Workers' Comp Outlook

Outlook: Eight Industry Leaders Discuss Top Comp Issues

By: | January 21, 2014 • 15 min read

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

Predictive modeling, industry consolidation, opioids, and health care reform are among the themes on the minds of workers’ comp thought leaders this year. Eight industry leaders share their thoughts.

Dr. Douglas Benner

The ramifications of the aging workforce are becoming more challenging for the workers’ comp system, says Dr. Douglas Benner, chief medical officer of EK Health Services, and a longtime medical management consultant to the nation’s health care system, especially workers’ comp. He says increasingly, chronic disease is creeping into the system.

“In the claims world, there may have been a specific injury or complaint of pain at work. But before a claim is closed, we are seeing a lot of claims and medical care related to chronic disease and not the workers’ comp injury,” Benner says. “There’s a natural tendency for people to complain about everything to their physician, and many physicians seem not very effective in sorting out only those complaints caused by the injury and not including the rest in the workers’ comp claim.”

Pharmaceutical concerns also continue to plague the system. Benner is especially cognizant of medical costs related to new drugs.

“When we see extended release hydrocodone, which comes out, it’s an old drug with a new face. It doesn’t have the acetaminophen anymore, and in higher doses it’ll be more expensive,” Benner explains. “Will we see more inroads of higher dose opiates coming into the market? Doses will creep up, and the cost will creep up.”

Benner says despite the continuing problems related to opioid abuse and misuse, things may be changing for the better. “Overall, there’s a lot more awareness about problems with prescription painkillers and overdose deaths. So, hopefully, states will take more action to try to control that,” he says. “Will more states require reporting of what drugs are prescribed and dispensed? California, for example, is trying to revitalize its pharmaceutical reporting program — CURES — but very few physicians use it or have even signed up to use it. So there have been attempts to make those programs more effective.”

Finally, the Affordable Care Act and its impact on the workers’ comp system remains a big question for 2014 and beyond. “My view is [that] long term it will be beneficial when it is fully implemented. However, in the transition years, there will be problems with people enrolling,” he says. “There may be people without insurance, or they’ve lost their insurance, and that raises a question of cost shifting to workers’ comp.”

Dr. Jennifer Christian

The ACA could be a first step in health care delivery that may become a game changer in helping people avoid or leave the nation’s inventory of long-term workers’ comp and disability claims. That’s the view of Dr. Jennifer Christian, president of Webility Corporation, founder and lead Maze-Masters guide for the Maze-Masters Program, and one of the nation’s foremost activists for people with disabilities.

“The ACA is only the first little step in a longer-term and quite dramatic evolution we are going to see in health care delivery,” Christian said. “It is dawning on more and more experts that the market for health care services is fundamentally driven by patient demand. Although it’s true that health care professionals often select which treatments to provide, it’s the patients who start the process by seeking care. Starting to think more deeply about how to decrease the demand for medical care in workers’ comp is a powerful idea that is gradually coming to the fore.”

Christian contends that looking at sickness and disability from a new angle is the key to reducing demand for “inappropriate, excessive, ineffective, or even harmful care.”

The term “biopsychosocial model” is being used increasingly by workers’ comp practitioners, especially during the recent 2013 National Workers’ Compensation and Disability Conference® & Expo (produced by Workers’ Compensation Report publisher LRP Publications). As Christian says, workers’ comp professionals are getting curious what that really is and what it means for them.

“Here’s the heart of it: The highest cost claims happen when a worker has special risks, vulnerabilities, and needs,” she said. “We must meet the reasonable needs of the whole person in the context of their life predicaments in order to heal them and resolve the situation. The conventional medical model combined with traditional claim and medical management doesn’t work in these situations.”

She believes workers’ comp professionals are starting to embrace this idea and points to the standing room only crowd that attended her session on the subject during the recent conference. “Part of the reason people came to the session was the word ‘biopsychosocial,'” she says. “They are trying to understand what it means and what they need to do differently. I’m trying to help people get a deeper understanding. Looking at problematic situations through this new lens makes you see new ways to improve outcomes.”

Advertisement




Christian believes that seeing new strategies is an important part of the changes taking place in the workers’ comp system.

“Stopping the wrong thing does not make the right thing happen,” Christian said. “As one specific example, I hear a lot of blaming the claimant for demanding opioids. Consider the possibility they are simply ignorant. I suggest you ask yourself what steps you have taken to create an informed consumer.”

Last year, Christian led a group of doctors in developing a free patient brochure with a different slant on opioids. “We couldn’t find any websites or brochures delivering this simple message: If opioid medications haven’t restored the rhythm of your daily life, they may be the wrong treatment for you,  and here are some other treatments that work as well or better,” she said. “So now, why can’t employers and payers prepare their employees/claimants to make better choices by sending them educational materials?”

Christian hopes 2014 and beyond will bring about a focus not only on what needs to change in the workers’ comp system, but on taking simple actions to make it happen such as tweaking programs and finding new solution vendors.

Dr. Marianne Cloeren

Providing access to detox and rehabilitation programs is an important next step in addressing the opioid crisis, says Dr. Marianne Cloeren, medical director of Managed Care Advisors. There are some effective substance abuse programs now available for this issue.

“When someone’s become addicted by following their doctor’s orders, a different mindset is needed,” Cloeren said. “Some inpatient programs have developed specifically to help people with this problem. So the rehab programs are developing pain med addiction services, but they don’t have well-
established relationships with payers, insurance companies. I think we are going to start to see more collaboration.”

Also in the offing, she anticipates, is better collaboration with the injured worker. Cloeren says better informed injured workers can be a major part of the decision-making process, leading to better outcomes.

“I would love to have the opportunity to be more involved in developing really functional informed decision-making in workers’ comp. There is such a need,” Cloeren said. “It is not being done much in workers’ comp, and I feel like we’d have much different outcomes if we found a way to deliver the whole story. [Providing] balanced information to injured workers about their real options — the risks and the benefits. It’s much different than just getting consent before an operation.”

Finally, Cloeren is concerned about cost shifting by the small minority of treating physicians who abuse the workers’ comp system. “Wherever there are loopholes or gaps where we are not paying a lot of attention, there are going to be people taking advantage. Things like the physician dispensing issue and testing that doesn’t make any difference in a person’s outcome,” she said. “As one type of insurance, for example, Medicare — if it gets more strict and puts more controls in, then the providers that were previously taking advantage of weaknesses need to find other systems to take advantage of, and I think they are finding their way into workers’ comp. It’s not the majority of providers that are naughty, but there are naughty providers out there and once they understand how they take advantage.”

Jill Dulich

Removing legacy claims from the system is a major focus for Jill Dulich, senior director of Marriott claims services. She looks to technology as a game changer in 2014.

“What I’d like to see more of is additional predictive modeling, the use of artificial intelligence and systems that will alert us or an adjuster when a case is starting to get off track, outside the boundaries of evidence-based medicine,” she said. “A simple ankle strain should be approximately nine days of disability but someone may be out for seven months. By the 10th day, it would be nice to get an alert.”

A focus on psychosocial issues is another tool to address long-term workers’ comp claims. Dulich said Marriott, for example, is refocusing its efforts in that area.

“We need to look at those issues and do things differently; use out-of-the-box thinking that will bring in additional tools and methods to help these folks deal with the chronic pain they are living with so they have a healthy productive life,” Dulich said. “We have been using the tools but better early identification of the cases that can benefit from this intervention is key.  That will be a really strong focus going forward.”

Chronic illnesses and co-morbidities, especially those related to the aging workforce, is another issue on which Marriott is increasingly being challenged in the states that Dulich manages. As she explained, the vast majority of positions within the hotel chain are physically demanding.

“Basically, there a lot more cumulative trauma type things,” she said. “The impact of the physical requirements of the job compared to the physical abilities of the individuals as we all age is just increasing exposures.”

The addition of stretching programs and other tools has helped, although Dulich says getting longtime employees to change the ways they manage their tasks can be a challenge.

The impact of ACA on the system is also top of mind for Dulich. However, she believes there will be few, if any, noticeable changes for several years.

Advertisement




“All these new people in the system are not used to going to the doctor when they are a little ill, they wait until they are really ill and go to the emergency room. Simply because [health care] is available to them doesn’t mean they’re going to avail themselves of that. As they are not currently educated health care consumers, it’s not their norm,” she said. “I just think that the challenge will start setting in in about two or three years when they begin to understand their availability to health care. I think it will take a decade before there is any real balance to how it is going to affect access to care.”

Dr. Gary Franklin

“The opioid problem is just as bad as it ever was, but in Washington, it is definitely turning around,” said Dr. Gary Franklin, the medical director of the Washington Department of Labor and Industries. “In states that have taken more action such as Ohio, I think we are going to see a lot of reversal.”

Franklin, who has been at the forefront of efforts to address the nation’s opioid crisis, said that and other improvements have not come about quickly. He says changes made in his state, for example, have a long window.

“The changes we are trying to make are very long strategic changes because the problems we face have been going on for so long, like the opioid problem,” he said. “Reversing them or turning things around in workers’ comp is more than a year to year proposition.”

Among the long-term initiatives that are having a positive impact in Washington is a focus on evidence-based decision-making to prevent disability. The Health Technology Assessment Program, for example, helps identify the medical procedures that help recovery.

“An example applicable to workers’ comp, there is no evidence for the efficacy and it causes harm and death, so we don’t cover intrathecal pumps” used to deliver medications, Franklin said. “Those are covered just about everywhere else but [not here] because of the state program.”

The system also requires prior authorization for all advanced imaging such as MRIs for all body parts. “It is all done online through our utilization review program so it doesn’t cost much, and because of the prevention of MRIs, we are saving money,” Franklin said. “Spending went from $32 million to $19 million a year in two years.”

Despite the uniqueness of Washington’s workers’ comp system, he believes other states can learn from and use many of the same tools. “We are a single payer, I know, people say ‘how can others do this,'” Franklin said. “But Kaiser-on-the-job does this. If they can do it, anyone can do it.”

Shahin Hatamian

A shift to better outcomes, as opposed to discounts, is taking hold on the industry, said Shahin Hatamian, vice president of product management and strategy for the workers’ comp division of bill review software creator Mitchell International. The focus he sees is on getting in front of cases early in the claims process and driving care to high-quality providers.

“We’re seeing an increased focus on managed care and utilization review, so our products are becoming more integrated with these important services,” he said.

An increased need for specialty networks has come about in the last year or so. Pre-negotiated rates with the manufacturers of implant solutions, for example, can help contain costs to workers’ comp payers.

“Part is cost shifting, and part is the cost of treatment going up,” Hatamian said. “A physician is doing surgery [for example] and needs an implant. There’s a little screw that looks like something you could get at Home Depot for $1. They’d say ‘this screw cost $5,000 to $10,000 because they are specialty devices.’ There is a huge cost. Then there is a huge markup passing it on to the payers.”

Pharmaceutical issues, especially as they relate to opioids, continue to be a trend the company is seeing. He believes the need to address this issue may result in 2014 being a breakthrough year for technology in the workers’ comp system.

“We are truly looking at a stand-alone strategy that has several prongs,” Hatamian said. “Leveraging data; data analytics. … I think opioids will be one of the drivers to bring that to fruition and make it operationalized, looking at claims with the potential for opioid abuse early in the cycle.”

Hatamian believes workers’ comp payers are more willing to fund the additional level of insight that comes from data analytics. Also, he says they are starting to better understand its value.

The replacement of ICD-10 code sets used to report medical diagnoses and inpatient procedures from ICD-9 codes could wreak some havoc on the workers’ comp system. “My fear is a lot of providers are not going to be ready,” Hatamian said. “On top of that there are jurisdictional issues. Every state is different. You’ll have a mixed bag of what gets implemented and when. We’ll need to be flexible while providers and payers are playing catch-up. It will be interesting.”

Finally, Hatamian believes 2014 might see a major push toward the use of virtual payments in the workers’ comp system, i.e., the use of major credit cards as an alternative to electronic payment through an eBilling clearinghouse.

“With electronic checks, you as a provider have to subscribe to that method of payment, whereas with a virtual card, from say Master Card, most providers are already equipped in their offices to receive these types of payments,” Hatamain said. “There is no selling them on the idea. It’s a no-brainer. I think there will be quite a bit of traction in this area.”

Dr. Jacob  Lazarovic

Opioids, physician dispensing, and the increasing use of data analytics are among the trends of note for Dr. Jacob Lazarovic, the senior vice president and chief medical officer of Broadspire. On the number one issue, opioids, Lazarovic says he sees some reason for optimism.

“Some of the industry data shows some moderation in the use [of opioids], but I don’t think anybody feels the problem is solved,” Lazarovic said. “I think that we and most managed care folks and payers are continuing to look at more and more ways to help contain the impact of opioids.”

Advertisement




Broadspire, he says, is also working with pharmacy benefit managers and ancillary services such as psychological interventions and addiction treatment. “I’ve seen data that shows that the cost of opioids is moderating and certainly there is greater attention to it,” Lazarovic said. “So I’m assuming it’s a cause and effect issue.”

There is increasing attention on physician dispensing, Lazarovic said. He is encouraged by the number of states that have imposed restrictions on the practice.

“It’s a cost issue and a safety issue because if you have office dispensing you are losing a lot of the prospective drug utilization review [you’d have had] if it was dispensed in a retail pharmacy,” Lazarovic said.

Using predictive analytics to address problem claims early and identify the best medical providers is another theme Lazarovic says is becoming prevalent in the workers’ comp system. The company, he said, intends to be a leader in the use of predictive modeling and data analytics.

Finally, industry consolidation is a trend Lazarovic has seen in the last few months, especially among ancillary providers. “How that will shake out for organizations like ours is still up in the air,” he said. “It has the potential for efficiencies and automation, but at the same time, there are risks of increased costs with fewer sources in the market for various services.”

Patrick Walsh

The issue of venture capital in the workers’ comp system is being closely watched by Patrick Walsh, vice president and chief claims officer of Accident Fund Holdings Inc. “I’m fascinated by the amount of money that’s coming into the vendor/service side of our industry,” Walsh said. “Inherently, venture capital is about increasing returns and that is not necessarily a bad thing and to some degree could be a positive, as it could bring very interesting ideas to the industry. But there is also a significant risk of impacts to price and service if there are fewer and fewer choices. That’s something we are going to have to watch very closely.”

Walsh is also concerned about the lack of talent in the system. He said that is something the industry has helped create.

“I really think as the economy has begun to turn, and the workers’ comp market has begun to firm in places and we’ve seen some good growth, there clearly is a talent shortage across all servicing disciplines — claims, underwriting, loss control,” Walsh said. “I think that’s going to be one of the themes that is going to continue next year. It is a big focus, big challenge for the industry.”

Walsh says the regionalization of workers’ comp in terms of claims and underwriting servicing centers, and decisions by companies to reduce the amount of training they provide are the unintended root causes of the talent void.

“Our focus heavily is on changing our thinking on where we hire, who we hire, and how we develop them,” Walsh said.

Among preparations for changes coming in 2014, Walsh says practitioners can take actions on the ACA.

“The only thing anyone can tell anyone for certain [about the ACA] is we don’t know,” Walsh said. “The focus in 2014 for carriers — claims and actuarial — is ‘what’s this doing to us? Is it good, bad, or neutral?’ The people who figure it out early and can act on what they learn are going to have a significant advantage in the market.”

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

Advertisement




Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

Advertisement




We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

Advertisement




Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

Advertisement




Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now and where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

Advertisement




More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]