RISING TO THE TOP - SPECIAL REPORT INDUSTRY TRENDS + RISK MANAGEMENT EDUCATION
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
STRESS FACTORS: Pandemic adds to workers’ mental health pressures - PAGE 4
DECEMBER 2020
RISING TO
THE TOP
Profiles of female leaders
reshaping the industry,
paving the way for others
PAGE 25
SPECIAL
REPORT
INDUSTRY
TRENDS
+ RISK
MANAGEMENT
EDUCATION
PAGE 22
There’s no loss needed to access our claims service. Our claims
professionals are by your side even before your policy is issued –
‘level-setting’ on coverage intent, helping you mitigate potential claims,
and drawing up a plan to address your specific needs and preferences
when a loss occurs. All so that when a claim happens, our claims handling
excellence is there right on schedule. At BHSI, claim time starts day one.
Claim time.
www.bhspecialty.com
The information contained herein is for general informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any product or service.
Any description set forth herein does not include all policy terms, conditions and exclusions. Please refer to the actual policy for complete details of coverage and exclusions.
Ad Template.indd 7 11/19/20 4:12 PM
PRESIDENT
Steve Acunto 2020
WOMEN TO WATCH
(Greenwich)
sa@businessinsurance.com
PUBLISHER
Keith Kenner
Now in its 15th year, the
(Chicago)
kkenner@businessinsurance.com Business Insurance Women
EDITOR to Watch program honors
Gavin Souter outstanding female executives
(Chicago)
gsouter@businessinsurance.com working across the globe in
the risk management and
DEPUTY EDITOR
Claire Wilkinson insurance sector. The 2020
(New York) program again features the
cwilkinson@businessinsurance.com
Women to Watch Inspiration
ASSISTANT EDITOR
Louise Esola Award, which recognizes
(New Orleans) the accomplishments of an
lesola@businessinsurance.com
individual who is a role model
SENIOR REPORTER for the industry. PAGE 25
Judy Greenwald
(San Jose)
jgreenwald@businessinsurance.com
REPORTER
Angela Childers
(Chicago)
achilders@businessinsurance.com INSIDE
REPORTER
Matthew Lerner
SPECIAL REPORT: INSURANCE PROFESSIONALS
(New York)
mlerner@businessinsurance.com
COPY CHIEF
John Obrecht
(Chicago)
The Business Insurance Diversity and Inclusion Institute conducted an online survey
jobrecht@businessinsurance.com of insurance and risk management professionals earlier this year that reveals what
COPY EDITOR attracted them to the industry, their job satisfaction and more. PAGE 22
Brian Gaynor
(Portland)
bgaynor@businessinsurance.com
ART DIRECTOR
NEWS ANALYSIS WORKERS COMP
Payroll declines and negative rate pressure could
Jeremy Werling
(Cincinnati) FOR BREAKING NEWS challenge the still-strong workers comp line. PAGE 12
jwerling@businessinsurance.com
COVERAGE, VISIT
DIRECTOR OF RESEARCH,
PLANNING AND INSIGHTS
businessinsurance.com RISK MANAGEMENT
Andy Toh Large reinsurance brokerage mergers can create
(Chicago) opportunities for smaller rivals. PAGE 14
atoh@businessinsurance.com
MAJOR ACCOUNTS DIRECTOR -
NORTHEASTERN U.S. & INTERNATIONAL INTERNATIONAL
Ron Kolgraf The United Arab Emirates’ insurance market is the biggest
(Boston)
rkolgraf@businessinsurance.com in the Gulf Cooperation Council, featuring relatively large
energy, property and construction sectors. PAGE 16
SENIOR VICE PRESIDENT,
BUSINESS DEVELOPMENT
Stephen Acunto
(Princeton)
stephen@businessinsurance.com PERSPECTIVES
HEAD OF SALES, EVENTS It’s crucial that brokers and insurers inform
& REPRINT SALES MANAGER
Susan Stilwill
(Nashville)
clients about evolving cyber risks such as SMS
phishing, writes Douglas Ruhlman of Brit Global
VIEW FROM
sstilwill@businessinsurance.com
Specialty USA. PAGE 57 THE TOP
VICE PRESIDENT OF MARKETING
Brian McGann
(Buffalo)
bmcgann@businessinsurance.com OFF BEAT
A cold-blooded court
LISA CORLESS
DIGITAL AD OPERATIONS MANAGER
Jordan Kilty
LEGAL BRIEFS As the second
battle erupts over
(Raleigh) Recent court opinions PAGE 18 consecutive female
jkilty@businessinsurance.com Truman Capote’s
“Breakfast at Tiffany’s.” CEO of Lansing-
DIGITAL MARKETING MANAGER
Jen Jonasson
MARKET PULSE PAGE 59 based insurer AF
(Chicago) Products, deals and more PAGE 55 Group, a subsidiary
jjonasson@businessinsurance.com
of Blue Cross Blue
DIRECTOR OF MARKETING & EVENTS OPINIONS Shield of Michigan,
Katie Kett
(Portland)
2020 defied prediction; inspiration of Lisa Corless oversees the group’s seven brands. The Texas
kkett@businessinsurance.com women leaders. PAGE 56 native discusses the challenges the workers compensation
MARKETING & EVENTS MANAGER industry has experienced as a result of the pandemic, the
Brittany Collins PEOPLE insurer’s recent expansion into commercial auto and how
(Lafayette)
bcollins@businessinsurance.com Insurance industry moves PAGE 58 technology is changing that sector. PAGE 21
MARKETING & EVENTS SPECIALIST
Beth Wojdyla
BUSINESS INSURANCE (ISSN 0007-6864) Vol. 54, No. 13, Copyright © 2020 by Business Insurance Holdings, Inc. is published monthly by Business Insurance Holdings, Inc., 1030 Lake Avenue,
(Chicago)
Greenwich, CT 06831. Accounting, business, circulation and editorial offices: PO Box 1010, Greenwich, CT 06836. Call 954-449-0736 to subscribe. Periodicals postage is paid at Greenwich, CT.
bwojdyla@businessinsurance.com
Printed in the USA. POSTMASTER: Send address changes to Business Insurance at PO Box 1010, Greenwich, CT 06836.
SUBSCRIPTIONS & SINGLE COPY SALES
membership@businessinsurance.com
954-449-0736 BUSINESS INSURANCE DECEMBER 2020 3
NEWS ANALYSIS GUIDELINES
RECOMMEND
NON-DRUG
Virus linked to mental health issues
BY LOUISE ESOLA J
TREATMENTS
ust as workers compensation
insurers use evidence-based
medical treatment guidelines
lesola@businessinsurance.com to help injured workers heal
from pulled muscles and broken
T
he COVID-19 pandemic has pushed bones, the industry is using
mental health to the forefront in gen- this approach to treat mental
eral, as experts far and wide attest to an health issues such as anxiety and
increase in issues among those affected by depression.
shutdowns, isolation, illness and job loss. Mental health is now addressed
And injured workers navigating the work- in the American College of
ers compensation system are not immune, Occupational and Environmental
according to claims experts. Medicine guidance and the
Mental health awareness “has been going Official Disability Guidelines, or
on in this marketplace for quite some ODG, Workers’ Compensation
time, but I think what is bringing it to the Drug Formulary, published by
forefront more is COVID-19,” said Verna MCG Health LLC. These two
Jackson, Maplewood, New Jersey-based vice entities create evidence-based
president of case management for Broadspire guidelines for injured workers
Services Inc., the third-party administrator and have been adopted in several
for Crawford & Co. states as the basis for workers
The pandemic delayed surgeries and whether they will have a job, and childcare pounding pressures can expand the treat- compensation drug lists and
impeded return to work as much of the responsibilities amid remote learning, she ment costs as well as the disability duration treatment protocols.
country stayed home. The shutdowns cre- said. “Not to mention they may have close of the workplace injury.” In line with the workers
ated other hurdles with regards to care and friends or relatives affected by the virus. … The mental effects of a COVID-19 compensation industry’s overall
recovery, including issues with prescriptions, There’s more anxiety and depression across diagnosis and a subsequent workers com- trend toward nonpharmacological
physical therapy and more. Couple that with the board,” she said. pensation claim — with nine states now treatment, drugs to treat
the fear of treatment — already present in “Injured workers can often feel isolated accepting such injury claims — is another such ailments as anxiety and
many comp claims — compounded by the because of an injury, especially if it affects new area of focus for the comp industry, depression are not the first line of
fear of getting the virus in a medical setting, their mobility or activity level, or keeps them according to Reema Hammoud, Southfield, treatment, according to experts.
experts say. out of work for an extended period of time,” Michigan-based assistant vice president “It’s been very similar to our
“We have been seeing this since March,” Deborah Gleason, Philadelphia-based clin- of clinical pharmacy for Sedgwick Claims approach to the opioid epidemic;
Ms. Jackson said. “They weren’t doing elec- ical resources manager of medical programs Management Services Inc. how do you manage opioids
tive surgeries in hospitals coast to coast and for third-party administrator ESIS Inc., a A study published in November in The in a work-related injury? A lot
physical therapy (clinics) closed their doors subsidiary of Chubb Ltd., wrote in an email. Lancet medical journal found that COVID- of what we do is recommend
to a lot of people.” “Depending on the local response to COVID, 19 survivors posed an increased risk for their a lot of nonpharmacological
there may be an additional level of isolation first-ever diagnosis of psychiatric illness solutions in lieu of an actual
DEPRESSION LINKED because of lockdowns, and that may lead to between 14 and 90 days after being diag- drug,” said Tammy Bradly, Lillian,
TO MUSCULOSKELETAL or increase anxiety, loneliness or depression.” nosed with the virus. Specifically, the study of Alabama-based vice president of
WORK-RELATED Much of the trend is seen anecdotally, as 62,354 COVID-19 patients showed the esti- clinical product development for
INJURIES concrete figures on mental health claims in mated probability of having been diagnosed Coventry Workers’ Comp Services.
n Half of the 332 workers who missed comp in 2020, especially related to the pan- with any psychiatric illness was 18.1%, “sig- “All of our case managers are
at least five days of work due to demic, are not yet available, experts say. How- nificantly higher” than for all control health trained in cognitive behaviors
work-related musculoskeletal
injuries reported that they frequently ever, data analytics — much of which has events, between 1.2% and 1.5%. The most coaching. We do that because
felt symptoms of depression in the driven the industry to focus more on mental common psychiatric diagnosis after COVID- our case managers need to
year following their injuries. health among claimants — show that bio- 19 diagnosis was anxiety disorder, followed by understand and look beyond that
n Of employees who were off work psychosocial concerns are prevalent in comp, mood disorders, according to the study. initial diagnosis and look at what
for at least five days, almost 10% according to Joseph Guerriero, Westmin- “We do know that COVID affects the may be impacting return to work
were diagnosed with depression at ster, Colorado-based senior vice president brain, and there may be long-term issues,” and a lot of the time it is those
some point during the 12 months
following the injury. of MGD guidelines at Reed Group. The she said. “We want our clinical staff, too, to psychosocial issues,” she said.
Source: Institute for Work and Health
company helps craft injured-worker treat- be aware of post-intensive care syndrome,” The latest ACOEM guidelines
ment guidelines for the American College which triggers a mental health diagnosis now list mindfulness therapy,
The pandemic has hit those in recovery of Occupational and Environmental Med- after a patient is admitted into intensive care light therapy, and exercise
with other injuries especially hard, according icine, which this year updated its guidelines in a hospital for complications from the virus. as among the recommended
to Tammy Bradly, Lillian, Alabama-based on mental health treatment. “We are keeping an eye on this because it treatment for depressive
vice president of clinical product develop- Mr. Guerriero cited research published in is changing on a daily basis,” she said. “We disorders, for example.
ment for Coventry Workers’ Comp Services. the Disability and Health Journal in 2018 don’t know what we don’t know.” “With our clinical team, when
“Put yourself in the role of an injured work- in which 21% of disabled workers report- Instances of post-traumatic stress disorder we look at their guidelines, we
er; all of those things that are preventing you ed “depression/anxiety/emotional problem” related to COVID-19, especially, are on the look at what the patient has
from recovering, plus financial concerns — as the condition causing limitations — the rise, according to Mr. Guerriero, who helped tried and failed,” said Reema
how are you going to pay your bills? You No. 2 reason after “back or neck problems,” oversee the introduction of PTSD guidelines Hammoud, Southfield, Michigan-
may be worried about your loss of function which was reported by 30.3%. in 2019 and says the guidelines are subject based assistant vice president of
— is it going to reduce the quality of your “Return to work delays are emerging as to constant revision — and have been used clinical pharmacy for Sedgwick
life? Those are the stressors” common in any either a primary or secondary diagnosis of to craft the Medical Treatment Utilization Claims Management Services
comp claim, she said. depression, and that’s what’s driving this in Schedule Drug List for injured workers in Inc. “There is good literature that
Put COVID-19 on top of that and now comp,” Ms. Bradley said. “We have come to California. “COVID is now a big part of the supports (non-drug) treatments.”
people have additional stressors, such as the point in the industry that these com- discussion,” he said. Louise Esola
4 DECEMBER 2020 BUSINESS INSURANCE
AIG is proud to
support the 2020
Business Insurance
Women to Watch
Awards, as an ally.
Congratulations to this year’s honorees, including our very own
Susan Gonzales, Nina Duft, and Vered Lobel.
Every great story needs an ally.
#AIGALLIES
Learn more at AIG.com
Insurance, products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Insurance
and services may not be available in all jurisdictions, and coverage is subject to actual policy language.
For additional information, please visit our website at www.AIG.com.
Ad Template.indd 9 11/19/20 4:12 PM
NEWS ANALYSIS
Sizing up comp for COVID-19 on the inside
BY ANGELA CHILDERS of injury or assault, he said. And assaults
achilders@businessinsurance.com have been linked to mental trauma,
according to multiple sources.
T
he plight of essential and health care “Sometimes the injuries can be really
workers has dominated the news this significant, long-lasting and permanent
year, but the effects of the pandemic — it speaks to the fact that we really need
and civil unrest on workers in jails and pris- to do all we can to be fully staffed,” Mr.
ons in the U.S. has largely gone unreported. Schnell said.
Correctional officers and jailers have one The State of Tennessee has only accept-
of the highest rates of injuries and illnesses ed a few COVID-19 claims from correc-
of all occupations, according to the U.S. tional officers so far, but had there been a
Bureau of Labor Statistics, and the pan- presumption, “I think it would have been
demic and its related effects are likely to very costly for us,” said Rodney Escobar,
lead to an even greater uptick in workers the state’s director of the division of claims
compensation claims in 2020, experts say. and risk management.
In the U.S. there are more than 2.3 mil- PTSD claims where correctional offi-
lion incarcerated individuals, and the insti- cers end up going out on disability for long
tutions that house them act as “a powerful periods tend to be the bigger issue, Mr.
transmission multiplier” of COVID-19, STATES WITH COVID-19 exposure to COVID is extremely high. If Escobar said.
according to a spring study released by the REBUTTABLE PRESUMPTIONS you take past studies of PTSD, add the “Being a former correctional officer, I’ve
American Journal of Preventative Medi- FOR CORRECTIONAL OFFICERS pandemic, as well as riots, you’re only seen assaults on officers in the past and
cine. Even without the pandemic-related Six states have passed either executive increasing the rate of behavioral health know how devastating that can be,” Mr.
stressors, the rates of depression, anxiety, orders or legislation that allows correctional issues within those correctional facilities.” Escobar said. “I can understand why people
PTSD and suicide are at least 40% higher officers working in prison or jail populations Six states have included correctional would have issues coming back to work.”
among correctional staff than police offi- with COVID-19 exposure to presume that officers among those who are presumed The stress from the pandemic and civil
they contracted the virus in the course
cers, the researchers found. to have caught COVID-19 on the job and unrest has led to a 30% surge in correc-
and scope of their employment.
Since March, thousands of the more qualify for workers compensation benefits, tional officers requesting therapy, said
than 450,000 correctional officers in according to the National Council of Nancy Bohl, director of The Counseling
the U.S. were infected by COVID-19, State Legislatures. Team International, a San Bernardino,
according to research from the Justice In Minnesota, for example, cor- California-based provider of critical inci-
Action Network, a Washington-based rectional officers are considered pub- dent intervention and counseling to first
nonprofit that advocates for criminal lic safety officers and are included in the responders, including correctional officers.
justice reform. In Texas, which employs state’s COVID-19 presumption, which “They’re frightened and worried about
more correctional officers than any other came in the form of a law that took effect their families … they’re worried that they
state, 23% of COVID-19-related workers in April. Correctional officers were also might have exposed their families,” she
compensation claims filed in the state’s roped into the state’s post-traumatic stress said. “And it’s not just COVID. It’s the
workers comp system came from correc- disorder presumption for first responders; defund the police, the vilifying of them,
tional officers and prison workers, and a a law which took effect Jan. 1, 2019. no matter what uniform you have on,
quarter of the state’s total fatal coronavirus Source: National Council of State Legislatures “We’ve had some staff pretty significantly you’re a target.”
comp claims were among those work- impacted by COVID, and one of them had In Minnesota, Mr. Schnell is focused on
ers, according to a study from the Texas in criminology, law and society at George to be hospitalized on a ventilator for a con- creating a culture of support and recogni-
Workers Compensation Research and Mason University. “The job is stressful, it’s siderable period of time,” said Paul Schnell, tion of the challenges staff face.
Evaluation Group. full of dangerous unknowns.” the corrections commissioner for the State “We’re learning more about the impact
“Correctional officers have died from “With correctional officers, very few of Minnesota. “But it’s a fairly small amount of PTSD and repeated ongoing exposure
COVID-19, and there’s pressure on the people would doubt that they’re exposed of (total) workers comp claims.” to trauma,” Mr. Schnell said. “As a result,
staff with screening, testing, quarantining, to trauma on a daily basis,” said John However, the pandemic and quarantin- as employers, we’re trying to be more
keeping inmates and their quarters clean,” Hanson, Atlanta-based vice president at ing requirements have placed strain on responsive, in part because we want to do
said Gary Cornelius, retired corrections Alliant Insurance Services Inc. “(With the staffing levels, which in turn can expose right by our staff, but also the real interest
professional and current adjunct professor pandemic), they can’t socially distance, the correctional officers on duty to greater risk in reducing our liability.”
SAFETY FOCUS HELPS TO MITIGATE RISKS FOR CORRECTIONS FACILITIES
P rioritizing workplace safety and
returning correctional officers to work
more quickly can have significant cost
benefits, experts say.
In 2012, the State of Tennessee was
A former correctional officer at a
maximum security prison in Kansas,
Mr. Escobar recognized the importance
of returning officers to work more
quickly, and with the blessing of
in Suffolk, Virginia, slips, trips and
falls have been the most common
compensable injuries, often occurring
when an officer is running to an
emergency situation, said William Smith,
“We try to look at each situation and
analyze it to see if it’s preventable,”
he said. “Some (changes) were simply
changing the time that cleanup was
done throughout the facility … to middle
spending about $5 million a year in total the commissioner of the Tennessee the jail’s superintendent. of the night or off hours.”
temporary disability, with correctional Department of Corrections, he But when the jail’s self-funded The jail has also implemented weekly
officers and prison workers comprising overhauled the return-to-work program, workers compensation pool offered a safety inspections with supervisors on a
the largest portion of those recipients, reducing disability payments by 60% in discount for a safety committee, Mr. rotation. “A fresh set of eyes seems to
said Rodney Escobar, the state’s director the first year. In 2019, the state paid just Smith formed one and found that the catch a few things that may have been
of the division of claims and risk $750,000 in total temporary disability. monthly meetings and incident reviews missed,” he said.
management. At Western Tidewater Regional Jail could mitigate the risk of injury. Angela Childers
6 DECEMBER 2020 BUSINESS INSURANCE
T:10"
S:9.25"
S:12.25"
T:13"
EMPOWERING AGENTS AND BROKERS TO
PROACTIVELY HELP CLIENTS MANAGE RISK.
We’re reinventing what you expect from a medical professional
liability provider, with risk analytic services that leverage over a
decade of claims data to help predict and manage your clients’ risk.
So you can help them focus on what matters most—improving
clinical, operational, and financial outcomes. Visit coverys.com/focus
Copyrighted. Insurance products issued by Medical Professional Mutual Insurance Company and its subsidiaries.
Boston, MA. In CA, transacting business as Coverys Insurance Company (CA# 6122-6).
Ad Template.indd 12 10/22/20 3:19 PM
NEWS ANALYSIS
Law enforcement liability faces hard market
BY JUDY GREENWALD ties are also very important and the back-
Reuters
jgreenwald@businessinsurance.com bone” of the insurance, and many treaties
come up for renewal in January.
R
ecent police-related deaths and injuries Many reinsurers are reconsidering how
are contributing to a hardening market much capacity they will put up, Mr. Turka-
for law enforcement liability insurance. lo said. While it is difficult to predict how
Rates are firming, terms and conditions much capacity will be withdrawn “we do
becoming more stringent, and available anticipate some pullback,” he said.
limits reduced following several months of If reinsurers do reduce their capacity and/
tension between police and communities or increase rates, the exposure will remain
in various areas of the country. with clients, he said.
Recent incidents include the death of Policyholders will probably have to con-
George Floyd by suffocation in Minne- sider larger retentions, and perhaps take
apolis, Breonna Taylor’s shooting death on more risk for law enforcement but
in Louisville, Kentucky, and Jacob Blake’s keep retentions lower in other areas, Mr.
paralysis from a police shooting in Keno- Turkalo said.
sha, Wisconsin. Ms. Coulter said Charlotte, which has
Meanwhile, a Colorado law enacted in excess coverage over a $2 million retention,
June will hold police officers responsible combines its law enforcement liability cov-
for paying up to $25,000 themselves for erage with its general liability and expects
awards issued against them. (see sidebar). Louisville Police officers stand guard as demonstrators march during a peaceful protest after rate hikes of about 12-15% next year.
Experts say many public entities are a grand jury decided not to bring homicide charges against police officers involved in the “We’re a large entity, so we’re able to do
either largely self-insured or obtain their fatal shooting of Breonna Taylor. things a little bit differently,” she said. “Some
coverage through pools. The coverage can of the smaller entities that do not have our
be separate or part of municipalities’ gen- Towers Watson PLC’s North American market hardening since then, “and we’ve volume” are “taking a pretty big hit” in their
eral liability policies. public entity and education practice, said, experienced some of that,” Mr. Grubb said. law enforcement liability coverage.
Mark Goode, Charlotte, North Caro- “I don’t think there has necessarily been a The impact depends upon the loss expe-
lina-based managing director of Willis huge increase in the frequency of claims,”
but there has been an increase in their
rience and “upon the nature of your rela-
tionship with excess insurers,” he said.
“For a $10 million policy you are
COLORADO LAW severity, much of which has been driven Mark Dillard, vice president of Public going to pay considerably more
PUTS ONUS by the publicity. Risk Underwriters of Texas in Richardson,
ON OFFICERS Betty Coulter, risk manager for the city of Texas, a managing general underwriter, that you did a year ago.”
Provisions of Colorado’s recently enacted Charlotte, its school district and Mecklen- said rates are firming “and terms are get-
Mark Dillard,
Enhance Law Enforcement Integrity law, parts burg County, said, “I think that insurance ting a little bit more restrictive. Capacity is
Public Risk Underwriters of Texas
of which take effect July 1, 2023, include: companies are looking at it as a huge expo- getting restricted by most of us who are in
n State political subdivisions indemnify sure with the unrest across the country.” this marketplace.
police officers for judgments except “We are like everyone else, experiencing “The increasing conflicts and the kinds of
if they determine the officer did not some difficulties with the renewals,” said value of awards that have been seen recent- Mr. Dillard said that in certain areas
act in good faith and a reasonable
belief the action was lawful.
David N. Grubb, managing director of ly are expected in the coming months, cer- “where tensions are perceived to be the
n In that case, the police officer is
Saddle Brook, New Jersey-based PERMA tainly, to drive a more cautious approach. highest, the rates could be increased to
personally liable for 5% of the judgment, risk management services, which operates There’s no doubt about it.” the magnitude of 20% or better,” with less
or $25,000, whichever is less. a joint insurance fund for New Jersey Mark Turkalo, national education and capacity available.
n If the judgment is uncollectible from municipalities. public entity placement leader for Marsh “For a $10 million policy, you are going
the officer, the employer pays it. “You’ve got a general market situation LLC in New York, said that while most to pay considerably more than you did a
n A public entity does not have to out there that some people have likened insurers include law enforcement in their year ago.” Large accounts, in particular, will
indemnify a police officer if the officer to the situation of the mid-1980s. I don’t policies, there is “serious concern to the see the most constriction and rate increas-
was convicted of a criminal violation. think it’s as bad,” but “it’s the most serious” extent that in some cases, reinsurance trea- es, he said.
POLICE OFFICER ‘INTEGRITY’ LEGISLATION EXPECTED TO SPREAD
A new Colorado law that will make
police officers responsible for
5% of judgments against them,
up to $25,000, could be influential
in other states, observers say.
already has been interest elsewhere,
including a comparable, widely publicized
bill introduced in the New York State
Legislature that remained in committee.
“I’m highly doubtful that (the Colorado
an officer acted, it will exclude the officer
from its coverage, he said.
“What you get is a lot of finger pointing
and a lot of varying opinions on whether
the police officer’s behavior was in line
It’s too early to determine the effect of law) is going to work the way they with department policies and procedures,”
the Enhance Law Enforcement Integrity anticipate,” said Mark Dillard, vice Mr. Dillard said. “It gets very convoluted.”
legislation, which was signed into law president of Public Risk Underwriters of Betty Coulter, risk manager for the
in June, said Mark Turkalo, national Texas in Richardson, Texas. “What Colorado city of Charlotte, North Carolina, and If it is determined the officer has
education and public entity placement is trying to do is delineate between actions the Mecklenburg County, said the engaged in criminal activity outside the
leader for Marsh LLC in New York. But he that someone deems acceptable” and those legislation creates a “slippery slope.” scope of his job, “it becomes the officer’s
expects there will be similar legislation deemed unacceptable, he said. The law is If the police officer must pay, she asked, liability in any event,” Ms. Coulter said.
approved in other jurisdictions. There saying that if an entity doesn’t like the way where are the assets going to come from? Judy Greenwald
8 DECEMBER 2020 BUSINESS INSURANCE
Celebrating today’s
female voices
for a better future.
At Liberty Mutual Insurance, we believe that by
working together we can create a culture of open
communication and inclusiveness — which is why
we are excited to celebrate the female leaders who
drive the risk management industry forward and
accomplish more.
Proud supporter of Business Insurance’s 2020
Women to Watch.
®
Congratulations to this year’s award recipients, including our colleagues:
Virna Alexander Rhodes Melanie O’Neill
Vice President and Manager Chief Underwriting Officer
Claims Shared Services Commercial
Global Risk Solutions North America Liberty Specialty Markets
© 2020 Liberty Mutual Insurance. Insurance underwritten by Liberty Mutual Insurance Co., Boston, MA, or its affiliates or subsidiaries.
Ad Template.indd 6 11/19/20 4:12 PM
NEWS ANALYSIS
Casualty market wavers on pandemic cover
BY CLAIRE WILKINSON “Suffice to say it’s somewhat shocking
cwilkinson@businessinsurance.com that some of these large umbrella insur-
ers that put up large chunks of capacity
B
rokers are pushing back against wide- won’t budge on the communicable disease
spread communicable disease exclu- issue,” he said.
sions in casualty insurance policies Certain industries such as real estate,
due to the pandemic and in some cases health care, higher education, hospitality
managing to narrow exclusions or to pre- — “all those you would expect to have
serve disease coverage for risk managers, coverage restrictions imposed have felt
experts say. that,” said Debbie Goldstine, Chica-
Still, the lack of a consistent approach go-based executive vice president, head
by casualty insurers to communicable dis- of U.S. casualty at Lockton Cos. LLC.
ease risks amid an already hard market “The general industrywide reaction has
means that building large towers of lia- been to default to exclude, and then you
bility insurance for certain buyers can be hope to negotiate it,” Ms. Goldstine said.
especially challenging, they say. When building excess casualty towers
The approach by each insurer is very that comprise numerous insurers, “you
different and varies by geography and by have to negotiate actively with all of
client, said Nick Moore, managing direc- them. In some cases, we’re only able to
tor, excess casualty, at Aon Risk Services negotiate silent wording up to a point,”
in New York. say $50 million of limit, she said.
“There’s no uniform approach from all able to negotiate carvebacks for foodborne virus or flu-type illness that you have to Umbrella and excess layers have been
insurers to address this. It can be quite illness risks, Mr. Garson said. manage,” Mr. Nesbit said. more challenging, said Jessica Cullen,
fractured across the industry,” he said. However, the carvebacks are not being Young Life went back to Chubb and New York-based managing director of
“When you’re building these very large applied to every account. “It depends on explained the risk controls it has in place, Arthur J. Gallagher & Co.’s casualty
towers of $300 million, $400 the market and on the specific its history and ability to manage the kids’ practice.
million or $500 million (in underwriter,” he said. health, and its food safety protocols. “If your general liability carrier in the
limits) it can be challenging to
HARDENING Prior to the COVID-19 pan- Chubb then gave it limited coverage for primary is putting up $2 million, the
have a consistent level or con-
MARKET demic, Young Life, a religious communicable and infectious diseases on excess guys are putting up anywhere
6.7%
sistent language through every organization based in Colorado a per location basis, and the disease has to between $5 million and $25 million each,
layer of the policy, particularly Springs, Colorado that runs arise out of its operations, he said. so they’re a little bit more protective,”
with this new risk generally,” summer camps in the U.S. and Chubb declined to be interviewed for she said.
Mr. Moore said. Average general Canada, had communicable this story. While some insurers have corporate
Initially many insurers filed liability rate increases disease coverage in its casualty Jett Abramson, executive vice presi- mandates to exclude communicable dis-
endorsements or “very broad in the third quarter. insurance policy. dent of AmWINS Insurance Brokerage ease on all risks, others are taking an
communicable disease exclu- Two weeks before the poli- of California LLC, based in Manhattan underwriting approach, depending on the
sions,” but now the situation
is “fluid,” said Burt Garson,
coverage and claims leader for
Marsh LLC’s U.S. casualty
22.9%
Average umbrella
commercial rate
cy’s May 1 renewal, its insurer,
Chubb Ltd., said it was going
to exclude any coverage for
bodily injury or physical dam-
Beach, cited a recent experience negoti-
ating umbrella liability coverage for an
owner-operator of ski resorts.
Despite a communicable disease exclu-
industry, Ms. Cullen said.
“If they feel like it’s a good client, with
good risk management procedures, and
the risk is minimal, they’ll deal with you,”
practice in New York. increases in the age arising out of infectious or sion on the primary admitted policy, the she said.
In some situations policy third quarter. communicable diseases, said retail broker was able to push back and get Admitted markets are typically reverting
exclusions can be narrowed to Source: CIAB
Gary Nesbit, senior director a carveback for foodborne illness, he said. to their standard filed and approved com-
COVID-19 and its mutations, of risk management at Young “We were able to get the entire umbrella municable disease endorsements, which
and in other cases brokers are managing Life and a board director of the Risk & to follow form on that. We had to replace they’ve had in their library for years, bro-
to negotiate language to limit the scope Insurance Management Society Inc. carriers who refused to give an exception kers say.
of the exclusions to pandemics declared “That puts us at risk,” he said. While to the absolute communicable disease Many state regulators are unwilling to
by entities such as the World Health this year’s summer camp program was exclusion,” Mr. Abramson said. There approve new endorsements on admitted
Organization, he said. highly curtailed, “any time you get 600 were about a dozen different insurers on policies that they view as limiting cover-
For food industry clients, brokers may be kids together there’s always the risk of a the policy, he said. age during a pandemic.
FOCUS ON VIRUS TRANSMISSION RISK MANAGEMENT CAN EASE PRESSURE
B usinesses with strong risk
management protocols that
communicate them clearly to
insurers are more likely to preserve
some level of communicable disease
manufacturing client with retail locations.
“They were able to maintain no
exclusion, but they have very strict
guidelines and practices in place, and
we incorporated that into the renewal,
the coronavirus and are able to illustrate
and document the procedures they are
following, said Nick Moore, managing
director, excess casualty, at Aon Risk
Services in New York.
with a chain of restaurants was able
to obtain a carveback for foodborne
illness, said Jett Abramson, executive
vice president, AmWINS Insurance
Brokerage of California LLC, based in
coverage in their casualty insurance as well as presentations from their “The Fortune 1000 companies that we Manhattan Beach.
policies, experts say. internal staff in charge of managing the primarily deal with have been taking Businesses must determine the areas
Jessica Cullen, New York-based exposure,” she said. the virus seriously and addressing the where they may have communicable
managing director of Arthur J. Gallagher Brokers are trying to make sure clients concern both with the safety of their disease exposure and have a plan of what
& Co.’s casualty practice, cited her are following Centers for Disease Control employees and customers,” he said. to do in case of an outbreak, he said.
experience of a Sept. 1 renewal for a and Prevention guidelines with respect to With a codified plan in place a client Claire Wilkinson
10 DECEMBER 2020 BUSINESS INSURANCERyan Specialty Group
Congratulates Our Very Own
Shannon Stefanski
&
and all of the incredible women whose remarkable achievements
and leadership have helped shape our industry.
ryansg.com
Ad Template.indd 4 11/19/20 4:11 PMNEWS ANALYSIS
Comp insurers wrestle with COVID-19
as payroll, premium declines take toll
BY ANGELA CHILDERS
achilders@businessinsurance.com
T
he financial impact from the pandemic
is still being felt by all lines as 2020
nears its end, with workers compen-
sation among the lines facing the most
uncertainty, experts say.
The drop in direct written premiums
due to the decline in payrolls and nega-
tive premium rate pressure is likely to cre-
ate challenges for the still-strong workers
comp line, they say.
“The fact of the matter is, 2020 is an
unprecedented year in the roughly 110-
year history of workers compensation,”
said Robert Hartwig, clinical associate
professor and director of the Risk and
Uncertainty Management Center at the
University of South Carolina in Colum-
bia. “Even to this day, we’ve recovered only
about half of the jobs” lost when the coun-
try went into lockdown in March.
“Some of the lessons here are not going
to come from historical insurance data,
they’re going to come from economic
experience and economic expectations,”
he said. The first half of this year saw direct vide 2020 data “given the uncertainties
In the past five years, net written pre- written premium decline by nearly 10%, surrounding the current pandemic.”
“There’s economic uncertainty,
mium in the industry has held steady,
ending 2019 at $47 billion, and the line’s
amid the sharp drop in employment due
to COVID-19 shutdowns.
Typically, Boca Raton, Florida-based
NCCI would use historical data to provide
rate uncertainty, reinsurance cost
combined ratio averaged 91% during In a study of the property/casualty mar- its first projection of 2020 premium vol- uncertainty, federal aid uncertainty
that period, according to data from Fitch ket conducted by the Council of Insurance ume, but the “very volatile” data from the
Ratings Inc. Agents & Brokers in October, more than early part of the year precludes the ratings – a lot more uncertainty than
one-third of insurers surveyed between agency from applying its typical historical
WORKERS COMP PREMIUM July 1 and Sept. 30 reported that their loss development factors, said Jeff Edding- we would normally see.”
RATE CHANGE IN Q3 workers compensation premiums had er, senior division executive at NCCI. Jackie Lentz, A.M. Best
Respondents to a survey by the Council of
begun to rebound from shutdown-related “There’s economic uncertainty, rate
Insurance Agents & Brokers largely reported second-quarter declines. uncertainty, reinsurance cost uncertain-
workers compensation premiums saw little Insurers with higher concentrations of ty, federal aid uncertainty — a lot more
change from the second quarter. small businesses have been hit the most by uncertainty than we would normally see,” very expensive, very serious injuries and
premium decreases as a result of declining said Jackie Lentz, director at A.M. Best. claims,” he said.
payroll, said Dan Mangano, financial ana- “The line was performing very well; there NCCI is working with a modeling firm
lyst at Oldwick, New Jersey-based A.M. were a lot of safety programs that helped to predict whether a pandemic provision
Best Co. drive the loss ratio down. We still have may be something brought up in next
CHANGE IN PREMIUMS The ratings agency is closely monitor- concerns about the workers comp line year’s filing season, similar to the terrorism
No change 40% ing how pandemic-related issues may even though the initial forecast didn’t provisions that were introduced after the
Down 1-9% 21% affect the workers comp line, analyz- seem to materialize.” 9/11 attacks, he said.
Down 10-19% 2% ing the uptick in severity in certain Early forecasting by insurance ratings After 9/11, comp insurers chose not to
Up 1-9% 28%
areas, the COVID-19 rebuttable pre- bureaus had warned that rebuttable pre- renew some policies for employers locat-
sumption measures approved in some sumption laws making COVID-19 a ed in tall buildings or near landmarks,
Up 10-19% 5%
states, the effect of shutdowns on compensable illness if contracted at work or changed the way they underwrote
Up 20-29% 2% entertainment, hotels and restaurants would lead to billions of dollars in claims. those risks, “and that could happen with
Up 30-50% 1% and how remote working employees As of late November such measures were COVID,” he said.
Not sure 1% may affect comp, he said. in place in nine states and proposed in at AmWINS Group Inc. Vice President
The National Council on Compensa- least a dozen others. Kim Weisse said clients in her book have
tion Insurance, which typically provides Mr. Eddinger said he has seen some $1 reported few COVID-19 claims com-
preliminary estimates of net written pre- million-plus coronavirus claims. pared with what she was expecting, but
mium volume and combined ratio in late “I think carriers need to be on the she noted payrolls have declined as many
Source: Council of Insurance Agents & Brokers fall for the current year, declined to pro- lookout for those rare but lingering, companies shutter their businesses, reduce
12 DECEMBER 2020 BUSINESS INSURANCEWORKERS COMP UNDERWRITING PERFORMANCE
For the past five years, workers compensation has outperformed other property/casualty commercial
lines segments, though net written premiums for 2020 will be affected by the coronavirus pandemic
PREMIUM, INTEREST RATE TRENDS
because of sharp payroll declines during government-mandated shutdowns. CHALLENGE WORKERS COMPENSATION
T
NET WRITTEN PREMIUM IN BILLIONS
$49B he workers compensation line is very good reserve experience in the
still a strong performer, although last two to three years, and I still think
$48B negative premium rate trends and there’s redundancy in reserves.”
$47B
the low interest rate environment are But the degree to which “reserving
putting pressure on the line, experts say. practices will change for 2020 is
$46B “I thought (the workers comp unclear,” said Robert Hartwig,
$45B
line) would be deteriorating clinical associate professor
a bit sooner given pricing and director of the
$44B trends,” said James Risk and Uncertainty
$43B
Auden, Chicago-based Management Center
2015 2016 2017 2018 2019 managing director at the University
Source: Fitch Ratings Inc. of insurance at Fitch of South Carolina
Ratings Inc. in Columbia. “It’s
staff or reclassify employees now working Despite payroll declines negatively Among property/ possible that
from home. affecting premiums and the unknowns casualty lines, workers companies will be
Ms. Weisse said health care compa- of how workplace COVID-19 cases may compensation is the more cautious about
nies will face challenges in the upcoming affect comp, Mr. Hartwig is confident only major segment releasing reserves given
renewal season. that the economy will rebound more that has not seen big rate the uncertainty. That alone
“There are carriers that aren’t writ- quickly than during other times of work- increases in recent years, he could have a material impact in
ing that business anymore (because of ) force reductions. noted. However, he said that given the driving up the combined ratio.”
concerns over essential workers and the “I think most carriers will be looking long run of strong results, the line is The low interest rate environment is
presumption, and the impact on workers past this and understand that this is tem- likely to begin to turn soon. another concern. “There could be riskier
comp long term because of the uncer- porary,” he said. “I think recovery from “The trends on pricing point to assets coming into the fold as insurers
tainty,” she said. “Maybe they’ll be able to COVID will actually occur much more deterioration going forward,” he said. are looking for that same rate,” said Dan
get a renewal from a current carrier, but quickly than the recovery from the finan- But the “loss reserve strength of the Mangano, Oldwick, New Jersey-based
if they’re trying to find another carrier to cial crisis, which is not only good for the insurance carriers” is in the line’s favor, financial analyst with A.M. Best Co.
get them a better rate, they’re going to be overall economy, but very good news for Mr. Auden said. “Workers comp has had Angela Childers
hard pressed to find one.” property/casualty insurers.”
Columbia University
would like to congratulate
the 2020 Women to Watch
Award Recipients
Master’s in Insurance Management
Ensure the Future
Part-Time | Online | 16 Months
21INSM018–11/13
sps.columbia.edu/insuranceW2W
BUSINESS INSURANCE DECEMBER 2020 13DIRECT SALES
ALTERNATIVE
NEWS ANALYSIS
W hile reinsurance brokers
place a significant
proportion of reinsurance
business, some reinsurers also
Reinsurance broker choice shrinks
use their own salesforces to
attract and bind business,
bypassing the broker-controlled
sector of the market.
As reinsurance brokers
BY MATTHEW LERNER consolidate, direct sales remain
mlerner@businessinsurance.com an option and possible avenue
for growth for reinsurers.
M
ergers and acquisitions are reshaping “Reinsurance has a whole world
the reinsurance brokerage sector, with of direct sales,” said J. Paul
two large deals among the top five bro- Newsome Jr., Chicago-based
kers in the past two years alone. managing director at investment
Marsh & McLennan Cos. Inc.’s $5.6 bil- brokerage Piper Sandler Cos.
lion acquisition of Jardine Lloyd Thompson “Big companies like Munich
Group PLC in 2019 and Aon PLC’s pending Re and Swiss Re, they have
acquisition of Willis Towers Watson PLC to their own sales force,” Mr.
create the world’s largest insurance brokerage Newsome said. Many times
have redrawn the landscape of reinsurance they use the big brokers “but
broking and concentrated business in fewer sometimes they don’t,” he said.
and fewer hands. “They just do the deals on their
The large deals, however, also create own. A lot of times insurance
opportunity for smaller brokerages to both companies will work directly
win new business and recruit talent as the fewer brokers for years but the recent con- “I think there’s absolutely a place for the with reinsurance companies
mergers lead to the shedding of producers solidation among the top global reinsurance niche players,” said Mr. Sidhu. “There are on transactions. There’s not
or reassessments by clients. brokers has further shifted the balance of players which focus on climate risks, cyber always a broker in the middle.”
“The reinsurance brokerage business is power to their side, he said. risks; smaller players that bring their own Munich Reinsurance Co.
already concentrated among three brokers “There has been a rush to scale,” a trend value by really knowing their space inside and Swiss Re Ltd. did not
and two of them are merging,” said J. Paul capped by the proposed Aon-Willis merger, and out. Smaller players may not be every- respond to requests for
Newsome Jr., Chicago-based managing said Angus Milgate, head of treaty reinsur- thing to everyone, but the marketplace really comment for this article.
director at investment brokerage Piper San- ance at McGill and Partners Ltd. in London. recognizes that expertise in those specialties.” Reinsurers have always had
dler Cos. “We’re seeing the heavyweights acquire their In addition, changes brought by large their own salesforces, said
Aon is the largest reinsurance broker in the way forward.” mergers may result in producers leaving one Vikram Sidhu, a partner in New
world and Willis Towers Watson is the third McGill and Partners was launched offi- of the firms in a deal, creating an opportunity York with Clyde & Co LLP, but
largest behind Marsh & McLennan’s Guy cially in October 2019 by former Aon senior elsewhere, sources said. were previously not as proactive
Carpenter & Co. LLC. executive Steve McGill. The brokerage has “When things come together as they are, as more recently. “They are more
The sector was concentrated already, said grown to about 250 people, Mr. Milgate there is certainly an opportunity to pick up active players. Big companies see
Steve Chirico, a director at A.M. Best Co. said, adding he sees opportunity in the wake good talent,” Mr. Milgate said. they have to offer more than just
Inc. in Oldwick, New Jersey. of the large deals. “The cornerstone of any Piper Sandler’s Mr. Newsome said “it capital taking on risk. They must
“We had a small handful of very large com- successful and efficient market is choice.” remains to be seen” what the fallout might be. actively sell a suite of products.”
panies producing a lot of the brokerage,” he “Competition is good,” said Carlos “I imagine there has to be some opportunity “The reinsurers themselves
said, adding that continued consolidation Wong-Fupuy, senior director, global rein- for the small reinsurance brokerages because have been trying to do a greater
will give that group even more leverage in surance ratings, at A.M. Best. “Competi- that’s what usually happens when you have push into being out there and
the marketplace. tion spurs things like innovation. When you this sort of continued consolidation.” trying to attract and manage
According to Business Insurance’s latest eliminate competition in one element of the business more directly,” Mr.
ranking, Aon, Guy Carpenter and Willis supply chain, it’s never good for the other Sidhu said, even as the role of
Competition concerns
Towers Watson all reported more than $1 members of the supply chain.” the reinsurance broker evolved
billion in reinsurance brokerage revenue last When single firms account for a larger When Marsh & McLennan bought JLT from being a “gatekeeper”
year, while the fourth largest broker reported proportion of a reinsurer’s distribution, “they in 2019, it agreed to sell JLT’s aerospace or “matchmaker” for the
$125 million in revenue. ultimately have more negotiating leverage,” practice to rival Arthur J. Gallagher & Co. reinsurers to providing more
“Consolidation of brokers will further said Mr. Gharib. to allay regulatory concerns. services like risk analysis.
entrench the intermediaries,” said Taou- Newer entrants in the reinsurance broker- The concentration of reinsurance business There has been a recognition of
fik Gharib, senior director, North America age sector launch with the notion “that there in a merged Aon-Willis has led to some the need “not to be completely
insurance ratings, at New York-based S&P is a place for more players in the reinsurance speculation among analysts that regula- beholden to the gatekeeper
Global Ratings Inc. intermediation space,” said Vikram Sidhu, a tors might require some divestitures before and have “numerous avenues of
Global reinsurers have been dealing with partner in New York with Clyde & Co LLP. approving the deal. access, avenues to business they
On Aon’s third-quarter earnings call, how- want to write,” said Mr. Sidhu.
WORLD’S LARGEST REINSURANCE BROKERS ever, Chief Financial Officer Christa Davies “It may be the reinsurers
Ranked by 2019 gross revenue from reinsurance brokerage and related services*
said the broker remains on track to close the push more through the direct
Willis Towers Watson deal in the first half of channel and it becomes
Rank Company 2019 gross revenue 2018 gross revenue % increase (decrease) 2021 and does not expect to sell any business. increasingly a direct business,”
“There is enormous competition from a Mr. Newsome said.
1 Aon's Reinsurance Solutions $1,665,000,000 $1,546,000,000 7.7% client choice perspective,” she said, noting On Aon’s third-quarter earnings
2 Guy Carpenter & Co. LLC1 $1,482,096,000 $1,441,153,0002 2.8%
that in addition to using other reinsurance call, Christa Davies, chief
brokers, cedents can deal with some reinsur- financial officer of the brokerage
3 Willis Re $1,021,803,000 $966,286,000 2
5.7% ers directly (see related story). said “clients have a huge range
Insurance regulators in the U.S. tend to of choices. If you think about
4 TigerRisk Partners LLC $125,000,000 $95,000,0003 31.6%
focus on avoiding market concentrations the client for reinsurance it’s
5 Gallagher Re4 $100,000,000 $70,000,000 42.9% with respect to the risk bearers themselves as an insurer and they can place
opposed to intermediaries, said Mr. Sidhu. direct, which a lot of them do.”
*
Includes all reinsurance revenue reported through holding and/or subsidiary companies. 1Acquired JLT Reinsurance in April 2019.
2
Restated. 3 BI estimate. 4 Formerly Capsicum Reinsurance Brokers LLP. “Client and market choice is key,” he said. Matthew Lerner
Source: BI survey
14 DECEMBER 2020 BUSINESS INSURANCECongratulations!
Ana Franco de Sarabia Reema Hammoud, Pharm.D, BCPS
Country Manager, Sedgwick Iberia AVP Clinical Pharmacy, Sedgwick
Selected for Business Insurance 2020 Selected for Business Insurance 2020
Women to Watch EMEA Women to Watch U.S.
YO U R “ BACK TO B US I N E SS ” TO O LK IT
Every industry and organization is faced with the same
challenge due to the impact of COVID-19: What does
getting “back to business” look like and how will we
move forward? Sedgwick can be your partner in figuring
this out, together.
We have designed a suite of services that will help your business
respond quickly and safely as COVID-19 restrictions evolve. Our
solutions are designed to fit your specific needs through three key
phases: reopen, return, recover.
L E T ’ S C R E AT E A P L A N F O R
Y O U R O R G A N I Z AT I O N
Contact us to learn how Sedgwick’s back to business solutions
can be tailored for you.
EMAIL: backtobusiness@sedgwick.com
WEB: sedgwick.com/backtobusiness
caring counts | sedgwick.com © 2020 Sedgwick
Ad Template.indd 8 11/19/20 4:12 PMYou can also read
