large deductible program cash flow less $ on premium retained losses are deductable catastrophic...
TRANSCRIPT
Large Deductible Program
Cash flow
Less $ on premium
Retained losses are deductable
Catastrophic protection
Pricing driven by individual risk history
Claims handling
Have financial capacity to retain risk; financials meet carrier criteria
Collateral and escrow
Less budget stability
Pricing driven by individual risk history
Increased administration
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Self-Insured Retention Program
No collateral
Less fronting cost
Retained losses are deductable
TPA or self administration selection
Choose your lawyer
Insurers do not “Drop Down”
Dedicated internal resources to manage claims
Limited carrier selection
Certificate of insurance issues
2
Qualified Self-Insured Program
Frequently the least collateral
Possible reductions in assessments and taxes
TPA or self administration selection
Choose your own lawyer
Must still buy excess coverage
Collateral must be posted in each state
States hold on to collateral for a long time
No “Out and Back In” without reapplication
Increased administration
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Risk Transfer/Risk Retention Efficient Frontier
Risk Transfer Savings
Risk Retention
Current “deductible”
program
The Efficient Frontier 1
Bare
Guaranteed Cost
Risk FinancingAlternatives
1The efficient frontier is the point at which there is no greater expected reward for a given level of risk retention 4
Measuring Program Efficiency Over Time
Defining Total Cost of RiskHistorical TCOR Analysis
Total Cost of Riskas%of Sales
CompanySalesRevenue(000s)
Total Premium
Premiumas%of Sales
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
TargetCostCurrentCostPreviousYearPreviousYearPreviousYearPreviousYear
$1M
$2M
$3M
$4M
$5M
$6M
Tota
TCOR + Savings Historical TCOR
Total Cost of Risk
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Walmart Stores, Inc. is comprised of:
Walmart U.S. (approx. 1,420,000 associates)• 3,600 Walmart Retail Stores• 153 Neighborhood Markets• 598 Sam’s Clubs• 142 Distribution Centers
Walmart International (approx. 709,000 associates)• 4,557 Retail Units• 14 Countries
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Wor
kers
’ Com
pens
ation
• Self-insurance – 13 states
• High deductible insurance coverage – 36 states
• Administration through wholly owned subsidiary TPA – 35 states
• Administration through outside TPA – 14 states
Walmart’s casualty program utilizes the following structure:
Gen
eral
Lia
bilit
y
• Self-insurance – all states
• Administration through wholly owned subsidiary TPA – 49 states
• Administration through outside TPA – 1 state
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The Walmart Casualty Focus:
• Receive prompt and appropriate medical care that is focused on their recovery and return to gainful employment;
• Receive prompt and appropriate disability benefits;
• Compliance.
Workers’ Compensation ensure associates that suffer work injuries:
• Addressed promptly and appropriately while recognizing the importance of our customers in the retail environment;
• Compliance.
General Liability Program ensure all customers claims are:
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Program structure allows Walmart to concentrate on our associates and customers through:
Process ImprovementRisk Control
Self Administration RMIS
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Administering claims through our wholly owned subsidiary TPA helps ensure:
• Owning the process
• Experience in best practices between in-house TPA and outside TPA vendors
• Compliance focus
• Direct relationship between operations and risk management
Appropriate claims management by: • Accuracy
• Analysis
• Functional
Data integrity:
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Flexibility
The appropriate RMIS tool is vital to the continual evolution of our program by allowing:
Scalability
Sustainability
The RMIS tool must act as an “enabler” to allow
your property and casualty program to
pursue overall company objectives.
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Risk Control, although not part of our Risk Management Team, is an integral partner that focuses on:
Safe place to work /safe place to shop
Accident prevention
Post accident supportAccident investigation
Risk Control
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Lastly, our program structure allows for continual focus on process improvements.
Safety focus on accident prevention
Workflow process
improvementsTrend analysis
Resource allocation
Utilization of real-time data from all aspects of Walmart to drive:
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In conclusion, our program structure:
Allows for optimum focus on our customers and
our associates
Ensures that we capture and
evaluate the data to drive
improvement
Works with our business
model
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Current Reality Panel Discussion
Questions &
Answers
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