URMIA Matters

Episode 4: The Tightening Insurance Market with URMIA Leadership

November 20, 2019 URMIA Season 1 Episode 4
URMIA Matters
Episode 4: The Tightening Insurance Market with URMIA Leadership
Show Notes Transcript

Leverage the experience and knowledge of URMIA’s leadership team as they discuss how to successfully navigate insurance market cycles – especially hardening market conditions – with host Jenny Whittington. Courtney Davis Curtis, executive director of risk management at the University of Chicago; Chauncey Fagler, executive director & CRO of the Florida College System Risk Management Consortium; and Luke Figora, senior associate vice president & chief risk and compliance officer of Northwestern University, provide practical tips that anyone can implement.

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Jenny: Hello everyone this is Jenny Whittington, Urmia’s Executive Director and welcome to another addition of URMIA Matters, our new podcast. So with me today I have three members of our Leadership team. I have Courtney Davis Curtis from University of Chicago. She is our president elect right now. I have Luke Figora from Northwestern University and then I have Chauncy Fagler from Florida Consortium. So, welcome everyone to our podcast, thrilled we can be here today, and our subject today is the hardening Insurance Market. I know the three of you were kind of involved in the article that we just recently published in URMIA insights, our electronic newsletter. So I just wanted you guys to highlight some of the areas of concern, any tips for our members so why don't I kick it off with Courtney, why don't you start at the top and then we'll just make this very organic conversation.

Courtney: Sounds good, thank you. You know, this is a very interesting market, especially after going through the last renewal cycle and I think we're looking and anticipating some of the same coming up in the next year and so I think it's critically important that knowing that we’re already in this position that assess risk managers start to think and plan ahead. And in that same conjunction, it's really important for us to communicate and communicate often with our leadership team as well as our peers and counterparts across the Enterprise we work with so that everyone is prepared to know what to expect, whether we're talking about the budgetary process, the renewal application process because it can require a lot of time and energy from others outside of the risk management world.

Jenny: Very good. Luke, why don’t you talk about your own experience with it.

Luke: so far, Northwestern’s experience with it has been relatively tame, and I think, as Courtney was saying, we’ve tried to take an eye towards the future, and what might be next. I really do echo her comment around communication. I think for many of our members this will be the first time they've had to give challenging messages to campus leaders and thinking through how to best set themselves up for success in those conversations will be an important step as this potentially continues to get worse.

Jenny: So, when you say challenging, will you be more specific? Is it dollars and cents we’re talking about, or is it more complicated than that? 

Luke: I think it varies. I think dollars and cents is one piece of it, but I think for many of us that actually comes second behind “can you buy the breadth the coverage that you're looking for?”, “can you protect yourself against all the risks that you’d ideally like to transfer out to the markets?”. Over the last handful of years, that hasn’t been a hard challenge for most of us, I think. But, I think we're seeing while price is moving, terms and conditions are also kind of following alongside that. 

Jenny: Just to give everybody a little bit of a demographic, you two are both with, shall we say, private institutions. So Chauncey, why don’t you get in here and talk about your experience and tell a little bit about your college system.

Chauncey: Well, we’re basically a two-year system in the state of Florida, all of the publicly funded community colleges are in the system, there’s 28 of them. Basically, we cover from Pensacola to Key West. You had asked earlier about what we're seeing as specifically in the market and as we get ready for our renewal this year and having two hurricanes in the last 2 years, we’re potentially going to see 30 to 60% increases just on our property premiums. So, we’re gearing up for that. As the colleagues already mentioned here, communication is very important. I have already been in front of the council presidents and given them a heads up on that; it was sort of a deer in the headlights look I got back when I told them 30 to 60% increases. But it is important to have that opportunity to communicate and get in front of your group that way. 

That’s quite an increase. I’m not sure how, if somebody told me my mortgage was going up 30-60%... I mean that is a number that is really hard to deal with. How do your schools fund it? Chauncey: That's the question, that really is the question. In the other side of that conversation, Luke alluded to this too, can you hang on to your limits that you already have? So we’re looking at those increases hoping to hang onto our 100 million limit and not have to decrease the limit. Considering we just had hurricane Michael come through, we spent 60 million dollars of a 100-million-dollar limit on two colleges. So, it’s a game of rolling the dice at this point. 

Luke: I would say I think different schools will deal with this in different ways. Certain institutions that have resources will be able to plan for this and even if percentage increase like Chauncey is alluding to can be sustained if you get far enough out in front of that, right. Other schools will start having to make harder decisions between buy and no buy, or do I allocate dollars here there because they're really dealing with more of a finite spend overall.

Chauncey: And you know, on of the strategies that we’ve always practiced in our system is that when the market is soft, we will buy more limit. So, as the market starts to firm and harden, we can give away that limit and spend the same amount of dollars. But again, a bit of a gamble when you have to get everyone to a certain confidence level. It gets into risk tolerance and risk appetite and all of these scenarios that you discuss with your groups. 

Jenny: Would you two say that that’s a common theme? Do other risk managers practice that same strategy?

Courtney: I think it will be a hard conversation to have at our institution; we would always like to hold onto the limit, but what you may have to deal with in these types of renewals is you may be able to keep the same limits, but some of the coverages that are afforded may change a little bit. So, allow the conversations when you’re looking at liability in particular, traumatic brain injury or sexual abuse or molestation. So your overall limits may stay the same, but you can anticipate that there may be some difficulties maintaining the full breadth for all types of coverages under respective line of coverage. 

Jenny: Ok, that’s fair. So, I know in the URMIA world, our relationships with the brokers and the the underwriters are critical to what you all do. Can you guys all talk about how important that relationship is, and how you can leverage that through these kind of tough market conditions? 

Courtney: Yeah, I think one thing to keep in mind is that you don't have to have a conversations alone that were talking about. Sometimes it helps to have the experts right there with you, whether that's your broker partner, or having the insurers come out to the campus and talk with the leadership team so that they understand exactly what it is that you may be experiencing, especially from their perspective. I think that that’s really important. Sometimes that even requires you going to them, so that’s kind of a change in position for us as Risk Managers. A lot of the times we expect perhaps the broker partner to come to us, or the Insurance Partners to come to us but I think in this market we have to do something a little bit different, especially to make our case to those insurers and brokers.

Luke: I think that this is the time that universities and schools need to differentiate themselves in terms of risk, and I can speak only for ourselves, but we’ve really tried to treat our partners fairly over the last 10 years. So, even when the market has been soft, we’ve been hesitant to move coverages or shop around because we want those long-term Partnerships in place, and so our hope is that since we’ve treated them fairly when the market was on the other side, they’ll do the same, and we can keep those relationships even through what’s a more difficult cycle. 

Chauncey: And I agree. I think your broker is a big piece of the conversation and they can certainly give you the data and the background and history to help set the expectations when you speak to your boards and your individual colleges or campuses, however you’re set up.

Jenny: And how about talking among yourselves? Is consulting with your peers one of your tips as well?

Chauncy: Definitely, but I think we’re all a bit different . If you’re in a big system in an area that is prone like I am, then the conversation goes right to property all the time, and liability becomes secondary, one of my other colleagues here might be able to speak to that. Certainly the conversations amongst ourselves are always going on.

Luke: I think it helps to hear what others are dealing with. I think we're all unique, and we have different sets of issues that we're trying to resolve, but knowing what Chauncy may have experienced three or four months ago will at least help me prepare for some of those themes maybe a month later. 

Jenny: Do you use, I know in a group like the Big Ten in friends that I've had the pleasure of attending that meeting over the years, I know there are a lot of cohort groups that go on, are those helpful in these situations where you can bounce ideas off of like-institutions? 

Courtney: I think so. Sometimes it just helps to understand what others are hearing to make certain that the message has the same and consistent amongst others that may be similar in terms of public and private etc. but to a certain extent you also want to appreciate, like Luke and Chauncey both said, some of the things that make you different as well. And so I think the experience is one that we can all kind of share in. 

Jenny: That makes good sense. And another one of your tips is to be flexible, can you guys all kind of expand on what that means?

Courtney: Yeah, so in in this market the things that may have worked for you in years past may not in this time frame and so you always want to be in the position that you allow your institution to be cool, as Chauncey and I were kind of talking about and think outside of the box. Just because you had a program structure or workerd with an insurer in the past, it doesn’t mean that it is the same way that it needs to necessarily be in the future. I think being open to new ways and approaches and how you represent, I think you also have to be flexible in how you’re selling yourself to a certain degree, to explain what it is that you’ve done to differentiate yourself, whether it’s new policies and procedures you’re implementing or the conversations you’re having at the institution, or enterprise risk management is always a good topic to discusswith your insurers about the things that may have an impact to your program may be helpful to sell yourself in a different way. 

Jenny: That’s really good to know. When I first started with URMIA a long time ago, I first started working on URMIA’s insurance renewals, Ellen Shew Holland helped me really develop a marketing brochure that I submitted every year with our insurance applications because she daid how important it was to market, to get the insurer, the broker, the underwriter to understand who we are, and in URMIA’s perspective, how little risk we have in comparison. Is that similar what you do? I mean, paint a picture like what your whole program is and what great risk management programs you have in place that are protecting the institution? Am I up the right alley there? 

Chauncey: On of the things that we do especially when we go to London, we take a placemat so we can show the London underwriters what we do on the property side, we also include a little bit of employee benefits side, because they always like to hear about enterprise risk management. So it’s a very quick way to tell the story, plus you can point and guide them the way you want the conversation to go vs. the way they wan t the conversation to go, so it’s important to have something that you can talk from as your discussion point piece and we just always call it a placemat.  

Jenny: That’s really clever. Luke, do you do anything like that? 

Luke: So, we've done a placemat. London didn’t like ours as much, but the other thing we’ve done over the last couple years is, I do my best to deliver the message on behalf of the University, but I also know that I’m not the expert in everything. For example, last year, given how much concern has been out there with brain injuries and concussions, we took an approach of actually bringing our head of sports medicine to the markets in Bermuda in London with us so it kind of let him sort of tell the story directly to the insurance market, and let them ask questions about science and medicine that frankly I couldn’t answer, and I think that bought them some comfort with what’s kind of unique with Northwestern and our programs but also felt they felt like they were hearing more than they felt kind of heard otherwise. So it’s not something filtered through the media, or I read this in a newspaper article, this person actually understands the science is telling me kind of what the current state of things are. So, we found that we got a lot of bang for that and our insurance partners really appreciated that. 

Chauncey: I actually do take one of my operations committee members, which is like a board of trustees if you will, with me every year to London so they get perspective, and they’re usually a CFO from on of the colleges, so they get, the underwriters get a perspective from a college individual perspective, plus someone that serves on the board and what the consortium does and why it’s important, and a lot of times the conversation ends up happening more between the underwriter and that person because they’re just interested in someone else other than the insurance guy, so to speak.  

Courtney: You can also hit the tough discussions head-on especially with regards to claims, also having those who don't firsthand, whether that is someone from general counsel, there to speak to that and show the history and the details behind your program as well. I think they always are interested in learning what we’re doing to prevent the claims in the risk from happening but how are you actually responding when those events occur as well, because that's where they're concerned about where things may funnel up to their lair, so what is your expertise to kind of mitigate before things become a dollar or a cost to them. 

Jenny: Wow, that’s really good. So this might be kind of a naïve question, and so some of our members, you know, go to London every year, and kinf of have those meetings face to face, and some of our members do not, can you guys educate me on why that happens, why not all of our members go to London? Is it a comfort zone, is it a maturity, is it an experience thing? 

Yes. I think it would depend on your institution. First of all if you’ve got budget concerns because it's not an inexpensive trip, but for us it's worthwhile going especially when the amount of  dollars we spend on property alone but also I’ll tell you that we also spend the same amount of time with her domestic carriers here in the US we actually have a meeting before we go to London with domestics and get a sense of what the market’s doing here so if we have to bounce them off one another we can do that while we’re in London. I think size of institution and what your budgetary constraints might be, but if you can go you should go because you know, think about the European markets, they will love those face-to-face meetings more than anything else. It will build repour and one of the things that we're hopeful as we move forward is that, because we’ve been going to London now for seven or eight years in a row, we will be able to at least hold on capacity if we can afford it.

Courtney: Sometimes it could be optics as well. It may not be the best for your institution to depending on what your budgetary challenges are to hear that there's a colleague going to London, or there’s dollars being spent there, and so it may not be the best message for the institution and that's why I like trying to suggest that having meetings here domestically, locally as well even if it's a video conference in any way to put a name and a face together or making anything to differentiate beyond the submissions are seen from others in other industry as well. 

Jenny: Ok, very good. Anything to add to that, Luke? 

Luke: I think every Institution is a little bit different. You’re talking to three that have pretty large risk portfolios at the end of the day and need to scour the world for the amount of capacity that we’re trying to buy. There are absolutely smaller schools that are protected by different kinds of immunity that ultimately don't need the same layers of coverage that we do and so it's completely appropriate for some schools to work domestically and buy the limits of coverage that they need. Not everyone needs to be trading what we are.
 Courtney: And I think your broker can help to assess what may be necessary for your respective institution or to the extent they're coordinating market meetings with others in the area region you may be able to benefit from them bringing the markets to you in that regard if that's what's best for your institution. 

That totally makes sense, thank you for answering my naïve question. So we're wrapping things up, now do you guys have any closing comments on the market in general, any advice you want to give to fellow urmians out here? 

Courtney: Start early- 6-7 months in advance, even though it may seem like you just finished wrapping up your last renewal, it's never really too early to start thinking about it and preparing to have a conversation to know what it would it's going to look like the next 6-7 months ahead of you. 

Luke: Yeah, I think also try to map out for your campus leadership kind of a longer-term view on this stuff and so it's easy to view things as 30% year-over-year is unsustainable, but if you look at it as more of a five or six-year window, you might find that there are ways to spread those costs, or balance them over time. I’d encourage people to take a longer view on some of these decisions vs. just the year-over-year decision-making process.  

Chauncey: And again I think you should also consider a look-back, so go back and look at what you were paying 5, 6, 10 years ago and you may not even be paying that premium today, because the market has been so soft for so long, so you really have to go back and know your data and be able to tell the story for even several years back to where you are today and what you anticipate. 

Jenny: Ok, that’s excellent. Thanks so much to the three of you for being part of our podcast, URMIA Matters, that will be a wrap for today. The URMIA Matters podcast is brought to you by the University Risk Management and Insurance Association, you can find and subscribe to the podcast on any podcast app and while you’re there, we’d appreciate it if you give us a 5 star review.