Experience Forged in Crisis: Army Veteran Jane Holl Lute a Timely Addition to MMC Board

Jane Holl Lute joins the Marsh board with a career rich in risk management training and expertise.

In a distinguished career spent in both the public and private sectors, Jane Holl Lute has refined her risk management skills under a variety of circumstances.

Lute, who served as deputy secretary of Homeland Security from 2009 to 2013 and is president/CEO of SICPA North America, was elected to the 13-member board of Marsh & McLennan Companies effective March 1.

After serving in the U.S. Army for more than a decade, including during Operation Desert Storm, Lute was a director on the White House National Security Council staff under Presidents George H. W. Bush and Bill Clinton. Her experience on the National Security Council Staff and in other high-profile assignments honed her boots-on-the-ground experience in the management of various national and multinational endeavors. That included protecting borders, mobilizing disaster relief and deploying peace operations.

“There’s nothing like trying to set up a refugee camp in Darfur for 50,000 people. It really focuses the mind,” Lute said.

In early 2009, President Barrack Obama nominated Lute to serve as deputy secretary for the U.S. Department of Homeland Security, the government’s third largest agency. In this role, she managed the day-to-day operations for the department’s 500,000 employees and contract personnel. From 2013 to 2016, she was chief executive officer of the Council on Cybersecurity and later the Center for Internet Security.

“I have an operating approach to risk management,” Lute said. “I want to add value to the board of Marsh & McLennan based on my experience, which is largely not in the commercial sector, but in national and multinational public sectors. I really consider myself to be an operations professional. I run things.”

Her career has prepared her to anticipate risk and to think creatively about solutions, tapping resources and executing well-considered plans for addressing complicated challenges.

“The needs [in a disaster] are widespread and fast-moving,” she said.

“We need to mobilize accurate information. We need to ask ourselves, ‘Can we mobilize resources, distribute them and get them to where they need to be?’ ”

The Experience to Thrive

After retiring from the Army in 1994, Lute joined the Carnegie Corporation as executive director for its Commission on Preventing Deadly Conflict. She then served at the United Nations in various peacekeeping and peacebuilding roles, including as Assistant Secretary-General for Peacebuilding Support in the Executive Office of Secretary-General Ban Ki-Moon.

Managing risk also requires the ability to define and explain problems and to outline challenges and present solutions to high-level executives as Lute did at the U.N.

“Did you see risk coming?” she asked. “Did you prepare for it? After [a need occurs] is not the time to figure out you’ve got a problem.”

Thinking before doing, creating a response plan and adjusting it as needed is the best path to a successful operation: “We’ve all seen the Keystone Cops,” she said. “There can be a lot of people doing things without accomplishing anything. We need to consider what’s happening, what’s not happening and how can we affect things in a positive way.”

Lute suggests risk managers pose several questions when confronting a challenge:

Vision: What are you trying to do? What problem are you trying to solve?

Organize: Are you hiring the right people and giving them the right leadership?

Resources: What are the resources that can be tapped to solve a problem?

Execute: Tie a vision to the plan and bring all these elements together to execute.

“When you put answers to all of these together, it’s extremely formidable,” Lute said

Collaboration Is Key

Lute grew up in New Jersey. Her appreciation for being part of a group where everyone works together — an attitude she plans to take to the board — stemmed from her experience growing up in a large family.

“I was in the middle of seven children,” she said. “I like to work in collaboration, because you learn so much.”

Listening and getting input from a variety of sources is a key part of addressing any challenge.

“I think it’s always more advisable to hear what people think and see how they think,” she said. “These can be the source of breakthroughs.”

Lute said an important part of managing risk is architecting trust into the assets, systems and processes we rely on, which is the focus of her current organization SICPA North America, which provides material and digital integrity and security solutions in such crucial areas as IDs and passports, oil and gas, pharmaceuticals, and currency.

Joining a Great Team

H. Edward Hanway, chairman of the board at Marsh & McLennan, said he’s pleased to welcome Lute.

“Jane brings a unique blend of insights and capabilities to Marsh & McLennan,” he said. “She has broad experience in cyber security, vast international experience and has managed large, complex organizations.”

Lute’s experience as a woman in the military in the 1970s and 80s provides insight into the insurance industry’s looming talent gap as older workers retire. One way to inspire and retain workers is to help them see the overarching value in the work they do — whether it’s in the military or in a corporation.

“There weren’t a lot of women in the military when I started. It was eye-opening,” she said. “But it taught me many things, including to connect meaning to life and to a mission, whether it’s ensuring the safety of other soldiers or working to see an undertaking is accomplished successfully. I loved it.”

Young people have a huge reserve of talent to be tapped. “The job of our generation is to connect with them and to be an asset and foundation while providing structure without being a straight jacket,” she said.

The job of any risk manager, according to Lute, is to build confidence in whatever product or service is being sold.

Lute also serves on the boards of Union Pacific Corporation and Atlas Worldwide Holdings. &

Annemarie Mannion is a freelance writer. She can be reached at [email protected].

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

By: Risk & Insurance | April 3, 2024

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.