At the 2019 Advisen Casualty Insights Conference a panel discussed how risk managers view the current casualty insurance marketplace. The speakers were:
- Barry Martin – EVP Old Republic Risk Management (moderator)
- Stephanie Fisher – Director of Risk Management and Insurance, Quanta Services Inc.
- Lisa Kerr – Vice President Risk Management, Henry Schein
- Jane Sandler – VP Global Risk Management, McKesson
Q: How is the Casualty insurance market impacting Risk Management?
- Several different casualty lines of insurance are challenged right now which is unusual to have so many seeing adverse development at the same time.
- Messaging from the marketplace to the risk managers is changing constantly, which makes it very difficult for risk managers to set expectations with their C-suite.
- We would like to build long-term partnerships with our insurance partners. Previously our company was constantly changing insurance companies which led to lots of volatility in their program.
- As part of that partnership we expect our carriers to give us advance notice if there will be changes to our program. This includes if they are going to pull back capacity in the marketplace.
- Budgeting is an important consideration so if there are going to be price changes these need to be communicated well in advance.
- They would also like more direct communication directly from their carrier not just filtered through their brokers.
- Risk managers have more than insurance to manage their risk program including adjusting what you are retaining or using captives.
Q: How can the casualty insurance marketplace better serve you?
- We need more face to face meetings and be straightforward with us. Tell us what your challenges are and what the trends are. Tell us if pricing or appetite is changing.
- Help us better communicate with our C-Suite. We need assistance preparing that communication in a very short, concise manner. They are not going to read a 70 page report on the marketplace.
- Help us to understand the elements of pricing and what impacts pricing. What can clients do to impact the pricing?
- Give us the information we need to help us make decisions around retentions and limits and how that impacts pricing.
- We need our third party administrators to provide good claims handling plus any tools you have to assist us in managing the losses. This includes any analytics and benchmarking to assist in identifying claims trends.
- Give us an executive summary of anything you provide to us.
- Point out the things we do well that separate us from our competitors.
Q: How burdensome are certificates of insurance?
- Risk Management is the gatekeeper for setting up contracts with new suppliers. We have to collect certificates of insurance from all suppliers and monitor this information constantly to keep it current.
- We work with over 3200 suppliers globally which is a large amount of insurance certificates to track. Some companies may be dealing with 10 or 100 times more different suppliers.
- This is one of our biggest challenges. There are software tools that can assist us with tracking but at the end of day our staff has to reach out to get the required information.
- As a construction contractor we issue over 25,000 certificates of insurance every year. We need to make sure we are issuing the proper certificates and that the information we are providing is accurate and current.
Q: Why is communication with carriers and brokers challenging?
- Too often the person you are talking to does not have the authority to make decisions around pricing or capacity.
- Carriers are concerned about leaving money on the table so do not want to commit to a price too early.
- No one wants to deliver bad news so those discussions are delayed longer than they should be.
- You build trust with clients by being straightforward and honest. That needs to happen all the time.
Q: How is your C-Suite responding to large verdicts?
- They are shocked by the size of the verdicts.
- They don’t want to believe these large losses can happen to us.
- These awards are alarming especially since many of them have been in our industry (healthcare).
- They verdicts are often irrational and not appropriate for the situation. This makes them difficult to understand.
Q: What tools do you use to evaluate the liability insurance capacity you need to purchase?
- Benchmarking is helpful but has limits. We do not have clear competitors that are exactly like us.
- Large verdict examples are useful for trying to establish the “worst case” scenario.
- Keep an eye on the size of your company vs the size of your insurance limits. As your company grows, so should your insurance limits.
- Benchmarking is only as good as the decisions that other companies are making. If you compare yourself to people making bad decisions you will also make bad decisions.
- We make choices how to deploy our capital to best protect our balance sheet. That may be retaining more risk or buying more insurance. At the end of the day we need to understand our companies risk tolerance.