Retailer Risk: The Tipping Point IND019

Transcription

1 Speakers: Retailer Risk: The Tipping Point IND019 Carol L. Murphy, Managing Director, Aon Risk Solutions Maggie Biggs, Director, Risk & Insurance, PetSmart Lé Andra Holly, Senior Manager, Risk Management, Staples, Inc. Dave Smith, Director, Risk Services, Advance Auto Parts

2 Learning Objectives At the end of this session, you will: Understand new analytics available to help reduce TCOR Learn how specialty retailers address benchmarking and analytics and adapt to unique business models Understand the benefits of big data for operational improvement Cautionary insights

3 Carol Murphy Managing Director Aon Risk Solutions

4 Today s Discussion Continuous Improvement Journey The Tipping Point Communicating Impact Understanding Unique Exposures Targets and Corporate Culture Technology Solutions Actuarial Direction Process Improvements Cautionary Tales Scorecards and Beyond Thank you and Questions

5 Retailer WC Costs A B

6 WC Costs Analytics

7 Collateral and Credit Analytics Benchmarking collateral outcomes by credit rating Program scale / potential caps on unsecured exposure Credit advocacy Alternative forms of collateral Multiyear approaches and agreements Actuarial and data integrity

8 Risk Financing Analytics Risk Financing Decision Platform (RFDP)

9 Risk Financing Analytics

10 TCOR Analytics

11 Retail WC Cost Drivers

12 Sample TCOR Strategy

13 TCOR Results Growth Company WC Loss Costs Comparison Actual v. Status Quo

14 Claims Benchmarking - RTW *Data developed to ultimate settlement value and trended to FY2015 basis.

15 Claims Benchmarking - RTW $15,000,000 Estimated Ultimate TTD Claims Savings* $12,000,000 $9,000,000 $6,000,000 $3,000,000 $- FY2011 FY2012 FY2013 FY2014 FY2015 *Potential Savings do not specifically distill only the impact of RTW, but reflect an estimate of overall savings on TTD claims due to claim severity reductions.

16 Communicating Impact CFOs don t like surprises Stability Prediction accuracy Alignment with corporate finance strategy and corporate strategic plans Not all risks important to CEO or CFO appear on financial statements So what response to data generation Prioritization Conflicting incentives Metrics compliance vs. impact Example: OSHA statistics vs. workers compensation costs Common language Other considerations?

17 Maggie Biggs Director, Risk & Insurance PetSmart

18 Who is PetSmart?

19 PetSmart s Total Cost of Risk (TCOR)

20 Risk Management & Safety Story WC Claims GL Claims FY'06 FY'07 FY'08 FY'09 FY'10 FY'11 FY'12 FY'13 FY'14 FY'15 FY'16

21 Pet Specialty Retail What do we do to understand and mitigate our unique exposures and non-traditional risks? How does this impact benchmarking and analysis?

22 Data Driven Risk Management You can t impact what you can t measure Leverage existing internal and external capabilities Emerging Tools What is your priority / guiding light?

23 Lé Andra Holly Senior Manager, Risk Management Staples, Inc.

24 Staples Risk Management MAKE MORE HAPPEN! GET THE RIGHT INFORMATION TO THE RIGHT PEOPLE AT THE RIGHT TIME! DRIVE LOSS AND SAFETY NUMBERS DOWN AND CORPORATE-WIDE KEY PERFORMANCE INDICATORS UP!

25 Primary Targets Direct Costs Reduce Insurance Premiums & Collateral Reduce Claims Costs & Expenses Indirect Costs Reduce Downtime & Decreased Quality Reduce Need to Replace Associates Reduce Need for Replacement Vehicles or Equipment Increase Morale Retail-Relevant Increase Sales Reduce Shrinkage Increase Stock Turnover Rate Increase Customer Retention & Service Scores Remove Need for Unionization

26 Challenges Small Risk Management Department Inability to Efficiently Combine Data From Multiple Sources Inability to Efficiently Measure Processes, Programs & Mitigation Plans Information Flow Bottlenecks & Gaps

27 Solutions: Technology Risk Management Information System (Riskonnect) Increased Risk Management Visibility throughout Staples Eliminating Manual Processes & Streamline Risk Management Processes Improving Ability to Identify, Manage & Mitigate Risk in a Timely Fashion Ability to Share & Manage Multiple Sources of Data Efficiently Maximizing Cost-Saving Opportunities Efficient Use of Time & Risk Management Resources Proactive Risk Management

28 Data Integration Sources of Information Insurance & Claims Disability Management Finance & Accounting Human Resources Learning & Development Loss Prevention Safety & Health Wellness The Big Picture DOWN TO THE DETAILS & CIRCUMSTANCES DRIVING THE TOTAL COST OF RISK What s Really Going On?

29 Proceed with Caution Meaningful Data Meaningful Tools & Functionality Data Integrity Audience Timing Of Integration & Information

30 Solutions: Processes Shift Claims Management Strategy Encourage Creative, Cost-Effective Claim Management Solutions Via Data Analytics, Team Engagement & Empowerment and Measurement Of Outcomes Claim Cost Analysis Identified Gaps Inherent in Traditional Claims Management Processes Developing & Implementing Various Cost Effective Solutions

31 Return on Investment Insurance Management Better Story to Tell Underwriters Reduce Insurance Premiums & Collateral Obligations Increase Carrier & Coverage Options Claims Management Performance Based Measurement of Internal Claims Partners & Service Providers Aggressive Integrated Return to Work Program Targeted Cost Saving Opportunities Pharmacy, Hospital, IMEs, PT, NCM, SIU, Legal & Managed Care Costs

32 Return on Investment Loss Prevention & Safety Culture of Wellness & Safety Focus on Quality, Execution & Associates Overall Health as an Investment in the Future of Staples Vendor Management Certificates for High Exposure Suppliers & Service Providers Technology, Medical, Distributors, Manufacturers, etc. Easily Identify Contingent Service Providers Cyber Liability & Property Programs

33 David Theron Smith Director, Risk Services Advance Auto Parts

34 David Theron Smith Director-Risk Services Advance Auto Parts Roanoke, VA Analytics & Metrics The Strategic Payoff Total Cost of Risk Actuarial Management Analytics Goals & Objectives The Basics The Buzz The Real Stuff Managing Your Actuary

35 Analytics Goals & Objectives Operational Financial Reduction in the Rate of Total Cost of Risk (TCOR) Reduction in Ultimate Liabilities Actuarial Management

36 $ MILLIONS Strategic Analytics & Metrics TCOR/Actuarial Management Total Cost of Risk Actuarial Savings Opportunity Premium 27% Administrative 10% Claims 64% $4M $4.5M $6M $8.5M $2M $8.2M $4.2M $6.2M $4.5M $5.8M $6M $3.2M INCURRED YEAR (AS OF ) Performance Measurement: TCOR as a Rate Manageable. PAID RESERVED IBNR

37 Basics Scorecards & Benchmarking Where we ve been Where we are

38 The Buzz Where We re Going Predictive Modeling What is it? An attempt to predict future outcomes based upon historic data or behavior. An attempt to forecast probabilities and trends based upon data mining of what has already happened An attempt to leverage statistics to predict theoretical outcomes. A tool on which to formulate strategic initiatives It s a science, it s Actuarial.

39 The Real Stuff Beyond the Scorecards Risk Management Information Systems (RMIS) A business tool creating greater risk management efficiencies through consolidation of data and information with the ability to generate customized outputs of information. Leveraging Partnerships for Customized Metrics & Analytics Consolidates information detail to assess and manage risk addressing: Loss avoidance Insurance policies and coverage Loss data Risk Characteristics Predictive Modeling Financial reporting Administrative Some Examples Auto Managed Care Pharmacy Legal Enables increased program customization

40 Fleet Data Analytics Million Miles Analysis - PMM Year Total Claims PMM Controllable Claims PMM Preventable Claims PMM Miles Driven ,811, ,235, ,278, ,191,604 % Change From % -5.8% -0.5% 32.6% Accident Frequency Trending

41 Technology-Driven Data Analytics Telematics-Integrated Administrator Solution Risk Level 4 Total Damage Cost: $7,813.53

42 Fleet Data Analytics Accident Trend & Benchmark Comparison Client vs. Similar Fleets For The 5 CEI Major Types # = Client 2014 Claim Count

43 Managed Care Analytics Spend Analysis 2016

44 Managed Care Analytics Utilization Analysis 2016

45 Pharmacy Analytics PBM Reporting & Analytics

46 Legal Expense Analytics Division Analysis % HOURS BILLED % AMOUNT BILLED 46.50% 11.29% AUTO LIABILITY 41.30% 9.88% 42.22% GENERAL LIABILITY WORKERS' COMPENSATION 48.82% AUTO LIABILITY GENERAL LIABILITY WORKERS' COMPENSATION TOTAL LAW FIRMS MATTERS ,797 INVOICES 564 5,428 9,312 15,304 HOURS BILLED 6, , , , % HOURS BILLED 11.29% 42.22% 46.50% % AVERAGE RATE $ $ $ $ FEES BILLED $ 988, $ 4,249, $ 3,760, $ 8,998, COSTS BILLED $ 19, $ 736, $ 456, $ 1,212, CREDITS/DISCOUNTS BILLED $ $ (3,303.93) $ (2,117.66) $ (4,861.59) AMOUNT BILLED $ 1,008, $ 4,982, $ 4,214, $ 10,206, % AMOUNT BILLED 9.88% 48.82% 41.30% % REALIZED ADJUSTMENTS $ (43,968.53) $ (458,197.12) $ (461,736.79) $ (963,902.44) % REALIZED ADJUSTMENTS -4.36% -9.20% % -9.44%

47 Amount (USD) Sample Net Savings Analysis $300, $250, $200, $150, Recommended Adjustments Realized Adjustments Quovant Fee $100, $50, $- Quarter Amount Billed * Recommended Adjustments In-House Returns % In-House Returns * In-House Adjustments Approved Appeals Realized Adjustments % Realized Adjustments Quovant Fee Net Savings % NET SAVINGS Q $ 22, $ (3,110.95) $ % $ - $ - $ % $ $ (660.67) -3.00% Q $ 420, $ (69,183.98) $ 3, % $ (23.25) $ 9, $ (15,418.16) -3.68% $ 12, $ 2, % Q $ 545, $ (49,026.97) $ % $ (19.43) $ 14, $ (29,621.08) -5.72% $ 16, $ 13, % Q $ 573, $ (76,981.67) $ 1, % $ (84.15) $ 29, $ (46,154.71) -8.20% $ 17, $ 28, % Q $ 608, $ (69,446.56) $ % $ (20.01) $ 18, $ (51,119.34) % $ 18, $ 32, % Q $ 458, $ (64,755.15) $ % $ - $ 24, $ (37,026.19) -8.81% $ 13, $ 23, % Q $ 781, $ (257,086.18) $ % $ - $ 94, $ (161,594.66) % $ 23, $ 138, % Q $ 549, $ (150,113.42) $ 4, % $ (166.92) $ 61, $ (84,156.71) % $ 16, $ 67, % Q $ 755, $ (178,931.90) $ 34, % $ (56.92) $ 81, $ (62,443.28) -8.71% $ 22, $ 39, % Q $ 676, $ (105,850.97) $ 2, % $ - $ 63, $ (37,465.88) -5.93% $ 20, $ 17, % Q $ 880, $ (47,286.72) $ % $ - $ 8, $ (34,167.44) -4.82% $ 26, $ 7, % Total Net Savings * Please Note: Amount Billed includes Credits/Discounts. % Net Savings % In-House Returns reflect the percentage of recommended adjustments returned during Sedgwick Review. $ 371, %

48 Risk Analytics as Performance Drivers Identify and Manage Trends Red Flag Analytics Communicate, Drive & Manage Behavior Financial Reporting & Accounting Reduce TCOR Demonstrate Performance to Actuaries

49 Actuarial Management

50 Appendix

51 Carol Murphy Managing Director and U.S. Casualty Growth Leader, Aon Broking Carol is our U.S. practice leader responsible for casualty business development. She serves as casualty broker for some of the largest and most complex clients in the firm, and also formed and leads our industry-leading Loss Portfolio Transactions practice and our Laser Broking platform. Carol s areas of expertise include Analytics and Modeling, TCOR Strategy, Collateral, Umbrella & Excess Liability, Alternative Risk and Loss Portfolio Transactions. Background: A leader in our Casualty Broking operations since 2001, she led our Central Region Broking team from , driving growth by building distinctive customer value through broking, accountability and service. She was promoted to Managing Director and Strategic Account Manager in 1997 and lead the Risk Management practice in San Francisco from B.A., Economics, Bates College. M.B.A., The University of Chicago Booth Graduate School of Business. Carol has been recognized as a top Power Broker by Risk & Insurance for eight years and as a Responsibility Leader in 2012 and Ms. Murphy has also been honored as a Woman to Watch by Business Insurance, Woman Worth Watching by Diversity Journal and as one of the top 50 women in insurance by Reactions.

52 Maggie Biggs Director, Risk & Insurance, PetSmart Maggie currently leads the Risk Finance / Insurance & Analytics, Claims Management, and Business Continuity teams for this $7B retailer with 54,000 associates, 1,400 stores, and 8 distribution centers in the US and Canada. Background: Maggie received her MBA and a B.S. in Finance from Arizona State University. Prior to joining PetSmart, Maggie served in a Treasury function at Starwood Hotels & Resorts, a global hotel & hospitality company, and in an Executive Risk Client Advisory function for Marsh, a global provider of insurance & risk services

53 Lé Andra Holly Senior Manager, Risk Management, Staples, Inc. Lé Andra manages key components of Staples Global Risk Management Program. Lé Andra has spearheaded several key risk management projects over the years, including the implementation of risk management information systems to turn big data into actionable data. Background: Lé Andra brings over 14 years of experience in the risk management. She began her career as a multi-line Adjuster at Federated Mutual Insurance before moving into claims consulting with McGriff Seibels & Williams. Prior to Staples she managed the insurance and claims programs for Kenco Group, Inc., a privately-held third party logistics corporation.

54 David Theron Smith Director, Risk Services, Advance Auto Parts David has more than 30 years of Diverse experience in the insurance sector. Background: David has served as Vice President and Board Member for the Carolina s Risk and Insurance Management Society (RIMS), has served on the Board of Directors for the South Carolina Captive Insurance Association (SCCIA), and served as Workplace Task Force Co-Chair & Executive Committee Member National Action Alliance for Suicide Prevention, under former Secretary of Health and Human Services, Kathleen Sebelius, and former Secretary of the Army, John McHugh. Mr. Smith has been featured in Risk & Insurance, published in Claims Management, Risk & Insurance, and National Underwriter magazines. Mr. Smith has spoken on various Risk Management, Disability Management, Crisis Response, Business Continuity, Disaster Response, Workplace Violence, Litigation Management, ERM, Fraud, Pharmaceutical Abuse before multiple professional organizations, including the American Bar Association and the Risk and Insurance Management Society (RIMS). For his work in the development of successful post traumatic response to workplace violence and acceleration of return to work, Mr. Smith received Risk & Insurance Management Magazine s Risk Innovator of the Year award and Liberty Mutual s Responsibility Leader Award.

55 Thank you! Questions?