Occupational Disease Claims Practice MANAGING DISEASE LIABILITIES

Transcription

1 Occupational Disease Claims Practice MANAGING DISEASE LIABILITIES

2 Foreword 1 1. Introduction 2 2. Why should I hire Marsh? 3 3. Disease Liabilities Risk Management Tool 4 4. Marsh s Occupational Disease Claims Practice 6 5. Case Study 7 6. Key Contacts 9

3 FOREWORD We recognise that occupational disease claims present a real business risk and Marsh s Occupational Disease Claims Practice enables capability to be harnessed from across the Marsh business in the UK providing our clients with a dedicated service. While there are certain industry sectors that are particularly prone to disease claims, it has become increasingly noticeable that any type of organisation is susceptible. Interestingly, we have recently seen claims from teachers, office workers, students, and shop assistants; not professions traditionally associated with risks from occupational disease. Even a company with no direct link to a claimant s exposure may still be held liable. This liability may be historic, stretching back several decades, or inherited as a result of an acquisition or merger. Naturally, industries such as heavy engineering, shipbuilding, printing, aviation, and building contractors continue to have significant disease liabilities. The ongoing and future risk is sizeable for many companies within these business sectors. Asbestos-related claims in particular are well publicised. Employees exposed to asbestos several decades ago are only now being diagnosed with asbestos-related diseases. This lengthy latency causes multiple problems for companies as the records they have are often very limited; in some cases they may not even be aware if they owned the company which allegedly exposed the claimant. In addition, the current legislative landscape makes it easier than ever for individuals to bring legal action against companies that may have exposed them to asbestos. We are mindful of the uncertainty and potential financial loss that these claims cause and we strongly support our clients. Through the experience within our Occupational Disease Claims Practice and our development of industry award-winning solutions, we are able to meet our clients needs and very often exceed expectations through achieving savings for those clients. I am proud of the ongoing success of the practice which continues to grow from strength to strength. RICHARD WATERER Managing Director Marsh Risk Consulting Marsh 1

4 1.INTRODUCTION Many types of occupational claims continue to increase in both value and frequency. The financial risk of such liabilities cause significant uncertainty to companies and can have a major impact upon its profit margins. Mesothelioma claims, for instance, now average GBP175,000 and regularly exceed GBP250,000. On the other hand, noise-induced hearing loss claims are relatively low value, however the volume has increased substantially with over 55,000 newly notified claims in 2013 at a cost of over GBP70 million*. 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 its disease claims and provisioning requirements. To meet the needs of companies with disease liabilities and to actively manage the financial risk, Marsh s Occupational Disease Claims Practice has developed award-winning solutions. * Source: Institute of Actuaries. 2 MANAGING DISEASE LIABILITIES

5 2. WHY SHOULD I HIRE MARSH? Marsh s Occupational Disease Claims Practice consists of colleagues from across the business who have significant experience in all types of disease liabilities. The combined skills are complementary and enable an integrated approach. The practice has conceived and developed comprehensive solutions which have been dovetailed to produce a highly effective 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 an industry award-winning product and recognition from law firms as a valuable tool for the market. With our skills, capability, resources, and experience, we are 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 3

6 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 company details relating to insurance cover and identification of corporate history. We visit 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 their 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 is given on coverage deficiency and risk exposure. PHASE 4 Comprehensive disease claims management, robust auditing of insolvent insurers, and detailed analysis of claims data is carried out. 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. PHASE 5 We use the information and data gathered from the previous phases to build actuarial models. This enables 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 and budgeting. 4 MANAGING DISEASE LIABILITIES

7 POTENTIAL BENEFITS OF THIS APPROACH Marsh s Occupational Disease Claims Practice helps clients of all sizes to manage the financial risk of its disease liabilities. The experience and approach used: Provides historic insurance due diligence through tracing historic insurers. Eliminates unnecessary funding of claims by identifying where legal liabilities rest for subsidiaries. Gains recoveries from insolvent schemes of arrangement and the FSCS. Identifies issues and implements corrective strategies. Determines future budgeting requirements by calculating the number and value of future expected claims. Achieves budget certainty where required through examining risk exit strategies. Protects investors and shareholders through a highly due diligent approach. Marsh 5

8 4. MARSH S OCCUPATIONAL DISEASE CLAIMS PRACTICE Our practice has wide-ranging and considerable experience in all the main types of occupational disease which has enabled the tool to be hugely successful. The practice consists of: Insurance and corporate archaeologists. Risk specialists in assessing legal liabilities. Policy advisers who review historic policies and identify coverage deficiencies. Claims specialists in disease claims management and auditing. Professionals in insolvent schemes of arrangement. Qualified actuaries. We have 24 colleagues based in 7 locations: Norwich, London, Birmingham, Manchester, Edinburgh, Leeds, and Reading. 6 MANAGING DISEASE LIABILITIES

9 5. CASE STUDY CASE STUDY A US corporation acquired a large UK engineering group which had in excess of 100 subsidiary companies within the group. Following the acquisition, it became the target for numerous occupational disease claims with over 140 claims received in the first 12 months. The US corporation appointed Marsh to manage its occupational disease claims and it was clear from an initial review that the client had significant gaps in legacy insurance cover and some difficulties in understanding corporate liability and Transfer of Undertaking (TUPE) issues. Marsh also discovered that the client had paid some claims for which they did not own the legal liability of the employing company. Where legal liabilities for the employing entity attached to the client, Marsh comprehensively managed each claim to conclusion through organising all insurers on cover, determining the lead insurer, reviewing apportionment, assessing uninsured periods, micro-managing insolvent insurer exposures, and ensuring a robust defence was employed wherever possible. This highly due-diligent approach ensured that over 65% of claims were successfully repudiated. The overall savings achieved for the client through the combined approach of insurance archaeology and disease claims management is estimated to be in excess of GBP2.5 million to date. Marsh s first step was to complete a companies house tree, noting the historic trading names, its current legal status, and TUPE links to other companies. This generated a template for Marsh to use when reviewing claims. Marsh then reviewed, on a claim by claim basis, the corporate history of the employing companies, assessing the legal liability to the client. Marsh determined that, for 70% of the original claims passed to it, the client was not legally liable for the employing entity. The claimants solicitors were informed accordingly. For claims where the client owned the legal liabilities for the employing entity, Marsh sought to trace coverage where there were gaps in the insurance history. Much coverage was traced including two mesothelioma losses with a combined value of over GBP500,000. Marsh 7

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11 6. KEY CONTACTS BILL KIRKHAM, OCCUPATIONAL DISEASE CLAIMS PRACTICE LEADER T +44 (0) E bill.kirkham@marsh.com 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 Marsh seminars and client days on occupational disease liabilities. He has co-written white papers on mesothelioma and has had articles and comments published in a number of insurance publications. He manages many of our disease liability projects. IAN PELHAM, MANAGING CONSULTANT INSURANCE ARCHAEOLOGY T +44 (0) E ian.pelham@insolutionsworld.com 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. JOHN DAVIES, MANAGING DIRECTOR MARSH RISK FINANCE T +44 (0) E john.h.davies@marsh.com John leads the Risk Finance team that includes our actuarial and analytics capability. The team utilises the latest actuarial, statistical modelling, and business discovery approaches to provide Marsh clients with solutions that deliver value. The team have extensive industry experience and have worked on a wide variety of analytic, risk financing and structured risk solutions to enable clients to manage volatility and release value. Marsh 9

12 The information contained herein is based on sources we believe reliable and should be understood to be general risk management and insurance information only. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such. Marsh Ltd is authorised and regulated by the Financial Conduct Authority. Copyright 2014 Marsh Ltd All rights reserved GRAPHICS NO