Risk Insider: Carol Murphy

Changing the Game

By: | May 17, 2016 • 3 min read

Carol Murphy has more than two decades of risk experience and currently leads U.S. Casualty sales and the Loss Portfolio Transactions practice at Aon. She can be reached at [email protected]

If the market is so competitive, why are there more challenging renewals this year?  The reason is that global volatility of risk is increasing.


Volatility arises from multiple factors: insurer challenges, re-underwriting, exposures, products or coverage placements that are newly considered difficult, financial and collateral challenges.

Best negotiating practices help, especially during turbulent times. When the renewal game gets difficult, change the game by knowing your options, managing the timetable, preparing harder, communicating and then over-communicating.

Several years ago, I worked with a large client for the first time. High costs of collateral were a strain on the company and the risk manager felt trapped.

In listening harder, we found that what the risk manager and his bosses wanted was to be able to understand and quantify their options at all times.

They wanted expansive and unconventional options for consideration. Once we could quantify both the nominal costs and opportunity costs of different options, then we could consider trade offs.

The change of mindset from trapped to having options completely changed the game with the insurer, who then came to the table and negotiated a better win-win result that saved the client both costs and collateral.

I’m fanatical about preparation. Listening harder to understand concerns, using analytics to establish the counterparty’s negotiating position, anticipating questions, and articulating your story are more important than ever.

I’ve seen risk managers work through successful coverage renewals on difficult products many times. Many times, the insurers’ starting positions in the negotiation were to exclude coverage for a specific product that had caused significant known losses.

In listening harder, we found that what the risk manager and his bosses wanted was to be able to understand and quantify their options at all times.

By explaining the product and any difficult aspects in a very deep and technical way, the risk managers were often able to negotiate a reasonable result.

Having options matters here too — is there an opportunity to carve out a portion of the risk to a specialty market or an opportunity to change retention without increasing total cost of risk?

Managing the timetable to allow maximum optionality and stakeholder communications is one of the most effective tools any risk manager can deploy.

Many risk managers ask for guidance into what to build into budgets way in advance and then hold counterparties accountable for the budgetary goals. This doesn’t mean “settling” if you could achieve a better result than budget but certainly means preparing management and stakeholders for the best and worst case options.

Risk managers can also facilitate an effective timetable by providing renewal underwriting information as early as possible. By providing a timely and accurate submission, you can often hold insurers accountable for a timely quote.

Early quotes afford you more optionality with ample time to negotiate improvements, follow up on new or increased data needs or underwriting questions, or negotiate with alternative solution providers.

Recently, a wise risk manager was facing a difficult renewal. By knowing the options, preparing for the most effective negotiation and managing an effective renewal timetable, he was recommending a change to achieve substantial cost savings and more program sustainability. He had already talked to his boss, the Chief Financial Officer but he needed more time to get in touch with other stakeholders.


“Communicating and over-communicating” turned out to be essential given the fast-paced, global nature of the organization.

In a well-managed organization, surprises, even “good” ones, are often unwelcome. By communicating early and often, we can avoid surprises.

Changing the game can be unsettling for insurers who may be accustomed to a traditional renewal dance where they are holding the cards.  But changing the game may result in a home run without sacrificing strong relationships.

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]