Risk Management Reports

In the past twelve months I’ve criticized the insurance industry for many of its business practices (see ‘The Unraveling,” December 2001; “Oh Insurer, Where Art Thou?” April 2002, “A Death Spiral? June 2002, “The Cost of a Soda?” July 2002, “Insurance Woes,” October 2002). I am increasingly concerned the management and future of many of these companies, particularly non-life institutions in the United States. Recent news reports from North America, the UK, Switzerland and Germany do nothing to change my mind.

Yet all is not gloom and doom. In keeping with this holiday season I wish to report two examples of good management. The business can be run well.

On the dark and stormy evening of Tuesday, October 15, a woman with whom I am closely acquainted (but who shall remain anonymous) backed her station wagon into a remarkably sturdy mailbox, shattering the rear window but leaving the box mutely testifying its superiority. The next morning I reported by phone the accident to her insurer, the United Services Automobile Association (USAA), in San Antonio, Texas, and took the car to the local dealer for repair. She returned from a short trip two days (late Friday) and collected the repaired car. On Monday morning I reported the claim costs to the USAA telephone representative, who noted them and the applicable deductible, and advised that a check would be sent immediately. On Friday, October 25, the USAA check arrived, four days after reporting the cost of the claim and nine after the initial report. I spent all of seven minutes on the telephone.

While I treat this as exceptional service, I’m sure that USAA views it as standard, as it should.

My second example: the risk manager of a major financial institution in New York City reported to me the following: “To give you an example of how topsy-turvy the insurance markets are these days, we just completed a casualty (insurance) renewal in which every party to the transaction—the broker, the winning insurer, my company, and even the losing incumbent broker—ended up very happy with the outcome. If I recall, Jerry Seinfeld joked about a hidden world within our world where everything is reversed. It appears that we have all taken a temporary trip into this universe.”

My first example shows how an organization can turn a normal service relationship into one that is noteworthy. The second shows how times of stress and misgivings can be turned to mutual benefit. Trust and confidence in service are the goals of good risk management.