Coverage Gaps and Traps: One RIMS Session With the Know-How on All Things D&O

Board members are being held accountable for company-wide failure to curb misconduct and report incidents in a timely manner. This RIMS session is sure to help.
By: | April 26, 2019

The directors and officers (D&O) liability insurance market was not left unscathed after 2018’s cyber breaches and the ongoing fallout from the #MeToo movement.

Board members are being held accountable for company-wide failings to curb misconduct and report incidents in a timely manner.

In fact, law experts say the risk of directors and officers being taken to courts by the DOJ, the SEC or others should be firmly on risk managers’ minds despite recent shifts within the DOJ.

In a recent Risk & Insurance article, Bill Leone, the head of the New York white-collar practice at the Norton Rose Fulbright law office told us: “Directors have always been exposed to prosecutions … It is only the DOJ’s emphasis that has changed in recent years.”

For these reasons, three industry professionals have joined together to talk specifically about D&O trends and policy wording during RIMS 2019 in Boston, held April 29 through May 1.

Robert Yellen, executive vice president, D&O and fiduciary liability product leader, FINEX, Willis Towers Watson; Deirdre Martin, SVP/product lead, management liability, public, financial lines, AIG; and Greg Hodgson, director of risk management, California Resources Corporation, will present on Wednesday, May 1 at 11 a.m. in Room 157AB.

“We’re going to run through very real gaps and traps from a traditional policy perspective,” said Yellen.

Read More: DOJ to Directors and Officers: Speak Up About Misconduct or Pay the Price

It’s a timely topic; with more directors and officers facing scrutiny, concerns about gaps in D&O coverage are growing.

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Cyber threats, privacy, #MeToo, the relation back rule and investigation costs all feed into concerns that a D&O insurance placement will fall short of critical coverage.

Their RIMS session, Trends (and Solutions) for Critical D&O Gaps and Traps, will explore today’s D&O insurance contract certainty and coverage compliance risks.

It will also examine top coverage defense tactics and wording flags, as well as critical, innovative solutions.

“What we will talk about is universal to insurance,” Yellen said. “The challenges go deep into the architecture of claims-made policies.”

The session has three main learning objectives: Attendees should be able to anticipate and avoid potential D&O insurance gaps and traps, as well as spot opportunities to improve their programs; summarize the state of D&O coverage litigation and key trends; and prepare practical questions for this year’s D&O renewal.

Rob Yellen, D&O and fiduciary products, Willis Towers Watson

Yellen also hopes attendees will be better prepared to speak to their stakeholders about today’s biggest D&O risks.

“I think they will be in much better shape to ask the questions they need of their insurance partners” after the session, he said. “We’re going to talk about solutions for [attendees] to better understand the opportunities to work with their carrier and broker, to put them in a better position with clearer wording.”

He also teased the speakers will be diving into the concept of ‘zombie claims’ — where old D&O claims might come back from the dead.

Yellen stressed in situations like these, a ‘zombie-killer endorsement’ could be the best defense.

“I learn something new every time I go to RIMS,” added Yellen. “It’s an opportunity to really plug-in with all the minds in our industry.” &

Autumn Heisler is the digital producer and a staff writer at Risk & Insurance®. She can be reached at [email protected]

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]