2014 Power Broker

Transportation

Getting Answers

Sarah Allison Senior Vice President Marsh, New York

Sarah Allison
Senior Vice President
Marsh, New York

For one client completing a merger after the company’s insurance renewal, Sarah Allison had to arrange cost-efficient short-term coverage for its workers’ compensation, general liability, automobile liability and excess liability risks.

But the merger fell behind schedule, so the broker had to arrange another short-term renewal — and then another after yet another delay. After the merger’s completion, Allison had to arrange a fourth short-term renewal. The most important reason was that the risk manager wanted to show insurers that the merged entity was a much better risk than they anticipated. That led to a huge reduction in various insurance costs when the merged company renewed for a full year, the company’s risk manager said.

“The biggest challenge for us as [a merged] enterprise was the collateral required for our insurance program,” the risk manager said. “Sarah’s efforts resulted in an ultimate collateral reduction of 30 percent compared to where it was tracking for our insurance program.”

Allison also assisted another client, JHT Holdings Inc., realize significant collateral savings.

“JHT’s insurance program is high deductible in nature,” said Christopher H. Reehl, executive vice president and CFO. Many times, Allison negotiated JHT’s “two key needs,” he said: a depleting cash collateral program and a multi-month payment installment plan.  Allison and her team also “have been strong advocates for the company [in] negotiating the release of excess collateral from JHT’s previous insurance carrier on a policy which predated Marsh’s involvement with the organization,” Reehl noted.

Bridging Gaps

Barry Jones Managing Director  Marsh, London

Barry Jones
Managing Director
Marsh, London

FirstGroup plc, a major operator of commuter rail and bus services in Europe and North America, recently benefitted from Barry Jones’ expertise. A FirstGroup unit had had a long-running, large, complex crime claim that had been “drifting,” said Richard D. Millington, group insurance director. The claim was becoming more problematic because FirstGroup had an opportunity to sell the unit.

Jones gathered all stakeholders on both sides of the claim and deftly managed their expectations, Millington said. In particular, insurers had to accept that FirstGroup had significant coverage, and FirstGroup had to understand that the claim’s complexity raised legitimate questions for insurers, he said.

Ultimately, a settlement met not only FirstGroup’s financial goals but also its tight deadline. Jones, who was brought into the dispute in November 2012, facilitated a deal by March 31, 2013 — FirstGroup’s fiscal year end.

Jones also has taken a seat on the management board of FirstGroup’s in-house third-party administrator to assist it in becoming a “best-in-class” claims handler, Millington said.

Another client also lauded Jones’ negotiating skills. “Barry is a great communicator and does an excellent job in bridging the gap between people with different opinions,” the client said. “He is open to hearing the views of other parties and in brokering a deal between those parties. He is adept at knowing when to give ground in order to secure a deal rather than just pushing against a closed door.”

Saving the Day

Sheldon Kaufman, AIIC, CIP Senior Vice President Marsh, Montreal

Sheldon Kaufman, AIIC, CIP
Senior Vice President
Marsh, Montreal

Changes in regulations and marine insurance policy terms were about to affect one company’s ability to transport nuclear materials and transfer them at its terminals.

Sheldon Kaufman saw it coming, and brought the situation to the shipper’s attention. Initially, company executives were not overly concerned, despite having a contract to transport an especially large nuclear shipment. Management felt that its environmental liability insurance policy should satisfy the new regulations, but that wasn’t the case. The insurer refused to cover the exposure.

Thankfully, Kaufman had already anticipated the problem, and had approached the insurance market for an underwriter willing to cover the risk. Hours after the environmental insurer refused to cover the risk — with the shipper waiting to transport the large radioactive materials cargo — Kaufman delivered a nuclear liability policy.

“If we didn’t have even the minimum possible coverage to protect [our company], we would have had to deal with breaking significant contractual obligations, labor issues and the ramifications associated with lost revenue,” an executive with the shipper noted.

Now, with the new coverage, the shipper has been able to win more nuclear cargo business, the executive said.

“Mr. Kaufman is attentive and solution-oriented in his work, which certainly helps him succeed,” one client observed. “His responsiveness makes him a reliable broker and very easy to work with.”

A Difference Maker

Simon Methven Property Leader Aon, London

Simon Methven
Property Leader
Aon, London

In its tough 2014 property renewal, a CSX Transportation reinsurer said it needed a 40 percent rate hike — if it even remained in the program, said Juliana J. Keaton, the railroad’s director of insurance. Simon Methven, Property leader, North America and Pacific Region, assisted CSX in more accurately quantifying exposures, especially in Cat-prone regions, and assessing whether the railroad had appropriate retentions and limits in its excess program. For Cat risks, Methven looked to alternative risk financing, and educating underwriters in the insurance-linked securities and Cat bond markets about the railroad’s risks and risk mitigation efforts.

The recalcitrant reinsurer stayed, increasing its participation and cutting its rate hike to 16 percent. Keaton noted that “at least one well-respected reinsurer” has said “on more than one occasion that Simon is the reason they write our program.”

Meanwhile, the departure of key risk management executives had put the 2013 property renewal behind schedule for commuter railroad Metra. R. John Anderson, then-new director of risk manager and insurance, brought in Methven to handle the renewal and also return a portion of the program to the London market after a long absence.

Despite a time challenge and a decade of poor loss history, Methven renewed the program in time and below budget, Anderson said. Methven not only placed much of the program in London, but also persuaded underwriters to make several coverage enhancements, including stripping out an aggregate limit that had cost the railroad $500,000 over the past decade.

A Real Mover

John Raymond Senior Vice President Marsh, Philadelphia

John Raymond
Senior Vice President
Marsh, Philadelphia

Canadian Pacific Railway relied on John Raymond to replace a key market, which had written 50 percent of the railroad’s primary property program but imposed significant coverage restrictions, said Shireen Bond, managing director-risk management. The insurer was investigating a large claim that would not be resolved until after renewal, so maintaining a good relationship was key. Raymond deftly placed broader property coverage for the railway while still maintaining the insurer’s goodwill.

Raymond also helped RailAmerica create “buzz” for a restructured property program that would provide the railroad greater coverage at a lower cost, said Mike Morningstar, director of risk management and claims at Genesee & Wyoming, which has since acquired RailAmerica.

“Transferring additional risk to the insurance carriers while realizing a savings in premium was paramount to our bottom line, and Mr. Raymond was able to develop a plan which he implemented,” Morningstar said.

Another transportation industry client last year asked Raymond to execute a late change in its property risk financing plans during its program renewal. The client decided to take a much larger self-insured retention to generate substantial premium savings. Raymond further negotiated higher sublimits on several coverages, the client’s risk manager said.

“My company wanted to reduce insurance spend, create more leverage in our relationship with insurers, and gain broader terms and conditions,” the client explained. “John was an integral component of accomplishing all of our objectives.”

Keeping the Railroad Running

Jeremiah White Account Executive Aon, Baltimore

Jeremiah White
Account Executive
Aon, Baltimore

Travelliance Inc. needed its liability program renewed far ahead of its summer 2013 renewal date to satisfy its largest client, with which it has a complex contractual agreement. Missing the deadline would damage the relationship with the client, explained Todd M. Friesen, president and chief operating officer-rail transportation.

White developed a robust marketing campaign that featured the railroad’s various risk management practices, putting the railroad’s executives directly in touch with underwriters. White’s plan created competition for the account, resulting in an early deal that met the client’s insurance requirements and reduced the railroad’s liability insurance costs. The program not only preserved Travelliance’s relationship with its largest client but also provided the railroad a framework it could use with other clients, Friesen noted. “Jeremiah is simply a problem solver when it comes to insurance,” Friesen observed.

Another railroad client faced a tougher property insurance renewal due to significant fire losses as a result of long-term drought conditions. It also faced dramatically higher liability insurance rates, noted its controller.

A previous broker attempted just weeks before renewal to place the property program plus rolling stock and vehicle coverage, but failed to obtain timely rate quotes. White came in and placed all of the coverage within days at a savings of $45,000, the controller noted. He also saved the railroad tens of thousands of dollars more by placing the liability program at expiring coverage and rating terms and only a slightly higher retention, she said.

BlueBar

LBR_ResponsiblityLeaderBLUE_logo-175Commitment to Clients and the Community

Aon’s Jeremiah White takes involvement and leadership to the next level, both within his company and his community. He writes to political representatives on the federal level to express his clients’ opinions on industry-relevant topics and lobbies for their interests. He meets with local municipalities to discuss contract requirements and upcoming railroad projects, exceeding expectations to make life a little easier for his customers.

At Aon, he commits a few hours each week to talking with younger brokers, “to make sure they are learning the ‘why’ instead of just ‘how.’ ” He presents himself as a resource for his younger colleagues, helping to boost their product knowledge and pass along his energy and excitement.

And the number of community service projects that White gives his time to cannot be counted on two hands. He participates in 5K charity runs for schools in his community, volunteers for an area cold weather shelter, serves as a volunteer assistant coach for youth football and participates in his local chapter of the American Legion. White also represents the rail industry and Aon at numerous professional events.

“My time is my most valuable resource,” White said, “so whenever I am giving my time to help others I know that I am contributing positively to the future.” As the main contact for and face of the Aon Rail Practice, White is making a good impression.

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

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.

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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.

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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. &

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