Benchmarking Services Empower Risk Managers'Decision-making The new online cost of risk benchmarkingprogram developed by the Risk and Insurance Management Society Inc.is another in a series of programs the New York City-basedassociation has devised to drive improvements in services for theentire risk services industry.

According to Chris Mandel, the chief risk officer for RIMS andits immediate past president, the online benchmark survey,developed in partnership with Advisen Ltd., is the most up-to-datebenchmarking survey for risk managers. Advisen is an informationservices company to the insurance industry based in New YorkCity.

In the past, survey results were typically four-to-six monthsold, Mr. Mandel reported. “And being a practitioner myself, I canunderstand the frustration with even six-month-old benchmarks,” hesaid.

“I think its a critical issue as we try to satisfy managementthat our results are what they are. To be able to say that thebenchmarks we are comparing to are relevant, we have to show theyare current,” he said.

The results of past book-bound RIMS surveys, done in conjunctionwith other information services, were viewed as old information bythe time it hit the streets. With the new online service, Mr.Mandel said, the information is current and continuallyupdated.

The updating, he explained, is accomplished when executives goto the site for information. They have to put their organizations'own risk information in before getting the results showing wherethey stand with their peers.

“We are looking at fundamentally capturing the key cost ofrisk,” explained Mr. Mandel. “Premium is only one part of it.”

Other costs that the risk manager can get information on fromthe benchmarking survey include retained losses, broker and systemcosts, consulting fees, and the risk management departments ownadministrative costs.

“Ultimately, we hope as this thing evolves as Advisen hasdesigned it, it has the opportunity to become much broader aswell,” he said.

In the future, as risk managers are branching out into otherareas of risk–beyond traditional forms of risk involving insurance,such as business risk, financial risk and other operationalrisksMr. Mandel said he expects the survey to benchmark “in allthose realms over time.”

It will be a few years before the system gets to that point, Mr.Mandel added, as the association moves the last of its old dataonline. The goal now is to get the participation rate up to the4,000 member companies, and for 8,000 individual members to beginactively using the survey. But there is a larger universe, Mr.Mandel indicated, and the hope for the future is that even moreexecutives will log onto the resource, which is available toeveryone.

He noted that the online survey could also serve as a tool toincrease membership, since non-members would pay more to access theinformation available to members.

The benchmarking survey was rolled out in April during the RIMSChicago conference and, he pointed out, professionals are justlearning its capabilities. The data itself can be viewed in anymanner the user wishes, either by individual industry or across awide spectrum of other companies.

And it is secure. Mr. Mandel said that it is not possible for auser to identify the individual source of information, and thatthere are extensive controls in place to prevent hackers fromgetting to the data.

Another driver to improving quality of service, in the muchbroader sense, is the RIMS Quality Improvement Process. The ideabehind this program, Mr. Mandel pointed out, is to establishagreements for the mutual benefit of risk management professionalsand their providers, setting performance expectations.

It is a flexible program, he explained, that provides guidancein setting up a program with an insurance broker, for example, andunderstanding the type and cost of programs you are getting.

“You can make it what you want it to be, but ultimately it is toget alignment between the parties and get them to agree with whatare the expectations for performance,” he said.

The benchmarking survey would be one way of measuring theseexpectations, he suggested, but it is only one “narrow” way ofmaking those measurements.

What drove the creation of the QIP was the demise of the QualityInsurance Congress. The QIC was a forum created by the industry todrive quality service. After its demise a few years ago, RIMS tookup the challenge and eventually developed the QIP program.

There is, Mr. Mandel said, a broad alignment between the majorbrokers, underwriters and others throughout the industry to drivequality and improve performance. The QIP is a two-way process thatsets the standards of expectations between what the buyer andseller of insurance provide to one another and what each expectsfrom the other.

Last year, the first phase of the program was rolled out forinsurance brokers and risk managers. Mr. Mandel said that the nextstep will be to roll out similar programs for others, such asunderwriters, claims providers and consultants to develop their ownmutual agreements.

The program is beginning to “pick-up some steam” as more andmore inquiries come into the New York office for information. Thereis also mounting evidence, he suggested, that more and more riskmanagers are insisting that, as part of a brokers request forproposal, they use the QIP process.

“When you get a good understanding between the two parties aboutexpectations, there is something to point to, to show that one ofthe parties has fallen down on the job,” he said. “And when youdont fall down on the job, you will know. When [the broker or riskmanger has] met expectations, you will show you deserve the moneyyou are getting and maybe more.”

Ultimately, he concluded, the aim of these programs is to makeRIMS members more successful and to get to the goal of providingthe kind of service that no longer leaves the chief financialofficer asking the risk manager “why” on insurance issues.

Reproduced from National Underwriter Edition, July 7, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.