National Underwriter - September 5, 2011

Zimmel: Is the World Riskier Or Safer?

Is the world a riskier or safer place? We ask Karl Zimmel, director of risk-management services at UniSource Energy Corp.

Recently we have seen hackers shut down various online services, and identity theft is on the rise, thanks to the bad guys’ use of technology.

The good news is that risk-management tools have been enhanced to address greater risk.

THE WORLD IS riskier for two ma- jor reasons: J Natural disasters are trending up. J Emerging risks add to the previous portfolio of risk.

There is empirical evidence that windstorms in particular are at or near record levels.

It started six years ago with Hurricane Katrina and continued this spring with a large volume of tornadoes in the U.S. and the tsunami in Japan. Fortunately for the global insurance market, only a relatively small portion of the tsunami was reinsured.

The use of the Internet and general increase in technology has increased risk; the cyber risks we see today were virtually nonexistent 10 years ago.

KARL ZIMMEL Director, Risk Management Services, UniSource Energy Corp.

Member of National Underwriter’s Risk Managers Advisory Board.

Also, the insurance market has provided substantial surplus capital to handle recent catastrophic property losses generally without significant premium increases.

Given this increase in risk, it is no
coincidence that many new insurance
products have been developed in the
past 10 years. Right about the year
2000 employment-practices liability
developed into a viable product with
substantial coverage at a reasonable
premium. In a similar timeframe, stand-
alone pollution-liability policies became
viable with good, affordable coverage.

WCEC Reporter’s Notebook: Workers’ Compensation Tips For Risk Managers

THE RISK MANAGERS educational track at this year’s Workers Compensation Educational Conference, held August 21- 24 in Orlando, featured a number of standout sessions. Here are some highlights.

E At a session on predictive modeling, the speakers focused on how risk managers can analyze the data they have on file to reduce the cost and duration of claims and to cut down on fraud. One of the tips that stood out: Use text-mining technology that sifts through the notes made by claims adjusters—which often contain far more gems of insight than the boxes being checked on a standard claims form (about age, gender, marital status, etc.).

It’s not uncommon for a claim file to have 200 notes or more—and that could very well be where the details are that will help identify as early as possible those claims with the potential to become problem cases without the right intervention.

E The session “Communicating Metrics to the CFO to Impact the Finances of the Company” was unsurprisingly popular. And the first speaker left no doubt as to his qualifications on the topic: Fred Pachon, vice president of risk management and insurance at Select Staffing, has documented savings for his company of over $300 million as a result of his initiatives. And this clearly demonstrated worth has meant his department has grown from three employees to 60.

With credentials like that, Pachon obviously
had the audience’s full attention. His advice
for risk managers when talking to the C-suite:
focus on two issues—profit and growth. “It’s
all they care about,” he says. Risk managers
also should focus on disabusing CEOs of the
commonly held belief that insurance is a fixed
cost that can’t be improved upon. Other tips
for the toolbox: CEOs and CFOs love year-over-
year comparisons, peer-marker comparisons
and names named when it comes to top
performers—and their opposites.

E Some advice that definitely struck the crowd in “Developing and Implementing a Corporate Safety Culture” as worth trying at home: Invite (don’t require) workers who have been hurt on the job to speak to their peers about how the injury happened—a great (and free) way to reduce the odds of the event being repeated.