Communicating Value

Nancy Chambers’ upcoming year as president of the Risk and Insurance Management Society (RIMS) has “no catchy theme”, but perhaps that is fitting. Chambers, who is risk manager for the Waterloo Region Municipalities Insurance Pool, views her profession simply – even in the face of great turmoil in the current insurance market and the increasing responsibility being shouldered by risk managers, she advocates a return to fundamentals. “If you look over the last decade, risk managers have been faced with formidable challenges.”

Among these “challenges” are stock market declines, terrorism and war in the Middle East, global disease, and, of course, a “sellers’ market” in insurance. “As these kinds of issues hit our world, we apply the basic principles to how we do things,” Chambers observes. Those principles include investigation and communication – assessing the risks and finding the right kind of expertise to effectively control or spread the risk, Chambers explains. “As a risk manager, I am not an engineer, a lawyer, a financial guru. What I have to know is when I need them.”

COMMUNICATION

Chambers will officially take over the top spot on the RIMS executive council following the RIMS annual conference in San Diego this April. She says much of her focus in that role will be on members and chapters, specifically on anticipating members’ needs and facilitating interaction between different aspects of the risk management community and its partners. Members are the “owners” of RIMS, and its customers, but they are also its lifeblood and workforce, she says. What makes the risk management profession unique is “so many people from different aspects of the industry sharing ideas”. It is this kind of open communication and idea-sharing Chambers wants to make a top priority in the year ahead.

One example of the willingness of risk managers to provide guidance to one another is the Municipal Risk Managers Forum, for which Chambers is the current chair. Begun by former RIMS Canada Council chair Wayne Hickey, the forum joined together to discuss issues of common concern once a year at the RIMS Canada conference. The forum has subsequently spawned an “e-group” with more than 100 municipal risk managers taking part. “It’s one example of why I’m in the industry,” says Chambers. “The willingness of risk managers to share [resources], not only risk managers, but other parts of the industry [ insurers and adjusters, etc.].”

Even in the face of rising insurance rates, reduced capacity and tightening policy terms, Chambers sees possibilities for risk managers, brokers and insurers to strengthen relationships. “It [the current market] is a great opportunity for risk managers to sit down with brokers and insurers to market their program.” Risk managers now, more than ever, need to “sell” their program, including their past claims record and risk control initiatives, to a reluctant insurance market. “It was never done in the past, where you [a risk manager] would go in [to meet the insurer] with your broker.” That rapport building is also important in advance of potential claims, she adds.

POOL EXPERIENCE

Chambers has witnessed first-hand the value of meeting one-on-one with insurers. Formerly she was risk manager for the Corp. of the City of Kitchener, which, in the face of rising insurance rates in 1996, began looking at alternative risk transfer methods. Following a feasibility study, the Waterloo municipalities pool was launched in 1998 to take advantage of high deductibles. Through this process, she was able to meet face-to-face with reinsurers, and in the end, the pool saved member municipalities $3.2 million in the first three years. When the program was renewed in June, 2001, prior to the massive market upheaval caused by the September 11 terrorist attacks, $1 million went back to members along with a reduced levy.

Although she faces the prospect of renewals in June of this year, Chambers says the pool mechanism continues to do the job. “We will have the ability with our reserves to address changes in terms and rates.” In fact, she has seen increased interest in pools by other municipalities facing a challenging insurance market. She has been working since 1999 with municipalities in New Brunswick who are researching the feasibility of a pool there.

The hard insurance market, along with the increased profile of corporate risks, including corporate governance requirements, have placed intense focus on risk managers and the role they play within corporations, Chambers attests. “I have seen how risk management has evolved and become a focus…it’s a buzzword, ‘risk management’, and it’s really positive for risk managers.” Corporations are making serious attempts to deal with crisis management, business continuity, corporate responsibility, controlling liability and enterprise risk management. In this environment, risk management has moved from “trying to be noticed” to getting a seat in the boardroom.

However, not all of the effects of the hard market have been positive, or are even dissipating with the expectation of a market turn. One example is the increased focus on corporate governance and liability, which has spilled over into reduced capacity and pricing in the directors’ and officers’ (D&O) liability line. “Everybody’s watching to see what happens [with D&O],” Chambers notes.

ANTICIPATION

In fact, the entire risk management community is on “pins and needles” waiting to see the outcome of the current hard market and just as importantly, when it will end. This is a “date” which Chambers is unwilling to speculate on.

But, the market “Benchmark Survey” conducted by RIMS suggests that rates in some lines, specifically property risks, are already leveling off. Chambers, however, wants to encourage Canadian risk managers to share their data for the survey so that “break-out” Canadian data will become available. As well, RIMS is introducing a new survey this year, one which will compare compensation rates for risk managers. The first report will be released in April, and again Chambers wants to see Canadian risk managers significantly represented in the results.

Chambers says RIMS’ commitment to Canada remains strong through the work of the RIMS Canada Council, which is chaired by Nowell Seaman. This year, the council will head to Ottawa to lobby for risk management issues in the style adopted by its U.S. cousin under the “RIMS on the Hill” campaign. Meetings have been scheduled with the Office of the Superintendent of Financial Institutions (OSFI) as well as Public Safety and Emergency Preparedness Canada.

In the U.S., RIMS will be focusing on the need for tort reform, as well as the 2005 deadline for the Terrorism Risk Insurance Act (TRIA). RIMS will also maintain its “outward focus” with the organization having recently sponsored the first conference of the Russian Risk Management Association – Chambers was amongst the speakers at the event.

Chambers has a long history of sharing her expertise with fellow risk managers, being the first Canadian risk manager to take part in RIMS’ Spencer Education Foundation “risk manager in residence” program, lecturing at Temple University in 1999. In addition, she partook in instructing CRM courses at the University of Toronto, and helping to establish the risk analyst program at Sheridan College. She is a past chair of RIMS national education committee, and has sat as on the executive council as vice president-conference and vice president-treasurer, with her current role as first vice president, audit & investments. These roles have bolstered Chambers’ reputation for keeping the organization’s lines of communication open. “We have to listen to the members, what do they want? We need to have a nimble infrastructure so we can seize opportunities. And we have to anticipate what the needs are before members even ask for them.”