Public Sector Risk

Risk on the Thin Blue Line

Targeted killings of police officers are on the rise.
By: | June 6, 2017 • 6 min read

Police work is a risky job that is getting even more perilous.

The number of police officers shot and killed in the United States in 2016 increased by 64 (56 percent) over 2015, according to the National Law Enforcement Officers Memorial Fund.

If that statistic seems startling, consider the number of ambush-style police killings in 2016 — 21 — the highest total in more than two decades.

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And that figure may well be surpassed in 2017, said Ken Wallentine, senior legal advisor for Lexipol, which provides best practice policy guidance to public safety agencies across the nation.

“Sadly, we are on track for another tragically record setting year,” with 17 targeted police officer killings already in 2017, said Wallentine, “and we’re not even half way through the year. I don’t remember ever seeing this before.”

Nancy Sylvester, managing director of Arthur J. Gallagher’s public sector practice is dismayed, but not surprised, by fatal gun attacks upon police.

“Is it increasing? Yes, and I’d never heard of that happening before. But now it’s expected.”

Barry Scott, risk manager for the City of Philadelphia said he’s trying not to be surprised, but instead to be aware about what’s going on.

“But certainly it’s an unusual phenomenon,” he said.

Build Trust, and Underwrite

The challenges facing public sector administrators charged with protecting police was part of Scott’s presentation at the RIMS conference in his city back in late April: police tactical awareness, officer mental health and well-being, police department support and training, “those were just some of the areas we talked about and it was very well received,” Scott said.

Fortunately, Scott was able to speak from a position of strength, having worked with the Philadelphia police department and its 6,300 police officers “to provide them with the tools they need to stay safe.”

Sensitivity training, de-escalation techniques and better ways of responding to the mentally ill underpin a new police culture. It’s also a culture where the mental and emotional well-being of officers is emphasized.

There were two targeted attacks resulting in injuries to Philadelphia police in 2016.  Philadelphia experienced just one police fatality by firearm since August 2012.

Unfortunately, the risk profile Philly’s police officers face from violence remains high, and much of this has to do with one word, Scott said: trust. It’s the one thing that keeps him busiest — building trust within the community while ensuring police have the tools needed to protect themselves along with the community.

“From a risk perspective, we’re working with the mayor’s office, city council and legislative offices to try and make sure the laws we have are ones that end up leaving us better protected.”

A case in point, Scott said, is last year’s DNC convention in Philadelphia. Laws were adjusted to make incidents associated with public demonstrations a lower-grade crime “so that we weren’t arresting a number of people during the convention who were just demonstrating and exercising their civil rights. That kind of step really takes away some opportunities for more violent or dangerous confrontation,” he said.

That didn’t stop the city from purchasing protester insurance for the convention. As Scott told a reporter last year, “We’re looking to protect the city’s financial resources for the taxpayers who have given us those dollars to steward. So if we are able to buy insurance to do that, then it’s a great deal.”

Mental Health: a Two-Way Street

For others, the main problems associated with violence against police aren’t legal or monetary, but cultural. Groups like Black Lives Matters leave cops “grappling with a conundrum,” said Wallentine: citizens want police officers to effectively police their communities and yet “are hyper-critical of us when we engage in policing.

“We are hyper-exposed to danger and one of the cultural artifacts is that some officers are saying, `If I don’t want to get into trouble, I shouldn’t do anything.’ ”

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Wallentine’s advice to police departments is to respond in a more nuanced fashion to the culture of caution that has always marked police work. That means creating an environment where police officers remain vigilant, but don’t over-read the clues in a domestic situation, for example (the most dangerous call for police), before that situation actually unfolds.

“We want officers to be careful, but we can’t have them behaving with hyper-vigilance and treating citizens as if they’re all the enemy. First off, that’s not so, and secondly, that’s not very effective policing.”

Sylvester agrees. Once a public sector risk manager, now a broker who gives advice to risk managers, she said the new catchphrase in police/community interactions is “managing crisis confrontation.”

Sensitivity training, de-escalation techniques and better ways of responding to the mentally ill underpin a new police culture. It’s also a culture where the mental and emotional well-being of officers is emphasized.

Sylvester said judging mental fitness for duty now occurs well before a raw recruit steps into a police car with an older, more experienced officer.

“Now, there’s a matrix test for the mental and emotional well-being of new recruits. Before, that would come later in their training; they’d `get around to it.’ They deal with that upfront now.”

Costs Count, Too

“Be careful out there!” That was the staff sergeant’s admonition to officers leaving the precinct on the hit TV show Hill Street Blues years ago. But it might just as easily come from the police department’s chief accountant. That’s because the number of officers heading out the door for some of Sylvester’s larger metropolitan clients have a hard time filling their full roster for law enforcement.

“Do more officers have to take more shifts and what does that do at the end of the day? But it also presents a different picture to the insurance underwriter.” Sylvester admits her clients “hate” her insurance application because it’s so long, including a liability costs review centered on a great many things, including training, dispatcher and police dog numbers, jail size, and hot pursuit policies.

Dale Stockton, executive director of Below 100, a national officer-safety initiative designed to reduce police line-of-duty deaths, underscores the dangers hot pursuits pose to police officers with a story: at the end of May, Bluefield, West Virginia’s Lieutenant Aaron Crook was killed when his patrol car in pursuit of a suspected drunk driver collided with another Bluefield Police Department patrol car and a West Virginia State Police patrol car.

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“The devastation,” said Stockton, “is as great to the family as when an officer is lost in gunfire incidents.” Nearly as sad, he added, vehicle crashes “are about as preventable as it gets.”

Stockton’s story is intended to make an even more sobering but largely unknown point: the risk posed by increased police shootings is far below that of police vehicle crashes.

The cost to law enforcement of police officer injury is also difficult to estimate, said Stockton, including life time medical, workers’ comp payments, and payments for pain and suffering. People remember media stories about police dying in a hail of bullets or high-profile vehicle crashes, he said. But there are plenty of additional costs that never make the pages of the newspaper.

David Godkin is a freelance magazine writer based in Toronto. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

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]