The Inside SPOT: An Interview with the Chief Claims Officer for Chartis U.S. (formerly AIG Commercial Insurance)

On July 28, 2010, The Claims SPOT had the pleasure to sit down with Rick Woollams for our “The Inside SPOT” series of industry leaders. We hope to present more interviews where we explore how these leaders began their careers and how they see the industry today.

Rick Wollams is in charge of one of the largest claims organizations in the world. What was most interesting about our discussion was how he began his insurance career as a front line liability claims handler and worked his way up the ranks. At his heart he is a claims person through and through and clearly cares about the profession and the people that work for him.

The Claims SPOT: Tell us about your first claims job

Rick Woollams: My first claims job was as a claim rep, inside liability claim rep, at the Travelers in Cleveland, Ohio. It was a really good first job because it was all liability. Back in the day, when personal lines and commercial lines were blended, I could be doing personal auto, commercial auto, homeowners, products liability, commercial premises, or construction. It was all sizes and shapes so it was a great first job.

The Claims SPOT: How was the transition from practicing law to now being on the claims side?

Rick Woollams: Well, it took a little getting used to. The nice thing about it, besides the fact that they paid benefits, was that I was the client. I went from being an executor of the orders of somebody else to the guy who gets to tell the lawyer what to do, and that’s a lot of fun.

The Claims SPOT: What was the most unusual claim you ever worked on?

Rick Woollams: I had a homeowners claim once where two guys were trimming branches from a tree on one guy’s yard. This is the guy who comes over with the chainsaw and is climbing around up in the tree, cutting down limbs, and the actual owner is down on the ground watching. So the guy cutting down the limbs does it wrong, falls out of the tree and breaks his leg, and of course sues our homeowner. His theory of liability was that since the owner was on the ground he must have had a better view and therefore you could have prevented the fall.

“there’s something gratifying about being the first guy in a big and complicated claim to see what’s going to happen”

The Claims SPOT: What was the best result you remember achieving as a claims handler?

Rick Woollams: I don’t know if it’s necessarily the best outcome, but there’s something gratifying about being the first guy in a big and complicated claim to see what’s going to happen. To really understand the claim well enough to say – “here’s what’s going to happen in this claim.” Even though maybe you may be able to change how it’s going to happen, or maybe you can’t, to really understand it that well, and to be among all the lawyers and all the professionals associated with it, to know that is very gratifying.

I’m always pushing my people to understand that this is chess, and you don’t play chess a move at a time. You play it a bunch of moves ahead (if you’re doing it right) and that’s what we have to do.

The Claims SPOT: So when did you realize that you wanted to stay in claims and make it your profession?

Rick Woollams: It seemed to me pretty early on that it was an interesting and challenging job and that there was a lot of room for advancement within it so that if you devoted yourself to it hard, and you worked at it hard, you could do well. I also found it was truly intellectually fulfilling work.

The Claims SPOT: What do you think are the biggest roadblocks for people entering the profession now?

Rick Woollams: The first claim job, now, because we as an industry are so much more specialized, might cause some people to have a hard time breaking through into something that is more intellectually interesting. In that first job you might be getting an unending stream of the exact same thing, and that might be difficult.

The Claims SPOT: When you got your first management job, what was your biggest concern?

Rick Woollams: Well, I was managing a bunch of people that I had been working right next to the day before. I was promoted to a supervisor in the same claim office and, while I know there are pluses and minuses to that, that sort of immediate change in status among your peers was a really uncomfortable thing.

The Claims SPOT: As you moved through management what do you see as the next biggest challenge or concern?

Rick Woollams: It’s trying to resist the temptation to spend my time doing the things I’m comfortable doing, and that I know I know how to do well. Because as you progress, you need to understand that each new job has with it a set of responsibilities that are different than the ones before. You have to embrace those differences and get good at them.

The Claims SPOT: When you were younger, what did you want to be when you grow up?

Rick Woollams: I have to go back to when I was a kid and I guess I wanted to be the right fielder for the Cleveland Indians, Rocky Colavito because I was a Cleveland Indians fan and he was our great player at the time. So like every small town kid in the Midwest I wanted to be something like that.

The Claims SPOT: What do you see as your primary charge in your current role?

Rick Woollams: Well, you have to start with the big number on the board, right? So that’s payout. I run an operation that spends, in really, really round numbers about $1.5 billion a month in claims, so job one is to make sure that we’re managing that claim inventory to its appropriate outcome every single time.

“It’s still going to be about the human being figuring out the right answers and figuring out how to interact with this person across the table or on the phone to get the right outcome.”

The Claims SPOT: If you could look into the future, what do you see that claims organization in the future looking like?

Rick Woollams: Technology will drive it to be more decentralized and at some point in our business it will hardly matter where, physically, you are. There will always be certain subsets of our activity where it does matter. You have to attend a mediation or settlement conference, you have to climb on a roof, or do an inspection. Those tasks will still require the physicality to matter, but a lot of the other things that we do as claim people, physical location doesn’t matter. You don’t necessarily need to be in the office, you don’t necessarily need to be in the city or the county, and you can be in a lot of different places. I also think you’ll continue to see various kinds of technological tools to make claim people smarter and more productive.

The Claims SPOT: Do you think claim handlers are being asked use technology more so that they’re not necessarily going back to the art of claims?

Rick Woollams: I’ll always be a defender of the art, so I’ll always be skeptical about tools that say they’re going to do the thinking for us. To me that’s the core of what we do is the thinking part. I think it’s great that we’ve got a lot of tools to bring us more information and make us more efficient and be able to chop the claim up into little segments where some of it can be done by others.

But at the end of the day a claim person’s craft is thinking about what the right outcome is and strategizing about how to get there and then the personal interactions that get that outcome.

The Claims SPOT: If you were giving advice to claims executives, managing groups in the industry, what would you tell a claim executive now?

Rick Woollams: Well, if they’re working for other companies, I don’t want them to be better at what they do. So I’m not sure I would give them advice. Or if I did, I might intentionally give them bad advice.

The Claims SPOT: Well, what would you tell your own executives, then?

Rick Woollams: Well if I’m talking to my own, then it’s embrace the hard parts of the job, embrace the parts that you are less comfortable with. I’ve got a lot of people that work for me who grew up in this business as technical claim people. Managing their transition from being purely technical, to mastering the financial and process and HR-related aspects of those jobs, is the main nudge I have to provide.

I’ve had to go through that as well. I find myself wanting to lapse into wanting to spend half the day doing something really technical because it’s fun.

The Claims SPOT: And for the individual to succeed at this business do you have any keys to their success?

Rick Woollams: There’s a couple of things. First, you’ve got a whole bunch of different competing tasks awaiting you every day but do the hard thing first. The human temptation is to let it go and knock off a couple of easy ones, but the hard thing never gets easier by letting it sit, so you’re better off just doing it and knocking it off and then moving through the day with greater dispatch.

That plus simply working harder never hurts you. My attitude was always give me a job to do and to do the job to the absolute best.

The Claims SPOT: Do you have a sense that the younger generation in the business is always looking for the next opportunity and not as “nose to the grindstone” about their current role?

Rick Woollams: Yeah, they’re clearly a more interactive group so that’s a good point it could be a generational thing. I do, intellectually think it’s just the right answer, just as one of the other bits of advice I give our claim people is that they shouldn’t look upon career as a purely vertical progression.

I’m always encouraging people to look to either side of where they are as well as looking up. If there’s one thing I’ve learned here, in a place where we have lots and lots of lines of business, are people with broad knowledge are really valuable. The idea that I’ve got someone who has maybe seen a little bit of the underwriting world, and seen two or three lines of claims, means a person that is intrinsically more valuable than someone who has just done one thing.

The Claims SPOT: What do you think is the most innovative technology that claims has embraced that has helped the industry?

Rick Woollams: I am going to speak to this from a very narrow perspective now – that’s just what’s going on here in my world. For us, it’s the ability to have sort of the virtual workstation at home or at some remote place.

That technology is so powerful in terms of what it lets us do that that is the big thing. We’ve got lots of other stuff going on, but for me that’s the headline and we’re just now starting to scratch the surface of what that can do for us in terms of how we deploy our people and what that does for the physical structure of the claim department and its cost structure. I’m expecting big things out of that.

INTERVIEW HAS BEEN CONDENSED AND EDITED

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Richard Woollams is the Chief Claims Officer of Chartis U.S. (formerly AIG Commercial Insurance), a position he assumed in April of 2008. In this capacity, he oversees the operation of Chartis U.S.’s Primary Claims, P & C Severity Claims, Financial Lines Claims, Claims Resources and Solutions, Commercial Property Claims, Lexington Claims, Aviation Claims, Canadian Claims, Structured Settlements and Claims Operations and Systems organizations. Prior to assuming this role, Rick was the President of P&C Severity Claims for AIG Domestic Claims Inc., where he was responsible for the operations of the Aviation, Canadian, Lexington, Excess, Environmental, Asbestos, Mass Tort, Healthcare, Excess Worker’s Compensation, Pollution Insurance Product (PIP), Risk Finance, AIG CAT Excess and Commercial Property claim departments. He held that position from 2002 to 2008. Previously, Rick served as Senior Vice President, leading the Excess Casualty Claims Department of AIG Technical Services, Inc. (AIGTS) – the predecessor to AIG Domestic Claims – a position he held for over four years.

Prior to joining AIGTS, Rick was the Second Vice President for Strategic Claims at Travelers Property Casualty. He began his career in the insurance industry in 1988 with Travelers, holding a variety of claims positions there before joining AIG Domestic Claims.

Before joining Travelers, Rick was an attorney in private practice in Ohio. He graduated from the Cleveland State University John Marshall School of Law in 1979 and was admitted to the Ohio Bar in November of the same year. Rick was the Chairman of the Claim Committee for the American Excess Insurance Association and is a current member of the Claim Committee for American Nuclear Insurers.

Claim auditing is an essential tool to ensure best practices and timely claim payouts

Obviously the tragedy caused by the Deepwater Horizon accident will be felt for years, if not decades to come. I have previously commented on claims issues surrounding this loss that have yet to hit the industry in my Commentary: Expect Gulf Oil Slick Claims To be Extensive And Impact Multiple Lines of Business. Recently there have been numerous reports about the speed and adequacy of claim payments being made by BP, including a statement by President Obama, that White House will be watching the claims process closely (see White House Statement of June 7, 2010). On June 9, 2010 it was reported that Admiral Thad Allen met with BP to ensure “every legitimate claim is honored and paid in an efficient manner” (see UPI – Allen, BP Meet on Claims Process). And even more recently, the administration is seeking BP to establish a compensation fund so the Federal Government can manage the claims process (see White House: Obama poised to take claims processing away from BP unless it changes system).

Managing this enormous claims undertaking won’t be easy and will be criticized for years to come. Regardless, claims auditing is a way to ensure ongoing claims practices are fair and expeditious.

The enormity of the claims process

While changing daily, there are some reports, BP has processed over 51,000 claims and paid over $62 million (see BP Oil Spill Claims Reach $1.6 Billion). With over 25 claims offices and some 600 claims professionals working to resolve matters, this is one of the largest claims organizaitons operating in this country focused on one event.

From a claims management perspective, handling this many claims is an enormous task that is fraught with potential problems and criticisms. It is a massive undertaking rivaling claims organizations for some of the largest insurance companies for all lines of business. Keep in mind that it all had to be established in a matter of a few short weeks.

While there is no easy way to manage such an onslaught, there are a few things that can be done to make sure best practices and timely compliance is occurring: Internal reviews and audits.

Audit to ensure compliance and look for waste

There are a variety of Audits that should be explored when faced with a large catastrophe situation. A proper audit can look for weaknesses in the operation, provide valuable feedback to improve those weaknesses and further protect against waste and mismanagement. In a large CAT loss situations, such as in the Gulf tragedy, audits should be an essential element of the process.

3 Claim audits that should be done, preferably by a third party not associated with those managing the claims, can include:

Best practices and procedural reviews to ensure there are no delays in payments, the claims staff is appropriately trained, and to identify inefficient processes. When done correctly, and regularly, these reviews can save money and ensure appropriate payments are being processed timely and appropriately.
Anti-fraud assessments are needed to ensure fraud is identified and prevented. The reality is in any catastrophe situation the unscrupulous will come out of the wood works to claim all sorts of false damages. Fraud diverts resources away from legitimate claims and will only create further delays in the claims process. Ensuring fraud is properly detected, and ensuring law enforcement aggressively prosecutes those involved, is essential.
Vendor selection and compliance must be reviewed to ensure appropriate vendors are being hired and “kept honest” to help those who have been damaged. Many vendors will say they can handle certain types of losses or repairs when the reality is they are not staffed nor experienced in the areas they claim to be. A proper vetting process and regular audits of those vendors, is the best way to ensure compliance and prevent waste (see How Do You Effectively Manage A TPA? Speak Up And Be Active!).

Audits performed periodically can ensure ongoing quality claims services, and help to see if claims are being handled consistently from office to office. Successes from one office can then be passed to others, and failures can be used as learning experiences to prevent future problems.

The Claims SPOT

Identifying opportunities is easier when you know how to SPOT the issues

Category Archives: Rick Woollams (Chartis Chief Claims Officer)

Do The Hard Things First And Embrace The Challenges: A Conversation With Chartis (AIG) Chief Claims Officer Rick Woollams