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Business and Employee Safety During Crisis Explored at RIMS 2018

SAN ANTONIO – Emergency preparedness and action plans amid violent crises were explored during educational sessions at RIMS 2018 here. On Monday and Tuesday, experts discussed ways businesses can prepare for active shooter events and kidnapping crises. Experts agreed that in such events, lives, operations, reputation and finances are all at stake.

Some highlights from the sessions:

Kidnapped! A Crisis Simulation Exercise
Bill Laurence, head of crisis management at S-RM offered a kidnap simulation for a well-attended session on Monday. Laurence provided a scenario, asking the audience to assume a collective role as decision-makers of a fictitious, billion-dollar coffee company that has an executive abducted in Mexico. The group’s assignment was to create a crisis management team and decide who the communicator would be, how they would respond to threats and what information to relay to their insurance provider, among other critical actions.

“The first 24 hours are always the most critical during a kidnapping or ransom scenario,” Laurence said.

The simulation included real-life audio and video examples of terrifying ransom-demanding calls. The team learned that the kidnapper has typically planned the abduction in advance and always has control of the situation – beginning with communication. “For that reason alone, you cannot speed up the process,” Laurence said.

And although things may seem dire, he explained ways to glean information – and feel somewhat positive – even after a brief phone call. “We all react differently to pressure,” he said. “But avoid speculation and always prepare for the next call.”

Read more about kidnapping in a Q&A with the session’s co-host, Denise Balan, senior vice president and head of U.S. kidnap & ransom at XL Catlin, on page 9 in Tuesday’s Show Daily.

Active Threat and Workplace Violence on Campus: Preparedness, Response and Recovery
Craig McAllister, Cornell University’s director of risk management and insurance, opened a session on Tuesday with a discussion of duty of care and the obligation to the campus or work environment.

He pointed out that, in early January, the National Fire Protection Association (NFPA) processed its NFPA 3000 Standard as a provisional one to streamline the program elements necessary for organizing, managing, and sustaining an active shooter and/or hostile event response program. The standard gained even more input following the Marjory Stoneman Douglas High School in Parkland, Florida, on Feb. 14 in an effort to reduce or eliminate the risks, effect, and impact on an organization or community affected by these events

Paul Mills, global kidnap prevention manager at AIG, followed with a segment addressing best practices for violent incident preparation and response. He discussed response and resilience training for employees who need enhanced preparedness with the rise of violence against soft targets.

He noted that advances in technology often are putting people in harm’s way by default. “People are distracted to the point where they are unaware of the threats they face. It’s also delaying and inhibiting their response times,” he said. “Without even realizing it, they often portray victim-like behavior.”

Kendell Moore, senior vice president at the Abernathy MacGregor Group, delved into the key crisis management sources of an organization’s response support, both internally and externally. She used a mass shooting that occurred inside a local business in the western United States (that is also part of a major American chain) as an example of an entity that needed to enact its crisis communication plan immediately after the attack.

Moore offered some crisis communication principles:

  • Media is a conduit, not an audience. “The media needs to catch up to the actions of the business.”
  • Speak directly to the impacted. “It is most important to communicate with victims, loved ones, the community and those who are directly affected.”
  • Take action, not credit. “No statement, no matter how eloquent, can substitute for doing the right thing.”
  • Communicate what matters when it matters. ““What is said first must stand the test of time. So announce nothing and predict nothing that isn’t solid and certain.”
  • Build relationships in the community. ““Work alongside local law enforcement, government officials and those who know the community best.”
  • Listen to people’s needs and requests. “Ask what people need, rather than telling them what you think they need.”

P&C Rates Continue Upward Trend

The U.S. property and casualty industry continues to show rate increases, with a first quarter composite rate of plus 2%, according to MarketScout. The increase is in all lines except workers compensation, which had a rate decrease of 2%. The trend follows a 2% increase in the fourth quarter of 2017.

By coverage classification, business interruption, inland marine and professional lines all raised rates 1% higher than in the last quarter of 2017. Only EPLI rates moderated.
By account size, rates for medium accounts ($25,001 to $250,000 premium) increased from plus 2% in the final quarter of 2017 to plus 3% in the first quarter of 2018.
By industry group, service contractors, public entities, and energy accounts were assessed larger rate increases in the first quarter of 2018 than in last quarter of 2017. Transportation accounts had a quarter-over-quarter price decrease from plus 5 to plus 4%.
Richard Kerr, chief executive officer of MarketScout noted, “Automobile and transportation exposures continued to experience the greatest rate increases due to increasing expenses and adverse claim development. Insurers are struggling with this segment of our industry. Part of the problem is actual underwriting results, part is expense ratios, and in our view, a larger part is the uncertainty of the long-term prospects for the auto insurance industry.”

He noted that the questionable future of auto insurance could be impacting insurers’ willingness to invest in new safety concepts, pricing models and distribution alternatives. “Autonomous vehicles are going to change the auto insurance industry forever. Many tech firms are working hard to deploy new insurance alternatives, which reflect the lower claims frequency and severity anticipated by driverless or driver assisted trucking exposures. Traditional auto insurer opportunities will shrink unless they adapt their business model to get in the middle of the autonomous vehicle parade,” Kerr said.

 

The Planet’s Plastic Garbage Problem

A giant island composed of plastic waste thrice the size of France is floating in the Pacific Ocean. The Great Pacific Garbage Patch (GPGP) contains 1.

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8 trillion pieces of plastic weighing 80,000 metric tons. It is located between Hawaii and California, which has the distinction of being the world’s largest accumulation zone for ocean plastics because it just happens to be where multiple sea currents meet and where the (mostly) plastic mass churns.

The GPGP was on Risk Management Monitor’s radar back in 2014 (and prior to that, as well) and even then, it was already considered one of the costliest man-made disasters in history. But new developments from the Ocean Cleanup Foundation (OCF) confirmed that the buoyant junk heap exceeds earlier projections of its size and scope. According to the OCF, the newly released estimates are four to 16 times higher than previously expected for the GPGP’s overall size. 92% of the mass is represented by larger objects; while only 8% of the mass is contained in microplastics, defined as pieces smaller than a quarter-inch in size.

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“We were surprised by the amount of large plastic objects we encountered,” said Dr. Julia Reisser, chief scientist of the expeditions. “We used to think most of the debris consists of small fragments, but this new analysis shines a new light on the scope of the debris.”

The OCF has removal plans in motion and scientists said this situation also highlights the need for stronger recycling efforts.

Boyan Slat, founder of the OCF and co-author of the study, elaborated on the relevance of the findings for his organization’s cleanup plans: “To be able to solve a problem, we believe it is essential to first understand it. These results provide us with key data to develop and test our cleanup technology, but it also underlines the urgency of dealing with the plastic pollution problem. Since the results indicate that the amount of hazardous microplastics is set to increase more than tenfold if left to fragment, the time to start is now.”

OCF, which is privately funded, plans to remove the plastic heap using an autonomous floating system (composed of high-density polyethylene, a durable and recyclable material) designed to capture small plastic particles less than a half-inch and as large as tens of yards wide. Cleanup is expected to begin in the next six months and OCF models indicate that half of the GPGP can be removed by 2023. According to its website:

By removing the plastic while most of it is still large, we prevent it from breaking down into dangerous microplastics. Combining the cleanup with source reduction on land paves the road towards a plastic-free ocean in 2050.

Unfortunately, such a huge environmental risk is not limited to the Pacific.

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Last month, a study released in Frontiers in Marine Science found lots of microplastics in the fish and marine life of the North Atlantic Ocean:

Using forensic methods, this study assessed microplastic frequency of occurrence in mesopelagic fish gut contents from a warm-core eddy in the Northwest Atlantic. We detected a significantly higher occurrence rate of 73% in contrast to previous studies reporting occurrence rates of 11% in the North Atlantic and 9% and 35% in the North Pacific Gyre regions.

In a recent USA Today article, one Frontiers study author reminded that just because these fish may be out of our physical reach, our waste knows no bounds.

“These seemingly remote fishes located thousands of kilometers (miles) from land and 600 meters (2,000 feet) down in our ocean are not isolated from our pollution,” said study co-author Tom Doyle, a marine biologist at the National University of Ireland in Galway.

5 Tips for Choosing the Right TPA

While many risk managers have had excellent experience with their third party administrators (TPAs), others have been disappointed. Unfortunately, when the match isn’t right, the risk manager may be left with poor claim outcomes, higher claims and insurance costs, and difficulty identifying issues and making corrections.

The key to successful relationships often hinges on the risk manager’s ability to set  priorities and evaluate prospective TPAs and other claim service providers accordingly, based on objective, outcome-based metrics. Here are five tips for choosing TPA and claim service providers that are best suited to meet your needs:

  1. Look beyond household names. Too often, risk managers narrow their options based on name recognition.
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    While this might appear to be a safe choice, it may not yield the best fit. And that can lead to higher costs, poor outcomes, and ineffective relationships. Even with name-brand providers, mismatches might exist between the risk professional’s priorities and the service provider’s capabilities and operating cultures of the two organizations, available industry expertise, and resources such as risk management information systems.

  2. Articulate your needs and priorities. An effective relationship starts with knowing the specific requirements of your enterprise and setting relevant priorities. Are you in an industry with unique risks? Do you have a backlog of complex and legacy claims? Is your geographic footprint local, regional or national? Do you have significant operations in states with challenging regulatory frameworks? Do you need a provider with a strong reputation for closing difficult claims or managing litigation? How valuable are the TPA’s data management resources or risk management information system to your program? What’s your claims volume? Conduct a careful assessment of your needs, establish priorities, and create a request for proposal and related scorecard for evaluating candidates.
  3. Check how closely the TPA’s capabilities and resources match your needs. Areas you might examine include: staffing and account management, geographic locations, adjuster case load, pricing structure, reserving practices, quality assurance and training, MMSEA (Medicare, Medicaid and SCHIP Extension Act of 2007) reporting, litigation and subrogation management, managed care, data handling and reporting capabilities, and transition planning.
  4. As practical, insist on outcome-based metrics and use them to compare candidates. When you break it down, the fees charged by claim service providers represent only a small percentage of claim costs. Whenever possible, try to obtain metrics on actual claim outcomes rather than process. Analyze time and cost of various types of claim closures and percentages over time that might apply to your organization, check average claim duration and costs, and examine these results by state, your industry sector and other relevant breakouts.
  5. Know which adjusters will be assigned to your program. They’re the gatekeepers who will make a big difference in your results. So, be sure you know who the adjusters will be on your account. If your largest claims typically demand experienced adjusters with proven track records make sure that’s what you’ll be getting. Find out about their adjuster turnover rates. While some attrition might be expected, you want to avoid situations where you’re constantly re-educating adjusters to get up to speed—especially on complex and legacy claims. Try to ascertain whether their adjusters fit your culture, claims handling approach and priorities.
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Once you make your TPA selection, evaluate their performance on a regular basis. Track the TPA’s results against what you anticipated based on the metrics they provided in response to your request for proposal (RFP).

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By adhering to an objective selection process, including making sure the TPA’s team and capabilities are aligned with your priorities, you’ll be in the best position to get the results you want.