Common sense risk management

Just before Christmas I was searching for a gag gift for one of my friends. I was shopping with several adjusters, and adjusters and insurance professionals, generally speaking, have very twisted senses of humor. This probably arises as a coping mechanism for dealing with mutilation, foolishness and death on a daily basis. But I digress.

I found a book of postcards titled Grandma’s Dead: Breaking Bad News with Baby Animals. As we read through the postcards, and many of them were quite graphic, we laughed so heartily and for so long that other bookstore customers began to gather around to see what all the fuss was about. Let's face it, in these economic times, everyone is looking for a laugh.

In short, the book is a series of postcard pictures of beautiful baby animals with captions like “Recycling Won’t Work," "The Meteor Can't Be Stopped," or, one germane to this post, “There is no Santa Claus.” Some of the captions are in extremely poor taste, but some are downright hilarious. See a preview at http://www.amazon.com/Grandmas-Dead-Breaking-News-Animals/dp/0061673765/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1230586397&sr=8-1

As I was zooming through a slideshow last night of the people and funds that were hit in the Madoff scandal, I couldn’t help but think of the old adage that rings true especially today: “If it looks to good to be true, it probably isn’t.” One of the fund victims stated that participants questioned why they were consistently achieving about 10 percent return on investment when the global financial markets were melting down. Now they know.

What can we learn from this tragic lesson, which has rocked both charities and personal fortunes and led, so sadly, to one apparent suicide? The lesson is simple, and it is in the book Grandma’s Dead: “There is no Santa Claus.”
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Unfortunately, the impact of this crash is going to ruin many people’s holidays, probably for years to come.

If you are an agent and would like to help your commercial customers better manage their risk, refer them to my blog on AllBusiness.com at http://www.allbusiness.com/4974114-1.html. Each week I give tips to help small-to-medium sized businesses better manage their risks.

Cavalcade of Risk #67

This is my first hosting of the Cavalcade of Risk, which is made up of some of the tops blog entries on risk management written in the past few weeks. Perhaps it is the economy, maybe it is the holiday, but for whatever reason, most of the submissions have leaned toward personal finance and I have weeded most of them out. Perhaps that's because many of us are currently paper paupers. I don't know about you, but with layoffs abounding in the insurance industry and beyond, I am grateful today for the security provided by this great career.

We did have some great risk management submissions, though. Because I am by trade an insurance marketing person, I read with a cautious eye Wenchypoo's entry, The Con in Lexicon, where we are told how "mere words can rob us blind." I must say, though, I agreed with the entry and even added my own suggestion: Value-Added Tax (VAT). Although I love my Irish scarf, it is not one iota more valuable because I paid my VAT.

We have several health insurance-related posts this month, including Richard Eskow at Sentinel Effect, who suggests another approach to the auto bailout: What if the government funded and managed the Big Three's health benefits instead? The Obama team could build a working model of health reform, Richard thinks.

Another health care post is one from Jaan Sidorov at Disease Management Care. In this post, physician and ex-medical director Jaan Sidorov examines how health insurers think about generic drugs and the tricks they use to promote their use and manage their trend.

Also posting this month is Jay Norris from the Colorado Health Insurance Insider, who tells us in his entry that just providing health insurance to the uninsured would still leave us with a pretty big mess. We don't have enough primary care docs, our drugs are too expensive, our hospitals are too focused on turning a profit, we spend more than any other country on our healthcare, and yet our results are mediocre at best.

Joe Paduda of Managed Care Matters gives us the gift of his insight in his blog, We Have to Deal with Costs. Clearly, the nation is at a crossroads in health coverage. The next few years will be interesting and expensive, no matter what happens.

Some companies will do anything to meet analyst and shareholder earning expectations, according to this post. Backdating contracts is one way to achieve this goal. By backdating contracts so that the revenues can be recorded for the current quarter, management is essentially recording future revenues in the current quarter. If you are considering investing, according to Qovax, take time to read both the auditor's report and the K-8s. Better yet, read this post.

In the Sun's Financial Diary, we are told the obvious: That diversification may not work in the current economic market. This article is short on answers, but what the heck, I'm in the holiday spirit.

Carson Brackney, the Personal Finance Analyst, blogs on a topic I have unfortunately experienced firsthand: a major illness sans long-term disability coverage. In Long-Term Disability Coverage Makes Sense, Brackney outlines the top reasons we need this vital coverage. In case you are wondering, I will be working much longer than I anticipated due to my lack of foresight. What are you waiting for? Call your agent.

Here's a post from the Monevator on why the riskiest assets to buy right now could be the safest: US treasuries. This article explains why.

Whenever I see the name Chris Boggs I read him because he is a strong writer and very knowledgeable. I tracked him down on My New Markets, which he edits. Boggs fills us in on Insurance for Bloggers (in three parts). Bloggers, beware!

InsureBlog gives us a really insightful post on sharia-based insurance. Is it good risk management or a cover for terror-enabling? Henry Stern takes a look at this controversial new product. I just have one question. Can women underwrite or handle the claims for the sharia-based coverage? Many interesting avenues to this post, so don't miss it.

In a timely article given that several New York workers' compensation trusts have gone belly up, Julie Ferguson of Workers Comp Insider tells us what happens to your workers' comp claim if your insurer or your employer declares bankruptcy.

In this time of economic turmoil, many of us will be either giving or receiving loans from relatives. This quick post from Bargaineering outlines some tips to help us lend without running afoul of the IRS.

This week I tackle public relations and recommend a great book in my blog Risk Management for the 21st Century. Bad PR is a killer to firms large and small, so take a gander.

To end on a humorous note, here is a great entry I found in The Employment Law Post entitled, Booze, Porn Addictions and Interventions: What a Holiday Party. I used to think I was a pretty good boss until I started watching The Office and realized I had more in common with Michael than I cared to admit. If you missed that episode of the office, see if you can find it somewhere. It's a hoot.

If you would like to post in an upcoming blog, feel free to submit to Cavalcade of Risk using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Have a safe and risk-averse holiday.

An example of bad business writing

Sorry to dog the English since they usually do have a better command of the English language than do Americans, but here's an example of business writing at is worst.

This was recently disseminated interoffice in an insurance setting in England:

The new Bulletins system was launched on 24 March 2008. This is information regarding how HO Underwriting will utilise the system to communicate changes. Previously, communications specific to the Regions were termed Circulars andthose to Agents were Technical Bulletins. All information will now be issued via the system as Bulletins, so to differentiate between them for the purposes of explaining how the system will be used, we will refer to circulars as "regional instructions" and Technical bulletins as "general instructions".

Regions will receive advance notice of general instructions via e-mail.When published, Regions and Agents will receive the standard e-mail notification produced by the system. If you do not receive the automated e-mails that colleagues get, please contact the Service Desk to check your inclusion in the e-mail group "Networked Group Secretaries" or "UnderwritingBulletins (Advance Notice)" (or a sub-group therein). [Editorial comment: If you didn't get it, how do you know you didn't get it?]

General instructions will be made available for everyone to read and can be accessed through the Bulletin system via the (their internal intranet).(Link on the left side of the Agents page and also on the Underwriting homepage). Some bulletins may only be relevant to the Regional Underwriters (regional instructions), in which case they will be targeted at this group so that others do not receive unnecessary communications.

Therefore, if some bulletins have a limited audience, an individual's view may not include all sequencial numbers, but you will have access to bulletins relevant to yourself. Details are included in the Underwriting Procedures manual, (accessed via the Underwriting Manuals page on (their internal intranet) under: Account Management Programme / Underwriting Bulletins : Guide to issuingUnderwriting Instructions (via the Bulletins system).

Please continue to liaise with your Region regarding clarification of the detail of any bulletins, who can then liaise with HO as necessary. Any problems accessing the Bulletin system itself can be directed to the Service Desk.

Whew! I don't know about you, but I'm lost! Can you really afford to send that kind of communication to your staff? If the information is important enough to communicate, it should be right! Business communications should be crisp, clear and to the point. People can't and won't take the time to "extract" the message from the mess.

C-Level executives obtain most of their purchasing information on line

If your business isn't advertising on line, you may be losing access to the key decision makers in today's businesses: C-level executives such as CEOs, CROs, CFOs, and CLOs.

Forbes recently completed a blind survey of 286 C-level executives and found they spend an average of 16 hours weekly on the Web, not including using e-mail. 64 percent of the respondents viewed eight or more Websites per month looking for business and financial information.

Compared to the time the C-execs spent on other resources,if you aren't making use of web advertising, you may be missing your audience.

Here is the time C-execs spent viewing other medium:

• TV 8.6 hours per week
• Magazines 6.6 hours per week
• Newspapers 6.6 hours per week
• Radio 5.7 hours per week

Should you rethink your advertising dollars? If so, please call to view our innovative HTML advertising campaigns or White Papers that have helped drive traffic to our clients' sites. We have helped dozens of financial services companies build a strong web presence. We would love to help you deliver a crisp, clear message that reaches your intended audience at a rate that is amazingly affordable.

Call (602) 870-3230 for a rapid response.

Upcoming speaking engagement

Nancy Germond will address the Loss Executives Association's (LEA) 77th Spring Meeting and Educational Conference in Portland, Main, on June 12, 2008. Her session, "Brain Drain in the Insurance Industry," provides proactive tips for managing, retaining and training insurance industry personnel. With more than one quarter of the U.S. population eligible to retire in the next few years, this topic is critical to the strategic management of insurance organizations.

The LEA is the premier source of education and training of property claims managers nationwide.

Nancy's articles appear in industry trade journals and her weekly column, "Risk Management for the 21st Century," appears on Allbusiness.com.

Selling workers' compensation coverage

Tired of competing solely on price? Then watch this video and learn:

1) An overview of experience rating
2) Nine key concepts of experience rating that employers need to understand
3) The process of using ModMaster to compute a mod
4) Interpreting ModMaster reports
5) Communicating the 9 key concepts using ModMaster reports, and
6) Taking the next step by introducing WorkCompEdge

RiskList helps businesses manage risk

Do you want free advice from some of the world's top risk managers? Then join RiskList, a moderated risk management discussion forum.

Click to join RiskList

Turn your employees into headhunters

Last week I attended a four-day Society of Insurance Trainers & Educators conference. The class size was small, about eight, but what was exciting was the level of young talent in the training.

If we are reading the trade journals, we know that our industry talent is disappearing, in part due to the current and pending Baby Boomer retirements, and in part because of our seeming inability as an industry to attract new candidates. When was the last time you heard a young person, when asked his or her career plans, say, "I'm planning an exciting career in insurance!"

But the reality is, the insurance industry offers exciting career opportunities. Here are just a few of the advantages I've found during my two-decade plus career:

• Wonderful and supportive coworkers.
• Ample training opportunities, whether at the workplace or self-directed.
• Interesting dilemmas to solve, whether during my years in claims, my years working with agents and MGAs, or my years in risk management.
• A fairly lucrative wage.

But as an industry, we don't convey these benefits. As I watched the younger participants at this training workshop, I kept thinking, "Some headhunter is missing a great opportunity here." I would have hired any of the participants in a heartbeat.

If you are having trouble attracting great talent, why not turn your employees into headhunters? As they attend seminars and networking events, ask them to exchange business cards with people they think would be a fit for your company.

While these attendees may not be in the job market right now and you may not even have a current opening, a year down the road, with growth, mergers and acquisitions and downsizing, the story may be entirely different.

When I talk with other young people, particularly women, I encourage them to think about insurance as a career path. You may want to do the same.

Performance appraisals can limit liablility

I've been very busy with my new column in Allbusiness.com.

Click here to read the latest entry.

Public sector risk managers do more with less

If you want to see risk managers who really know how to do more with less, spend a few days with public agency risk managers as I recently did in Anaheim, California. About a thousand risk managers and human resources officers, third-party administrators and those impacted by risk gathered at the Public Agency Risk Manager's Conference (PARMA) last week to discuss trends in public sector risk management.

I heard many great speakers, but the one who really stood out was Gordon Graham, a former police officer and safety consultant. He spoke about Admiral Rickover's 7 Rules of Safety Success, which I turned into a column in Risk Management for the 21st Century on http://www.allbusiness.com/. To read the column, click here.

Public sector risk managers are the unsung heroes of their agencies because they consistently figure out ways to manage the myriad problems public entities face as they try to provide services to an increasingly demanding public.

Should your organization hire a risk manager?

View my latest column in Allbusiness.com.

Your company isn't immune to employee theft

Read my latest column in Allbusiness.com.

Are auto accidents driving your losses?

Read my latest column in Allbusiness.com.

Use the rifle approach to safety

View my most recent column in Allbusiness.com.

New book on risk management a must read

Because I believe in insurance and risk management education, I'm posting a review from claims writer and pundit Kevin Quinley's website praising a new book by insurance professional Rick Vassar.

"Olly olly oxen free! Come out, come out, wherever you are!"

Reviewed by Kevin Quinley

Hide! Here Comes the Insurance Guy

by Rick Vassar, iUniverse, 2006, 196 pp., $17.95

Somebody once said that a New York accent was the most effective form of birth control known to man. Others might nominate as an effective contraceptive any tendency to talk about insurance… or risk management, for that matter.

Author, risk manager and consultant Rick Vassar has penned an illuminating primer on insurance and risk management in his book, "Hide! Here Comes the Insurance Guy." The title is a take-off on the notion that, for most people, meeting with an insurance person or discussing coverage is as much fun as a root canal or proctological exam. The author – a CPCU and an ARM -- lives a dual existence. By day, he is a mild-mannered risk manager for a company in the Washington D.C. area. In his spare time, he writes and consults on risk management topics (check out vassargroup). Vassar tries (successfully) to cushion the blow and counter the stereotype by presenting insurance and risk management principles in a straightforward way that can profit any business professional.

Part of his theme is that most companies have risks that are overseen by someone whose title is not "Risk Manager." Most companies do not have risk managers; you need to have a pretty big insurance budget to justify that as a full-time position. No company vies to be paying so much in insurance premium that they spotlight the problem by having a full-time individual to tend to it. Nevertheless, all companies have risks and need to manage it. For these risk managers without title or formal portfolio, Vassar's book – perhaps the best risk management book of the year even without that phrase in the title -- is an indispensable primer and guide. Reading and heeding his advice will save businesses much money, frustration and Excedrin-consumption.
Vassar divides his book into three main sections. Part I discusses business strategies to even the playing field between policyholders and insurance companies. Part II walks through the major basic forms of insurance coverage for most any business. Part III rounds out with a useful; glossary and index.

Vassar's target audience is likely not the Fortune 500 or Fortune 1000 risk pro who attends the annual RIMS Conference. There is no highfalutin discussion of enterprise risk management or views from 50,000 feet above ground level. If you are seeking information on Sarbanes-Oxley compliance or the risk management implications of global warming, look elsewhere. The storefront risk manager, though, will find a wellspring of effective tips and tricks between these covers.

Vassar's focus is practical and hands-on, leavened with a self-deprecating sense of humor. Did I say "humor"? Yes, though few comedy clubs are likely to feature an Open Mike night for insurance reps, Vassar takes the human antipathy toward insurance and turns it into a source of mirth and amusement. (Some end-of-chapter checklists would have been a nice addition to the text, but this is a minor quibble.)

So run -- but don't hide - and get your copy of "Hide! Here Comes the Insurance Guy." Get out from under the desk. Leave the closet and face your fears. Insurance and risk management may not be fun (though they are occasionally funny), but Rick Vassar has come as close to anyone in blending sharp wit with moneysaving risk management insights.