1. 24 November 2009
Sponsored by
Andrew Catapano
President
USI Northeast
Christopher de Wolfe
Risk Manager
Mars, Incorporated
David Dwortz
Executive Vice President,
Middle Market, Eastern Division
Liberty Mutual

2. Risk Management 25
Building Relationships to
Strengthen Risk Programs
David Eaglen
Senior Vice President &
General Manager,
National Markets
Liberty Mutual
George Kuklevsky
Managing Director
Marsh
Ron Yakin
President
American Pecco Corporation
photographybyarnoldadlerwww.arnoldadler.com
In today’s challenging business environment, it is more important than ever that the three points of the risk program
triangle— insurer, broker and buyer—can work together to protect the policyholder’s employees and the bottom
line. From identifying risk to developing mitigation strategies to tracking program results, all parties play a role.
But building a strong partnership—with clear roles, responsibilities and timelines—produces far better results than
everyone working on a loose team. Risk Management spoke with six risk professionals about the best ways for insur-
ers, brokers and buyers to work together.

3. 25 November 2009
Sponsored by Liberty Mutual, Proud Supporter of RIMS
tion systems while measuring our success
along the way. In this particular pro-
gram, I know Marsh’s safety and Mars’
safety and Liberty’s safety folks work
together to reduce loss and our ultimate
goal is to have minimal claims. I’ve got
a team of people that work daily with
Mars, and talk to them constantly about
losses and controls, continually building
and monitoring loss control programs to
help mitigate loss so they can go about
focusing on the core business of Mars.
Yakin [buyer]: I think it is very impor-
tant for the broker and the carrier to
understand our business, understand the
risk and share with us their expertise and
what other companies are doing. For our
company, we understand that reducing
loss saves us money, not only in dol-
lars and cents, but also from the human
aspect of protecting our employees.
Catapano [broker]: We believe our
role as a broker is to be an extension of
our client’s risk management depart-
ment. In that role, it is imperative that
we completely understand the client’s
business, what they are trying to accom-
plish and their exposure to risk. Ron is
our client and he runs a very successful
construction company in the Northeast.
As his broker, it is important for us to
provide strategic analysis that will help
him determine his current risk profile,
the economic impact of that profile,
the most suitable carrier and the proper
risk financing mythology. We must also
provide him with relevant and industry
specific information to help determine
proper coverage design, peer group anal-
ysis and retention limits. Our overall
responsibility with our clients is to make
sure that we offer the right resources and
expertise to manage their risk.
exposure to risk and either prevent the
need to have insurance, or at least make
ourselves the most attractive risk possible
so insurance is available at competitive
terms and conditions.
You’ll need insurance, you’ll want
insurance, but, what we have are full-
time professionals who manage risk,
mostly to make sure that we don’t have
losses in the first place. At the end of
the day, if there’s a claim that involves
a loss of a factory, you know that the
insurance policy will pay out—fantas-
tic. It will probably pay your business
interruption and that’s great too, but it
doesn’t put products on the shelf. And
if we don’t have product on the shelf,
then we don’t have a business and that’s
why managing risk is a very important
part of what we’re doing.
We have representation in more than
80 countries. We have a risk manage-
ment department of 84 people, which
is quite sizeable. The reason we have a
department of 84 is because we have
four full-time associates at Mars and we
have 80 Marsh account executives that
manage our program for us around the
world as well as locally. So we really do
see our insurance broker as an extension
of the risk management department
and our insurer as our risk partner.
Eaglen [insurer]: Our responsibility in
the partnership is providing all the loss
control, claims services and risk informa-
Commercial insurance buyers, brokers
and insurers work together to effectively
manage a company’s risk. What are the
strengths of each of these groups? How
can they best identify the risks faced by
a company, build a program to mitigate
those risks, measure the performance of
that effort, and adjust it as needed?
Kuklevsky [broker]: I think that one
of the strengths of the client is the knowl-
edge of his or her own business and their
ability to articulate it to their risk part-
ners. Brokers like to think we know our
client’s business, and we do to a certain
extent. Clients know what their strate-
gies are, they know their operations, their
exposures, what their goals are. It is our
responsibility as brokers to get as close
to that knowledge base as possible, to
understand the client’s risk management
goals and objectives. We bring indus-
try and peer knowledge, knowledge of
the marketplace, as well as provide risk
management tools that not only compli-
ment the client’s focus on, for example,
on loss control and claims, but also the
carrier’s. At the end of the day it works
because there are three parties working
vigorously at it, with the same vision, to
accomplish the same goals.
de Wolfe [buyer]: It is a trifecta, no
doubt about it. The way that we see it
at Mars, the three participants-—Mars,
Marsh and insurer—are working in a
mutually beneficial relationship. Our
department is very small relative to the
size of our organization, so it is impera-
tive that we can rely on the other mem-
bers in the relationship. For us, the pro-
cess of buying insurance is only one part
of what we do. It’s an important part,
but relatively small. For us, as managers
of risk, we are primarily implementing
processes and systems that reduce our
“One of the strengths of the client is the knowledge of
his or her own business and their ability to articulate it
to their risk partners...It is our responsibility as brokers
to get as close to that knowledge base as possible.”
“It is very important for the broker and the carrier to
understand our business, understand the risk and
share with us their expertise and what other companies
are doing.We understand that reducing loss saves us
money, not only in dollars and cents, but also from the
human aspect of protecting our employees.”

4. 25 November 2009
Sponsored by Liberty Mutual, Proud Supporter of RIMS
have confidence that we are a good risk
and that we’re going to be here for the
long run. You need to know that you
can go to your direct underwriting con-
tact and know that they understand the
risk. We are sometimes expecting those
people to take a risk themselves and we
have to be able to support them when
they need to explain underwriting deci-
sions to senior management.
Dwortz [insurer]: The same type of
thing happens in the middle market
business. We call it the “Stewardship
Process,” which has many touch points
throughout the year. We have the day-
to-day contact with the loss control,
claims and account service people, but
we also have touch points with manage-
ment of the buyer and agent/broker to
ensure that we are living up to our ser-
vice commitments. This can’t happen
just at renewal time; it has to happen
throughout the year. We try not to think
of it as an event, but as a living, breath-
ing partnership throughout the year at
all levels of the organization. The renew-
al takes care of itself if we are consistently
connected to each other’s business.
What are the keys to maintaining good
communication between carrier, bro-
ker and buyer? How can all partners
work together to improve that com-
munication?
Kuklevsky [broker]: When I entered
the brokerage business back in the
1970s, we rarely encouraged face to face
meetings with carriers. It was just not
done, and I could never understand it.
Fortunately we have progressed beyond
that, and meetings of the three—client,
oping a partnership whereby everything
we do is connected to their business
objectives, issues, goals and strategies.
In my opinion, you cannot accomplish
all those goals once a year at the time
of the renewal. Renewals can at times
be stressful and complicated. As a bro-
ker you must make the time during
the course of the year to get to know
your client, get to know their busi-
ness, understand what they are trying
to accomplish and their philosophy
around risk. That’s how strong and last-
ing relationships are built.
de Wolfe [buyer]: We put that into
action every year. We hold mid-term
meetings, quarterly meetings and,
as you mentioned, regular claim file
reviews. But at Mars it’s important to
make sure that our risk partner under-
stands us intimately so that they can
make informed decisions and perhaps
go the extra yard for us when we need
it. We do this by having an open flow
of dialogue with them and hosting visits
to our facilities around the world. By
doing this, we are working to avoid the
market fluctuations as much as possible.
In addition, we continue to work with
our risk partners to ensure that they
What are some of the key ingredients
of a strong relationship between a
buyer, broker and insurer? How can all
three best work together to make sure
that relationship stays strong and the
risk program remains effective?
Yakin [buyer]: We have long-term
relationships with our customers, our
professionals, our accountants and our
insurance companies. I think we’ve
been with Liberty Mutual for more
than 20 years, so it’s very important
that if you have a little blip in the cycle,
then, in this case, Liberty Mutual or
USI would understand that we’re in it
for the long haul. We’re not just shop-
ping a rate from one year to the next.
It’s important to keep that relation-
ship going. We have a lot of contact
with Liberty Mutual and now USI. We
schedule claims reviews and other meet-
ings so there is a constant flow of inter-
action throughout the year. We’re not
as big as Mars, but we rely on Liberty
Mutual and USI as our in-house insur-
ance department. I’ve dealt with their
service people for probably 20 years.
And that gives me a lot of comfort that
everything is being taken care of.
Catapano [broker]: I think what
we all want and strive for is that long-
standing relationship based on trust.
A relationship that helps both of us
weather the up and downs of the eco-
nomic environment and insurance cap-
ital markets. We must remember that
each client is different and unique and
each program can include elements of
self insurance, risk avoidance and risk
transfer. Our objective is to work with
our clients throughout the year devel-
“Loss control is an integral part of our
culture. If you walked into 175 Berkeley
Street [Liberty Mutual’s headquarters] and
looked up on the front entrance wall, you’d
see our corporate creed is about,“helping
people live safer, more secure lives.”
“We believe our role as a broker is to be an
extension of our client’s risk management
department. In that role, it is imperative that we
completely understand the client’s business,
what they are trying to accomplish and their
exposure to risk.”

5. 25 November 2009
Sponsored by Liberty Mutual, Proud Supporter of RIMS
but these guys come in and tell us what
happens under other people’s roofs.
Catapano [broker]: I think Chris
brings up an interesting and important
point. Think about what is represent-
ed at this table with USI, Marsh and
Liberty Mutual. A lot of resources and
capabilities are available from each of us.
The challenge, the mandate for us, is to
make sure that our clients have access
to what is available. Our clients have
the need for risk management services,
support and analysis but typically have
limited internal resources. Our ability to
provide claims and loss control analysis
and to share our industry specific and
carrier intelligence with our clients and
to discuss alternative strategies will cre-
ate real value for our clients. Whether we
accept it or not, our competitors are also
talking to our clients and the very last
thing that we want is for them to solve a
problem that we missed. So we continue
to be proactive and make sure that we
are communicating frequently--not just
at the renewal.
Dwortz [insurer]: What allows us to
take the relationship to a strategic level is
having agents and policyholders who are
willing to open up and share their busi-
ness strategies and critical objectives and
allow us in to provide our expertise and
share the knowledge we have from serv-
ing companies around the world.
Kuklevsky [broker]: It is important
from the broker’s perspective to be in that
mix, to develop and continue to improve
ways of dealing with risk, whether it is
workforce strategies, asset conservation,
whatever. This is as important as broker-
ing and servicing insurance placements.
As Andrew said, if you are not doing it,
work together to try to develop a pro-
gram that would be implemented in all
of our facilities.
Eaglen [insurer]: Loss control is
an integral part of our culture. If you
walked into 175 Berkeley Street [Liberty
Mutual’s headquarters] and looked up
on the front entrance wall, you’d see our
corporate creed is about, “helping peo-
ple live safer, more secure lives.” That’s
been on the wall since the company first
opened its doors. We deeply believe in
that and therefore, that’s what our busi-
ness and culture is based on.
Dwortz [insurer]: From my perspec-
tive, I think we flat-out invest more
in loss prevention than most other
companies do. We have the Liberty
Mutual Research Institute for Safety in
Hopkinton, Massachusetts and another
one in China and we have a fire safety
lab in Wausau, Wisconsin. We also
employ a number of engineers, doc-
tors and other experts to focus on risk
mitigation to protect our policyholders’
business, their employees and reduce
their total cost of risk.
de Wolfe [buyer]: And as you do all
this work for so many other companies,
we get access to all that knowledge. We
are Mars, we know about everything
that we do, but what happens that we
don’t know about? What happens in
the crane industry? Is there anything in
that industry which could be relevant
to what we do? The comment about
gloves for electric shock is not exclusive
to that company. It’s relevant to ours
too. So the benefit that I see is that it
brings external expertise, telling us what
happens to the rest of the world. Again,
we know what happens under our roof,
insurer and broker—have become com-
monplace, which is probably the biggest
step that we have taken over the last 20
plus years that has contributed to the
success of these relationships. I think you
have to have good team support that is
responsive to the client. There must be
open dialogue, open lines of communi-
cation. We have to be able to confront
and reflect on it positively, looking for a
collective solution to the problem. There
is no place for finger pointing.
Catapano [broker]: What we try to
do with our clients is to be as proactive
as we can be—providing industry and
insurance market intelligence, being
mindful of the current economic cli-
mate and giving them all the tools and
resources that they would find useful.
The very last thing you want to do is to
go silent. Even when you have clients
who for whatever reason can’t make a
lot of time for you, you must contin-
ue to feed them relevant information
and alternatives. As a broker what you
want to avoid is having a client who
doesn’t feel that they are in control of
their insurance program. Make sure
that your goals are in alignment with
the companies risk management phi-
losophy and take a consultative rather
that a transactional perspective.
How can buyers, brokers and insur-
ers partner to develop risk mitigation
strategies? What are risk managers and
brokers looking for when it comes to
receiving good risk mitigation support
from their insurance partners?
Yakin [buyer]: We have worked very
closely with Liberty’s loss prevention.
They assigned a person to our account
who works with our safety people. They
design a program, they also visit our
shops and our facilities, looking at how
we make repairs to equipment, how we
load equipment, how we store equip-
ment and how we work on electrical
equipment. I remember they recom-
mended using special shock prevention
gloves for the workers. They would
make up this program in conjunction
with our loss prevention people and
“We have been in an economic environment
where our customers, in many cases, are
not in a position to absorb higher rates.That
puts more pressure on all of us, including the
agent/broker and carrier, to make sure our
operations are as efficient as possible.”

6. 25 November 2009
Sponsored by Liberty Mutual, Proud Supporter of RIMS
on all of us, including the agent/broker
and carrier, to make sure our operations
are as efficient as possible.
How has this environment provided
you with an opportunity for risk man-
agement success? What are some tri-
umphs you have experienced recently?
Yakin [buyer]: Our property is insured
with Liberty Mutual, and when we had
a hurricane in Texas, we looked at the
policy and noticed that the wind dam-
age deductible had increased, so we went
back to Liberty Mutual and asked what
happened and why. They checked into
their records and noticed that it should
not have been changed so they reversed
it. That was a very good point in the rela-
tionship. Another example was when we
had a claim where one of our employees
was seriously hurt. The Liberty Mutual
nurses were involved in the rehabilita-
tion of the worker and we created some
light duty work for him. He’s now back
working for us. We also met with loss
prevention to see what could have been
done to prevent the accident.
Dwortz [insurer]: That example is
really powerful. These were very serious
injuries—life threatening injuries—and
the teamwork in the relationship really
showed itself. Not only did we have
the Liberty Mutual nurses and doctors
involved with the hospitals, but we had
a partner in American Pecco who put
their money where their mouth is. They
were committed to finding alternative
work arrangements and they were com-
mitted to the vocational rehab that was
required. We can provide those services,
but we needed a partner on the other
side to embrace that approach.
Yakin [buyer]: I don’t know if any
other carrier would have had the
resources to help us get this employee
back to work and get him healthy again.
We have a lot of long-term employees
so we understand that when dealing
with a claim, it’s not only about dol-
lars and cents, but the personal effect on
employees and their family. So we were
very pleased with the outcome. n
think with your clients in terms beyond
commoditized product sales and make it
clear that, for risk management, insur-
ance is only one of the available tools.
Eaglen [insurer]: Our balance sheet
is strong and we’ve always paid atten-
tion to our budget, but budgets are
not paramount, it’s not what drives us.
What is driving us is the needs of our
customers. This account, in particular,
has some new risks that they’ve brought
on board this past renewal and we are
applying more services to this account
than before, so it’s a case-by-case basis.
From a business perspective, the budget
is there, but it’s not what drives us.
de Wolfe [buyer]: There are five steps
to managing risk and one of the most
important ones is the last one-continue
to evaluate your decision and make sure
you’ve got the right risk management
measure in place. So you’ve done all the
first four steps. You’ve identified and
analyzed the risk, you’ve considered
how you’re going to address it, you’ve
implemented and maintained measure
most likely to reduce the risk, but you
have to keep reviewing it to make sure
you made the right decision. A properly
working relationship with your broker
and risk partner keeps your program
under a perpetual state of review.
Dwortz [insurer]: There are a lot of
things that are driving our economics,
like investment returns and reinsurance
costs, which suggest higher insurance
prices need to be in place. However, we
have also been in an economic environ-
ment where our customers, in many
cases, are not in a position to absorb
higher rates. That puts more pressure
bringing new ideas, concepts to your cli-
ent, somebody else is. There is project
work that comes up periodically, things
that are important to Mars, in support
of their risk management goals. Just
recently we completed an assessment of
their use of occupational nurses in deal-
ing with workers compensation claims.
It’s an ongoing process.
de Wolfe [buyer]: That’s a perfect
example. We recently decided to revamp,
enhance and refresh our occupational
health function in North America par-
ticularly and, again, we know our world,
but what we said to our risk partners
was “give us good business arguments
for enhancing this organization, tell us
why it adds value to our business and our
insurance program.” Then, we took the
expertise and the resources at Marsh to
work with our occupational health man-
agement team to structure it. Input from
both helped us design the structure we
have today, which benefits all three of us.
With buyers, brokers and carriers all
feeling expense pressures, how can
they collaborate to be more efficient
and balance the needs of all parties?
Catapano [broker]: I look at the cur-
rent economic and political climate as an
additional opportunity to communicate
with our clients. In this ever chang-
ing environment, it is important to
help our clients understand the current
insurance marketplace and why carrier
relationships are so important and criti-
cal in providing necessary coverage. Our
ability to provide solutions is based in
the understanding that insurance is just
another form of capital and by its nature
is often the most efficient financial solu-
tion available. It is also important to
“There are five steps to managing risk and
one of the most important ones is the last
one-continue to evaluate your decision and
make sure you’ve got the right risk manage-
ment measure in place.”