Risk Insider: Jeff Hallman

Has Anyone Noticed That Our Underwriter Is Missing?

By: | June 2, 2014 • 2 min read

Jeff Hallman is the vice president in charge of National Accounts at RPA Insurance Services in Parsippany NJ, a commercial property / casualty retail agency specializing in the hospitality industry. He can be reached at [email protected]

Large account property/casualty underwriting has undergone a fundamental shift over the last 4-5 years. Casualty underwriting and pricing has been ceded to actuarial departments and property underwriting is now dictated by Cat Modeling (RMS 2013).

These days just about every underwriter comes up with very similar expected loss estimates on any given account. Once this “loss pick” has been established, it is a simple matter to add on expected profit and expenses which becomes the basis of the quote.

A few higher-level underwriters have the authority to release their quote to the broker, but most still have to run this statistically derived quote by an underwriting manager or even higher authority before it can be offered as a quote.

The Underwriter’s Dwindling Authority

In reinventing the process of underwriting and quoting, the insurance carriers have fundamentally changed the position of “underwriter.” This new type of underwriter is essentially a clearinghouse for underwriting data between the broker and the carrier.

The actual inputting of the data is performed by clerical level employees that are paid significantly less than the traditional underwriters while the actual quoting and binding authority has been pushed up to the level of an underwriting manager or higher authority.

This has basically stripped away the responsibility and authority of the underwriting position that brokers have been acquainted with for the last hundred years.

Raising the Bar for the Broker

It has become very difficult for brokers to produce significant amounts of new business because most still sell based on price. Brokers will no longer be able find an underwriter that will provide a quotation on an account that is 30-40 percent lower than other competing underwriters.

Advancing technology has allowed actuaries to insinuate themselves into the individual account underwriting function instead of simply giving pricing guidance on large books of business or classes of risk.

From now on, if a broker does not have a compelling reason other than price for a client to fire their current broker and sign on with them, the account almost never moves.

Predicament for the Buyer

This new phenomenon masks the inefficiency of the broker system because competing brokers will be unable to deliver proposals with premiums low enough to justify changing brokers.

The insurance buyer will be led into the belief that their current broker is doing a good job since it appears that no other competing broker can offer pricing low enough to justify changing brokers which is a disservice to the buyer.

What Can Buyers Do?

Buyers should pay as much attention to the services offered by a broker as they do to the “premium summary page.” The one surefire way to lower costs is to lower losses.

Challenge the broker to outline a specific plan to reduce losses in addition to just placing policies. Request a proposal that details the services the broker is going to provide and find out how the broker proposes to measure the effectiveness of their program.

Read all of Jeff Hallman’s Risk Insider contributions.

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]