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While the risk management approach at CSL Behring L.L.C. and CSL Ltd. involves managing exposures as though the company had no insurance, CSL does in fact have an extensive insurance program.
Marsh Inc. is CSL's broker across its entire program, said John J. Marren, director, global risk and insurance management at CSL Behring L.L.C. in King of Prussia, Pa., and its Parkville, Australia-based parent, CSL Ltd.
“Originally, our relationship started with them in Australia,” Mr. Marren said. “Because CSL Behring was here, Marsh adopted the Philadelphia office as the servicing arm for the Behring business.”
Now the Philadelphia Marsh office is the lead office for CSL's business, with some global placements still handled through Marsh's Melbourne, Australia, office, including global directors and officers liability and global marine.
“When I go to Melbourne, I end up spending a fair amount of time with them,” Mr. Marren said. In addition, Marsh's Adelaide, Australia, office handles CSL's expatriate medical programs.
“When I started here, we still had a separate property program for Australia and then for the rest of the world. We globalized that program that year, in 2007,” Mr. Marren said. “That program is led by Allianz (S.E.). They front the program and they participate to a significant degree in it.”
The global master property program is a layered program, Mr. Marren said, with a deductible, then typically a primary layer with two excess layers above. “We're not particularly cat-exposed, so it's really not a driver of our program structure or pricing,” Mr. Marren said.
“We do issue local policies in quite a number of countries. Larger limits in our main countries—Germany, Switzerland, Australia, the United States—all again fronted by Allianz, then smaller limits in some other countries,” Mr. Marren said. “Essentially, where we've got manufacturing, we've got large local policies.” There are 19 local property policies, the risk manager said.
On the liability side, Chubb Corp. is at the front of CSL's product liability program. “They're there for a strategic reason, really,” Mr. Marren said. “Chubb has a very good clinical trials insurance management tool globally.”
“Before we brought Chubb into the fold, clinical trials around the world were sort of done on an ad hoc basis with particular insurers that were capable and ones that we'd had traditional relationships with, but every single trial had to be bid,” Mr. Marren said. “As you could imagine, it was a cumbersome task.”
Under the current program, Chubb provides a primary layer of insurance that covers clinical trials and product liability. “But their limit is nominal,” Mr. Marren said. “And it's mostly to access their service side and placement side for clinical trials.”
“The excess tower over them isn't a follow-form tower,” he said. “So really when we talk about the primary layer for underwriting our products risk, that is done by Alterra (Capital Holdings Ltd.) out of Dublin.”
There are several excess layers above the primary, with most of the insurers involved having been part of the program since CSL globalized its products liability coverage in 2006. Other insurers involved in those excess layers include XL Group P.L.C. in Dublin, Chartis Inc. out of London, Allied World Assurance Co. out of Dublin, Aspen Insurance Holdings Ltd. out of Dublin and London, ACE Ltd. out of London, QBE Insurance Group Ltd. out of London, and Endurance Specialty Holdings Ltd. in Pembroke, Bermuda.
Elsewhere on the casualty side, “we've got your traditional primary casualty-type structure,” Mr. Marren said. Chartis provides CSL's primary general liability globally, as well as U.S. auto liability. Travelers Cos. Inc. is the workers compensation insurer, and First Specialty Insurance Corp. provides CSL's umbrella liability coverage.
The company's plasma collection process creates a “quasi-professional” liability exposure, Mr. Marren said. “We've got people that are sticking needles into donors,” he said. “We opted a number of years ago to self-insure that exposure, and we generally don't have issues with it.”
Claims that do occur from the phlebotomist exposure “tend to be more like a trip-and-fall (general liability) claim,” Mr. Marren said. “They tend to not be for a lot of money.”
Still, the company carries some excess coverage above its retention for the phlebotomist exposure in case CSL faces a catastrophic event. But, “the primary coverage for that was quite expensive, which was kind of driving the question of whether to buy it or not,” Mr. Marren said, and the company made a strategic and economic decision about six years ago to retain the risk.
“One of our more active polices...is our business travel accident policy,” Mr. Marren said. “We do have quite a number of people who travel regularly on business all over the world. People tend to lose things; things get damaged, broken; people get sick while traveling.”
The risk manager said that coverage proved particularly useful last year when CSL employees were in Christchurch, New Zealand, for a conference during a catastrophic earthquake.
“Their bags were all left in the hotel and they could not access the hotel after the quake. In fact, their bags were in that hotel for probably the better part of a year,” Mr. Marren said. Many had their travel documents at the hotel as well.
The travel insurance company picked up on the ball “for delayed baggage, lost baggage, lost credentials, things like that,” Mr. Marren said. In addition, “we had just entered into a relationship with International SOS...for travel-related services” to get the employees home, he said.
“It's a very valuable piece of our insurance program and risk management with the company,” he said. “Because it's essentially one of those few places where insurance and risk management touches the everyday employee of CSL.”
The overriding risk management philosophy at CSL Ltd. and CSL Behring L.L.C. is operational risk management, and executing the philosophy involves a decentralized approach passing risk management responsibility to the managers of the companies' various operations.