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

The VP of risk management for the Tutor Perini Corp. understands the value of risk management for a company’s long-term success.
By: | April 8, 2015 • 4 min read
Topics: April 2015 Issue | ERM

R&I: What was your first job?

I was hired at a local bank in Chicago as the first person to go through their new management-training program. I worked in all of the major areas of the bank and ended up in the controller’s office.

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

Over time, I have held all of the major financial positions — I was controller at North Park College, treasurer at Bank Western, and CFO at Adwest Minerals International — a gold mining company.

In each of those positions I managed various elements of risk management. My focus became full time when Mary Gardner hired me into risk management, finance, insurance and claims, at MediaOne during the 1990s and I have enjoyed the job ever since.

R6-14p42_Profession.inddR&I:  What is the risk management community doing right?

When the community started to see itself as an asset to their companies rather than just a cost center, the real value of risk management started to come into focus. Today’s risk managers are pulling together various elements of risk and creating profit centers for their corporations.

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

For me, I need to continue to focus on our partnership with the safety team — project executives that have the most influence on their job site — and to look for trending data to support the various business units.

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

Most people will say San Diego and I would not disagree.

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

Rather than a “fire and forget” [i.e., buy your corporate policy once a year and never look back] tool, risk management is an active partner around the CEO’s table.

R&I:  Is the contingent commission controversy overblown?

Yes.

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

Some of our London placements are direct — otherwise we use our broker to our fullest advantage.

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

The risks of cyber security and the rise of tribalism, which is unsettling communities and country borders.  A return to a Cold War is also a very real risk. We pulled most of our operations out of several Middle Eastern countries for these reasons.

R&I:  Are you optimistic about the U.S. economy or pessimistic and why?

Optimistic. We have a growing economy, relatively secure borders, and we are close to having an immigration policy.

R&I:  Who is your mentor and why?

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I mentioned Mary Gardner, director of risk management, finance insurance and claims with the former Media One in an earlier answer.  She took the time to teach me the important aspects of what we were doing and also gave me an opportunity to learn and grow. That’s the definition of a mentor.

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

Personally: my marriage and our three daughters.  In my professional life, it is those that I was able to support and mentor in the various roles I have been entrusted with.

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

Plus or minus 100.

R&I:  How many do you answer?

Probably 20 or 30. I have several risk managers that work for me around the country and they frequently copy me on emails to keep me apprised as to what is going on at the firm.

Bill Buchan, vice president, risk management, Tutor Perrini Corp.

Bill Buchan, vice president, risk management, Tutor Perini Corp.

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

The last movie I watched was “Fury.” A guy movie to be sure, but the sub-story to the tank battles was “what does it take to build a team?”

In this case, in a tank in the middle of World War II, it was the statement that “I promise to get each of my men home safely,” even though the reality of death was all around them.

I have often told people I was recruiting that I would take the first bullet for them. People have a need and a desire to know that managers and co-workers will stand with them in both good and hard times.

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

I like pizza — so most pizza places are on this list.

R&I:  What is your favorite drink?

I live in Sonoma — so I need to say wine!

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

Cambodia, about 10 years ago. The border had just opened up with Thailand and we were on a guided tour and visited Angkor Wat, which had been a large thriving city containing many religious and ceremonial buildings.

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

A high ropes course in Ecuador.

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

The world has many heroes. We just need to look around us — they are everywhere.

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

When all of the construction crews go home at night to their families.

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

I’ve had a few careers and right now they would say I buy insurance and handle claims.

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

Integrating Disability Management

Experts say risk management talent is needed for true integration and optimum savings.
By: | April 8, 2015 • 8 min read
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Getting risk management and human resources professionals to put their heads together in the increasingly critical area of integrated disability management (IDM) is a state-of-the-art approach — though it’s still the exception to the rule, experts said.

Meanwhile, disability absences and expenses continue to grow, increasing the impetus for change.

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Examining a U.S. workforce of over 132 million, the Integrated Benefits Institute (IBI) finds that workers’ comp costs, including medical payments on claims, are now roughly $58.4 billion. Short-term, nonoccupational disability costs are $26.3 billion, and long-term disability costs are $13 billion, not including medical treatment. Experience varies widely among employers.

While always a challenge, nonoccupational disability costs have continued to rise in recent years due to factors like an aging workforce and a tendency for older employees to be higher wage earners. Then too, employers are more frequently self-insuring both their workers’ compensation and short-term disability risks or maintaining high deductibles for such programs. That raises the stakes for risk specialists wanting to keep absenteeism low and productivity high.

“Short- and long-term disability expenses can [easily] exceed those of workers’ compensation,” said Beth Wood, vice president and claims cost control consultant with Lockton in Kansas City, Mo.

“Statistics vary, however; that amount can be up to five times greater than that of workers’ compensation for some employers,” she said.

What to Do?

Experts generally concede that risk management and HR functions governing workers’ compensation, nonoccupational disability and other functions such as wellness would be more effective in serving employees and keeping costs in check if they were integrated across employer organizations, rather than dealt with as disparate, siloed units.

“We are talking about more than just workers’ comp and welfare plan disability,” said Matt Sears, regional director of employee benefits with EPIC Insurance Brokers and Consultants in San Francisco. “Integration should also begin to start including corporate wellness and safety programs as well,” he said, adding that any one of these units invariably impacts the other.

For instance, said Sears, “We know smokers are 40 percent more likely to have a workers’ compensation claim. Wellness plans to stop smoking will lower comp claims and also impact disability, since smoking-related diseases can often lead to a disability.”

Bringing On Risk Management

But old habits often die hard — particularly when it comes to bringing risk management and human resource personnel together as part of IDM programs and similar initiatives.

Marlene Dines National Integrated Disability Manager Kaiser Permanente

Marlene Dines
National Integrated Disability Manager
Kaiser Permanente

“Generally we do not see risk management groups coordinating benefits for nonoccupational absences. Usually an employer’s HR department is responsible for the management of nonoccupational absences,” said Lockton’s Wood.

“We would definitely recommend, however, that risk managers and their HR counterparts work together to coordinate occupational and nonoccupational absence management and benefits,” she said. “It is important that the employee hear a consistent message as far as recovery from an injury or illness, as well as what to expect when they return to work.”

Risk management typically focuses on prevention, so while these financial pros are most capable of keeping injuries and absences down, human resources administrators are more likely to respond to what is happening in the moment. Thus, when risk management is involved with disability issues, employers may better understand the rate of employee absences and where injuries are coming from, experts said.

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“Risk managers tend to be involved with workplace injury prevention and return-to-work from work-related injuries,” said Wood.

“Risk managers and their teams can use that expertise to partner and collaborate with HR teams in terms of employee wellness, preventing nonoccupational absences and implementing effective return-to-work practices with nonoccupational injuries, and any resulting disability that might impact an employee’s ability to return to work,” she added.

Interestingly enough, this is not a new innovation. “The concept and discussion around integrated disability and absence management have been going on for at least 20 years,” said Wood.

In the last five to 10 years, there has been more focused attention, partly because of the Family Medical and Leave Act’s impact on workforce absence, changes to the Americans with Disabilities Act, and more recently the passage of the Affordable Care Act, Wood said.

Moreover, said Teri Zanders, EPIC vice president of client advocacy, “risk managers tend to have a broader view of regulatory requirements and compliance. While HR teams have their own compliance issues and focus, risk managers typically track a broader range of issues and add an analytical perspective that provide a more holistic, enterprise-wide view.”

Working With Vendors

Marlene Dines, national integrated disability management leader at Kaiser Permanente in Oakland, Calif., said that for the last several years, Kaiser has not only acted as a vendor providing integrated disability and health care services to other firms, but has built its own system combining integrated resources in disability management with resources in employee assistance programs, workforce wellness, and workforce safety, among others.

“Our nonoccupational vendor MetLife also partners frequently with our workers’ compensation vendor Sedgwick for the benefit of our 175,000 employees,” said Dines.

Dines added, however, that “comprehensive integration between IDM and risk management is key to the success of the program.”

Kaiser Permanente’s IDM program has existed since 2005 and has become more robust and better connected with risk management for the past two years.

“Shared strategies between IDM, workplace safety and risk management are predicted to show a positive impact on the prevention of new injuries and illnesses, and an increase in return-to-work outcomes,” Dines said.

“The shift has been from us trying to explain a brand new concept to exploring a concept people are beginning to understand — one they are now seeing documented by research organizations, or hearing about at conferences.” — Matt Sears, regional director of employee benefits with EPIC Insurance Brokers and Consultants in San Francisco.

Kim Passini-Akhtar, senior director of global benefits and HR operations at semiconductor firm IDT in San Jose, Calif. is another longtime fan of integration.

“I’ve worked with EPIC’s Teri Zanders for about 20 years,” said Passini-Akhtar. As a result, she said, for two decades, “we’ve had a fully integrated Leave Of Absence (LOA) program which includes workers’ compensation, as well as long- and short-term disability.”

Is risk management involved? To a small extent only — for now, she said.

Clearly, in some organizations, risk management continues to focus on workers’ compensation insurance, even where integration has been put in place otherwise.

“We partner with risk management as far as what type of insurance we are going to put into place on workers’ compensation,” said Passini-Akhtar.

But it is the benefits team that handles all claims management for long-term disability at IDT — which self-insures its short-term disability risks — in partnership with an LOA TPA.

Results of IDM

So, what sort of results are employers getting?

A 2014 Sedgwick white paper on the subject explained that over three years, employers that implemented IDM programs reduced their internal administration costs by an estimated 10 percent to 20 percent. They also decreased days away from work by 10 percent to 25 percent, depending on past administrative practices.

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And, despite some slowness in getting risk management and HR professionals on the same page, Sedgwick wrote in the white paper that, “Today, we are already helping employers create emerging vision programs that bring together their employee benefits and risk management programs.”

It’s not a slam dunk, just yet. Whereas very few of the Sedgwick clients represented in the report have reorganized to bring risk management and employee benefits professionals together, some do collaborate, said Shawn Johnson, senior vice president of disability services with Sedgwick in Memphis, Tenn.

“Those who are getting the best results are collaborating,” she said.

Moreover, some companies have known the upsides of IDM longer than others, apparently. When Pitney Bowes embarked on an integrated disability management program in the 1990s, for instance, the firm reported it was able to reduce lost time by 42 percent in the first two years and sustain the lower rates.

The company was also able to “reduce medical cost by 25 percent in the first two years and limit medical cost inflation [and] achieve these gains with virtually zero impact on employee deductibles, co-pays or other costs,” according to a Pitney Bowes case study published by IBI.

Productivity Increase is Key Benefit

Among integration’s primary benefits, said EPIC’s Sears, are reduced costs due to increased productivity. He noted that three-quarters of the return on investment from wellness programs comes from productivity gains, and only one-quarter from reduced claims costs, for instance.

Matt Sears Regional Director of Employee Benefits, EPIC

Matt Sears
Regional Director of Employee Benefits, EPIC

Of late, Sears added, “The shift has been from us trying to explain a brand new concept to exploring a concept people are beginning to understand — one they are now seeing documented by research organizations, or hearing about at conferences.

“This exploration takes the form of detailed analysis of each client’s individual situation — this can vary widely, depending on the depth of data maintained by each client. The shift has gone from our teaching an idea to evaluating possibilities.”

The biggest mistake Sears has seen clients make is following the historic pattern of keeping management of workers’ comp, benefits, safety and wellness in silos. At the same time, he said, employers should not be too eager to jump on the integration bandwagon, particularly if they are missing key data on things like employee productivity, which needs to be measured before it can be improved on.

“Setting the foundation by gathering data is a critical place to start, and one we often have to help individual employers secure,” Sears said.

“You’d be surprised at how many employers know how many dollars they’re spending in compensation claims but not their experience with disability and workdays lost. We could realistically spend nine months just gathering that sort of data.”

Challenges Include Carrier Collaboration

Finally, as promising as all of this may sound, not every employer finds it so easy to make the integration work in a seamless fashion, and some say good vendors serving the IDM arena are hard to find.

Paulette Wright, director of benefits, corporate wellness and HR operations with the Hackensack University Medical Center (Hackensack UMC), knows the space well.

In fact, with her help, Hackensack UMC launched a new employer-sponsored temporary disability program, which eliminated a state-imposed cap of $604 per week.

“As it stands today,” said Wright, “the medical center’s workers’ compensation is handled through New Jersey Manufacturers Insurance, while The Hartford handles its absence management program.

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Although there is some integration between the two — N.J. Manufacturers shares workers’ compensation absence management data for Hackensack UMC’s 7,600 employees with Hartford, for instance — there are still separate contracts and policies.

“I think that integration is a direction we will eventually move in,” said Wright.

“But the process is very involved for us, and not a lot of carriers out there are positioned to actually do this.

“Despite IDM’s current popularity, not all insurers have the bandwidth to handle both workers’ compensation and disability. The industry has reported a data system that integrated the two, but it is a rarity. Once more vendors learn the value of IDM, Hackensack UMC will most likely consider the move,” Wright said.

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

The Profession

Scott Clark agreed to join Miami-Dade County Public Schools for two years to help build its risk management department. Then he forgot to leave.
By: | March 2, 2015 • 5 min read

R&I: What was your first job?

I got into the insurance business working for the Combined Insurance Co. of America on a part-time basis while I was attending the University of Illinois.

I was interested in the business partly because my great-grandfather started a regional property insurance company in 1917 in Indianapolis, Ind., named Merchants Property Insurance Co. of Indiana. It is still family owned and I succeeded my father on the board of directors when he passed away in 2011.

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

I was recruited by Wausau Insurance Cos. … As it turned out, the Superintendent of Schools for Miami-Dade County Public Schools (M-DCPS), Leonard Britton, had been reading about risk management and told his friend — who happened to be my boss with Wausau — that he wanted to create a risk management department from what was the current insurance department.

I [agreed] to meet with Superintendent Britton … he told me of his vision. Ultimately, I told Dr. Britton that I would come to the school for two years and help him build a risk management program for the district [but] I forgot to leave. I’m currently in the middle of my 29th year here!

R6-14p42_Profession.inddR&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

I think the biggest change is the fact that risk managers are not just viewed as insurance purchasers but professionals that sit at the highest levels of our organizations and serve business leaders on a macro level rather than just serving as insurance people within our organizations.

With a push from the risk management community, the insurance industry has become more accountable to their policyholders. This includes listening to the risk management community with regard to the types of coverage risk managers are seeking, including terms and conditions; issuing policies in a timely manner; and overall becoming a partner in creating strategic risk solutions.

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

Like many other industry professionals I am concerned about cyber risk, but my concern transcends the normal risks associated with cyber. It’s not just about making sure that … the personal information of my 345,000 students and 50,000 full and part-time employees is not hacked.

We have a significant focus on placing technology in the hands of our students, and to move them from traditional book learning into a high-tech environment of teaching and learning. That includes providing students with tablets, outfitting classrooms with SmartBoards and empowering all 345,000 students to become technologically savvy so that they will be able to compete in a technologically sophisticated world.

When you do that, cyber capability and protecting the risk around it becomes paramount. We must take necessary steps to protect [employees’ and students’] personal information, Social Security numbers, grades, and family information. Many fees which were once paid with cash are now paid with credit cards at our 400+ locations and this information must be protected as well.

With a push from the risk management community, the insurance industry has become more accountable to their policyholders.

R&I: Who is your mentor and why?

My mentor is a gentleman whom I have had the privilege of knowing and working with for my entire career at Miami-Dade County Public Schools. His name is Jim Marshall and he is a principal in the consulting firm of Silver Insurance Consultants based in St Petersburg, Fla.

I’ve worked with him for the better part of my 29 years at the Miami-Dade schools. His firm has been a consultant to Miami-Dade in property/casualty and risk management including claims administration. Jim has been instrumental in providing wording for many of the district’s manuscript insurance policies.

He is one of the most knowledgeable people I know and someone I would go to when I need clarity on how to handle a risk management issue.

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

Being identified as a national leader in risk management and serving as president of the Risk and Insurance Management Society (RIMS) in 2011.

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

Devil in the White City by Erik Larson is my favorite book. The book is set in Chicago around 1893 and is an interesting depiction of the 1893 Chicago World’s Fair intertwined with fictional characters and sub-plots.

Being from Illinois, I found the book fascinating for its historic depiction of the creation of the buildings for the 1893 World’s Fair on the South side of Chicago close to where the University of Chicago now is, and Erik Larson’s ability to augment this nonfiction story with creative fictional story lines and sub-plots.

I remember vividly how young the North Korean soldiers appeared to be, and I was only 20 years of age myself at the time.

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

Seoul, South Korea. I was fortunate enough to be able to travel with my best friend and fraternity brother and his family my senior year at U of I. His father was a project engineer for Amoco and they were building a refinery in the Seoul area.

I believe it struck me as a kid from Illinois as it was so different from other places I had traveled and we were actually able to go to the demilitarized zone and step into North Korea.

I remember vividly how young the North Korean soldiers appeared to be, and I was only 20 years of age myself at the time.

R&I: What is the riskiest thing you have ever done?

As a risk manager, I dare say that I typically do not participate in risky things; however, the two things which come to mind which I would typically not do include taking a small seaplane from Vancouver to Victoria (we returned by way of Ferry).

The other was a helicopter ride over the Hawaiian waterfalls and the pilot realized halfway through the trip that he was on the wrong radio frequency and unable to communicate with other helicopters in the area.

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

Heroes are very personal and it’s not my place to name one for the world; however, my father who passed away in 2011 was one of mine. He taught me right from wrong, supported me and was very proud of my career in the insurance industry.

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