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As vp, risk management for Sony Corp. of America, Julie DeSantis consolidated many of the media and electronics company's large, complex and diverse risks into a blend of customized and standardized insurance programs.
In the United States alone, Sony maintains more than 100 insurance policies that address unique risk exposures across 13 business units. That compares with the more than 200 U.S. policies in force prior to Ms. DeSantis' arrival at Sony, where many of the insurance programs were dispersed, largely because of Sony's wide-spread risk profile.
“When I came to Sony in 1993, there were probably in excess of 200 insurance policies, and we were covering fewer operations than we do today,” Ms. DeSantis said, noting that “we're a centralized function supporting a decentralized organization.”
Sony's centralized risk management department comprises six full-time risk professionals and one part-time employee who meet, consult and respond to the various risks of the business units.
Ms. DeSantis' top priority and focus has been to identify synergies among Sony's insurance portfolio to secure the broadest coverage and enhance overall coverage terms.
This collaborative and consolidated approach has resulted in premium savings of $20 million dollars over a five-year period.
“It's resulted in the savings, but it's also resulted in a more efficient program for Sony Corp. of America and all of the business units within that umbrella,” said David J. Liston, managing director and New York metro partnership leader at Marsh Inc. in New York. “It is very innovative, and we certainly don't see that with all of our clients. But I think it takes somebody with Julie's skill set to approach that sort of opportunity and be able to see it through to conclusion with such positive results.”
To accomplish insurance policy consolidation year-over-year, Ms. DeSantis and her team worked with senior executives at each of the Sony groups, primarily with the chief financial officer, controller and general counsel. She focused on different coverage segments, first targeting Sony's casualty insurance program.
To consolidate various casualty insurance programs—including commercial general liability, auto liability and workers compensation—from various Sony companies, Ms. DeSantis looked for similarities.
“We looked for commonalities and the broadest terms and conditions that were being provided from one carrier,” she said. “I'm not just about price. I want quality coverage for the best price.”
For example, if there were seven CGL policies, many of them were with different carriers. The business units “all had different buying styles, because they are all different entities with different CFOs. The risk appetites were different. So we might have had one that guaranteed costs and maybe one that had a higher retention, or some with short retentions,” she said.
Working with the Sony business units, Ms. DeSantis identified and evaluated risk exposures associated with the companies' operations, and then combined risk analyses, risk transferences, insurance and self-insurance to address the exposures.
If there were seven different CGL policies that five insurers were providing, Ms. DeSantis would approach those insurers and other markets as well with underwriting data from the various business units to consolidate the CGL program across all entities.
“It's a big undertaking, because the underwriting data comes from the various companies, and the application would be different,” she said. “Then we had to do a consolidated submission, have meetings with the carriers, and make our presentation to them.”
“Then we started being successful,” Ms. DeSantis said, noting that the first casualty coverage to be consolidated was Sony's auto liability coverage, followed by general liability, umbrella excess and workers comp before moving on to property.
The consolidation of Sony's property programs was a particularly significant process, as it wasn't a single insurer covering one business unit. The property policies are generally layered to get to the proper capacity needed, Ms. DeSantis said. “There were multiple insurance carriers for different entities, and some entities were already combined, but some weren't,” she said.
“So we went under this massive undertaking again to get the broadest terms and conditions in each policy, do the matrix analysis, make a proposal, and try to get the lowest retention that would satisfy everyone and optimize the program.”
While Ms. DeSantis earned Sony executive buy-in for the philosophy that a consolidated approach was best for the business units by achieving insurance premium savings, the actual goal was efficient claims handling, Ms. DeSantis said.
“If you have six different workers comp policies, that's six different third-party administrators or in-house claims departments you would have to work with, different safety and loss control expectations,” she said.
Insurance policy consolidation is now woven into the fabric of Sony's risk management and insurance purchasing practices. As the company grows and continues to acquire new businesses, Ms. DeSantis and her team assess the acquired company's risk portfolio prior to actual acquisition, looking at ways to fit that company's exposures into existing policies.
“So during the due-diligence process, whether we complete a transaction or not, I always task my team to think forward, because we want to be quick to react on day one instead of waiting,” said Ms. DeSantis. “Most companies will say, "Let's wait another year and we'll evaluate it.' We wanted to be able to start thinking about integration, if we could, and if we could have any challenges, and how to get around it. So we're always trying to think. We're very proactive toward thinking.”
April 1 renewals for Sony were challenging, Ms. DeSantis said, noting that negotiations were focused on increased premiums and reductions and modifications in terms and conditions.
“This year, we were successful in consolidating six stand-alone cyber, media, tech (and) errors and omissions policies into one consolidated program. This resulted in broader terms and conditions for Sony consolidated,” Ms. DeSantis said.
Managing Sony Corp. of America's entertainment exposures poses unique and interesting challenges for Julie DeSantis, vp, risk management.