Risk Insider: Michael Korn

6 Fire Loss Scenarios to Review Before It’s Too Late

By: | May 23, 2018 • 2 min read

Michael Korn is a Managing Principal and the Property Practice Leader for Integro Insurance Brokers. He oversees the firm’s property brokerage services including growth, placement, market relations and product development. Risk management is in Mike’s DNA — he’s the son of a career risk manager and the father of a broker and an underwriter. Mike can be reached at [email protected]

What could happen to your facility in a fire? More appropriately, what could go wrong at your facility and cause a property loss?


That’s a good question and there are multiple answers depending on how deep into severity you want to dive.

Property underwriters use a number of measures in determining their exposure to fire loss, the amount of capacity they will deploy, how much they will reinsure, and the price they will charge. Some of the terms are synonymous and though the differences between loss scenario approaches are subtle, they can have a significant impact on the quantum of loss estimates.

If you understand how an underwriter is evaluating your properties, you’ll be in a better position to evaluate recommendations and negotiate renewal terms.

Here is a guide to the most commonly accepted definitions of the various fire loss scenario approaches:

  • NLE (Normal Loss Expectancy): This is the loss estimate expected under normal conditions, with all fire protection in place and operating as expected. This is also the loss expected after a recommendation is completed.
  • PML (Probable Maximum Loss): This is the loss amount expected with some impairment to normally only one sprinkler system, but not total shutdown of all protection systems. For example, when one sprinkler control valve is closed.
  • MFL (Maximum Foreseeable Loss): Short of a plane landing on the facility, this is the worst-case fire scenario. The sprinkler systems don’t work; the fire department doesn’t arrive; the accumulation of combustible material is at its peak. It’s a free-burn situation. The only thing that will stop the fire from spreading is a significant firewall or space separation and eventually running out of combustible material to burn.
  • EML (Estimated Maximum Loss): This term is similar to the MFL, but may rule out “remote coincidences” and tends to be slightly lower.
  • MPL (Maximum Possible Loss or Maximum Probable Loss): Maximum Possible Loss is more akin to the MFL, while Maximum Probable Loss is similar to the PML concept. Possible assumes no protection; probable is more likely, with some protection services operable.
  • AS (Amount Subject): This is the total amount of value (property damage and time element) exposed to potential loss in a given fire area.

Loss control engineers visit sites to conduct surveys, which include an estimate of potential loss scenarios and the economic impact, including property damage loss and resultant business interruption as well as extra expense. Estimated loss amounts can be the same given the physical characteristics of a facility. For example, the NLE, PML and MFL at an unsprinklered wood frame facility could all be equal to 100 percent of the values exposed.

Underwriters who write Highly Protected Risks usually offer more capacity on individual risks. They can be more conservative in their approach to loss estimates, because they have more to lose and tend to use the MFL approach rather than underwriting to a PML.

If you understand how an underwriter is evaluating your properties, you’ll be in a better position to evaluate recommendations and negotiate renewal terms. &

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.


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.


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]