Risk Management | Insurance Writer

Top Ten Mistakes to Avoid as a New Risk Manager

If you’re a new risk manager, these tips can help you transition into your new, challenging role.

new-risk-manager400 — Avoid these mistakes

The transition into your first risk management job can be difficult. Whether your boss promotes you into your first risk management job or hires you from another organization, you want to excel at your new position over the long haul. In part, that means avoiding mistakes, even though we often learn our best lessons when we fail. However, some mistakes can seriously hurt your risk management program, harm your reputation, or even derail your career. Here are ten mistakes you can avoid.

1. Don’t rush in with all the answers. You may arrive wanting to form your own alliances and acquire your own team, but avoid making hasty decisions. Give current employees a chance to prove themselves before you transfer them or hire your own team. The same applies to vendor relationships. You can lose a great deal of historical exposure along with loss history and coverage negotiation knowledge if you immediately decide to switch insurance brokers. “Changing brokers can be a great way to create significant coverage gaps or an errors and omissions claim for your friend the new broker,” according to one Atlanta broker. Some vendor alliances, such as relationships with contractors and body shops, may be long-standing, especially in a small town. Rushing in and making changes can cause big ripples in a little pond.

2. Don’t try to do everything at once. In my teens, I read a book called Ringolevio, about a kid named Emmett Groan growing up in the streets of New York City. One of his compatriots frequently warned Emmett when he was about to rush headlong into a decision, “Take it easy, greasy, you’ve got a long way to slide.” I found that advice very applicable in risk management. If you inherit a big job, you will be faced with hundreds of decisions, some big, some small. Take your time. While you may feel overwhelmed at first, chip away at the organization’s most pressing problems. Put out fires as they arise. Then schedule time for you and your advisers — your brokers, your attorneys, your actuaries, and your managers – to develop sound strategies and solid strategic plans.

3. Don’t use a shotgun, use a rifle. If the organization is experiencing too many injuries, for example, don’t jump to an obvious solution like deciding more personal protective equipment will answer the company’s biggest safety issues. Talk with front-line supervisors, study historical loss data, and consider several options before you throw money at a problem. Once in the door, interview employees, talk with other managers, meet with your vendors, and set a few important priorities for your first six months in the job. Using a rifle approach means you’ll have to say “No” to some people. This can cause problems. When possible, explain why you’re declining to act on the problems or the specific issues others may present to you. The more transparently you operate, the less criticism you will face. Openness reduces speculation and helps avoid resentment.

4. Don’t job hop. Most people can be very ambitious early in their careers. Yet too much ambition can hurt your career. Think long and hard before changing jobs. Bad bosses rarely outlast their employees. Deciding to change jobs because of a conflict with a supervisor is often short-sighted. The grass might seem greener on the other side, but sometimes that’s because of a septic tank (to paraphrase a famous comedian). These questions may help you avoid rash decisions.

Am I making the change solely to earn more money or for a more prestigious title? If so, will this change “pay for” what I will lose?
Am I making the change because I’m feeling unchallenged or bored? If so, what steps can I take to make my current job more challenging? For example, would becoming more active in a trade association, offering your expertise to a local non-profit, or mentoring an up-and-coming risk management professional add challenge and interest?
How will this impact my retirement financially? Will I be changing retirement systems or will I lose significant bonuses or vacation due to the change? Always factor those figures into the salary decision. This question becomes more important as you edge closer to retirement age.
How will this change impact my family and my coworkers? Our coworkers can turn even a challenging job into an appealing one. Do you really want to leave your coworkers? As for family, what ages are your children? Disrupting school-aged children can be very problematic and have negative, long-term consequences.
What are the odds I will regret this decision? Go ahead, we’re numbers people. Put a percentage to your decision then ask yourself if you’re really ready to take that gamble.

It takes months to settle into a new job. It’s often a year or more before we feel comfortable. Some studies show that many people who change jobs would have done much better if they had stayed put longer. Change for the sake of change frequently is not positive.

5. Don’t entertain gossip about your predecessors. Some at your new organization may try to build an alliance with you at the expense of your predecessor. Short-circuit these conversations whenever possible. Tactfully turn the conversation to another subject or excuse yourself from the conversation. Try not to make an enemy of the person who is trying to get into your good graces.

6. Don’t revisit your predecessor’s decisions. Especially when working with unions, you may find people lined up at your door asking you to revisit your predecessor’s judgments. Unless your predecessor’s conclusions negatively impact your overall program, don’t rush into undoing the decisions and the work he or she completed. You may not be operating under the same set of facts or with the same long-term vision that former risk manager had at his or her disposal.

7. Don’t believe your own PR. Never pretend you know more than you know and don’t start believing your own “press.” While others may soon invite you to participate on panels and present at conferences, remain humble and teachable. It’s terribly painful to learn humility through humiliation.

8. Don’t fail to communicate. A lack of communication is one of the most damaging mistakes a risk manager can make. A risk manager must have the ear of employees across the organization, from line supervisors to senior management. According to Don Donaldson, President of LA Group, a Texas-based risk management consulting group, “A risk manager needs to be an excellent communicator and facilitate his or her message across the entire organization. In my mind, that requires getting out of the office and pressing the flesh; seeing and being seen and listening, really listening, to determine what is going on in the organization.” Management by walking around is one strong tool in a new risk manager’s tool bag. Once people see that you’re willing to leave your office to discover what is happening, whether it’s on the shop floor or on the sewer line, they’ll more readily accept your expertise and counsel.

9. Don’t get discouraged. “New risk managers may make the mistake of thinking that risk management is as important to others in the organization as it is to them,” according to Harriette J. Leibovitz, a senior insurance business analyst with Yodil, Inc. “It takes time, and more time for some than others, to figure out that you’re more than an irritation to the folks who believe they drive all the revenue.” Over time, you will prove your value to the organization many times over. Until that day, quietly do your job and find encouragement from your risk management peers.

10. Don’t forget to laugh. You will be privy to the peculiarities of human nature both at its finest and at its worst, so don’t forget to find the lighter side of situations when you can. A robust sense of humor will help you through the rough spots and build bonds with your coworkers.

While these are just a few tips to help you in your new role as a risk manager, your peers probably can offer many more ways to ensure success. Over my career in risk management, I have found my fellow risk management professionals to be some of the most generous people in my life, always willing to share their expertise and provide me with a helping hand. Develop and lean on your network.

If this is your first job as a risk manager, you’re in for a wonderful experience. Take time along the way to enjoy the experiences, appreciate the great people you will meet and appreciate the lighter side of risk management.

Expressing Professional Gratitude

Today, though, I urge you to take a moment to contact a person in your career for whom you are grateful, either past or present, and say, “Thank you.”

This year my women’s group, which has been meeting once a month for our third year, is reading and discussing a book by Amanda Gore, The Gospel of Joy. I heard Ms. Gore speak at a teleconference last year and her highly personal presentation really hit my core beliefs.

Her book is perfect for a study group since there are twelve chapters in the book, one for each month. Each chapter explores a different spiritual principle, for example, listening, laughter, hope and gratitude. Gratitude has always been my struggle. I sometimes say, “My glass isn’t only half empty; it has a hole in it.” In other words, I have to work to stay grateful.

One of the questions in her gratitude chapter hit home with me. It asked, “Did your parents’ behavior model gratitude?” I can easily say that, “Yes,” their behavior did. Both my parents were independent insurance agents and both people of strong faith. My father, a Lutheran, served in his church as a council member and all-around fix-it guy. My mother, a more reserved Catholic, quietly put her faith into action by volunteering for years at the Westside Food Bank. Their motto in business was “Service before self” and while they were very successful insurance agents, they never let profit interfere with doing the right thing.

I grew up with three older brothers and one of us, usually me or my brother, Ted, was always wrecking a car. (I was quite sure my father owned an interest in the local body shop he insured.) After our accidents, my father would assess the damage then quietly say, “Everything happens for the best.” Frankly, at the time I thought he was slightly mental.

“Dad,” I finally asked when my brother ran his Mustang into a ditch at the end of our street, “How can a car accident ‘be for the best’?”

“Perhaps this minor accident where no one was hurt saved him from a major collision. After all, cars we can fix. You and the boys are irreplaceable.” Dad could always put things into perspective for me. I am so grateful for the wonderful lessons my parents taught me.

This story leads me to my topic – professional gratitude. There are so many insurance gurus who have mentored me over the years, from one of my first bosses at Commercial Union – who predicted, “Ms. Germond, in five years you will be a claim manager,” and I was – to the many risk managers who helped me when I was a fledgling risk manager, never an easy job.

Over the years I have trained and mentored my share of risk and claims professionals. Rarely do they thank me. I’m not dismayed by this; I rarely think of it because at some level, I am sure they are grateful but unaccustomed to expressing gratitude verbally. Today, though, I urge you to take a moment to contact a person in your career for whom you are grateful, either past or present, and say, “Thank you.” I guarantee you: This will mean a great deal to him or her.

As many of you know, for years I have alternated between running Insurance Writer full time and working more directly in the insurance industry. I just couldn’t stay away from a challenge. But I also know there is more to life than a paycheck. This year, I’m putting it all on the line to branch out, utilizing my God-given gifts to provide specialized services to the insurance industry.

If you’re interested in learning more about Ms. Gore, here is a link to her YouTube channel. If I can help you, these are some of my areas of specialty:

Copywriting, including White Papers, advertising copy, articles, ghostwriting and blog entries
Consulting with small-to-medium sized businesses to reduce losses and improve workers’ compensation programs
Curriculum development and on-site training, including:
- Customer service training
- Workers’ compensation claims management training
- CGL coverage training
- Business auto training
- On-site Associate in Claims training
- Miscellaneous management training

Please feel free to contact me at (602) 870.3230.

Why Does My Insurance Company Hate My Dog?

It’s time for the insurance industry to wake up and smell the dog food. A more nuanced approach to pet underwriting is a win/win for the industry and for pet lovers everywhere.

Property Casualty 360 and other industry magazines report escalating dog bite settlements. The industry is moving to endorsements and policy language to exclude canine liability. Why doesn’t the insurance industry take a more analytical approach to underwriting household dogs? As dog trainers will tell you, aggression is not breed-specific. Almost any dog improperly socialized, or with dog aggression in its line, will bite. I’ve seen American Kennel Club-elite Labradors, one of the friendliest breeds, that will take a chunk out of you, and German shepherds that wouldn’t bite you if it would save their own or their master’s life.

Rather than deny coverage by breed, why not partner with the American Kennel Club (AKC) and use the Canine Good Citizen program as an underwriting guideline? The Canine Good Citizen must pass 10 temperament tests – for example, allowing a stranger to approach, demonstrating a lack of dog aggression (very important since so many people get bitten when their people-loving dogs tangle with other, not-so-dog-friendly pooches), and the dog’s reaction in a crowd. Evaluators are available in hundreds of locations throughout the United States.

People who love their dogs would happily dole out the small cost associated with their dog’s evaluation rather than face no insurance. This is not a blanket endorsement of the American Kennel Club. However, their Canine Good Citizen certification is a strong indicator of Fido’s friendliness and steady temperament.

The insurance industry has always adapted coverage to meet the needs of a changing society. Dog ownership is not changing; in fact as crime rates escalate, more Americans turn to dogs for their safety. Underwriters do not understand canine temperament. Instead, there has been a knee-jerk reaction to exclude one of our home’s best protectors against burglars, and many Americans’ best friends. Simply, insurers refuse to take a more nuanced approach to underwriting dogs. Using the Canine Good Citizen is a solid approach instead of a blanket exclusion by breed. It might take some time to develop the partnership with the AKC, but in a previous discussion I had with a staff member at the AKC, they are eager to help.

Americans love their dogs. And dogs will not go away. Instead, more owners will deny they own an excluded breed and insurers will be stuck in coverage battles that will do nothing to further the industry’s image. Additionally, messing with America’s best friends will do nothing to improve the industry’s always struggling image.

It’s time for the insurance industry to wake up and smell the dog food. A more nuanced approach to pet underwriting is a win/win for the industry and for pet lovers everywhere.

What Does 2014 Hold for Insurance Rates?

With 2014 rapidly approaching, contact your broker or consultant now to discuss steps you can take to reduce your 2014 commercial premiums.

What can you expect for property and casualty insurance pricing in 2014? Expect some increases, but watch for significant decreases in at least one line of insurance. According to Willis’s recently published Marketplace Realities 2014, new capacity is flooding the market from “as widespread as China and Omaha.” New capital supply offers a more “inviting marketplace,” Willis executives believe. Others insurance experts across the U.S. agree. Here is what to expect in 2014.

Primary and Excess Casualty

Do not expect huge decreases in casualty prices even with “abundant” capacity and “new market entrances,” according to Willis and other experts. With the loss of the federal terrorism backstop looming in December 2014, carriers hesitate to write exposures with large risk concentrations. Underwriters are also avoiding manuscript endorsements, relying more heavily on Insurance Services Office (ISO) language. Standard ISO language has more court decisions behind it, which equates to more predictable loss experience for underwriters to base their rates, many believe. Willis predicts casualty pricing to increase two to 10 percent in 2014.

Auto and Fleet

Auto liability continues to challenge fleet owners nationwide. Experts predict auto liability pricing increases between two to 10 percent. Underwriters are imposing higher retentions on risks with large fleets, heavy trucks or poor loss experience. Carriers like ACE offer auto liability buffer limits, coverage outside the working layer when primary limits do not meet umbrella attachment points. You can help with fleet insurance by installing GPS tracking software from companies like Lytx onto your fleet, so you know where they are at all times if ever needed for evidence in future cases.

Workers’ Compensation

There are several emerging issues in workers’ compensation. With the Affordable Care Act expected to bring new insureds into the healthcare system, expect strains on the work comp system. This will put pricing pressure on workers’ compensation premiums. While experts predict that earlier treatment for comorbidities will benefit workers’ compensation experience, we predict this will be a long-term benefit. In the near term, Willis predicts work comp rates will increase from 2.5 to 10 percent. The exception is California, where employer can expect rate increases of up to 20 percent.

Employment Practices Liability (EPL)

Adverse claims experience is placing upward pressure on EPL coverage. Entities domiciled in certain California counties may find themselves unable to obtain coverage, Willis predicts. While overall capacity remains “abundant,” there are no new EPL carriers entering the market. Pricing overall will be flat to a 10 percent increase, with private, nonprofit and smaller employees predicted to face up to 15 percent increases. The Equal Employment Opportunity Commission continues its aggressive enforcement plan despite some staggering trial losses for the EEOC in 2013. There is no time like the present to explore ways to decrease your EPL risks and avoid EEOC scrutiny.

Cyberrisk

When Cyberrisk gets its own page in a white paper discussing rates, you know it is a hot topic among insurers and risk managers. There were more than eight hacking incident per day in the US in 2012 according to the report. With increased security concerns, coverage is now a “must have” for many organizations. Calling the market for stand-alone Cyberrisk “active,” Willis predicts rates will remain competitive. If your firm has had losses, however, Willis predicts slight changes – between -two to five percent overall. There are many new Cyberrisk buyers in the marketplace and pricing for first-time buyers remains competitive. If you outsource your data to cloud vendors, underwriters will review your existing contracts. Your indemnification language will be a critical factor in underwriting your risk.

Directors & Officers (D&O)

Price increases are moderating with pricing expected to be flat to a high of 20 percent for financial services firms. Homeowner and condominium associations as well as educational institutions should expect premium increases. One carrier has indicated a willingness to provide “mega limits” for Side A coverage, which protects executives against claims not indemnified by the corporation. The non-traditional money that is now flooding the insurance industry may lead to downward pressure on D&O pricing in 2014, Willis contends.

Property

We saved the best news for last. With loss ratios hovering between 75 and 85 percent for many property insurers, Willis and other insurance experts predict a big decrease in property insurance pricing. In non-catastrophe exposed risks, expect a 10 to 12.5 percent decrease in pricing. For cat-exposed property, Willis predicts smaller decreases of between five to 10 percent. Any port in a storm, right?

With 2014 rapidly approaching, contact your broker or consultant now to discuss steps you can take to reduce your 2014 commercial premiums.

Cavalcade of Risk #192 Gallops Into View

Cavalcade of Risk #192 gallops into view with some interesting risk-related posts and great advice from various risk experts in their specific fields, from life insurance to enterprise risk management.

Excuse the slightly tongue-in-cheek lead-in, because this week’s Cavalcade of Risk is full of great risk management information. We visit a variety of risk management experts for their take on current events impacting their practices. Take a few minutes, grab a cup of coffee and visit and interact with our contributors.

In this post, Dr. Sidorov looks at a recent scientific study that examined national insurance data to determine what happened to the commercial health insurers in the wake of the Obamacare rule that they spend at least 80 to 85 percent of their income on medical care. It turns out that the most vulnerable part of the health insurance market-individual insurance-saw a decrease in profitability.

Jeff Rose helps us through the maze of medical conditions that can limit your ability to buy health insurance in his post. If you have an aortic valve disorder like aortic stenosis or aortic insufficiency, these conditions will impact you when you apply for life insurance. Insurance companies are very cautious about aortic valve disorders because of their potential to cause serious heart problems. Therefore, this may have an impact on who you decide to insure yourself with and may mean that you’ll have to do some additional research into exactly what each policy covers. Using a comparison site like Policyme (https://www.policyme.com/) should help you to wade through the options and find one that works best for you. There is hope, however. Jeff informs us you can still get insurance despite your condition. It really depends on a few factors, including the seriousness of your condition. To get a better idea of what to expect, read his guide to insurance underwriting for aortic valve disorders.

Here’s a news flash: If you are uninsured, there is a risk of being overcharged for hospital services. In California, the risk is 0. Jason Shafrin of The Healthcare Economist explains why here.

Recently, there have been some remarkable changes in how life insurance is now underwritten, including the use of social media and new technology. Henry (Hank) Stern of InsureBlog has the details.

Julie Ferguson of Workers’ Comp Insider isn’t talking scratch when she asks: “How much risk do you want to take with your kids’ chicken nuggets?” Chickens are on the front burner on the legislative circuit lately with the USDA seeking to overhaul poultry processing regulations that many see as unsafe for workers. But Julie notes that there is more than just worker safety at stake. Read her fast take on fast food here. I would have said, “Winner winner; chicken dinner.” Except after reading her post, and watching the video, I may go vegan. Soon.

David Williams of Health Business Blog says that a patient advocate tells him that it’s “dangerous” to rely on online doctor ratings and reviews and to rely on the “facts” instead. David argues that the case against reviews is seriously overrated and the proposed alternative paths are not as promising as they sound. Read his comments here. I have to admit, I’m a big believer in Yelp and a frequent Yelper myself. I don’t go out to dinner without checking Yelp, let alone try to find a service provider, doctors and dentists included.

Here are some closing thoughts from yours truly regarding the trends I and other risk management experts throughout the US are currently seeing.

Enterprise risk management is becoming increasingly important to organizations.
Jury verdicts continue to rise. Check your liability limits and double check your policies to determine if you have defense inside or outside limits. Most professional liability policies provide defense within limits, and defense costs can erode your limits significantly.
Workers’ compensation costs have moderated in a few states; however, don’t expect to see rates decrease anytime soon, like never. Medical costs continue to escalate nationwide, outstripping wage loss benefits paid.
Cyber risks continue to be the bane of businesses at home and abroad; however, hackers increasingly target small-to-medium sized businesses because they seem to provide the path of least resistance to hackers.
Commercial insurance prices increased by six percent in the second quarter of 2013, the 10th consecutive quarter of price increases, according to a recent survey conducted by Towers Watson. Now is the time to bulletproof your risk management practices and consider increasing your deductibles or taking higher self-insured retentions.

This does it for another edition of Cavalcade of Risk.

Cut Rate Auto and Homeowners Insurance May Cost You

Cut rate auto and homeowners insurance may cost you big in the long run.

You no doubt frequently receive solicitations and ads from insurance companies promising to save you money on your auto or homeowners insurance. Most consumers are looking at each expense they pay to cut costs. However, buying cut-rate insurance may cost you much more in the long run.

Insurance is your first line of defense against life’s calamities. After a loss, these are just a few of the problems a good insurance company can help you solve.

Provide prompt and courteous service year round after a loss.

Provide knowledgeable adjusters who can assist you in making important post-loss decisions.

Find a top-rated repair shop to repair your damaged car.

Promptly and conveniently provide a replacement vehicle while your vehicle is in the shop if you purchased rental coverage.

Pay for a similar alternative living space if you are unable to occupy your home after a loss.

If you are sued after a loss, provide a strong defense with excellent legal counsel.

Provide prompt board-up services after a loss.

Help you locate a trustworthy contractor if your home or roof is damaged.

Cut-rate insurance carriers cost less because they generally provide fewer services and less coverage. The decision to purchase insurance should go beyond price. Protection for your home and family after a loss is priceless.

Several of my friends have recently been involved in auto accidents and found themselves lacking rental reimbursement coverage and gap coverage. Gap coverage helps make up the difference between a totaled new car and its depreciation if the vehicle is damaged while the owner is still “upside down.” A good independent insurance agent can help you avoid these necessary coverage gaps.

Don’t get suckered into buying insurance solely based on the lowest premium. If you have a loss, cheapest may cost you.