With prescription drug prices continuing to grow, employers and plan sponsors are seeking new ways to combat rising costs without impacting their members.
Americans spend more on healthcare than any other country in the world, primarily due to the extremely high cost of prescription medications. While prices are not rising as quickly as in prior years, prescription drug costs have still increased 2.5% since the beginning of the COVID-19 pandemic. Since 2014, prices have risen an astonishing 35%.
Specialty pharmaceutical costs are a significant driver of these increases. Specialty pharmaceutical prescriptions accounted for a staggering 51% of total pharmacy spending in 2021. This is even more surprising considering only 2% of the population uses them.
In light of these trends, employers and plan sponsors facing rising costs are being forced to react. As such, pharmacy coalitions are rising in popularity – and for good reason. Joining them is one of the most effective steps organizations can take to keep spending on pharmaceutical drugs in check.
Benefiting From Economies of Scale
Pharmacy coalitions are groups of employers, plan sponsors, and other large purchasers of prescription drugs that have banded together to gain purchasing power and negotiating strength. By aggregating members, they’re able to place large orders of prescription drugs at a time, thus commanding more competitive pricing than if a single organization were to negotiate a deal alone.
Typically, these coalitions bring together thousands or even millions of members to vastly improve their negotiating positions. These savings are passed on to plan sponsors and employers. As a result of the stronger negotiating power, greater purchasing power, and competitive pricing that comes with joining a coalition, these partnerships can save employers and plan sponsors up to 25 percent of their annual pharmacy spend.
This pricing power is even more valuable today as pharmaceutical drugs have become more commoditized. In an attempt to minimize disruption to their members, employers and plan sponsors are often reluctant to make changes to their benefits plans. Yet most of the time, members won’t see any of their pharmacy benefits change and will face little to no disruption in their health plan at all after joining a coalition. They’ll still be able to access the medications they need, just at better prices.
Maximizing Your Participation
Aside from greater pricing and purchasing power, joining a pharmacy coalition with the support of an experienced insurance broker can come with many additional benefits that can help employers and plan sponsors further reduce their overall pharmacy costs.
For example, coalitions often come with custom preferred medication lists that help members avoid low-quality, high-cost drugs when superior, less-expensive alternatives are available. Integrated patient assistance programs that facilitate appropriate medication use among members are also often provided through prescription care management programs. These high-touch patient and physician medication management programs have been proven to drive better outcomes for patients.
Employers and plan sponsors should also ensure they receive access to custom data reporting and analytics that can help them identify medication management opportunities. National pharmacy pricing transparency tools, like GoodRx, can also come in handy for patients making decisions about which drugs to purchase and where to find the best price.
Employers and plan sponsors will want to ensure they join pharmacy coalitions that provide these benefits in addition to greater purchasing power. Selecting a coalition that works best for the organization is best accomplished alongside a knowledgeable insurance broker that understands the landscape and can help them make the best decision based on their needs.
Continued Cost Challenges
Unfortunately, prescription drug prices aren’t likely to come down anytime soon. As new sophisticated specialty drugs continue to come to market and drive up overall pharmacy spending, employers and plan sponsors should consider acting as soon as possible. Pharmacy coalitions are great places for these organizations to start. They’re a fit for nearly any organization with more than approximately 250 employees and can provide valuable purchasing power that translates to thousands of dollars in savings each year. They offer very little disruption to members and should be considered by almost any employer or plan sponsor seeking greater control of their pharmacy spend.
Partnering with knowledgeable and experienced insurance brokers can help these organizations get the most out of their participation. At Conner Strong & Buckelew, we offer our employee benefits clients access to these coalitions and support their participation by offering a world-class clinical team, including clinical pharmacists that will strategize overall pharmacy design and analytics.
There’s no reason to overpay for prescription drugs.
Reach out to us today to see how power in numbers can lower your overall prescription drug costs.
Even with increased cyber awareness, threat actors continue to gain access to companies’ networks through human error. Employees may click on a link in a phishing email or threat actors may gain access through passwords found on the dark web. Once they gain access to the network, threat actors use existing email rules and forwarding to monitor client and vendor communications, obtain banking & wire transfer information, and collect personal identifiable information (“PII”). If email rules are not monitored, a cybercriminal may remain in a company’s system, undetected, for an extended period.
WHAT ARE EMAIL FORWARDING RULES?
Email Forwarding Rules allow an email account user to automatically redirect incoming emails to a separate account. This feature is a convenient tool for users and is utilized often in a business setting. For example, if a person will be out of the office for vacation or an extended period, they may forward their emails to a colleague in their absence. Cybercriminals use this feature to forward incoming emails to a separate folder or email account. Not only does this provide the attacker with intelligence for a subsequent broader attack, but it may also provide the cybercriminal with PII of other potential victims. In addition, the cybercriminal may have access to the emails even if the user turns on multi-factor authentication (“MFA”) or changes their password.
WHAT IMPACT COULD EMAIL FORWARDING RULES HAVE ON YOUR BUSINESS?
Once a threat actor gains access to a company’s email system, commonly referred to as a Business Email Compromise (“BEC”), they may access PII of your employees, vendors, and clients. Compromises may require forensic investigation to determine what individuals and regulators will need notification. BECs can be expensive and detrimental to a company; this is often only the beginning of a larger attack.
WHAT MAY HAPPEN NEXT?
HOW CAN YOUR COMPANY AVOID THIS TYPE OF ATTACK?
Cybercriminals continue to grow in sophistication. Companies can improve their defenses through detection and prevention.
The cyber landscape is changing rapidly with many insurers reducing coverage, increasing deductibles, and dramatically raising premiums. Some insurance markets are no longer renewing existing policies, nor writing new cyber business at all.
What can you do to obtain coverage?
Contact us for your free, customized cyber risk analysis including:
As catastrophes grow in terms of frequency, severity, and the geographic areas they impact, insurance carriers today are shifting how they rate and assess catastrophe-exposed properties. As a result, insureds – both for and non-profits – must rethink strategies to ensure they’re fully protected.
Total losses resulting from catastrophes rose dramatically over the last several years through flash floods, forest fires, hurricanes, terrorist attacks, and more. According to Swiss Re, global losses topped $270 billion in 2021, up significantly from $210 billion in 2020. This figure is expected to continue rising.
Traditionally, catastrophes were thought of as a seasonal risk that impacted insureds with operations in specific high-risk areas. Today, catastrophes can strike anywhere, anytime. Properties that were previously not considered catastrophe exposed may face a much greater risk today. As a result, many carriers are reacting by increasing premiums and revising deductible structures, adding sublimits, etc.
In light of these changes, insureds should consider reevaluating their own risk management and claims preparation strategies. This is not just for those located along the coasts or in tornado alley. Doing so will help them negotiate better rates, secure the coverage they need from carriers, and best prepare for a potential catastrophe in this new environment.
At Conner Strong & Buckelew, we have decades of experience in claims and risk management and can help our clients better protect themselves from a potential catastrophic event. Here’s our advice on how companies can protect themselves before and after a disaster strikes:
Planning for the worst
The difference between surviving a business interruption and total loss often hinges on one factor—preparation. The best way to prevent a disaster is to have a proper continuity plan in place. Whether the peril is a fire, hurricane, flood or civil unrest, having a plan in place can make the difference in keeping your business afloat.
Start the process by establishing a planning team tasked with developing a Business Continuity Plan. Typical goals of your plan should include:
Take an “all hazards” approach. Conduct an impact analysis considering the likelihood and severity of the consequences of an interruption. Take steps before an emergency to address hazards, including training employees and establishing contractual agreements with service providers.
Audit the plan at least once a year. Identify any new hazards or regulations and update the plan as necessary. Defining potential risks that will affect operations and implementing safeguards and procedures designed to mitigate those risks is crucial.
Here are a few common hazards to plan for:
Preparing for the impact of a claim
Insureds that experience a catastrophic loss are typically facing tens of millions of dollars in expenses. Even when fully insured, managing such a large claim will require significant time, energy and resources. Filing a claim, documenting the damage and navigating your existing contracts and coverages, all while trying to keep a business afloat, can put a significant strain on leaders.
A strong relationship with your claim specialists can ensure you receive the full reimbursement you’re entitled to while relieving the heavy lifting of managing the claim. Knowledgeable and experienced insurance brokers play a critical role in working closely with insureds on both the front and back ends of a catastrophe.
Pre-loss planning
The most important aspect of pre-loss planning is to fully understand your risks. By performing a thorough risk assessment, you can develop a strategy to best protect and preserve your property in the event of a catastrophe.
Another crucial aspect of pre-loss planning is to build a response team of experienced professionals that can assist with this process and continually reassess the business’ preparedness. These individuals should also stay ready to act in the event of a disaster. This team should be identified well in advance and include an insurance/risk manager, financial and operations personnel, a broker and claim advocate, a forensic accountant, restoration professionals, general contractors, engineers and other experts that will be critical to getting the business back on track.
Post-catastrophe response
Immediately after a disaster strikes, there are a series of steps that will increase the chances of receiving a full reimbursement. After ensuring the safety of employees, leaders should focus on claims management strategy.
Below is a checklist of steps to take in the first few days following a catastrophe:
Taking a proactive approach
As insurance carriers change how they assess catastrophic risks, it is more important than ever to prepare for these events and have the right partners in place to help. An insurance broker can be an invaluable resource when an incident arises, providing advice and guidance throughout the claims process.
At Conner Strong & Buckelew, our team leads the industry in catastrophic preparation and claims guidance and has strong relationships with carriers to ensure coordination and the best possible outcomes for clients. Our robust team of claims consultants and safety experts work side by side with our clients to deliver a holistic approach to managing and preventing catastrophic claims, with expertise in managing claims and implementing safety and risk control programs. You should not wait for disaster to strike. Taking action today could save millions of dollars down the line.
We live in a world of immediate transparency. Smart phones have given everyone 24/7 access to a camera and social media platforms to voice their opinion, and every one of us has the ability to move a story across the globe – sometimes in the matter of minutes. This immediate transparency can be a risk or a reward to a company, its reputation, and its bottom line depending on its actions.
ESG (Environment, Social and Corporate Governance) criteria has emerged as the set of standards used to measure the relationships, operations, and performance of companies as corporate citizens. Both private and public companies are viewed through an ESG lens by investors, employees, customers, and stakeholders.
What began as investment criteria for large, publicly held companies primarily in industries with an outsized impact on the environment has advanced significantly in recent years. Today, ESG represents the evolution of business frameworks such as Total Quality Management, Sustainability and Corporate Social Responsibility that take a more holistic view of a company’s operations and impact. ESG is fast becoming a business imperative for organizations of all sizes and across industries. Many are recognizing their role as ESG stewards. In fact, 91% of business leaders believe their company has a responsibility to act on ESG issues, according to PWC research. As the ESG landscape matures, middle-market companies in particular are recognizing that formalizing a framework for ESG performance is vital to maximizing potential and growth. Increasingly, employees and potential hires, customers and prospects, and a wide range of other stakeholders are evaluating organizations on factors related to ESG.
Defining ESG as a Set of Risk Parameters
At its core, ESG considerations reflect a dedication to the greater good. The criteria identifies a company’s role as a steward of the environment, the social impact of the relationships and reputations it fosters within the communities it does business, and the corporate processes and policies it puts in place to govern itself. Put simply, the criteria explores a company’s actions and exposures based on a set of risk criteria that looks beyond the immediate bottom line.
Risk management and insurance can and should play a pivotal role in a company’s ESG efforts. ESG initiatives and insurance programs, in many ways, interplay in intent. The alignment of objectives between ESG initiatives and insurance programs allow for leveraged opportunities that create a more cost-effective and comprehensive insurance program while enhancing a company’s ESG performance and reputation.
Incorporating ESG into Conversations with Underwriters
Due to this intersectionality of ESG and insurance, ESG efforts are increasingly playing a vital role as organizations look to secure or renew coverage. Much like investors, insurance companies recognize the relationship between an insured’s awareness of their ESG criteria and profitable underwriting. A company’s identification of this criteria shows a proactive approach to risk management and reputation protection. More and more, carriers are considering ESG criteria in their underwriting, including requesting documentation and details about protocols. ESG metrics and results are even being incorporated into some ratings models and directly impacting pricing.
Directors & Officers Liability underwriters, for example, largely are recognizing ESG as an important consideration in their rating models. As a line of coverage that frequently responds due to litigation from shareholders when an event occurs that negatively impacts a firm’s reputation (and subsequently impacts the company’s bottom line or stock price), Directors and Officers Liability can be greatly bolstered by ESG initiatives to best prevent such an event. Focusing on these ESG initiatives in conversations with markets can differentiate clients and best position their risk, especially in a challenging marketplace. Similarly, the Cyber Liability marketplace has grown to also welcome ESG conversations in underwriting. Corporate Governance criteria of ESG encompasses a focus on cyber security and data privacy. Positioning accounts in an ESG context uniquely positions risks in a complex market, which gains underwriting attention and can lead to a more comprehensive and cost-effective outcome.
At the same time, there’s real value to be found in developing a more robust framework for these conversations that goes beyond traditional risk transfer. More broadly, strong ESG conversations gain the attention of external audiences, like the investor community and Board of Directors.
Supporting ESG Efforts with Coverage and Risk Mitigation
Insurance can also offer significant benefits for companies looking to advance ESG policies and protocols. As organizations look to quantify and plan against their ESG promises, insurance offers coverage and a financing vehicle to ensure those commitments are grounded in real-world data. In addition, parametric insurance products have emerged as a mechanism to transfer ESG risk.
Once again, this enhances an organization’s ability to tell a more compelling and comprehensive ESG story to stakeholders and audiences. It’s a way to show that a company’s efforts go beyond lofty rhetoric and there is a robust financial plan around its commitments.
Finding the Right Risk and Insurance Partner for ESG Efforts
As middle-market companies look to leverage their company’s awareness and dedication to ESG criteria during their insurance renewal season, a good partner can be an invaluable resource. That partner should understand the fundamental connection between ESG programs and risk and insurance. That includes opportunities to secure more cost-effective coverage and bolster ESG initiatives with tangible coverages and policies.
At the same time, the right partner should have an in-depth understanding of the organization and their industry. They should take a holistic approach to advancing ESG efforts, looking beyond individual policies and consider non-insurable risks. Often, realizing these benefits begins with an honest look at current efforts – where ESG protocols are strong, and where there is opportunity for improvement.
At Conner Strong & Buckelew, we offer robust and innovative risk management services for organizations at various stages in their ESG journeys. Our experts have a deep understanding of how ESG policies can create advantages in coverage and in executing a long-term growth strategy.
Get in touch today to begin a conversation around improved renewals and risk management through your ESG efforts.
With the continued events in Ukraine, there remains a heightened concern regarding cyber-attacks of all kinds.
One cyber-attack that remains prevalent is theft of funds by using fake wire instructions. In one method of this type of attack, the cybercriminal obtains access to the email of an employee. The cybercriminal monitors that email for any communications regarding payment either to a vendor or from a customer. When a payment becomes due, the cyber criminal will impersonate whichever party is expecting to receive payment and request the funds be wired to a new set of wire instructions. Of course, these new wire instructions direct the funds to the cybercriminal’s account where they can quickly move the funds out of the reach of law enforcement.
Whenever a business partner seeks to change their wire instructions, you should strongly consider contacting the business directly to confirm the change. When doing so, you should consider using a known telephone number or method of communication other than email.
Some businesses, like Conner Strong & Buckelew, will never change wire instructions via email.
For more information on the cyber security impacts of the Russian invasion of Ukraine, please visit CISA’s Shields Up page.
Business interruption is a leading risk concern for many businesses, and rightfully so. While business interruption claims have always been complex, never have they been more so than in this post-pandemic world.
The COVID-19 pandemic has interrupted business operations in ways never before thought possible. Lockdowns, mask mandates, supply chain disruptions, demand changes and constantly changing capacity restrictions have had significant impacts on businesses of all shapes and sizes. Making matters more complex, there was no way for many businesses to predict what would come next or how long it would last. These challenges and changes significantly affected the operations and financial performance of countless businesses. For many, this was a negative impact, but we can’t discuss those without also considering businesses with positive impacts. Regardless of the nature of the impact, what is consistent is the financial performance for many businesses historically looks different post-COVID than it may have in the past. Further, it may continue to look different into the future.
Considering the magnitude and complexity of this worldwide event, I have seen significant changes in the way business interruption claims are being evaluated and will continue to be evaluated in the future. Thankfully, there are several steps businesses can take today to better prepare for these changes and maximize the recovery they receive as a result of a post-pandemic loss event.
For any company impacted by COVID-19, here are the three biggest changes I have seen in non-COVID-19 business interruption claims to date. I expect these will continue in the years ahead.
Going forward, business interruption claims will be much more complicated and require more time and resources to investigate. The COVID-19 pandemic impacted every business in a multitude of different ways, including shutdowns, labor shortages, supply chain issues, demand changes and more. Identifying each of these impacts, when they started, how long they lasted and their ultimate financial impact involves complex analyses.
Claims analyses traditionally included an analysis of past performance when calculating a business interruption loss. However, the pandemic has impacted the financial performance of many businesses significantly over the last two years. Some businesses were forced to restrict capacity which reduced revenue, while others saw skyrocketing demand which drove up revenue. Others saw significant labor impacts (employee layoffs, increased hiring, rising labor costs (salary and hourly rates)) which impacted the business’ overall cost structure. Due to the varied financial impacts, the financial results reported during the pandemic or during portions of the pandemic may not be indicative of future performance. This makes calculating a business interruption claim a much more complex and difficult task.
The period of restoration will also likely continue to be impacted by the COVID-19 pandemic. Supply chain issues and labor shortages experienced today may persist for years, impacting restoration time frames.
How businesses can better handle their next claim
There are a few steps all companies can take before and after a business interruption occurs to better prepare for their next claim. As the above business interruption challenges persist over the next several years, taking these steps will vastly improve a company’s chances of maximizing the recovery they receive down the line.
Before an interruption:
Businesses will be well served by proactively taking time today to fully understand how the pandemic has impacted their business and its finances so far. Whether it was a government-mandated shutdown, capacity restrictions, supply chain issue, change in demand or a shortage of labor (or all of the above and more), identifying the change as well as taking detailed notes on how it impacted financial performance will save time down the road and help companies best answer questions from carriers during the claim process.
After an interruption:
When an interruption occurs, taking detailed records will be critical when building a case for a business interruption claim. Businesses should consider preparing a timeline documenting changes to operations, tracking key business metrics, and detailing specific event-related business activity like cancellations. A business should also document any challenges or expected challenges it sees in obtaining permits, materials, contractors, etc. which would impact repair times. Bringing in business interruption claims experts with knowledge of what information carriers seek, what questions they ask and what documents they request can also help companies make a stronger case to carriers when the time comes.
Don’t go at it alone
When faced with a business interruption, business owners will need to spend their time managing the disruption and getting operations back on track instead of managing the many different challenges of filing a claim. These business leaders should lean on experienced counsel who can take care of the details and guide their team through the process while they focus on taking care of their employees and customers. At Conner Strong & Buckelew and J.A. Montgomery, our teams have decades of experience navigating business interruption claims and have helped countless companies through complex COVID-19-caused interruptions. Business owners are best served taking time today to prepare for their next business interruption to avoid being caught flat footed when the next interruption strikes.
