What You Need to Know About RFP’s

The Current State of ‘Employer vs. Insurance RFP’s

 

Employers today often find themselves undertaking a Request for Proposal (RFP). RFPs are an important tool that allow for greater insight into the market. RFPs are used as a mechanism by employers to test the market competitiveness of their insurance programs and collect market intelligence regarding new offerings. The bidding process aids accountability and provides market information on emerging risk management techniques, regulatory changes and recent trends. However, RFPs are a time consuming and an arduous task that require inputs from multiple stakeholders, who often have competing priorities.

Captive insurance companies provide an alternate solution for employers who are looking to escape the rut of undertaking an RFP every few years. Captives provide greater transparency and control to employers over their insurance programs and eliminate the often costly and time-consuming need to bid programs to ensure competitiveness. Captives allow organizations to have a clear understanding of their experience and thereby eliminate the arbitrariness of rate hikes by the incumbent carriers. An RFP can also be an expensive exercise both in terms of tangible and intangible resources. In monetary terms, there are the fees for advisors/brokers/consultants. Additionally, time and effort required by your team are also important factors to consider while evaluating the true cost of an RFP.Insurance RFPs

A bidding exercise is often seen as an opportunity to hit reset on an existing plan and evaluate if the program continues to meet the everchanging needs of an organization. In a dynamic and ever-changing business environment, waiting for an opportunity to bid the program to reevaluate its effectiveness and appropriateness for the organization can result in repairable loss. Businesses need to be able to constantly evolve and change to meet the needs of the market or risk losing its competitive edge.

Captives provide a clear line of sight to the working of the program, thereby allowing for customization in an almost real time basis. A captive framework leads to additional reports and information which further facilitate tweaks and adjustments that benefit an organizations insurance program.

A captive insurance company allows a company to gain true transparency and control of not only their loss exposure, but also the expense structure required to support their programs. This transparency promotes a sense of partnership between the employer and the insurance carrier. Employers with captives have often commented on the change in the relationship dynamic between the two entities, viewing the carrier as a partner than as a market option can have long term benefits.

Organizations that use captives are able to ascertain the need for a change or adjustment in rates without input from the market. Captives rid insurance transactions of opaqueness and thereby results in an open and honest conversations among all stakeholders – insurance carriers, brokers and internal organizational stakeholders.

An integral part of most insurance arrangements is the broker. Broker arrangements can, at times, create a degree of obscurity. Since brokers are usually commissions-based, decreasing premiums or making changes may sometimes not be in the broker’s best interest. This could potentially add another degree of complication and difficulty to the decision-making process. In a captive setting commissions paid to brokers are clearly visible. This clarity of fees generally leads to a clearly defined scope of work for the broker/consultant/advisor. Allowing employers to derive more value from their service providers.

Many organizations may feel pressure compelled to bid frequently, to continually create competitive pressures and achieve better rates. This approach can create an abrasive relationship between the organization, the broker and the insurance carriers. Insurance carriers are looking for long term partners and often may choose to not bid aggressively in cases involving organizations who have a reputation of constantly looking to bid, as this can be disruptive for all parties involved.

 

Case Study

Spring recently undertook an analysis for an organization whose incumbent broker initially quoted a 25% rate increase on the employee benefit program. When threatened with the possibility of an RFP, the incumbent carrier revised their quote to reflect a 10% increase in premium. The organization was disillusioned with the insurance carrier and decided to undertake an RFP – which resulted in an alternate carrier quoting a net decrease in premiums of about 15% along with a multi-year rate guarantee.Captive Insurance

While a 15% rate reduction is a seemingly positive result, the process and effort required to get there was expensive, time consuming and left the HR team feeling beholden to the wishes of the insurance carriers and the broker.

The employer requested Spring undertake an independent review of the information presented to them by their broker and insurance carriers. Spring’s analysis revealed that the organization had a much better loss experience than indicated in the rates provided. The organization is currently considering its options for the upcoming year, including potentially utilizing a captive to underwrite their employee benefit risks. This exercise could have been avoided if the employer was using a captive to insure its risks. At the time of the initial rate increase (of 10%) the employer along with their broker would have been able to quickly ascertain that the rate hike was unnecessary and could have been addressed with a quick discussion with the insurance carrier. Which could have saved the organization valuable time, effort and cost of disruption.

To conclude, companies that are financially sound and have a reasonably predictable insurance risk, are ideal candidates to evaluate the possibility of using a captive. If you are an employer looking for a long-term solutions should consider a captive. Captives provide the benefits of an RFP without disrupting a company’s day to day activities. It also helps bridge the gap of obscurity and trust between your company and your insurance carriers.

To see if a captive solution is right for your company, a captive feasibility study is the logical first step. The study identifies the organization’s goals and objectives, reviews the current state of programs, analyzes the data, and then estimates potential captive savings for each line of coverage. The study determines the most effective program design for the organization, including potential advantages or disadvantages of this alternate funding mechanism.

What the Microsoft Settlement Means for the Captive Industry

Recent legislation around captives have kept us and many of our colleagues on our toes. Last year, we had the Avrahami case. This year we had the Reserve Mechanical case. Now, we’re looking at an interesting turn of events between Microsoft, its captive, and the state of Washington.

For some background, tech giant Microsoft is based in Redmond, Washington. Its pure captive, Cypress Insurance Company, was formed in 2008 and is domiciled in Arizona.

Microsoft captive settlement

In May of 2018, the Insurance Commissioner of Washington state issued a cease-and-desist to Microsoft. This order, number 18-0220, required that Cypress stop selling insurance to its parent company and asked for about $1.4M in unpaid premium taxes.

The insurance Commissioner contends that:

  1. Microsoft/Cypress did not pay 2% premium tax for the business being underwritten by the captive. Within the ten years between the captive’s establishment and the cease-and-desist, Microsoft paid over $91 million in written premiums to Cypress. Washington state law mandates insurance companies to pay a 2% tax based on their written premiums.
  2. Cypress did not hold a certificate of authority to sell insurance in the state of Washington.
  3. The coverage provided to Microsoft through Cypress was not placed through a surplus line broker licensed in Washington.

Surplus lines typically come into play for lines of coverage not usually covered by other, commercial insurers.

The Commissioner argued that, because of the above points, Cypress was violating the following sections of the Revised Code of Washington (RCW):

  • RCW 48.05.030(1) (certificate of authority required)
  • RCW 48.15.020(1) (solicitation by unauthorized insurer prohibited)
  • RCW 48.17.060(1) (license required)
  • RCW 48.14.020(1) (failing to remit two percent premium tax)
  • RCW 4S.14.060(l)-(2) (failing to timely remit two percent premium tax)

On July 1st, Microsoft announced that it had established new policies for Cypress through a surplus line broker, but that didn’t negate the issue. Further, they settled the case with the commissioner in mid-August. The settlement involved a $867,820 payment ($573,905 in unpaid premium taxes and $302,915 in interest and penalties) from Microsoft to the Washington State Insurance Commissioner. As a result, the cease-and-desist has been lifted, and Cypress can continue operations. The Insurance Commissioner of Washington did note that it has its eye on other Washington-based companies using captives.

The announcement of the settlement came around the same time that New Jersey made some of its own captive legislative moves on medical and consumer-goods conglomerate, Johnson & Johnson. The organization, headquartered in New Jersey, has long been utilizing an out-of-state captive and paying taxes on the premiums written to the captive for risks located in New Jersey. However recently, the state decided that, according to the Non-admitted and Reinsurance Reform Act (NRRA), Johnson & Johnson and like companies should be paying taxes on premiums written for all risks within the U.S. , not just those residing in the state. While the company tried to argue that the NRRA uses vague language that seems to only apply to surplus lines of business, they ultimately lost the battle, along with the $55 million refund they were looking for.

What can we learn from these instances?

Captive owners should review their structure based on recent developments and business changes. In light of the changes in the tax code, regulatory changes and the recent case laws, regardless of the state of domicile, it would be prudent to review your captive based on its unique situation and circumstances. Doing so on a regular basis is an advisable business practice.

These recent cases are a step towards a maturing industry and should give captive and insurance professionals the motivation to be as diligent and cautious as they should always have been.

5 Ways VCIA is Future-Focused

The Vermont Captive Insurance Association (VCIA), founded in 1985, is the largest trade association for captive insurance in the world. As such, it’s no surprise that their annual conference yields both an impressive turnout and range of educational sessions. A long-time sponsor and member of VCIA, Spring anticipates the August event each year.

The VCIA 2018 Annual Conference, themed “Where the Captive World Comes to Meet”, was just as high-caliber as past years, but each event tends to build its own unique motif. This year, as about 1,100 insurance professionals gathered in Burlington, Vermont, and 40 presentations were made, the three-day conference seemed to emphasize “the future” most notably. The sessions below, along with general conversations I had with a range of people at the conference, are what led me to identify this theme.

  1. Future-Proofing Your Captive

    This presentation, including Spring’s Managing Partner, Karin Landry, urged audience members to consider emerging risks like climate, and highlighted ways in which one captive has and continues to prepare for the future. Then, Andrew Braille of AES Corporation outlined the organization’s plans for the future, including a 50% reduction in carbon intensity.

  2. Succession Planning: Bridging the Next Generation of LeadersEmerging Risks

    An experienced panel led this discussion on how to nurture and attract captive talent to ensure a bright future for the insurance industry, one that is aging and failing to appeal to millennials. Tips like developing mentoring relationships and utilizing updated technology were given.

  1. Blockchain & Distributed Ledger Technology

    VCIA attendees, myself included, learned a lot about blockchain during this Wednesday morning session. The presenters defined blockchain and explained how it will impact captives and the insurance industry at large in the years to come. Good news – experts expect blockchain to reduce costs, lower risks, increase trust, and save time for insurance professionals as it continues to evolve.

  1. Integrated Solutions: The Future of Risk Management

    Todd Cunningham and Carol Murphy highlighted the efficiencies to be gained by moving from a traditional insurance structure to an integrated model, where 1st excess coverage across lines all operates within the same system. They explained that this is the direction they see the industry will and should go.

  2. The Cognitive Captive: Artificial Intelligence for Smarter Insurance

    Tracy Hassett of edHEALTH, and two others informed attendees about how A.I. will affect insurance risks and the labor market, and explained the role that predictive analytics and “The Future of Mobility” will have.  A special focus was made on driverless cars and their impact on insurance.

To be clear, these are only a handful of informative and strong presentations (you can read about the others here), but the underlying theme is gear up for what’s to come.

I hope you enjoyed the summary, whether you were at VCIA or not. As you can see, I did manage to learn quite a bit despite the bike rides and cocktail receptions!

5 Times Inclusivity Took the Stage at DMEC

As a national sponsor of the Disability Management Employer Coalition (DMEC), Spring has been involved in the organization and its events for over a decade. Each year the team

DMEC

looks forward to the Annual Conference, among other DMEC events and initiatives. This year it took place in the fun city of Austin, and we made sure to do some sightseeing while we were there.

This was my first DMEC conference and I was amazed at the wealth of knowledge present. There was an obvious eagerness to learn that hung in the air, and learn we did. Over 700 professionals specializing in areas like occupational health, disability management, FMLA/ADA, claims management, HR and more gathered to share best practices and experiences. The resulting 40+ educational presentations and workshops did not disappoint.

Spring attends and sponsors a range of events throughout any given year. After each one, we take the time to reflect on key takeaways and then share them with our peers (like you!).

The name of the game in Austin this year was inclusivity. Here are five featured topics that explain why.

  1. “Impactful Diversity and Inclusion Strategies for the Workplace”

    This session highlighted the importance of workplace diversity and the trend towards it as a corporate goal. The presenter walked the audience through the different types of diversity, including the more obvious such as race, sexual orientation and gender, as well as the areas of diversity often over-looked: veteran status, education, tenure, full-time vs. part-time status, etc. We learned that these different demographics may have varying degrees of stress, pain, or health issues based on that one facet alone. Generational differences in things like returning to work and communications tendencies and preferences were also discussed.

  1. “Neurodiversity: Driving Innovation from Unexpected Places”

    A small team from EY led this discussion around neurodiversity, which is not a term you hear every day. The session focused on the importance of including autistic employees and understanding their specific needs from an employer. A shockingly low 32% of autistic adults are engaged in some form of paid work, a statistic which needs upward improvement.

  1. “Tools, Techniques, and Technologies for Creative Inclusive Workplaces”employee disability

    Anne Hirsh and Deb Dagit started out this presentation by opening the audience’s eyes to “Five Signs of Inclusion”: ethos, public relations/marketing, policies and practice, physical accessibility, and technical accessibility. They then walked through several tools and platforms that can help employers exhibit all five signs of inclusion.

  2. “Disability and Fitness for Duty in Transgender Employees”

    Brian Hurley, a medical doctor and expert in addiction and mental health, led an interesting session that educated attendees on sex development, gender identity, gender expression, sexual orientation, and gender dysphoria. He helped raised awareness around issues in the workplace, citing that 90% of transgenders surveyed reported experiencing harassment at work, and ended with an outline of model employer practices pertaining to transgender employees.

  3. “Get Explicit About Implicit Bias Using Compassionate Dialogue”

    In this presentation, more indirectly related to inclusivity as some others, a woman led an interactive discussion around implicit biases and the fact that we all have them. These are involuntary, inherent attitudes and stereotypes that we may not know we have. This of course can be problematic in the workplace, so audiences were given “debiasing” techniques to prohibit their implicit biases from interfering in fair and compliant practices.

absence managementWith over three full days of educational presentations, there were plenty of other hot topics such as mental health, return-to-work strategies, FMLA and ADA issues, and data and technology trends. The Spring team partnered with clients to present “Implementation Done Right”, where they highlighted best practices and tips for top-notch absence management programs.

All in all, the event was a valuable learning experience. But it wasn’t all business – we hosted an “extracurricular” activity at a local Austin brewery to relax and mix things up, and there were all sorts of networking opportunities throughout. We are already looking forward to next year’s conference.

Your 6-Step Plan to Captive Optimization

Captives should adapt to their parent companies’ changing risk profiles. Following this plan helps risk managers identify and execute necessary changes.

You conducted a feasibility study before forming your captive, establishing long term goals and objectives, determining which risks to write, where to domicile, and how to finance it all.

But that was five years ago.

Since then, your company has made two acquisitions, expanded its workforce, implemented new technology, contracted with new suppliers, and been affected by a new federal regulation.  In short, the risk profile has changed considerably.

Is your captive keeping up?

As with all other business matters, your company’s captive needs and goals are likely to change over time, especially with new and emerging risks sprouting up frequently. We recommend a ‘refeasibility’ study at least every five years to reassess risk appetite and exposure.

A ‘refeasibility’ study ensures your captive insurance company is still serving your organization’s needs and furthering its mission, rather than holding it back. Unlike the initial feasibility study, this periodic checkup must consider your existing captive structure and financing strategies, and take into account how the captive has performed thus far.

To gain a holistic view of your captive’s performance and evaluate the need for change, captive owners should ask themselves these five questions:

  1. Do your captive’s goals align with your risk profile?

    Evaluating your captive’s goals in the first step of a refeasibility plan. And that begins with collection of data. Claims experience, reserve and surplus levels, loss ratios and other measures of efficiency indicate how successfully the captive has operated and where it has underperformed.

    This indicates whether it has met initial goals, and whether those goals should change. This decision is also largely dependent on changes in the insured organization’s risk profile and the subsequent impact on insurance needs.

    Moving employee benefits into a captive may be a more efficient way to provide coverage for a larger payroll. Greater reliance on automation or IoT technology may likewise increase the need for cyber coverage tailored to an organization’s specific needs. Emerging risks should be considered in this assessment. For example, new technologies like driverless cars and drones and increasing automation will create both risks and opportunities across various industries.

    Performance metrics can help risk managers identify areas where resources can be shifted to support the coverage needs demanded by organizational change and emerging risks.

  2. How will proposed changes impact other parts of the captive company?

    The second stage of the study considers how adjustments to long term goals affect other pieces of the captive puzzle, such risk financing and use of reinsurance.

    Adding new lines of coverage or expanding or reducing existing ones will necessitate an evaluation of risk financing strategies and could lead to changes in an organization’s investment mix or retention levels. This may also impact reliance on reinsurance as a component of the overall risk transfer strategy.

    The best way to pinpoint the extent to which these changes should be made is through stress-testing.

    Running through scenarios with reasonable adverse case outcomes highlight where more or less financing is needed to service claims and maintain favorable loss ratios.

  3. What specific implementation strategies will make your changes stick?

    As with any enterprise-wide change, a detailed roadmap lays the groundwork for successful outcomes and can gain the confidence of stakeholders.

    This stage identifies lines of insurance that could be moved into the captive or other coverages that would be more cost effective to insure through the traditional insurance market. Along with cyber and employee benefits, some of the most common risks to insure in captives include professional liability, auto liability, reputation, and business interruption.

    Capital management strategies should also specify how surplus will be used going forward.

    There are several considerations in appropriately managing the capital and surplus levels over the life of a captive, including average cost of capital, retention levels, reinsurance use and taxes, among others.  A team of actuaries and consultants could review and develop strategy to address these.

  4. Does your existing captive structure still work?

    Captives have taken on a number of different forms since their inception — single parent, group/association, rental captives, sponsored captives, non-controlled foreign corporations, etc. The primary differences between these structures center on the way risk is shared among the parties involved and how the captive is financed and regulated.

    Sponsored captives, for example, offer a way for companies to take advantage of the established infrastructure of a traditional insurer and avoid the upfront costs of forming a captive — though they are not accepted in all domiciles.  Group captives allow companies with unrelated risks to spread out their exposure and reduce their total cost of risk, but can present management challenges.

    A captive’s domicile, the scope of risk it seeks to cover, and the financial strength of its parent company all help to determine which structure will work best.

  5. Does your captive account for recent case law and regulations?

    The technology industry isn’t the only one that is always changing. Laws, regulations and court cases, especially lately, have an impact on captives and need to be considered asCaptive optimization you are taking a fresh look at your strategy.

    Firstly, there’s tax reform. The tax rate reduction under the Trump administration has had a direct impact on captives, and a consolidated tax return that includes a captive insurance company should have its tax sharing agreement reviewed.

    Further, payments to a foreign captive should be reviewed to determine if the Base Erosion Anti-Abuse Tax (BEAT) is applicable, and anyone in the U.S. with an owner’s interest in a foreign insurance company needs to review their holdings. IRS Notice 2016-66 with respect to microcaptives should also be considered, which leads us to our next point.

    In light of two recent court cases – Avrahami vs. Commissioner and Reserve Mech. Corp. v. Commissioner – we now have more insight into what the IRS believes to be the criteria for a bona fide insurance company. As a result, we recommend going through a checklist of sorts to ensure the following regarding your captive:

    • Is the captive created for a non-tax business reason?
    • Is comparable coverage available in the market?
    • Are the policies valid and binding?

    Domicile-related regulations are also changing. Is yours compliant with your current domicile, and have you looked at the new domiciles available? Lastly, it’s imperative to take a look at the Dodd Frank Act, specifically the self-procurement tax to ensure your captive is appropriately aligned.

  6. Are the changes having the effect they’re supposed to?

    You’ve identified new opportunities for your captive, supported proposed changes with data and stakeholder feedback, and developed detailed and holistic plans to move forward. But you’re not done.

    The final step of any refeasibility study is to measure outcomes. Collect data again to see if newly established goals are being met and how the rest of the captive organization has been impacted.

    A great deal of this stage relies on solid industry benchmarks against which to measure current and future captive performance. Furthermore, it’s important that the optimization team takes this data and edits their implementation plan accordingly to keep captive performance on track, making actionable recommendations for staff to follow.

    To execute your plan, turn to expert help.

    These findings should serve as a baseline for measurement going forward. But look for a team of experts ranging from employee benefits, risk management and actuarial services to walk you through the steps and, ultimately, implementation. This is especially important as new risks continue to emerge and evolve; routine maintenance on your captive is important, just like it is on your car!

Local Shakeup: What a Partners & Harvard Pilgrim Merger Could Mean For You

On Friday, May 4th, the local healthcare market was shocked by the news of a possible merger between Partners HealthCare and Harvard Pilgrim Health Care, two of the largest healthcare organizations in the Massachusetts and New England areas. From a regional standpoint, this would throw a large wrench in an already uncertain and increasingly unaffordable healthcare market, whether for good or for bad (which I will get into later).
Healthcare New England

For some background, Partners HealthCare is a Boston-based hospital and physicians network with over 23,000 employees. Partners already owns several large, New England-based healthcare institutions like Brigham and Women’s Hospital, Massachusetts General Hospital (MGH), Neighborhood Health Plan and Mass Eye and Ear. Harvard Pilgrim Health Care, on the other hand, is a leading national health insurance carrier. With over one million members, it has a large footprint in New England

While still merely a possibility, the unknown is causing a certain degree of uneasiness. There are a lot of questions around:

  • Will this survive the antitrust reviews, based on consumer impact and consistency of the two organizations’ missions?
  • Will this make healthcare in New England specifically more expensive?
  • What are the positives a merger could have from a consumer standpoint?
  • Beyond power, what would be the real reason behind the merger? Traditionally, a hospital system and an insurance carrier would have two different, often conflicting goals.
  • What would this mean for the local, independent health systems like Lahey Clinic?

Although it is not possible to know all of these answers, consolidation often means less competition and higher costs.  Whether you’re locally-based or not, you’ll want to stay tuned!

Boston Healthcare Merger

Spring Spotlight: Grace Giannattasio

We know you’ve been missing these, so we’re back and we’re giving you the deets on Grace.

Title: Consulting AnalystSpring Consulting

Joined Spring in: July of 2017, although she’s sometimes still referred to as the “new girl” for some unbeknownst reason.

Professional interests/skills: Grace is an integral part of the Integrated Disability Management (IDM) team. As such she works on leave and absence management projects of varying kinds, like those related to the FMLA or ADA.

Outside-of-work: Grace is always making us jealous of her awesome tan, so it’s no surprise that she spends a lot of time outside (when Boston weather allows – a very small window!). She also enjoys reading and going to the beach (reading at the beach is a favorite activity).

Favorite season: Summer because, obviously. This is the only time she can work on said tan and beach reading.

Favorite flower: Grace went with lavender because it smells nice and is also known for helping you relax and sleep well.

Favorite part about working at Spring: “My favorite part about working at Spring is definitely the team I work with. Everyone is collaborative and supportive and the whole group works really well together.”

If your house was burning down, what non-living thing would you save? Grace would, rightly so, save her great-grandmother’s jewelry. Proud.

 

Don’t Risk Missing These 3 Hot Topics from RIMS

RIMS 2018Each year, the Risk Management Society (RIMS) hosts one of the largest industry events. The annual conference and tradeshow brings together thousands of insurance and risk experts, and for the 11th year in a row, the Spring team was among them. We were happy to take a break from Boston’s not-so-springy weather and head to San Antonio for RIMS 2018.

Over the course of the 3-4 days, I was able to a) meet and greet insurance colleagues, both new and familiar, b) party like a true Texan (in case you thought Risk Managers would make for a dull crowd – you may want to rethink this notion), and c) get a gauge on the most popular industry trends and concerns.

For this writeup, I’m focusing on point C, because between various networking and social events, there was a lot to learn at the RIMS annual conference, and I’d love to share some takeaways. Here are the most buzz-worthy topics, in my opinion.

  1. Cyber & Tech

As it has with conferences and news headlines over the past 5-10 years, technology took center stage at RIMS. However, I’m using “technology” as an umbrella term to represent a range of digitally-centric, Internet of Things (IoT) subjects, such as:

a) Cyber

During Berkshire Hathaway, Inc.’s annual shareholders meeting, Warren Buffett Chairman, President and CEO said, “Insurance is very early in the game in determining how to cover the risk of data breaches, ransomware anCyber RIsk Mitigationd other hacking perils”. He then went on to say that the risk itself is a “very material risk” that didn’t exist 15 years ago one that will get worse. The world of cyber threats and attacks continues to keep risk professionals up at night. From my actuarial perspective, the probability and severity of cyber loss events are becoming better understood, although there still is tremendous uncertainty due to the rapidly changing nature of the risk. The following Cyber sessions were presented at RIMS:

  • In “Are You Prepared for a Cyber Extortion Event?”, audiences were walked through different ransomware threats and a checklist for getting through such an attack.
  • Jason Trahan went into further detail in explaining the “Anatomy of a Cyber Event Claim”, which provided a preparation process for cyber claims as well as an extensive list of possible claims expenses.
  • A representative from Willis Towers Watson highlighted the importance of corporate culture when it comes to combating cyber risk.
  • A woman from The Washington Post Risk Management team led a discussion on the different insurance policies that intersect when it comes to cyber risk, and how to manage these overlaps.
  • Jeffrey Sharer of EY revealed some startling statistics such as: “89% say their cybersecurity function does not fully meet their organization’s needs”.
  • Joon Sung and Kevin Kalinich stressed the importance of recognizing and addressing your third party/vendor cyber exposures, nothing that cyber resilience is not just an internal matter.
  • During “Pay Up or Else: Ransomware Risks”, John Coletti and Anna Ziegler explained the latest trends and scams in the ransomware sphere and offered advice on how to be both proactive and reactive.
  • One session focused on communicating a cyber attack to your C-suite, board of directors, and/or other superiors. Ten best practices were shared, such as: “Have a customer notification plan and procedures in place.”

b) Autonomous Vehicles

In March, a self-driving Uber car killed a pedestrian in Arizona, and an autonomous Tesla vehicle caused another death in California. These two incidents are just a couple of many news headlines involving self-driving cars, which certainly pose a variety of risks. As such, they were discussed on several occasions at this year’s conference.

  • In a session entitled, “Driving Insurance Forward”, Katherine J. Henry provided an overview of how autonomous vehicles are covered, the consequences they can bring and ways to confront this emerging risk.
  • Representatives from Liberty Mutual and Ford Motor Company teamed up to explain the different industries that will be affected by the rise in self-driving cars, from oil to advertising companies. Their presentation spoke to the broader trend of disruption in the automotive industry, pointing out 4 facets to consider: autonomous driving, electrification, connectivity, shared mobility/economy.

c) Social Media & Mobile Apps

Considering the recent Facebook privacy scandal, it was important to look at social media and mobile issues from the perspective of risk management and mitigation.

social media risk

  • Gregory Bangs of XL Catlin spoke to the topic of “Social Engineering”, which can incorporate a range of scams such as vendor impersonation and malware. He explained what these fraudulent activities can look like and their implications for insurance coverage and employee preparedness.
  • In “Swipe Right on Insurance”, Cort T. Malone and Stephanie Hyde discussed the risks and insurance options related to social media platforms and mobile apps, as used by employees. They covered things like harassment, privacy, reputation, business torts, intellectual property and the regulatory environment.

d) Wearables

  • Thomas Ryan highlighted the opportunity a “wearable” device poses from a workers’ compensation coverage standpoint and guided the audience on selecting a wearable vendor for corporate use.
  • Two experts from Modjoul Inc. and Cotton Holdings Inc. explained wearables in detail – why use them, how to use them, how they work with insurance carriers, etc. Through a case study, they also endorsed wearables as an option to keep employees safe and productive.

e) Drones & Other Tech Matters

  • Chris Proudlove of Global Aerospace and Vincent Monastersky of Fox Entertainment Group presented the challenges and opportunities associated with the widespread growth of drone use, both commercially and personally. It turns out, over 75% of drone-related claims were caused by operator error. Further, they outlined coverage types and options.
  • A session on emerging technologies, including smart sensors, wearables, drones and artificial intelligence gave audiences a broad but detailed landscape of how all of this connectivity affects the “risk ecosystem”, and tips on drones business riskhow to prepare for the future.
  • Another discussion, led by Tim Yeates, covered the “Fourth Industrial Revolution” and the benefits and risks of the level of information being shared today. Thought-provoking questions like, “Who do we trust – human intelligence or artificial intelligence?” were posed.
  1. Natural Disasters

In 2017, the U.S. was hit hard with Hurricanes Maria, Harvey and Irma as well as wildfires in California. Outside the U.S., the Caribbean was crushed with those same hurricanes, a devastating earthquake hit Mexico, extreme flooding impacted areas like Bangladesh and Sierra Leone, and areas of China suffered from landslides and typhoons. Unfortunately, this is not an exhaustive list.

As risk professionals we need to look at these occurrences from a different lens, so it was no surprise that the word “catastrophe” was rampant at the RIMS 2018 conference.Catastrophic Loss

  • Stephen Moss explained the anatomy of a catastrophe risk model and pointed out the large protection gap, noting that about 50% of the losses incurred from 2017’s most impactful natural disasters were uninsured.
  • An attorney from McCarter & English, LLP focused on business interruption losses resulting from catastrophic loss, discussing pitfalls that could cause your claims to be undermined as well as best practices for getting coverage.
  • Robert Nusslein of Swiss Re explained parametric natural catastrophe insurance for hurricanes and earthquakes, how it differs from traditional insurance and how it can help fill in gaps.
  • In “The Future of Climate Risk Management”, audiences learned about their company’s climate risks – the size, scale, complexity and reach. Then, the speaker introduced solutions and tools for such risks.
  • James Pierce spoke on “Mother Nature’s Onslaught” and speculated on whether a new norm is needed in combatting natural disasters.
  • One session, “The Sky Fell”, went into further detail on catastrophic claims: common claim mistakes, communication issues between layers of insurance, crisis management tactics, TPA management and more.
  • The CEO and Founder of Orbital Insight, a geospatial analytics company, outlined how technologies like satellite and drone imagery as well as AI and cloud computing can provide insight into catastrophic risk assessments. He even showed audiences imagery showing flood detection for Hurricane Harvey, as one of several illustrations.
  1. Compliance

Compliance is always a key concern in this industry. What changes year to year are the specific areas of compliance focus, some of which are below.

  • Lisa Kerr and Bruce Wineman led a session on multinational program compliance – highlighting regulations, tax law, offshoring and variability as things to look out for.
  • A different presentation focused on Medicare and Medicaid compliance, going over the boatload of associated acronyms, lien compliance, reporting and what to look for in a partner.
  • In “Risk Management, Compliance and Preparedness”, attendees received an overview of SRM and ERM, examples of strategic risk, automation advice and more.

 

If you were able to make it to the RIMS conference this year, I hope this helps you retain they event’s key takeaways. If you couldn’t make it to San Antonio, well, now it’s almost as if you were there!

Please feel free to reach out with any questions, actuarial or otherwise. In the meantime, put RIMS 2019 on your calendar – April 28th – May 1st – in Boston (our backyard). We’re already excited for it!