Tag Archives: business insurance

Thought Leader in Action: Chris Mandel

Back in the ’70s, Chris Mandel quite literally stumbled into insurance, as a result of a racketball injury at Virginia Polytech Institute when he suffered a detached retina. After two months of lying flat in a hospital bed, he had to forego his post-graduate job in retail management and start looking for employment in D.C. — he began an unexpected career in managing claims at Liberty Mutual.

Mandel excelled in his job but realized a career in claims management wasn’t what he wanted. So, in the early ’80s, he moved to Marsh brokerage for five years and set up a risk management program for an AT&T spinoff that evolved into what is now Verizon. He then left Marsh to be Verizon’s first risk manager — building its program from scratch.

By the ’90s, he landed in several top corporate risk management positions at the American Red Cross, Pepsico/KFC and Triton Global Restaurants (YUM Brands). Mandel also began his six-year volunteer stint as the president of RIMS (1998-2004), after serving in many different key RIMS leadership roles. He earned an MBA in finance from George Mason University along the way.

By 2001, Mandel was on several advisory boards (i.e. Zurich, AIG, FM Global and Liberty Mutual), before making a career and geographic move to the USAA Group in San Antonio. There, he built an enterprise risk management (ERM) program because he saw a “broken traditional approach” to risk management. After nearly 10 years of developing an ERM program lauded in the industry (including by AM Best, Moody’s and S&P), Mandel was promoted at USAA to head of enterprise risk management, as well as president and vice chair of Enterprise Indemnity, a USAA commercial insurance subsidiary. While at USAA, he was recognized as Business Insurance’s Risk Manager of the Year (2004).

His dream was to be a corporate chief risk officer, but he saw that title more often going to “quants,” (like actuaries), rather than risk professionals. So, as a well-known and sought-out industry spokesperson and visionary, Mandel moved on from USAA in 2010 to found a Nashville-based risk management consulting group, then-called rPM3 Solutions, which holds a patent on a game-changing enterprise risk measurement methodology. Then, in 2013, he moved to Sedgwick as a senior vice president. He is responsible for conducting scholarly research, driving innovation, managing industry relations and forging new business partnerships.

In early 2016, he was appointed director of the newly formed Sedgwick Institute, which is an extension of the firm’s commitment to delivering innovative business solutions to Sedgwick’s clients and business partners — as well as the whole insurance industry. In 2016, Mandel was awarded RIMS’ distinguished Goodell Award (see video below).

When asked what he sees as critical strengths for someone entering risk management, Mandel said: “I try to hire managers who can think strategically and who can convince C-suiters and boards of the value of being resilient in addressing a company’s risk profile. Progressive leaders understand the strategy to leverage risk for value.”

A holistic approach, as he describes it, “seeks a vantage point that can assess both the upside and downside of all foreseeable risks.” He believes true innovation evolves from a company’s risk-taking. “It’s not so much identifying what or when adversity is going to happen, it’s how a company responds to risk in order to minimize disruption,” he said.

In assessing his personal strengths and accomplishments, Mandel feels that a person needs to be “emotionally intelligent” — able to adapt to different people in organizations. He doesn’t consider himself a people person but says he learned to be one the hard way. He advises: “Team spirit is putting other people first and helping them succeed. … Admit your failures and build trustworthiness from your mistakes.”

Besides writing, teaching, speaking and (still) playing racketball, he serves an active role as an advisory board member of Insurance Thought Leadership. He and his wife also serve in church ministries, where he often plays guitar alongside his grown children, who are ordained ministers. Mandel said, “I’m blessed by a Creator who’s had my back.”

10 Reasons to Innovate — NOW!

We’re busy gearing up for the annual SMA Summit, where innovation will take center stage. In the spirit of the summit, I started to gather some inescapable facts that could inspire us all to innovate and improve – to truly become the Next-Gen Insurer. But, rather than peddle the same old innovation benefits and business rationale, I thought it would be refreshing to share 10 facts about change and innovation that will directly affect insurance and that may inspire you, surprise you or reinforce why you should be continuously improving by reimagining and reinventing the business of insurance!

  1. Younger generations like Millennials and Generation Z are going to be the biggest consumers in the market in five to 10 years. Make sure you can reach them. They will not use paper applications or have a face-to-face meeting, but they will be searching for options from their phones and cars. A typical mobile user checks her phone more than 100 times a day (Marketing to Millennials).
  2. Innovative workplaces attract the best and brightest talent. Today, word of a stale, outdated work environment spreads fast. Don’t be one of those employers. Invest in talent, but also invest in your infrastructure and creating an innovative workplace (How Great Companies Attract Top Talent).
  3. A majority of insurers (65%) have focused on innovation for five years or less. You aren’t alone, and, surprisingly, you probably aren’t far behind. With the right focus, you can make remarkable strides in a short amount of time (SMA Research: Innovation in Insurance: Expanding Focus and Growing Momentum).
  4. 80% of all crowdsourcing is done by small business and start-ups. Embrace the crowd! It is often the most cost-effective way to generate ideas. Big business loves the crowd, too. Just look at McDonald’s crowdsourced burger or Apple’s crowdsourced mapping tools (Crowdsourcing: Great For Your Business).
  5. The amount of stored data doubles every 24 months. The U.S. Census estimates that the population has grown more than 27% in the last two decades. Changing demographics, aging citizens and diverse populations are changing the face of data accessible to insurers. To stay on top of the situation, you need a data and analytics strategy that makes the most of the new data available (Vernon Turner).
  6. Wearable devices have grown 200% every month since 2012. This doesn’t mean that wearables won’t eventually be replaced by something else or evolve. It does mean that wearables are growing so fast that it makes sense to try to tap into some of that innovation and apply it to your own organization, your processes or even your products (2013 Internet Trends).
  7. It is six to seven times more expensive to acquire new customers than it is to keep existing ones. One risk of not innovating is that you may start losing customers who can find better, easier-to-use insurance options. Studying consumer behavior might be the best indicator of market trends and areas to innovate. Don’t lose renewals because you haven’t kept up with market demands (15 Statistics That Should Change the Business World But Haven’t).
  8. More than 40% of the companies at the top of the Fortune 500 list in 2000 were not on the list in 2010. The digital age shuttered many long-standing businesses. Some experts think that, in the next decade, businesses that do not embrace innovation or adapt to market demands will suffer the same fate. Insurance is not immune to this phenomenon. Today, everything is connected (Sorry We’re Closed: The Rise of Digital Darwinism).
  9. Just 10% of cars were connected to the internet in 2012, but by 2020 it is estimated that 90% will be. It is amazing to think of how quickly we are witnessing innovation expand. What was once an outlier is now a standard (Amazing Facts Everyone Should Know About the Internet of Things).
  10. Internet of Things (IoT) technology has the potential to add $10 to $15 trillion to global GDP over the next 20 years. Like the connected car, IoT will eventually become standard. What insurers do with the new data available and the amazing growth potential will ultimately make or break them (Internet of Things Market Statistics-2015).

These facts are inescapable. Not only is innovation here, but the statistics are astounding. The time to embrace innovation and become the Next-Generation Insurer is now.

A How-To on Nurse Case Management

Nurse case management (NCM) has a powerful impact on workers’ compensation claim cost and outcome. Positive results of nurse involvement have long been anecdotally accepted, but widespread evidence of nurse impact has not emerged, and objective proof of value is still missing. Several factors account for this.

Inconsistent Referrals

For one thing, NCMs are usually considered an adjunct to the claims process, called upon in sticky situations. Too often, referrals to nurses is a last resort rather than an integral and standardized part of claim management. When claims adjusters have the sole responsibility to refer to NCMs, it can be subjective, uneven and therefore unmeasurable.

Besides receiving referrals for sundry issues at different points in the course of the claim, nurses have not clearly articulated their case management interventions. Claims adjusters sometimes misunderstand the nurses’ approach. However, consistent referrals and standardized procedures can bring about major change.

Consistent referrals

Referrals to NCM should be made based on specific medical conditions in claims such as comorbidity like diabetes or problematic injuries like low back strains that tend to morph into complexity and high cost. Specific risky situations found in claims data should automatically trigger NCM notification.

A recent article published in Business Insurance, “Nurses a linchpin in reducing workers’ comp costs,” points out how Liberty Mutual has developed a tool that notifies claims adjusters of cases that would most benefit from a nurse’s involvement. Decision burdens for claims adjusters are eliminated. Referrals to NCM are automatic based on specific high-risk situations found in the claim. Inconsistency disappears, and several benefits evolve from this approach.

Process standardization

An operational process can be dissected and categorized, thereby gaining better understanding of its components and relative importance. Review the data to determine which medical conditions in claims result in longer disability, lower rates of return to work and, of course, higher costs. Select the conditions in claims that should activate an NCM referral.

An example is a mental health diagnosis appearing in the data well into the claim process. A mental health diagnosis appearing during the claim for a physical injury such as a low back strain is a strong indicator of trouble. The injured worker is not progressing toward recovery. However, the only way to know this diagnosis has occurred in a claim is to electronically monitor claims on a continuous basis.

Data monitoring

To identify problematic medical situations in claims and intervene early enough to affect outcome, the data should be monitored continually. Clearly, this is an electronic, not a human function. When the data in a claim matches a select indicator, an automatic notice is sent to the appropriate person.

Standardized procedures

Catching high-risk conditions in claims is just the first step. NCM procedures must be established to guide responses to each situation triggered. Standardized procedures should describe what the NCM should evaluate and advise possible interventions. Such processes not only explain the NCM contribution, they assist in documentation and are the basis for defining value.

Measuring value

NCM has been under-appreciated in the industry because measuring apples-to-apples cost benefit has been impractical. When claims adjusters decide about referring to NCMs and individual nurses create their own methodology, variables are endless and little is measurable.

In contrast to the subjective approach, specific conditions in claims found through continuous data monitoring can automatically trigger a referral to the NCM. In response, the nurse is guided by the standard procedures of the organization. When referrals are based on specific conditions in claims and response procedures are delineated, outcomes can be analyzed and objectively scored.

What’s the Cost of the Polar Vortex?

Long-range forecasts don’t all agree on the weather or how we label it, but another winter of extreme cold may be upon much of the nation. I’m personally convinced one is because even where I live, in Tennessee, my dog, Max, is vocally rejecting his outdoor house at night — and that doesn’t usually happen until January. While Max and I, having lived in the South all our lives, may be wimps when it comes to the cold, conditions are clearly calling for an alternate plan. And that brings me to today’s topic: From a workers’ comp and safety perspective, did last year’s polar vortex provide any important lessons?

Slips and falls

Slips, trips and falls, according to OSHA, contribute to 15% of all workplace fatalities — second only to motor vehicle accidents. WorkCompWire recently reported that nearly one-third of all workers’ comp claims in the Midwest last year were because of slips and falls on ice and snow, doubling the rate of the previous year.

This data, from the Accident Fund and United Heartland, represents only five states, so I don’t want to say we have a national trend — but I am eager to see 2013-2014 data from the Bureau of Labor Statistics or other major sources. Would it be surprising if percentages were even higher in areas where extreme winter weather is rare?

While it will be another year before the first “polar vortex” slips and falls from late 2013 show up on experience mods, I thought it would be interesting to set up a few scenarios and with the help of ModMaster illustrate how an increase in these accidents might affect an employer’s experience mod and premium.

The cost in terms of mod points – and increased premium

For the following scenarios, I assumed an average slip and fall on the ice would cost $22,000, which is in range of varied statistics I found on the web. Of course, an actual slip-and-fall expense could vary from very little to tens of thousands of dollars, depending on complications and time away from work. As you see below, whether the loss is kept as a medical-only loss or involves indemnity makes quite a difference – although, in actuality, an indemnity claim is probably going to be quite a bit higher than $22,000. As a reminder, in most states, medical-only losses are reduced by 70% because of the experience rating adjustment (ERA) rule of the experience rating formula.

For the first scenario, let’s imagine a relatively small machine shop with about $1.5 million in annual payroll. This company’s minimum mod is 0.79, and the manual premium is $75,000. As you can see below, a single average slip and fall would increase the mod by 8 points (on a scale of 100) and increase the premium by 10% – unless the claim is kept medical-only, in which case the impact would be only 3 mod points and about 3% of the premium.

Polar1

In a second scenario, let’s imagine another small company, one that consists of office workers. Because this company’s expected losses (not shown) are much less than in the first scenario, the company’s minimum mod isn’t as low as our first example. Furthermore, the impact of a single slip and fall is much more significant in terms of mod points. However, this company’s manual premium is only $5,000 — so while the premium impact of the slip and fall may not seem too significant in dollars, the percentage increase of their premium is notable.

Polar2

Finally, I wanted to see what kind of impact  several slips and falls might have on a larger company. My mind is already on holiday baking, so let’s imagine a cookie factory of several hundred employees and about $20 million in annual payroll. Then let’s imagine that, during a particularly bad patch of weather, seven people slip and fall in the parking lot and three more slip and fall in an entryway that has become wet with melting ice. For this company, which has a minimum mod of 0.43 and a manual premium of $500,000, those 10 slips are still a hefty impact if they’re not held to type 6.

Polar3

For the examples above, I’ve depicted companies whose workers are not primarily assigned to environmentally challenging conditions. Imagine the spike in injuries and cost for companies whose employees are exposed to cold stress.

‘The tip of the iceberg’

Slips and falls certainly aren’t the only winter issue. Workers’ comp and insurance news and blogs are populated with lists and stories of all types. Consider just a couple:

1.  A recent story in Business Insurance concerns an employee injured when her employer gave her a ride in the floor of a company van during a snowstorm. While the employer was clearly trying to help out its employees, this employee is due benefits, a NY court ruled, because she was still on the clock, and the employer “took responsibility for the inherent risks of transporting its employees from the worksite.”

2.  Although it’s not mentioned as a weather-related issue, it’s easy     to imagine that a situation like this wet floor case could have developed because of rain or snow. The moral of this particular story? A “wet floor” sign is a safety device that an employer must ensure is utilized, not just made available to custodians.

Regardless of the cause of any injury, a popular analogy in risk management is that the cost of workers’ compensation insurance is just the “tip of the iceberg.” In addition to direct insurance, medical and indemnity costs, the full costs include administrative expenses, potentially significant impacts to a company’s productivity and the injured employee’s overall well-being. By the most conservative estimates, an average slip of $22,000 may actually cost twice that — and by some estimates may approach $100,000 in total costs.

Summary

As the examples above show, the experience mod and cost impact of winter-related accidents are sure to vary considerably from one accident and one company to the next. Regardless of exact cost, the reported uptick in slips and falls on ice and snow should serve as a flare on a snowy roadside, reminding us that every company, regardless of its size or geographic location or the type of work it does, needs some level of preparation for extreme weather in terms of policy, operations and equipment. (Broker Briefcase is a good resource to help.)

Even before I read the news about the increase in Midwestern slips and falls, a prevalence of winter-related slips and falls had stood out to me in loss runs that I occasionally see in the process of assisting clients. Have you seen evidence of this, as well? How are you helping your client or company understand the potential cost of just one winter weather loss, and to prepare as much as possible for avoiding or mitigating that loss?

I’d love to hear your thoughts in the comments below.