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 * Sections
   * Critical Risks
   * Risk Management
   * The Insurance Industry
   * Claims & The Law
   * Workers’ Comp Forum
   * Risk Insiders
   * Sector Focus
   * .
   * Risk Central
   * Power Broker
   * Risk Matrix
   * Risk Scenarios
   * Risk All Stars
   * Teddy Award
   * Sponsored Content
   * Branded Webinars
 * Magazine
   * Digital Issue
   * Issue Archive
   * Subscribe
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   * National Comp
   * National Ergo & Ergo Expo
 * Advertise
 * Subscribe
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   * &BrandStudio
   * Privacy Policy
   * About R&I
   * Contact Us
   * Media Kit

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TURNING DATA INTO DOLLARS. HOW KARA SEPULVEDA IS THE DRIVING FORCE BEHIND LITHIA
MOTORS’ ENHANCED RISK MANAGEMENT

Kara Sepulveda’s transformative risk management leads to sweeping operational
improvements.
By: Annemarie Mannion | July 14, 2023
Topics: Claims | July/Aug. 2023 Issue | Risk All Stars | Workers' Comp |
Workers' Comp Forum



Claims processing and risk management are running like a well-oiled machine at
Lithia, one of the country’s largest automotive retailers featuring domestic and
import franchises.

Much of that success is thanks to Kara Sepulveda, senior corporate risk manager
for the company.

As a result of Sepulveda’s work, Lithia’s lag time for claims fell from 19 days
to just seven. The company also realized a 15% increase in closed claims, all of
which has improved the injured workers’ experiences and decreased costs and risk
for the company.

When Sepulveda joined Lithia in 2022, she saw an opportunity to implement an
RMIS system. This enhancement tackled the decentralization issue that arose from
dealerships operating independently while risk was managed in conjunction with
the corporate office.

Lithia had not been using this type of system to collect losses and insurance
information, which kept them from identifying risk and calculating the
appropriate risk transfer between corporate and dealers.

The RMIS system has produced many other benefits, according to Sepulveda.

“We can gather data from across the organization in a single system,” she said.

“Having all of these components together allows us to identify patterns in risk
and respond faster with mitigation solutions.”

J.D. Taylor, vice president of national accounts for CorVel Corporation, said
Sepulveda is always looking for better ways to predict risk.

“She’s curious about her risk program,” he said. “She wants to improve. She
wants to know why things happen.”

Using CorVel’s CareMC Edge, Lithia has been able to tap into the data and
intelligence needed to purchase the appropriate level of insurance and
accurately charge back to various locations. Lithia can drill down for more
granular information in order to be more proactive in claims and
case management.

For Sepulveda, smooth claims handling also helps employees feel good about where
they work. “We never want our employees to feel like a claimant; we want them to
know they are valued,” she said.

New policies at Lithia have also allowed field case managers to attend
employees’ follow-up appointments after a major diagnostic test.

“This can be a scary time when the employee is finding out if they are going to
need surgery, and the results from this appointment can impact not just their
work but their personal life,” she explained. “Risk isn’t always about just
getting employees back to work fast; it is about getting them back to work
healthy.”

Lithia has added 100 dealerships in the past 12 months, but that doesn’t faze
Sepulveda, who said the growth keeps her on her toes.

“I enjoy the constant problem-solving,” she said. “We continue to grow at such a
rapid rate that you must be adept at pivoting at a moment’s notice. It allows
for you to be challenged at every turn.” &

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



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.

Annemarie Mannion is a freelance writer. She can be reached 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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