Risk Management

The Profession

At McKesson, Jane Sandler blends her passions for risk management and health care to help the organization develop innovative, forward-thinking solutions.
By: | December 14, 2016 • 4 min read

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R&I What was your first job?

My first paycheck came from bagging groceries at Kroger. I didn’t have a car and had to walk to work. My ultimate goal was to save enough money for my first car. The very car I later drove to my first insurance job in an underwriting department. It was a great feeling.

R&I How did you come to work in risk management?

Growing up in a state-controlled environment of the former Soviet Union, risk management was not on my radar. I have always had a passion for health care as it touches and influences the lives of so many. I was pre-med when a friend told me about her major – risk management and insurance. It seemed fascinating.

R&I What is the risk management community doing right?

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One of the things I appreciate the most about our industry is the depth of relationships. Trust and integrity are crucial. Risk managers form long-standing partnerships with insurers and other industry colleagues, enabling us to support each other and excel during challenging times.

At the core of everything risk managers do lays the desire to prevent injuries, enable new opportunities and protect our enterprise against volatility.

R&I What could the risk management community be doing a better job of?

We could do a better job of attracting young talent. There is a stigma associated with the insurance industry — it’s perceived as boring, and that could not be further from the truth. I’ve been stretched and challenged every step of the way and feel that this is one of the more engaging professions.

I serve on the board of trustees for the Georgia State University Risk Management Foundation and one of our strategic initiatives focuses on educating college recruits on the breadth of opportunities afforded by our industry.

R&I What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

In my 20 years in the industry, risk managers have made a huge move from being “insurance and claim guys” to becoming a trusted business adviser to the C-suite. We’ve embraced that we cannot eliminate or insure all risk. Risk-taking is an essential part of any business opportunity. But what we can do is partner with key stakeholders to better understand the risk and empower innovative solutions.

R&I What emerging commercial risk most concerns you?

It’s the risks associated with new technological breakthroughs and legislative developments. Most recent examples in the health care industry are interconnectivity and value-based reimbursements. In the early stages of any initiative, much is undefined.

R&I Who is your mentor and why?

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I have been very lucky to meet many colleagues along the way that have opened doors, given me a chance and shared their expertise. Deanna Allen gave me my first opportunity in health care risk management, welcomed me with open arms, pushed me and really helped me grow in my early career.

Another individual who comes to mind is Allan Bogenschutz. He’s one of the best colleagues you could have, always willing to share his candid feedback. Allan has been a great sounding board and adviser to me over the years.

R&I What have you accomplished that you are proudest of?

Having emigrated here at the age of 17 from Ukraine, successfully establishing a new life is a point of both pride and immense gratitude to everyone who helped me along the way.  I am appreciative of the freedom and opportunities this country affords to anyone who’s willing to work hard and apply themselves.

R&I What is the riskiest activity you ever engaged in?

Riding on an ATV with my husband. It was all fun and games until he flipped us over. So, my zip-lining experience, in comparison, was very safe.

R&I What is your favorite book or movie?

“Kafka on the Shore” by Haruki Murakami.

R&I What is your favorite drink?

Absinth.

R&I What is the most unusual/interesting place you have ever visited?

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Travel is my escape and it is hard to narrow down the wonders of the world to just one. I would say for architecture it’s the magic of Gaudi’s Barcelona. For nature, it’s the grandeur of the Alps.

R&I What about this work do you find the most fulfilling or rewarding?

The most fulfilling part is blazing new trails and developing innovative solutions to support my company’s growth. I am very grateful for the opportunity McKesson has afforded me in leading the risk management department in a new direction. I am lucky to have an incredibly talented global team.

We are very focused on quantification of risk in a way that is easy to communicate across the organization. McKesson’s leadership team values the role and contribution of the risk management function.

R&I What do your friends and family think you do?

I talk about it so much, I am pretty sure they know exactly what I do! To my kids, I explained that it’s planning in advance and having a plan B. Last time we were at the beach in the fall, their shoes got soaking wet and we had a spare pair in the car. I think they got it.




Katie Siegel is an associate editor at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Alternative Energy

A Shift in the Wind

As warranties run out on wind turbines, underwriters gain insight into their long-term costs.
By: | September 12, 2017 • 6 min read

Wind energy is all grown up. It is no longer an alternative, but in some wholesale markets has set the incremental cost of generation.

As the industry has grown, turbine towers have as well. And as the older ones roll out of their warranty periods, there are more claims.

This is a bit of a pinch in a soft market, but it gives underwriters new insight into performance over time — insight not available while manufacturers were repairing or replacing components.

Charles Long, area SVP, renewable energy, Arthur J. Gallagher

“There is a lot of capacity in the wind market,” said Charles Long, area senior vice president for renewable energy at broker Arthur J. Gallagher.

“The segment is still very soft. What we are not seeing is any major change in forms from the major underwriters. They still have 280-page forms. The specialty underwriters have a 48-page form. The larger carriers need to get away from a standard form with multiple endorsements and move to a form designed for wind, or solar, or storage. It is starting to become apparent to the clients that the firms have not kept up with construction or operations,” at renewable energy facilities, he said.

Third-party liability also remains competitive, Long noted.

“The traditional markets are doing liability very well. There are opportunities for us to market to multiple carriers. There is a lot of generation out there, but the bulk of the writing is by a handful of insurers.”

Broadly the market is “still softish,” said Jatin Sharma, head of business development for specialty underwriter G-Cube.

“There has been an increase in some distressed areas, but there has also been some regional firming. Our focus is very much on the technical underwriting. We are also emphasizing standardization, clean contracts. That extends to business interruption, marine transit, and other covers.”

The Blade Problem

“Gear-box maintenance has been a significant issue for a long time, and now with bigger and bigger blades, leading-edge erosion has become a big topic,” said Sharma. “Others include cracking and lightning and even catastrophic blade loss.”

Long, at Gallagher, noted that operationally, gear boxes have been getting significantly better. “Now it is blades that have become a concern,” he said. “Problems include cracking, fraying, splitting.

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“In response, operators are using more sophisticated inspection techniques, including flying drones. Those reduce the amount of climbing necessary, reducing risk to personnel as well.”

Underwriters certainly like that, and it is a huge cost saver to the owners, however, “we are not yet seeing that credited in the underwriting,” said Long.

He added that insurance is playing an important role in the development of renewable energy beyond the traditional property, casualty, and liability coverages.

“Most projects operate at lower capacity than anticipated. But they can purchase coverage for when the wind won’t blow or the sun won’t shine. Weather risk coverage can be done in multiple ways, or there can be an actual put, up to a fixed portion of capacity, plus or minus 20 percent, like a collar; a straight over/under.”

As useful as those financial instruments are, the first priority is to get power into the grid. And for that, Long anticipates “aggressive forward moves around storage. Spikes into the system are not good. Grid storage is not just a way of providing power when the wind is not blowing; it also acts as a shock absorber for times when the wind blows too hard. There are ebbs and flows in wind and solar so we really need that surge capacity.”

Long noted that there are some companies that are storage only.

“That is really what the utilities are seeking. The storage company becomes, in effect, just another generator. It has its own [power purchase agreement] and its own interconnect.”

“Most projects operate at lower capacity than anticipated. But they can purchase coverage for when the wind won’t blow or the sun won’t shine.”  —Charles Long, area senior vice president for renewable energy, Arthur J. Gallagher

Another trend is co-location, with wind and solar, as well as grid-storage or auxiliary generation, on the same site.

“Investors like it because it boosts internal rates of return on the equity side,” said Sharma. “But while it increases revenue, it also increases exposure. … You may have a $400 million wind farm, plus a $150 million solar array on the same substation.”

In the beginning, wind turbines did not generate much power, explained Rob Battenfield, senior vice president and head of downstream at JLT Specialty USA.

“As turbines developed, they got higher and higher, with bigger blades. They became more economically viable. There are still subsidies, and at present those subsidies drive the investment decisions.”

For example, some non-tax paying utilities are not eligible for the tax credits, so they don’t invest in new wind power. But once smaller companies or private investors have made use of the credits, the big utilities are likely to provide a ready secondary market for the builders to recoup their capital.

That structure also affects insurance. More PPAs mandate grid storage for intermittent generators such as wind and solar. State of the art for such storage is lithium-ion batteries, which have been prone to fires if damaged or if they malfunction.

“Grid storage is getting larger,” said Battenfield. “If you have variable generation you need to balance that. Most underwriters insure generation and storage together. Project leaders may need to have that because of non-recourse debt financing. On the other side, insurers may be syndicating the battery risk, but to the insured it is all together.”

“Grid storage is getting larger. If you have variable generation you need to balance that.” — Rob Battenfield, senior vice president, head of downstream, JLT Specialty USA

There has also been a mechanical and maintenance evolution along the way. “The early-generation short turbines were throwing gears all the time,” said Battenfield.

But now, he said, with fewer manufacturers in play, “the blades, gears, nacelles, and generators are much more mechanically sound and much more standardized. Carriers are more willing to write that risk.”

There is also more operational and maintenance data now as warranties roll off. Battenfield suggested that the door started to open on that data three or four years ago, but it won’t stay open forever.

“When the equipment was under warranty, it would just be repaired or replaced by the manufacturer,” he said.

“Now there’s more equipment out of warranty, there are more claims. However, if the big utilities start to aggregate wind farms, claims are likely to drop again. That is because the utilities have large retentions, often about $5 million. Claims and premiums are likely to go down for wind equipment.”

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Repair costs are also dropping, said Battenfield.

“An out-of-warranty blade set replacement can cost $300,000. But if it is repairable by a third party, it could cost as little as $30,000 to have a specialist in fiberglass do it in a few days.”

As that approach becomes more prevalent, business interruption (BI) coverage comes to the fore. Battenfield stressed that it is important for owners to understand their PPA obligations, as well as BI triggers and waiting periods.

“The BI challenge can be bigger than the property loss,” said Battenfield. “It is important that coverage dovetails into the operator’s contractual obligations.” &

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected]