< Previous8BEST’S REVIEW • JANUARY 2023 Executive Changes officer and then moved into the role as CRO in 2017, according to a company statement. As CRO, Murphy will lead all aspects of risk management across Sun Life globally, including financial, insurance, credit, operational and enterprise risk. He also will have oversight responsibility for the global actuarial and asset liability management functions, the company said. Murphy was president of fixed income and head of institutional business for SLC Management, Sun Life’s alternatives asset manager. He has more than 25 years of global asset management experience. He joined SLC Management in 2018 as head of affiliate development and business strategy. Prior to that, he was a senior partner with Mercer for 20 years, where he built and led the company’s investment management businesses in Europe and also led Mercer’s North American investments and actuarial businesses, according to the company. Brit CEO Steps Down; Successor Named Brit Ltd. named Martin Thompson to succeed Matthew Wilson as group chief executive officer and executive chairman of Ki, subject to regulatory approval. Wilson, who stepped down, continues to work within the Fairfax Financial Holdings Group as an executive advisory director. Wilson returned as Brit CEO in September 2022 following a leave of absence to undergo treatment for a rare form of blood cancer, according to BestWire. In stepping down as CEO and becoming an executive advisory director to Fairfax, Wilson will be able to prioritize his own health and spend more time with his family, according to a company statement. Wilson has been at Brit since 1999, becoming group CEO in 2018, and has been pivotal in creating its inclusive, innovative and underwriting-centric culture, culminating in the formation of Ki, the first algorithmically underwritten syndicate in Lloyd’s. He also served on the board of the Lloyd’s Market Association from 2011-2022 and has been closely involved in driving and supporting a number of marketwide initiatives, the company said. Thompson was interim group CEO during Wilson’s leave of absence. A highly experienced leader in the insurance sector, Thompson was president and CEO of RSA Canada before joining the Fairfax Group in 2021, the company said. RenaissanceRe Taps Group Chief Underwriting Officer, Chief Portfolio Officer RenaissanceRe named David Marra as group chief underwriting officer and Ross Curtis as chief portfolio officer, effective Jan. 1. In his new role, Marra is responsible for developing and executing the company’s underwriting strategy, including risk appetite, client engagement, and business and product development. Marra also joins RenaissanceRe’s Governance Committee, according to a company statement. Marra was the CUO for the casualty/specialty segment and president of Renaissance Reinsurance U.S. Inc. He has been with RenaissanceRe since 2008, according to the company. In his newly created role, Curtis is responsible for the execution of RenaissanceRe’s gross-to-net strategy, advancing the company’s ability to create attractive portfolios and match those portfolios with the most appropriate capital. Curtis will oversee risk tolerance, portfolio optimization, deployed underwriting capital, and the claims function. Curtis was the group CUO for RenaissanceRe and has held underwriting roles of increasing leadership since 1999, the company said. Axa XL Appoints Exec to Lead New Underwriting Innovation Office Axa XL has launched an underwriting innovation office in the Americas to drive innovation in support of business initiatives and has named Rose Hall as head of innovation, Americas. The office will liaise across Axa XL’s business lines and support functions in the Americas, including client distribution, underwriting and risk engineering/consulting, to support innovation initiatives that range from incremental to disruptive. Hall joined Axa XL in 2015 as a construction risk engineer and most recently served as vice president, head of construction innovation. BR David Marra Matthew Wilson Rose Hall10BEST’S REVIEW • JANUARY 2023 Monthly Insurance Magazine Published by AM Best A.M. BEST COMPANY, INC. Oldwick, NJ CHAIRMAN, PRESIDENT & CEO Arthur Snyder III SENIOR VICE PRESIDENTS Alessandra L. Czarnecki, Thomas J. Plummer GROUP VICE PRESIDENT Lee McDonald A.M. BEST RATING SERVICES, INC. Oldwick, NJ PRESIDENT & CEO Matthew C. Mosher EXECUTIVE VICE PRESIDENT & COO James Gillard EXECUTIVE VICE PRESIDENT & CSO Andrea Keenan SENIOR MANAGING DIRECTORS Edward H. Easop, Stefan W. Holzberger, James F. 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Insurance marketers play a vital role in meeting those needs by delivering on customers’ expectations of personalization while also providing a well-defined strategy that clearly outlines what customer data to capture to ensure it’s used in a transparent manner, said Rich Tallo, chief marketing officer at Baldwin Risk Partners, an insurance distribution holding company. He was the featured guest in a recent webinar sponsored by AM Best and the Insurance Marketing & Communications Association. Following is an edited transcript of Tallo’s comments. In building and maintaining a corporate culture that supports customers, where does marketing fit in? In our firm, we believe colleagues who are energized by the company’s mission, vision and purpose will undoubtedly deliver a differentiated experience to clients. Those are not mutually exclusive in my mind. We have a document created by the firm’s founders Lori Chordas is a senior associate editor. She can be reached at lori.chordas@ambest.com.13BEST’S REVIEW • JANUARY 2023 called Azimuth, which is a corporate constitution of sorts that outlines the mission, vision and core values of the firm. It’s very specific in terms of the promises we make to clients, carriers, communities and shareholders. Many companies have something similar, but they are only as good as their implementation. For me, who was on the outside before coming into our company, I read the document, but you only know if it’s real when you live it and you’re in it. I’ve been very gratified to see that it is real, and we live in it and aspire to it and it comes to life in many ways around the firm. I think marketers can bring that voice of the customer within a company and champion some of that outside-in thinking. Marketers should have a strong point of view, rooted in good objective research and insights about how a particular business decision or direction can impact customer experience. Marketers will be most effective when that is baked into the broader culture of a company. What priorities are you most focused on right now and how do you expect them to change in the next one to two years? We’re focused on brand work at the moment. We’re partnering with leaders within the firm, our operating group leaders and marketing teams. We’re also helping advisers anticipate and exceed some of the expectations our clients have for us and further differentiate the company in our offerings. We’re working internally with our leadership team and our chief colleague officer on nurturing the firm’s culture and colleague engagement. It is an intimate and critical component of our brand and who we are, and how we do what we do for clients and each other. We just announced a partnership with the University of South Florida to invest significantly in their risk management and insurance program. It will be named the Baldwin Risk Partners School of Risk Management and Insurance. Growing our own and attracting a new and diverse group of the best and brightest to our industry is very important to our firm. What advice do you have for marketers looking to get into the industry? I wish more marketers thought of our industry more top of mind. There’s such tremendous social value in what our industry does to enable commerce, risk-taking, innovation, growth and expansion, and it’s a very rewarding industry to work in. My advice for marketers is to learn the business. We are all better marketers when we understand at a deep level how the business functions, what clients’ needs and perspectives are, what happens at claims time, how the language of the policy matters. I was extremely fortunate early in my career to have some mentors and leaders who put me in meetings that maybe ostensibly I didn’t belong in, but I learned a lot about how the insurance business works. Ultimately, that makes me a better marketer. It lends more credibility and depth to the recommendations we make for how to deploy the arrows in the marketing and communications quiver to support the business and drive growth. BR Rich Tallo AM Best TV Visit bestsreview.ambest.com to watch the webinar with Rich Tallo. Connect with AM Best Twitter @AMBestCo @AMBestRatings LinkedIn ambest.com/corplinkedin ambest.com/ratingslinkedin ambest.com/infoserviceslinkedin YouTube www.ambest.com/ AMBestYouTube/ Facebook www.facebook.com/ ambestcompany/ Multimedia Channels The Twitter, LinkedIn, YouTube & Facebook logos are trademarks of Twitter Inc., LinkedIn Corp., Google LLC and Meta Platforms Inc.At Large 14BEST’S REVIEW • JANUARY 2023 By Bill Pieroni Size doesn’t really help insurers do better, according to an ACORD study. Better underwriting and claims efficiency will help carriers successfully acquire, develop and retain customers in an evolving industry. Informational Scale and Scope: The Key to High Performance C onventional wisdom suggests economies of scale exist in every industry—that as firms increase in size and/or scope, they experience superior financial outcomes. ACORD studied the 200 largest carriers around the world, evaluating operating and performance metrics over a 10-year period, to see if this holds true in insurance. Perhaps surprisingly, the research revealed no correlation between a company’s scale (referring to volume, e.g., writing more premium) and/or scope (implying variety, e.g., of customers and products) and superior financial performance. Scale and scope in premiums written, geographies served, lines of business, customer segments—none of these played any role in achieving better financial outcomes. Informational Scale and Scope But perhaps this should not surprise us after all. Strong financial performance in our industry is driven by execution across core insurance functions: underwriting and claims. Insurers must be efficient and effective in these areas to successfully acquire, develop, and retain customers—and subsequently grow and create value. Why would size really help insurers do this better? The key to improving claims and underwriting is not a carrier’s size or reach. It’s data that becomes information that can’t be ignored. Indeed, our research did reveal economies of scale among those carriers that outperform their peers—not traditional scale and scope, but informational scale and scope. The good news is that this goal is attainable for virtually any carrier, regardless of its size. The industry has seen an explosion of capabilities in recent decades, causing an unprecedented accessibility to large Best’s Review columnist Bill Pieroni is president and CEO of ACORD. He can be reached at bestreviewcomment@ambest.com.15BEST’S REVIEW • JANUARY 2023 amounts of increasingly accurate, transparent data—as well as the tools to make that data available for insight at the moment of value. The research shows that ongoing, thoughtful investment and deployment of these capabilities is reflected in financial performance—insurers achieving informational economies of scale have an advantage in delivering both value and growth. Play to Your Strengths However, the path to achieving informational scale and scope will likely look different for large, diverse carriers versus smaller, more focused carriers. Insurers need to understand and play to the inherent strengths of their operating models to successfully integrate key capabilities and data. For example, large carriers typically have greater capacity and more resources. These insurers should use those assets to build a robust technology and data infrastructure, allowing them to operate more efficiently and effectively across the enterprise. On the other hand, smaller, more focused carriers have the benefit of local insight—an advantage larger players may struggle to replicate. These smaller insurers better understand the customer segments and communities in which they operate and can utilize their data-driven insights to provide those customers with highly tailored service and support. Insurers both large and small can realize the benefits of informational scale and scope, but it will require thoughtful integration of tools that increase access to data, leveraged at the right time and in the right manner, to produce superior outcomes. Risk Adviser 16BEST’S REVIEW • JANUARY 2023 By Lance Ewing Many carriers have added data analytics, artificial intelligence tracking and software identification to catch and prosecute fraudsters. Workers’ Comp Fraud Costly for Industry A fter discovering he had a gift for complete healing of others, a young minister was demonstrating his powers of medical healing by making a blind man see, a deaf man hear, and a lame woman walk. As the minister approached a man in an arm cast, the man jumped up and stumbled backward. “Keep your hands off me!” the man cried. “I am on workers’ comp.” Or so the story goes. Workers’ compensation in the United States had its start in Wisconsin in 1911. That same year, nine other states legislated workers’ compensation acts to protect employees. Today, all 50 states, the District of Columbia and the U.S. territories have workers’ compensation regulations in place. Moreover, all of them have had workers’ compensation fraud units created to combat the over $30 billion in workers’ compensation fraud that occurs annually, according to the Coalition Against Insurance Fraud. Like the Greek mythological creature known as Hydra, workers’ compensation fraud is a multiheaded monster. An employee embellishing a medical condition is only one of the heads. Workers’ compensation fraud occurs when health care providers bill for services never performed, when employers underreport payroll, when attorneys and or claims adjusters enable fraud, when an employee fakes and reports an injury or illness as well as myriad other persons commit fraud. And like the mythological beast, once one fraudulent case is discovered, prosecuted, and cut off, another one or two materializes to be fought. The axiom of “cut off one head and two more will grow” is relevant in the battle against workers’ compensation fraud. The question is, why? The answer is because there are too many fraudsters (unscrupulous employers, attorneys, employees, and more so medical providers) and not enough checks, balances, audits, law enforcement resources or rigorous “feel the pain” of retribution. The workers’ compensation system was built on trust. That trust and integrity has been eroded over the years to be replaced by “gaming the system” to make what is perceived to be easy money. Employers can be some of the worst fraudsters. An estimated $20 billion in premium fraud is caused by employers’ underhanded tactics, including Best’s Review columnist Lance Ewing is vice president, enterprise risk management and operations for the San Manuel Band of Mission Indians. He also is a former president of the Risk and Insurance Management Society. He can be reached at bestreviewcomment@ambest.com.17BEST’S REVIEW • JANUARY 2023 misclassifying workers and underreporting payroll according to Valen Analytics. Historically, there has been a popular presumption that those committing the costliest type of workers’ compensation fraud have been claimants themselves whose actions, such as double dipping or claims for false injuries, drive up the cost of workers’ compensation insurance. While claimants are a part of the fraud scheme in workers’ compensation, fraud is growing among medical providers. As the world of medicine, patient care and billing changes so does the fraud conducted by medical doctors, clinics, hospitals, pharmacists, and other medical professionals. Blatant fraud occurs when providers bill for treatments that never occurred, were unnecessary or where two or more medical providers receive kickbacks from specialists and other treatment providers. With technology there is provider upcoding, where a provider charges for a higher-priced treatment than the one performed. Another fraud is self-referrals, when medical providers refer a patient to a clinic or laboratory in which the provider has a financial interest. Pharmacists will use product switching fraud. This is where a pharmacy or other provider charges for one type of product but dispenses a cheaper version. Most major carriers writing workers’ compensation have special investigative units that investigate employer and employee fraud. But carriers have broadened their investigations and continue to fight alongside state and local law enforcement in using data analytics, artificial intelligence tracking, software identification, sting operations, and old-fashioned investigative work to catch and prosecute medical fraudsters, as well as those others who continue to scam the workers’ compensation system. Next >