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Sony Pictures Entertainment Inc.February 20, 2013 D-R-A-F-T 4
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I. MISSION STATEMENT
PROTECT THE ASSETS OF SONY PICTURES ENTERTAINMENT
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II. RISK MANAGEMENT STRUCTURE
Janel ClausenVice President,
Risk Management
Aaron AuCoordinator
Douglas Hastings,
Claims Manager
Dawn Luehrs Director
Donna TetzlaffDirector
Britianey Barnes Administrator
Kate Calabrese Claims/Systems,
Administrator
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III. Key Risk Management Functions
Risk Identification Understanding SPE and identifying its unique risk characteristics Assessing Film & TV Production Risks
Risk Treatment Working with Internal Partners Developing a policy on risk to optimize risk retention/transfer methods (Finance) Negotiating and implementing insurance risk transfer program (Insurance Companies) Fixed asset protection and catastrophic risk assessment (Finance & Administration) Liability and litigation control (Legal) Employee and public safety, security & crime control (SEHS)
Risk Administration Claims Management for Studio and offsite Productions Maintain insurable asset inventory Allocate risk costs to Studio and each Production Management Reports
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Contract reviews Corporate (200) Productions Domestic and Foreign(1,500 per year)
Coverage Requests (600 per year) Scope, limits, extensions, amendments
Ongoing Cross-Team communication
Outgoing Certificates Reviewed (5,000 per year) Same Day Issuance Notice of Cancellation Compliance
Incoming Certificates Reviewed (600)
Endorsements (3,000 per year)
Policy Renewals Policies reviewed to verify terms and conditions match quotations received Policies summarized updated and maintained
IV. SPE Risk Management: The Day-To-Day
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Risk and Insurance Strategy: SPE Risk Management Achievements – What have we done lately
Casualty, Property and Executive Risk
Financial 4 Year Program Results
Cumulative savings of $2,600,000 Collateral reduction of $900,000 in 2012
Work Comp Medical Bill Review pricing shifted from percentage (25%) of savings to per bill ($12.50). Estimated cost savings in excess $100,000
Major Insurance Claim Settlements Grouper - $15MM Pinewood - $15MM Crime and Employment Claims – Cher Simon $1.4MM
Program Enhancements Workers’ Compensation program moved from ACE to Tokio Marine in 2010 Lowered Workers’ Compensation deductible from $750K to $500K Negotiated Workers’ Compensation Aggregate Deductible Implemented audit swing provisions for General and Auto Liability Expanded CA Earthquake Coverage from $70MM to $100MM
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Risk and Insurance Strategy: Sampling of SPE Risk Management Achievements
Program Enhancements (cont.) Expanded Property Program Loss Limit from $400MM to $500MM Multimedia/Technology policy limit was increased from $50MM to $80MM Cyber Liability program was separated from the Multimedia/Technology program and
now has a separate $20MM limit with expanded coverage Cyber Liability amended to provide coverage for the care, custody and control of Third
Party Intellectual Property Assets Analysis of Who is An Insured wording to address the LLC concerns Terrorism Coverage - Expanded Policy Form to include Coverage For Political Violence;
Secured Coverage For $193MM International Office Schedule at No Charge; Expanded Policy To Provide $1MM in Coverage For Previously Excluded Territories
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Risk and Insurance Strategy: Sampling of SPE Risk Management Achievements
Program Enhancements (cont.) Expanding relationship with Tokio Marine on P/C Coverages Regular testing of Broker Offerings with RFP's in 2007 and 2011 Maintaining experienced staff while developing new staff assuring quality service continuity
with regular staff evaluations and goal setting Unique claim settlements (Pinewood property claim, certain E&O claims, 9/11 Civil Authority) Implementation of Risk Management Information System (RMIS) Reduction of Cost of Risk over the last few years despite upward cost pressure from insurers
Administrative
Oversee timely and thorough responses to requests for production specific requests: Production specific endorsements Stand-alone policies (OCP’s, Railroad Protective etc.) Specialty certificates of insurance
Broker assists in contracts reviews to ensure SPE compliance with stated insurance / indemnity provisions
Broker administer stand-alone FearNet. Increased Umbrella limit from $1MM to $5MM
Policy wording has and continues to be amended to fit SPE’s Risk Profile
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SPE Business Partners & Resources
· Finance · Security · Adjusters· Treasury · Real Estate · Artists· Accounting · Procurement · Attorneys· Tax · Int’l Admin & Finance · Physicians/Nurses· People & Organization · Distribution · Rehab Counselors· Labor Relations · Events · Studio Risk Managers· Legal · Promotions/Marketing · Ins Brokers & Carriers· Litigation · Transportation · Business Managers· Business Affairs · Production Offices · Appraisers· Facilities Admin · Post Production · Vendors/Contractors/ · Studio Operations · SEL/SME Risk Mgmt Consultants· Medical · Safety/Environmental · Investigators· Digital Group · Worldwide Production · Muni/Govt Agencies
Home Entertainment · Finance Companies
Internal External
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Procurement Legal
Studio Operations Studio Facilities – East & West Coast
Real Estate Corporate Safety/Security & Environmental Affairs
Information Security Compliance
Corporate Communications Information Technology
EIS Infrastructure Marketing & Publicity for MPG/TV and HE
Digital Group – SPI, SPII, SPA, SP Technology Production Acquisitions for Sony Pictures Classis, Worldwide
Corporate Acquisitions and Mergers Corporate Events
Sony Sister Companies involved with SPE or its subs Consultant Agreements
Medical Department People & Organization
Transportation
SPE Business Partners & Resources
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SPE - A Specialized Risk Profile
Studio Property Assets Fire and Earthquake Business Interruption
Off-Site Production Risks International Marine Aviation
Intellectual Property Risks Media Cyber/Technology
Mergers, Acquisitions & Divestitures Claim legacy (e.g. Grouper)
Employee and Third Party Safety
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Risk and Insurance Total Cost of Risk – Fiscal Year 2014 UPDATED WITH CURRENT FIGURES-DRAFT PER ROGER 2/19/13
Premiums: $10.5 Million
(includes all U.S./Canada and Master International, excludes Production Package and Local Foreign)
Retained Losses: $4.2 - $5.2 Million Estimated
(includes: auto, general liability, workers compensation, errors & omissions/
media and cyber but excludes production)
Exposures Revenue: $9 Billion Property Assets (Total Insured Values): $1.92 Billion
(Replacement Cost inc. Bus. Intrp + Extra Exp.) Workers Compensation Payroll (subject payroll): $722.3 Million Production Cost: $900 + Million
(TV, MP, Home Entertainment, Digital and Studio)
Protection 16 Major Lines of Coverage Over 50 Underwriters providing over 70 Policies plus numerous local and
international policies for non-US production offices
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Program Structure – Major Coverage Limits
$80M
$10M
Program Structure – Major Coverage Limits
Umbrella & Excess Liability
Up to $150m xs of Primary
$1M $1M GL $2MAL $3M
$1M
$2M $10M P $50KEQ 5% $50K $50K $50K
$5M$15M
$10M
$15M
Various
$150M
$5K
$50M
P$
50
0M
$20M
$250KGL $100K 500KAL $25K
CA
EQ
$ 7
0M
$100M
$150M
SIR/Deductible
$75K
$10M
$1M$25M $5K
$50M
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SPE Risk ManagementInsurance Broker Service Deliverables
Risk Assessment – conduct annual review of SPE’s risk profile, highlighting changes which could impact coverage requirements.
Quantitative Analysis – assess recent and historical loss trends. Emphasize improvements which can result in deductible / structure improvements
Marketing – annual marketing is undertaken to identify best-in-class insurers capable of responding to the SPE Risk Management Standards.
Program Negotiation – negotiate optimal program structure with cost effective balance between deductibles and premiums. Program must provide the most comprehensive coverage with the flexibility to respond quickly to SPE’s inherent and contractual exposures.
Day to Day Administration – timely and accurate responses to SPE’s unique day to day requirements.
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SPE Risk ManagementInsurance Broker Service Deliverables
Review, analyze and negotiate claim service pricing and agreements with Third Party Administrator and carriers
Assist Productions in claim reporting and in resolving difficult or unusual claims
Coordinate bi-annual claims review with ESIS and with Tokio Marine
Review statistical loss runs and claim status on legacy CNA and current Chartis Insurance Services programs
Review claim reserves and evaluate the accuracy of reserve levels on casualty programs
Procure annual claim data files for actuary utilization and loss forecasting
Monitor claim status and disposition plans on legacy programs
Evaluate bi-annual Workers' Compensation Trend & Loss Analysis reports
Review carrier position on any denied claims for challenge to coverage applications
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SPE Risk Management Insurance Company Relationships Identify insurance company partners that will provide long term stability
Production Package market is limited and Fireman’s Fund has been identified as a preferred partner
Tokio Marine has been a preferred partner since the Sony acquisition and participates on major portions of the property & casualty programs
Hiscox has emerged as a strategic partner for the specialized Media Liability risks of SPE
Insurance Company providers are continually assessed for their financial stability and a long term commitment to the Entertainment Industry
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M A R K E T I N G S P E ’s : P r o p e r t y, C a s u a l t y, E x e c u t i v e / P r o f e s s i o n a l R i s k s
Working with our Risk Management Partners, establish desired program options, limits, retentions, structure, pricing and terms
Assess market relations and leverage existing partnerships and facilitate new competitive alliances
Establish a Renewal Timeline
Build the SPE Marketing and Risk Story
Deliver a best-in-class submission
Drive the market through knowledge, leverage and competition
Direct interaction with underwriters to tell “The SPE Story”
Update Insurer Security Status
Risk Management Insurance Program Development
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Risk Management and Insurance Strategy
Central to our role as SPE’s Risk Management Department is the rigorous process utilized to assess SPE’s exposure to risk on a long term strategic basis and day-to-day project basis.
Inherent to anticipating and proactively addressing SPE’s risk exposures, we:
Understand SPE’s objectives in designing and implementing a superior insurance program, using specialized professional resources as needed, in formulating cost efficient risk management and insurance solutions.
Formulate action plans to leverage SPE’s strengths and opportunities of SPE’s risk techniques relative to overall financial and operational conditions, the business environment as well as insurance market conditions.
In partnership with External Risk Management Professionals, we continually identify / evaluate opportunities and threats which arise and implement processes and procedures to address them.