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| Latest Web-Exclusive Columns
October 2, 2009 at 1:14 am
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| Our Loss Control and Legal columnists--Steve Hernandez and Phil Kircher--filed their Sept. pieces. One's about the real cargo theft danger, the other about the Supreme Court's upcoming business-related decisions.
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| Seeds of Speed
October 2, 2009 at 1:14 am
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| A conservative culture at Chubb cedes to a radical program to slash the development times for bringing to market new products and services. Enter Chief Innovation Officer Jon Bidwell.
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| The Increasing Complexity of Privacy Rules
October 2, 2009 at 1:14 am
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| Unless a business is prepared to go "off the grid" and forego the benefits of technology tools, it should be sure to understand its data profile, create a strong data protection and response plan, and ensure that it is adequately protected against liabilities.
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| The Monstrous Tax Quandary
October 2, 2009 at 1:14 am
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| A friend of mine in the insurance sector faces a difficult decision late in life. Bermuda is about to ask him to leave, after he has spent most of his adult life working on the island.
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| CEO Spiders
October 2, 2009 at 1:14 am
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| Ever notice how things happen in threes? These past weeks, I have been enjoying wonderful patio conversations with old and new friends.
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| GRC: Win or Spin?
October 2, 2009 at 1:14 am
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| Like all disciplines, risk management must innovate to justify the resources needed to accomplish goals.
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| Two Different States
October 2, 2009 at 1:14 am
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| The Workers Compensation Research Institute released this summer a valuable study of claimant experience with the workers' compensation systems of 11 states.
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| Really, Really Smart Cars
October 2, 2009 at 1:14 am
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| Cars have become safer and more fun to drive over the years thanks to all kinds of innovative technology. Seat belts and air bags have played a major role in reducing accident fatalities and injuries over the last few decades.
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| 2009 Risk Innovator: Triumph of the Insiders
October 2, 2009 at 1:14 am
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| There is a thread that runs through the scores of individuals profiled in this year's Risk Innovator issue: Innovators remain long-time corporate insiders who've honed their expertise over decades.
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| Risk Innovators: A Special Thank You
October 2, 2009 at 1:14 am
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| Whoever said risk management and insurance was devoid of innovation got it dead wrong. There is plenty of innovation in the industry, and the dozens of pages in this issue attest to that.
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| Sprinkling the Wealth
October 2, 2009 at 1:14 am
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| FM Global, happy to share its innovative know-how, begins a program of nonexclusive, royalty-free licensing agreements with manufacturers.
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| Microinsurance Has Big Upside
October 2, 2009 at 1:14 am
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| More insurers look to get involved in microfinance for all the right reasons. But they might also become better, more innovative carriers by the time they're done.
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| Scale: A Boon to Innovation
October 2, 2009 at 1:14 am
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| The larger the scale, the more latitude and the greater the chance for innovation.
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| 2009 Responsibility Leaders
October 2, 2009 at 1:14 am
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| Nine leaders in the world of risk and insurance management committed to doing what is right instead of doing what is easy.
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| The Two Sides to Web Detection
October 2, 2009 at 1:14 am
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| Monitoring online postings for signs of troubled students or faculty makes sense, but case law is unclear about where duty ends and liability begins.
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| Responsibility Leader: Dr. Nathan Cope
October 2, 2009 at 1:14 am
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| There's a small group of catastrophic injuries that, too often, are written off, costing employers and insurers huge, ongoing medical expenses and confining injured workers to a life far more difficult than they ever expected. It's those really tough injuries--severe brain trauma, spinal cord injuries and severe burns--that are the focus of the work of Dr. Nathan Cope. With missionary zeal, Dr. Cope has refused to accept that these cases are beyond help. Instead, with his focus on a unique team treatment program, his patients return to work about 40 percent of the time, rather than the 8 percent that is usual for these kinds of injuries. The philosophy behind his program is that if you do the best for a patient medically, the financial benefits will follow. And it's this idea of "doing the right thing for the patient" that's behind much of the movement today for the reform of the U.S. healthcare system.
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| Responsibility Leader: Robert Furtado
October 2, 2009 at 1:14 am
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| Robert Furtado developed a solution to a problem in the supply chain that persisted without a solution--the theft of in-transit cargo, mostly expensive cargo. An answer could give his company, LoJack Supply Chain Integrity, a competitive advantage. But Furtado believes in sharing, and he has become something of an industry advocate offering help with solving a difficult, industrywide problem and developing a set of best practices. He defines part of his job as raising the awareness of the problem even among his competitors, but certainly among the industry at large. In particular, Furtado works with the Supply Chain Information Sharing and Analysis Center to help the industry become far more knowledgeable about the vulnerabilities of cargo during the actual in-transit process. The results are exciting: millions of dollars worth of cargo recovered while "on the road."
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| Responsibility Leader: Jane Keegan
October 2, 2009 at 1:14 am
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| Environmental problems are ripe for public controversy, especially political controversy. They have just the right mix of factors that can torpedo a solution even before it gets off the ground. And a port is among the most common locations to find controversial environmental issues. Enter Jane Keegan, risk manager for the Port and Enterprise Department of the city of Oakland. She's been at the port for more than 20 years and has worked diligently to cultivate the trust and support of a slew of leaders in different government jurisdictions, along with trust of the neighborhood and city surrounding the port. Keegan found an unusual solution--insuring the known environmental risks on the site. During this time, she also developed a reputation as a leader in the San Francisco Bay risk management community. Then she was able to sell the insurance risk transfer solution along with a unique cost-allocation process among all the players. And it was her abilities and respect that made it possible to get it done.
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| Responsibility Leader: Ernie Machado
October 2, 2009 at 1:14 am
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| Ernie Machado asked the "responsible" question: Why does it have to be that way? Workers for poultry producers are prone to severe injuries, especially newly hired, young workers. This problem was "almost considered the cost of doing business" but Machado, risk manager for Foster Farms, refused to accept the status quo. After attempts to solve the problem using more standard ergonomic solutions, Machado found that testing new employees for the right kind of physical skills would reduce injuries and lower costs. Machado used testing expertise from BTE Technologies to find a post-offer testing process and then expanded its use to experienced workers who may have been looking for a better job within the company. Machado faced push-back from human resources and organized labor, but he wouldn't give up. Now the successful results are in and all parties agree it was a classic "win-win."
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| Dan Steere
October 2, 2009 at 1:14 am
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| CEO GreenRoad Inc. Redwood City, Calif. GreenRoad's monitoring system coaches bad drivers, from veteran taxicab owners to teens newly issued driving privileges. Ten years ago, the biggest thing in the logistics industry was supply chain management software. Today, it's a standard tool, and no company could compete without it. Dan Steere, CEO of Redwood City, Calif.-based GreenRoad Inc., said the feedback he's received so far about the company's driving monitoring system launched in 2007 indicates that, in a few years, it will be impossible to manage a fleet of vehicles without it. While it might sound like a lofty statement, the GreenRoad system has impressed investors, risk managers, insurance companies and consumers. GreenRoad's service provides instant, in-vehicle feedback from a red-yellow-green LED display. Sensors analyze up to 120 separate driving events in five categories: speed handling, cornering, lane handling, braking and acceleration. Patented algorithms associate risk with vehicle movement and categories of driving and automatically assess driver safety. Drivers are classified as red (high risk, 50 or more risky events per 10 driving hours); yellow (attention required, 20-49 risky events); or green (safe, 0-19 risky events). The data feed from the device in the vehicle automatically updates the online reports and analysis available to drivers and fleet managers. Web-based and e-mail reports provide individual trip detail, risk analysis and coaching. "With camera systems, you have to take all the data and footage and look at it frame by frame and see what is good and bad," said Robin Harbage, a consultant at EMB who previously spent 20 years with Progressive Insurance, mostly in product development. "This system with the lights, they show you immediately if you do something good or bad and later translate that into a score. The immediacy of the feedback makes improving driver behavior automatic." Dave Huber, a director at AAA who is analyzing the GreenRoad system in a pilot program aimed at improving driving safety in teens, said the product stands out compared with other systems, particularly in-vehicle video cameras viewed by drivers as "Big Brother." "The emphasis is on coaching rather than others that are focused on reporting, which in a world with teenagers would be seen as kind of punitive," Huber said. "Rather than being caught doing something bad--Johnny was speeding--an alternative approach is to provide a little more insight into the behavior and ideally make suggestions to avoid some of those risky behaviors."
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| MASS APPEAL
October 2, 2009 at 1:14 am
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| Huber said the GreenRoad system is appealing in many ways. It fits the AAA brand in regard to encouraging safety, and it finds a middle ground between teens and parents. GreenRoad also offers reward incentive programs for green drivers and can be leveraged by insurance companies to offer reduced rates for safe drivers. GreenRoad's service has been implemented by more than 60 fleets in trucking and other industries including Stagecoach, T-Mobile, LeFleur Transportation, Ryder and the U.K. Ministry of Defense. The system has been shown to reduce crash costs by 49 percent and cut fuel usage by 7 percent to 11 percent. At about $30 a month per vehicle, users can see a return on investment in the first month. "In my mind, as an insurance executive, this just blows me away," said Harbage. "If we could see this safety improvement throughout the auto industry, we would see an incredible drop in accidents across the board." Steere said GreenRoad's system has been validated across every class of vehicle and across different countries and vastly different driving populations, from long-haul truckers and public bus drivers to taxicab operators and new teen drivers. "We've led the way in a more effective approach to quantify risk," Steere said. --By Erin Gazica
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| THE ALLOCATION
October 2, 2009 at 1:14 am
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| The icing on the cake? Keegan was able to develop an effective cost-allocation system to recapture much of the cost of the premium for this environmental coverage by allocating it to developers and tenants of enterprise land covered by the insurance. In doing that, she helped ensure the financial sustainability of the port, which is heavily indebted, and secured funding for remediation of known and unknown environmental hazards that could be detrimental to the health of thousands of employees as well as local residents. Transferring costs to the private industry makes a tremendous impact and not just in terms of creating bottom-line profit but in saving and creating jobs. Keegan also helped community relations, which had suffered due to publicity about the port's lack of commitment to improving the environment. It was the cost and community benefits that led Smith to refer to Keegan as a "visionary practitioner." "This was creative in the sense that you have a public entity engage in a practice you would expect to see out of private industry," said Smith. "In getting the cost-allocation system, she was able to assist the port in its own cash-flow position, which had become very critical." In the end, Keegan's initiatives sent a strong message, which is that the port is serious about environmental cleanup. --By Erin Gazica
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| DOING A NICHE WELL
October 2, 2009 at 1:14 am
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| As a MGU, Redwoods serves a niche market--about half of the 1,000 YMCA organizations across the country and, more recently, 25 Jewish Community Centers, which have similar risks. "Doug knows the business extremely well," said Joel Porten, a safety professional and assistant vice president at Global Loss Prevention, previously known as AIG Consultants. Lexington Insurance is the carrier on the YMCA program. "He has communicated a variety of different things to his customers on a regular basis," Porten said. Porten admitted that "it was a huge leap of faith on our part" to take on the loss-control coordination for Redwoods due to the nature of the clients. But during the five or so years that Porten's firm has done business with Redwoods, he's had no complaints. He said losses have been kept to a minimum and "we pay their claims." Indeed, from January 2001 to January 2008, Redwoods' 13 paid losses ranged from $2,802 to $932,115. Following a $500,000 sauna fire loss at a North Carolina YMCA in 2007, where there were no automatic sprinklers, Page researched trends in YMCA fires and discovered that most fires at Ys started in saunas and caused more than $1.7 million in losses from April 2000 to April 2007. So Page developed a pretty simple, and cheap, remedy. Redwoods recommended that Ys install one high temperature sprinkler head tied to the water line above each sauna. That solution cost Ys less than $300, versus the much higher cost of a fully automatic sprinkler system. Since launching the sauna safety program in January 2008, total losses due to sauna fires are at an all-time company low--one sauna fire loss over an 18-month period. Over the same time period, there's been a 32 percent increase in the number of YMCAs installing sprinklers in their saunas. --By Julie Liedman
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| William Persyn
October 2, 2009 at 1:14 am
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| Group Leader, Risk and Insurance Mgmt. and Public Safety Arizona Public Service Phoenix A group of utilities tries to identify the risks of carbon capture and sequestration and creates a new kind of liability package. Imagine driving by your local power plant and seeing no thick cloud of smoke floating overhead. The surrounding sky is blue and the air is fresh. The carbon-capture and sequestration technology necessary to trap that waste and store it safely underground could be closer to making its way into mainstream America, thanks to William Persyn, group leader of risk and insurance management and public safety at Arizona Public Service. Persyn's company, the largest electricity utility in Arizona, has embarked on a partnership to test the feasibility, efficacy, safety and cost of storing carbon dioxide underground as a way of managing greenhouse-gas emissions. It was Persyn who took on the task of securing an insurance program that protected all members of the consortium, not just his employer. It all started when APS joined WestCarb, one of the U.S. Department of Energy's seven carbon sequestration regional partnerships. WestCarb's research project site is located on land owned by APS, so while all members of the consortium share an equal partnership, APS and Persyn have the most vested in the project. The project created new risks that have up to now not existed or been evaluated. Persyn said he was excited by the challenge, particularly because carbon capture is an important step before all energy is renewable. "As a utility, as much as renewables sound sexy and a great prospect, there's no getting around that they cost so much more and can't replace our existing fossil-fuel methods," he said. "The government is giving grants for this because they realize that existing power plants are a pretty heavy investment and we'll have to continue maximizing them while we look into renewable energy." But who wants to be the risk manager in charge when something goes wrong, when a leak occurs, a person is injured or the environment suffers as a result of this experiment? The government certainly hasn't offered to be held accountable. Persyn said he felt that, if not him, then who? "Even though this project sounds risky and new, it's on a small scale," he said. "There are some other countries that have begun doing some large-scale carbon storage and sequestration and it seemed like the right thing for us to do as a utility."
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| 14 Categories of Risk Innovator Winners
October 2, 2009 at 1:14 am
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| Find out who won in the 14 categories of this year's Risk Innovator competition. Just click on the appropriate category and read full profiles on all the 2009 honorees.
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| Bob Chauncey
October 2, 2009 at 1:14 am
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| Church Security Consultant Church Security Institute Virginia Beach, Va. With churches becoming new targets of violence, many have turned to a risk management program to mitigate the exposures. Setting up a risk management consultancy may not seem all that innovative, but Bob Chauncey has focused his safety and security expertise on a group of clients that has suffered more than 140 violent incidences since the beginning of the year--churches. After all, churches are considered "a safe sort of place," said Chauncey, but sometimes even God can't protect worshippers from violence. And, unfortunately, that's what a growing number of churches have suffered from, despite the liturgy that condemns violence. These aren't biblical times, when swords served as the primary protectors of churches. So to secure and protect churches, Chauncey created his Church Security Institute in Virginia Beach, Va., a bit more than a year ago. He said his mission and calling is to educate the leaders at both small and large churches on the need to develop a risk management plan to prevent that enraged shooter from even entering the church. Chauncey's approach is based upon knowledge he's gleaned through criminal justice and law enforcement training, along with his background in general and commercial insurance, security protection with electronic and personal surveillance, risk analysis and loss prevention, and serving as a chaplain. Not that many years ago, few considered that a risk management analysis or plan for churches was even necessary. "Church and ministries are at so much more risk (today)," said Chauncey. "They need to be prepared." Most often, the intruder is not even a member of the particular church but harbors uncontrolled anger, perhaps toward Christianity, as was the case in a shooting at the 10,000-member New Life Church in Colorado Springs, Colo., in December 2007. The shooter, Matthew Murray, killed two sisters in the parking lot before entering the church, where he was shot and killed by a church member who volunteered as a security guard. Earlier in the day, Murray had killed two people at a missionary training center. And consider what happened in May, when Dr. George Tiller, one of the very few late-term abortion providers in the country, was shot and killed in the foyer of the Reformation Lutheran Church in Wichita, Kan., where he was serving as an usher. The church had no security plan. "Churches are prone to not think it will happen to them," said Chauncey, who is a Certified Protection Professional and has beefed up his safety and security knowledge through several security management seminars and church security conferences. "I'm meeting a need that I didn't see companies addressing," he said. Church resistance is tough to overcome. "In a church you have a very open and inviting atmosphere, and it is hard to get people, pastors, members, deacons and trustees to realize that you can be open but also alert and observant to potential problems," he said. "You have to select and train greeters, ushers, ministerial staff and members that there is a way to welcome and accept new folks but to also be observant and ask questions to judge feelings."
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| THE APPROACH
October 2, 2009 at 1:14 am
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| His approach: Once he meets with church officials, he performs a risk analysis, identifying potential trouble areas such as large parking lots, dark areas inside the church where someone could hide, plus other vulnerable areas. That includes the perimeter around the parking lot, the door greeters, the entrance to the sanctuary and closer to the pulpit, where the minister and others are open to attack. Training church volunteers serves as the crux of his risk prevention program. Chauncey frankly prefers that volunteers learn to identify potential troublemakers and how to deal with them, either with nonlethal weapons, such as pepper spray and handcuffs, or guns. Some churches want their protection to be much more visible, so they may hire security guards to ward off the unwanted. In other churches you might find a loaded gun sitting behind the pulpit. "Costwise, it's much less expensive for a church to train their own people," said Bob Petty, police chaplain with the Chesapeake, Va., police department and a security expert. "That makes people more comfortable; they know the members much better. Members take on the responsibility, so if they see someone who doesn't belong, they know that," Petty said. On the other hand, a paid security guard doesn't know who belongs and who doesn't. Petty calls it "a home-court advantage." "Using a new attitude and observation tools, plus having a trained and prepared team with not only a plan, but one that has been reviewed, practiced and improved along the way, you can do the most and best possible to provide a safe place." Chauncey said. --By Julie Liedman
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| Eric Guichard
October 2, 2009 at 1:14 am
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| Chairman and CEO GRAVITAS Capital Advisors Inc. Washington, D.C. Giving state pension funds access to capital markets at reasonable rates. When you're a foreign state pension fund, it's not always that easy to tap the capital markets the way that a U.S. fund can like a CalPERS. One reason is that the credit rating of these foreign state pension funds is not separate and apart from the credit rating of the country itself and many times emerging market countries have poor credit ratings because of various levels of financial mismanagement. That means the financing, if available, is often far too expensive to make it worthwhile. Without easy access to the capital markets, these funds sometimes end up in financial trouble and default on their obligations to retirees. It doesn't help that assumptions about actuarial hurdle rates for emerging economies wrongly assume similarities with those of developed countries and that state pension risk control parameters are too stringent. Eric Guichard recognized this problem after leaving his job at the World Bank in the late 1990s and founded GRAVITAS Capital, which works mostly with emerging market countries in Latin America, the Caribbean, Asia and Africa. The mission of GRAVITAS, he said, is to pick up where the World Bank left off and customize solutions that the World Bank could not do because of its own limitations. The idea, he said, is to approach a number of highly rated banks in Europe and "borrow" their balance sheet at a reasonable cost. In other words, the Pension Support Fund founded by GRAVITAS would borrow from these banks and then invest the funds in a variety of safe, but diversified investments, such as U.S. Treasuries, high-yield corporate bonds, emerging market bonds and emerging market equities. Those investments would then generate enough yield to pay back the bank debt, as well as help the pension funds generate higher yields than they otherwise could get to meet their long-term obligations. The Pension Support Fund was implemented as a fund or hedging platform that is offered as a limited partnership to participating state pensions. "The benefit of all of this is that the pension funds are now able to meet their long-term obligations, and the beneficiaries don't have to worry about defaults," Guichard said. This also has a significant impact on these countries, and their economies are now able to provide for retirees and prevent these funds from defaulting.
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| Richard G. Vassar
October 2, 2009 at 1:14 am
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| General Manager, Risk Management Volkswagen Group of America Inc. Herndon, Va. Laughter and creativity guide Volkswagen's risk manager, who knows how to bring risk management to those around him. Given the title of a nicely selling book about giving the insurance industry a little comeuppance you might think it was written by Public Citizen, a public advocacy group started by Ralph Nader. The title of the book, "Hide! Here Comes the Insurance Guy: Understanding Business and Risk Management" in fact, belongs to Richard G. Vassar, general manager, risk management at Herndon, Va.-based Volkswagen Group of America Inc. The journey of Vassar's book from idea to rolling off the press is a real saga. After Vassar talked to more book publishers than he cares to remember, he decided to take a bold step: enter the world of print-on-demand, wherein he would foot the bill for every book sold, title by title. It was a good gamble. With some promotional help from RIMS and speaking engagements, as well as a number of favorable reviews, he knew his approach of simplifying substantial insurance concepts with touches of humor here and there was catching on. That was July of 2006. Within a year or so about 1,200 print-on-demand copies had been sold. So in November of last year, in addition to the print-on-demand title, Vassar's publisher, iUniverse, launched a traditional title of the same name and has sold about 300 copies since then. The books are available through the publisher and Amazon.com. Vassar wrote the book principally for midsize and smaller companies at which the risk manager often wears other hats as well. Said Vassar: "I wrote the book because most organizations lack the basic knowledge of risk management and insurance. Many look at insurance as a 'necessary evil' and do not know how to take a proactive approach to reducing losses, which in turn reduces insurance costs. "I also recognized that insurance has its own language, and the book was aimed at being a translator for those with business acumen but who find insurance much too technical to warrant its study." Vassar said the current target reader for "Hide!" is a larger business audience. "What I've learned working in Corporate America is that when you walk into the CFOs office you've got to speak like they do--in numbers. If you go in talking insurance language then you're not going to get buy-in."
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| BREAKING IT DOWN
October 2, 2009 at 1:14 am
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| Several people who know Vassar well said he is the ideal person for breaking down insurance speak into understandable business terms. Joe Donnelly, senior vice president at Kansas City-based Lockton Companies LLC, a construction services business manager, said of Vassar: "Rick is a creative risk manager. Many risk managers will sit back and let things run themselves. Rick is more of a mind to take positive action. "He works very closely with his broker. Then he takes a very aggressive role in dealing with the market. He can be a challenge to work with at times--but for all the right reasons. I enjoy working with him." Added Donnelly: "Rick is well versed in his field. He knows what he wants, but at the same time he is easy going. In a business/social situation he is very comfortable; he is well spoken and a genuinely nice guy." "When working with Rick there was never an easy solution," noted Jim Misselwitz, senior account executive and part owner at ECBM, a very large independent broker in the Philadelphia area. "You always had to keep working a project until everybody was fully satisfied but Rick had a way of dissecting a problem that left everybody feeling comfortable." "Rick is one of those guys who, when bombs are going off all around you, has a way of being calm, of staying focused on the end game. He had a level of knowledge such that he could communicate at any level in the corporation. Rick also knew how to stay on task. If somebody came and said, 'We've got to this and we've got to do it now,' he would put it in a place it belonged and come back to it at the appropriate time. He always served the company first." Throughout the years, Vassar has consistently realized a 20 percent first-year cost improvement and maintained or improved on those numbers for every corporation where he's worked more than 20 years: 15 years at Thrifty Car Rental, Inc.; five years at Valcourt Building Services and in the past year at Volkswagen Group of America. --By Steve Yahn
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| THE TRIGGER COMETH
October 2, 2009 at 1:14 am
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| Not long after the policy came into effect, it was almost triggered by the H1N1 flu. "We had a bit of a test run with the swine flu," said Moriarty. "That really caused us to think about the threats. With a World Health Organization rating of 5, there were very strict protocols for us to collect on the policy. But once WHO went to Level 6 for the H1N1, all the hoops are gone. If the virus comes back this fall--and we pray that it won't--we would still have to prove a financial loss, but otherwise are free and clear." Many carriers exclude swine flu, so similar coverage would not be available elsewhere, she noted. "The potential loss for the colleges and universities is if they would have to cancel classes or even just some programs and return tuition money or fees," said Olsen. "We could not get anyone to write this coverage for us, so we had to find another way to get our clients protected." Coverage triggers vary depending on the type of hazard but generally are built around a percentage of students and faculty who must stay away from campus for several days. The policy was crafted for colleges and universities, but it could be applicable to other public and private institutions, pools and associations, she said. Siri Gadbois, president of EIIA, recommended that participating institutions purchase the coverage, she added. In negotiations with Berkshire he developed the concept of front-loading premium to allow for an institution's budgets to catch up to the premium costs. --By Gregory DL Morris
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| FORGING PERSONAL RELATIONSHIPS
October 2, 2009 at 1:14 am
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| Employees are promised that the assessments are not shared with their employers or health insurance carriers but are private communications between them and their coaches. "We seal it and open it with them when we come back during scheduled visits," said McGuire. "That's when the rubber really hits the road. "A coach will come back during a scheduled visit, go up to 'Joe' and say, 'Joe, let's talk about hydration' if that's what Joe said he was concerned about. Now it's personal. "We don't just go up to a fat guy and say, 'Let's talk about losing weight.' We walk up to everyone with information that's relevant to them, whether they're concerned about hydration or how not to injure their back, or what to do after they fall and land on their shoulder." Eventually, employees know when coaches will be on-site and personal relationships are forged. The idea is to change wellness from being something that is remote and impersonal to something that is relevant, convenient, responsive and very, very personal. And it pays off. An independent analysis made for Wellness Coaches USA concluded that the company's clients do, indeed, experience risk factor reductions, said McGuire. "Clients have seen a 20 percent decline in incurred costs tied to new injuries (because healthier employees don't get injured as much) and a predictive ROI model that averages four to one." What's more, McGuire said, "Most ROI models are based on the participating group only. We use the entire population of the company as the denominator. "We do that simply because we get so many more employees who participate. They are more engaged and more responsive to every aspect of wellness." --By Julie Liedman
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| TEAMWORK
October 2, 2009 at 1:14 am
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| Iervolino is also very appreciative of all the help he's had along the way, all the "great minds that brought me along," such as Bob Garrison at Siemens. He thanked the talent around him, including "his lean mean team" of Michael Doherty and Tara Schmiel. And there's his team of outside partners as well. "He has a knack for getting the best out of the best," said David Pagoumian, CEO of wholesale broker Napco. It can involve being honest with a broker or other partner when he's not happy about something but also giving that person the respect to admit his own mistake and fix the problem. It also means making everyone work as a team ... yes, even brokers from different firms. Iervolino has mastered the symposium, where he brings together all interested brokers and underwriters to, say, discuss Wyndham's property program. He even held his own party at RIMS this year, hosting partners at a type of event they normally invite him to. "We work together as a team, on the property especially," said broker Whitten. "It was kind of odd, you're working with your competitors." But when you are working with Iervolino, you're as loyal to him as he is to you. "We'd love to have 20 more of Jim," said Pagoumian. --By Matthew Brodsky
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| AN ENTIRELY DIFFERENT MATTER
October 2, 2009 at 1:14 am
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| So does Jim Vance, Western & Southern's vice president and treasurer. Western & Southern had worked under Turner's builder's risk policy for an earlier 200,000-square-foot building on the site, but this second piece was an entirely different matter. "The second project was going to be substantially larger, much bigger with cranes and we are basically right across the street from Great American Ballpark, a high traffic area," Vance said. So, with the help of Western & Southern's real estate staff, and his brokers at Aon Corp., Musgrove got to work and leveraged the relationship with Great American to have that company provide the builder's risk policy, thereby doubling the coverage at a 35 percent discount. Not only that, but he was also able to arrange products and completed operations coverage for the project for the full term required under state statute, 10 years, as opposed to the three years the Turner policy provided. All in all, pretty much a home run. So, how does Musgrove do what he does? "John is extremely patient and speaks from authority and is very fact-based," Vance said. "He doesn't really go by opinion or politics, he goes by, 'OK, what's best for the company?' " Musgrove's communication skills really came into play here. Turner was a cooperative partner, according to Musgrove and Vance, but Musgrove needed to convince the massive contractor and his own board's insurance committee of the need for the expanded coverage and why the coverage that worked on phase one wasn't such a good fit for phase two. "It was a very interesting project and I will tell you that there was much that I learned about construction risk management and what's involved with a building of this size and magnitude and this scale. I think throughout a learning experience like this I was able to tap into all of the resources that were available," Musgrove said. Most of all, perhaps, including his own. --By Dan Reynolds
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| ALL SAFE AND SOUND
October 2, 2009 at 1:14 am
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| With Pugaczewski's program, reducing the prospect of a leaking tank not only protects the environment from harm, but neighboring properties, waterways and groundwater will be safe as well. James Eaton, vice president at Beazley Group and a business associate of Pugaczewski's, said the idea was "very clever." Pugaczewski approached the problem in a very unique way compared with how the heating oil industry typically approached it. "Mike's idea was to pretest every tank to make sure there were no environmental problems," said Eaton. "Then the tank would be insured and continuously tested each year during the lifetime of its membership in the program." Eaton said the best part about the program is that it limits the risks associated with tanks that are already leaking while also allowing for earlier detection of leaks. "We liked it because it was addressing a problem in the industry, and it was an industry-changing idea," he said. On a personal level, Eaton said Pugaczewski has a grasp on the needs of his clients more than most insurance professionals. "He's got a deep understanding of the industry in which he works, grown over many years of experience," said Eaton. "He's very dedicated to finding a solution to problems, and he understands the needs of insureds and the needs of the heating oil industry." --By Erin Gazica
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| Responsibility Leader: Kent Paul
October 2, 2009 at 1:14 am
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| Now here's a challenge: develop a comprehensive risk management program for more than 500 independent Indian tribes spread over 32 states involving sophisticated alternative risk options for a variety of different risks along with the challenge of insuring more than 55,000 structures from a range of potential catastrophic losses. The solutions, though innovative and imaginative, were not the crux of the issues. It was the trust of the tribal communities in Kent Paul that made it all come together. For good reasons, over the decades, trust has been a tough issue to overcome when working with Native American tribes. Because of his understanding of the cultural background of his Indian clients, Paul has been able to bring risk management techniques to the fore. "He shines the light on others," said one of his colleagues. "He makes us feel important and proud to be who we are."
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| Jeffrey Alpaugh
October 2, 2009 at 1:14 am
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| Global Real Estate Practice Leader Marsh Boston PRIZM product allows middle-market clients to pass on seeking coverage from multiple carriers for different lines. With the downturn in the economy, there has not been much going on in the commercial real estate markets from a transactional standpoint. But that does not mean that forward thinking real estate and construction risk managers should not have stayed busy helping their clients and their companies cut costs and reposition themselves for the coming upswing. That's exactly what Jeff Alpaugh, the Boston-based global real estate practice leader for Marsh has been up to. According to co-workers and clients, Alpaugh has been instrumental in designing and selling a suite of products aimed at cutting costs for commercial real estate clients and positioning them for more efficient growth when things turn around. In coming up with the new suite, Alpaugh has leveraged a natural passion for the game with a genuine interest in clients' issues and concerns. One of the new products he championed, PRIZM, is aimed at commercial real estate businesses with revenues under $2 billion that might not have the resources or the weight to negotiate economical lines of business from carriers. "A lot of the middle market buyers in the U.S. sometimes can't get the bells and whistles that a larger firm can get," Alpaugh explains. PRIZM, which stands for Portfolio Real Estate Innovations Zurich/Marsh is, as its name suggests, a Zurich-Marsh collaboration. It provides one-stop shopping for middle market clients, allowing them to apply for a range of coverages without having to fill out a separate application for each one. Rather than go with multiple carriers for different lines, the coverage gives buyers the financial stability of Zurich (Standard & Poors AA-minus) and skips the drama that can occur when multiple carriers are pulled into a claim. "Sometimes if you have two different insurance carriers insuring the risk, they both point the fingers at each other," Alpaugh said. PRIZM includes green endorsements for clients building or renovating LEED-certified properties and provides separate towers for earthquake, catastrophic windstorm and flood coverage and another tower for casualty. Jim Romano, a knowledge manager at Marsh, said that although many professionals recognized that commercial real estate clients needed help and needed it fast, it was Alpaugh who got things going on the Zurich collaboration. "He really spearheaded the whole thing," Romano said. "He saw the need that a lot of the midsize and midmarket real estate companies had to consolidate and reduce costs and he went to Zurich with the need and was able to pound out the program," Romano said. Alpaugh was also instrumental in developing a product called Involuntary Unemployment Insurance (IUI) for tenants, which helps owners of apartment buildings and multifamily properties protect lease revenue streams against exposures from job losses. Add to that a Lease Receivables Protection product which helps to protect a policy holder from tenant bankruptcy exposures.
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| THAT'S NOT ALL
October 2, 2009 at 1:14 am
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| But that's not all folks. Alpaugh, working with Marsh subsidiary CS STARS, developed RealSTAR, a technology tool that helps clients track their assets and their asset exposures. The program lets managers see at a glance the particulars of their policy on each site, its transaction history and its physical location, (using a link to Google Earth). "So there are a lot of different customer reporting features that they can tap into," Romano said. Romano said Alpaugh cares about his professional area of interest, but he also travels constantly, interviewing clients or prospective clients, thinking about how the changing economy is affecting them and trying to come up with solutions. "For the amount of time that he is on the road and working on issues and working on new products like we've described, I don't know how he does it," Romano said. "I couldn't keep up with that pace." "I think he is a very good listener and so if there is a need for a solution out there he is really good at coming back and being able to design that solution," said Claire Skinner, director, insurance risk manager with the Boston-based AEW Capital Management. "He knows the industry so well that when you bring up an issue he knows five other companies potentially that are dealing with that issue. He is very circumspect, he would never acknowledge who they are," Skinner said. --By Dan Reynolds
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| Responsibility Leaders: Doug Page and Peter Kvale
October 2, 2009 at 1:14 am
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| The Redwood Group sums up its corporate values in two words: "serve others." Doug Page and Peter Kvale take that mission seriously, especially with their clients. Redwood took the unusual step to incur a financial loss last year because of the recession, rather than layoff employees and reduce services to clients--that is, to "serve others." Both men advocate a culture of safety among their fellow employees and clients. It's this commitment to service and the service culture that distinguishes them as Responsibility Leaders. Customers and fellow employees are key constituencies who are part of a commitment to responsibility. Doug and Peter's unusual solution to the YMCA sauna fire problem, as well, helped to change the culture toward safety at YMCAs. And these two Responsibility Leaders won't stand on the sidelines if their clients don't commit to key risk management issues. For example, they refused to insure 15-passenger vans. Because of that policy, two clients left. All these efforts stem back to that corporate philosophy to "serve others."
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| THE MOST PLAY
October 2, 2009 at 1:14 am
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| For now, Hazleton said builders in the private sector that are in the business of building mixed use residential and retail have been the ones most likely to take up ACE's program. "That is where we have seen more of a play with the green construction products," Hazelton said. But he also sees a day when alternative energy projects such as wind farms and ethanol plants will be interested. Public funding is so constricted that Hazelton said he hasn't seen much if a public hunger for the new program, not yet anyway. As the private sector shifts and reinvents itself to stay alive, contractors are moving into places they have never been before. Hazelton is seeing large players delve into projects normally reserved for the middle market and the middle market dipping into places where the smaller market traditionally dwelt and so on. "I think from a revenue standpoint they are looking at projects to diversify themselves and to look at areas they might not have looked at before," Hazelton said. Rojewski said Hazelton travels 40 weeks out of the year, is deeply dug into the industry and had plenty of ideas to give the team that created this project all it needed to succeed. "I think he is the one that set the stage for us and then he let us rock and roll with it," Rojewski said. --By Dan Reynolds
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