RIMS News 

RIMS Supports Expansion of Liability Risk Retention Act

3/11/2010

New measure to include commercial property insurance

NEW YORK (March 11, 2010) — The Risk and Insurance Management Society (RIMS) today announced its support of legislation that would amend and expand the Liability Risk Retention Act (LRRA) to include commercial property insurance.

Reintroduced by Rep. Dennis Moore (D-KS), the measure, (H.R. 4802, the “Risk Retention Modernization Act of 2010”) marks the second consecutive congress that Rep. Moore has led efforts to extend the LRRA’s reach to cover commercial property insurance to address potential capacity shortages. 

The LRRA permits Risk Retention Groups to self insure risk on a group basis and create Risk Purchasing Groups to allow insurers to market commercial insurance on a group basis.

“The new legislation, if passed, would provide another critical venue for insurance purchasers to secure commercial property insurance,” says Scott Clark, RIMS board member and risk and benefits officer for Miami-Dade County Public Schools. “Such an option can make insurance more affordable, especially when natural disasters in some U.S. regions have made it more difficult to purchase commercial property insurance. Many liability risks are related to property owned by business entities and non-profit organizations, and this bill will enable those businesses to obtain coverages that might not otherwise be readily available.” 

Rep. Moore is joined by cosponsors Rep. Tom Campbell (R-CA) and Rep. Suzanne Kosmas (D-FL).  

RIMS and Ernst & Young Tackle FEMA Claims in Risk Insights

3/10/2010

  White paper addresses financial recovery from disasters through FEMA claims

NEW YORK (March 10, 2010) — The Risk and Insurance Management Society (RIMS) and Ernst & Young announce the release of Beyond Insurance: Financial Recovery from Disasters through FEMA Claims, the latest installment of Risk Insights, their ongoing series of white papers. Beyond Insurance guides risk professionals through the often arduous process of filing Federal Emergency Management Agency (FEMA) claims.

The white paper cites increased property insurance deductibles and lower sub-limits for damage from natural disasters as an impetus for risk managers to gain a firm understanding of the FEMA claim processes, limitations and requirements.

Additionally, the paper delves into the notion that insurance claims often exhaust property insurance policy coverage before they recover all property damage, extra expense and business interruption losses. In these circumstances, many public and private companies would have little recourse to recover these uninsured losses beyond their property insurance policy. Fortunately for some entities, particularly certain private non-profit organizations, FEMA provides additional funding to recover certain emergency protective costs and property damage losses beyond insurance.

The paper was authored by Robert Reeves, a partner at Ernst & Young, and Sheri Wilson, a senior manager at the firm. Both Reeves and Wilson concentrate on complex insurance claims and dispute-related services.

This issue of Risk Insights is available to RIMS members free of charge here. Launched in 2008, this white paper series will continue through 2010.

Note: Members of the media who would like to obtain a copy of the paper may contact Amy Benson at abenson@RIMS.org or (212) 655-6059.

RIMS Announces Hot Topics at 2010 Annual Conference & Exhibition

3/9/2010

• Solar Storms: Protecting Your Operations Against the Sun's 'Dark Side'
  In anticipation of the upswing in solar activity predicted for 2012, which could wreak havoc on power grids, computer networks and telecommunications, this special session will consider the risks of solar storms and explore a variety of mitigation techniques.  

• Insurance Purchasers Unite! Know Your Rights on Contingent Commissions
  Last year saw several major brokerage firms seek regulatory approval to resume accepting contingent commissions over and above their regular compensation. During this session, senior insurance executives will burrow deep into brokerage compensation agreements to help attendees understand fee structures and how to negotiate service-level agreements.

“This year’s Hot Topic sessions illustrate the vast range of issues risk professionals face and the dynamic skill set they need in order to do their jobs effectively,” says Mary Roth, executive director of RIMS. “RIMS 2010 Annual Conference & Exhibition is an unrivaled forum for obtaining the latest information on how to address these varied risks and for discussion on best practices in the industry.”

In addition to Hot Topic sessions, the conference boasts more than 400 industry experts who will lead 130+ sessions on a variety of topics such as captives, claims management, disaster recovery, ERM, finance, globalization, governance and regulatory compliance, loss control and other critical risk management issues.

The conference also features keynote presentations from Gary Loveman, chairman, CEO and president of Harrah’s Entertainment, Inc.; Nassim Nicholas Taleb, professor of risk engineering at the Polytechnic Institute of New York University and principal at Universa Investments; and Rebecca Ryan, founder of Next Generation Consulting.

RIMS 2010 will offer Strategic Partner Sessions from the nation’s leading insurers and brokers covering topics that address the needs and concerns of the risk management and insurance community. Sessions will be hosted by Aon, Chartis, Liberty Mutual, Marsh, Willis, and Zurich.

To register for RIMS 2010 Annual Conference & Exhibition, please visit www.rims.org/registernow.  

March Issue of Risk Management Now Available!

3/1/2010

RIMS Clarifies Statement on Broker Practices

2/23/2010

When Scott Clark, member of RIMS board of directors and risk and benefits officer for Miami-Dade County Public Schools, commented in the National Underwriter on Gallagher’s decision to disclose contingent payments and provide clients the choice of whether they receive them, he used a figure of speech to express RIMS approval of that decision. 

RIMS does not claim authority in assigning or granting “gold standard” status or any other classification for any broker, nor does it plan to in the future.

An extensive outline of RIMS position on broker compensation can be found in RIMS executive report, A Practical Guide to Insurance Broker Compensation and Potential Conflicts of Interest for the Risk Manager. The report is free for RIMS members and can be purchased by non-members by clicking here.

RIMS reaffirms its position that contingent fees for insurance producers should be prohibited, and that in the absence of prohibition, all compensation arrangements should be fully disclosed to the client.

RIMS Disappointed in Decision to Allow Resumed Contingent Commissions

2/17/2010

  New York Insurance Department and Attorney General’s decision to reinstate contingent commissions, not in the best interest of the insurance consumer.

NEW YORK (February 17, 2010) — The Risk and Insurance Management Society, Inc. (RIMS) today announced its dismay at a decision by the New York Insurance Department and Attorney General to allow the nation’s top insurance brokerage firms, Aon, Marsh, and Willis, to resume accepting contingent commissions. 

This decision comes on the heels of disclosure requirements that do not afford consumers appropriate protections. The investigations, admissions, and fines that led to the 2005 agreements banning such commissions prove that these practices can be, and were, manipulated at the expense of the insurance consumer. Without strong consumer protections in place, RIMS has strong reservations about a policy that permits contingent commissions again, and this development illustrates why RIMS so vigorously fought for a stronger rule. 

“When Arthur J. Gallagher and Company was released from its agreement in Illinois in 2009, RIMS expected that New York would shortly follow suit,” says Scott Clark, director of RIMS External Affairs Committee and risk and benefits officer for Miami-Dade County Public Schools.

“RIMS had hoped that in the absence of a contingent commission ban, brokers would be required to provide full compensation disclosure, allowing the consumer to decide whether the broker is acting in their best interest,” added Clark. “Unfortunately, the final regulation does not live up to that standard, and instead the burden to request full disclosure has been placed squarely on the consumer.”

RIMS urges Aon, Marsh, and Willis to commit to full compensation disclosure above and beyond the recent NYID regulation. Such action would go a long way toward building trust and strengthening the relationship between broker and purchaser. RIMS also reiterates its call that the New York Insurance Department revisit its producer compensation regulation, and open it up to another comment period following the most recent changes. 

RIMS encourages other states to go further with their regulation and make a strong effort to enact full mandatory disclosure requirements that will protect the insurance consumer. RIMS will continue to work closely with all parties on the issues of producer compensation and disclosure.

RIMS Objects to New York Insurance Department’s Final Producer Compensation Regulation

2/11/2010

“Consumer organizations have not had the opportunity to digest these additional changes and comment upon them,” says Scott Clark, director of RIMS External Affairs Committee and risk and benefits officer for Miami-Dade County Public Schools. “The previous revision had reinstated the disclosure requirements for most renewals so the reversal would appear to warrant another comment period.”

The intent of the rule, as it was initially presented, was to bring greater clarity and certainty to the insurance purchase transaction in order to protect consumers. While this objective was a positive first step by the Department; each subsequent revision has diluted the original intent and has resulted in the final rule that falls short of complete and mandatory disclosure, for which RIMS has been a long-time advocate.“

If New York returns to a policy that permits contingent fees on a wide scale basis, smaller consumer entities, in particular, would be subject to a lack of complete transparency of producer compensation as a piece of the insurance purchase transaction. That could give rise to the same conflict-of-interest concerns that the proposed rule was meant to address.

“While RIMS will continue its mission of educating consumers, the published rule potentially puts many at a disadvantage when dealing with producers,” says Clark. “RIMS believes the Department should permit another comment period so that affected parties might once again have an opportunity to be heard.”

RIMS 2010 Publication Display Requests Now Available

2/5/2010

Publishers are invited to display their pulbications at RIMS 2010, where thousands of risk management professionals will gather this April in Boston. The RIMS 2010 Publication Display area is made up exclusively of industry magazines, journals, white papers, relevant newspapers, etc. and is located in the highly visible sessions and exhibit corridor.

Gain more readers—submit your Publication Display Order Form today!

RIMS Launches 60th Anniversary Homepage

2/2/2010

RIMS thanks you for your support and looks forward to another 60 years of critical strides within the risk management community!

Check out the January/February Issue of Risk Management!

2/2/2010

RIMS Disappointed in Obama Budget Plan

2/2/2010

First, for the second consecutive year, the Obama Administration has attempted to reduce or eliminate the federal underpinnings of terrorism insurance. “The Administration’s proposal to eliminate $250 million is regrettable and disappointing, from the consumer perspective,” said Scott Clark, RIMS secretary and director of RIMS External Affairs Committee and Risk and Benefits Officer for Miami-Dade County School Board.

“In 2007, Congress reauthorized the Terrorism Risk Insurance Act (TRIA) for a seven year period. TRIA and the federal government’s commitment to act as the ultimate backstop for terrorism insurance served to stabilize the market for policy holders,” Clark added. “This legislation was the product of much negotiation and compromise from all political parties, chambers and branches of government. To attempt to withdraw the government’s support will adversely impact the availability and affordability of terrorism insurance. We hope that Congress will once again see the wisdom in not adopting this as part of its budget going forward.”

Second, Clark noted that a proposal contained in the Administration blueprint would impair the insurance market for individual and commercial insurance policy holders. The FY 2011 budget appears to adopt, in concept, legislation introduced in the House of Representatives that denies the tax deduction for reinsurance premiums paid to foreign affiliates by domestic insurers.  Similar to the legislation sponsored by Rep. Richard Neal (D-MA), the proposal would have a chilling effect on these insurers and reinsurers who provide an important safety valve in many areas of the country. The proposal would inhibit domestic companies with foreign affiliates from engaging in a legitimate risk management practice; ceding reinsurance to an affiliate in order to provide for greater capacity and liquidity. 

According to Clark, an economic study of the legislation estimates that if the proposal was enacted into law, it would cost consumers $10-12 billion a year. “This far exceeds the revenue estimate of $233 million savings the Administration is projecting over five years at a far greater cost to individual policy holders and businesses of all types and sizes,” said Clark.

Noting the two proposals in the budget, Clark stated that there is an inherent conflict in policy goals. On the one hand, the Administration is curtailing the government’s commitment to ensure a stable market for terrorism insurance. On the other, it is acting to restrict one of the primary means the industry uses to manage its terrorism risk through reinsurance. According to Dowling and Partners, 64 percent of the losses related to 9/11 were paid by non-United States insurers and reinsurers. RIMS intends to strongly oppose both proposals. 

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RIMS Joins Haiti Relief Effort

1/21/2010

Year Closes with No End in Sight to Soft Commercial Insurance Market, according to RIMS Benchmark Survey™

1/13/2010

  Risk managers continue to enjoy favorable insurance prices, but brokers struggle with declining revenues.

NEW YORK (January 13, 2010) — Commercial insurance buyers saw premiums continue to tumble in the fourth quarter, with few signs that that the soft phase of the pricing cycle is near its end, according to the RIMS Benchmark Survey™, administered by Advisen Ltd. The survey tracks changes in insurance policy renewal prices as reported by North American corporate risk managers. Directors and officers liability (D&O), general liability and workers compensation all posted decreases in average premium, while property once again held steady.

“Pricing trends have been remarkably consistent over the past several quarters,” said Dave Bradford, executive vice president of Advisen and editor-in-chief of the survey. “The combination of a weak economy, which has suppressed demand for insurance capacity, combined with a very mild year for natural catastrophes, has kept downward pressure on rate levels. Unless very large catastrophe losses soak up excess capacity, we expect to see this trend continue well into 2010.”

Workers’ compensation and general liability saw the largest decreases, with average declines in renewal premiums of 5.5 percent and 5.0 percent respectively. Average D&O premium fell 2.8 percent, and property was essentially unchanged, falling less than half of a percentage point.

“Some risk managers are reporting higher renewal premiums but, overall, the market continues to be very favorable for insurance buyers,” said Daniel H. Kugler, ARM, CEBS, CPCU, AIC, ACI, member of RIMS board of directors and assistant treasurer, risk management, at Snap-on, Inc. “Capacity is abundant in almost every line of insurance. As things now stand, there is little reason to expect commercial insurance prices to increase in the near future. More likely, they will fall yet further.”

While market conditions are benefiting insurance buyers, they are contributing to growing financial stress on agents and brokers that derive much of their income from commissions on insurance premiums. Not only is commission income down because of falling rates, the global recession has cut into insurance premium volume as companies downsize or go out of business. Insurance companies also are suffering from lower premium volume, but the impact is lessened by income from invested assets and by favorable claims experience due to the fact that no major natural catastrophes occurred in the U.S. in 2009. The U.S. property & casualty insurance industry posted a 4.5 percent return on average surplus for the first nine months, rebounding from a negative rate of return in the first quarter, according to the Insurance Information Institute.

About The RIMS Benchmark Survey^TM
RIMS Benchmark Survey™ is produced by Advisen, Ltd., which collects and analyzes the data and provides the technology infrastructure for the survey’s online services. Risk managers and buyers of insurance either contribute directly to RIMS Benchmark Survey™ or by using our “data participation letter” to authorize their broker to provide the client’s program details. The letter is available at www.RIMS.org/brokerform or by calling 800-655-6590. Risk management professionals can also contribute by e-mailing current and prior year policy schedules to Benchmark@RIMS.org or by faxing to 212-655-7453.

Risk managers who contribute data to the survey can benchmark the structure of their commercial insurance programs, retained loss costs, exposure demographics and Total Cost of Risk (TCOR) against a highly relevant group of peer companies. Additionally, survey respondents can use software personalized and configured for their needs to view detailed schedules of insurance, programs for current and past years and full-color program tower charts. Both benchmark charts and program charts can be downloaded into any presentation for senior management. The results of the RIMS Benchmark Survey™ are available online or in an annually-published book. Visit www.RIMS.org/benchmark for details.

About Advisen
Advisen integrates business information and market data for the commercial insurance industry and maintains critical risk analytics and time-saving workflow tools for over 530 industry leading firms. Through its work for the broadest customer base among information service providers, Advisen delivers actionable information and risk models at a fraction of the cost to have them built internally. Designed and evolved by risk and insurance experts, and used daily by more than 100,000 professionals, Advisen combines the industry’s deepest data sets with proprietary analytics and offers insight into risk and insurance that is not available on any other system.  Advisen is headquartered in New York. For more information, visit http://www.advisen.com or call +1.212.897.4800 in New York or +44(0)20.7929.5929 in London.

RIMS Announces 2009 Membership Award Winners

1/5/2010

  RIMS Chapter membership grows despite depressed economy

NEW YORK (January 5, 2010) — The Risk and Insurance Management Society (RIMS) today announced the winners of the 2009 Membership Star and SuperStar awards. Initiated in 2008 to acknowledge chapters with exceptional growth rates, Star Awards are bestowed upon those chapters with growth rates of at least 6 percent but less than 9 percent, while SuperStar Awards are granted to those chapters with growth rates of 9 percent or more.

Recipients will receive their honors at the Awards Luncheon during the RIMS 2010 Annual Conference and Exhibition in Boston on April 26.

“This year’s SuperStar and Star award winners deserve special recognition,” says Mary Roth, ARM, executive director of RIMS. “Their membership growth, given the economic conditions of the past year, demonstrates that the chapters and their leaders are providing tremendous value.  By offering opportunities for professional development and collegial networking, the chapters are helping their members succeed, even in these challenging financial times.”

Recipients of the 2009 Membership SuperStar Award are: 

• RIMS Newfoundland & Labrador Chapter
• RIMS Delaware Valley Chapter
• RIMS Upstate New York Chapter
• RIMS Saskatchewan Chapter
• RIMS Mid-Illinois Chapter
• RIMS South Texas Chapter
• RIMS Maritime Chapter 

Recipient of the 2009 Membership Star Award is: 

• RIMS Tampa Bay Chapter

For more information about RIMS chapters, click here.

RIMS Announces 2010 President and Board of Directors

12/21/2009

Fleming, currently vice president of the Society, has served on RIMS board of directors since 2004. He is the board liaison to the Finance Committee and has served on RIMS Conference Programming and Audit Committees in the past. Fleming is also a former president of RIMS Potomac Chapter and a former president of the Public Risk Management Association (PRIMA) Maryland Chapter.

Joining Fleming as officers on RIMS 2010 board of directors:

Deborah M. Luthi, ARM, CCSA
Director, Enterprise Risk Management Services, Matheson, Inc.
Luthi will serve as vice president;

John R. Phelps, ARM, CPCU, CBCP
Director of Business Risk Solutions at Blue Cross and Blue Shield of Florida, Inc.
Phelps will serve as treasurer; and

Scott B. Clark, AAI,
Risk and Benefits Officer for the School Board of Miami-Dade County, Florida.
Clark will serve as secretary.

The newly-elected members of the board are:

Julie C. Pemberton, ARM
Manager, Enterprise Risk Management, Chiquita Brands International, Inc.

Michael D. Phillipus, ARM
Director, Insurance and Risk Management, ATP Oil & Gas Corporation

The following members of RIMS board were re-elected for the 2009 term:

Robert Cartwright Jr., CRM
Loss Prevention Manager, Bridgestone Retail Operations, LLC

Frederick J. Savage, FCII, ARM
Director, Risk Management (San Ramon), Chevron Corporation

Janet E. Barnes, ARM
Risk Manager and Security Administrator, Snohomish County PUD No.1

Daniel H. Kugler, ARM, CEBS, CPCU, AIC, ACI
Assistant Treasurer, Corporate Risk Management, Snap-on Incorporated

W. Michael McDonald, ARM
Vice President, Risk Management, Quality Distribution, Inc.

Richard J. Roberts, Jr., ALCM, ARM, CPCU, RF
Corporate Risk Manager, Ensign-Bickford Industries, Inc.

Wayne Salen, ARM, CHCM, CPSM
Director of Risk Management, Labor Finders International, Inc.

Nowell Seaman, CIP, CRM
Manager, Risk Management and Insurance Services, University of Saskatchewan

Carolyn M. Snow, CPCU
Director, Insurance Risk Management, Humana Inc.

Joseph A. Restoule, CIP, CRM (Ex Officio)
Leader, Risk Management, NOVA Chemicals Corporation

For more information about RIMS leadership, please visit www.RIMS.org.

RIMS members save $300 on 2010 Enterprise Risk Management: Retooling the Discipline

12/8/2009

The conference takes place January 27 & 28, 2010 in Toronto. View the full agenda, and the list of speakers here.

This is the Conference Board’s 12^th annual ERM conference, and will help attendees to refine their ERM program to focus on future risk potential, develop strategies to increase resilience, and improve their organizations’ ability to respond to external shocks and changes in the business environment.

December Issue of Risk Management Features the Magazine’s Annual “Year in Risk”

12/4/2009

RIMS Supports Federal Insurance Office Legislation

12/3/2009

RIMS is encouraged by the House of Representatives inclusion of H.R. 2609 in the regulatory modernization effort, and calls upon the Senate to include this same proposal in its version.

Keynote Speaker Lineup Announced for RIMS 2010 Boston

11/16/2009

NEW YORK (November 16, 2009) —The Risk and Insurance Management Society (RIMS) today announced its three keynote speakers for RIMS 2010 Annual Conference & Exhibition, taking place April 25-29 in Boston. They include Gary Loveman, chairman, CEO and president of Harrah’s Entertainment, Inc.; Nassim Taleb, professor of risk engineering at the Polytechnic Institute of New York University and principal at Universa Investments; and Rebecca Ryan, founder of Next Generation Consulting.

“Risk professionals today face a rapidly changing landscape as the discipline adapts to the post financial crisis business climate,” says Mary Roth, ARM, executive director of RIMS. “This was our mindset as we set out to bring the brightest, most innovative speakers to RIMS 2010. I am confident that the keynote addresses will be packed with both sound practical advice and inspiration.”

The Speakers:

Gary Loveman is a former associate professor at the Harvard University Graduate School of Business Administration. He joined Harrah’s Entertainment as chief operating officer in 1998 and drew on his extensive background in retail marketing and service-management to develop and implement the gaming industry's most sophisticated and successful loyalty program, Total Rewards. Loveman has earned the distinction of being recognized as the gaming and lodging industry's best CEO by Institutional Investor magazine for four consecutive years. He is the past chairman of the American Gaming Association and a director of Coach, Inc. and FedEx Corporation. He also sits on the Board of Trustees at JoslinDiabetes Center in Boston and on the Trust Board at Children's Hospital Boston. He holds a Ph.D. in economics from M.I.T., where he was an Alfred Sloan Doctoral Dissertation Fellow, and a B.A. in economics from Wesleyan University.

Nassim N. Taleb is a scholar of risk and model error, literary essayist, and derivatives trader. He is known for a multidisciplinary approach to the role of the high-impact rare event –across economics, philosophy, finance, engineering, and history. He is author of the New York Times best-seller The Black Swan: The Impact of the Highly Improbable which was voted by paper as one of the 12 most influential books since World War II. His books have more than two and a half million copies in print in 31 languages, making him one the most read and most translated essayists. Taleb is currently distinguished professor in risk engineering at New York University Polytechnic Institute and Principal at Universa Investments. He has an MBA from Wharton and a PhD from the University of Paris.

Rebecca Ryan is an energetic entrepreneur and the founder of Next Generation Consulting (NGC), a research and consulting firm that helps clients engage the next generation. NGC has conducted interviews, focus groups, and surveys with over 30,000 young professionals since 1998. Ryan is author of Live First, Work Second: Getting Inside the Minds of the Next Generation and was named the 2004 Entrepreneur of the Year by the U.S. Association for Small Business and Entrepreneurship, as well as the 2006 Communicator of the Year by Women in Communication. Prior to starting NGC in 1998, Ryan held posts with the Iowa Department of Economic Development, Iowa Department of Education, Iowa Association of Business and Industry, and Keep Iowa Beautiful. She has played professional basketball in Iowa, Minneapolis, Germany, and Hungary.

About RIMS Annual Conference & Exhibition

Launched in 1963, RIMS Annual Conference & Exhibition attracts some 10,000 risk and insurance professionals at all experience levels, business executives with risk management interests, brokers, insurers and service providers for the ultimate educational and networking experience. The five-day event offers more than 120 educational sessions, keynote presentations, special events and an expansive Exhibit Hall with more than 400 exhibitors. Following Boston, the event will be hosted in Vancouver in 2011. For more information, visit www.RIMS.org/RIMS2010.

RIMS Remembers Samantha Cohn

11/4/2009

RIMS is deeply saddened by the untimely passing of staff member Samantha Cohn, a Senior Meeting Planner with the Meetings & Events department for over four years.

In 2008, Samantha received her Certified Meeting Professional designation and was the MPI Greater New York Chapter’s “rising star”. In 2009, Samantha was appointed to the MPIGNY 2009-10 Board of Directors.

Samantha was a highly regarded member of the RIMS team who excelled at her profession and who had many bright years ahead of her. Her colleagues will remember a sunny individual driven to serve and support everyone around her. Samantha was particularly dedicated to working at RIMS Community Service Day each year and was one of that event’s most motivated participants.

Please join RIMS in remembering a member of our community.

November Issue of Risk Management Now Available!

11/3/2009

RIMS Publishes Executive Report on Insurance Broker Compensation

10/14/2009

RIMS’ ultimate goal in publishing this report is to heighten members’ awareness of the potential pitfalls surrounding the insurance purchase transaction, so they are empowered to press for greater transparency in their negotiations with brokers as well as for regulatory reform in their own states.

“In ideal settings, insurance brokers and risk managers are working very closely toward a common goal—marketing the insured’s coverage to achieve optimal results within the commercial insurance market,” says Deborah Luthi, director, RIMS External Affairs Committee and director of enterprise risk management at Matheson, Inc. “However, because the industry has yet to mandate full disclosure, risk managers must be diligent in their broker selection process. This report gives them the tools they need, not only to successfully make that selection, but to drive a higher standard of conduct industry-wide.”  

The report stresses that any compensation to the broker from insurers with whom the broker places client business must be transparent or eliminated altogether, thus ensuring brokers are acting solely in the interest of their client. Other topics covered within the report include: 

• An extensive outline of insurance broker compensation types;
• Tips for crafting an effective request for proposal;
• Recommendations for delineating services to be provided and associated charges within a Service Level Agreement (SLA).  

RIMS also released today a revised position statement on broker compensation, in tandem with the executive report. In reiterating the call for risk managers to demand full transparency of all revenue streams by the broker in advance of any submission to market, purchase or placement of coverage, the statement also addresses broker-marketed new products and services to carriers.  “While RIMS takes no issue with new products, there must be a separate agreement between the two parties which does not link these services to specific clients.  However, if a broker receives payment from both the carrier and the buyer for placement of insurance products, all transparency requirements should adhere to that transaction,” says Luthi.

Members may download the full report by clicking here.

RIMS Supports Mandated Risk Committees

10/7/2009

RIMS called upon Congress to incorporate this concept into its ongoing effort to craft legislation addressing the corporate governance lapses and business practices that played a major role in the recent market turmoil. RIMS argues that the current system-wide failure to embrace appropriate enterprise risk management practices was a major contributor to the current financial crisis.

RIMS’ position is that the risk committee concept, applied to financial and nonfinancial institutions alike, would help ensure that all institutions of a specified size engage in the effective management of risk across their respective organizations. While RIMS does not endorse any particular standard or practice, according to Pete Fahrenthold, vice chair of the Enterprise Risk Management Development Committee at RIMS and managing director for risk management at Continental Airlines, there are  international standards that can be used as the basis for an effective ERM program for a wide variety of organizations. Under the RIMS proposal, many small businesses would be exempt from these requirements.

Legislation including the risk committee proposal was introduced earlier this year as part of a larger effort by senior Banking Committee member Senator Charles Schumer (D-NY) to make corporations more responsible to their shareholders. The bill, entitled “the Shareholder Bill of Rights” (S. 1074), would require all publicly traded companies to establish risk committees comprised entirely of independent directors who would be responsible for establishing and evaluating risk management practices.

“We are working with Senator Schumer’s office to modify his proposal to make compliance less onerous and more flexible,” says Fahrenthold. “We support an exemption for smaller organizations, and a modification that would allow the number of independent directors on the risk committee to be determined on a sliding scale based on the size of the organization or the extent to which the organization’s operations might pose more risk to the financial system as a whole. We also believe that the function of the risk committees could be incorporated into an already existing audit committee without compromising the integrity of the oversight process.  As for the requisite risk management standards, we believe that the recently developed International Standards Organization (ISO) 31000 provides a solid framework without being too prescriptive.”

RIMS asserts that it is essential to include all companies of a certain size under the umbrella requirement for risk committees, rather than focusing exclusively on financial institutions. A broad application of the risk committee concept would ensure that most large organizations have appropriate risk management oversight, thereby protecting their shareholders as well as the pension plans and qualified retirement plans that invest in the debt and equity securities issued by these organizations. This new requirement will close what would otherwise be a  gaping hole in the financial system’s risk management practices.

In June, the Securities Exchange Commission also weighed in on the debate with proposed rules that would require publicly traded companies to disclose the extent of board level participation in the risk oversight process, and the implementation of risk management practices. According to Fahrenthold, RIMS supports the agency proposal, but asserts it should go further by requiring additional disclosures, including the qualifications of the board members charged with the oversight of risk.

3Q RIMS Benchmark Survey Now Available

10/7/2009

“Insurers have bounced back from the worst first quarter on record, but their results are still pretty grim,” says Dave Bradford, Advisen executive vice president and editor-in-chief of the survey. “Carriers are posting underwriting losses, but in this recession, they have found it nearly impossible to push through rate increases except in a few especially distressed areas.”

Property insurance policies renewed in the third quarter with essentially no change in average premium. Directors and officers liability (D&O) policies also renewed with no change in average premium, though the D&O market remains divided between the financial institution segment, which was pummeled by the subprime mortgage market meltdown and has seen premiums rise, and the rest of the market, which still is seeing premiums drift lower. The average general liability premium fell 3.7 percent and the average workers’ compensation premium was down 4.5 percent. Contributing to lower general liability and workers compensation average premiums were declining sales and payrolls, which are used to calculate premiums.

“It’s still a buyer’s market, and it looks as if it may stay that way for a while,” says Daniel H. Kugler, ARM, CEBS, CPCU, AIC, ACI, member of RIMS board of directors and assistant treasurer, risk management, at Snap-on, Inc. “Under normal circumstances, premiums should be rising by now. But many companies are buying less insurance, and underwriters feel pressured to keep prices low to hold on to the remaining premium dollars.”

About The RIMS Benchmark Survey^TM

RIMS Benchmark Survey™ is produced by Advisen, Ltd., which collects and analyzes the data and provides the technology infrastructure for the survey’s online services. Risk managers and buyers of insurance either contribute directly to RIMS Benchmark Survey™ or by using our “data participation letter” to authorize their broker to provide the client’s program details. The letter is available at www.RIMS.org/brokerform or by calling 800-655-6590. Risk management professionals can also contribute by e-mailing current and prior year policy schedules to Benchmark@RIMS.org or by faxing to 212-655-7453.

Risk managers who contribute data to the survey can benchmark the structure of their commercial insurance programs, retained loss costs, exposure demographics and Total Cost of Risk (TCOR) against a highly relevant group of peer companies. Additionally, survey respondents can use software personalized and configured for their needs to view detailed schedules of insurance, programs for current and past years and full-color program tower charts. Both benchmark charts and program charts can be downloaded into any presentation for senior management. The results of the RIMS Benchmark Survey™ are available online or in an annually-published book. Visit www.RIMS.org/benchmark for details.

October Issue of Risk Management Magazine Now Available!

10/5/2009

Fall 2009 RIMSCOPE is Now Available Online!

9/24/2009

RIMS Rolls Out First-Ever Branded Ad Campaign

9/21/2009

“This brand positioning is intended to capture the attention of current and potential members, alike, reminding them of the uniquely collaborative nature of RIMS membership, and the vast network of informational resources we offer,” said Mary Roth, ARM, executive director of RIMS.  “This is a natural extension of the mission we’ve espoused for the past 60 years—providing innovative education opportunities and attracting a diverse membership to enrich our field.”

The ads are designed to trigger a dialogue among risk managers surrounding such issues as business risk and the vulnerabilities that can result from poor risk management.  They deliver a distinct message to nontraditional members of the risk management community, as well, such as compliance officers, CEOs and CFOs, who should be participating in risk management functions.  Growing RIMS membership in these niche areas is crucial to integrating risk management into a range of diverse business activities.

For more information about RIMS contact Amy Benson at 212.655.6059 or abenson@rims.org.

RIMS to Host Webinar on Medicare Secondary Payer Reporting

9/17/2009

The webinar is FREE for RIMS members. All others may participate for a fee of $30.  For more information, please visit www.RIMS.org/Medicare2009.  

Note: Accredited members of the press are invited to participate in the webinar free of charge.  To register, please contact Amy Benson, RIMS communications associate, at (212) 655-6059 or abenson@rims.org.

RIMS Ontario Chapter Awards Highest Canadian Risk Management Honor

9/15/2009

“We are delighted to have the opportunity to pay tribute to Janice, who is now deservedly ranked among the greatest minds in our field,” says Steve Pottle, president of RIMS Ontario Chapter and risk manager at York University. “Her commitment to risk management is second to none and we are grateful for the talent, innovation and integrity she has brought to the Canadian community of risk managers.”     

McGraw, a RIMS fellow holder, is a part-time lecturer at McGill University’s Centre for Continuing Education. She has served as a member of RIMS Canada Council’s National Education Committee (NEC) and is a past member of RIMS board of directors, RIMS Conference Programming Committee and the Global Risk Management Institute (GRMI) board of directors. McGraw is also a past president of the Québec Risk and Insurance Management Association (QRIMA), and is currently a member of the QRIMA board of directors. She is the recipient of the 2007 QRIMA “Excellentia” Prize, created by QRIMA in 2005 to promote advancement in the field of risk management and insurance.

“It is a great honor to accept the 2009 Don Stuart Award,” says McGraw. “This award is particularly meaningful to me considering the influential group of awardees that precedes me. Recognizing the list of past recipients, and their significant contributions in the field, crystallized my belief that each of us is entrusted with ensuring that the legacy endures for those who will follow us. Volunteering in RIMS ensures the sustainability of these fine organizations, through mentorship and public service, and it gives me incredible satisfaction knowing that I am a part of this enduring legacy.”

Also presented during the conference was the Fred H. Bossons Award, which each year honors the risk management professional who earns the highest marks on the three courses required to receive the Canadian Risk Management designation. This year, a tie resulted in two winners: Samuel Holliss, risk analyst at Magna International Inc. and Brian Jeans, regional technical dangerous goods inspector at Transport Canada.

Arthur J. Gallagher & Co. Commits $100,000 to Spencer Educational Foundation

9/14/2009

“We are grateful for the tremendous generosity of Arthur J. Gallagher & Co., and know that its contribution will be instrumental in cultivating a dynamic next generation of risk and insurance talent,” says Donna Galer, chairwoman of Spencer Educational Foundation, Inc. “This scholarship will be a continuous reminder of the long history of support Arthur J. Gallagher & Co has given Spencer Educational Foundation. We thank Pat Gallagher and his team."

Since its formation in 1979, Spencer Educational Foundation has awarded 454 student scholarships totaling $3.6 million and university grants totaling $1.3 million in the United States, Canada and United Kingdom. The Foundation will begin accepting scholarship applications for the 2010-2011 academic year in November 2009. 

RIMS Endorses Surplus Lines Legislation

9/9/2009

“This vital piece of bipartisan legislation has long been a top priority for RIMS and, while the Society is very pleased to see it make headway in the House of Representatives, it views this as a critical juncture that compels Senate action,” says Deborah M. Luthi, ARM, CCSA, member of RIMS board of directors and director of enterprise risk management services at Matheson. “RIMS views the surplus lines industry as central to the nation’s economic health, and H.R. 2571 will serve to bolster the industry by not only making this insurance more available, but more cost effective as well. It is imperative that the Senate move its version either separately or as part of a larger effort to reform the financial regulatory structure this year.”

 The Non-Admitted and Reinsurance Reform Act of 2009:

• Allows brokers representing large policy holders to go directly to the non-admitted market to purchase insurance;
• Requires all surplus lines carriers to meet certain financial, capital and other criteria in order to be eligible to provide insurance in states; and
• Preempts state insurance regulators from interfering in reinsurance agreements of ceding insurers domiciled in other states. 

The legislation also states that in order for commercial insurance purchasers to gain expedited access to the non-admitted market, an insured must employ a “qualified risk manager” to work with a broker. As a result of RIMS lobbying efforts, the original language was modified to provide a broader definition of a “qualified risk manager” so that most of RIMS members and other risk practitioners will qualify.  

For more information on RIMS legislative activities, visit www.RIMS.org/LegislativeAction.

RIMS to Host Pandemic Action Plan Webinar

9/2/2009

The webinar is FREE for RIMS members. All others may participate for a fee of $30.  For more information, please visit www.RIMS.org/pandemicaction.  

Note: Accredited members of the press are invited to participate in the webinar free of charge.  To register, please contact Amy Benson, RIMS communications associate, at (212) 655-6059 or abenson@rims.org.

Risk Management Magazine Features Military Risk Assessment Report

9/2/2009

RIMS Canada Conference Convenes September 13-16

8/14/2009

Climate change, enterprise risk management and insurer insolvency are three key topics to be explored at the 35th Annual RIMS Canada Conference on September 13-16, in St. John's, Newfoundland. Dubbed "Charting the Course-Navigating Your Risk," the conference is hosted by RIMS Newfoundland and Labrador Chapter. This year's conference features more than 20 breakout sessions. Featured speakers include:

• Gen. R. J. Hillier, retired from the Canadian Forces, speaking on "Corporate and Military Risk Management Strategies"
• Dr. Richard Leblanc, assistant professor of corporate governance, law and ethics at the Atkinson Faculty of Liberal and Professional Studies, York University, speaking on "Enabling and Empowering the Risk Manager"
• Gwynne Dyer, author and freelance journalist, speaking on "Global Events Affecting Canadian Business"
• Rex Murphy, CBC personality, author and columnist at the Globe and Mail, speaking on "Politics, Business and the Media: Communicating in an Age of Clamour"

Other events at the conference include the sixth annual McGannon Foundation 5K Fun Run / Walk, sponsored by FM Global and RIMS Canada Council. Proceeds will benefit the William H. McGannon Foundation, which provides resources and grants to advance risk management in Canada. Other networking events include an opening reception, gala and Exhibit Hall coffee breaks and luncheons.

Online registration closes August 28. On-site registration will be available on September 12. Complete details and registration for RIMS Canada Conference are available at http://conference.RIMScanada.org.

RIMS Members: Financial Solutions Just a Click Away

8/13/2009

RIMS now offers its members the services of a full-fledged credit union and financial advisory to support them with a variety of commercial and personal financial solutions including real estate programs, loans and wealth management services.

To learn more about RIMS financial services program, visit www.RIMS.org/financialservices.

New RIMS Committee Assists in Development of Risk Management Standards Internationally

8/13/2009

RIMS Standards and Practices Committee will enable the Society to increase its profile in the standards and practices arena and make it the primary resource in shaping and developing global risk management standards. Initial tasks of the committee include educating risk managers and organizations on various risk management standards, including ISO 31000 and Guide 73. The committee will also work with the U.S. Department of Homeland Security on voluntary preparedness and business continuity.

Wayne L. Salen, ARM, CHCM, CPSM, member of RIMS board of directors and director of risk management at Labor Finders International, Inc., serves as the first board liaison for the committee. The committee is chaired by Carol A. Fox, ARM, past chair of RIMS ERM Development Committee and senior director of risk management at Convergys Corporation. The vice chair of the Standards and Practices Committee is Manus C. O'Donnell, ARM, CPCU, administrative vice president and director of corporate insurance and risk at M&T Bank. Other members include:

• Susan T. Barry, ARM, CPEA, PG, director of risk management at DRS Technologies, Inc.
• Sandra J. Bodensteiner, ARM, claims manager at the City of St. Paul, Minn.
• Kristen Drobnis, CBCP, CSOX, PMP, senior vice president of risk management at MassDevelopment
• Lois A. Gardiner, CMA, FCIP, FRM, director of risk management at Canadian Pacific Railway
• Yvette Ho Sang, ARM, risk management analyst at the Institute of Electrical and Electronics Engineers, Inc. (IEEE)
• Paul B. Piazza, risk manager at Honeywell International Inc.
• Nathan Bacchus, RIMS state and regulatory affairs associate

RIMS to Host Hurricane Disaster and Recovery Webinar

8/6/2009

RIMS will host a webinar, Disaster and Recovery: Preparing Your Business for Hurricane Season, on Thursday, August 13, at 1:00-2:00 pm EST. This webinar, sponsored by Ernst & Young, will discuss what companies can do right now, and immediately after a hurricane or other disaster strikes, to expedite and optimize operational, business and financial recovery. Panelists include David B. Goodwin, partner at Covington & Burling LLP; Nigel Henley, senior manager of insurance claims services practice at Ernst & Young; Polly E. James, manager of risk analysis and control at General Motors; and Allen Melton, partner and Americas leader of insurance claims services practice at Ernst & Young.

The webinar is free for RIMS members. All others may participate for a fee of $30. For more information, visit www.RIMS.org/2009HurricaneWebinar.

RIMS Western Regional Conference to Convene on September 22-25

8/5/2009

Top executives from Aon Risk Services and Marsh will address the current state of the insurance market and how companies can save money and look to alternatives to transfer and finance risk at RIMS Western Regional Conference on September 22-25 in Seattle, Washington. Risk managers will hear from Eric Andersen, CEO, ARS - U.S. Retail, Aon Risk Services and Joe McSweeney, president, U.S. & Canada Operations, Marsh discuss new and creative solutions to manage risks through an economic downturn. The conference, tagged "Fresh Ideas, Market Choices and Sound Decisions," is hosted by RIMS Washington Chapter. The deadline for early bird registration is August 21.

The conference features more than 30 educational sessions on a variety of industry issues such as the current macro and micro economic situation, the value of insurance in a recession, mergers and acquisitions, pandemics, piracy and sustainability.

The deadline for early bird registration is August 21. Online registration closes September 8. On-site registration will be available on September 22. Complete details on RIMS Western Regional Conference may be found at www.RIMS.org/WRC.

Risk Management Magazine Features Captive Domicile Review

8/3/2009

The July/August issue of Risk Management features our Fifth Annual Captive Domicile Review with a listing of 25 of the world's most popular captive domiciles. Also featured is our annual mid-year review of the property/casualty industry along with features about using group captives for health insurance and utilizing return-to-work programs in unionized companies. Columns covering how to look at risk strategically and how to control public perception are also included, among others.

Read the June issue online at www.RMmagazine.com.

RIMS Opposes H.R. 3424

7/31/2009

RIMS reiterated its opposition to legislative efforts disallowing the tax deduction for reinsurance premiums paid to foreign affiliates by domestic insurers. The legislation, H.R. 3424, was reintroduced by Rep. Richard Neal, D-Mass., a senior member of the U.S. House of Representatives Committee on Ways and Means and chair of the House Subcommittee on Select Revenue Measures.

"H.R. 3424 would limit the tax deduction to the industry index for each line of property and casualty insurance and, in doing so, would have a chilling effect on these entities and their willingness to serve as a safety valve in many areas of the country," says Deborah M. Luthi, ARM, CCSA, member of RIMS board of directors and director of enterprise risk management services at Matheson. "This bill would severely inhibit domestics with foreign affiliates from engaging in a legitimate risk management practice. The result is a disruption to the market, reduction in the supply of insurance in the United States and an increased cost to the commercial insurance consumer by $10-12 billion per year for the same amount of insurance."

RIMS is very concerned that this legislation goes against the recent Brattle Group report, "The Impact on the U.S. Insurance Market of a Tax on Offshore Affiliate Reinsurance: An Economic Analysis," which found that the bill could eliminate the practice of domestic insurers ceding to their offshore affiliate reinsurers.

Current tax code law permits insurers to deduct reinsurance premiums paid to affiliate foreign reinsurers with no penalty or cap. Over the years, non-U.S. reinsurers have served as an important backstop, ensuring the availability of insurance, particularly in areas prone to natural disasters. RIMS opposed similar legislation in 2001, 2007 and 2008. For more information on RIMS legislative activities, visit www.RIMS.org/LegislativeAction.

Illinois Decision to Allow Contingent Commissions Disappoints RIMS

7/29/2009

RIMS is disappointed with the decision taken by the Illinois Attorney General and the Illinois Department of Insurance to allow Arthur J. Gallagher & Co. to begin accepting contingent commissions. RIMS has consistently stated that contingent commissions should be broadly prohibited as they represent an inherent conflict of interest. The investigations, admissions and fines that culminated in the agreement signed by some brokers in 2005 prove that these practices can be, and were, manipulated to the detriment of the insurance consumer.

"RIMS is concerned that Arthur J. Gallagher & Co., who signed the agreement in 2005, is now permitted to participate in this compensation practice," says Terry Fleming, RIMS vice president and director of the division of risk management at Montgomery County, Maryland. "However, we hope that full disclosure of all forms of compensation will be provided to the insurance buyer in a timely manner. This will allow the consumer to determine whether the broker is acting in their best interest, before binding the contract."

The decision to lift the ban on contingent commissions comes without any concurrent proposal by the Illinois Department of Insurance and Attorney General to regulate producer disclosure. RIMS has great reservations about lifting the ban on contingent commissions without strong protections for consumers.

RIMS strongly urges Arthur J. Gallagher & Co. to continue to use the compensation disclosure requirements that were part of the 2005 agreement. Historically, RIMS has argued that, in the absence of a ban on contingent commissions, all forms of compensation-direct and indirect-should be fully disclosed to the consumer. This is a crucial component to the relationship between producer and consumer.

RIMS remains troubled that the insurance industry promotes compensation practices that can lead to conflicts of interest. The Society hopes for a continued open dialogue between all parties on issues of producer compensation and disclosure.

Second Quarter RIMS Benchmark Survey Shows Commercial Insurance Premiums Under Pressure

7/28/2009

However, depletion of insurance capacity signals rising commercial insurance rates

Despite poor financial results, insurance companies continued to compete vigorously for business in the second quarter, according to RIMS Benchmark Survey™. General liability and workers' compensation policies both posted average decreases in renewal premiums. Directors and officers liability (D&O) policies renewed at higher premiums on average, but the increase was due to financial sector companies, a segment that has been bloodied by the subprime mortgage meltdown and credit crisis. Property policies renewed at essentially no change.

Workers' compensation recorded a 2.8 percent average decrease in renewal premiums, as compared to a 1.7 percent drop in the second quarter of 2008, and general liability posted a 1.1 percent drop as compared to nearly a 5 percent decline a year ago. D&O increased 2.9 percent, a reversal of the 6.4 percent average decrease in the second quarter of 2008. However, excluding financial services companies, D&O policies renewed with a 4.1 percent average decrease. Property premiums fell less than 1 percent, which compares to a 6.1 percent drop in the second quarter of 2008.

For more information, visit www.RIMS.org/benchmark.

Spencer Educational Foundation Launches New Website with Professional Networking Tools

7/27/2009

Spencer Educational Foundation, Inc. today unveiled its new website, www.spencered.org. The newly designed site provides professional networking opportunities for students studying risk management and insurance, and offers a convenient way for students to interact with risk practitioners. On the site, users can create and manage profiles, form special interest groups, participate in online discussions, explore scholarship and grant programs, learn about upcoming events and make a donation. Other features of the re-launched website include:

• easy access to information about the Foundation's programs;
• the Foundation's events calendar;
• an improved online payment system for contributors; and,
• a link to the Foundation Community (eGroups, Member Directory and Resource Library).

Support Spencer Educational Foundation in its pursuit of excellence—tour www.spencered.org today! 

“Building an Enterprise Approach to Risk and Performance” White Paper Now Available

7/15/2009

The article focuses on certain elements of RIMS Risk Maturity Model (RMM), namely adoption of an ERM-based approach, process management and risk appetite management.

The article is available to RIMS members at www.RIMS.org/RiskInsights.

RIMS and Marsh Release Excellence in Risk Management VI Report

7/14/2009

RIMS members can download a copy of the report at www.RIMS.org/ResourceLibrary.  Others may access the report by registering at http://global.marsh.com/news/articles/excellence/register.php.