those exposures.

One of those tools, a comprehensive cyber risk modeling application for the insurance and reinsurance markets, was announced on April 24 by AIR Worldwide.

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Last year at RIMS, AIR announced the release of the industry’s first open source deterministic cyber risk scenario, subsequently releasing a series of scenarios throughout the year, and offering the service to insurers on a consulting basis.

Its latest release, ARC– Analytics of Risk from Cyber — continues that work by offering the modeling platform for license to insurance clients for internal use rather than on a consulting basis. ARC is separate from AIR’s Touchstone platform, allowing for more flexibility in the rapidly changing cyber environment.

ARC allows insurers to get a better picture of their exposures across an entire book of business, with the help of a comprehensive industry exposure database that combines data from multiple public and commercial sources.

Scott Stransky, assistant vice president and principal scientist, AIR Worldwide

The recent attacks on Dyn and Amazon Web Services (AWS) provide perfect examples of how the ARC platform can be used to enhance the industry’s resilience, said Scott Stransky, assistant vice president and principal scientist for AIR Worldwide.

Stransky noted that insurers don’t necessarily have visibility into which of their insureds use Dyn, Amazon Web Services, Rackspace, or other common internet services providers.

In the Dyn and AWS events, there was little insured loss because the downtime fell largely just under policy waiting periods.

But,” said Stransky, “it got our clients thinking, well it happened for a few hours – could it happen for longer? And what does that do to us if it does? … This is really where our model can be very helpful.”

The purpose of having this model is to make the world more resilient … that’s really the goal.” Scott Stransky, assistant vice president and principal scientist, AIR Worldwide

AIR has run the Dyn incident through its model, with the parameters of a single day of downtime impacting the Fortune 1000. Then it did the same with the AWS event.

When we run Fortune 1000 for Dyn for one day, we get a half a billion dollars of loss,” said Stransky. “Taking it one step further – we’ve run the same exercise for AWS for one day, through the Fortune 1000 only, and the losses are about $3 billion.”

So once you expand it out to millions of businesses, the losses would be much higher,” he added.

The ARC platform allows insurers to assess cyber exposures including “silent cyber,” across the spectrum of business, be it D&O, E&O, general liability or property. There are 18 scenarios that can be modeled, with the capability to adjust variables broadly for a better handle on events of varying severity and scope.

Looking ahead, AIR is taking a closer look at what Stransky calls “silent silent cyber,” the complex indirect and difficult to assess or insure potential impacts of any given cyber event.

Stransky cites the 2014 hack of the National Weather Service website as an example. For several days after the hack, no satellite weather imagery was available to be fed into weather models.

Imagine there was a hurricane happening during the time there was no weather service imagery,” he said. “[So] the models wouldn’t have been as accurate; people wouldn’t have had as much advance warning; they wouldn’t have evacuated as quickly or boarded up their homes.”

It’s possible that the losses would be significantly higher in such a scenario, but there would be no way to quantify how much of it could be attributed to the cyber attack and how much was strictly the result of the hurricane itself.

It’s very, very indirect,” said Stransky, citing the recent hack of the Dallas tornado sirens as another example. Not only did the situation jam up the 911 system, potentially exacerbating any number of crisis events, but such a false alarm could lead to increased losses in the future.

The next time if there’s a real tornado, people make think, ‘Oh, its just some hack,’ ” he said. “So if there’s a real tornado, who knows what’s going to happen.”

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Modeling for “silent silent cyber” remains elusive. But platforms like ARC are a step in the right direction for ensuring the continued health and strength of the insurance industry in the face of the ever-changing specter of cyber exposure.

Because we have this model, insurers are now able to manage the risks better, to be more resilient against cyber attacks, to really understand their portfolios,” said Stransky. “So when it does happen, they’ll be able to respond, they’ll be able to pay out the claims properly, they’ll be prepared.

The purpose of having this model is to make the world more resilient … that’s really the goal.”

Additional stories from RIMS 2017:

Blockchain Pros and Cons

If barriers to implementation are brought down, blockchain offers potential for financial institutions.

Embrace the Internet of Things

Risk managers can use IoT for data analytics and other risk mitigation needs, but connected devices also offer a multitude of exposures.

Feeling Unprepared to Deal With Risks

Damage to brand and reputation ranked as the top risk concern of risk managers throughout the world.

Reviewing Medical Marijuana Claims

Liberty Mutual appears to be the first carrier to create a workflow process for evaluating medical marijuana expense reimbursement requests.

Cyber Threat Will Get More Difficult

Companies should focus on response, resiliency and recovery when it comes to cyber risks.

RIMS Conference Held in Birthplace of Insurance in US

Carriers continue their vital role of helping insureds mitigate risks and promote safety.

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