New RIMS Pres. Puts Skills To The Test

"I knew in a post-Sept. 11 market that strategically we had to be prepared for such an erratic move," he said, "and we were. We had five other markets we were talking to, all of which were interested in the business, and most of which came forth with prices at the end of the day."

The result was "a fairly good-news story," he continued. The competition brought the original carrier "back to the table on a preferable basis, price-wise, and drove them to the most competitive level relative to price, terms and conditions."

Mr. Mandel took a similar approach with D&O, E&O and aviation coverages. He was able to wrap up aviation coverage "for only 22 percent above expiring–a very good result," he said.

Terrorism, he said, remains "the biggest problem in almost everything I deal with. It's been a component part of all the programs just mentioned. And it really, in my opinion, is relevant to the professional liability [risks]."

Reinsurers, however, "were forcing outright and absolute terrorism exclusions on primary underwriters," even though it might not be relevant to a particular exposure, he noted. The first order of business, he said, "was to take a modified exclusion, not absolute as proposed."

Mr. Mandel outlined some of his key goals for RIMS in a recent interview with National Underwriter:

The financial stability of RIMS through surplus enhancement.

Surplus has been reduced "because of capital and other expenditures as well as net negatives," he said. To get the budget in shape, he plans to "make more money off of the [annual] conference and find new ways to produce revenues that are net-positive."

Greater product and service delivery efficiencies.

Because of the costs of delivering services from the staff level, "we need to find more efficiencies in the way we do that," he said. "The first order of business is the Web. The efficiencies we've found from the staff delivery standpoint off the Web so far are nearly $400,000 annualized."

Meanwhile, by finding new ways to deliver educational products over the Web, RIMS will produce "an efficiency that will allow us to reduce our expense side. It may also mean redirecting staff resources to different products and services in demand by the membership to produce a positive net," he said.

Revenue streams.

The most significant "is probably the Web site, as a platform and a channel for the delivery of educational products and services, which is our mission," he said.

Other new revenues are being generated "out of key partnerships," he added. "We are in discussion right now with several major trade associations in the industry that I think will provide us with substantial partnership funding toward the delivery of the Quality Improvement Process Product." (QIP is a product designed to assess and improve the performance of risk managers and the various parties providing services to them, including insurers, brokers and third-party administrators.)

"While it may not explicitly be a new revenue, it will be an expense offset that will have the same effect," he said.

Other goals he cited include:

Broadening membership.

RIMS membership is made up of some 4,000 corporate members, which includes 85 percent of the Fortune 1000 companies, he said. This would include "others performing risk management duties," such as treasury departments and other areas "where specialty practices of risk management are going on."

The Web will again be called upon for support, assisting in the membership drive by helping RIMS "reach back out to public [sector] risk managers," he said, who "actually split off from RIMS a couple of decades ago." The interests of risk managers, "whether they are private companies, public companies or municipalities, really aren't all that different," he said.

The Web is also seen as a way to facilitate the expansion of the organization internationally, he said. It will "allow us to reach out to the world and to provide what we do over the Internet." He added that the Web will also help "expand our focus from the traditional risk management approach of P&C risk management to financial risk managers."

Enhancing member value.

"To keep membership growing, we have to keep membership value growing," he said. This means providing "more effective, efficient and relevant products and services to members."

Moving risk management closer to becoming a true profession.

"While some of us call it a profession, it really is, technically, a discipline," he said, rather than "a profession in the truest sense of the word," such as the medical profession, or a professional accountant or engineer.

One way this will be achieved is through the RIMS Fellow program, which he described as a "CPA of risk management, which is being deployed this year."

Meanwhile, in light of the current recession, Mr. Mandel advised risk managers to leverage "those things they should have been doing all along," which include building relationships with underwriters to make sure there is a good understanding of the "risk profile they bring to them for consideration of transferring that risk."

When it came to his own renewals, Mr. Mandel said that building relationships was critical. "[Renewals] were tough and they produced price increases, but in my opinion, below-market price increases," he said.

When an organization is downsizing, as many are in this volatile economy, he advised that "the first risk that comes to anyones mind this year is workers comp experience." Once there is a reduction in the workforce, some employees "will take advantage of the system, particularly in production or manufacturing environments," he warned.

Mr. Mandel advised putting controls in place to ensure that any claims filed are legitimate. This requires "having a great claims management operation, both internally and with whatever third party youre using," he said.

Layoffs also have employment practices liability implications. To get coverage for such risks, "the issue will always be getting a renewal price that is reasonable in light of what underwriters will be concerned about," he said.

Risk managers with a company that is downsizing, he said, must "communicate to the market and the underwriting community that the way in which its being done is both fair, prudent and reasonable."

Laid-off employees who feel they were treated fairly while at the company, "understood why this had to be done, felt they were treated well, and as a result there was no ill will or bitterness," he explained.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, April 15, 2002. Copyright 2002 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.