HONOLULU–Risk managers face an ongoing battle to make sure their brokers and carriers offer more than lip service in terms of improved service and transparency, leaders of the top commercial buyers group warn.
"To a certain extent, we're still being held hostage to the process," said Ellen Vinck, outgoing president of the New York-based Risk and Insurance Management Society. "We have to keep getting the message out that we won't tolerate business as usual."
Her comments came a day before authorities announced that ACE Ltd. had agreed to pay $80 million in the latest settlement to emerge after investigations that turned up evidence of bid-rigging schemes involving carriers paying hidden contingent fees to brokers who steered business their way.
The biggest gripe cited by Ms. Vinck and her successor as RIMS president, Michael Liebowitz, is the fact that buyers too often are rushed through the renewal process at the last minute and then fail to get accurate policies in a timely fashion after coverage has long since gone into effect.
"Fundamentally we should be able to get a quote on a renewal 30 days before our current coverage expires, or earlier," said Ms. Vinck, vice president of risk management and benefits at BAE Systems Ship Repair, in San Diego. "For most risk managers, that is simply not happening."
Speaking to reporters here at a presidential press conference during the RIMS annual convention, Ms. Vinck complained that because "the marketplace has shrunk over the years for big corporate buyers," thanks to mergers and acquisitions, "not getting a renewal quote in a timely fashion puts us on the spot. You can't be shopping for new quotes two weeks prior to our expirations."
The key to turning the situation around is being proactive with vendors, according to the RIMS leadership.
"You are more likely to get a quote in a timely fashion if you sit down with your underwriter and settle on a reasonable schedule for both sides," said Ms. Vinck. "Unfortunately, not all buyers are having such meetings," depending entirely on the broker to work with carriers instead.
"It's really up to the individual risk manager" to hold their brokers and carriers accountable, said Janice Ochenkowski, a vice president and director at RIMS.
"We as an organization can set standards and provide tools to improve the quality of the process, but individual risk managers have to put them into action and enforce the standards we've set in their own company's context, or else nothing will really change," added Ms. Ochenkowski, director of global risk management at Jones Lang LaSalle, in Chicago.
Mr. Liebowitz, due to take over as RIMS president later this week, said he insists his broker begin the renewal process six months prior to expiration, with clear deadlines set to complete each step, as well as a standard of having an accurate policy in hand within 30 days of the coverage's inception.
To monitor progress as well as make sure his account is properly serviced, "I also expect to see all e-mail communications on my renewal in real time. That way I can co-pilot along with the broker as the process goes on," said Mr. Liebowitz, who is director of risk management at Bridgeport Hospital and Healthcare Services in Bridgeport, Conn.
Such transparency is critical to helping reassure buyers that brokers are serving their interests and that buyers and brokers are being upfront with their carriers, added Ms. Vinck. "Transparency means all parts of the transaction for all three parties–broker, buyer and insurer," she said. "The underwriter should never be concerned that the buyer or broker is holding back information. That's the key to having a true partnership."
However, following settlements of bid-rigging and contingency fee abuse charges among major brokerages and carriers, Ms. Vinck believes brokers have a way to go before buyers are completely comfortable again that their interests are front and center.
"We have to make sure the broker-insurer relationship isn't so close that our interests are ever again secondary or sacrificed," she said.
During a panel discussion including the heads of Marsh, Aon, Integro and Gallagher on the brokerage side, as well as ACE, AIG and FM Global on the company side, Ms. Vinck threw down the gauntlet on contingency fees, demanding to know why buyers haven't seen a premium cut to reflect the fact that the major players have all given up the bonus, volume-based commissions that led to conflict of interest charges.
"There is a pot of money that hasn't come back to the insured" after contingency fees were dropped, she said, asking where that money went. She received no direct response from any of the panelists.
"It all goes back to integrity," she said later, during the RIMS presidential press conference. "My biggest concern is that the CEOs up there [on the panel] need to be aware of the heartbeat–what's going on in the actual process.
"They all talk about how things are changing and how much improvement there has been, but they need to track and quantify that progress and share it with buyers, who remain very skeptical with how this is all playing out in day-to-day terms."
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