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Self Insurers of South Australia
Introducing Gallagher Bassett
Who is GB ?
Arthur J. Gallagher & Co
Gallagher Bassett Services Inc.
Gallagher Bassett Australia
IMA Gallagher Bassett
Brief History - Who is AJG ?
Post WW1- 1919
No brokers - insurance sold by agents
AJG a bookkeeper at an insurance agent
Success at door knocking
Resigned 25 Aug 1927
Focussed on commercial lines
Insurance readily available – ample labour pool
No financial incentive for risk management
The Beginnings of Risk Management
AJG recognised an opportunity for businesses
Reduced losses = time and productivity savings
Hannah trucking = driver incentive rewards and penalties.
Bonus for driving well, penalties for chargeable accidents or
unsafe driving
Expanded to dairies, other transport companies
Truck safety focus as a consequence
The Beginnings of Self Insurance
1938 - AJG co-designed the Retrospective Rating Program of the
Hartford Group
Gave customers credit for containing their losses
Premium reflects insured’s experience – 18 month review - 12
month review thereafter
The first step towards self insurance and the alternative market
Beginnings not only of self insurance, but of risk management
services
The Beginnings of Self Insurance
Further steps towards SI
1938 wrote the first large deductible fire policy in Chicago for the
Bowman Dairy Co.
Later, AJG established self insurance plan for Chicago archdiocese
Large deductibles and experience rating are now common practice
The Beginnings of Self Insurance
1957 - AJG wins Beatrice Foods account
premiums based on exposure to loss, irrespective of the actual losses
Beatrice keen to establish their own ins company to reduce costs
At this time some comp SI but no commercial SI
The Beginnings of Self Insurance
Need a claims system and claims managers to be a successful SI
Sterling Bassett claims adjuster at the General Adjusting Bureau.
A friend and neighbour who caught the train into Chicago
“Gallagher Bassett” November 10 1962
March 1 1963, Beatrice becomes a self insurer
The Beginnings of Self Insurance
Adjusters and in house lawyers recruited
Developed a claims management system
Created a insurance company style operation
Became very unpopular with other insurers
Self insurance program for the archdiocese to be self insured
Millions saved in insurance costs
Recent Gallagher Bassett Statistics
660,000 claims per annum
3400 employees
RISX-FACS®
80% of global claim volume = compensation claims
15,000 approved physios, chiros, occ therapists in 6000 locations
across the US
Operations in US, UK, Canada, Australia
Recent Arthur J. Gallagher & Co. Statistics
2006 revenue $US 1.5 bill
8700 employees
Virtually debt free
Tangible net worth $US 334 mill
IMAGB
15 years operational presence SA
120 years experience in the management team
GB’s WorkCover tender application
IMA an ideal fit with GB’s claims management background
Support for IMA’s core claims, OH&S and other consulting service
Applying the Knowledge
Recent Gallagher Bassett Assignments
Examples of GB assignments
Mercury energy
NZ Earthquake Commission
Victorian workers compensation
NSW workers compensation
HIH Claim Support Limited
Large domestic insurer
Mercury energy
19 Feb 1998 Auckland CBD loses power supply
Damage to main power supply infrastructure
GB team of 30 established within 10 days
10,000 claims settled in 3 months
Not one class action commenced
Entire project settled for less than once third of the government’s
actuarial assessment.
NZ Earthquake Commission
Natural Disaster Fund approx $5.4 bill
60 Year history
Approx 7000 claims per annum
Operates from GB’s Brisbane office
Business continuity considerations
NZ time and procedures
Client branded service
Victorian workers compensation
22 April 2002 – license granted – 14 staff
Operational 1 July 2002 with 90 staff
9000 “active” claims – unmatched mail
18000 employers
11.7% market share
Currently approx 2700 open claims
180 staff
Oct 2006 – actuarial release of $165 mill
NSW workers compensation
October 2005 - license granted
5% market share premium - 10% market share policies
Approx 30,000 employers -32,791 policies
4660 long tail claims received
Tail now at 2460 – reduction of 2200
Approx 190 staff
HIH Claim Support Limited
Australia’s largest corporate collapse
ICA intervention - entitlement scheme
Tender in 2004 - GB successful
KPI – 60 per month – GB achieved 127 per month
Legal cost component reduction
Internal mediation capability
Fee saved prior to the start of the contract
Large domestic insurer
Portfolio A 12000 claims
reserves 3.8 msettlements 1.0 m
savings 2.8 m
Portfolio B 8500 claims
reserves 5.3 msettlements 0.9 m
savings 4.4 m
Total Savings 7.2 m
The Third Portfolio
Future Direction
Steady, considered growth
Continue the focus on working with underwriters and brokers
Government sector
New Zealand – ACC
Self Insurers
South Australia and Queensland jurisdictions
