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

According to Chris Mandel, the chief risk officer for RIMS and its immediate past president, the online benchmark survey, developed in partnership with Advisen Ltd., is the most up-to-date benchmarking survey for risk managers. Advisen is an information services company to the insurance industry based in New York City.

In the past, survey results were typically four-to-six months old, Mr. Mandel reported. “And being a practitioner myself, I can understand the frustration with even six-month-old benchmarks,” he said.

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

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

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

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

Other costs that the risk manager can get information on from the benchmarking survey include retained losses, broker and system costs, consulting fees, and the risk management departments own administrative costs.

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

In the future, as risk managers are branching out into other areas of risk–beyond traditional forms of risk involving insurance, such as business risk, financial risk and other operational risksMr. Mandel said he expects the survey to benchmark “in all those 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 data online. The goal now is to get the participation rate up to the 4,000 member companies, and for 8,000 individual members to begin actively using the survey. But there is a larger universe, Mr. Mandel indicated, and the hope for the future is that even more executives will log onto the resource, which is available to everyone.

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

The benchmarking survey was rolled out in April during the RIMS Chicago conference and, he pointed out, professionals are just learning its capabilities. The data itself can be viewed in any manner the user wishes, either by individual industry or across a wide spectrum of other companies.

And it is secure. Mr. Mandel said that it is not possible for a user to identify the individual source of information, and that there are extensive controls in place to prevent hackers from getting to the data.

Another driver to improving quality of service, in the much broader sense, is the RIMS Quality Improvement Process. The idea behind this program, Mr. Mandel pointed out, is to establish agreements for the mutual benefit of risk management professionals and their providers, setting performance expectations.

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

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

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

What drove the creation of the QIP was the demise of the Quality Insurance Congress. The QIC was a forum created by the industry to drive quality service. After its demise a few years ago, RIMS took up the challenge and eventually developed the QIP program.

There is, Mr. Mandel said, a broad alignment between the major brokers, underwriters and others throughout the industry to drive quality and improve performance. The QIP is a two-way process that sets the standards of expectations between what the buyer and seller of insurance provide to one another and what each expects from the other.

Last year, the first phase of the program was rolled out for insurance brokers and risk managers. Mr. Mandel said that the next step will be to roll out similar programs for others, such as underwriters, claims providers and consultants to develop their own mutual agreements.

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

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

Ultimately, he concluded, the aim of these programs is to make RIMS members more successful and to get to the goal of providing the kind of service that no longer leaves the chief financial officer 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 serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.

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Benchmarking Services Empower Risk Managers' Decision-making

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