Category Archives: Risk Management

Here We Go Again

Well it was a nice lull while it lasted.  For better than ten years following the chaos caused by Katrina and other mid-2000s hurricanes, North America has enjoyed pretty tame hurricane seasons, with the notable exception of Superstorm Sandy in 2012.  Then along came Harvey last month.  Now we’re staring down mega-hurricane Irma about to descend on Florida.  As if two major hurricanes in only two weeks isn’t bad enough, Jose lurks out there in the Atlantic though it looks like we may dodge that bullet.  All of this and we’ve still got more than a month left in the hurricane season.

Cue the media hysteria.  I realize that we live in the era of the 24-hour news cycle, and Jim Cantore would be an utterly lost soul if he weren’t firmly ensconced at ground zero of every major storm.  We’ve had never-ending 24-hour coverage of Harvey’s development, Harvey’s landfall, Harvey’s aftermath, Irma’s development, preparations for Irma, and we’ll be hearing about Harvey and Irma for the next several weeks.  I do not intend to minimize the human tragedy of these storms, but I am wary of the indictments that will inevitably flow from all this media hype.  We’re already seeing it…

Predictably, climate change is already being linked with the current roster of storms, such as in this doozy of an article from Newsweek.  The article relies on alleged climate data manipulator Michael Mann.  I hope all of you Florida evacuees heading north on I-75 realize that you’re setting the stage for the next Irma as your internal combustion engine idles in the traffic jam.  Talk about a Catch-22.

The Wall Street Journal recently highlighted hurricane deductibles as the reason that many hurricane victims will find themselves shouldering 1-2% of their hurricane loss.  The slant of the article (and others like it) portrays insurers as greedy companies looking to stick it to their policyholders at every turn.  Let me see if I have this straight.  My beautiful Florida home suffers a $500,000 hurricane loss, and I’m distraught that I have to cover $10,000 of that loss out of my own pocket before my insurer covers the remaining $490,000?  Sure, $10,000 is a chunk of change, but would I have really wanted to pay the actuarially-mandated premium to have hurricane insurance with first dollar coverage (assuming I could even find such coverage)?  Nope.  Even a $10,000 hurricane deductible is a fair price to pay for living in a beautiful coastal home in paradise.  Or at least it should be.  The hurricane deductibles were a necessary component to keep the private hurricane insurance market from evaporating after Katrina thus giving us yet another incarnation of the notoriously underwater (pun intended) National Flood Insurance Program.  NHIP anyone?

Speaking of flood insurance.  There are also hundreds of articles and reports on the uninsured and underinsured flood losses from Harvey, and more will follow from Irma.  Yes, the NFIP is woefully outdated and in debt.  Even for the minority of homeowners and businesses who purchase flood insurance, the program limits (e.g., $250,000 on a home’s structure, no business interruption coverage at all for businesses) leave many underinsured.

Although a certain amount of media attention is helpful in calling attention to problems that need solving, I fear that what we have in most of today’s media hype is politically motivated hyperbole that exploits the actual victims of these natural disasters in order to advance an agenda (e.g., climate change, anti-capitalist, etc.) It would be nice if we could just tone it down a bit and focus on genuine problem-solving instead of slanted accusation.

In the spirit of genuine problem-solving, insurance guru Bill Wilson recently blogged about the concept of mandatory flood insurance coupled with strict loss control.  Is that an idea whose time has finally come (or perhaps is long overdue)?  The logic is compelling, but then we’d better be prepared for another batch of media reports on how outrageously expensive mandatory flood insurance has become, how unfair the tax penalties are for those who can’t/won’t buy mandatory flood insurance, how onerous are the loss control requirements, and how the flood insurance exchanges are suffering from unexpected losses and need to be taxpayer-subsidized, and the whole flood insurance system is in a death spiral.  Sound familiar?

My sincere thoughts and prayers are with you Florida, and Texas.

 

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Back to School

We’re back.  Summer was great, but the academic year is officially underway and there is no shortage of events and topics to consider.  Of course, the devastation and tragedy brought about by Hurricane Harvey is heart-wrenching.  Coincidentally, it was almost exactly one year ago that I blogged about flood insurance and the Louisiana floods.  Harvey leads us back to many of the same issues that I wrote about last year.

Risk and insurance headlines continue to debate the future of auto insurance as the reality of driverless automobiles draws closer.  Cyber-security, ransomware, and data breaches still demand considerable risk management attention.  AIG has a new CEO with considerable industry chops and he’s already making big moves.  Drones are playing a large part in the claims process following Harvey.

Contrary to popular belief, risk and insurance is anything but boring.  These are just some of the weighty issues that Ferris State University RMI students will be exploring in the months ahead.  This is going to be fun.

RIMS 2017 – Here we come

Bright and early Sunday morning, I depart with four Ferris State RMI students to attend the 2017 RIMS Annual Conference in Philadelphia, Pennsylvania.  I confess that at this stage of my career – having endured 30 years of planes, trains, and automobiles – business travel has little appeal to me.  Yet, I am enthused to accompany four students to this very large and impressive industry event.

It’s difficult to convey the vast scope of the RMI industry within a classroom.   Some things just have to be experienced and witnessed firsthand.  The immensity of the RIMS conference, with its thousands of attendees and vast array of exhibitors that includes many household names of the insurance industry, certainly drives home the point with students.  The educational sessions show the students that there is much more for them to learn and a cornucopia of career opportunities awaiting them.

My first RIMS conference was 26 years ago, and I still learn something new every year.  I am truly excited for the opportunities awaiting my four students.  I know that they will meet new and interesting professionals at the conference events, learn of concepts that will spark their interest, generate new ideas for their careers and personal ambitions, and yes, have some fun.

It’s going to be a great week and I will relish the opportunity to watch my students take it all in.  It may even make the planes, trains, and automobiles tedium of business travel worthwhile.  Maybe.

Scholarship Season

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Spring break is upon us!  Over the next few days, Ferris State students will scatter to various warm climates for spring break next week.  When the RMI students return in mid-March, they will be facing several imminent scholarship deadlines.  The amount of scholarship assistance that is available to today’s RMI student is impressive, uplifting, and dare I say, overwhelming.  The ever-growing list of RMI scholarships certainly reflects the industry’s urgent need for young talent, and that should speak volumes to those students and parents still contemplating an academic and career direction.

Many of these scholarships have springtime application deadlines so that awards may be made during May for the upcoming 2017-18 academic year.  This time of year, I receive multiple scholarship opportunities each week that I pass along to my RMI students.  As I have blogged in the past, there are also several online resources (including our own partial list) that will help students to find RMI scholarships.  There is absolutely no reason that a diligent student cannot find at least some scholarship assistance for their RMI education.

All of this is good.  Or is it?  Let me return to my prior use of the word “overwhelming” as it relates to these scholarships.  There are so many scholarship opportunities from every type of RMI organization imaginable, that students seem to be “freezing up” when it comes to applying for these scholarships.  With so many opportunities, it becomes difficult for the individual student to discern which opportunities afford them the best chance of receiving an award, and with limited time to crank out scholarship applications, they can apply for only so many.  In fact, this is beginning to be noticed by the awarding organizations as I have begun to receive queries from some scholarship sponsors as to why their application numbers are lower than expected.  To be clear, I don’t think that’s a universal condition as many of the established and well-known scholarships continue to receive plenty of applicants and award their scholarships only to the most deserving students.  It seems to be the newer, lesser-known scholarships that are struggling to find applicants.

This is a real shame because these sponsoring organizations have funds to help students, and they really do want to bolster the young talent coming into the industry.  I hesitate to say that there may be an over-supply of RMI scholarships because that almost feels blasphemous.  How could there ever be an over-supply of such a fantastic thing as scholarship money when tuition and book costs continue to rise?

I have an idea.  What if some of these scholarship sponsoring organizations who are struggling to generate applicants diverted those scholarships funds for a few years?  Instead of begging for student applicants, put the funds into the hands of the collegiate RMI programs to use for program marketing and enrollment growth initiatives.  More RMI students enrolled at schools equals more future scholarship applicants.  Now, you might argue that the scholarships themselves should be a powerful recruiting tool for boosting RMI enrollment.  Absolutely true, but there is much more to the student decision to major in RMI and I believe that the individual RMI schools are in the best position to convey the overall value proposition (including abundant scholarship opportunities) to prospective students – but not many schools have budgeted funds specifically for marketing their RMI academic programs.

This could be an interesting short-term tactical shift for some scholarship sponsors that pays off with a long-term strategic success of awarding more scholarships to the most deserving students (however each awarding organization may define that) a few years down the road.

Flexible Career

career_in_insurance

Practical Education, Flexible Career, Rewarding Life.

Last week, I posted about the practical education element of the Ferris State RMI program’s tagline.  In the continuing spirit of Insurance Careers Month, I will discuss the flexible career aspect this week.  I’d like to begin by highlighting one example of insurance career flexibility: me.

I was one of the many “accidental” insurance professionals who stumbled into a commercial underwriting position fresh out of college.  A few years later, I moved into a risk management role with a large retailer.  Applying my interests and aptitudes for technology, I eventually started my own consulting practice where I worked on several Fortune 500 risk management information system projects.  An opportunity came along to develop a system and process for tracking certificates of insurance, and an entirely new business was born.  Over the course of ten years, I was able to grow and then sell that business, and then pursue the bucket list objective of earning a doctoral degree.  Shortly thereafter, Ferris State revived its RMI academic program and began searching for a lead faculty and program coordinator, and here I am today.

Over the years, I’ve talked to countless risk and insurance professionals, some who intentionally entered the industry and many who discovered it accidentally.  I am always intrigued by the unique stories of these career arcs.  They are always a fascinating story of career evolution that starts in one area of the industry and then twists and turns through a variety of different roles, opportunities, firms, and locations.  Many in the industry have had the chance to live in some wonderful places, including overseas.  Here in Michigan, insurance professionals can work in the metropolitan areas of Detroit and Grand Rapids, or near the exquisite shorelines of Grand Haven and Traverse City, or in the pristine wilderness (and sportsman’s paradise) of the Upper Peninsula.  The key takeaway from my and many other stories is that a risk and insurance career is not stagnant, but rather it allows for evolution through a number of interesting, challenging, and meaningful positions in a variety of locations.

A flexible career has another meaning besides career path mobility and opportunity.  Numerous articles describing the desire for workplace flexibility have appeared in recent years, particularly when discussing the Millennial generation.  However, I believe that this desire for flexibility is not unique to the Millennials.  In this age of instant, always-on communication, I think we all value the ability to work from anywhere we wish, and at the times that we wish.  Technology certainly supports our ability to be productive from our home office or even from the bleacher seats as we watch our children and grandchildren play sports.  The risk and insurance industry offers this type of flexibility.  Many professionals are now based out of home offices.  Field personnel who do loss control or claims work often schedule their own appointments.  I’ve spoken with many insurance agents over the years who treasure the ability to work in the office during the morning, have a client meeting over lunch, spend time on a family activity during the afternoon, and finish up their day with a little work in their home office.  The next day’s schedule may look entirely different – it’s up to them.

Let me be clear.  There is work to be done.  I don’t intend to paint a picture of insurance professionals spending all of their afternoons on the golf course,  During my consulting days, I traveled 50-75% of the time and I was away from my young family more than I cared to be at times.  Nevertheless, the work was always interesting, never boring, and I always had a degree of control over when I scheduled projects.  On the whole, I have enjoyed a tremendous amount of flexibility and variety in my risk and insurance career, and you can too.

 

Practical Education

theory_into_practice

February is “Insurance Careers Month” during which risk and insurance professionals make a concerted effort to highlight the industry’s career opportunities for young people facing a myriad of academic and professional choices.  A few years ago, when Ferris State University revived its storied risk management and insurance academic program, we re-engineered the curriculum and co-curricular opportunities for the 21st century.  As the new program took shape, I sat down with an advisory board sub-committee to craft a tagline for the program that would capture its essence and the potential that it offered students:

Ferris State University Risk Management and Insurance:  Practical Education.  Flexible Career.  Rewarding Life.

 In the context of insurance careers month, I decided to break this tagline down and discuss each of its component parts over the next few weeks.

“Practical Education” is not just lip service – it’s part of the Ferris State DNA.  The school was founded in 1884 by Woodbridge and Helen Ferris as Big Rapids Industrial School.  A review of the school’s history clearly demonstrates a focus on teaching practical skills that prepare students for gainful employment and successful careers in fields where workers are needed.  To this day, Ferris offers programs in such fields as Heavy Equipment Technology, Welding Engineering Technology, Plastics Engineering Technology, Pharmacy, Optometry, and yes, Risk Management and Insurance.  All of these are fields clamoring for young, educated talent.  The Ferris State mission and core values clearly emphasize the practical nature of a Ferris State education.

The new Ferris State RMI academic program has been designed from the ground-up to provide this practical education.  Our students learn the foundational concepts of the risk management process, insurance coverages, insurance law, and terminology.  But that’s not all.  The reality is that in many fields, a significant portion of the technical knowledge a person gains in school will be obsolete within ten years of graduation.  The truth is that the technical learning continues well beyond college graduation, and in fact, never really ends.  Insurance coverages will evolve with emerging risks such as cyber-risk, and who knows what comes next in the 2030s, 2040s, and beyond.

At the heart of our practical education is an emphasis on experiential learning, adaptable degree programs, and development of timeless skills.  Practical education means that our students will complete internships where they go to work in the “real world” of risk and insurance.  It means they attend industry conferences where they are exposed to emerging industry issues and begin building a professional network.  It means that they participate in co-curricular activities such as Gamma Iota Sigma.

Practical education means that students complete the foundational RMI courses and then have the opportunity to draw a variety of other courses from across the University to complete their degree and to suit their interests and career direction.  Interested in becoming a cyber-security/cyber-risk expert? Take a few of our information security courses.  Interested in predictive analytics for risk and insurance? Take data analytics and data mining courses.  Interested in the agency side of the business? Take our agency operations course along with a few small business management courses.  Examples of practical tailored education abound.

Practical education means that students learn and practice the skills that every employer seeks.  The RMIN 489 capstone course includes units, exercises, and activities in such areas as critical thinking skills, logic, problem-solving, and collaboration, to name a few.  Just next week, the RMIN 489 students will be addressed by an industry veteran who will be coaching them through several case studies drawn from genuine situations from the realms of underwriting, claims, sales, and risk management.  The cases we use in this course are not canned textbook cases – they are real-world (with names changed to protect the guilty/innocent) situations for which there is rarely “one correct solution.”  The intent is to exercise the students’ problem-solving and analytical skills as they evaluate each case against the foundational risk and insurance knowledge they have gained.

This is real-world stuff.  This is a practical education.

Back to School

college_bound

Next week marks the beginning of a new academic year at Ferris State University, and it is going to be a busy one.  The FSU Risk Management and Insurance program officially launches a re-engineered curriculum this fall.  One of the most important features of the updated curriculum is a 15-credit block wherein students will tailor their education (with academic and professional advice) to suit their interests and aptitudes.  Some students may decide to enhance their RMI degree with an area of emphasis in data analytics by completing coursework in data mining, statistics, and predictive analytics.  Other students may focus on risk management by adding coursework in advanced risk management, enterprise risk management, and risk management technologies.  These are but two examples of potential specializations which might also include other areas such as cyber-risk, entrepreneurship, agency operations, and more.  Fun stuff!

Earlier this year, the Ferris State RMI program launched a strategic planning process.  The bulk of the committee’s planning work is now complete.  Execution of the strategic plan is already underway, and will be an ongoing process over the next few years.  This will result in considerable activity both inside and outside of the academic classroom, adding to our students’ success and strengthening the program for future students.

On a personal note, I am beginning my fourth year in academia this fall.  After spending the first 25 years of my career working in and around the risk and insurance industry in a variety of roles, I can honestly say that the past three years have been the most intrinsically rewarding years of my career.  But what really excites me is what I see ahead.  Ferris State has established a fantastic foundation for the RMI program, the risk and insurance industry is eager to hire ambitious graduates, and now we just need to fill more of the seats.  It is going to be a busy and exhilarating year.  Let’s get started.