Whether it involves sawing a slab or cutting a concrete building in half, CLM Fellow Carl Jones is able to drill down to create effective risk management strategies for his group of companies because of his experience and skills.
Q. How did you start in risk management?
A. I worked in claims for 31 years starting with Berkshire Hathaway Homestate Companies and Metzler Brothers Insurance, a brokerage. Through the years, I have handled various lines of insurance, including homeowners’, auto, and commercial. If a client had a claim and they called the broker, I handled it. One of the Metzler Brother’s largest accounts was Coring & Cutting, so I was in constant communication with them. After many years, Coring & Cutting decided to leave the brokerage to offshore captive, but before they left they asked if they could hire me. Since it was a great opportunity and everyone was supportive, I took the job in September 2001, and I’ve been here ever since.
Q. So you started a new job in construction right before 9/11?
A. Yes, 10 days before the towers fell I started in my position. It was a scary time for everyone, and I thought I might lose my job. I had two young children at home and worried if I had made a huge mistake. To make matters worse, our captive was written with Legion Insurance, which was a fronting company for the United Airlines jets that crashed into the World Trade Center. This one event crippled the captive, and it failed in March 2002. Suddenly, we were thrown back into the direct market. So not only did we lose our initial $1.2 million, which was one year of premiums, but also we had to come up with another $987,000 to find insurance in 30 days. Lockton found us a great policy, but it carried a $100,000 deductible per occurrence for every line: workers’ compensation, auto, general liability, and property. We were scared to drive any of our 200 trucks on the road because we knew that we were risking $100,000 each time a truck left the shop.
Q. How did that fear translate into your safety programs?
A. We had our most successful loss year that year because we talked about safety a lot and preached it every day. We stressed the importance of proper personal protection equipment, performing a correct inspection, and conducting proper job site cleanups because we knew we had the first $100,000 of any loss. So that knowledge made safety even more important than it already was.
Q. What are some of the benefits of using a captive versus the direct market? Detriments?
A. With a captive, a lot of it depends on your partners. In the prime of our captive, we wrote close to $10 million into the captive and averaged $4 million in losses. The remaining money (minus writing expenses) went back to the members. So as long as everyone in the captive focuses on controlling losses in their companies, it works well. When working in the direct market, you have a lot less control because it sets the price. Even though you might earn “credits” for having policies and procedures in place to help control losses, at the end of the day, we’re at the mercy of our underwriter every year. They also dictate when they will settle a claim and for how much. So there are positives and negatives to both.
Q. You have been deposed many times throughout your career. What makes for a good deposition?
A. I listen very carefully to the question and answer it exactly. I don’t add to it; I make them pull it from me. That’s advice I give to every one of our employees facing a deposition: Don’t give them anything. If you are unsure about what they are asking, have them repeat it or ask to have it phrased in a different way for better clarification.
Q. Have you developed an overall philosophy to risk management over the years?
A. Who we hire today will be our challenge tomorrow. So depending on how well you hire, train, and maintain that employee will determine how successful you are as a risk manager. Without our employees, we are nobody; we need them to come to work every day. We need to give them the proper tools and equipment so that they are successful at completing their daily jobs. If they get injured, we need to take care of them and always let them know how vital they are to our group of companies.