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   * Risk Management
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   * Workers’ Comp Forum
   * Risk Insiders
   * Sector Focus
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SHIRLEY FORER: A PILLAR OF RESILIENCE IN NEW YORK’S CHALLENGING CONSTRUCTION
INSURANCE CLIMATE

Shirley Forer of The Related Companies makes obtaining construction liability
insurance a breeze for New York project owners.
By: Alex Wright | July 14, 2023
Topics: Construction | July/Aug. 2023 Issue | Risk All Stars | Risk Management



A statute in New York State makes it prohibitively expensive for construction
firms to obtain liability insurance. New York Labor Law 240 imposes strict
liability on project owners for worker injuries resulting from falls from
height.

The statute also enables injured workers in New York to pursue an action over a
claim to the general liability program, where damages greatly exceed those
recoverable under a workers’ compensation program.

As a result, there is widespread abuse of the law, and claimants and their
attorneys often receive significant judgments that range from high six-digits to
multiple millions of dollars based on injuries that are self-inflicted,
exaggerated or fabricated.

Due to these rising claims, the cost of insuring a construction project is
significantly higher in New York than in any other state, and many insurers are
unwilling to offer primary coverage or sufficient limits. Those that do require
deductibles of more than $1 million.

Enter Shirley Forer, vice president, construction risk management at The Related
Companies, who has placed more than one dozen projects with construction volumes
above $5 billion, with equivalent insurance costs in the hundreds of millions.

During her time, she has secured some of the largest owner-controlled insurance
programs covering major construction projects in New York City, including those
of the New York City School Construction Authority, Brookfield Properties’
Manhattan West and Related’s Hudson Yards.

> “Our approach to risk management has allowed Related to enjoy great
> partnerships with our insurance partners and continues to attract underwriting
> interest.” — Shirley Forer, vice president, construction risk management, The
> Related Companies.

Working with her safety and claims team, Forer has quickly identified and
addressed many of the issues caused by the statute. By harnessing additional
safety resources, aggressive claims management and risk financing techniques to
attract greater insurer interest, she has been able to better control exposures
and mounting expenses for the companies she has worked at while continuing to
keep their workers safe.

“With the efforts I have been able to deploy, the average costs of construction
insurance to my current and previous employers have trended materially below the
industry average, and the resulting loss frequency is also lower than average,”
said Forer.

“Our approach to risk management has allowed Related to enjoy great partnerships
with our insurance partners and continues to attract underwriting interest in
our construction projects in New York as well as in the rest of the country.”

Sonia Drexler, executive vice president at Willis Towers Watson, said: “Shirley
is a top-notch risk manager and formerly a broker with a deep knowledge of the
construction industry.

“She has a large network of underwriters, risk managers and brokers that she can
tap into to stay on top of the happenings in the insurance and construction
industries,” Drexler added.

“While working with me at WTW, she worked on some of the largest
owner-controlled insurance programs for public entities, private developers and
international construction companies accounts.

“She is inquisitive, curious, creative and resourceful, and she always looks for
new ways to bring solutions to the table.” &

--------------------------------------------------------------------------------



Every year, Risk & Insurance selects deserving candidates to become Risk All
Stars. These are risk managers who, through their perseverance, passion and
creativity, make a big difference to the stability of their organizations.

See all the 2023 Risk All Star Winners here.

Alex Wright is a UK-based business journalist, who previously was deputy
business editor at The Royal Gazette in Bermuda. You can reach him at
riskletters@theinstitutes.org.





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SPONSORED: PHILADELPHIA INSURANCE COMPANIES



HOW A CARRIER PARTNER CAN HELP NAVIGATE A CHALLENGING MANAGEMENT AND
PROFESSIONAL LIABILITY MARKET

A combination of a choppy economy with increased claims frequency and severity
could lead to rate increases in the Management & Professional Liability market.
By: Risk & Insurance | April 3, 2024

Rates in the management & professional liability (M&PL) markets were on the rise
from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including
management liability (D&O), professional liability (E&O), employment practices
liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into
2024, a big influence on the marketplace has been the extremely aggressive and
softening public company D&O market.

Though these rates have been softening for management liability, that may change
over the next few years as companies continue to adjust their business models
motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes
reported, even as other recession indicators, like the inflation rate, improved.
A recession could lead to an increased claim activity and force carriers to
raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim
frequency pop up,” said George Schalick, Jr., senior vice president of the
Management and Professional Liability Division at Philadelphia Insurance
Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with
pandemic-related claims should seek a carrier with a long history in M&PL
products. They will provide much-needed risk management guidance and be better
positioned to support their insureds during market fluctuations.


WHY INSUREDS MIGHT SEE AN UPTICK IN M&PL CLAIMS

George Schalick, Jr., Senior Vice President of the Management and Professional
Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track
with previous underwriting cycles and economic conditions. Afterall, many
privately held and non-profit organizations struggled during the early days of
the pandemic with shutdowns and rapidly declining revenues.  But the Government
assistance programs, like the Paycheck Protection Program loans, helped keep
many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to
sort out all of the health and safety challenges,” Schalick said. “They were
forced to lock down, but then all the government assistance programs allowed
them to keep people employed. The increased volume of claims we anticipated we
would see coming from the lockdowns and restrictions that were imposed upon
businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of
the pandemic, doesn’t mean the circumstances that would give rise to a claim
being reported didn’t occur. Courts and the judicial system were closed or
slowed and now that they are back open, we’re starting to see the circumstances
that occurred during the COVID lockdowns becoming claims today,” Schalick said.
“Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that
might be filed as the country inches toward an economic downturn. Though a
recession was avoided in 2023, experts think a soft dip could occur in 2024,
with 76% of economists saying there’s a 50% or less chance of an economic
downturn this year — that almost always results in more management liability
claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims
because of the economic conditions and the pressure it placed on organizations.
They were making personnel changes with significant belt tightening almost
immediately.” Schalick said.


WHAT’S IN STORE FOR M&PL POLICY RATES IN 2024?

Despite an uptick in claims and increased economic uncertainty, management
liability rates haven’t increased, resulting in market-wide pricing levels that
may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,”
Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because
carriers experiencing the dramatic soft market in the public D&O market are
seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The
rates were increasing in the private, not-for-profit market, and rightfully so,
but there’s a desire to supplement overall mid-size D&O for carriers who also
write private not-for-profit, and they see that as an opportunity to aggregate
premium,” Schalick said. “So the always competitive landscape in the private,
not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management
liability rates in the future. Legal system abuse is resulting in increases in
both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal
system abuse. As a result, insureds in these localities are likely to be
vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases
so carriers are able to stay in that market long term,” Schalick said.


WHY A TENURED CARRIER PARTNER CAN HELP INSUREDS NAVIGATE AN UNCERTAIN MARKET

It’s clear that insureds are facing an uncertain M&PL market over the next few
years. Fortunately, carriers with a long history in the M&PL space will be there
to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years.
PHLY is committed to offering long-term rate stability, even as economic and
claims trends start to push premiums upwards. They have an appetite for all
sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured
underwriters in this space,” Schalick said. “We like to stay very consistent.”

 PHLY has worked with both for-profit and non-profit on management liability
policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY
provides the support agents and brokers are looking for on behalf of their
clients. The teams know their regions well and can respond to local trends.
They’re also dedicated to making the renewal process as easy as possible for
their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal
experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier
this year, they launched a new online risk management platform, PHLYGateway,
which offers resources for insureds on how to create an employee handbook and
trainings on issues such as recognizing workplace sexual harassment and
discrimination.

If insureds have questions, they can consult a Best Practices Help Line,
provided via the platform. That way, they can get on the spot risk management
guidance to help them prevent claims.

To learn more, visit:
https://www.phly.com/mplDivision/managementLiability/default.aspx.


 



This article was produced by the R&I Brand Studio, a unit of the advertising
department of Risk & Insurance, in collaboration with Philadelphia Insurance
Companies. The editorial staff of Risk & Insurance had no role in its
preparation.















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