A.O. Smith Streamlines Underwriting, Lowers Cost
Client: A.O. Smith Corporation
Challenge: Streamline processes with up to eight third-party administrators and centralize global risk management information
Solution: CSC’s RISKMASTER software
Results: Lowered insurance costs with improved underwriting data; identified risk trends and saved 15 percent annually; increased staff productivity despite growth; supported company’s acquisition strategy
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A.O. Smith, a leading manufacturer of water heaters and electric motors, faces a wide range of risks and claims including occupational injury and disease cases, premises liability, auto liability, product liability and property exposures. For many years, the company used spreadsheets to tie together information from as many as eight third-party administrators (TPAs). “It was spreadsheet purgatory trying to collect data,” said Scott Towne, corporate risk manager.
After reviewing other software on the market, A.O. Smith chose CSC’s RISKMASTER risk and claims management system. The company chose to let CSC handle the IT support of the system through its managed hosting operations, reducing the need for internal support and allowing the company to move forward quickly with the new software.
Streamlining the Underwriting Process
Immediately after converting to RISKMASTER, A. O. Smith experienced improvements in the time and effort needed to gather risk management data, as well as the integrity and validity of the data. Using reports generated by RISKMASTER, the company was able to provide its insurance brokers with solid underwriting information. “A.O. Smith now ‘owns’ the data,” Towne said. “Having extensive claims history gives us more credibility. The system allows me to reproduce data year after year in one single document. This makes my job and the jobs of our underwriters that much easier.”
“Having the confidence to slice data in different ways — whatever underwriters typically like to see — and knowing the data was the same from slice to slice gave us the confidence we could demonstrate the data was valid. We don’t get any challenging questions anymore. All that’s left are the negotiations.”
Identifying and Eliminating Risk Exposures
A centralized global system lets the company identify emerging trends in manufacturing operations. “If we see trends or developing product liability issues, we can relay that to our management and reduce risks associated with new products, even raw material selection,” Towne said. “If we see compelling loss drivers, we can evaluate and ultimately dispose of those losses.”
A. O. Smith just completed a major risk remediation project in which the company used RISKMASTER to identify negative trends. Through the application of alternative dispute resolution methodologies, the company is projected to save at least 15 percent annually.
Benefiting from an Independent System
One of the benefits of working with CSC is that RISKMASTER is developed independently of systems offered by brokers and TPAs. This allows the company to better focus on both risk and claims.
“There are some very fine systems out there tied to broker systems and insurance company systems,” Towne said. “But I like the independence RISKMASTER gives us, and our relationships with our brokers are intact. And RISKMASTER is reliable. I’ve had experience with other risk management information systems. Inevitably, you have to build in some sort of penalty in the contract for system down time. We’ve had no down time so far with RISKMASTER.”
