Category: Latest Thinking

By Monica Attanasi-Schultz and Colleen Vallen 

Documenting and preparing an insurance claim as a result of a loss event is often disruptive, complicated and time consuming. For an insured, the claims process can be a drain on resources during  time when normal business operations should be the primary focus of management. To minimize the  impact of the claims process, an insured is well served by the early establishment of a team of experts, including forensic accountants and industry professionals, to assist in the claims process. A knowledgeable broker can facilitate the building and management of the expert team on the insured’s behalf. The broker and the expert team will work to expedite the settlement of the claim and minimize the disruption to the insured. Establishing a team early allows management to focus on the business of its business.

The role of a forensic accountant in the claims process is an important one, and often a policy will provide the insured with coverage to hire one. A forensic accountant utilizes accounting, auditing and  investigative skills to analyze financial information and identify the financial impacts of a loss event. The forensic accountant will not only gather the financial documentation and conduct in-depth financial analyses and modeling to quantify the financial impact of the event on the insured, but will also work closely with the team in presenting this information to the insurance carrier and its experts.

When selecting a forensic accountant, there are several important considerations.

1. Experience in the Quantification of Insurance Claims

Forensic accountants have different credentials, specializations and experience. It is important when selecting a forensic accountant for insurance claim matters to understand the forensic accountant’s relevant experience.

When working on an insurance claim, an experienced forensic accountant understands the importance of linking the financial damages to the loss event. This requires an understanding of the insurance policies and their application as well as the ability to perform the necessary financial analysis and develop the appropriate models to accurately quantify the impact of the loss.

2. A Deep Understanding of a Client’s Business

An experienced forensic accountant has a client-centric approach. Insurance claims are unique, and no two organizations are alike. There’s not a one-size-fits-all solution for the forensic accounting work that goes into preparing a claim. An effective forensic accountant understands this and will take steps to develop a deeper understanding of the insured’s business as well as the financial impacts of the event.

To do this, a forensic accountant may employ a variety of activities including financial analysis, interviews and market/industry research. Through this process, the forensic accountant obtains an understanding of the financial trends, business history, future plans, the industry/market the insured operates in and any special circumstances that are important in analyzing the loss. This deeper understanding is tremendously valuable in helping to ascertain the true financial impact of the loss.

3. A Focus on Effective Communication

The ability to effectively communicate is a critical skill for a forensic accountant. The forensic accountant, as part of the insured’s claims team, has to be able to communicate regularly with management and other experts on the team. An effective forensic accountant will keep a channel for continuous interaction with the team to manage expectations, resolve issues as they arise, report on findings and ensure that efforts are not duplicative. Effective communication is important to keep the claim process moving and minimize the impact to management.

Communication is also essential in the presentation of findings. The financial analyses and modeling done by the forensic accountant are detailed and complex, and they tell a story. The ability to explain the analysis and findings in a clear concise manner, often to non-accountants, is essential to the claims resolution process. This focus on effective communication should not be limited to verbal communication, but should extend to any analyses and reports being prepared as well. A good forensic accountant understands the relationship between the narrative and the analysis and the importance of presentation.

Effective Claims Resolution with Forensic Accounting

While not every claim warrants a forensic accountant, for those that do, having an experienced forensic accountant on the team can reduce the burden on management related to claim preparation and assist in moving the matter toward settlement.

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On this edition of HBS Legal Trends, Chris Grosso, Connor Strong, and Jeff Daitz, Hall Booth Smith, discussed how they use their respective expertise in insurance brokerage and employment law to help organizations limit potential claims exposure. Chris and Jeff discussed how they work together, the nature and severity of claims arising from the pandemic and a remote work environment, the value of employment practices audits, the application process for employment practices liability, and much more.

HBS Legal Trends is sponsored by Hall, Booth, Smith, PC and is produced by the North Fulton studio of Business RadioX®.

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NOTE: THE RESOURCES PROVIDED ON THIS PAGE SHOULD NOT BE INTERPRETED AS LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS, PLEASE CONSULT YOUR LEGAL COUNSEL.

By Jim McGlynn, James Hanrahan & Lisa Vanore

Whether fighting a fire or dealing with difficult business situations, it is critical to have the right people on your side. Experience, know-how and a willingness to work through the challenges are key to achieving successful outcomes. As the property & casualty insurance market shifts to a hard market, insurance buyers should understand the new insurance playing field and critically evaluate their brokerage relationship to be certain that they have the right partner.

Simply stated, a hard insurance market is defined by continued high demand for insurance coverage with limited or reduced supply. The causes for the limited or reduced supply are manifold, but the net result is an upset from the status quo with insurance carriers focused on increasing rates, restricting coverage terms and conditions and possibly raising deductibles and retentions for the insured. Typically, underwriting authority is transitioned to the management level, competition among carriers is limited as insurance companies retrench on their existing business and insurance buyers find it more difficult to secure coverage at what they feel is a reasonable price.

Many related factors are driving the underwriting stringency in today’s property and casualty insurance market. Low interest rates in the bond market are weakening carriers’ investment returns, adding pressure to achieve underwriting profitability. Many carriers are pointing at a phenomenon called social inflation, which has led to increased litigation, plaintiff-friendly legal decisions and larger jury awards, all of which adversely impact underwriting performance. Finally, recent catastrophic events that resulted in massive insured losses, such as hurricanes Maria, Irma and Harvey, floods and California wildfires, collectively have lingering effects on insurance carriers’ balance sheets.

This hardening insurance market requires a more deliberate and detailed approach to securing coverage. Insurance brokers with a deep knowledge of the market and close carrier relationships are best suited to help navigate the process. Below are a few best practices in working with a broker to ensure the best outcome in today’s hardening market:

1. Anticipate Requests and Prepare Early

In a hard market, underwriters ask more questions, require more detailed information and spend more time reviewing submissions. Many carriers require the additional steps of performing their own risk control inspections and, often, in-person customer meetings. Given these additional requests for information and potential delays in coordinating customer underwriting meetings, insurance buyers are wise to begin gathering renewal data and reviewing prior insurance claims as early as is practicable.

Companies should also spend time analyzing and strengthening the efficacy of their risk control and safety programs, as well as identifying and addressing the key risk factors facing their business. Demonstrating robust safety protocols that differentiate the company from competitors will help the submission gain traction with the carrier. Now is also the time to analyze historical claims performance data and other underwriting information and develop the most effective way to communicate those results.

2. Facilitate Open Communication

Establishing open communication between insured, broker and carrier is crucial to securing optimal coverage in a hardening market. In order for the broker to represent the company accurately in the market, they must fully understand the company’s potential exposures, safety protocols and overall risk profile. This requires transparent conversations between the parties throughout the submission process.

An insured and their broker should collaborate closely in securing coverage. Typically, it is the insured’s responsibility to articulate their needs and exposures, while it’s the broker’s responsibility to discuss strategy and communicate with the carrier. However, as the hardening market drives more in-person sit downs between carriers and insureds, companies are increasingly required to tell their own story. These meetings are a good way for insureds to differentiate themselves, add a personal touch and demonstrate their engagement.

3. Build Out Comprehensive Submissions

Brokers can help insureds develop a final submission package that meets the onerous requirements of a hard market and stands out among the rest. Insureds should include every piece of information that could be of use to the carrier. In any absence of information, insurance underwriters sometimes assume the worst. Robust submissions take the guess work out of the equation and make underwriters’ jobs easier.

At Conner Strong & Buckelew, we emphasize first-class submissions because they create an impression on the underwriters and often establish a clear path from submission to coverage. Many insurance brokers shy away from the challenges that come with a hardening market. But a true business advocate will do everything in their power to understand the details of their customer and put forth the effort to create a comprehensive submission that secures the broadest insurance coverage possible at the most competitive rates in order to protect the insured’s bottom line.

4. Embrace a Little Creativity

When prices rise, insureds have an opportunity to evaluate new program structures and alternatives to traditional coverage such as self-insurance or captives. Brokers with relationships across the insurance industry can help companies get creative by engaging other carriers and investigating unique solutions that may not have been previously considered.

Conner Strong & Buckelew’s account management and in-house captives teams provide our clients with an edge in hard markets. In a captive, insureds create their own insurance companies, reducing their reliance on traditional insurance carriers. This approach can shield companies from market fluctuation and provide a level of independence in creating customized insurance programs to meet their risk financing needs. While not a solution for every company, captives can provide organizations with a number of benefits:

• greater control, flexibility and transparency into their program and claims
• more stable costs
• enhanced loss protection services

Brokers with a thorough understanding of the market and the intricacies of captives can help companies evaluate this option.

A Broker’s Added Value

In hard markets, the true value of an experienced insurance broker is revealed. Clearly it is important to work with the right broker to assist with the placement of coverage, but insureds should also look to partner with a broker that can offer services the insurance carriers might cut back on during difficult times. As insurance carriers focus on underwriting profits, their focus might shift away from risk control and safety services designed to mitigate risk, and claims handling may suffer if adjusters become inundated with claim files. Brokers like Conner Strong & Buckelew can pick up this slack by providing access to our own in-house risk and safety professionals and help insureds navigate the claims processes for any losses that do arise.

Hard markets present many challenges for businesses from increasing insurance costs to potential restrictions in coverage terms. The current COVID-19 outbreak places even more pressure on companies to make sure they are protected. To achieve the best outcome for your business, it is critical that companies have an experienced broker partner with the knowledge and resources available to do the necessary work on your behalf. A broker with strong market relationships and a creative strategy will go a long way to alleviate much of the strain associated with the uncertainty of the hard market.

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Insurance brokerages and agencies have emerged as prime acquisition targets for a multitude of different buyers. These agencies have experienced steady growth over the past several years thanks to a flurry of market tailwinds. Improving macroeconomic conditions and rising demand for insurance coverage in a hardening market has resulted in growing insurance premiums. Considering most brokerages make their revenue from commissions, these rising premiums have positively impacted brokers’ bottom lines.

These dynamics have caught the attention of both strategic and financial buyers looking to acquire businesses with strong cash flows and solid fundamentals. Because of this, competition for deals is high, and agency valuations have also increased significantly.

A number of trends are likely to keep this M&A momentum going throughout 2020. Here are a few dynamics to look out for in the year ahead:

1. Deals, Deals, Deals

The number of transactions taking place in the brokerage sector is charting an upward trajectory. In fact, the total number of deals in the insurance brokerage space hit an all-time high in 2019 with 649 total transactions, up from 643 in 2018, according to Optis Partners LLC. Given the growing profitability of the sector and the amount of capital available to pursue deals, this trend is showing no signs of slowing down. Optis Partners also predicts that 2020 will be another huge year for M&A in the brokerage space.

2. Private Equity Buyers Emerge

One major driver of M&A activity in recent years has been the emergence of private equity buyers in the market. According to the Optis Partners report, brokers owned by private equity firms or with some other form of significant outside capital support were by far the most active buyers of insurance brokers in 2019. These companies represented roughly 66% of all buyers last year. According to PwC, the robust M&A activity expected in 2020 will likely be driven by these private equity and corporate buyers. But sellers must take note — private equity firms may have the capital needed to fund a transaction, they may not be able to provide the structure, resources, technology, industry relationships and expertise that a broker with decades of experience in the industry can.

3. Overall Growing M&A Activity

The M&A trend is not limited to the insurance brokerage industry. According to Deloitte, more than $10 trillion in transactions have been announced across all industries in the U.S. since 2013.3 Approximately 63% of executives Deloitte surveyed expect total deal volume to continue rising in 2020. This trend can present challenges to the insurance brokerage industry and business stability. Organizations can lose customers when they merge with another organization that does business with a different broker.  Insurance brokers are also facing pressure in the fight for talent. As companies get larger and offer employees more resources, it makes it difficult for smaller, middle-market brokers to retain the talent they’ve spent years training and developing.

Building a Plan for the Future

As the amount of M&A activity continues to rise, brokers of all sizes must begin to think about formalizing their strategy. With agency valuations and competition for deals increasing, many business owners considering a sale find themselves in a favorable position. However, these conditions will not last forever, and brokers do not want to miss their chance on an attractive opportunity.

To learn more or contact our team, visit our M&A Opportunities web page.

This piece originally ran in Property Casualty 360 .

Nearly half of all mergers and acquisitions (M&A) fail to create shareholder value, according to Boston Consulting Group. One typical reason why is that too many agreements are focused on the deal itself and not what happens after signing on the dotted line.

Post-merger integration cannot be an afterthought. Far from it, the details of how organizations will come together are critical to any deal’s success and should be addressed far in advance of any agreement being finalized.

For leaders who have gone through an M&A transaction, hindsight is often 20/20. Even in the most successful deals, there are countless lessons learned and best practices. At Conner Strong & Buckelew, our senior leadership has key insights into what makes mergers and acquisitions successful. Below are a few key takeaways all stakeholders should keep in mind before entering the M&A process.

1. Prioritize Collaboration

As early in the process as possible, it’s a good idea to bring together senior leadership from all involved parties for an in-person session to discuss the integration process at a high level. At this session, it is important that all voices, especially the selling party, are heard. No matter how the deal is technically structured, a one-sided process will start integration off on the wrong foot.

The selling party must be given a chance to voice their thoughts and concerns. These folks know the most about the business being acquired, its operations and any potential integration pitfalls that may lie ahead. In our experience, business integrations are most successful when the focus is on collaboration and making the most of shared resources.

2. Establish Clear Communication Strategies

When a deal closes, many people’s lives are affected overnight. Both the buying and selling parties are responsible for effectively communicating the news to their customers, employees and other interested stakeholders. A hasty email or one-off mailer will not suffice. Companies must clearly and honestly communicate the timeline of the integration, how employees may be affected and what changes customers can expect — if any.

It’s also often beneficial to share some key details on the rationale behind the deal. The last thing any business wants to do is upset their employees or customers. Yet too often, this communication strategy is overlooked and underappreciated by business leaders.

3. Seamlessly Integrate Technology

When two businesses come together, they typically each have their own data storage systems, employee software and customer-facing technology. One company may possess a more robust technology offering than the other. Either way, integrating the two systems can be disruptive for customers and employees. Business leaders can find the benefits in these disparate technologies by taking a few key steps:

• Create a detailed technology integration plan.
• Communicate the plan clearly to employees and customers.
• Consider hiring outside experts skilled in these types of integrations when appropriate.
• Train employees on the new technology and tools available to them so they can begin
• realizing the benefits right away.

Post-merger Integration – The Key to Successful Deals

Based on our experience navigating M&A transactions, we know the work is not over just because the deal is done. In many ways, it’s really just beginning. That’s when the hard work of integrating the organizations begins. That’s when meaningful collaboration, effective communication and successfully merging technologies really come into play. These steps cannot be an afterthought – often they’re the factors that lead to a successful M&A deal.

To learn more or contact our team, visit our M&A Opportunities web page.

By Tammy L. Brown

Designing health and group benefit plans has become a challenging process.

With ensuring compliance with the Affordable Care Act, selecting insurance carriers, setting employee contribution limits and much more, administrators, HR departments and business leaders are faced with more decisions than ever before.

Not to mention, the healthcare landscape has become increasingly complex. Healthcare and pharmacy costs have skyrocketed, providers are administering care in new environments, and new technologies are revolutionizing how individuals receive care. In this environment, plan administrators are faced with a unique set of challenges when designing health and group benefit plans.

Thankfully, the volume of healthcare and patient data has exploded in recent years, creating an opportunity for plan administrators and HR departments to make more informed, strategic decisions. When leveraged correctly, using data to design plans can boost participation, keep costs down and deliver a superior end product to employees.

However, leveraging data in this way requires a certain level of expertise. Here’s what employers need to know before diving in.

What specific data is most useful?

The high volume of healthcare data available to decision makers can be overwhelming at first. Experts predict the total volume of data in the industry will grow faster[1] than any other industry in the next five years.

Instead of looking at this data in its entirety, employers should first determine what type of data will help them make better decisions. For example, census data that shows how many families will join the plan as opposed to individuals, the average ages of participants and other demographic information can help paint a clearer picture of the employee population in need of coverage. Employer benefit offerings are often tied to specific populations and industries.

Behavioral data can also help decision makers understand how employees are using their benefits. For example, the amount of healthcare dollars spent on in-network versus out-of-network providers can give employers a sense of whether or not they should consider changes to their network of providers. The setting in which patients receive care dramatically affects the end cost. For example, assessing whether patients tend to visit urgent care facilities or hospitals can provide powerful insights to plan administrators looking to reduce expenses.

Also, employers can take a closer look at claims information by diagnosis code to determine how many employees need chronic care requiring expensive treatments. With this information, they can make adjustments to the plan to better account for ongoing claims and expenses. Members can then be directed to seek care in the most effective setting to drive favorable outcomes.

Leveraging data analysis capabilities and expertise

After identifying useful data, a level of expertise is required to leverage this information effectively. Data warehouses have emerged as valuable service providers that can help employers. Not only do these services store and organize the data, they also provide services to help employers analyze it.

An insurance broker that brings new technology and experience analyzing healthcare data can also add value to this process. For example, actuarial platforms can help model plan design changes and the impact on costs and utilization. Claims repricing systems can measure a carrier’s provider network discounts to ensure a thorough analysis is performed when evaluating networks. While all carriers contend they alone have the best discounts off of charges, consultants and employers need to focus more on net cost. Other tools are available that capture all of a group’s claims and utilization experience to allow for a panoramic drill down analysis into drivers of cost and gaps in care so that specific actions can be taken to address cost and quality proactively.

Gaps in care identification will reveal opportunities to support wellness programs. Employers should look to promote programs that focus on diabetes, high blood pressure, obesity and other chronic conditions. Member contributions may quite often be linked to completion of a health risk assessment, smoking attestations and routine connections with a health coach to encourage behavioral changes.

Mitigating pharmacy costs

The cost of pharmaceutical drugs has skyrocketed in recent years. According to the most recent data from the CDC, 9.5% of all national health expenditures[2] in 2017 were spent on pharmaceutical drugs. This has led many businesses to take a closer look at how to bring down these costs for their employees.

Data analytics can help employers accomplish this in a number of ways. Employers can look into which name brand prescription drugs are close to having their patent expire. Considering the cost of generic drugs are far less than brand name drugs, employers can make plan decisions that incentivize the use of these less expensive, yet equally effective, alternatives. In looking at claims by diagnosis code, employers can also get a sense of how many employees will be in need of expensive drugs and treatments. Additionally, they can look at which drugs are currently in the clinical trial stage and what impact they may have on overall costs once approved.

You don’t know what you don’t know

Healthcare data can provide valuable insights that can save companies money and help them deliver a better experience to employees. Yet many employers today are simply unaware of the powerful cost-saving advantages data analytics can provide their business. The first step in taking advantage is to gain awareness of this information. From there, an insurance broker with experience tracking down, organizing and analyzing healthcare data can help administrators and HR professionals make more informed decisions around their benefits plans.

[1] https://www.businesswire.com/news/home/20181126005585/en/Seagate-Launches-New-Data-Readiness-Index-Revealing-Impact

[2] https://www.cdc.gov/nchs/fastats/health-expenditures.htm

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When it comes to mergers and acquisitions, it’s not unusual for potential buyers to come to the table with a long list of questions to vet the business they want to acquire. But there’s often less emphasis placed on the questions the seller may have for the potential buyer.

That’s an oversight that can derail meaningful deals and degrade partnerships. Asking the right questions can help qualify prospective buyers, streamline the process and ultimately ensure a win-win scenario for all parties involved.

Before signing on the dotted line, everyone considering selling a stake in their business should ask a few critical questions of the prospective buyer. Below are 5 questions to start the conversation:

1. What is Your Experience with M&A and Business Integrations?

While many businesses may be quick to discuss the number of transactions they’ve made over the last several years, sellers should inquire further into their experience integrating companies. The integration process is often overlooked, but remains critical to the success of any transaction. Buyers must be able to articulate their plan for executing a successful business transition that benefits customers and employees. It can also be helpful to ask about prior examples as well as speak to any references they can provide. This can offer the seller insight into how the process will impact their customers and employees and set the transaction up for success.

2. What First Attracted Your Interest in Our Company?

In the most successful transactions, buyers are attracted to more than just the target’s book of business. Sellers should consider asking prospective buyers what initially sparked their interest in the company to see if there is a high level of alignment between the two companies. Buyers should be able to articulate the unique value a potential target presents to their business. This will provide decision makers with insight into what aspects of the business the buyer intends to maintain and what they may change in the integration process. It’s important for both buyers and sellers to agree on the aspects of the business worth maintaining in the long run.

3. What Will Post-merger Integration Look Like?

Owners and executives should enter into a transaction with a full understanding of how the deal will impact current customers, employees and vendors. Business leaders can start by asking the buying party about their vision for the combined entity. What role will existing leadership play in the day-to-day operations? Will the selling company keep its own brand and office locations? Will employees be forced

to relocate and will their job roles materially change? How much autonomy will existing leadership have in the future of the business? These are critical questions that both parties must align on before inking a partnership.

4. What’s Your Company’s Five-year Plan?

For any transaction to reach its full potential, it is important that the company be featured as an integral part of the buyer’s long-term business plan. Strategic buyers have a clear idea for what the near and long-term future of their business holds and are looking to augment that growth and complement its capabilities by making acquisitions. Successful transactions start out with a firm understanding of how the partnership will help the combined entity reach its goals. Selling parties should be clear on what their role will be in this plan.

5. Can We Maintain Our Company Culture?

Beyond making sense from a business perspective, business leaders should ensure there is cultural alignment between the two companies before merging. What is the dress code? What is the paid time off policy for employees? Are workers given autonomy over their positions, or do orders come down directly from management? Any major change to these areas can be disruptive to a business. But when the two companies align, the integration runs smoothly. Ensuring a cultural fit between the two companies is an important yet often overlooked component of a successful merger or acquisition.

While the above five questions are not a comprehensive list, they offer a solid starting point for any business owner considering selling a stake in their company. Entering into a merger or acquisition should never be rushed. To ensure alignment, both from a business and cultural perspective, owners and management must engage in honest conversations around the process, the integration and the desired end result.

To learn more or contact our team, visit our M&A Opportunities web page

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Loss of manufacturing capability as a result of regulatory non-compliance can have a devastating impact on biotech, pharmaceutical or medical device companies and can happen anywhere along a company’s supply chain. Please fill out the form below to download the article about the impact of regulatory action on life science                                                                    companies.

Many doctor visits today are plagued by difficulties scheduling appointments, long wait times and rushed conversations with the physician. It’s a frustrating experience for patients and challenging for organizations looking to prioritize member health without productivity taking a hit. Please fill out the form below to download the article about the value of on-site and near-site health centers.

Construction and real estate companies face large risks and have significant property and casualty insurance needs. These risks are growing in severity and frequency, creating a challenging environment for securing adequate insurance coverage at a reasonable rate. Please fill out the form below to download the article about securing property & casualty coverage for construction and real estate.