2015 Power Broker

Pharma

He ‘Knows His Stuff’

Jack Bodden, ARM, CPCU Managing Director Marsh, Philadelphia

Jack Bodden, ARM, CPCU
Managing Director
Marsh, Philadelphia

Typical risk issues at global pharmaceutical companies include product liability and professional liability.

These two exposures tend to surround the placement of significant amounts of coverage — which is made difficult because there are relatively few carriers that write that much coverage and it may be challenging to get the needed limits.

For an East Coast client, Jack Bodden introduced an advanced analytics program that helped management make better decisions especially with risk transfer options for products liability exposure in building the layers of coverage.

However, although it is less visible, pharma companies also have large property liabilities for their facilities around the world.

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Bodden’s client had a multimillion-dollar loss when one of its facilities in Australia was destroyed. There was a quick advance payment for a significant portion of the claim less than four months after the accident, but the balance was subject to extensive investigation by forensic accountants and the carrier’s claims team.

Bodden, with the client, devised a strategy to expedite payment.

It hinged on his client receiving payment within their fiscal year — which was a significant challenge for this large a claim.

“He brought in all the right people including those needed to document a significant business interruption loss,” the risk manager said.

Sealing the Deal

Erica Craner Senior Vice President Marsh, Morristown, N.J.

Erica Craner
Senior Vice President
Marsh, Morristown, N.J.

Talk with a trucking company or cargo insurer and they will tell you that pharmaceutical shipments can be the most difficult cargo to insure.

Just think about how much a truckload of Viagra is worth on the market today if it were stolen. Millions.

A client of Erica Craner’s called one afternoon (on a day when U.S. offices were scheduled to close early) about a pharmaceutical shipment coming into the United States from outside the country.

The firm needed cargo and liability insurance immediately. And the Marsh team needed time to make the arrangements.

Craner arranged for a West Coast underwriter of the carrier to handle the proposed transaction, giving her team essential additional time for negotiations. Although cost was not as much of an issue, comprehensive coverage of the exposure was critical. The requirements were reached and the coverage secured in time for the shipment.

Insuring pharmaceutical clinical trial risk is also a challenge. One of Craner’s clients has significant clinical trial activity in foreign countries, making capacity difficult to come by.

To create a solution, Craner and her team reviewed each individual trial for each country involved. She was able to arrange additional capacity to give the master global program the strength it needed to account for any differences in limits and differences in conditions.

Throughout her career, Craner has learned that it’s one thing to create a successful result in a renewal, but quite another to retain clients unless the customer service is beyond reproach.

Focusing on Strategic Goals

Mark Miller Managing Director Marsh, Chicago

Mark Miller
Managing Director
Marsh, Chicago

“Be prepared” is Mark Miller’s motto.

“He always makes sure that we have a strategic vision of what we’re going to do if something goes wrong,” one risk manager said of him.

For example, products liability coverage can be difficult. “He asked, ‘What do we do if we lose a carrier?’ He helped us develop a very effective strategy — looking at other markets, like Bermuda, or examining our retentions.”

She added that Miller has been good at connecting her with underwriters who may not be writing their risks now, but may be needed in the future.

“He gets my face in front of them so they know me and who we are.”

For another client, Miller created a risk management manual and a process manual.

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The basic manual is detailed, almost outlining what to complete on a day-to-day basis. But it’s also written in a way that gives the senior management a good understanding of how risk is managed within the different parts of the organization, the risk manager said.

Miller has also gained good marks for handling claims and other problems. Before Marsh held the account, one of the company’s carriers was put into runoff.

As time went on, reimbursement issues developed. Miller stepped in and got both sides of the issue together.

“We both understood each other and we resolved the problem with great results for us. We couldn’t have reached that point without Marsh,” she added.

Overcoming Challenges

Patrick Roth Vice President Aon, Denver

Patrick Roth
Vice President
Aon, Denver

Two big issues highlight the importance of professional liability coverage at pharmaceutical and life science companies. The first is huge claims and losses stemming from product liability risk. Second, but almost as important, has been the proliferation of merger and acquisition activity within the industry.

Patrick Roth heads up Aon’s executive liability practice for the life science industry.

As a client of his pointed out, there are ongoing issues concerning the supply of enough strong insurance carriers for these risks. Things are further complicated by ongoing declines in insurance capacity, increasing claims, and pricing that continues to increase.

For example, in a relatively recent transaction, a privately owned firm looked to purchase professional liability for a public company (possibly anticipating some changes). In this case, the number of available markets was limited and the budget was constricted.

The company needed to convince the underwriters that although they were privately held, their risk profile was best-in-class. Roth showed why the company was a standout, compared to its peers, especially in the area of clinical trials, which pose a significant risk.

The result: The needed insurance was acquired at a price that met the company’s budget relative to coverage and limits.

In another case, one of Roth’s clients faced bankruptcy if the company’s renewal wasn’t a success. He was able to renew the professional liability coverage, despite an increase in the underlying risk.

Satisfying Evolving Demands

Aaron Simpson Director Aon, Philadelphia

Aaron Simpson
Director
Aon, Philadelphia

A client of Aaron Simpson’s faced a dramatically changing risk profile. The client’s strategic plan called for accelerated growth during the coming two years through an expanding product portfolio.

Up to that point, the company’s risk was concentrated in a relatively narrow, homogeneous exposure. The plan would broaden that exposure by adding a diversified set of new products and new risks.

The challenge for Simpson and the company was to fashion a program that had to change significantly because of the evolving risk profile.

The company sought a multiyear relationship with its life science carriers. That relationship was needed to build upon the risk appetite of the carrier and move toward more diversified exposures.

Most carriers are not comfortable with all aspects of the risk in the life science industry, so it was a challenge to find the right carriers for the program.

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The client’s strategy included both internal growth and growth through acquisitions, which added further complications to developing a flexible program.

“This was a difficult and comprehensive process,” the client said.

Usually, especially at pharmaceutical companies, the issues flow well beyond risk management and require the oversight and active participation of the finance operations. Pharmaceuticals also have significant compliance requirements that affect risk management and risk transfer.

That’s why brokers must act as trusted advisers all year long, not just during renewals.

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]