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Principal Consultant, Katersky Consulting
Former Assistant Vice President of Risk Management, BJ's Wholesale Club Inc.

Katersky Assumes Responsibility

Risk manager helps BJ's Wholesale Club take control of its claims.

Adding members and then retaining them is the principal goal of BJ's Wholesale Club Inc., which operates 185 membership warehouse stores in 15 states.

Responding to a companywide membership retention challenge, Ed Katersky, former assistant vice president of risk management at BJ's Wholesale Club Inc. in Natick, Mass., successfully put in place a two-stage plan of action over the past 10 years.

First, after several years of increasing general liability costs, Katersky and his risk management staff convinced management in 2001 to bring its general liability claims administration program in-house and discontinue using its prior third-party administrator.

Katersky led the risk management team in shifting its thinking about BJ's liability claims. Shoppers involved in in-store incidents at BJ's are not merely claimants, he reminded his team, but rather loyal club members who pay for the privilege to shop there. Because of this paid membership relationship, he said, BJ's chooses to accept a higher degree of responsibility to its shoppers than regular retail stores.

In bringing its general liability claims business in-house, "we did cost analysis and hiring two or three adjusters was far cheaper than third-party administrator fees, so it proved its worth cost-wise and met our goal of customer retention," said Katersky, who has moved on to become the principal consultant at Katersky Consulting. "Using the third-party administrator involved a lot of activity by lawyers costing legal fees that were very, very high."

To accelerate the response to member concerns, club store managers now submit incident reports electronically to corporate risk management on the day of the incident, and the details of the incident are confirmed within 24 hours.

Using a triage model, a dedicated BJ's claims adjuster makes contact with every shopper involved in an incident within 24 hours. Instead of a confrontational argument regarding negligence, the adjuster works to reach a fast and positive resolution with the member before the incident spirals into a claim.

With widespread support in the organization, nearly 80 percent of incidents are now settled quickly and efficiently. This program has reduced BJ's average claim value by 67 percent. These results were achieved despite new store openings, membership growth and increasing medical costs.

The second major advance achieved by Katersky and his staff was a novel notion, indeed.

They recommended to senior management that BJ's gift cards be distributed, as part of the general liability resolution process to generate additional goodwill during a potentially frustrating time.

"The gift card was seen as a victory by the member and it was a victory for us because there was no cash outlay like in a claim," Katersky said. "And we knew that when people got a gift card they would come back to the store, so now we're hitting customer retention."

Katersky said that because people shop at the same BJ's club most of the time, he and his team didn't want to create a bad feeling between local management and the member, so they took the process away from the club. "That way the club didn't have to get into a fight with the member," Katersky said. "The club was not good at investigations, they were better at running stores. We would tell them when things were resolved and to please look for the member at the member's next visit."

Another key ingredient in the gift card program, he said, was that a letter was sent with each gift card. "We did not ask for a release because then it became a claim and people would hire a lawyer to review the release and before you know it you would have more lawyers in this thing, which we didn't want," Katersky said. "So we took a position that these are relatively small dollar matters and we would try it without the release to see what would happen. And nothing ever happened, so it was great."

Of some 400 events that occurred last year, 320 to 350 of them were resolved without incident.
"Ed Katersky is an awesome risk professional," said Joanne Heslin, vice president of Willis of Massachusetts. "He's very bright. He likes to try new things. He's ahead of his time in many of the things he does. He's very good at forming partnerships. He very successfully trains people. We call him the professor."

-- Steve Yahn

Bestowing the Simple Gift of Engagement

In his approach to liability claims stemming from the wholesale club's in-store operations, Ed Katersky, former assistant vice president for risk management with B.J.'s Wholesale Club Inc., took the concept of the early offer and advanced it.

For a company that had taken its general liability claims administration in-house years ago, Katersky advanced his former employer's claims management and customer service goals by creating a system that called for almost immediate, personal responses to in-store injuries incurred by the club's membership shoppers.

His response involved the creation of an electronic reporting system that confirmed the details of an incident within 24 hours. That was followed by rapid personal engagement with the injured party, which diffused the mistrust and miscommunication that can often lead to a claim.

When Katersky felt the program had reached a plateau, he took it a step further by offering gift cards to wholesale club members involved in an incident. Claims costs declined yet again.

Katersky is a Responsibility Leader® because he took the initiative in making good customer relations even better, when he felt there was room for improvement.