Dan Reynolds

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

Editor's Letter

Enough Already

The New York AG’s pursuit of Hank Greenberg has now gone well past the ridiculous.
By: | September 20, 2016 • 3 min read
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In this era of rigid and sometimes rancorous political disagreement, it’s notable when members of opposing political parties publicly agree with one another.

It’s even more notable when those leaders both shouldered the responsibility of leading the State of New York, home to one of the most vital economic and cultural centers on the planet.

That’s precisely what former New York Governors George Pataki and Mario Cuomo did.

They penned a letter to the “Wall Street Journal” expressing their dismay that the Attorney General’s Office of the State of New York was still pursuing a civil case, using the powers granted by 1921’s Martin Act, against Hank Greenberg and another former AIG executive, Howard Smith, for reinsurance transactions that took place more than 15 years ago.

The case was initiated by former NY State Attorney General Eliott Spitzer and is being carried on by the current AG Eric Schneiderman.

The AG office’s aim, to “continue to seek, among other remedies, several forms of injunctive relief [against Greenberg] including but not limited to a ban on participation in the securities industry and a ban on serving as an officer of a public company,” struck both former governors as absurd.

“Mr. Greenberg has never worked in the securities industry and he hasn’t been an officer or director of a public company in eight years,” — Former Gov. George Pataki, a Republican, and former Gov. Mario Cuomo, a Democrat, in their letter in the “Wall Street Journal,” published May 12, 2013.

It is absurd. Hank Greenberg never worked in the securities industry. He has no intentions of working in the securities industry.

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“Mr. Greenberg has never worked in the securities industry and he hasn’t been an officer or director of a public company in eight years,” Pataki, a Republican, and Cuomo, a Democrat, wrote in their letter in the WSJ, published May 12, 2013.

Now here we are, more than three years past that date and Greenberg is still being harassed by the government.

Cuomo and Pataki also cited a 2007 study commissioned by then NY Mayor Michael Bloomberg and Sen. Charles Schumer that the “unpredictable nature of the legal system” in the U.S. is a major factor in undermining New York’s competitiveness as a financial center.

“New York’s ‘attractiveness to international companies’ is diminished by the ‘perception that penalties are arbitrary and unfair,’” the study, as cited by Pataki and Cuomo, concluded.

We concur.

In an opinion piece in the “Wall Street Journal” in June of this year, Thomas Donohue, the president and CEO of the U.S. Chamber of Commerce, referred to New York’s case against Hank Greenberg as a “vendetta.”

We can only ask for what?

Hank Greenberg is without question one of the greatest of the “Greatest Generation.”

He was among those that stormed the beaches of Normandy in 1944 when Allied Forces rose to wrest Europe from the grip of a murderous tyrant.

In his lifetime, he’s created, literally, tens of thousands of jobs. That’s a lot of taxes being paid to cover the salaries of a lot of politicians.

Hank Greenberg, chairman and CEO, the Starr Companies

Hank Greenberg, chairman and CEO,
Starr Cos.

In the four years alone before Spitzer brought enough pressure on AIG’s board to push Greenberg out, from 2000 to 2004, AIG grew from a company with $81.3 billion in identifiable assets to one of $131 billion in identifiable assets.

At an age when most men are either in the grave or on the golf course, Greenberg is pressing on, continuing to build as chairman and CEO of the Starr Cos.

Greenberg’s attorney, David Boies, is more than capable of defending him. What we are about here is decrying a waste of taxpayer money in a nakedly pointless pursuit.

Politicians don’t create jobs. Business leaders do.

It’s high time the politicians left this one alone.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]
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Memory Care

The Dying Light

Millions suffer from Alzheimer’s and other forms of memory loss. Memory care is a fast-growing field, but residents in memory care facilities are fragile and difficult to care for. The risks are formidable.
By: | August 31, 2016 • 10 min read
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Consider first these numbers.

There are 5.2 million people in the U.S. suffering from Alzheimer’s, the chief form of dementia that is invariably fatal, usually within eight to 10 years of diagnosis.

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With age being the chief risk factor, and the baby boomer generation crossing over the age of 65 by the thousands every day, the number of people with Alzheimer’s and other forms of dementia in this country is expected to grow to between 14 million and 16 million by 2050.

Ten to 15 years ago, the sector of health care referred to as memory care was barely known. Now, those that own and manage long-term health care facilities say it is the fastest growing segment in their industry.

“It’s off the charts,” is how Tim Goux, the founder and CEO of CareRise, a New Orleans-based post-acute-care risk management company, described the growth in the construction of memory care wings and stand-alone facilities.

Frank Russo, senior vice president, risk and legal affairs, Silverado Senior Living

Frank Russo, senior vice president, risk and legal affairs, Silverado Senior Living

“The need for quality memory care communities is unprecedented,” said Frank Russo, senior vice president, risk and legal affairs at Silverado Senior Living, an Irvine, Calif.-based company that devotes itself exclusively to the care of patients with Alzheimer’s and other forms of dementia.

Lancaster Pollard, a privately held investment banking firm based in Columbus, Ohio, conducts an annual survey of C-suite executives in the long-term health care space.

Steve Kennedy, a senior managing director with the company, said that 61 percent of those executives surveyed feel that memory care will be the fastest growing segment in the senior living space in 2016.

Kennedy said construction investment in the space ran about $4 billion in 2015 and is ticking up at about a 5 percent pace annually.

“There is enormous and continuous demand for stand- alone memory care communities and as a result we are witnessing more construction of new memory care facilities than we have ever seen before,” said Silverado’s Russo.

“It’s a disease and a condition that is expensive and unfortunately, there is no current cure,” said Kennedy. “It’s sad what’s driven the growth of this.

“But on the positive side, having a significant number of facilities that can meet the very specific and unique needs of dementia and Alzheimer’s patients is a blessing that didn’t exist five years ago.”

Bank lending has gotten tighter, but there are enough private and public sector lending sources to build facilities.

The demand, the need, is certainly there. And insurance capacity, while cautious, is ample in long-term health care.

A Formidable List of Risks

This all brings us to the risks, and the risks in memory care are formidable.

To begin with, we are talking about a patient population that is losing and will completely lose one of the most important tools a patient can have: the capacity to cooperate and take an active role in their health care and well-being.

“Let’s say you are on a liquid diet. They have a swallowing issue. But they see a cheese Danish sitting on a plate somewhere and they eat it. That compromises their airway and that can lead to death.” — Barry Weiner, managing director, health care, Aon

“Among many other medical diagnoses there is a very significant progressive morbidity,” said Patricia Hughes, a senior vice president for healthcare with OneBeacon.

“This is such an awful disease that in the final stages people will become bed-bound, needing around-the-clock care. With that immobility comes a number of other issues, pressure ulcers, etc.,” she said.

As in all senior care, the most frequent loss occurrence in memory care is falls. But the most severe risk in memory care is elopement; that patients with no memory and a penchant for wandering will escape a facility and be at the mercy of either the natural elements or predatory humans.

“When a family entrusts you with the care of their memory-impaired loved one, this also includes safety,” Russo said.

“Elopements are a very realistic threat to all memory care communities and an elopement gone wrong can be nearly indefensible from both a licensing and litigation standpoint,” he said.

“If a provider does not put in the time, effort, training and education required to handle this kind of care, insurance costs, negative PR or litigation can quickly and easily put them out of business.”

Ten years ago, according to CareRise’s Goux, assisted living in Texas and Florida was overbuilt and thus heavily marketed. That resulted in patients in need of overall skilled nursing care, including memory care, who were not always being properly screened for assisted living facilities.

Because of some improper screening, some of those assisted living facilities experienced elopements and in some cases, people lost their lives.

Tim Goux, founder and CEO, CareRise

Tim Goux, founder and CEO, CareRise

“That’s an easy courtroom judgment, and in many cases, quick settlements of a million dollars are the norm,” Goux said.

“There is a hit to reputation, to trust,” said OneBeacon’s Hughes.

“Now the other families are concerned. ‘That could happen to my mother or father.’ ”

The full list of risks in memory care is very long and for family members, it can be emotionally wrenching.

Dementia patients lose inhibitions. Patient-on-patient aggression occurs. Patient-on-caregiver violence happens.

“Residents with dementia and Alzheimer’s can be very challenging to care for if you aren’t well trained and educated on the disease process,” said Russo.

“An Alzheimer’s resident can demonstrate difficult behaviors including physical aggression [to both staff and residents]. Care staff must be able to recognize triggers for these behaviors and understand the appropriate corrective measures, which may include repositioning or redirecting. Due to these types of behaviors, typically not found in a traditional AL [assisted living] or SNF [skilled nursing facility] setting, the risk for workers’ comp claims and elder abuse can be elevated,” he said.

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The flip side of that risk is an allegation of neglect or abuse by the caregiver. It takes a special and a specially trained person to care for someone who might hit them or abuse them in some other fashion.

Sexual relationships may develop between memory care residents. Determining whether both parties consented is very difficult to do. Imagine breaking that kind of news to a daughter or son.

Medication issues, and adherence to medical treatment become much more complicated. Remember, any cooperation from the patient is out the door.

“Let’s say you are on a liquid diet. They have a swallowing issue,” said Barry Weiner, a managing director with Aon’s health care practice based in Philadelphia.

“But they see a cheese Danish sitting on a plate somewhere and they eat it,” he said. “That compromises their airway and that can lead to death.

“Every challenge is amplified in memory care,” Weiner said.

Now let’s add another layer of risk. Given all the difficulties in taking care of patients with memory care, there is now and will continue to be a shortage of qualified staff and management to care for this patient population.

“The risk is supplying the HR to meet the demand,” said Goux. “It’s not technology. It’s not bricks and mortar.

“The real issue is the lack of clinical caregiving human resources to meet demand irrespective of whether the building is 30 years old or the Ritz-Carlton.”

Burnout and turnover in geriatric care is severe. Goux estimates that 50 percent of the head nursing talent in general senior care living turns over every year.

“It is a very specialized management and personnel workplace,” said Lancaster Pollard’s Kennedy.

“… We are witnessing more construction of new memory care facilities than we have ever seen before.” — Frank Russo, senior vice president, risk and legal affairs, Silverado Senior Living

“By nature your supply of staff and management is going to be a little less fertile than those forms of care that have been around longer,” he said.

“When I go to association meetings in Wisconsin, the biggest topic is how do we recruit staff and keep staff at a competitive wage?”

“There is a tremendous amount of turnover and burnout in this industry,” said Hughes.

“One of the biggest risks to these facilities is who you hire and background checks,” she said.

“Do they have experience and if not do I provide training for this very specialized type of care?”

Setting Expectations and Other Best Practices

Given the high litigation exposure in this sector, and the emotional pain the family members of memory care patients must invariably be in, clear, documented communication and setting reasonable expectations are key risk mitigation tasks.

“Communication with authorized family members is extremely important,” said Hughes.

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Part of that means being clear with family members about the stages of degeneration their relative is going to experience. That includes being frank about such touchy subjects as elderly sexual relationships, aggressive behavior, the near-certainty of falls and the threat of elopement.

“As the experts in memory care, it is our responsibility to educate our families on the disease(s) and the progression of the disease,” Russo said.

“Seeing their loved ones in this condition can be a very scary time for families. Especially ones who have never experienced this before. We’ve experienced this thousands of times and hopefully we can provide families with the proper knowledge and understanding to better accept the difficult realities associated with it.

“When you don’t have reasonable expectations, that is when you have lawsuits,” he said.

Barry Weiner, managing director, Aon

Barry Weiner, managing director, Aon

“Many of my clients do a very good job of this,” said Aon’s Weiner. “They start having those discussions very early on.”

Having processes in place, documenting them and communicating clearly and professionally with your insurance carrier is also very important.

“A facility can protect themselves by having protocols in place and continually following them,” said Alicia Marsiglia, a vice president and allied health care product head for Hiscox.

“Even if a fall does happen, we can point to all the things they did right to try and prevent that so that negligence is harder to prove,” she said.

Marsiglia said underwriters view more kindly organizations that deliver coverage applications that are clear and very well organized.

“When I see an application that is concisely completed, that there seems to be thought behind the plans and protocols that are in place, I feel like that is always going to be a better risk,” she said.

“It’s just an offshoot of what they are doing in their risk management,” she said.

According to Silverado’s Russo, regular inspections of memory care facilities to examine and prevent the dire threat of elopements, and regular assessments of residents to gauge the progression of this dread disease are two such protocols.

There are hopes that foreign-trained nurses and aides can help ameliorate the staff and management shortage that is so acute in memory care.

But whether foreign-trained staff can come to the rescue or not, CareRise’s Goux said making the best of human resources in this area means taking the time to know what is really important to staff members. Listen to them authentically, he said, and you have a much better chance of keeping them.

“You don’t know what matters to people unless you bring them in and talk to them,” said Goux, whose family has been in the senior care business for generations.

“It needs to be a truly focused group effort within an organization to ensure that the ownership is aware of what matters to those employees,” he said.

That may mean free meals on campus; top-notch health care coverage; or making sure that if one employee group, say the nurses, has a special outing, that the nurses’ aides get their own day out.

Constant mini-focus groups (weekly) with the facility team, ensuring their needs are being met, coupled with rewarding good customer-based performance is a solid way of retaining staff within the marketplace, Goux said.

Russo said stringent testing of prospective hires is one way to avoid litigation, to in fact determine whether an individual is right for a very challenging work environment.

“We take that all the way from the initial hiring process. We even conduct an integrity test for every new associate and if they don’t pass then they don’t work for Silverado,” he said.

“We take a lot of measures to make sure that we have the best people in place that can handle the unique issues and challenges that come with Alzheimer’s and dementia care,” he said.

Those not trained in this area will probably react the wrong way when struck or otherwise abused by a resident. That could well lead to a charge of elder abuse.

“That’s a huge risk to providers when caring for this type of vulnerable and impulsive resident,” Russo said.

With this need and this type of demand, investment money is pouring into this space.

“It’s a disease and a condition that is expensive and there is no cure.” —Steve Kennedy, senior managing director, Lancaster Pollard

But OneBeacon’s Hughes said companies need to decide whether this is the right business for them.

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Does a company have the will and the ability to iron out uncertainty and create consistency in its memory care operations?

“By using an enterprise risk management approach you really decide whether this is a business you want to be in,” Hughes said.

Communicating your mission, your values, and why you will succeed is also very important in the conversation with insurance carriers, Russo said.

“I have the CEO and the CFO meet with the underwriters and explain the purpose of our organization. If we can explain what we do, that we’re not just in this business to make a profit, that we actually are in it to change lives and affect the world, that makes them more comfortable.” &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]
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In Memoriam

Readers’ Tributes to Steve Yahn

Experts in the art and insurance world share remembrances of Steve Yahn.
By: | August 10, 2016 • 5 min read
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Long-time Risk & Insurance® contributor Steve Yahn passed away at the age of 69 on June 28.

We knew Steve as an enthusiastic, skilled reporter who seemed to take a special joy from his ability to make connections and turn information from those contacts into interesting, many times groundbreaking stories.

Former R&I contributor Steve Yahn

Former R&I contributor Steve Yahn

In 2008, a three-part series reported and written for Risk & Insurance® by Steve and Peter Rousmaniere won a national gold award from the American Society of Business Publication Editors.

The series documented the workers’ compensation plight of first responders to the terror attacks that brought down the Twin Towers.

Steve’s journalism career was long and impressive.

Just to note a few hallmarks, he was the first editor of Crain’s Chicago Business in 1978, served as the editor of Ad Age in the 1990s and later included in his resume stints as an editor with the Philadelphia Daily News, the New York Daily News and the Pittsburgh Business Times.

Since his death, we’ve received a number of notes from readers and Steve’s industry contacts. In tribute to Steve, we’d like to share some of those letters with you.

 

“I just today learned that Steve Yahn passed away in June. I was very sorry to hear about it. I only just met Steve in early June for a story he was writing. We ended up having several rambling and wonderful conversations about the insurance market.

“We had a follow-up call one evening while I was at home, and he heard my 10-month old son babbling in the background. He insisted on sending him a couple of knitted caps that his friend had made, and they are adorable. I knew that he needed information for his article, but he had a way of being so kind and genuine that I really wanted to help him with his story as much as possible.

“I don’t know if there is any point in writing this or who will read it. But I was so sorry to hear about his death that I just wanted to express it to someone who might have known him. I want to say to his family and his colleagues that I am so sorry for your loss.”

Lacey Pevey

Vice President of Insurance, Next Insurance

 

Steve was such a great reporter and I enjoyed working with him on art insurance articles. Especially as we got to know each other through the years doing Power Broker® articles. He was always so encouraging whenever I talked to him. It was always a pleasure to hear from him – courteous and professional to the core.

“He will be missed and I will definitely keep his family in my prayers.”

Adrienne Reid

Vice President, Huntington T. Block Insurance Agency, Inc.

 

“I had the opportunity to serve as a resource to Steve for news content a number of times over the years. Steve was a quintessential professional who always took great care and pride to gather information accurately and to provide the most substantive and authoritative content he could access. And he was always just a pleasure as a person. We will miss him as a respected and esteemed journalist.”

Lawrence M.  Shindell
Chairman – ARIS Title Insurance

 

“I met Steve in the 1970s when he became the first editor of Crain’s Chicago Business.

“Over the years we stayed in touch and soon found that we shared a common interest – the Art World. Steve would call or email me to ask if I had any interesting and unreported art related incidents to share. He was always looking for a scoop so that he could best the competition. I had the good fortune to be one of his primary sounding boards and sometimes he even quoted me with my permission.

“Steve’s keen investigative mind and his superior writing skills were his professional hallmarks. I will miss his ‘sweet’ personality and sincere friendship, and so will my secretary, Linda Fritz.”

Scott Hodes

Senior Counsel,Bryan Cave LLP

 

“Steve was irresistible. Despite how busy I always was when he contacted me, he compelled me to put everything aside and get interested in whatever topic currently intrigued him. His passion and good nature were irresistible.

Sandra Berlin Senior Vice President · Fine Art, Jewelry, & Specie — Willis Towers Watson

Sandra Berlin
Senior Vice President – Fine Art, Jewelry, & Specie, Willis Towers Watson

“I will miss him and think of him often.   I will miss those opportunities he brought me to step back and reflect on the greater issues facing us in risk and insurance and grasp the wider view of the dynamics at play. I am saddened by this loss.”

Sandra Berlin

Senior Vice President – Fine Art, Jewelry, & Specie, Willis Towers Watson

 

“While I didn’t know Steve Yahn as well as many did and never had the pleasure of meeting him personally, I did have the opportunity to work with him on several projects he was involved in for Risk & Insurance®, including a wonderful profile of EPIC that he wrote in October 2014.

I was consistently impressed by Steve’s process, his attention to detail, his interest in understanding and accuracy, and his obvious passion for the work he did and his craft — as well as his genuine good nature, friendliness and sense of humor. There was just something about the man that I connected with, enjoyed and appreciated. I was truly saddened by the news of his death. I think we have lost one of the ‘good guys’ here.”

Dave Hock

Senior Vice President, Marketing & Communications, EPIC Insurance Brokers and Consultants

 

“I had the pleasure of working with Steve on stories for nearly 20 years. I only got to meet him once in person when RIMS was in Philadelphia and (former Risk & Insurance® editor) Jack Roberts held a little get-together for us communications folks and R&I writers.

“He was a true professional who made sure he got to the heart of a story, even an insurance story. And he took a personal interest in his contacts.He always asked about my daughters and I in turn loved to hear stories of his boys. He was a proud papa in addition to a pro writer.

“He’s the kind of guy that makes our jobs more enjoyable.”

Chris Weirsky

Communications Director, Marketing & Communications-North America, XL Catlin

 

I had no idea of Steve’s passing. What incredibly sad news. I just spoke to him a few weeks ago and he just sent me a hat and blanket for my baby.

Mary Pontillo Vice President — DeWitt Stern

Mary Pontillo
Vice President, DeWitt Stern

“Never have I met someone who was so enthusiastic about insurance and learning something new.

“His energy and sincere interest in our conversations was touching and inspiring.  Steve was a great collaborator and truly fun to interact with.

“Please give my regards to his family and colleagues that he leaves behind.”

Mary Pontillo

Vice President, DeWitt Stern

 

“Steve will be most sincerely missed! He was always a delight and his curiosity was contagious. I was always so pleased to work with him on his stories and appreciated his enthusiasm for even the most technical and esoteric details around our industry! My thoughts and prayers are with his family.”

Jennifer M. Schipf

Senior Vice President Fine Art & Specie-Americas, Specialty Broker Client Management-Americas, XL- Catlin

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]
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