IRMI Update—Issue #152
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
January 10, 2007
In This Issue
Message from the Editor
Colleague,
Last year was an incredible one for IRMI. The Construction Risk Conference
once again filled to capacity with more than 1,500 participants, the number
of CRIS designees rose to nearly 700, our winter and spring seminars were attended
by 650 people, and our family of publication subscribers continued its steady
growth. We are truly blessed by the friendship and support of our tens of thousands
of customers. Thank you very much for your business.
Everyone at IRMI is very excited about the prospects for 2007 because we
have plans to introduce many improvements in our web sites and reference library.
For example, we just intgroduced a new incredibly powerful online version of
our popular Classification Cross-Reference.
This publication has always been popular because it saves agents, CSRs, premium
auditors, and underwriters huge amounts of time when selecting or verifying
the correct classification codes by cross-referencing all the workers compensation,
SIC, NAICS, and general liability classification codes to each other. Our new
online version is even more user-friendly because it allows you to sort, search,
and scan the codes in almost any manner you can think of.
If you already subscribe to the
Classification
Cross-Reference in IRMI Online, be sure to check it out. You're going
to love it. Learn more about it here.
On behalf of my IRMI colleagues, I wish you all the best for happiness, good
health, and prosperity in 2007. We truly appreciate your confidence, friendship,
and support.
Have a great day.
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI
Risk Tip
Manage Your Cost of Risk to Control Price—Every
facet of your organization affects your cost of risk. And it is difficult, at
best, to quantify all aspects of this total cost of risk. For example, if you
manufacture a specialty product and are faced with a recall, how do you value
the loss of your reputation or market share? In contrast, other components of
your total cost of risk are easily quantifiable, such as insurance premiums,
or the downtime of a piece of machinery and the resulting lost production.
Total cost of risk describes the cost of both pure and speculative risk,
and it's synonymous with the price of your risk management program. Your goal
is to structure a risk management program that minimizes your price while protecting
your organization, personnel, property, and net income. You can do this through
a variety of insurance and non-insurance strategies.
- Work with your agent to identify your exposures. This means quantitatively
looking at your hard numbers, while qualitatively reviewing if your business
initiatives are in correlation to your risk management program.
- An estimated 75 percent of commercial insurance expenses are claims
driven. Look to control and reduce this percentage by implementing pre-
and postloss control measures such as developing a comprehensive employee
safety program, return to work program, and anti-fraud campaign.
- Next, focus on transferring and financing the remaining exposures. Consider
how much risk you can afford to assume in-house, how might contractually
transfer risk to third parties, and what portion of the exposures should
be insured.
- Develop a strategic action plan, execute your risk management program,
and stay committed to monitoring and supporting your initiatives will lead
you to your goal: managing your total cost of risk to control your price.
By: John Kuehn, P&C Operations Manager
Zywave, Inc.
Suggest a Risk Tip. Send us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages. Submit your tips. We'll
acknowledge your contribution as we did for John.
What's New in Your IRMI Library
We have recently updated a number of the reference manuals in the IRMI library
and published new issues of The Risk Report and Captive Insurance Company Reports.
To make sure you don't miss any of this new information take 30 seconds to scan
the "What's New" summary page.
For IRMI
Online and Print Subscribers
For SilverPlume
Sage subscribers
New Expert Commentary
There are now over 800 risk management and insurance articles on IRMI.com.
Below you'll find summaries of some recent additions with links to the articles.
NFIP Insurance CE Course Fulfills State Requirements
IRMI is now offering a new online course, "National Flood Insurance Program:
What You Should Know." This course was created in response to FEMA's request
of state insurance regulators to establish minimum training and educational
requirements for all insurance producers who sell flood insurance policies.
A number of states have established a requirement for at least 3 hours of training
on the NFIP program and more are expected to do so. FEMA devised a template
of various provisions it felt were necessary to cover in the course, and IRMI
utilized this template in designing the course. As a result, the course is approved
for at least 3 hours CE credit in all states that require NFIP training, and
it fulfills the flood insurance course requirement as well. To see whether your
state has approved this course, visit here.
Expert Commentator Profile: John Pryor
Since joining the IRMI.com team in 2004, John Pryor has authored 12 articles
on continuous
performance improvement as applied to the insurance industry. He is CEO
of his own independent consulting firm in Bakersfield, California. In 2006 he
retired as co-founder of Kern Insurance Associates, where he continues to serve
on the board of directors. For more information on Mr. Pryor, see his full biography and a list
of his articles.
Your View—Disaster Training
In IRMI Update 151, Jack Gibson asked readers
for their strategies for effective disaster planning and training employees
on their plans. Below are some of the responses we received.
-
Our office has implemented a Business Continuity Plan (BCP) and conducted
extensive testing of the plan on weekends, including live data entry. Each
time we've tested, we learn that there are still many issues that were unforeseen
that cause continual adjustments to our plan. The impetus for this was certain
clients that required us to have a continuity plan, but without full support
from top management our plan would be another binder on the bookshelf. Get
staff buy-in, try to make it fun, and get middle management to continually
think "disaster" with every workflow and procedure.
—Trish Drew, Marketing Manager, Jenkins Athens Insurance
Service, Concord, CA
-
I think many organizations miss opportunities that arise from events
that stress their systems, but are "less than disasters." For example a
nursing home I visited had survived a small fire quite well, evacuating
all the residents for several hours and readjusting for the damage after.
They noted that the process was much easier because the weather was good
and the fire occurred during the day shift with maximum staffing. I urged
them to rethink (while it was fresh) how it would have differed at night
with a foot of snow.
In our area, we have had a number of long power outages, but we could
still access most transportation and shipping, and water supplies were sound.
However, it gave people a great opportunity to consider how they might respond
to one or two more complications in the scenario.
—Kathy Wire, President, Kathryn Wire Risk Strategies,
St. Louis, MO
-
My company has a disaster recovery team, and each department has a representative.
Previously, tests were informal—we had a phone tree, and employees were
called the night before and asked to meet at a different location within
our building the next morning. Those that got the message were rewarded
with coffee and doughnuts at the designated location. Now the system is
automated, and employees are still contacted via telephone and asked to
confirm certain information to insure we've made contact. Results are much
more accurate, and these tests are conducted approximately twice per year.
This communication system would be enacted in the event of a disaster that
affected our workplace.
—Pam Pawelek, Territorial Underwriting Manager, Allstate
Insurance Company, South Barrington, IL
-
Hurricane Katrina provided a huge wake-up call for us. Like many other
companies, our disaster response plans centered largely around our September
11 experience, i.e., establish a control center within the perimeter, pre-established
contracts with hotels for lodging, role assignments for control center coordination,
etc. Many elements of this plan were totally inapplicable to Katrina response.
Reminders regarding this dose of humility serve as great motivators for
ongoing investment in planning, creative exercises to address multiple worst-case
scenarios, etc. Interestingly, as we currently prepare to provide psychological
first aid for employers during pandemic flu conditions, a synthesis of our
other plans is helpful.
—Bob VandePol, President, Crisis Care Network, Grandville,
MI
-
One way to reduce some confusion from the top down is to have a central
preparedness theme that individuals can relate to and participate in on
their level as well as the corporate level. One such tool that has found
considerable acceptance here and across the country is the use of ICE (In
Case of Emergency). It no longer represents just simply programming your
cell phone with contact numbers but the whole concept of being prepared.
Use of the highly recognizable ICE icon and preparedness tools can be understood
at all levels and encompass all aspects of disaster preparedness. The CNY
Public Safety Training Center (PSTC) is coordinating efforts to use the
publicly available ICE tools to develop preparedness training for the community.
NYCM has provided this free access for about a year now and large groups
and hospitals have been the main users as has some CERT groups....bottom
line, getting people to buy into the disaster preparedness process has to
have some rallying point—ICE might be that tool.
—Mark Balduzzi, Safety Manager, New York Compensation
Managers, Inc., Syracuse, NY
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