Driving Success for GM
Al Gier, GM’s director of Global Risk Management & Insurance, felt so strongly about Elisa Black’s work in 2013 that he nominated her personally as a Power Broker®. That’s quite an endorsement. In fact, Gier and Frida Berry, GM’s manager of Liability Risk Financing, agree that not only did Black manage that critical global juggling act, but she did it with her professional, focused style.
“Elisa was instrumental in helping reduce collateral requirements and improving the efficiency of the global claims handling process,” Gier said. “Her client philosophy focuses on being prepared and setting the marketing standard at the forefront of the negotiation.”
Gier explained that any broker can negotiate with a carrier post-quote. More impressive is doing the legwork so you come to the table prepared to negotiate ahead of time, a Black trademark. Also, for a large global enterprise, he said, timing is everything. So finalizing financial negotiations early allows the time to fulfill the administrative and contractual obligations of an insured — the lifeline of most international programs.
Gier said Black is great at articulating obligations and time constraints.
Bermuda Excess Market Wizardry
With the automotive market continuing to recover, the Bermuda excess market is looking to boost premiums come renewal time. To help alleviate that pricing stress, Chris Heinicke and his Aon team do their best to negotiate with markets to keep premiums from climbing.
In 2013, Heinicke faced a specific challenge for a client that was in the midst of a claims issue with one market that had a sizable amount of capacity on the excess casualty program. The issue was on a completely separate line of business, but was enough of a problem that the client had made the decision to cut this market from all of their lines of business. That decision was made after the entire program had already been quoted at the expiring premium and there was little to no capacity left in Bermuda. Heinicke and his team worked quickly by increasing capacity with the only market in Bermuda that had something available, and then worked with the U.S. and London teams to get the terms, pricing and capacity needed to replace the market. In the end, the client was pleased with the results and impressed at the quick response.
“Chris’ knowledge of the Bermuda markets helped us structure a program with the broadest coverage,” said the liability risk financing manager from another large automaker. “We have a very good risk profile, and Chris ensures we aren’t being charged improperly.”
A risk manager from a third automaker credited Heinicke with doing a “fantastic job” in helping the company identify critical areas the Bermuda markets focus on, as well as what is needed to communicate those key areas to underwriters.
Marshalling the Marsh Resources
In this case, the product over-shipment would create a much larger balance sheet exposure than the client would normally face. Also, the client’s treasury department wanted to use the large shipment to enhance cash flow as well as its borrowing base. Kowalski found a solution involving both private insurance and governmental support to manuscript a program that not only provided vital risk mitigation, but also enhanced this client’s cash flow management needs.
To make things happen, Kowalski often collaborates with Marsh brokerage teams on a global scale — from Detroit, New York, and Chicago to Bermuda, London, Zurich and various offices throughout Asia. Along the way, he has successfully placed complex risk finance programs involving more than 73 global markets and billions of dollars of capacity for a single line of coverage.
“Michael is our client executive and we have worked together for a number of years,” said Al Gier, director, Global Risk Management & Insurance at General Motors. “He has the skills we like to see in a broker — mainly, responsiveness and delivering the proper resources quickly.”
Expertise and Knowledge
Key Air Inc. was getting ready to consider other brokers until Joseph Braunstein was assigned to their account, said Greg Kinsella, president and CEO of Key Air, which manages and operates aircraft owned by others. “We agreed that if we were going to Marsh that he would make the difference, and he definitely has,” said Kinsella. “It was really on the customer service side. He didn’t go through the motions and just offer minimum basic support. He really looked at our policies.”
Another major benefit Braunstein, Marsh’s General Aviation practice leader, offered Key Air is a user-friendly handbook the company can use to educate its clients on the various coverages available to them and how the policies would work when needed.
“Joe took the initiative to create that. It really gives me and my team a tool to sit down with our clients and educate them on aviation insurance,” Kinsella said. “It has helped us be more effective.”
He was able to transition the perception of insurance from a liability to an asset.
The director of operations for a large aircraft charter company praised Braunstein as “a fantastic resource.”
“When Joe and Marsh got our business, we immediately saw an increase in coverage and a decrease in premium,” he said.
In addition, Braunstein’s “expertise and knowledge in aviation insurance is quite evident. Joe is looking out for our interests and that’s something we did not have before.”
Sharing His Knowledge
John Geisen, senior vice president at Aon, has been an account leader in the aviation space for nearly two decades, and his clients have benefited from his in-depth knowledge.
“In the aviation industry, there are a lot of challenges that come up,” said Bill Hoyt, insurance risk manager at the Metropolitan Airports Commission, a public corporation that provides aviation services throughout the Twin Cities metropolitan area, including operating the Minneapolis-St. Paul International Airport.
“The issues change almost every day,” Hoyt said. “In this industry, you have got to have someone who has a significant understanding of the risks. That’s what John has and that’s what John brings to the table for us.”
In addition to the typical coverage, Hoyt relies on Geisen for unusual coverage challenges, counting on him to determine whether current policy wording covers such a risk or if an endorsement is required. One example, he said, involved determining liability issues associated with glare and other risks related to solar panels.
For Karen Erazo, manager, Legal Affairs, Sun Country Airlines, Geisen’s attentiveness, knowledge and ideas are as welcome as his focus on keeping costs down.
One issue Geisen has been focusing on this past year is the workers’ compensation impact of senior flight attendants, she said. “He’s come up with suggestions on addressing lifting and other ways to help our flight attendants reduce the risk of injury,” Erazo said.
“He’s very knowledgeable and very anxious to share that knowledge,” she said.
Customization and Confidence
From helping out a mom-and-pop airline to covering aviation risks in war-torn countries, Jason Hendrix does it all. A pilot himself, Hendrix furthered his knowledge at the Embry-Riddle Aeronautical University, a college designed for aviation professionals, and as an aviation underwriter prior to becoming a broker.
“You can ask him anything about an airplane and he will tell you,” said Chrissy McCreary, supervisor, Risk Management, KBR, which operates air bases internationally, including in Iraq and Afghanistan. “Our corporate program is pretty specialized. We have bits and pieces all over the world and every project is different,” she said.
For Jake Duplechin, president and owner of Executive Aviation Management, Hendrix, an assistant vice president at Aon, helped him make his dream of owning his own aircraft management business a reality by fostering relationships with the insurance marketplace and putting together a fleet policy that covers the seven airplanes owned by about 15 companies.
“It’s almost like calling a buddy of mine on the phone but he’s such a professional when it gets down to it,” Duplechin said.
A challenge this year for CGG was the acquisition of a fleet of 28 aircraft in four countries.
“We never had to insure planes before,” said Erin Obrien Link, CGG’s enterprise risk management and insurance vice president. The situation was complicated by the planes being registered in different countries and having numerous local policies that were in effect. “He was able to put together a global policy, which was extremely complicated,” she said.
A True Partnership
As Intrepid Aviation was looking to grow, they called upon Drew Johnston, a vice president at Aon. “We were able to pivot very effectively from two aircraft to now 10 aircraft with customers in nine countries, said Intrepid’s chief investment officer, Brian Rynott. “We were looking for help to manage the portfolio and help plot out the growth trajectory, and someone to support us in that growth from an insurance perspective.”
Johnston was also crucial in coming up with a risk solution for Frank Perryman, president and CEO of Perryman Co., who is passionate about being in the left-hand seat and flying the company’s fleet of jet aircraft.
“Our qualifications are no different than professional pilots who would fly for any of the airlines, but being the owner and operator takes it to a unique difference,” Perryman said. “He takes the time to have an intimate knowledge of what we do and how we do it.”
Johnston also helped Perryman communicate the company’s message to their underwriter, which created “a better bond,” Perryman said. It also resulted in the liability limit the company required at a very competitive price. “There’s nothing that is cookie cutter anymore,” he said. “You have got to design solutions for each and every client and that’s what he did.”
Johnston also helps Beechcraft navigate its way through its international risks and the demands of its business partners, said Cheryl Herbst, manager, Insurance and Risk Management, Beechcraft. “They will ask for the moon,” she said. “He helps us find a solution, sometimes at the last minute.”
Chris Taylor “worked his magic” as he guided Hawker Beechcraft through a management liability renewal process prior to entering bankruptcy and in the formation of Beechcraft, the new company.
“There are special issues that arise, and it can be a real challenge to secure insurance prior to entering Chapter 11,” said Cheryl Herbst, manager, Insurance and Risk Management, Beechcraft. “However, thanks to Chris, we went through Chapter 11 with full coverage and a run-off policy.”
Taylor “just went above and beyond my expectations,” and worked late into the night as negotiations regarding formation of the new company took place. “The day we emerged as a new company, we had a total insurance program in place,” she said.
Taylor, a vice president at Aon, also was able to bring innovative solutions to a defense contractor, related to its wage and hour coverage and D&O needs, especially international D&O coverage.
Among the challenges he was able to address were dealing with the contractor’s multiple internal stakeholders, changing compliance requirements in various countries and communication issues with non-insurance professionals.
At another organization, a plastics manufacturer, Taylor had to handle a complex transaction with multiple U.S. and international D&O policies during an acquisition, which required extensive communication and time management as he worked with the new company’s risk management team and broker to align coverage to protect both companies.
AerSale has multifaceted and complicated aviation risk exposures, but William Willer was able to find ways to create solutions that work for both the company and underwriter.
“He provides excellent information and frankly seems to be able to get the underwriters to come along and cooperate with us. That impressed me,” said Gary Eakins, vice president and corporate counsel of AerSale Inc., an aircraft leasing company that ferries aircraft.
Insurance is very expensive for ferrying flights, and it goes up astronomically depending on the number of flights, said Eakins.
“That never made a lot of sense. It’s the landing and take offs that get you, not the number of miles you cruise at altitude,” he said. “Bill was able to moderate those costs in a reasonable and effective way.”
In addition, Willer’s technical knowledge has been extremely helpful in drafting contracts, and he has been very responsive. “The aviation space is quite small in terms of people. They all know each other. I find Bill to be very effective in dealing with underwriters when unusual issues come up or when we need to explore an area where we hadn’t been before,” Eakins said.
Willer, an area president at Arthur J. Gallagher, also helped an airline through a Chapter 11 process, while correcting some serious and costly actions caused by a previous broker, and helped the risk manager of an aircraft leasing company overhaul the entire risk management process.
Six Best Practices For Effective WC Management
It’s no secret that the professionals responsible for managing workers compensation programs need to be constantly vigilant.
Rising health care costs, complex state regulation, opioid-based prescription drug use and other scary trends tend to keep workers comp managers awake at night.
“Risk managers can never be comfortable because it’s the nature of the beast,” said Debbie Michel, president of Helmsman Management Services LLC, a third-party claims administrator (and a subsidiary of Liberty Mutual Insurance). “To manage comp requires a laser-like, constant focus on following best practices across the continuum.”
Michel pointed to two notable industry trends — rises in loss severity and overall medical spending — that will combine to drive comp costs higher. For example, loss severity is predicted to increase in 2014-2015, mainly due to those rising medical costs.
Debbie discusses the top workers’ comp challenge facing buyers and brokers.
The nation’s annual medical spending, for its part, is expected to grow 6.1 percent in 2014 and 6.2 percent on average from 2015 through 2022, according to the Federal Government’s Centers for Medicare and Medicaid Services. This increase is expected to be driven partially by increased medical services demand among the nation’s aging population – many of whom are baby boomers who have remained in the workplace longer.
Other emerging trends also can have a potential negative impact on comp costs. For example, the recent classification of obesity as a disease (and the corresponding rise of obesity in the U.S.) may increase both workers comp claim frequency and severity.
“The true goal here is to think about injured employees. Everyone needs to focus on helping them get well, back to work and functioning at their best. At the same time, following a best practices approach can reduce overall comp costs, and help risk managers get a much better night’s sleep.”
– Debbie Michel, President, Helmsman Management Services LLC (a subsidiary of Liberty Mutual)
“These are just some factors affecting the workers compensation loss dollar,” she added. “Risk managers, working with their TPAs and carriers, must focus on constant improvement. The good news is there are proven best practices to make it happen.”
Michel outlined some of those best practices risk managers can take to ensure they get the most value from their workers comp spending and help their employees receive the best possible medical outcomes:
1. Workplace Partnering
Risk managers should look to partner with workplace wellness/health programs. While typically managed by different departments, there is an obvious need for risk management and health and wellness programs to be aligned in understanding workforce demographics, health patterns and other claim red flags. These are the factors that often drive claims or impede recovery.
“A workforce might have a higher percentage of smokers or diabetics than the norm, something you can learn from health and wellness programs. Comp managers can collaborate with health and wellness programs to help mitigate the potential impact,” Michel said, adding that there needs to be a direct line between the workers compensation goals and overall employee health and wellness goals.
Debbie discusses the second biggest challenge facing buyers and brokers.
2. Financing Alternatives
Risk managers must constantly re-evaluate how they finance workers compensation insurance programs. For example, there could be an opportunity to reduce costs by moving to higher retention or deductible levels, or creating a captive. Taking on a larger financial, more direct stake in a workers comp program can drive positive changes in safety and related areas.
“We saw this trend grow in 2012-2013 during comp rate increases,” Michel said. “When you have something to lose, you naturally are more focused on safety and other pre-loss issues.”
3. TPA Training, Tenure and Resources
Businesses need to look for a tailored relationship with their TPA or carrier, where they work together to identify and build positive, strategic workers compensation programs. Also, they must exercise due diligence when choosing a TPA by taking a hard look at its training, experience and tools, which ultimately drive program performance.
For instance, Michel said, does the TPA hold regular monthly or quarterly meetings with clients and brokers to gauge progress or address issues? Or, does the TPA help create specific initiatives in a quest to take the workers compensation program to a higher level?
4. Analytics to Drive Positive Outcomes, Lower Loss Costs
Michel explained that best practices for an effective comp claims management process involve taking advantage of today’s powerful analytics tools, especially sophisticated predictive modeling. When woven into an overall claims management strategy, analytics can pinpoint where to focus resources on a high-cost claim, or they can capture the best data to be used for future safety and accident prevention efforts.
“Big data and advanced analytics drive a better understanding of the claims process to bring down the total cost of risk,” Michel added.
5. Provider Network Reach, Collaboration
Risk managers must pay close attention to provider networks and specifically work with outcome-based networks – in those states that allow employers to direct the care of injured workers. Such providers understand workers compensation and how to achieve optimal outcomes.
Risk managers should also understand if and how the TPA interacts with treating physicians. For example, Helmsman offers a peer-to-peer process with its 10 regional medical directors (one in each claims office). While the medical directors work closely with claims case professionals, they also interact directly, “peer-to-peer,” with treatment providers to create effective care paths or considerations.
“We have seen a lot of value here for our clients,” Michel said. “It’s a true differentiator.”
6. Strategic Outlook
Most of all, Michel said, it’s important for risk managers, brokers and TPAs to think strategically – from pre-loss and prevention to a claims process that delivers the best possible outcome for injured workers.
Debbie explains the value of working with Helmsman Management Services.
Helmsman, which provides claims management, managed care and risk control solutions for businesses with 50 employees or more, offers clients what it calls the Account Management Stewardship Program. The program coordinates the “right” resources within an organization and brings together all critical players – risk manager, safety and claims professionals, broker, account manager, etc. The program also frequently utilizes subject matter experts (pharma, networks, nurses, etc.) to help increase knowledge levels for risk and safety managers.
“The true goal here is to think about injured employees,” Michel said. “Everyone needs to focus on helping them get well, back to work and functioning at their best.
“At the same time, following a best practices approach can reduce overall comp costs, and help risk managers get a much better night’s sleep,” she said.
To learn more about how a third-party administrator like Helmsman Management Services LLC (a subsidiary of Liberty Mutual) can help manage your workers compensation costs, contact your broker.
Debbie discusses how Helmsman drives outcomes for risk managers.
Debbie explains how to manage medical outcomes.
Debbie discusses considerations when selecting a TPA.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Helmsman Management Services. The editorial staff of Risk & Insurance had no role in its preparation.