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Column: Roger's Soapbox

Pollsters, Ponies And Post-Truths

By: | March 3, 2017 • 3 min read
Roger Crombie is a United Kingdom-based columnist for Risk & Insurance®. He can be reached at [email protected]

Here’s what we know about what lies ahead: nothing. Nothing at all. Events are largely unpredictable far into the future; people much more so at any remove. Earthquakes happen without much warning; life is a minestrone.

To quote George Carlin: “We’re all here on a big rock, zippin’ around a bad star for no good reason. We don’t know where we came from, we don’t know where we’re going, we don’t know how long it’s gonna last, and we have to keep going to the bathroom. And on top of that, the whole thing is completely meaningless.”

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Despite which, forecasting is a basic requirement of any business — and in four industries that come immediately to mind, it’s the entire business.

What do the pollsters do wrong that insurance does right?

Weather forecasting is the weakest one. The bouncy weather girl hasn’t been selected for her brains or inside knowledge, because, generally speaking, she has neither.

Polling is another, although its reputation lies in ruin following a recent stunning series of wrong forecasts. Brexit. The British economy post-Brexit. Trump. Events have proven beyond the forecasting abilities of pollsters and economists, for that matter. The dismal science indeed.

Bookmaking fares better — not the art of printing and binding, but the science of knowing which horse or team will win the race or the game (Trump foxed even those guys). The “bookies” (or the OTB or what have you) make a solid living forecasting the outcome of complex events.

So do insurers. What is insurance if not the ability to accurately forecast life spans and accident probabilities?

Which begs the question: What do the pollsters do wrong that insurance does right? Easy enough to discern. It’s the clause in every insurance contract that says that if you lied on your application in any meaningful way, the policy is invalid. Simple.

Pollsters must rely on the answers they are given. Many of them phrase their questions to derive desired answers. I know this to be true, because I been politically polled. What was wanted was not the truth, but confirmation of the pollsters’ biases.

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Insurers want the truth, the whole truth and, quite literally, nothing but the truth. Not the post-truth or the alternative truth. A smoker who claims to abstain is warping beyond repair the forecasts on which premiums are based. The citizen who says she intends to vote Clinton, because she is embarrassed to admit to liking Trump, can lie with impunity. Many of them did, apparently.

Horse racing, football and all sports on which wagers are laid also rely on the integrity of the players, the officials and the supervising bodies. That’s why a drugged athlete offends our sense of fair play. Without that, all bets are off.

My truth may differ from yours, but the smart forecasting industries dial that out of the equation. That’s why insurance companies have billions and why there are at least two legalized betting shops on every high street in Britain.

Martin Luther King put it best: Peace if possible, truth at all costs. &

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.

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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.

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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. &

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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]