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Proactive Policies Help Companies Handle Workplace Harassment

The spotlight on workplace harassment is new, but the issue itself is not.
By: | April 2, 2018 • 7 min read

#MeToo, #TimesUp – these hashtags and the movements they represent were originally focused on the entertainment industry and political figures.

But no longer.

Over the last few months many corporate executives have been outed for their inappropriate or illegal actions toward women in the workplace. And it seems that a new bold-faced name appears in the headlines each week.

These high-profile cases are just the tip of the iceberg. While the big names may grab headlines, no industry or company of any size is immune to the risk of workplace harassment. Increased awareness around the issue is emboldening others to speak up and sexual harassment is now an exposure knocking on the door of every boardroom.

“We’re in the midst of a culture shift where society is paying more attention to equality and safety in the workplace,” said Gregg Glick, Senior Vice President, Private/Not-for-Profit Practice Lead, Private/Healthcare Division, Allied World.

But while the spotlight is new, the issue at hand is not.

“As an insurer, we have long seen allegations of workplace harassment resulting in Employment Practice Liability (EPL) claims, including not just harassment but also hostile work environment and wrongful termination,” Glick said. “Our focus has always been on managing the risk by fostering a safe work environment. It’s not just about an insurance policy, it is about a culture.”

Establishing a corporate culture in which safety and respect are valued and protected is the best way to manage the exposure long term.

To create and continually reinforce this culture, companies need to reevaluate their policies, incident reporting procedures and response plans. To ensure up-to-date, clear and effective policies, they can rely on the risk expertise of insurers with experience in and commitment to the employment practices liability space.

Strong, Current Policies and Consistent Enforcement are the Foundation for a Healthy Culture

Gregg Glick, Senior Vice President, Private/Not-for-Profit Practice Lead, Private/Healthcare Division

Small companies may have no formal written policies whatsoever. And employers with outdated policies may also be underprepared to address the exposure.

“Policy effectiveness is determined by how contemporary and well-reviewed they are, and by how they are deployed and enforced in the workplace. This is where you’re going to start to build the culture that’s going to foster a safe environment,” Glick said. “Policies that are outdated, unclear, or not well-communicated to employees don’t achieve much.”

Employee handbooks that haven’t been updated in a decade may no longer be comprehensive enough to address that various realms and modes in which workers interact. For example, they likely do not account for the prevalence of smartphones and social media or address cyber bullying.

Employees also need a way to report inappropriate behavior safely. This could mean setting up an anonymous hotline managed by a third party, or a private way to notify human resources. It has to be more robust than simply having employees report incidents to their direct manager.

“What if the manager is the harasser?” Glick said. “Few people would be willing to confront him or her directly and risk threatening their job status. Employees need to know how to share information with someone who’s going to help them. These policies have to be clear, easy to follow, and communicated often.”

Once an employee files a complaint, there also must be clear investigation procedures.

“Given the amount of public attention on sexual harassment in the workplace, companies may be inclined to take immediate action because they don’t want to look like they stood by and did nothing,” Glick said. “Every allegation must be taken seriously, but companies need to be able to conduct thorough investigations.”

Making a reactionary decision like terminating or suspending the accused on the spot could result in a wrongful termination claim if it turns out there was no bad behavior, and damage the company’s reputation.

If an investigation corroborates an employee’s claim and someone is guilty of inappropriate or hostile behavior, a clear response protocol should dictate next steps. A zero-tolerance policy ensures that a company’s response is consistent across the board, regardless of the severity of the claim or the position of those involved.

Every step that would normally be taken to terminate an employee should remain in place, and documented thoroughly. Rushing through an investigation or skipping steps of the process can be a violation of employment law and open a company up to wrongful termination lawsuits.

“Not every incident is preventable. There will always be bad apples, but your culture is defined by how you respond,” Glick said.

Be Prepared to Act Quickly and Effectively

Crystal clear procedures make it easier to catch, investigate and respond to incidents, but crafting these policies to be compliant and accessible to employees can be challenging, especially for small and mid-size companies with more limited resources.

Tools are available in the marketplace to help risk managers strengthen their defenses.

Third party risk management consultants and service providers can help companies stay up to date on their state’s employment laws via monthly updates and real-time alerts. Training modules for employees also remind them of the consequences of inappropriate workplace behavior and reinforce company policies. Portals and libraries for human resource managers provide template forms and posters, additional training materials, and regulatory news.

Some also offer handbook-building tools, which allow companies to craft custom policies that are applicable to their workforce while remaining compliant with federal and state law. This can help firms update existing policies or create completely new ones.

Around-the-clock helplines are another critical resource that risk managers would be remiss not to take advantage of. Employment practices attorneys with state-specific expertise are on call to answer insureds’ questions and offer advice, free of charge.

“This is an opportunity to have an experienced attorney walk you through a situation before it turns into a claim. If someone has a complaint, and you’re unsure of the proper protocol, how to launch an investigation, or what is required by law in your state, the answer is only a phone call away,” Glick said.

“We offer a 24/7 helpline, among other services, through our relationship with the workplace HELPLINE, powered by Enquiron®, a risk management consulting firm. Companies that utilize these services proactively position themselves for better claim outcomes.”

Unfortunately, many HR managers and risk professionals are unaware of services, missing opportunities to mitigate their exposure and avoid potential claims. Rather than leave insureds to find these resources on their own, Allied World works with brokers to educate them about their offerings from the time a policy is bound.

Heightened Risks and Changing Markets Require Working with High Quality Partners

Amid a societal shift demanding change, companies can expect employment practices insurance coverages to shift as well. Awareness will likely drive up claim frequency, and settlements for EPL lawsuits are climbing. As a result, rates could trend upward as well.

“Brokers can anticipate some market hardening, rising rates, tighter terms and conditions,” Glick said. “We have always been careful and thoughtful about risk selection, and thus are well positioned to not have to react hastily amid the culture shift and changing market conditions. All insurers in this space should be proactively analyzing their books to ensure they are accepting the right risks.”

Allied World evaluates each risk on its own merits, looking at criteria like industry type, employee size, and region. It carefully evaluates its portfolio on a regular basis to check its aggregate risk and limits. This means they are positioning themselves to stay competitive in the market over the long haul and avoid sudden changes in terms and conditions or rates.

“And that’s what you want in a partnership – no surprises,” Glick said. “We’ve been in the market for 10 years. We understand the needs of mid-size companies, and are committed to meeting those needs consistently.”

Communication with brokers and insureds is key to staying ahead of the risk and positioning every party to be prepared for changes in the exposure itself and the market landscape. Allied World’s senior leaders, each with an average 10 years of experience in the field, undergo continual education around the changing nature of the risk and regulatory landscape. Deployed throughout the country, they are always on-hand and accessible to answer insureds’ questions.

To learn more, visit https://www.alliedworldinsurance.com/.

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




Allied World is a global provider of innovative property, casualty and specialty insurance and reinsurance solutions.

More from Risk & Insurance

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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.

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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.

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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?

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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.

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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 an 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.

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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]