Email
Newsletters
R&I ONE®
(weekly)
The best articles from around the web and R&I, handpicked by R&I editors.
WORKERSCOMP FORUM
(weekly)
Workers' Comp news and insights as well as columns and features from R&I.
RISK SCENARIOS
(monthly)
Update on new scenarios as well as upcoming Risk Scenarios Live! events.

Janet Aschkenasy

Janet Aschkenasy is a freelance financial writer based in New York. She can be reached at riskletters@lrp.com.

Risk Management

The Profession

Rite Aid's Ryan McGuinness sees reasons to be optimistic about the U.S. economy.
By: | October 15, 2014 • 3 min read

R&I: What was your first job?

I was a claims examiner for former TPA GAB Robbins.

Advertisement




R&I: How did you come to work in risk management?

My predecessor at Rite Aid was leaving for another position outside the company and thought I’d be a good fit for Rite Aid. That’s how it all started. I had been working locally with PMA Insurance at the time as a claims examiner. It was a job opportunity. When I first got here I worked as a claims manager. Quickly, my interest was sparked in risk management as I was exposed to all aspects of the industry.

R&I: What is the risk management community doing right?

Risk managers have continued to do a much better job at risk identification and quantifying risk. As a result, I’d say that, today, risk managers are in a much better position to analyze and mitigate risk.

R&I: What could the risk management community be doing a better job of?

Capitalizing on opportunities to develop stronger partnerships with business partners within our own organizations and helping to educate them on recognizing and avoiding loss.

R&I: What sorts of challenges have colleagues been able to help you tackle?

Ryan J. McGuinness, senior director risk management, Rite Aid Corp.

Ryan J. McGuinness, senior director risk management, Rite Aid Corp.

The insurance and broker communities have significantly evolved in developing innovative ways to help measure and quantify risk, which, in turn, helps risk managers respond to the changing insurance landscape.

R&I: What was the best location for the RIMS conference and why?

San Diego. It’s a really nice venue. The convention center is centrally located and the city itself seems uniquely capable of accommodating large crowds.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

The emergence of cyber risk and cyber liability.

R&I: Besides the cyber issue, what emerging commercial risk most concerns you?

The rising cost of health care as it relates to workers’ compensation.

R&I: Is the contingent commission controversy overblown?

I think the contingent commission controversy is past at this point and I have considered it to be overblown, yes.

R&I: How much business do you do direct versus going through a broker?

None.

R&I: Are you optimistic about the US economy or pessimistic and why?

I am optimistic. Despite the news we see today, there are a lot of good signs the economy is returning. For instance, I think in the retail sector people are beginning to spend more money now than in years past.

R&I: What is your favorite book or movie?

My favorite book is “Last of the Mohicans” by James Fenimore Cooper.

10152014_profession_sidebarR&I: What’s the best restaurant you’ve ever eaten at?

Ray’s at Killer Creek in Alpharetta, Ga.

R&I: What would you do if you weren’t a risk manager?

I would be a youth counselor and fish much more.

R&I: Who is your mentor and why?

Jim Lott. He was the risk manager here at Rite Aid until 2004, when he retired. He’s the one who got me excited about risk and insurance. Through him, I learned about how the insurance procurement and placement process works, and really became interested in the business.

Advertisement




R&I: How many emails do you get in a day?

In the last 6 months I have received or exchanged over 8,000 emails.

R&I: If the world has a modern hero, who is it and why?

Derek Jeter. Simply, he exemplifies good values both on the field and off the field.

R&I: What is the most unusual/interesting place you have ever visited?

Bertchesgaden, Germany. It’s situated in the Alps, and very picturesque.

“I like working a project from start to end, and I like partnering with groups of people working towards a common goal and achieving the results we set out to accomplish.”

R&I: What about this work do you find the most fulfilling or rewarding?

Results. I like working a project from start to end, and I like partnering with groups of people working towards a common goal and achieving the results we set out to accomplish.

R&I: What do your friends and family think you do?

They think I am just in insurance, although they have a remote understanding of what risk management actually entails.

Janet Aschkenasy is a freelance financial writer based in New York. She can be reached at riskletters@lrp.com.
Share this article:

Complex Claims

When Insurers Say No

Complex claims — old and new — call for relationship-building to minimize surprises.
By: | October 15, 2014 • 7 min read
10152014_10_claims_lead

After 23 years managing risk at a company with a product line that includes respirators that protect workers from toxins created during sandblasting, Roger Andrews has learned a thing or two about complex claims.

As director of risk management for personal protective equipment maker E.D. Bullard Co., Andrews has handled thousands of lawsuits over the years, including those stemming from occupational disease claims in which plaintiffs have sought damages for asbestosis and silicosis — diseases that may be contracted 10 to 15 years or more before any symptoms or actual claims arise.

Advertisement




Some cases have emerged because workers used Bullard’s safety gear sporadically or not at all.

Whatever the merits of the underlying cases, it’s no surprise that historically such lawsuits have led insurers to balk at supplying policyholders with indemnification or defense. Clearly, the long-tail nature of occupational disease claims has led to disputes over items including applicable coverage triggers, policy duration, and sufficient notifications (or the lack thereof).

Nevertheless, Andrews said it is rare now that he faces conflicts with insurers, and that is largely due to ongoing relationship-building efforts to ensure he and his underwriters and claims adjusters are on the same page.

Andrews has worked with some carriers for 18 years. “It still makes sense to meet with them regularly once a year, usually in August just prior to our October renewals,” Andrews said, “just to get a feel for the marketplace, any rate increases, and what the situation is if we encountered any unique risks.

Roger Andrews, director of risk management, E.D. Bullard Co.

Roger Andrews, director of risk management, E.D. Bullard Co.

“It may be that we haven’t seen any claims or that we’ve seen lots of claims, and we’d talk through that.”

Working to solidify insurer relationships won’t always do the trick, of course. Most experts agree that insurance challenges continue to become more complex across commercial property as well as liability lines.

Industry attorney Ty Childress, a partner and head of the insurance recovery group at Jones Day in Los Angeles, said there are numerous cases where insurers are apt to deny claims — particularly when the stakes are high and large dollar amounts are at issue.

Such claims include “asbestos and environmental exposures covering multiple policy years,” he said.

Nor are the problems confined to liability insurance, Childress said, noting that the nature of business interruption can also make claims valuation difficult and subject to differing views from legal and insurance experts.

So, what are risk managers to do? Attorneys, brokers and other risk experts have several recommendations for insureds hoping to avoid insurer litigation or failing that, manage such cases more deftly.

One basic step risk managers should take is, prior to policy issuance or during annual meetings with underwriters, make sure any attorney you plan to use is on your insurers’ approved list in case litigation arises, Andrews said.

“One good rule of thumb is to anticipate that litigation will arise under most policies,” said Andrews.

“Not having your preferred attorney or law firm on the insurer’s ‘panel counsel’ list is a source of litigation in and of itself and can really prejudice the effective management of the litigation,” he said.

In addition to tightening the connection with insurers, risk managers should also ask to select the independent adjuster who will work on their account, said John Dempsey, managing director and practice leader, claims preparation, advocacy and valuations at Aon Global Risk Consulting.

Business Interruption Disconnect

Dempsey said there have been some real changes occurring in the property-catastrophe sector of late, in terms of how business interruption (BI) risks are interpreted.

Advertisement




For example, when a law firm noticed its billable hours fell following Superstorm Sandy and tried to collect under its BI policy, the lead insurer on the program interpreted the coverage clause in a somewhat novel way.

“The insurer said, ‘Let’s look at each lawyer [at the firm] and whether the reduced billings were the result of physical damage to the law firm’s property, or other causes such as trees blocking their driveways, gas shortages, or time spent repairing their damaged houses,’ ” Dempsey said.

“Not having your preferred attorney or law firm on the insurer’s ‘panel counsel’ list is a source of litigation in and of itself and can really prejudice the effective management of the litigation.”— Roger Andrews, director of risk management, E.D. Bullard Co.

“If other ‘causes’ were found, the business income claim was reduced, accordingly. Yet, all of these causes were inextricably linked to Sandy and its effects. There’s a disconnect here,” he said.

Clearly, that storm helped to illustrate that insurance products have not kept up with the changing risks companies are facing, he said.

For one thing, because coastal flooding caused significant damage, it was important to know whether that peril was classified as “flood” or “storm surge” under the policy. In some cases, insureds without adequate flood coverage were out of luck, he said.

Furthermore, whereas many businesses did not suffer direct property damage, which is generally required for the recovery of business interruption losses, the wider effects of Sandy meant that thousands of employees had trouble getting to work due to infrastructure damage in the storm’s aftermath.

Others suffered losses because financial institutions closed down for two days.

The result: Although many businesses sustained Sandy-related financial losses, without direct physical damage to trigger coverage, many insureds found they lacked protection under their property BI policies.

That has led some underwriters to urge risk managers to lower their claim recovery expectations.

“They do not wish to insure all of the things that could go wrong following a natural catastrophe like Superstorm Sandy or a terrorist event like 9/11,” Dempsey said.

Insurance company claims adjusters have pointed to the broader economic impact of large-scale events such as Sandy or 9/11 and theorized that certain losses would have been incurred even if a business did not take a direct hit.

This came as a shock to businesses that thought their policy covered all BI losses stemming from Sandy.

And, in fact, this theory — put forth by insurers and insurance adjusters — often has no basis in the policy wording, Dempsey said.

To minimize surprises going forward, Dempsey generally recommends that his clients have a role in selecting the independent adjuster and other insurance company experts working on their account.

“That may sound unusual,” he said. “But so much of the claims process comes down to personal relationships,” he said.

“Knowing the adjuster and the other experts, and being able to come to a meeting of the minds in terms of objectives and working through problems will pay huge dividends,” he said.

Best Practices

Here are some tips for dealing with complex claims litigation involving insurers:

  • Timing issues often create conflicts

One problem that can frustrate risk managers is claims-made liability coverage, which requires policyholders to give notice of circumstances that may give rise to a claim in the future, said attorney Mark Garbowski, a shareholder at Anderson Kill.

“That’s caused disagreements as to whether a new claim related back to an earlier claim or circumstance, and as to which tower of policies it went into,” said Garbowski, whose practice concentrates on insurance recovery on behalf of policyholders, with particular emphasis on professional liability coverages.

He advises insureds with claims-made coverage to expand their notification to insurers about potential claims.

“You might have a claim that comes in today and that relates back to a notice of circumstances two years ago. In that case, I suggest you give notice to policies in effect today as well as those in force two years ago,” he said.

  • Know state law

Frequently, when liability cases emerge, the third-party plaintiff will demand to see all communications between the insured and its underwriters. It is of paramount importance to know the law in your state, said Childress.

“Policyholders need to be wary of whether or not their communications with their insurers may be revealed to the underlying plaintiff,” he said. The answer may depend upon whether the insurer is a primary or defending insurer.

  • Review coverage extensions and exclusions annually

“When meeting with underwriters — something that should take place once a year at least — risk managers should discuss coverage extensions or exclusions that may be or should be on the policy and that could be of particular concern,” said Andrews of E.D. Bullard.

Advertisement




“A lot of the time, litigation arises because the risk manager thinks there’s coverage and the claims person says no, there’s this or that exclusion,” he said. “You want to know [in advance] what conditions might be imposed on the policy.”

  • Understand Your Cyber Liability Coverage

As cyber liability becomes a growing area of concern, risk managers need to be increasingly careful about what they’re buying.

“In the case of data breach, you’ve got to notify every single person that’s been affected,” Andrews said, and the costs can be monumental. If you want indemnification for such expenses, make sure whatever program you choose includes breach mitigation coverage.

Janet Aschkenasy is a freelance financial writer based in New York. She can be reached at riskletters@lrp.com.
Share this article:

Risk Management

The Profession

The Greenbrier Cos. Inc.'s Donna Tyner says a key part of risk management's appeal is that it's always brand new.
By: | October 1, 2014 • 4 min read

R&I: What was your first job?

My first official job right out of college was as a management trainee for the former First Interstate Bank in Portland, Ore.

R&I: How did you come to work in risk management?

Like a lot of risk professionals, I started in the world of insurance. I first worked as a claims adjuster for Allstate Insurance Co. and then looking for a different challenge, I went to work for the State of Oregon as a compliance officer. Eventually I ended up working for the state’s risk management division. I provided risk management consulting services to all state agencies such as the Oregon Health Sciences University, police and the department of transportation.

R&I: What is the risk management community doing right?

I have been in risk management for many years now, and I like how it’s grown to be a professional business with a code of conduct and educational standards, and that it encourages people to get an ARM or CPCU designation. I like that we’re encouraging youth to pursue risk management careers, and think highly of all the mentoring we provide each other. I’m proud to be part of such a professional industry.

I like that we’re encouraging youth to pursue risk management careers, and think highly of all the mentoring we provide each other.

R&I: What changes have you needed to deal with in shifting from the public to the private sector?

Advertisement




At the Port of Portland [Ore.], nearly everything you do is transparent. You’re free to share all sorts of information. At a publicly traded company, not everything can be shared. The only thing that’s truly public is the annual report.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

The accessibility of information is the biggest change. I think I got my work computer in 1991. There was no Internet at the time. Information was not at your fingertips. Back in the day, I’d have to create things from scratch. Today, things are different. You can find templates and samples online. I used these resources when I was learning about business continuity planning.

Donna Tyner Corporate Risk Manager The Greenbriar Cos

Donna Tyner
Corporate Risk Manager
The Greenbrier Cos.

R&I: What emerging commercial risk most concerns you?

Technological risk is concerning. We’ve all heard stories about what happened with TJ Maxx and Target. And now, people are talking about what an unscrupulous person could do with drones in terms of obtaining proprietary information.

R&I: Is the contingent commission controversy overblown?

I would say no. I want to know if my broker is receiving contingent commissions, so I can factor that in to the advice they’re giving me. I can also look for patterns over time.

Years ago, I brought my children to work during “Bring Your Child To Work Day” so they think that all I do all day is sit in front of a computer, attend meetings and talk on the phone.

R&I: Who is your mentor and why?

Andrea Marzette the former risk manager for the Port of Portland. She retired this past March. She was my boss for 13 years. She showed me what it means to lead and that being a great manager means making sure your employee is successful.

R&I: What have you accomplished that you are proudest of?

My role as a parent. I am proud of my two sons. One is a senior and the other is a sophomore in college. They are just great young men and they’re gifted in many ways. Fortunately, I’ve had lots of great support from my family, and my husband of 30 years.

R&I: Were you a stay-at-home mom?

Pretty much, yes, until my youngest was in preschool. I was fortunate to be able to work two days a week in a job-share arrangement at the risk management division with Robert Nies. You can only do this sort of thing if both of you have a solid work ethic.

R&I: What is your favorite book or movie?

I happen to love Malcolm Gladwell. My favorite book of his is “The Tipping Point.” It investigates the factors that go into making incremental change. He has written five books and I’ve read them all.

10012014_16_the_profession_sidebar

R&I: What’s the best restaurant you’ve ever eaten at?

I love E-San Thai food in Portland.

R&I: What is the most unusual/interesting place you have ever visited?

Among my favorites are the Mayan ruins in Honduras, Guatemala’s ruins of the sun and moon, the Coliseum in Rome, the Vatican for its artwork, and Frederick Douglass’ house in Washington, D.C.

R&I: What is the riskiest activity you ever engaged in?

I think when I went body surfing in Limon, Costa Rica. I was in college at the time. I didn’t check to see if there was undertow or look for any other risks.

R&I: If the world has a modern hero, who is it and why?

Roy Pittman. He has a wrestling club at Peninsula Park Community Center in North Portland and has coached thousands of young men and women over the years. Many of his students have won state, regional and national titles.

R&I: What about this work do you find the most fulfilling or rewarding?

Advertisement




What I’ve always loved about risk management is that it’s so stimulating. Something always comes up that is brand-new.

R&I: What do your friends and family think you do?

Years ago, I brought my children to work during “Bring Your Child To Work Day” so they think that all I do all day is sit in front of a computer, attend meetings and talk on the phone. Some of my friends think I just buy insurance and prevent employees from getting injured. It’s hard to describe what we do in simple terms. I take the time, however, to explain our role in managing risk.

Janet Aschkenasy is a freelance financial writer based in New York. She can be reached at riskletters@lrp.com.
Share this article: