3 Critical Risk Management Issues:
Workers Compensation
Affordable Health Care Act
Professional Liability
MARK GREGSON
Gallagher |

Gallagher |
Area Senior Vice President
Mark S. Gregson, CIC has worked in the insurance industry for more than 30 years. The combination of Mark ’ s senior management and large account brokerage experience provides Arthur J. Gallagher clients state of the art risk management solutions. He has extensive experience in large middle market and national market accounts. He also has commercial claims and insurance company management experience. This expertise provides the foundation to design risk management programs that effectively achieve the lowest net cost while reducing the client ’ s exposure to catastrophic loss.
Prior to joining Arthur J. Gallagher Mark was the Senior Vice President and
General Manager for at Liberty Mutual Insurance Company and the Senior Executive responsible for the Helmsman Insurance Agency. He had countrywide responsibility for over $1 billion in client revenue focusing on of client management services and new account development.
Mark is a graduate of the State University of New York at Cortland and is a
Certified Insurance Consultant. He currently lives and Charlotte, NC and has three children.
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Here ’ s a quick look at the company.
• Founded in 1927 by Arthur J. Gallagher, one of the pioneers of risk management.
• From one office in Chicago, AJG has grown to 250 offices in nine countries with revenues over $3billion and $30 billion in gross written premium.
• Publicly traded (NYSE:AJG) industry leader still run by its founding family—yet decidedly not run like a family business.
Instead, we ’ re a company with over 14,000 family members.
• Since 2002, the company has had an annual growth rate of about 10%.
• Arthur J. Gallagher & Co. has operating divisions in the U.S. and abroad which specialize in retail brokerage operations, benefits & HR consulting, third party administration & claims processing, and wholesale distribution.
• We ’ ve built a vast global carrier network with strategic partners in more than 115 countries that give our clients superior flexibility in coverage options and solution variables.
Gallagher |
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“ Growth oriented and performance driven to meet our clients needs ”
• 4 th largest broker in the U.S.
• Rated “ excellent ” by Greenwich for Customer Service.
• Ranked one of the World ’ s most ethical companies by
Ethispere. 2012 & 2013.
• Gallagher Bassett - is the largest TPA worldwide.
• G.B. rated “ Best TPA ” by Business Insurance.
• Artex Risk Solutions – is a wholly owned by AJG providing captive solutions.
• Risk Placement Solutions – is a wholly owed by AJG providing wholesale and excess solutions.
Gallagher | Construction
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Our Niche Focus
Supporting your business with what it needs to grow
Why partner with Gallagher Construction?
Construction: The Gallagher Way
Construction is the backbone of America. You have specific requirements. We understand. We're Gallagher Construction. Our mission, as your partner and as an industry leader in providing construction insurance and risk management services, is integral to your marketplace success and profitability. Count on Gallagher Construction to provide you, and your operation, with the highest level of customer service and leadership.
That's The Gallagher Way Working together, we can develop innovative solutions and services that are uniquely tailored to your operation in the
Construction Industry.
Designed for:
• General Contractors
• Specialty Trade
Contractors
• Heavy Commercial
• Utility Contractors
• Street & Road Contractors
• Concrete Contractors
Our Areas of Expertise Include:
Environmental Liability
Pollution Liability
Professional Liability
Group Health & Pension Plans
Captives & Alternative Risk
Commercial Property Insurance
Workers Compensation
Gallagher |Construction
OCIP/CCIP Programs
Aviation
Contractors Equipment
Builders Risk
Fidelity & Fiduciary
Umbrella & Excess
Bonding Programs
Automobile
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25%
20%
15%
10%
1975-78 1984-87 2000-03
2012 expected growth 5.8%
5%
0%
-5%
(Year)
71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11* 12
*2011 and 2012 figures are A.M. Best Estimates
Shaded areas denote “hard market” periods
Sources: A.M. Best (historical and forecast), ISO, Insurance Information Institute.

130
125
120
115
110
105
100
95
90
85
80
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11P 12F
Workers Comp Underwriting Results Are Deteriorating Markedly and the Worst They Have Been in a Decade
Sources: A.M. Best ; Insurance Information Institute.

Currently $5,000 is known as the primary / excess split point. Primary losses get full weight vs Excess losses receive only partial weighting.
SPLIT POINT CHANGES
• Year One (2013) – increased to $10,000
• Year Two (2014) – increased to $13,500
• Year Three (2015) – increased to $15,000 plus two years of inflation adjustment (rounded to the nearest $500)
• Split Point adjustments are based on countrywide vs. state data

2012
$20,000
15,000
9,750
2013
10,000
6,500
2014
6,500
4,225
2015
4,000
2,600
$0 5,000 10,000
14,750 16,500
*illustration assumes a 35% discount on excess loss
13,500
17,725
16,000
18,600

Annual
Planning
Guide identifies health and welfare plan requirements and provides easy-to-follow action steps

• Healthcare Reform
Update
• Directions Newsletter
• Technical Bulletin
• Webinars

General Liability Basics
-
Legally obligated to pay damages because of “bodily injury” or “property damage”
– Right and duty to defend the insured against any “suit” seeking those damages.
– Occurrence Policy.
– Premium based on revenues,values and scope of services
– Auditable

Professional Liability Basics
Responds to third party claims alleging financial loss, BI and PD caused by the insured’s professional services.
- Provides coverage for the rendering of or failure to render, professional services
- Coverage economic loss without any BI or PD.
- Claims Made Trigger.
- Premium based on revenues, values and scope of services
- Professionals can be held personally liable .
Not auditable

General
Professional
• Your Work or your product
• Expected or Intended
• Pollution
• Care Custody and Control
• Defective, deficient, inadequate or dangerous
• Impaired property
• Construction Managers errors or omissions

- Pre Claims Assistance
- Disciplinary Proceedings
- Pollution Coverage
- Technology and Media
Services Coverage
- Modified Hammer Clause
- Crisis Management
Coverage
- Joint Ventures Included
- Design Build Coverage
- Innocent Insured Language
- Punitive Damages
- Construction Management
Coverage
- Personal Injury Coverage

- Design error – in house or sub-consultant
- Negligent hiring of subcontractors and sub-consultants
- Shop drawings
- Change Orders
- Code compliance
- Value engineering
- Cost overruns/ Time delay
- Shoring and Reshoring

• Pre Claims
Assistance
• Disciplinary
Proceedings
• Pollution Coverage
• Technology and
Media Services
Coverage
• Modified Hammer
Clause
• Crisis Management
Coverage
• Joint Ventures
Included
• Design Build
Coverage
• Innocent Insured
Language
• Punitive Damages
• Construction
Management
Coverage
• Personal Injury
Coverage

• Construction delay on a $90 million hotel project
– allegation was contractor failed to properly coordinate and schedule the work. $1.5 million was paid in addition to a very expensive defense
(400,000).
• Construction company had agreed by contract to
“supervise construction and safety programs.”
Injured worker (subcontractor) sued construction company and was awarded $200,000 in addition to the workers compensation award.

• Contractor failed to adhere to change order provisions in client contract. Failure to manage and coordinate resulted in delays and contingent business interruption damages in the amount of
$570,000.
• Contractor designed and built ground floor slab.
Approximately one year after completion cracks appeared. After extensive research it was determined that the slab was under designed for the equipment resulting in a $600,000 loss .

Professional Liability Insurance Markets
BEAZLEY

MARK S. GREGSON