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Break The Bottlenecks With Business Insurance

The Harvard Business Review recently published an article titled “Break Your Industry’s Bottlenecks”. The concept being that to create a successful business “you have to break the rules and overturn the received wisdom about how things work.”

This could not be truer when it comes to the purchase of business insurance, which is a bottleneck for businesses and has been done the same old way since the Stone Age.

Two important items stood out:

When business as usual is set aside it significantly reduces cost, and

Outdated purchase is one of the five types of bottlenecks mentioned in the article

Premier Risk Management has also found these two items to be true. Too often the executive responsible for insurance has many responsibilities and business as usual is easy. Resource constraints force executives to stay the course, in turn abandoning meaningful savings opportunities. Companies often assume their broker is the only resource necessary. The executive has done it this way since he/she started in business, did it this way in their old company and this way in their new company. We can’t forget… they have been with the same broker for over 10 years.

Challenge the Business Insurance Status Quo

When companies and executives challenge conventional methods they will benefit and discover what they didn’t know … competition is a healthy alternative! Outsourced Risk Management helps remove the frustration and is an innovative way to provide expertise not otherwise available.

The Risk You Don’t Know Can Hurt Your Biz

Tom Bullen speaks on behalf of Premier Risk Management now part of the risk advisory arm of AETHOS Consulting Group in the Jennings Wire podcast.

Tom Bullen is with Premier Risk Management, the risk management advisory arm of AETHOS Consulting Group, a hospitality focused executive search and human capital services firm. AETHOS speaks with hospitality companies around the world and hears the concerns of CEOs and leadership, and the question of risk is always top of their minds.

Listen to the podcast here!

Who, What, When, Where – Does Your Risk Management Program Dig In?

We recommend using the 4W’s as a method of digging in to better understand the operations of a business. This concept is not new and sounds simple but is often not utilized appropriately.

The 4W’s concept can be used as the building blocks with a focus at all stages of operations when considering risk management. Here’s the problem; while every department head is very knowledgeable about their individual expertise it can be difficult if not overwhelming to think about it from the wide-ranging standpoint of risk.

“Digging In” – By using these four basic questions you can gather a wealth of knowledge about your business; the trick is to do this at the various stages of operation and not just the top-level thus coordination is important.

This valuable approach is overlooked and many times in Premier’s early analysis we find that businesses are generalized by the insurance industry and brokers. There is a lack of special attention to the individual company beyond “what is your business”.

This generalization becomes the cracks in the foundation … by doing these analyses you can better understand what risk you are accepting, how to transfer the risk, and/or mitigate the risk. While accepting risk is easy, when it comes to transferring risk most companies are unsure, and mitigating risk falls through the cracks because companies don’t know how to ask the right questions or utilize the services available.

After Premier “Digs In” we helps you better understand what risk to accept or transfer, ultimately we focus on mitigating risk. Imagine speaking to the insurance industry no longer being generalized but having a wealth of understanding. Not only will you be better prepared internally but since you are appropriately addressing risk this practice will result in lower premiums and lower total cost of risk. It’s a Win – Win.

Premier Risk is proud to announce our strategic partnership with AETHOS Consulting Group

We are thrilled to partner with AETHOS Consulting Group in providing risk management services to the hospitality industry.

Press Release:

AETHOS Consulting Group Expands Expertise With Outsourced Risk Management Consulting

Embarking upon an era of expansion of hospitality advisory services AETHOS Consulting Group, renowned specialists in advisory and executive search for C-Suite positions in the lodging, gaming, and restaurant arenas, has now secured a strategic partnership with a leading risk management firm.

AETHOS Consulting Group Managing Director and CEO Keith Kefgen announced that the new outsourced risk management practice “takes a long-term approach to helping our clients cost-effectively manage their unique risk profile.”

In partnership with Premier Risk Management, AETHOS will serve as the outsourced risk manager for mid-sized companies that typically do not have the resources to bring this function in-house.

“Risk Management is an integral component of every business,” adds Kefgen. “All segments of the hospitality industry are extremely vulnerable to a multitude of risks including liability, health and safety issues, employment law, and client data protection concerns. We want our clients to optimize risk management, while minimizing costs.”

“Risk and solutions to risk and exposures have become very dynamic and complex. Outsourced risk management consulting for lodging and restaurant companies is a service that is critically needed for the hospitality industry, ” shares R. Scott Wolff, CIC, CRIS, president and founder of Premier Risk Management. “We act as an advocate in all matters of insurance and help minimize risk and the cost of risk mitigation.”

Premier Risk Management is comprised of seasoned insurance and risk management consultants, possessing a range of expertise regarding insurance coverage detail, risk management claims handling, contract analysis, and insurance program management. Wolff himself brings 30+ years of operations experience including work in product development, claims, and underwriting. Wolff is also the author of An Executive’s Guide to Risk Management and Insurance – Reduce the Risk/Boost Your Bottom Line – a book written for executives, CEOs, CFOs, Controllers, COOs, VPs, board members, and business owners who appreciate the complexity and importance of such issues and recognize the profit potential of making an intelligent risk management decision.

“We have partnered with Premier Risk Management for a number of reasons,” adds Kefgen. “Premier Risk Management does not in fact sell any insurance products, and is not associated with any insurance firm or people who sell insurance. The insurance solutions presented to clients are completely objective with no conflict of interest. Clients can rely on Premier Risk Management for unbiased and independent advice for their insurance and risk management needs.”

About AETHOS Consulting Group: AETHOS Consulting Group is a hospitality-focused advisory and services firm, renowned in human capital and executive talent search and compensation, culture creation and organizational effectiveness. AETHOS’s survey research and white papers are highly regarded throughout the industry, and its film, The Power of Advice, was honored with a Silver Dolphin in the Online Media category at the Cannes Corporate Media & TV Awards in 2012. Additional expertise, through strategic relationships, include risk management and insurance consulting for hotels, restaurants and gaming. AETHOSCG.com also provides daily industry news wire headlines as provided by Gaming Ventures USA, publisher of the Daily Gaming, Restaurant and Casino reports. With offices in the United States, United Kingdom and Asia Pacific, AETHOS consultants value global citizenship, honesty, transparency, flexibility, humility and leadership, innovation, sustainability and meaning. For more information, please visit www.aethoscg.com.

EEOC Playing Hardball When it Comes to Employee Background Checks

Recently some predominant companies have been in the cross-hairs of the Equal Employment Opportunity Commission (EEOC). Since the EEOC found it necessary to release new guidelines related to background checks I thought I would share various articles that can be insightful for business today and a good read for the HR departments. Additionally here are some of those specific stories as they relate to some of those large companies answering to the EEOC.

Bottom line … whether you win or lose against the EEOC each employment practice liability insurance (EPLI) policy has a deductible. Premiums are impacted based on claim activity thus you can be financially impacted. End of the day, policy and procedures can be an important aspect of your risk management program to mitigate cost.

In Business, There is No Avoiding Risk

What is something exceptionally good about mid-market companies? They are agile and hold onto their entrepreneurial spirit … in fact they are even taking lessons from the big Fortune 500’s and looking to gain a financial advantage over competitors through various strategies.

A key point was recently made in a Traveler’s survey: “Business who manage risk report higher performances!”

What is evident is that the big boys’ (fortune 100 & 500 companies) have in-house risk manager’s that provide a level of knowledge that can’t be matched internally by other department heads. Thus a best business practice for mid-market companies seeking a financial advantage is to consider integrating similar risk management strategies and policies no matter your size of business.

The survey also points out: large firms continue to outpace their midsize counterparts in relying on third-party consultants for risk mitigation and prevention advice though mid-market companies’ risk mitigation strategies are beginning to equal strategies used by their larger counterparts.

The use of an Independent Outsourced Risk Manager is becoming an industry standard and if you don’t have an in-house or outsourced risk manager, you might not be taking full advantage of your opportunities.

The risk management department serves a vital role as it must understand the various silos within an organization whether it is operational, financial, or human resources. A structured approach helps create a risk-aware culture thus mitigating risk across an entire organization.

The biggest difficulty we see on a continual basis is that the typical company does not know how to utilize the resources available from an insurance carrier or broker or customize needed services according to specific operational units within an organization. Independent Outsourced Risk Manager’s can oversee the daily business operations and truly utilize the valuable services of those offered by the insurer and broker.

While there is No Avoiding Risk, you certainly can be better prepared.

New Guidelines On Pregnancy Discrimination & Related Issues

Equal Employment Opportunity Commission (EEOC) Issues Updated Enforcement Guidance On Pregnancy Discrimination And Related Issues

Fact Sheet for Small Businesses and Question and Answer Document Also Released

WASHINGTON — The U.S. Equal Employment Opportunity Commission (EEOC) today issued Enforcement Guidance on Pregnancy Discrimination and Related Issues, along with a question and answer document about the guidance and a Fact Sheet for Small Businesses. The Enforcement Guidance, Q&A document, and Fact Sheet will be available on the EEOC’s website.

This is the first comprehensive update of the Commission’s guidance on the subject of discrimination against pregnant workers since the 1983 publication of a Compliance Manual chapter on the subject. This guidance supersedes that document and incorporates significant developments in the law during the past 30 years.

In addition to addressing the requirements of the Pregnancy Discrimination Act (PDA), the guidance discusses the application of the Americans with Disabilities Act (ADA) as amended in 2008, to individuals who have pregnancy-related disabilities.

“Pregnancy is not a justification for excluding women from jobs that they are qualified to perform, and it cannot be a basis for denying employment or treating women less favorably than co-workers similar in their ability or inability to work,” said EEOC Chair Jacqueline A. Berrien. “Despite much progress, we continue to see a significant number of charges alleging pregnancy discrimination, and our investigations have revealed the persistence of overt pregnancy discrimination, as well as the emergence of more subtle discriminatory practices. This guidance will aid employers, job seekers, and workers in complying with the Pregnancy Discrimination Act and Americans with Disabilities Act, and thus advance EEOC’s Strategic Enforcement Plan priority of addressing the emerging issue of the interaction between these two anti-discrimination statutes.”

Much of the analysis in the enforcement guidance is an update of longstanding EEOC policy. The guidance sets out the fundamental PDA requirements that an employer may not discriminate against an employee on the basis of pregnancy, childbirth, or related medical conditions; and that women affected by pregnancy, childbirth or related medical conditions must be treated the same as other persons similar in their ability or inability to work. The guidance also explains how the ADA’s definition of “disability” might apply to workers with impairments related to pregnancy.

Among other issues, the guidance discusses:

The fact that the PDA covers not only current pregnancy, but discrimination based on past pregnancy and a woman’s potential to become pregnant;
Lactation as a covered pregnancy-related medical condition;
The circumstances under which employers may have to provide light duty for pregnant workers;
Issues related to leave for pregnancy and for medical conditions related to pregnancy;
The PDA’s prohibition against requiring pregnant workers who are able to do their jobs to take leave;
The requirement that parental leave (which is distinct from medical leave associated with childbearing or recovering from childbirth) be provided to similarly situated men and women on the same terms;
When employers may have to provide reasonable accommodations for workers with pregnancy-related impairments under the ADA and the types of accommodations that may be necessary; and
Best practices for employers to avoid unlawful discrimination against pregnant workers.

In February, 2012, the Commission held a public meeting to hear from stakeholders about issues related to pregnancy discrimination and discrimination against individuals with care giving responsibilities. The Commission Meeting record was held open for 15 days following the meeting, to facilitate public comment. The materials from that meeting, including testimony and transcripts, are available at www.eeoc.gov/eeoc/meetings/2-15-12/index.cfm.

The EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC is available on its web site at www.eeoc.gov.

Decisions, Decisions, Decisions…are you capable of making them?

In a recent Harvard Business Review post by Nick Tasler 3 Myths That Kill Strategic Planning, he shares that the most “precious ability” a great leader has is his or her ability to make decisions based on strategic thinking. He uses a Napoleon quote to make his point:

“Nothing is more difficult, and therefore more precious, than to be able to decide.”

It may seem like common sense but decisions go hand in hand with knowledge and as the old saying goes “knowledge is power”. However, leaders should ask themselves – “Do I feel comfortable enough to solely make decisions?”

The goal of get things done well, deciding where to focus, and ultimately having an actionable decision could also be the chapters seen in a risk management 101 course. The reality is, senior management typically wear multiple hats and suffer from resource constraints when it comes to risk management. So the question again is – “do you feel comfortable with the go-at-it alone approach?” As Nick stated in his blog “strategic thinking is about deciding on which opportunities to focus your time, people, and money.”

Fortune 500 companies utilize the knowledge of an in-house risk manager to assist with strategic thinking and in the past many middle market firms assumed an adviser was unnecessary given the presence of a broker. While a broker offers a certain level of knowledge, an outsourced adviser’s knowledge does not come with the sale of a product and the broker relationship is maintained like it does with Fortune 500 firms. Times have changed and in the absence of a full-time in-house risk manager, many middle markets firms have realized the need of an outsourced adviser. It is becoming an industry standard and the companies are realizing both the short and long-term benefits.

While Nick clarified the 3 myths that kill strategic planning; the shortage of knowledge can also be a killer.

The 5 Forces That Shape Industry Competition

As a person that considers himself an endless student of business, I was searching the Internet and thus came across a Harvard Business Review article written by Michael E. Porter, The Five Forces That Shape Industry Competition. This article is not only a good read but reminds me of the importance of getting back to the basics.

The Five Forces described in the article are basic concepts that apply to all industry groups. When reading the article one can see how appropriate these strategies are from the perspective of the insurance industry … to be honest they also shape Premier’s business model.

Without a doubt we can benefit from the study by understanding the guidelines that Porter details in the article. Porter stresses the importance of “awareness”… and that a business that is aware of the “five forces” will be better suited to understand the structure of its industry and can create a position for itself that is more profitable and less vulnerable to attack. Aligned with the message of the article, our business model is shaped by the understanding of competition and other risk management philosophies. It is important to have an educated point of view and an advocate for insurance matters!

All businesses are buyers of insurance products that protect their company. When you refer to Porter’s chart – if you are the buyer then you must ask yourself – who is the supplier?

If you said the supplier is the insurance carrier, then this is exactly what the insurance industry wants … overlooking the Broker as the true supplier.

How does a supplier gain bargaining power? Reducing competition and creating so called expanded services to make it harder for customers to leave.
How do you gain bargaining power as the buyer? By being a savvy buyer and forcing down prices by playing rivals against one another.
If you said the supplier is the Broker then what is your strategy for managing the procurement process? Do you internally have the skill set to understand and interpret factors such as market intelligence and product knowledge?

Remember the insurance carriers are experts when it comes to their products … are you?

Too often businesses as the buyer look at the insurance carriers as the Supplier. If you really think about it the Broker is the supplier and what the insurance carrier provides is the product.

So why, when it comes to insurance procurement do buyers not create competition at the supplier level? Remember, suppliers gain power by reducing competition. It truly comes down to being a savvy buyer. The real dilemma here is that buyers don’t know that there is in fact a niche business of insurance advisers or the “substitute” as identified in this article that can help shape competition.

Porter’s article would suggest that you can reshape the forces in your favor by using tactics designed specifically to reduce the share of profits (premium) leaking to other players. An example; neutralize supplier power by standardization, or as we would say “you can’t standardize it unless you understand it” thus making it easier to vet out your vendors.

The journey is not a straightforward path but one that is complicated and though it is sometimes considered a necessary evil – insurance matters.

Are You Playing Russian Roulette With The Insurance Related Provisions of Your Everyday Business Contracts?

Many times company leadership does not put much thought to the importance of reviewing the insurance related provisions of their business contracts, but if there is a single message I want to make clear in this post, it is that mitigation of risk is essential.

It is difficult to express in dollar value the importance of contract reviews especially given that you truly don’t know what has actually been saved if a problem or risk was mitigated ahead of time … which is the point of risk management. Unfortunately, and too often business leaders don’t see the value either and just let it go. In reality, it is like playing Russian roulette … it is not if, but when.

Here is a perfect example:

Recently a company was doing some capital improvements and adding a building extension. It was a 3 million dollar project where the contractor presented a “standard form” contract agreement for the project. Standard for who? The word “standard” should raise a red flag and can get you every time. You think, they are a large contractor they know what they are doing. That is exactly right, they know what they are doing … protecting themselves.

Needless to say, there was an accident. A subcontractor hit a sprinkler-head which caused water damage not only to the new construction but to the existing building. The section of the contract relating to indemnification and insurance was written poorly for this particular project and the owner was left holding the bag on $100,000 in repair cost.

Are the following words just a bunch of “mumbo jumbo” or do you understand how they work within the various provisions of your business contracts – additional insured, pollution liability, waiver of subrogation, and indemnification? Also important, will these contracts make insurance policies between the business parties respond appropriately?

Your turn to pull the trigger …