Risk Insider: Matthew Nielsen

California Dreamin’

By: | August 6, 2015 • 3 min read
Matthew Nielsen, a meteorologist and geographer with a great deal of experience in climate hazard models, is Senior Director, Global Governmental and Regulatory Affairs at RMS. He can be reached at [email protected]

It’s no secret that California has been suffering through a record-breaking drought that has plagued the state for over four years.  Reservoirs have been emptied, fields have been fallowed, and citizens are worried.

And while lawns across the state are turning brown in the blistering summer heat, good news has begun to appear for a potential savior to California’s water woes:  El Nino.

El Nino, identified by anomalous warming of the waters in the central Pacific Ocean, has been known to significantly affect the weather across North America.

El Nino is typically associated with quiet hurricane seasons in the Atlantic, warm winters in the eastern U.S., and stormier conditions in the West. It is often noted for causing substantial warming of the ocean off of California, Oregon, and Washington.

While improvements have been added to many vulnerable areas, such as the strengthening of levees around Sacramento, many of these flood defenses have yet to be put to the test.

So far this year, warm sea surface temperature anomalies have reached up to 5 degrees F in areas of California, leading to sightings of exotic sea life that typically live off the coast of Mexico and areas further south.

There’s no denying that some previous El Nino winters have brought torrential rainfall to the Golden State.

The 1997/1998 event brought twice the normal rainfall to many areas, along with devastating floods.  Rivers and lakes across the state were inundated by persistent rainfall, spilling water over floodwalls, rupturing levees, and soaking low lying areas.

While improvements have been added to many vulnerable areas, such as the strengthening of levees around Sacramento, many of these flood defenses have yet to be put to the test.

Flood insurance penetration remains low, and losses caused by a stormy winter are most likely to be carried by homeowners themselves.  Even though the National Flood Insurance Program is in place to provide up to $250,000 of dwelling coverage and $100,000 in contents coverage for single family residences, the average California home is worth over $400,000 (source:  Trulia).

This leaves a gap in the insurance to value ratio that many homeowners may not realize.

Making matters worse, this year’s wildfire season in California has also been active. Nearly 3,900 fires have been reported, burning almost 70,000 acres.  Two out of the three largest fires in California’s history have occurred during this major drought, leaving massive burn scars in their wake.

If this year’s El Nino event causes heavy rainfall, as in years past, these scorched areas could become highly susceptible to landslides.  The New Year’s Day Floods of 1997 caused a major mudslide in the burn scar along the American River, closing U.S. 50 through the Sierra Nevada Mountains for a month.  These floods also caused two levee failures in the Sacramento Valley, flooding what was then mostly farmland.

These welcome rains will hopefully put a dent in the drought across California, but they may also leave some homeowners ‘underwater.’  Years of extreme drought and devastating wildfires have left California vulnerable and unprepared for further disaster.

Share this article:

Risk Insider: Joe Tocco

Let’s Ditch Weather Complacency

By: | July 9, 2015 • 3 min read
Currently Chief Executive of the Americas for XL Catlin’s insurance operation, Joe Tocco has enjoyed three decades in the insurance industry at various organizations. He is also a veteran of the U.S. Navy, where he served as a nuclear field service engineer. He can be reached at [email protected]

No one likes to get caught off guard. All too often that’s exactly what happens, especially when Mother Nature delivers an unexpected punch of severe weather.

We’ve certainly seen quite a few punches lately with quick moving storms wreaking havoc with torrential rain, powerful winds, life-threatening conditions and significant and costly damage.

In the Houston area alone, recent torrential rains and the subsequent flooding resulted in at least $45 million in property damage.

Weather complacency worries me more than 100 mph winds.

Now we’re in the midst of hurricane season. It’s expected to be a quiet one.

Some breathed a sigh of relief on that prediction. I didn’t.

Instead, I got a little worried because it often means we get complacent. We’re satisfied with how things are; we don’t take precautions or look for improvements.

Weather complacency worries me more than 100 mph winds.

Complacency can be costly at any time of the year. Consider this — one in four businesses forced to close for at least 24 hours because of a disaster never reopens.

That’s one of the big lessons from Sandy, where power outages were widespread and many businesses had to shut down for multiple days or weeks.

Extreme weather appears to be happening more frequently. Chalk it up to global warming, El Nino, rising sea levels, or whatever.

Taking all of these factors together, our properties are more vulnerable today than they were a decade ago … or yesterday, for that matter. For one, we have built many properties along shorelines where rising sea levels have made storm surge a greater concern. Secondly, extreme weather hits in areas that in past were relatively unscathed, whether from tsunamis to tornadoes to drought.

Now we’re in the midst of hurricane season. It’s expected to be a quiet one. Some breathed a sigh of relief on that prediction. I didn’t.

So the question is, do we enjoy a potentially quiet hurricane season or do we take action, shake off weather complacency and boost our weather resilience? Here’s what I’m thinking:

Let’s reinforce what needs reinforcing. Go all-out for continual improvement. Your insurer’s property loss prevention team can offer guidance on ways to make your buildings more water-tight, wind resistant and fire-retardant, to make sure roofs can hold heavy loads of snow. Ask them.

Strive for above average. Building codes are considered minimum legal standards that focus on occupant safety, not preserving building use, ensuring reuse or business continuity. At www.disastersafety.org, the Insurance Institute of Business and Home Safety (IBHS) offers business guidance during new construction or remodeling to improve and/or enhance the physical strength of their commercial structures with design features and construction practices that go beyond building codes.

Don’t be a sitting duck. Storms don’t always give a lot of warning but they often require action — boarding up windows, securing equipment, and moving things that could be harm’s way — so you have to be ready to take action. During Sandy, many art galleries in the NY’s Chelsea neighborhood suffered significant losses of art stored in basements. You can bet they have storage contingency plans now. Whether it’s art, vehicles or equipment, storing on higher ground — or in totally different locations — can prevent losses.

Have backup plans. Following Sandy, my office in downtown Manhattan was inaccessible for a week. With advance planning by our business continuity management team, we were able to relocate to other offices or hotels or work remotely to keep our business operating as usual, at a time when many of our clients needed us to be fully operational.

No one really knows what the 2015 hurricane season, much less what tomorrow’s weather, will bring. But we do know that it can be costly to just sit back and do nothing. If there are actions that can be taken to prevent the worst from happening, let’s take them.

Share this article:

Sponsored: Lexington Insurance

Managing Patient Safety in a New Health Care World

There are great benefits and challenges associated with improving safety in health care institutions.
By: | August 31, 2015 • 5 min read

Much like regular screenings, exercise and a healthy diet, patient safety in health care institutions should be thought of as preventive medicine.

“Patient safety aims to relieve the burden of fixing mistakes by taking steps to prevent them from happening in the first place,” said Aileen Killen, head of casualty risk consulting, AIG.

With the right strategies and protocols in place, human error in delivering patient care can, to some degree, be factored out, mitigating the risk of things like falls or medication mistakes. And the outcomes-based reimbursement model enforced by the Affordable Care Act provides extra incentive to improve patients’ overall experience and reduce readmission rates.

Some challenges stand in the way, though, of achieving better safety.

For one thing, increased consolidation in the industry has brought risks associated with integrating disparate safety cultures and ensuring continuity of care if patients are moved to a new doctor. The trend of shifting more care out of main hospitals to ambulatory sites instead also creates concern that those outpatient facilities are not up to the same safety standards as larger organizations.

Finally, advancing technology — while offering great promise to eventually make health care more efficient and error-free — presents significant risks in its implementation while doctors, nurses and other health care professionals learn how to best use it.

Lexington Insurance, a member of AIG, is meeting the demand for more innovative tools to navigate the changing environment with a suite of safety assessment programs that identify problem areas and provide recommendations for improvement.

Assessing Safety Culture

Lex_BrandedContentThe first step in overcoming any challenge is assessing the situation in order to create the best strategy.

“Every health care organization should aim to become a ‘high reliability organization,’ or HRO,” said Brenda Osborne, division executive, health care, Lexington. “It’s a term borrowed from the airline and nuclear power industries, in which any employee has the right to shut down operations if they spot a safety issue.”

Lexington’s Best Practice Assessment tool allows organizations to compare their own protocols against evidence-based best practices and identify weak spots in their safety culture.

“We survey employees and ask if they feel free to speak up to people in authority,” Killen said. “If they can all say yes, you’re on the road to a safety culture. Then we drill down into specific high-risk areas.”

Clients can conduct specific assessments for error-prone areas like the emergency department, obstetrical department and operating room.

We give organizations recommendations on how they can improve in areas where they are deficient, and we can benchmark their performance against the best practice as well as against other institutions that have done the same assessment,” Killen said.

Those benchmark comparisons are key for securing leadership buy-in. Executives often need to see what other institutions are doing in order to feel confident in their decisions to make changes or invest more heavily in patient safety measures.

If another competitive hospital has better staffing ratios, for example, benchmark stats will show that and support the C-suite’s decision to hire more nurses to achieve a similar ratio.

“What it basically does is give the risk management, patient safety and quality improvement staff a roadmap for which areas to focus their activities for improving patient safety and risk management at their organization,” Killen said.

Acquisitions and Physician Employment

Lex_BrandedContentThe flurry of merger and acquisition activity in the health care industry creates new risks for large hospital networks that acquire physicians’ practices. The integration of different patient safety and risk management practices can prove difficult.

“You have to take multiple approaches and mindsets and meld them into one fluid organization,” Osborne said. “That has a big impact on physicians’ ability to treat patients and deal with the appropriate hand-offs.”

“Patient hand-off is one of the biggest safety challenges,” Killen said. “Assigning a patient’s care to a different doctor leaves room for gaps in communication, which is so critical to making the correct diagnosis and keeping a medication schedule.”

Lexington’s Office Practice Assessment tool scores acquired practices on 14 different domains, including risk management and patient safety, communication, infection control and prevention, incident reporting and medication safety, among others. Recommendations are provided for any domain that scores less than a perfect 100 percent.

“We’ve been able to go in and help these growing organizations benchmark each of these acquired physician offices to show where they are at in terms of their safety protocols,” Osborne said. “It helps risk managers know where they need to start.”

Ambulatory Safety

Another major challenge for patient safety is the movement of care away from main hospitals to ambulatory care settings, an area that previously did not concern hospital-based risk managers very much.

“Historically, there has not been a big focus from a patient safety standpoint on outpatient services,” Osborne said. “The office practice assessment that AIG’s been doing for the last two or three years has actually put us out in front. Few other resources out there can assist hospital-based risk managers in dealing with outpatient-type services.”

“Now more people are thinking about safety in ambulatory areas, and we have more knowledge and experience there,” Killen added.

The same office assessment tools that survey physician practices can also be applied to ancillary services like ambulances, blood banks, and outpatient surgery centers, though benchmarking is not yet available for these sites.

Advancing Technology

Lex_BrandedContentAdapting to new technology is an ongoing challenge for health care risk managers.

“Everyone thought electronic health records were going to solve all our patient safety issues, but they’ve come with some unintended and dangerous consequences,” Killen said. Employees may accidentally order medications for or even discharge the wrong patient, for example, if they have multiple records open at once.

The upside to technology advancements, though, is more streamlined documentation and more opportunities for communication between doctors and patients via telemedicine, which is slowly growing in popularity for remote and elderly patients.

“When we’re underwriting, we look at these areas of growth in technology and the many ways it can be applied,” Osborne said. “We consider all the pros and cons.”

Standout Services

Lexington’s dedication to improving safety in health care shines through in their thorough assessment tools, expert recommendations, and attention to insureds’ changing risk management needs.

“Our unique tools help insureds identify risks and minimize potential claims,” Killen said.

“These services are homegrown and developed by a lot of very knowledgeable people over a period of time,” Osborne said. “They’re not available out in the market, and only Lexington insureds have access to them.”

For more information about Lexington Insurance’s risk management services for the health care industry, please visit www.lexingtoninsurance.com.


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

Lexington Insurance Company, an AIG Company, is the leading U.S.-based surplus lines insurer.
Share this article: