Reducing Cat Risks

Wind Turbines Slow Down Hurricane Winds

Hurricane winds are dissipated by offshore wind farms.
By: | March 6, 2014 • 3 min read
Topics: Catastrophe | Energy
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Off the New York coastline would be a perfect place for an array of wind turbines, according to a Stanford professor. It would not only offer clean energy to the Big Apple but it would protect it the next time a Superstorm Sandy comes calling.

“If you have a large enough array of wind turbines, you can prevent the wind speeds [of a hurricane] from ever getting up to the destructive wind speeds,” said Mark Jacobson, a professor of civil and environmental engineering at Stanford University.

Computer models demonstrated that offshore wind turbines reduce peak wind speeds in hurricanes by up to 92 mph and decrease storm surge by up to 79 percent, said Jacobson, who worked on the study with University of Delaware researchers Cristina Archer and Willett Kempton.

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“The additional benefits are there is zero cost unlike seawalls, which would cost about $30 billion,” he said, noting that the wind turbines “generate electricity so they pay for themselves.”

The researchers studied three hurricanes, Sandy and Isaac, which struck New York and New Orleans, respectively, in 2012; and Katrina, which slammed into New Orleans in 2005. Generally, 70 percent of damage is caused by storm surge, with wind causing the remaining 30 percent, he said.

That’s why onshore wind farms would not be as effective, he said. While they would reduce the wind speed, they wouldn’t impact storm surge.

In 2013, one of the “most inactive” Atlantic hurricane seasons on record, insured losses totaled $920 million, according to Guy Carpenter, which relied on information from the Mexican Association of Insurance Institutions. The most noteworthy events were Hurricane Ingrid in the Atlantic and Tropical Storm Manuel in the Pacific, which displaced thousands as they caused excessive rainfall, flooding and mudslides.

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According to the Insurance Information Institute, Katrina was the costliest hurricane in insurance history, at $48.7 billion, followed by Andrew in 1992 at $25.6 billion and Sandy at $18.8 billion. Economic losses, of course, were much higher.

Wind turbines, which can withstand speeds of up to 112 mph, dissipate the hurricane winds from the outside-in, according to Jacobson’s study. First, they slow down the outer rotation winds, which feeds back to decrease wave height. That reduces the movement of air toward the center of the hurricane, and increases the central pressure, which in turn slows the winds of the entire hurricane and dissipates it faster.

The benefit would occur whether the turbines were immediately upstream of a city, or along an expanse of coastline. It could take anywhere from tens of thousands to hundreds of thousands of wind turbines off the coast to offer sufficient hurricane protection.

At present, there are no wind farms off the U.S. coastline, although 18 have been proposed for off the East Coast. Proposals have also been made for off the West Coast and the Great Lakes. There are 25 operational wind farms off the coast of Europe.

“Overall,” Jacobson and his colleagues concluded in the study, “we find here that large arrays of electricity-generating offshore wind turbines may diminish hurricane risk cost-effectively while reducing air pollution and global warming, and providing local or regionally sourced energy supply.”

Anne Freedman is managing editor of Risk & Insurance. She can be reached at [email protected]
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Project Cargo

Moving the Big Stuff

With capacity ample, project cargo insurers emphasize project management.
By: | August 31, 2015 • 8 min read
The nearly 400-foot long monster crane, "Left Coast Lifter," nicknamed "I Lift NY,"  makes its way along the Hudson River  on its way to port Thursday, Jan. 30, 2014, in Jersey City, N.J. I Lift NY is one of world's largest floating cranes and will be used in the construction of the New NY Bridge to replace the Tappan Zee. I Lift NY will be docking at a private facility in Jersey City, where it will be berthed until it is moved to the New NY Bridge project site in the spring. (AP Photo/The Jersey Journal, Reena Rose Sibayan)

Big changes in global energy markets and the infrastructure needs of developing nations are driving large-scale construction projects globally. The building blocks for many of those projects must move by sea, a perilous passageway with the potential for massive losses.

Soft insurance rates and plenty of capacity erase any notion of project cargo insurance as a commodity. It’s in the engineering and project management that carriers win the business.

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Steve Weiss, SVP, marine, Aspen

“In many insurance lines, loss control and risk management are reactive but in project cargo, it is very proactive, especially for us,” said Steve Weiss, now senior vice president, marine, for Aspen who spoke to Risk & Insurance® when he was a senior vice president for Liberty International Underwriters.

“Engineering is the life cycle of project cargo, from the time of submission through underwriting, post binding and execution.

“You don’t make money in project cargo on rates or terms and conditions, you make money on project management,” Weiss said.

Not that anyone is making a great deal of money in project cargo at present.

“The project cargo market is still very active globally,” said Kevin Wolfe, global head of project cargo for Allianz Global Corporate & Specialty.

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“There is more than ample capacity overall, but there are still a limited number of major players that prefer to lead the largest projects. Rates are more competitive than they were several years ago, but still are at a viable level where profitability can be maintained.

“Terms and conditions are always being tested by the marketplace. Some can be adjusted, but some are very specific to project cargo, such as survey warranties.

Without those in place, coverage becomes so broad that we just won’t entertain the specific risk.”

Weiss concurred: “There is plenty of capacity to build any tower you need, up to $1.5 billion or so. But there are only a handful of lead underwriters.”

Global Infrastructure Needs

By definition, project cargo varies practically with every shipment. Wolfe said that Allianz is seeing activity in all regions. In Asia-Pacific and Africa there are quite a few projects related to quality of living, water filtration, power generation and transmission. In South America and Australia, there has been a lot of bridge and tunnel construction, while the Middle East is seeing more rail building.

“In the last year, we have seen a lot more activity in plant upgrades and expansions,” said Wolfe, “whereas a few years before, we saw more greenfield projects. We continue to see jumbo projects, like the natural-gas liquefaction projects, but have seen much more activity in small to mid-sized ones.”
The project cargo market is notable for the high-profile moves of huge, expensive, heavy, fragile and unusual items.

John Michel, marine underwriting manager for Global Special Risks (GSR) Group, a subsidiary of RSG Underwriting Managers, said those moves tend to go well because there is often just one shipment, and every one is paying close attention.

That was not always the case, he said.

John Michel, marine underwriting manager, Global Special Risks (GSR) Group,

John Michel, marine underwriting manager, Global Special Risks (GSR) Group,

“A few years ago we had a project shipment of a complete factory being moved from North America across the Atlantic. It was thousands of parts in many shipments. We just knew there were going to be some loss(es) because of the numerous shipments.”

Michel added that GSR was able to implement a program, and handle any claims.

The highly variable nature of the project cargo market also means that any given move can be expensive to cover.

“We just bound a contract for a big generating plant,” said Kevan Gielty, president and CEO of Coast Underwriters.

“The overall market is soft, but in many projects such as this one there is heavy exposure in lag time if anything went wrong. So the pricing for that policy was firmer than we have seen recently. In cases where premiums are more competitive, there is an even greater emphasis on loss control.”

Gielty noted a continuing trend in project cargo is manufacturers offering coverage. This is not new, but in a soft market every competitor is a factor. Some very large utilities and energy companies will simply self-insure to a point and only go to the market for excess.

“We typically get involved in the delay-in-start-up [DSU] component,” he said.

“When the U.S. was slow, Latin America was busy, especially expanding power sectors, most notably in Brazil. Now we are anticipating an uptick in Mexico as the energy sector is liberalized.”
— Steven Weiss, senior vice president, marine, Aspen

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“That is not written alone because we need to be involved in the whole process.”
Weiss said that “North American rates have declined the last five to six years. The high was in 2007-08, and they are down 15 to 20 percent since then, although relatively flat so far this year. The U.S. and Canada have seen a decent uptick in project cargo because of power generation and natural gas.”

Different regions can often be countercyclical, he said. “When the U.S. was slow, Latin America was busy, especially expanding power sectors, most notably in Brazil. Now we are anticipating an uptick in Mexico as the energy sector is liberalized.”

Growth Areas

Even as underwriters track geographic and sector changes, they are also seeking new types of business.

09012015_03_ProjectCargo_sidebar_400pxGSR has recently begun to write stock throughputs. “We cover every aspect from procurement through delivery,” said Michel.

“It is a bit more of a challenge for the underwriter, but it simplifies things for the insured. This is definitely a growth area for us.

“Another extension of the project cargo market is contractor’s equipment. The energy markets in London can be expensive, and they are focused on windstorm.

“Covering that through the cargo market gets away from restrictions of geography and storm. It also moves to a market where there is ample capacity and moderate rates.”

Despite the current conditions where terms and conditions are broad and rates are trending down, Michel is sanguine.

“These trends will catch up with the industry at some point, it cannot go on forever.”

One of the interesting — and challenging — aspects of project cargo is that it can be counterintuitive.

For example, globalization of green energy might seem to be a boon, but Wolfe noted that more and more solar arrays and wind-turbine components are being made in each region, so the coverage of those moves tends to be within the engineering and construction policies, rather than in the deep-sea marine realm as it used to be when only a few places had industry capable of making such components.

“Mining is still active in North and South America, as well as sub-Saharan Africa,” Wolfe said, but again there can be an overlap with construction.

“In many regions, the biggest challenge of a mining or manufacturing project can be the adequacy of roads and bridges necessary to get components and then raw materials in, or production out.”

The variable nature and size of some coverage also makes project cargo unusual in that lead underwriters have to adapt their organizations to a large project.

“We have to consider deployment of our own resources even before we bind,” said Wolfe.

“By the time we have a contract, we have already had multiple conversations with our loss-control team. They are an integral part of the underwriting process. They might identify 40 critical items in the project that could require 100 or more surveys in total.”

Given the size and scope of Allianz, the company naturally prefers to use its own people whenever possible. But that still requires adaptation by the underwriters and marine loss control.

“As a result, we move our people around globally as needed,” said Wolfe.

“That varies with the size and type and number of projects. There can be hundreds of surveys required on different projects in different parts of the world at similar times.”

“Managing a project is a very fluid environment, modes of transit and shipping schedules change, the people change, even the risk managers. We constantly have to match people to risks and risks to people.”
— Kevin Wolfe, global head of project cargo, Allianz Global Corporate & Specialty

Adding a fourth dimension, “nothing ever stays the same over the course of a multiyear project,” said Wolfe.

“Managing a project is a very fluid environment: modes of transit and shipping schedules change, the people change, even the risk managers.

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“We constantly have to match people to risks and risks to people. We do have a short list of outside vendors that have been vetted by our head of marine loss control, but even then the internal dialogue stays lively throughout the life of each project.”

Insureds can deploy risk management as well. There are several service providers that aggregate and analyze exposures and losses.

“Data is often spread across many losses, claims, exposures, policies, programs and different companies with different platforms,” said Bob Petrie, CEO of Origami Risk.

“We use analytics to look for patterns and events that cause losses. Insureds can use those to identify sources of exposure. Then, if there is a loss, the software can be used to report a claim, and it will get the loss reports and supporting documents to the underwriters.”

One of the new targets in project cargo risk management is tracking near misses, said Phil Wiedower of Origami.

Near-miss data is often held within an owner’s records, but tends to get overlooked because there is no claim, he said.

“Owners are looking to understand what risks to retain and what to transfer. Knowing the near misses as well as the loss history is important in the transfer cost-benefit analysis,” Wiedower said.

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected]
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Sponsored Content by IPS

Managing Chronic Pain Requires a Holistic Strategy

To manage chronic pain and get the best possible outcomes for the payer and the injured worker, employ a holistic, start-to-finish process.
By: | August 3, 2015 • 5 min read
IPS_BrandedContent

Chronic, intractable pain within workers’ compensation is a serious problem.

The National Center for Biotechnology Information, part of the National Institutes of Health, reports that when chronic pain occurs in the context of workers’ comp, greater clinical complexity is almost sure to follow.

At the same time, Workers’ Compensation Research Institute (WCRI) studies show that 75 percent of injured workers get opioids, but don’t get opioid management services. The result is an epidemic of debilitating addiction within the workers’ compensation landscape.

As CEO and founder of Integrated Prescription Solutions Inc. (IPS), Greg Todd understands how pain is a serious challenge for workers’ compensation-related medical care. Todd sees a related, and alarming, trend as well – the incidence rate for injured workers seeking permanent or partial disability because of chronic pain continues to rise.

Challenges aside, managing chronic pain so both the payer and the injured worker can get the best possible outcomes is doable, Todd said, but it requires a holistic, start-to-finish process.

Todd explained that there are several critical components to managing chronic pain, involving both prospective and retrospective solutions.

 

Prospective View: Fast, Early Action

IPS_BrandedContent“Having the wrong treatment protocol on day one can contribute significantly to bad outcomes with injured workers,” Todd said. “Referred to as outliers, many of these ’red flag’ cases never return to work.”

Best practice care begins with the use of evidence-based UR recommendations such as ODG. Using a proven pharmacological safety and monitoring opioid management program is a top priority, but needs to be combined with an evidence-based medical treatment and rehabilitative process-focused plan. That means coordinating every aspect of care, including programs such as quality network diagnostics, in-network physical therapy, appropriate durable medical equipment (DME) and in more severe cases work hardening, which uses work (real or simulated) as a treatment modality.

Todd emphasized working closely with the primary treating physician, getting the doctor on board as soon as possible with plans for proven programs such as opioid Safety and Monitoring, EB PT facilities, patient progress monitoring and return-to-work or modified work duty recommendations.

“It comes down to doing the right thing for the right reasons for the right injury at the right time. To manage chronic pain successfully – mitigating disability and maximizing return-to-work – you have to offer a comprehensive approach.”
— Greg Todd, CEO and founder, Integrated Prescription Solutions Inc. (IPS)

 

Alternative Pain Management Strategies

IPS_BrandedContentUnfortunately, pain management today is practically an automatic move to a narcotic approach, versus a non-invasive, non-narcotic option. To manage that scenario, IPS’ pain management is in line with ODG as the most effective, polymodal approach to treatment. That includes N-drug formularies, adherence to therapy regiment guidelines and inclusive of appropriate alternative physical modalities (electrotherapy, hot/cold therapy, massage, exercise and acupuncture) that may help the claimant mitigate the pain while maximizing their ongoing overall recovery plan.

IPS encourages physicians to consider the least narcotic and non-invasive approach to treatment first and then work up the ladder in strength – versus the other way around.

“You can’t expect that you can give someone Percocet or Oxycontin for two months and then tell them to try Tramadol with NSAIDS or a TENS unit to see which one worked better; it makes no sense,” Todd explained.

He added that in many cases, using a “bottom up” treatment strategy alone can help injured workers return to work in accordance with best practice guidelines. They won’t need to be weaned off a long-acting opioid, which many times they’re prohibited to use while on the job anyway.

 

Chronic Pain: An Elusive Condition

IPS_BrandedContentSoft tissue injuries – whether a tear, sprain or strain – end up with some level of chronic pain. Often, it turns out that it’s due to a vascular component to the pain – not the original cause of the pain resulting from the injury. For example, it can be due to collagen (scar tissue) build up and improper blood flow in the area, particularly in post-surgical cases.

“Pain exists even though the surgery was successful,” Todd said.

The challenge here is simply managing the pain while helping the claimant get back to work. Sometimes the systemic effect of oral opioid-based drugs prohibits the person from going to work by its highly addictive nature. In a 2014 report, “A Nation in Pain,” St. Louis-based Express Scripts found that nearly half of those who took opioid medications for more than a month in their first year of treatment then refilled their prescriptions for three years or longer. Many studies confirm that chronic opioid use has led to declining functionality with reduced ability to recover.

This can be challenging if certain pain killers are being used to manage the pain but are prohibitive in performing work duties. This is where topical compound prescriptions – controversial due to high cost and a lack of control – may be used. IPS works with a reputable, highly cost-effective network of compound prescription providers, with costs about 30-50 percent less than the traditional compound prescription

In particular compounded Non-Systemic Transdermal (NST) pain creams are proving to be an effective treatment for chronic pain syndromes. There is much that is poorly understood about this treatment modality with the science and outcomes now emerging.

 

Retrospective Strategies: Staying on Top of the Claim

IPS_BrandedContentIPS’ retrospective approach includes components such as periodic letters of medical necessity sent to the physician, peer-to-peer and pharmacological reviews when necessary, toxicology monitoring and reporting, and even addiction rehab programs specifically tailored toward injured workers.

Todd said that the most effective WC pharmacy benefit manager (PBM) provides much more than just drug benefits, but rather combines pharmacy benefits with a comprehensive ancillary suite of services in a single portal assisting all medical care from onset of injury to RTW. IPS puts the tools at the adjustor fingertips and automates initial recommendations as soon as the claim in entered into its system through dashboard alerts. Claimant scheduling and progress reporting is made available to clients 24/7/365.

“It comes down to doing the right thing for the right reasons for the right injury at the right time,” Todd said, “To manage chronic pain successfully – mitigating disability and maximizing return-to-work – you have to offer a comprehensive approach,” he said.

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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 IPS. The editorial staff of Risk & Insurance had no role in its preparation.




Integrated Prescription Solutions (IPS) is a Pharmacy Benefit Management (PBM) and Ancillary Services partner to W/C and Auto (PIP) Insurance carriers, Self Insured Employers, and Third Party Administrators who specialize in Workers Compensation benefits management.
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