The Value of Risk Assessment & Loss Control
William Boyd is Senior Vice President of Risk Control for CNA insurance companies in Chicago, IL. He manages CNA’s risk control department, which provides companies with practical risk management solutions that help them control loss exposures.
In this interview, Boyd explains the value of risk assessment in the underwriting process and highlights some of the topics to be discussed during ASSE’s upcoming loss control symposium.
Please provide a brief overview of CNA and of your responsibilities as Senior Vice President of Risk Control.
CNA is the seventh largest commercial insurance writer and the 13 th largest property and casualty company in the U.S. We provide commercial insurance coverages such as workers’ compensation, commercial auto, property and general liability. I lead the risk control function, which has approximately 310 safety and health professionals who provide risk assessments and risk control services for agents and accounts.
How does CNA define, determine and measure the value of risk assessment? How does CNA demonstrate this value to its SH&E clients with respect to underwriting?
Risk control assessments are completed as part of the underwriting process. For example, in 2007 our risk control staff completed approximately 48,000 risk assessments. These assessments are used to assist underwriters in their decision making and pricing analysis for our commercial customers. At CNA, our risk assessment process has evolved to not only provide an exposure analysis, but to also tie the analysis to actual pricing models that fully integrate risk control into the underwriter decision and pricing analysis process. Our customized risk assessment process is mathematically tied to underwriting pricing decisions.
Our accounts will receive quotes and customized analysis and pricing based on their own exposures because CNA’s risk assessment is not only tied to the underwriters’ decision-making process, but is also directly tied to pricing analysis. This provides a more accurate analysis of an account based on its specific safety and health exposures.
How can insurance SH&E professionals best align risk assessment with underwriting?
By identifying exposures in targeted classes of business or industry segments and by determining those exposures, the assessment process should be tied to not just the underwriting decision making process but specifically to the pricing analysis. For example, CNA has a partnership with the National Roofing Contractors Association (NRCA). CNA is the industry leader in insuring commercial roofers. By working with NRCA, CNA determined that fires caused during roofing applications are a major source of loss exposures. We worked with NRCA to develop the CERTA program, which is required to teach all commercial roofers how to properly complete a torching hot work permit program. The results of this program demonstrate that the CNA-insured commercial roofers have fewer fire-related losses. CNA and the association work together in determining solutions that help customers best implement effective control programs for their key exposures to loss.
In what new ways are CNA’s clients using risk assessment to control losses?
By understanding key loss exposures, CNA brings solutions to target industries. We are also working with commercial roofers to help create a “100% fall protection program” to address falls from roofs, the most severe loss area. Our goal is to bring to our chosen markets quality solutions as well as excellent opportunities to partner with our company as we strive towards the elimination of key exposures in these businesses.
We also work with other associations to implement targeted programs based on customer needs. For example, the American Road & Transportation Builders Association (ARTBA) and its members provide new employees with a safety and health orientation program because of the high percentage of “ new workers” injured in road building. This program will help train all new workers on major exposures inherent to road building. CNA is the only insurance company involved in this consortium in helping the members of this association.
CNA offers employers the following workers’ compensation tools:
How does CNA help employers make the most of these tools, and does CNA plan to create any others based on employers’ and workers’ needs?
CNA uses these tools to customize services based on accounts’ needs. We do not try to “fit everyone in the same box.” We work to identify our accounts’ key safety and health concerns and provide customized solutions. At a national level, these solutions are customized with associations such as NRCA, ARTBA and others as we all work together to target loss drivers and exposures through solutions such as CERTA and fall protection programs. Another example is how we partnered with Capital Equipment and currently provide a three-day fall protection school to CNA-insured contractors who need fall protection guidance for their workers.
CNA will host the upcoming ASSE symposium “The Loss Control Experience: Emerging Challenges, Emerging Opportunities” at its Chicago headquarters this October. You will speak on the future of loss control during this symposium. Why is this topic so important at this time for SH&E professionals, and what are CNA’s predictions for the future of loss control?
Loss control within the insurance industry must demonstrate its financial return on investment. Loss control strategies vary among insurance carriers. This ranges from the completion of underwriting risk assessments, and many carriers work to provide some level of customer service.
The loss control-underwriting risk assessment should also directly impact pricing analysis. This is even more critical for companies in a “softening” market, as better loss control can assist in pricing analysis based on an account’s actual exposures. Loss control must focus on how to partner with underwriting in selecting and writing good business. Concerning customer service, loss control should be able to measure overall impact in this investment in premium retention and reduced losses and/or exposures. Services should focus on customers’ top loss problem areas and should measure solutions’ overall impact. The future of the loss control function must evolve and will be more strongly tied to actuarial data, underwriting and a company’s financial objectives in terms of measuring the success of pricing analysis with assessments, services and measuring the impact of services provided to customers.
The symposium will address liability issues stemming from the global marketplace. What are some examples of these liability issues, and how will they change as the global marketplace changes and expands?
In this global marketplace, we must address international exposures. For example, recent liability issues with products from China require that loss control professionals understand their U.S.-based products and look at the entire supply chain to determine the overall liability exposures to their customers. We have seen several examples of this such as lead paint and additives in certain products.
The symposium will also explore the impact of safety and loss control activities on risk-financing methods. How can SH&E professionals use this knowledge when making the business case for safety?
Internally, loss control professionals must measure risk assessments’ impact on decision making and pricing analysis for their underwriters. With respect to customer services, the return on investment must be determined for a lower loss ratio, higher retention rates and ultimately the impact on underwriting profitability. With customers, examples of their profitable measures include increased productivity and efficiency, lower error rates, higher yield rates, higher quality or whatever measures of success the customer uses with the ultimate goal of profitability. Successful loss control professionals will be able to measure results to demonstrate overall financial impact to their companies and customers.
What do you hope attendees will learn from this symposium?
As with all ASSE-sponsored symposia, attendees will have the opportunity to learn from each other. All of us at CNA look forward to hearing how other companies measure success and determine ongoing improvement. This should be an exciting forum to discuss the future of the insurance company loss control function.
What are CNA’s goals for the remainder of 2008?
Our enterprise goal is to meet our financial objectives. In risk control, we are further aligning with the underwriting process in the decision and pricing analysis process. We are also striving to have retention impact with our services that meets our company objectives. As our business is about people and providing quality services, we pride ourselves on having the best people. They make the best decisions and deliver the best services, which yields the best results. We will continue to provide our risk control team with the environment and opportunities to develop as leaders within the SH&E profession.
William Boyd is the Senior Vice President of Risk Control for CNA insurance companies in Chicago, IL. A 25+-year veteran of the insurance industry, Boyd specializes in practical risk management solutions. His experience with the USF&G Insurance Company, the St. Paul Companies and CNA has given him insight into the property/casualty insurance industry.Boyd holds a bachelor’s degree in chemistry from Austin Peay State University in Tennessee and a master’s degree in occupational health from the University of Tennessee. He is also a Certified Safety Professional (CSP), a Certified Industrial Hygienist (CIH) and a Certified Professional Ergonomist ( CPE). Throughout his career, Boyd has actively participated in several professional organizations, including the American Society of Safety Engineers (ASSE) and the National Safety Council (NSC), and he has served as co-chair of the Institute of Industrial Engineers’ National Applied Ergonomics Conference. He is also on the Board of Directors for the Board of Certified Professional Ergonomists.