Column: Roger's Soapbox

Astonishing Vagueries

By: | March 2, 2015 • 2 min read

Roger Crombie is a United Kingdom-based columnist for Risk & Insurance®. He can be reached at [email protected]

There it was, in black and white. Perhaps the most astonishing statement I’d read in a decades-long analysis of how insurance works. The newspaper article began: “A $250 million payoff is on the table if the proposed $11 billion merger between Axis and PartnerRe fails to go ahead.” It continued: “Each firm will be liable to pay a break fee to the other if the deal … gets called off.”


You’re going to tell me that it’s alright to use the word “get” (or more likely, in what passes for modern grammar, “your going to tell me its alright …”) but I digress — that’s not the point I’m making.

Think about the second sentence. It clearly states that if the deal between the two companies goes down the drain, each company will pay the other $250 million.

That can’t be right, I thought. What would be the point? If each company were to cut the other a check for $250 million, the one would cancel the other out, quite obviously.

Yet senior executives and bankers had put the deal together, and they usually know what they’re doing. Understanding the words became what Sherlock Holmes referred to as “a three-pipe problem.”

Eventually, I worked it out: It had to be a tax dodge. If the two checks were issued in high-tax jurisdictions, then banked in no-tax jurisdictions such as Bermuda, hefty net income all round.

To confirm it, I’d have to study both companies’ financials to see if they had taxed subsidiaries somewhere that earn $250 million of profit in a year, but then thought better of it.

I was reminded of the two economists who meet on the street. One holds a cat. “Buy this cat from me for $100 billion,” he said, “and then I’ll buy it back from you for $100 billion.”

“And what will we have then?” the second economist asked.

“A $200 billion economy,” the first replied.

I next considered the notion that most mergers destroy more value than they create. Perhaps these cross-payments might somehow increase the companies’ top lines and, therefore, their desirability to other potential partners. That didn’t cut it for me, so I stopped thinking and researched the matter.

Ultimately, the explanation was simplicity itself. An industry publication, considered in equal measure accurate and scurrilous, had run this sentence: “Axis and PartnerRe would be required to pay the opposite party a $250 million break fee if they decide to (cancel the merger agreement).” It’s badly worded, but you sort of know what it means.


A reporter at the newspaper I had first read had picked up the story and rewritten it. The reporter, whom I know, has no business experience. His background is the crime beat. But his editor understands nothing of money, and only hires those who know less than he does, a classic strategy of weak managers.

The rewritten sentence should have read something like this: “If either Axis or PartnerRe were to call off their proposed merger, it would be required to pay the jilted party $250 million.”

I should have known that at the start, but when it’s in the newspaper, one tends to believe it. That way, of course (Risk & Insurance® excepted) lies madness.

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.


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]