Risk Management Services
In 1986, Lockton formed the Risk Management Department as an in-house
consulting arm to focus specifically on designing creative alternative risk
financing structures for our clients who assume risk in their insurance and
risk financing programs.
The group has grown to include 14 seasoned professionals with a diversity
of backgrounds including accounting, banking, reinsurance, actuarial,
and tax.
This diversity of backgrounds allows this group to structure creative
programs optimizing our client objectives from a cash flow, budget, accounting,
and tax perspective.
The Risk Management team members are charged with the responsibility of
understanding all of the available risk financing vehicles in the marketplace
and applying them appropriately to a specific client problem.
Once a program is in place, we have the capability to measure and quantify the
financial impact of any risk assumed.
The Risk Management Department is broken into the following five practice groups:
- Quantitative - This group produces all of our analytical and actuarial analysis
- Risk Finance - Focused on designing creative risk-financing alternatives such as Rent-A-Captives and Finite Risk
- Captive - Focused on producing captive feasibility studies and risk retention studies for our clients
- Accounting/Tax - Provides guidance (not advice!) on accounting and tax issues as it relates to various alternative risk structures, and also prepares white papers on issues of interest in this area
- Enterprise Risk Management (ERM) - Provides guidance and analytics to support the ERM process of evaluating all exposures across an organization
The coverages we typically work with include:
- Workers’ Compensation
- Professional Liability
- General Liability
- Auto Liability
- Property
Lockton Service
Service starts with listening. We take the time to understand your specific goals, design a program that fits your needs, aggressively negotiate coverage, and implement a service plan. You will have the same dedicated service team throughout the entire process which allows us to anticipate your needs and create accountability.
It’s all about you. As a private, family-owned company, all our Associates focus solely on you, our client, rather than public shareholders.
Long-term thinking. Clients stay with us based on our expertise, creative solutions, seamless global resources and outstanding service. Our client retention rate of 95 percent reiterates our commitment to each and every client.
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Success Stories: |
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Releasing Trapped Collateral
One of our new clients thought they had a good deal from their casualty insurer when they had provided them with a “roll-over” renewal that--for the first time in nine years--didn't require the company to post additional collateral. They asked Lockton to look deeper, and we found major savings. Lockton helped this major consumer goods manufacturer free up $12 million in collateral. In addition, negotiations led to the return of $1.2 million in cash and reduced premiums by 20 percent while keeping the same retentions, policy limits and coverage. Said the company treasurer, “Lockton has done more in the past month than our other broker did in the past two years.”
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Creating Clarity from Confusion in Product Liability
The most compelling opportunity was to develop a unique product liability structure to meet the needs of diverse company’s holdings. Prior to Lockton’s involvement, one division was not able to secure product liability coverage due to their product class and associated catastrophe exposures. Other divisions purchased and managed programs independently. Additionally, the company had divisions headquartered in Europe and Asia, but no control of the insurance placements and no overlying excess program.
To address risk management issues, Lockton identified a creative underwriter, engaged the product liability defense counsel in a marketing effort, and developed credible loss data to support a unique product liability risk financing structure. Lockton not only placed coverage when none had existed, we developed a program structure that mirrored the company’s corporate risk profile along with the unique objectives of each subsidiary. Lockton ultimately created a single global casualty program providing consistent coverage across the enterprise.
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Corralling Collateral
A client--a major manufacturer of consumer goods—asked Lockton to take a look at their collateral for their casualty insurance programs. At first review, Lockton estimated that the firm had excess collateral of about $5.5 million, based on their expected remaining liabilities. The Lockton team then conducted an in-depth review, identifying collateral overlaps and developing the analytics and a communications strategy to convince the carrier to release the excess collateral. The client had recently engineered a dramatic financial turnaround that was not reflected in their public rating. The client and Lockton shared the positive impact of the company's loss control initiatives and financial rebound with the insurer's underwriting and credit teams. Lockton secured a renewal that reduced collateral by $6.75 million (including the renewal period) and the carrier implemented a Lockton-supported paid loss credit. Fixed costs—including premiums—were slashed by 23 percent while keeping the same retentions, policy limits and coverage. The agreement was completed in just 30 days, three weeks ahead of the renewal deadline. Said the treasurer of the company, “Lockton has done more for us in the past month than our previous broker did in two years.”
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