2011 Advisory Board Meeting Janet & Mark L. Goldenson Center for Actuarial Research University of Connecticut August 10, 2011 © 2010 Towers Watson. All rights reserved.
Table of Contents l Introductory remarks l Enterprise Risk Management for Small Business l Case study on Between Rounds Bagels l Claim Cost Management System l Mature Driver Screening Program Project towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 2
Introductory remarks l l l Welcoming Advisory Board Meeting special guests – Janet & Mark Goldenson, Frank Ramsay, Jerry and Laurie Puiia, Garry Lapidus and Asiri Gunathilaka. Highlight of past year’s activities is the expansion of the ERM for Small Businesses initiative and the publicity it has received Separate meetings with individual Board members to discuss joint projects with the Center. Potential projects include: l a predictive modeling approach to analyze early lapse experience of life insurance polices sold in China l l a Mature Driver Screening Program l Claims Management Modeling System for P&C liabilities l ERMSB analysis for brokerages and agencies of insurance companies l l a Retirement Satisfaction Index to measure non-economic factors impacting retirement attitudes A/E analysis of LTD claims Potential Center projects with non-Board members including an ERMSB project with the Mashantucket Pequot Tribal Nation, a risk management project with a major drug chain and a profit analysis project for a Las Vegas casino towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 3
Enterprise Risk Management for Small Business Jay Vadiveloo (UConn, Towers Watson) Lu Ma (UConn) Jackie Bogensberger (UConn) Laurie & Jerry Puiia Owners – Between Rounds Bagels towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 4
Differences with Enterprise Risk Management (ERM) for large corporations l l l Needs to incorporate business growth strategies as well Need to focus on reasonably likely risks with serious consequences versus low likelihood events with serious consequences Business owners are very knowledgeable about risks and business growth strategies Easier to assess and manage risks of a small business, but consequences of a risk shock are far greater Qualitative risks are just as important as quantitative risks ERM analysis covers a shorter time horizon (3 to 5 years) and should be revisited afterwards towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 5
Differences with ERM for large corporations: continued A well defined ERM analysis for small business, which incorporates business growth strategies can materially improve the sustainability and profitability of a small business towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 6
Risk Management Report for Between Rounds Bagels University of Connecticut Graduate Program in Actuarial Science: Lu Ma Jackie Bogensberger Eric Anderson Maura Bey towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 7
Outline l Recognition of Risks for Between Rounds l Data Analysis l l l Micro Level Macro Level Suggestions/Conclusions towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 8
Recognition of Risks l Competition l Bagel Stop Production Co, Bruegger’s Bagel Bakery and Lox Stock & Bagels, Inc, Dunkin’ Donuts l Seasonal trends l Trends due to the economy l Cost efficient items l Waste management l Advertisement towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 9
Micro Data Analysis l l l We used the information complied from Between Rounds’ register reports to create a user friendly pivot table (in Excel) In order to calculate the percent profit for each item, we assumed a 33% cost From there we looked at best selling items (contribute to 50% of profit) over a monthly and year basis towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 10
Monthly and Year Best Sellers towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 11
Total Gross Profit for All Locations l l Manchester is the only growing branch Manchester is the smallest branch -Overall profit has decreased, but as has the economy l l We see a positive outlook in 2010 in all stores Check 2011 data to see if up turn continues towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 12
Our Suggestions l l l Bagel Promotions: advertise on the side of a vehicle, coffee promotion, healthy promotion during New Years Resolution Time Online Advertisement: Groupon, Facebook Drive Thru Menu: consider the potential for traffic, new menu items (based on best sellers) towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 13
Our Suggestions (continued) l l l Data Collection: adjust your “family groups” to be more condensed or keep the names more consistent. Keep count on waste Strategizing to Appeal to other clientele: consider re-branding to appeal to younger customers/college students towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 14
Key deliverable l Excel-based model to track sales revenue and profit by individual item and by store in as frequent a basis as needed towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 15
THANK YOU! From all of us, thank you for allowing us to analyze your business. You have been more than cooperative and we appreciate it!! towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 16
Student perspective on Enterprise Risk Management for Small Business (ERMSB) initiative l l l Not a typical actuarial project Forces students to think out-of-the-box since each ERMSB project is unique Students work in a team and are involved from start to finish — Students work directly with the business owners — Final report, models and presentation done by students — Invaluable experience and immediate gratification of having recommendations implemented by owners towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 17
Where do we go from here? l l Need to expand the Center’s ERMSB initiative on a larger scale Any large scale implementation should be supported by large corporations, private foundations and government agencies and not small business Most cost effective way to do these projects is to engage students at universities all over the country (and globally as well) Positive public relations / articles / media coverage on this initiative would allow the Goldenson Center to help facilitate and coordinate any large scale ERMSB initiative l l l Radio talk show interview with Lu Ma and myself in June Interview by UConn media Upcoming paper in Contingencies Magazine Selected by SOA to be media spokesperson for ERM related activities Presentation at actuarial conferences Potential paid engagements by larger corporate sponsors towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 18
Claim Cost management Project: Red Wine Goldenson Center for Actuarial Research, University of Connecticut and Towers Watson Jay Vadiveloo (UConn, Towers Watsn) Frank Ramsay (Towers Watson) Brian Stoll (Towers Watson) Brian Wirtz (Towers Watson) Asiri Gunathilaka (UConn) James Gu (UConn) Yingqi Tao (UConn) towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 19
Project Overview Phase 1: Develop database tool for TW claim cost management review Phase 2: Build a quantitative formula to estimate ROI for client Phase 3: Develop a tool to combine databases from various clients in order to develop benchmarking studies Phase 4: Develop applications of predictive modeling for claim cost management towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 20
Existing Tool Startup Screen Typical Review Process • Obtain claim data from client • Selection of representative sample • Pre fill randomly selected claim information • Initial Review • Auditing for errors • Peer Review and make necessary changes • Generate reports • Final deliverables Data Entry Form towerswatson. com Report © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 21
Limitations Of Existing Tool l l Limited specificity to each line of business (LOB) Forced use of written worksheets to record data and then reenter into tool l Lack of an electronic peer review or project management function l No connectivity between users and project manager l Subjective questions that lead to bias responses l Information collected lacks details l Inability to customize data entry forms l Inefficient report system l Not user-friendly towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 22
Project Workflow PROJECT MANAGER Edit project information; Customize data entry forms; • • Prefill basic claim information; Claim assignment Peer review Report and analysis AUTOMATED Initial reviewer towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 23
New Tool: Control Panel Tailor-made versions for both project manager and initial reviewer with required functionalities Project manager version • Project customization / claim assignment • Initial review / peer review • Generate reports • Import and export Initial Reviewer version • Initial review • Import and export towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 24
New Tool: Data Entry Forms Existing data entry forms • • • Limited specificity to each LOB Subjective questions that lead to biased responses Information collected lacks details Inability to customize data entry forms No completeness check Not user-friendly towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 25
New Tool: Data Entry Forms Improvements of new data entry forms • • Specific closed form questions Complete details gathered Both loss and expense savings opportunities estimated for each activity Response specific details obtained Completeness check available Detailed quantitative analysis User-friendly towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 26
New Tool: Reports Report Generator Comparison New reports • • Categorized by line of business Seven reports versus 15+ reports Combined redundant reports Reports with graphs Old reports • Missing Line Specific reports • Report redundancy • Inefficient reports towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 27
New Tool: Reports Summary Graphs towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 28
Next Steps l l Extend General Liability model for Medical Malpractice claims model and other lines of business Explore customizing Claims Management tool for individual and group disability income claims Develop tool to combine databases from various clients in order to develop benchmarking studies Develop applications of predictive modeling for claim cost management towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 29
Mature Driver Screening Program Garry Lapidus Director, Injury Prevention Center Connecticut Children’s Medical Center/Hartford Hospital Associate Professor, UConn School of Medicine towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 30
Background l Motor vehicle crashes (MVCs) among mature drivers (age 65+) are an important traffic safety and public health issue l In 2009, 5, 300 deaths and 187, 000 non-fatal injuries l 16% of all traffic fatalities towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 31
Normal aging affects driving ability l Unlike younger drivers, mature-driver crashes result not from deliberate risk-taking but from age-related declines. l Declines in perceptual, cognitive, and psychomotor functions l Medical conditions and the medications used to treat them towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 32
Aging and Driving Mature Drivers tend to: l l towerswatson. com Travel slower Choose times, roadways, and routes that make them feel safest © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 33
Mature Driving Screening Benefits l Increase awareness of declines l Identify declines at an earlier stage allowing for intervention But l l Despite clear efficacy, screening is underutilized In most states, driver screening and referrals are not standardized or systematically provided towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 34
AAA Roadwise Review™ l Home based 30 minute computer program (CD ROM and internet) l Identifies impairments in 3 major areas: l l l Vision, physical fitness, cognition Scored as no, mild, serious impairments Provides recommendations to address impairments l l Vision/medical evaluation, Driver refresher course, Driving evaluation AAA reports widespread distribution but, l actual use unknown because it is designed to be used in-home towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 35
Roadwise Review™ adapted for community based screening at senior centers l Used test administrator for screening l Provided documentation of completion and analysis of results l Allowed for explanation/counseling of results for participants and followup towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 36
Results towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 37
Results towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 38
Referrals and follow-up l 75% of participants were given referrals l l Vision check (18%) l Medical evaluation (7%) l On-road driver evaluation (5%) l l Driver refresher course (73%) Occupation therapist evaluation (6%) At 2 week follow-up 74% reported intent to complete towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 39
Program satisfaction was high towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 40
Limitations of Roadwise Review™ and Need for new screening tool l Software and hardware limitations l l l Cumbersome set-up, confusing instructions, unable to easily fast forward Operating system and touch screen issues New screening tool l l Improve ease of use Demonstrate effectiveness by correlating screening performance and traffic violations, claims, and crashes towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 41
Joint proposal development with Goldenson Center to a major insurance company l Develop and test a new computerized mature driver risk screening tool l Disseminate new mature driver screening tool l Create a branded proprietary screening tool that can be sold nationwide and provide a revenue stream towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 42
Role of the Goldenson Center l l l Assist in the development of the screening tool Develop a predictive model which incorporates results of the screening tool with other related data such as driving history, medical data, etc. Apply results of predictive model to enable partnering insurer to better price auto insurance coverage for mature drivers towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 43
Project partners l Injury Prevention Center & UConn School of Medicine l Collaboration with the Goldenson Center faculty and graduate students l Target funder: major insurance company towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 44
Drive Safer, Longer towerswatson. com © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Presentation 2 45
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