Liebowitz Ready To Orchestrate RIMS

Looking at it from a macro-perspective, he said, "I'm responsible for making sure that our patients, our visitors and our employees can come into a safe environment." How does he achieve this? "I wear out a lot of shoes," he joked.

Mr. Liebowitz said he manages the organization's Environmental Care Committee, serving as chairman for more than 14 years. The committee examines any potential threats to the organization. Under the committee umbrella are emergency preparedness, security, occupational health, infection control, biomedical engineering, utilities management and overall safety.

According to RIMS, he created a risk management program that currently has a staff of four and is responsible for his entity's entire insurance program.

Professional and general liability is covered by a group captive domiciled in Bermuda, he said. The captive writes medical malpractice, "not only for our doctors but for our community-based physicians as well," he said. "It provides a stable platform for them to purchase their coverage, and it also provides them with a known face when it comes to claims handling."

The organization's workers' compensation is self-insured. "We purchase the excess for that program, as well," he noted. "And we perform claims management here for two of our system hospitals on the workers' comp side."

Mr. Liebowitz said he also purchases primary coverages–including property, helipad, automobile, directors and officers, fiduciary liability and surety bond coverage.

"When you need something, either from a financial perspective–meaning a financial guarantee type of policy–as well as your standard property and casualty policy, we're the one-stop shopping environment," he said.

As for his broker, Mr. Liebowitz said he retains the same intermediary as he did before broker integrity and contingency fees became an issue in the wake of probes by New York Attorney General Eliot Spitzer, which exposed bid-rigging and fee abuse by some of the industry's biggest players.

"I immediately went to my CEO, COO and CFO, disclosed the issue to them, and they left it to me as to what to do with regards to the broker," he said. "To remain where we are, or to move to another broker."

His response was that while switching brokers was an option, he advised that "what I think we'll find is that a majority of the brokers will have the same problem." Looking back, he said, "most of the major brokers did have the same problem, so that was probably the right decision."

Since then, Mr. Liebowitz said he has negotiated concessions with his broker in an effort to reduce costs as well as add control and oversight to the buying process. For his Oct. 1 renewals, for example, he met with his broker in May and laid out a time frame.

Requirements included requests for all correspondence, meetings with underwriters, in-hand quotes 30 days prior to the policy's expiration, and policy issuance within 30 days of inception. "I have to say, on everything but the last piece we hit 100 percent," he said. "On that piece, which was really not in [the broker's] hands, we are probably at about 75 percent compliance–a giant step compared to where the industry has been and probably still is."

Overall, he noted, the shakeup of the brokerage industry has helped his organization by creating transparency. "The window is no longer glazed over," he said. "I can say at any point in time who we're talking to, what they're saying and what's going on."

Previously, he recalled, he was not included in the negotiating process. Now, however, "I'm directly involved in it. I'd like to say I think all the forces combined helped to create a much more transparent marketplace."

He feels confident that "when I finally say we'll bind the program, it's the best possible program I can get for my organization."

Underlying it all is integrity, he said, which is needed on all sides. "It's a triangle. So you have the brokers, you have the marketplace and you have the risk manager. Everyone needs to have a high sense of integrity," he said. "Hopefully nothing would be done that your mother would be upset about."

While many risk managers are afraid of enterprise risk management, Mr. Liebowitz contends it is here to stay. As RIMS president, he said he will be "pushing ERM education and helping my colleagues understand what ERM is."

The fear of risk managers, he said, is that the finance side of risk management will move closer to the operational side–at which point "they would become one, leading to erosions of authority or erosions of a job"–even to the point where "the risk manager as we know it today could cease to exist."

The reality, however, is that risk managers "are doing [ERM] or major components of it and don't even know it," he said.

ERM for many risk managers is the logical next step, he surmised. "Risk managers are now in the boardroom. How many times have we sat through sessions on 'What will risk managers do when they're in the boardroom?' So, it's a natural progression."

The question, he said, is whether risk managers can "run with it, how far, and do they have the skill-sets?" One thing RIMS is doing, he said, is helping risk managers fill the void.

The Terrorism Risk Insurance Act is a "political hot potato that people don't want to deal with," according to Mr. Liebowitz, who added that eventually, "this administration will have to deal with it. Maybe it will be an election issue or a party issue."

The long-term future of TRIA's federal reinsurance backstop needs to be resolved sooner rather than later, because of the instability that could affect the marketplace if a solution is not adopted, he added. "TRIA has become woven into the framework of economic development in our country, and the country's engine needs to have TRIA because we need that coverage," he said.

The market is again in flux, thanks in part to record hurricane losses last year–but not to the extent it was after Sept. 11, 2001. "I think that for the most part, our insurers have done a good job of building up their reserves in order to create a marketplace that doesn't have the volatile swings we had seen in the last five years," he said.

The biggest unknown, he added, is catastrophic loss related to weather–especially in coastal regions in the southern United States. "We need to be prepared for some effect on property premiums throughout the country," he warned. "We're all going to pay for this in the end."

If risk managers can convince their insurer they're prepared and there will be minimum effect if a monster storm hits their facility, "then you can make an argument that may soften the blow of an increasing property market," he said, adding that a large variable on the primary side is dictated by reinsurance treaties.

"That's what's driving it, and the second piece of it is TRIA–there is a component of the premium that is allocated for [terrorism]."