Occupational Disease Claims Practice The Disease Liabilities Risk Management Tool Disease Liabilities Risk Management Tool

Transcription

1 Occupational Disease Claims Practice The Disease Liabilities Risk Management Tool Disease Liabilities Risk Management Tool

2 Contents Contents i Introduction 1 Why should I hire Marsh? 2 Disease Liabilities Risk Management Tool 3 Marsh Occupational Disease Team 5 Testimonials 6 Case Study 7 Key Contacts 8 Marsh i

3 1. Introduction Many types of long-tail disease claims continue to increase in both value and frequency. The financial risk of such liabilities causes significant uncertainty to companies and can have a major impact upon their profit margins. Mesothelioma claims, for instance, now regularly exceed GBP250,000 and over 2,100 new cases are diagnosed in the UK each year. Such cases are projected to continue increasing beyond Companies often have to fund such claims themselves due to untraced historic insurers or an insolvent insurer being on cover. There is often a lack of clarity as to which companies formed part of the relevant group and when these were acquired or sold which again leads to many companies funding claims for which they are simply not responsible. Many companies also face uncertainty of the future expected value of their disease claims and provisioning requirements. To meet the needs of companies with disease liabilities and to actively manage the financial risk, Marsh has developed a unique and award-winning product: the Disease Liabilities Risk Management Tool. Marsh 1

4 2. Why should I hire Marsh? The Marsh Occupational Disease Team consists of experts from across the business who have significant experience in all types of disease liabilities. The combined skills and expertise are complementary and enable an integrated approach. The team has conceived and developed comprehensive solutions which have been dovetailed to produce a highly effective and market-leading tool: the Disease Liabilities Risk Management Tool. This is summarised within the following chapter. The success of the innovative solutions within the risk management tool is demonstrated through: Over GBP6,500,000 of savings achieved for clients; Industry award-winning product Client satisfaction and high regard as demonstrated by testimonials received; Recognition from law firms that this as a valuable tool for the market; Clients of other brokers have directly approached / hired us to manage their disease liabilities. With our skills, expertise, resources and experience, we are very well placed to meet the needs and requirements of any company with potential disease liabilities; and not only in relation to short-term benefits but in relation to lasting corporate solutions. Marsh 2

5 3. Disease Liabilities Risk Management Tool Marsh s Disease Liabilities Risk Management Tool helps companies of all sizes to manage the financial risk of their disease liabilities. It is a unique product in the form of an integrated five-phased approach which identifies, assesses and mitigates companies risks to such liabilities. Solutions are tailored to the needs and requirements of each client. An overview of the tool is summarised below. Phase 1 This stage involves collating historic details that a company has relating to insurance cover and identification of corporate history. We attend the company s premises to carry out an extensive trawl and analysis of historical data, records, documents, policies and contracts. In addition, we interview key, long-standing personnel of the company who may be able to provide assistance and insight into the company s past. Evidence of mergers, acquisitions and disposals is collected. Phase 2 An insurance and corporate archaeology exercise is carried out to fill missing gaps from Phase 1. An Insurance and Corporate History Register is documented which provides the company with as full a picture as is possible of its insurance and corporate history. We are able to arrange specialist management of any claims (including litigated) which fall in periods identified as uninsured. Phase 3 An in-depth review is carried out to identify legal responsibilities for each division and subsidiary of the company for consideration by the company with its legal advisers. This helps to prevent the company from becoming involved with and funding claims where legal liabilities rest elsewhere. In addition a technical review of policy documents is undertaken to establish limits, exclusions and extensions. Cases of insurer insolvency are highlighted and greater clarity given on coverage deficiency and risk exposure. Phase 4 Detailed analysis of disease claims data is carried out together with an in-depth audit of those claims involving an insolvent insurer. A benchmarking exercise can be undertaken to compare the company s asbestos-related claims with claims of the same nature and with other companies within the same industry sector. In addition, we manage the process of calculating a rolling balance for historic insolvent insurer claims and recover any dividend payments which may be due to the company. Where applicable, it is ensured that all Financial Services Compensation Scheme (FSCS) payments have been sought. Marsh 3

6 Phase 5 We use the information and data gathered from the previous phases to build actuarial models. This enable us to calculate actuarial pricing and theoretical transfer and retention costs. Financial forecasts are determined to assist a client in establishing its future cash flows. We can investigate a range of risk transfer options for the company and approach the market to obtain quotes with a view to placement. Potential benefits of this approach This tool helps clients of all sizes to manage the financial risk of their disease liabilities. The benefits are that: Historic insurance due diligence is provided; Disease claims are passed to appropriate insurers ensuring claims are not funded by clients because of untraced cover; Claims are redirected to those companies where legal liabilities lie thereby ensuring clients do not fund such claims unwittingly; Competent handling is ensured of insolvent insurer claims in which clients have a financial interest; Full recoveries of FSCS payments and scheme of arrangement dividend payments are achieved; Trends, variances and issues with disease claims are identified through in-depth benchmarking and corrective strategies implemented; Potential future costs are budgeted appropriately and future cash flows determined which can lead to much capital being released which had previously been tied up; and Risk transfer vehicles achieve budget certainty for a client and capital and management resources can be freed. Marsh 4

7 4. Marsh Occupational Disease Team Our team has wide-ranging expertise and considerable experience in all the main types of occupational disease which has enabled the tool to be hugely successful. The team consists of: Insurance and Corporate Archaeologists Risk specialists in assessing legal liabilities with backgrounds including legal qualifications Policy Advisers who review historic policies and identify coverage deficiencies Claims specialists in disease claims auditing with backgrounds including legal qualifications Experts in insolvent schemes of arrangement Qualified actuaries Specialists in designing and placing risk transfer programmes Marsh 5

8 5. Testimonials Marsh s Disease Liabilities Risk Management Tool has proved very popular with clients. Some written testimonials received from clients are quoted below: Shipbuilding Company "Marsh s occupational disease risk management tool has helped us enormously in managing our asbestos-related liabilities. We now have an excellent understanding of our insurance and corporate history following 2 phases of work which has made it possible to redirect claims saving [us] considerable money. In a 3rd phase Marsh has also managed to recover substantial payments from a scheme of arrangement (GBP77,000). The end phase forecasted our future expected asbestos claims which provides much greater confidence to our shareholders of the visibility of future payments. The integrated phased approach that was adopted by you proved very successful and was of significant benefit to us." Publishing Company "Marsh's service has, and continues to be, very useful for us. Following the very helpful Marsh seminar in Manchester, we engaged Marsh in a number of phases of the tool. Unexpected recoveries were obtained by you from both the FSCS as well as from the Chester Street Scheme of Arrangement. Also previously unknown insurers have been identified through your insurance archaeology work which has prevented us from having to fund certain claims. The exercises where you have located sales and purchase agreements and identified legal responsibilities have also yielded excellent results. We are now able to redirect many claims to the appropriate company which own the legal liabilities. The Marsh disease project continues to be a success for us." Technology and Communications Company "Thank you for your help and advice in respect of the ongoing disease liabilities, it is appreciated. The London Client Day held by Marsh on the disease risk management tool was extremely useful to us. It has certainly helped us to manage the financial risk of our disease claims more effectively. The integrated approach offered by the 5 phased tool will no doubt prove useful to many companies that have disease claims." Electronics and Engineering Company "Marsh's approach to the management of our disease liabilities relating to our legacy group companies has been very beneficial. Many claims have successfully been redirected to third parties and those claims falling under insolvent insurer policies are being carefully managed. Following issues with a retro insurer, Marsh carefully managed a lengthy project which resulted in a favourable outcome for us. The solutions that Marsh has offered have proved very useful." Insurance Broker Marsh was referred to us to help with our ongoing efforts to effect an insurance recovery on behalf of a valued client. Marsh was responsive and attentive and the work was exemplary. With the assistance from Marsh, our client recovered approximately GBP170,000 from both the FSCS and an insolvent Scheme of Arrangement. We look forward to calling upon Marsh for assistance in the future. Marsh 6

9 6. Case Study A shipbuilding company had a significant number of asbestos related disease claims and much of its historic Employers Liability insurance was with an insolvent insurer. It appointed Marsh to review the insolvent insurer dividend payments. This exercise resulted in securing a payment from the scheme of arrangement to the client for over GBP77,000. The client was delighted with the result and subsequently appointed Marsh to carry out a further project involving 4 phases. The first phase involved Marsh attending the client's main site for 3 days to interview long-standing staff and to research archived information relating to insurance and corporate history. In addition a meeting was held with both the insolvent insurer's scheme administrator and claims handling agent. The second phase of the project involved an insurance archaeology exercise on an acquisition that the client had made more recently. Full historic coverage was traced which enabled claims to be directed to the appropriate insurers. This resulted in potential savings of approximately GBP400,000 for the client. The third phase involved a detailed review of asbestos-related claims to determine trends and variances and the profile of mesothelioma claims in particular. The previous phases enabled the completion of the fourth phase which involved a financial forecasting exercise to establish the expected number and value of asbestos-related claims that the client would sustain in the future. This was seen by the client to be extremely valuable in that they could determine their future cashflow requirements. Their provisioning for liabilities insured by an insolvent insurer was reduced from GBP44,000,000 to GBP16,300,000 thereby releasing much capital that had previously been set aside. Marsh 7

10 7. Key Contacts Bill Kirkham, Occupational Disease Claims Practice Leader T +44 (0) E [email protected] Bill is the Occupational Disease Claims Practice Leader. He specialises in, and has wide experience of, insolvent insurers and associated schemes of arrangement. Bill has organised and been a speaker at many of our seminars and client days on occupational disease liabilities. He has co-written white papers on mesothelioma, had articles published in insurance publications and his comments published in Insurance Day. He manages many of our disease liability projects. Ian Pelham, Managing Consultant Insurance and Corporate Archaeology T +44 (0) E [email protected] Ian has extensive experience in coverage research and is responsible for client relationship management for the Insurance Archaeology Team. Having been elected Associate of the Chartered Insurance Institute, Ian completed an MBA with distinction and has been elected a Fellow of the Institute of Leadership and Management. Ian has organised and been a speaker at a number of seminars involving insurance archaeology and research. Lyndsay Robertson, Claims Consultant Occupational Disease Claims Practice T +44 (0) E [email protected] Lyndsay is a Claims Consultant with a notable background in occupational disease claims handling having worked for a major insurer in this field for 8 years prior to joining Marsh. Her interest in this field was maintained when she moved to claims management within insurance broking. Michelle Jakes, Consultant Marsh Business Analytics T +44 (0) E [email protected] Michelle is a Consultant within Marsh Business Analytics. Her role involves developing tailor-made quantitative risk modelling and reserving tools. Financial modelling techniques and actuarial knowledge are then used, in conjunction with business and insurance market acumen, to recommend optimal risk financing strategies to clients. Michelle has been involved in a wide range of asbestos liability quantification exercises. Marsh 8

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