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MARK GREGSON . 3 Critical Risk Management Issues: Workers Compensation Affordable Health Care Act Professional Liability. Gallagher |. Mark S. Gregson. Area Senior Vice President .
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MARK GREGSON 3 Critical Risk Management Issues: Workers Compensation Affordable Health Care Act Professional Liability Gallagher |
Mark S. Gregson Area Senior Vice President Mark S. Gregson, CIC has worked in the insurance industry for more than 30 years. The combination of Mark’s senior management and large account brokerage experience provides Arthur J. Gallagher clients state of the art risk management solutions. He has extensive experience in large middle market and national market accounts. He also has commercial claims and insurance company management experience. This expertise provides the foundation to design risk management programs that effectively achieve the lowest net cost while reducing the client’s exposure to catastrophic loss. Prior to joining Arthur J. Gallagher Mark was the Senior Vice President and General Manager for at Liberty Mutual Insurance Company and the Senior Executive responsible for the Helmsman Insurance Agency. He had countrywide responsibility for over $1 billion in client revenue focusing on of client management services and new account development. Mark is a graduate of the State University of New York at Cortland and is a Certified Insurance Consultant. He currently lives and Charlotte, NC and has three children. Gallagher | Page | 2
About Arthur J. Gallagher Here’s a quick look at the company. • Founded in 1927 by Arthur J. Gallagher, one of the pioneers of risk management. • From one office in Chicago, AJG has grown to 250 offices in nine countries with revenues over $3billionand $30 billion in gross written premium. • Publicly traded (NYSE:AJG) industry leader still run by its founding family—yet decidedly not run like a family business. Instead, we’re a company with over 14,000 family members. • Since 2002, the company has had an annual growth rate of about 10%. • Arthur J. Gallagher & Co. has operating divisions in the U.S. and abroad which specialize in retail brokerage operations, benefits & HR consulting, third party administration & claims processing, and wholesale distribution. • We’ve built a vast global carrier network with strategic partners in more than 115 countries that give our clients superior flexibility in coverage options and solution variables. Gallagher | Page | 3
About Arthur J. Gallagher “Growth oriented and performance driven to meet our clients needs” • 4th largest broker in the U.S. • Rated “excellent” by Greenwich for Customer Service. • Ranked one of the World’s most ethical companies by Ethispere. 2012 & 2013. • Gallagher Bassett - is the largest TPA worldwide. • G.B. rated “Best TPA” by Business Insurance. • Artex Risk Solutions – is a wholly owned by AJG providing captive solutions. • Risk Placement Solutions – is a wholly owed by AJG providing wholesale and excess solutions. Gallagher |Construction Page | 4
About Arthur J. Gallagher Our Niche Focus Supporting your business with what it needs to grow Why partner with Gallagher Construction? Construction: The Gallagher Way Construction is the backbone of America. You have specific requirements. We understand. We're Gallagher Construction. Our mission, as your partner and as an industry leader in providing construction insurance and risk management services, is integral to your marketplace success and profitability. Count on Gallagher Construction to provide you, and your operation, with the highest level of customer service and leadership. That's The Gallagher Way Working together, we can develop innovative solutions and services that are uniquely tailored to your operation in the Construction Industry. • Designed for: • General Contractors • Specialty Trade Contractors • Heavy Commercial • Utility Contractors • Street & Road Contractors • Concrete Contractors Our Areas of Expertise Include: Environmental Liability Pollution Liability Professional Liability Group Health & Pension Plans Captives & Alternative Risk Commercial Property Insurance Workers Compensation OCIP/CCIP Programs Aviation Contractors Equipment Builders Risk Fidelity & Fiduciary Umbrella & Excess Bonding Programs Automobile Gallagher |Construction Page | 5
Managing through a Hardening Market “WORKERS COMPENSATION”
Historically hard markets last 3 years… 1975-78 1984-87 2000-03 (Rate) 2012 expected growth 5.8% (Year) *2011 and 2012 figures are A.M. Best Estimates Shaded areas denote “hard market” periods Sources: A.M. Best (historical and forecast), ISO, Insurance Information Institute.
Workers Compensation Combined Ratio: 1994–2012F Workers Comp Underwriting Results Are Deteriorating Markedly and the Worst They Have Been in a Decade Sources: A.M. Best ; Insurance Information Institute.
NCCI Experience Modifications Changes Currently $5,000 is known as the primary / excess split point. Primary losses get full weight vs Excess losses receive only partial weighting. SPLIT POINT CHANGES • Year One (2013) – increased to $10,000 • Year Two (2014) – increased to $13,500 • Year Three (2015) – increased to $15,000 plus two years of inflation adjustment (rounded to the nearest $500) • Split Point adjustments are based on countrywide vs. state data
Key Strategies • Tactical Marketing • Risk Transfer vs. Risk Assumption • Alternative Risk Options i.e. captive market • Active Service Plan – Loss Control / Claims • Benchmarking and Metrics Management
Compliance Annual Planning Guide Annual Planning Guide identifies health and welfare plan requirements and provides easy-to-follow action steps
Compliance Communications • Healthcare Reform Update • Directions Newsletter • Technical Bulletin • Webinars
General Liability Basics - Legally obligated to pay damages because of “bodily injury” or “property damage” • Right and duty to defend the insured against any “suit” seeking those damages. • Occurrence Policy. • Premium based on revenues,values and scope of services • Auditable
Professional Liability Basics - Responds to third party claims alleging financial loss, BI and PD caused by the insured’s professional services. • Provides coverage for the rendering of or failure to render, professional services - Coverage economic loss without any BI or PD. - Claims Made Trigger. - Premium based on revenues, values and scope of services - Professionals can be held personally liable. - Not auditable
General vs. Professional • Your Work or your product • Expected or Intended • Pollution • Care Custody and Control • Defective, deficient, inadequate or dangerous • Impaired property • Construction Managers errors or omissions
E&O Coverage Enhancements - Pre Claims Assistance - Disciplinary Proceedings - Pollution Coverage - Technology and Media Services Coverage - Modified Hammer Clause - Crisis Management Coverage - Joint Ventures Included - Design Build Coverage - Innocent Insured Language - Punitive Damages - Construction Management Coverage - Personal Injury Coverage
Exposures and Origin of Professional Claims - Design error – in house or sub-consultant - Negligent hiring of subcontractors and sub-consultants - Shop drawings - Change Orders - Code compliance - Value engineering - Cost overruns/ Time delay - Shoring and Reshoring
Potential Coverage Enhancements • Pre Claims Assistance • Disciplinary Proceedings • Pollution Coverage • Technology and Media Services Coverage • Modified Hammer Clause • Crisis Management Coverage • Joint Ventures Included • Design Build Coverage • Innocent Insured Language • Punitive Damages • Construction Management Coverage • Personal Injury Coverage
E&O Claims Examples • Construction delay on a $90 million hotel project – allegation was contractor failed to properly coordinate and schedule the work. $1.5 million was paid in addition to a very expensive defense (400,000). • Construction company had agreed by contract to “supervise construction and safety programs.” Injured worker (subcontractor) sued construction company and was awarded $200,000 in addition to the workers compensation award.
E&O Claims Examples • Contractor failed to adhere to change order provisions in client contract. Failure to manage and coordinate resulted in delays and contingent business interruption damages in the amount of $570,000. • Contractor designed and built ground floor slab. Approximately one year after completion cracks appeared. After extensive research it was determined that the slab was under designed for the equipment resulting in a $600,000 loss.
