Navigating the Future of Risk Management

Risk Transfer Programs and Renewals

The LAUSD is largely self-insured and represents the second-largest school district in the nation. It faced challenges before the pandemic began, with most of its students below the poverty line. For some students, the lunch they received during their school day might be their only meal of the day, creating a significant crisis when schools were shut down over the pandemic. Seeing an ultimate need, LAUSD launched a feeding program, offering a meal to anyone in need and providing over 100 million meals in the process. Other parts of their program have provided school supplies, diapers, and COVID-19 testing and vaccinations.

Mirroring most employers, LAUSD has been inundated with requests for reasonable accommodations for a disability, extended remote work opportunities, and vaccine policies. However, the reduction of silos and encouragement of departmental integration helped address these requests, providing more timely resolutions. Their workers compensation program has also adapted quickly through telehealth, outreach to injured workers, and increased efforts to resolve claims through settlements.

Compass Group, a leading food and hospitality company, has felt the effects of the hard market on its insurance program while paying particular attention to cyber during this renewal season. Its strong relationships with technology partners and insurers have proved vital throughout the submission process. Articulating to its brokers how it has specifically invested in technology has also been important during renewals. Noting that everyone is impacted during a cyber event, handling a breach correctly and communicating it across your enterprise can make all the difference. You also want to get ahead of your renewal and make sure that you are not overbuying, as it is likely for hard market trends to continue across 2022.

As a leading provider and distributor of products and services to the healthcare industry, McKesson has seen much of the same with a challenging market after 14 consecutive quarters of pricing increases. Successful management of various implications has come down to strengthening relationships and avoiding silos. It has partnered with brokers and insurers and invested in tools to manage the total cost of risks. Not expecting the return of a soft market anytime soon, better positioning of its risk management program has included the following.

• Network utilization. Work with your risk managers, rely on your market relationships, and have various options to maximize your coverage.
• Analytics use. Using a risk finance optimization study can help visualize a risk profile and draw insight into the pricing for your particular risk. It can also help frame internal dialogue around limits, deductibles, and self-insured layers. McKesson employs captives and has grown it through building out a portfolio of products that strengthen its ability to support the business, including funding high deductibles, quarter share layers with insurers, and taking in its own layers where pricing was not right.
• Loss control risk mitigation investments. This should be included in the overall strategy and details how risk managers can support the company's critical mission while also enabling it to move forward.

Walgreens credits its successful program in part to its relationships with its insurers' underwriters. While price is certainly important during renewal season, trust in partnerships can provide an incredible impact. Analytics also play an important role in driving conversations with senior executives to uncover their views on risk appetite and ensure strategies are aligned when developing your program.

Impact of Social Inflation

Noneconomic factors impacting premiums, like increased litigation and higher jury verdicts, can be associated with anticorporate sentiments and racial inequity movements. This phenomenon is often referred to as social inflation. While insurance premiums continue to rise, there are a few ways to offset some of the losses due to social inflation.

• Safety and loss prevention. Technology can help determine the cause of accidents, thus handling claims accordingly and ultimately avoiding litigation. Training to prevent accidents can also help.
• Claims handling. Some general liability claims can be resolved through early settlements. Typically, leaving these claims to a jury results in a worse outcome versus settling.
• Diversity, equity, and inclusion initiatives. Embracing the community can help understand the mindset of individuals, including clients and employees, and builds a better foundation. Hiring minority-owned law firms can also provide a different perspective that your organization may not have seen before.

Workers Compensation Programs

First and foremost, your workers compensation program should be worker-centric. It is a major tenet of managing risk within your program. Connect with injured workers early and often, and advocate for your employees so that they have a contact in the event of a claim. Successful programs also include a strong focus on medical management and holistic care for the individual and ensure individual business locations are not paying to bring an injured worker back to work.

Utilizing specialists, physical therapists, and rehabilitation facilities can help get an injured worker back to work and potentially settle a claim. Settling those lifetime claims can prevent a high-dollar event from occurring in the future. Presumptions are also changing what occupations have compensable claims, particularly involving COVID-19. The best way to manage claims cost, though, is to understand the data behind your program. Understand what departments are driving the losses and why.