Risk Managers

Pay Disparity Seen in Risk Management Roles

Lower pay for women in the field may be due to lower educational credentials or less time on the job.
By: | December 16, 2015 • 4 min read
Topics: ERM | RIMS | Risk Managers
Rims pay story

Female risk managers in the United States tend to earn nearly 25 percent less than their male counterparts, according to a new survey by RIMS.

The biannual “RIMS 2015 Compensation Survey” found that the median annual base salary for male U.S. risk managers was $130,000, compared to $101,000 for women.

Part of the disparity may be because male risk managers tend to have higher levels of education. Forty-two percent of males in the profession have a bachelor’s degree versus 31 percent of females.

Men also have a median of 19 years’ experience in risk management, compared to 15 years for women, the survey found.

Overall, the median annual base salary for all U.S. risk managers increased by 3.7 percent from the previous year, to $115,000 on June 1, 2015.

Overall, the median annual base salary for all U.S. risk managers increased by 3.7 percent from the previous year, to $115,000 on June 1, 2015.

Those with a degree higher than a bachelor’s typically earn $20,000 more than those without, while those with at least 25 years’ experience in the field brought in $55,000 more, on a median basis, than those with fewer than five years’ experience, the survey revealed.

There was also disparity in the earning potential between different job roles.

The survey found that the position with the highest median salary, of $170,000, was chief risk officer or vice president of risk management.

In contrast, claims manager or workers’ compensation claims managers earned only $73,000 for their duties.

Another area of greater earning potential were directors of risk management with ERM responsibility, who make, on average, $9,000 more than their insurance counterparts.

“No matter the maturity of an organization’s risk management program, understanding the cost of employing specialized personnel is critical to any senior leader’s decision-making process,” said RIMS President Rick Roberts.

“The idea of having the entire organization thinking about risk and contributing to the risk management process is extremely beneficial,” he said.

“Many organizations are catching on to this. The number of risk professionals with ERM experience is far lower than those without, making them in higher demand.”

Roberts added that claims personnel were also more highly valued, reflected in the fact that three out of four areas that had a salary increase were in technical or specialty positions — claims or workers’ compensation managers, claims analysts and risk management analysts.

“The ramifications of not addressing claims expediently has the potential of seriously damaging an organization’s reputation,” he said.

“Whether it’s ERM or another specialty,” he said, “the more ways you can improve yourself professionally, the more you can offer an employer.

“Expanding your breadth of knowledge is a sure way to advance professionally and increase the invitations one might receive to join high level discussions about organizational strategy.”

The survey, which was based on responses from 1,145 full-time risk professionals in the U.S. and Canada, found that the median value received by those eligible for additional cash or incentives and who stayed in the same position for the year to June 1, 2015 (77 percent), was $18,000.

Nine out of 10 received cash in the form of bonuses (89 percent), with profit sharing accounting for 16 percent, incentive pay 11 percent, and overtime only 1 percent.

About two-fifths of U.S. risk managers work for publicly traded organizations, one-third were in private industry and one in 10 were either in government or at a nonprofit.

Performance was the key in determining the amount of cash compensation received (94 percent of those eligible), with the organization’s performance (84 percent of U.S. risk managers) more crucial than the person (66 percent) or department (35 percent).

In terms of medical cover, 76 percent of all U.S. risk managers were offered a preferred provider organization.

Of the 96 percent of U.S. risk managers offered a retirement plan, 60 percent were given the choice of a defined-contribution plan.

Most U.S. risk managers also qualified for four weeks’ paid time off per annum, while the most common additional benefits included professional association dues, a cell phone, mileage reimbursement, an employee assistance program and/or a laptop or tablet.

The profile of respondent also made for interesting reading.

About two-fifths of U.S. risk managers work for publicly traded organizations, one-third were in private industry and one in 10 were either in government or at a nonprofit.

The largest number were involved in manufacturing (16 percent), while the typical U.S. risk manager works for an organization with 20,000-plus employees (25 percent).

The most common role in the U.S. was director of insurance and risk management (36 percent), and the least common was director of ERM/strategic risk manager (5 percent) or risk management analyst (5 percent).

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at riskletters@lrp.com.
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Risk Insider: Terri Rhodes

Ten Tips for Leave Management

By: | May 19, 2015 • 3 min read
Terri L. Rhodes is CEO of the Disability Management Employer Coalition (DMEC). Prior to returning to DMEC, Terri was an Absence and Disability Management Consultant for Mercer delivering strategic absence and disability management solutions to clients of all sizes, Director of Absence and Disability for Health Net and Corporate IDM Program Manager for Abbott Laboratories.

The environment for leave management has become increasingly complex—and potentially costly to those not in compliance with the growing number of leave laws and regulations. The Family Medical Leave Act (FMLA), Americans with Disabilities Act (ADA), and the myriad of state and local laws have made managing leave, while remaining in legal and regulatory compliance, more difficult and complex.

Leave laws not only create risk. They also create opportunity.

There is good news. A large and growing number of conferences, webinars and other resources are available to help guide risk managers and others through the ever changing leave landscape. DMEC’s recent Compliance Conference addressed many of the issues surrounding leave management and the ever-changing landscape.

During the RIMS annual conference, Karen English of Spring Consulting Group and I offered the following leave management tips at one session.

One: Training is critical. Managers must understand the leave process and their responsibilities under it and the law and uniformly administer leave policies. We don’t expect them to be experts but they need to understand how an employee might evoke their rights under FMLA or ADAA.

Two: HR and other staff must be qualified. Appropriate leave and HR administrators need to be up to date on all absence management programs and be prepared to answer employee questions about their rights for leave and job accommodation.

Three: Collaboration across business units is key. Leave programs across organizational boundaries; HR, disability, legal and other departments need to work collaboratively. Removing barriers between disciplines creates efficiencies and limits liability.

Four: Implement clear and consistent processes and policies. FMLA and ADA policies should be as uniform and applied as consistently as possible across the organization regardless of size or geography, allowing for some flexibility. Stakeholders need to engage with consistent correspondence, tracking, management, decision-making and communication.

Five: Centralize administration of the leave function. Employees and managers should have one source for questions and answers.

Six: Evaluate your program. Inventory the system used, are you tracking or managing your program. If an organization has internal system to manage or track its leave program, it should be regularly evaluated for effectiveness. If you choose a software system or outsource administration make sure that your vendor has ongoing compliance support.

Seven: Outsource if necessary. Outsourcing has increased over the last three years, there are more options than ever, and the list continues to grow. But it doesn’t fit every culture or organization; choose what works best for your company.

Eight: Evaluate your vendor. Just because a company outsources leave management, it does not mean it outsources its legal responsibilities.   Even with outsourcing, an organization must establish a process to update its leave programs to meet its changing business and staff needs.

Nine: Measurement, tracking and reporting should be actionable. Key metrics like lost time, costs, return-to-work rates, abuse and productivity are useful to the degree they enable managers to change leave programs to better meet the needs of employees and the organization.

Ten: Create a culture of continual improvement. While legal and regulatory compliance is essential, it is not enough to ensure a leave program helps advance strategic business goals. That requires that managers—and executives–view leave programs as an arena for new investment and training to catalyze change to maximize returns.

Leave laws not only create risk. They also create opportunity.

Planned and implemented in a thoughtful and strategic way, effective leave management can be a competitive advantage in the battle for the best talent. Take advantage of the resources out there and become educated on both the risks and opportunities offered by the new world of employee leave.

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Sponsored: State of Vermont

7 Questions to Answer before Choosing a Captive Insurance Domicile

Ask the right questions and choose a domicile for your immediate and long-term needs.
By: | February 5, 2016 • 7 min read
Vermont_SponsoredContent

Risk managers: Do your due diligence!

It seems as if every state in America, as well as many offshore locations, believes that they can pass captive legislation and declare, “We are open for business!”

In fact, nearly 40 states and dozens of offshore locations have enabling captive insurance legislation to do just that.

With so many choices how do you decide who is experienced enough to support the myriad of fiscal and regulatory requirements needed to ensure the long term success of your captive insurance company?

“There are certainly a lot of choices,” said Mike Meehan, a consultant with Milliman, an actuarial firm based out of Boston, Massachusetts, “but not all domiciles are created equal.”

Among the crowd, there are several long-standing domiciles that offer the legislative, regulatory and infrastructure support that makes captive ownership not only a successful risk management tool but also an efficient entity to manage and operate.

Selecting a domicile depends on many factors, but answering these seven questions will help focus your selection process on the domiciles that best fit your needs.

 

1. Is the domicile stable, proven and committed to the industry for the long term?

ThinkstockPhotos-139679578_700The more economic impact that the captive industry has on the domicile, the more likely it is that captives will receive ongoing regulatory and legislative support. The insurance industry moves very quickly and a domicile needs to be constantly adapting to stay up to date. How long has the domicile been operating and have they been consistent in their activity over the long term?

The number of active captive licenses, amount of gross premium written in a domicile and the tax revenue and fees collected can indicate how important the industry is to the jurisdiction’s bottom line. The strength of the infrastructure and the number of jobs created by the captive industry are also very relevant to a domicile’s commitment.

“It needs to be a win – win situation between the captives and the jurisdiction because if not, the domicile is often not committed for the long term,” said Dan Kusalia, Partner with Crowe Hortwath LLP focused on insurance company tax.

Vermont, for example, has been licensing captives since 1981 and had 589 active captives at the end of 2015, making it the largest domestic domicile and third largest in the world. Its captive insurance companies wrote over $25 billion in gross written premiums. The Vermont State Legislature actively supports an industry that creates significant tax revenue, jobs and tourist activity.

 

2. Are the domicile’s captives made up of your peer group?

The demographics of a domicile’s captive companies also indicate how well-suited the location may be for a business in a particular industry sector. Making sure that the jurisdiction has experience in the type and form of captive you are looking to establish is critical.

“Be among your peer group. Look around and ask, ‘Who else is like me?’” said Meehan. “Does the jurisdiction have experience licensing and regulating the lines of coverage for other businesses in your industry sector?”

 

3. Are the regulators experienced and consistent?

Vermont_SponsoredContentIt takes captive-specific expertise and broad experience to be an effective regulator.

A domicile with a stable and long-term, top-tier regulator is able to create a regulatory environment that is consistent and predictable. Simply put, quality regulation and longevity matter a lot.

“If domicile regulators are inexperienced, turnaround time will be slower with more hurdles. More experience means it is much easier operating your business, especially as your captive grows over time,” said Kusalia.

For example, over the past 35 years, only three leaders have helmed Vermont’s captive regulatory team. Current Deputy Commissioner David Provost is one of the longest tenured chief regulators and is a 25-year veteran in the captive insurance industry. That experienced and consistent leadership enables the domicile to not only attract quality companies, but also to provide expert guidance on the formation process and keep the daily operations running smoothly.

 

4. Are there world-class support services available to help manage your captive?

Vermont_SponsoredContentThe quality of advisors and managers available to assist you will have a large impact on the success of your captive as well as the ease of managing the ongoing operations.

“Most companies don’t have the expertise to operate an insurance company when you form a captive, so you need to help build them a team,” Jeffrey Kenneson, a Senior Vice President with R&Q Quest Management Services Limited.

Vermont boasts arguably the most stable and experienced captive infrastructure in the world. Many of the leading captive management companies have their headquarters for their Global, North America and U.S. operations based in Vermont. Experienced options for captive managers, accountants, auditors, actuaries, bankers, lawyers, and investment professionals are abundant in Vermont.

 

5. Can the domicile both efficiently license and provide on-going support to your captive as it grows to cover new lines of coverage and risks?

Vermont_SponsoredContentLicensing a new captive is just the beginning. Find out how long it takes for the application to get approved and how long it takes for an approval of a plan change of your captive’s operations.

A company’s risks will inevitably change over time. The captive will need to make plan changes which can include adding new lines of business. The speed with which your domicile’s regulatory branch reviews and approves these plan changes can make a critical difference in your captive’s growth and success.

The size of a captive division’s staff plays a big role in its speed and efficiency. Complex feasibility studies and actuarial analyses required for an application can take a lot of expertise and resources. A larger regulatory team will handle those examinations more efficiently. A 35-person staff like Vermont’s, for example, typically licenses a completed application within 30 days and reviews plan changes in a matter of days.

 

6. What are the real costs to establishing and managing your captive?

Vermont_SponsoredContentIt is important to factor in travel costs, the local costs of service providers, operating fees, and examination fees. Some states that do not impose a premium tax make up for it in high exam fees, which captives must be prepared for. Though Vermont does charge a premium tax, its examination fees are considered some of the least expensive options in the marketplace.

It is also important to consider the ease and professionalism of doing business with a domicile in the ongoing operations of your captive insurance company.

“The cost of doing business in a domicile goes far beyond simply the fixed cost required. If you can’t efficiently operate due to slow turn-around time or added obstacles, chances are you have made the wrong choice,” said Kenneson.

 

7. What is the domicile’s reputation?

Vermont_SponsoredContentMake sure to ask around and see what industry experts with experience in multiple domiciles have to say about the jurisdiction. Make sure the domicile isn’t known for only licensing certain types of captives that don’t fit your profile. Will it matter to your board of directors if your local newspaper decides to print a story announcing your new insurance subsidiary licensed in some far away location?

Are companies leaving the jurisdiction in high numbers and if so, why? Is the domicile actively licensing redomestications — when an existing captive moves from one domicile to another? This type of movement can often be a positive indicator to trends in a domicile. If companies of a particular size or sector are consistently moving to one state, it may indicate that the domicile has expertise particularly suited to that sector.

Redomestications made up 11 of the 33 new captives in Vermont in 2015. This trend is a positive one as it speaks to the strength of Vermont. It reinforces why Vermont is known throughout the world as the ‘Gold Standard’ of domiciles.

Asking the right questions and choosing a domicile that meets your needs both today and for the long term is vital to your overall success. As a risk manager you do not want surprises or headaches because you did not ask the right questions. Do the due diligence today so that you can ensure your peace of mind by choosing the right domicile to meet your needs.

For more information about the State of Vermont’s Captive Insurance, visit their website: VermontCaptive.com.

 

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with the State of Vermont. The editorial staff of Risk & Insurance had no role in its preparation.




The State of Vermont, known as the “Gold Standard” of captive domiciles, is the leading onshore captive insurance domicile, with over 1,000 licensed captive insurance companies, including 48 of the Fortune 100 and 18 of the companies that make up the Dow 30.
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