Steely Resolve Jaime Vigil Makes Sure His Customers Are Part of Every Step at Republic Steel

Fall/Winter 2012-13 Fedeli

FactorBuilding Relationships, Solving Problems, Adding Value & Networking Steely resolve Jaime Vigil makes sure his customers are part of every step at Republic Steel

plus How the Health Reform Decision Affects Your Business

Dr. Jerry Sue Thornton Talks Leadership, Tri-C Fedelifall/winter 2012-13 Building Relationships, SolvingFactor Problems, Adding Value & Networking

Dr. Jerry Sue Jaime Vigil, Thornton, president and president of CEO of Republic Cuyahoga Steel Community College

15 10 features

8 health care reform 18 VOLUNTARY BENEFITS A turning point for employers Helping employers shape voluntary benefits strategies

10 steely resolve 24 workers’ compensation Why the president and CEO of Republic Steel A challenging road lies ahead as premium rates would rather be on the front lines increase and availability of coverage declines

15 LEADING WITH AN OPEN EAR Jerry Sue Thornton focuses on communication and collaboration to grow Tri-C and the region

2 u Fedeli Factor Tim Pistell, former CFO of Parker Hannifin, Mal Mixon, chairman of the board and CEO of Invacare, and Umberto Fedeli

John Peca, Mayor Frank Jackson, Valarie McCall and Mayor Rudolph Giuliani Frankie Avalon 7 and Nick Fedeli 27 departments How to reach us:

4 relationship builder Know where you’re going and people will follow you

6 Who’s up for lunch High-profile leaders connect with the Cleveland business community at The Fedeli Group Phone: (216) 328-8080 / Toll Free: (800) 837-7191 21 Bench Strength: Rob Snyder Crowne Centre, 5005 Rockside Road, Fifth Floor Independence, OH 44131 Environmental Risk Management Specialist Rob Snyder [email protected] specializes in insurance and risk management

23 Bench Strength: nathalie Lacouture Making life a little easier for her clients is what drives Published by Smart Business Content Marketing, Nathalie Lacouture in her role as the director 835 Sharon Drive, Suite 200, Westlake, OH 44145. (440) 250-7000 of voluntary benefits at The Fedeli Group www.smartbusinesscontent.com

26 client stewardship Publisher: Michael Marzec A disciplined approach to client engagement Editor: Todd Shryock Associate Editors: Danielle Toth, Jessica Hanna, Erik Cassano 27 In the kitchen: with the fedeli family Art Director: Stacy Vickroy The Fedeli Group serves up authentic Italian cuisine Project Manager: Chris Rich Cover photography: Jeff Downie

www.thefedeligroup.com u 3 Relationship Builder: Umberto Fedeli

CEO Talk: Lessons in life and business

hen I was asked recently to deliver a Am I making a contribution? Am I going above and college commencement address, a friend beyond? It’s underpromising and overdelivering. I also think of mine, Leslie Ungar, suggested I reflect part of life is managing expectations, so you don’t want to on my more than 30 years of business overpromise and then underdeliver. experience and talk about the 10 lessons No. 3: Solving problems. People determine their problems. WI would like to share with graduates about business and life. No one lives in a vacuum, and people bring business I have had the pleasure of giving many talks to business problems home. I don’t have to have all the answers. It is firms on relationships and the power of networking, but this impossible to. Once my son, Nick, asked, “What is the was the first time I had given this talk. The lessons are what difference between going to school and being in the business I wish I would have known when I graduated from college, world?” I said, “Well, in school, you have to be good at what and I would like to share those. you do. And in business, you have to know who is good at No.1: There is nothing more important in life than what they do.” I don’t have to be good at everything. All of relationships. Relationships could be with family, friends, my successes, all of my failures, all of my happiness and all of faith or community. On their deathbed, the thing people my joys have to do with one three letter word W-H-O. It’s reflect on is relationships. If it’s that important at the end of always in the who – who you marry, who you hire, who you life, it should be a priority during your life. invest in, who you hang around. When the who isn’t right, This brings me to the law of reciprocity: You can get it’s never right. anything you want if you help other people get what they No. 4: 80 percent of success is choosing the right people. To be want. So if you want love, give it. If you want a friend, be world class, you have to have the right people in the right a friend. place. You have to engage your constituents, customers No. 2: It’s always important to add value. So no matter and coworkers. If you can get people emotionally involved what you’re doing, ask yourself, am I making a difference? and engage them, you can move mountains. The point is nothing really starts until somebody is enthusiastic. Even if they may not agree, if they think you are sincere, and if you really believe, success is yours. No. 5: We are not all called to do extraordinary things, but “I think many times we miss everybody can do ordinary things extraordinarily. This is opportunities every day something Mother Teresa said. I think many times people say, “When I get to be very successful, I can do this or this.” where we can do ordinary You’re not going to be the person who goes to the moon. things extraordinarily.” You may not be the person who cures cancer. You may not be the most successful business person. I think many times we miss opportunities every day where we can do ordinary

4 u Fedeli Factor things extraordinarily. It is important for all of us to be the best at what we can do and to be the best version of ourselves. In life before you figure what you want to do, you “It’s always in the who – who you have to figure out who you want to be! marry, who you hire, who you invest No. 6: Management consultant Peter Drucker once wrote, “Whenever anything is being accomplished, it is being done, in, who you hang around. When the I have learned, by a monomaniac with a mission.” At some who isn’t right, it’s never right.” point, you have to be focused and have the drive, work ethic, energy and will to spend the amount of time it takes to be the best at what you do. Having said that, you also have to simultaneously balance your life to be a peak performer. being proactive, that we should all adhere to. (That is a talk Dr. Gerald D. Bell, founder of the Bell Leadership for another time!) Institute, says that in order to be a peak performer, you No. 9: Even though there are many lessons in each of these, need to balance these major aspects of your life – family and the Pareto Principle (80 percent of your business comes from 20 personal, health, financial, career, spiritual, happy/fun. percent of your customers) works with just about everything No. 7: If you don’t know where you are going and what in life – it’s a small percentage of things that we need to you’re doing, how am I going to follow you? We have to have a focus on that is going to make the difference. Understanding vision, goals, strategy and action. We have to able to answer the Pareto Principle is going to focus us on how to get these questions: What am I doing? Why am I doing this? involved with the small percentage of things that can really How, when, and with whom? move the needle. It’s important to look at your goals and write them down. No. 10: At the end of the day, the lesson is not about a Once you know the goal and determine what the action comparison. It’s about a contribution. It’s not about comparing plans are, people will follow you if they think you know success, accomplishments or philanthropic endeavors – it’s what you are doing and where you are going. really about making contributions. Have you gone from No: 8. Life is constantly learning how to learn and “success to significance?” Have you made an impact? Have continuing to learn as much as you can in areas you are you made a difference? interested in or need to know. Learning is a lifelong experience. It’s not just something that we are going to do today and say we’re done. It’s something we are constantly going to try to improve. If you want to improve, you have to change your habits. If you don’t change your habits, you cannot achieve what you’re trying to accomplish. There are Umberto P. Fedeli, a number of disciplines in life, such as staying motivated and President and CEO of The Fedeli Group

www.thefedeligroup.com u 5 Who’s Up For Lunch? Talking at the Table High-profile leaders connect with the Cleveland business community at The Fedeli Group

You never know who you’ll meet at The Fedeli Group, where civic, government and business leaders come to dine and interact with clients and friends of the firm. CEO Umberto Fedeli says he enjoys bringing people together to talk politics and business and giving them an opportunity to share their concerns with influential leaders and to network (exchange information, ideas, and resources).

Event Chairman Umberto Fedeli helps fundraise for the Cleveland Clinic Children’s Hospital’s 2012 HeartThrob Ball,

featuring Kool & The Gang at Cleveland Public Auditorium. Past featured artists include Kenny Loggins, The Beach Boys and The Pointer Sisters. C ourtes y of M alt z useum of J ewish H eritage

Umberto Fedeli, Lorraine Dodero and Sam Miller participate in a panel discussion about Pope John Paul II at the Maltz Museum of Jewish Heritage.

C ourtes y of le v eland linic M edical A rt and P hotograph y

Dr. Toby Cosgrove, Norma Lerner, and Umberto Fedeli at The HeartThrob Ball. Bernie Kosar and Umberto Fedeli welcome the new owner of The Cleveland Browns, Jimmy Haslam.

6 u Fedeli Factor Who’s Up For Lunch?

Nick Fedeli, Governor Mitt Romney, Umberto Fedeli, Joe Miceli and Senator Rob Portman at Mayor Rudolph Giuliani having lunch in the Fedeli dining room. Umberto’s home.

American actor, singer, playwright, and former teen idol Frankie Avalon is a friend of Umberto. Here he is with John Peca, Cleveland Mayor Frank Jackson, Valarie McCall and Umberto at Cuyahoga U.S. Senate candidate Josh Mandel, Umberto Fedeli, Nick Fedeli Community College Foundation’s “A Cool Evening and Bernie Kosar welcome New Jersey Governor Chris Christie for Scholarships” at Pierre’s Ice Cream Company. to Umberto’s home.

www.thefedeligroup.com u 7 Health Care: Reform

Health Care Reform

A Turning Point for Employers By Andre J. Lukez, Chief Operating Officer, The Fedeli Group

n June 28th, 2012, the businesses to buy health insurance plans on Supreme Court of the United a comparison basis. Another purpose of the States issued its opinion on exchange is to administer the application the constitutionality of two of premium subsidies in the form of tax components of the Affordable credits (for those who have federal tax OCare Act (ACA), the individual mandate liability) or cost-sharing subsidies (for and Medicaid expansion. As has been those who have no federal tax liability). widely reported, the individual mandate These tax credits or cost-sharing subsidies was upheld, while the forced expansion of will limit the amount an individual or Medicaid by the federal government to the family will have to pay toward health states was struck down. insurance premiums. The range that a The Fedeli Group has written a family will pay toward health coverage will white paper on the impact to employers be from 2 percent of income at 100 percent based on what we know today. The full of the federal poverty level to 9.5 percent version of this paper can be found at of income for those at 400 percent of the www.thefedeligroup.com. This is an federal poverty level or above. abbreviated version of that document. Andre Lukez Based on household income thresholds set at 400 percent of the poverty level, it Impact to Date is estimated that more than 50 percent of To date, provisions implemented under American households will be eligible for ACA have had a minor impact on the a combination of these federal government some form of tax credit or subsidy. operation of employer health plans. In standards will be taxed. Health insurance premiums that a family fact, many of the provisions have been well The argument presented by supporters of will pay toward coverage will be based on a received, certainly by the voting public. It ACA is that individuals who fail to secure so-called Silver Qualified Health Plan. The is now law that children up to the age of health care coverage will ultimately use the Silver Plan is based on an actuarial value of 26 can stay on a parent’s health plan, that system through either a government-funded 70 percent of the “essential benefit package” there are no lifetime benefit limits, that program or uncompensated care. as described under the law. pre-existing conditions for minors (those Government participation in the health The essential benefit package is a listing under 19 years of age) have been eliminated care economy has been increasing since the of required medical and prescription drug and that preventive care services have no establishment of Medicare and Medicaid services, along with the maximum out-of- employee cost-share in a health plan. in 1965. Today, more than 50 percent of pocket costs. Maximum out-of-pocket costs health care spending is funded through a are established using the Health Savings government program. The brutal reality is Account plan limits of $5,950 per individual Participate or Be Taxed – and $11,900 per family from 2010 (indexed The Essence of the Law that the federal government has a greater impact on the health care system than most for inflation). However, for those with Perhaps the simplest way to look at ACA is would believe. The government is now family incomes below 400 percent of the that it is a “participate or be taxed” approach making employers its full partner whether federal poverty level, the amount of out-of- to health care financing for those employers they want to be or not. pocket maximum expense is reduced by up with 50 or more full-time employees. to two-thirds. Employers who offer health plans with Employers that offer health insurance “minimum” coverage standards (essential The Role of Exchanges coverage to their employees (outside an benefits) and “acceptable” employee Under the law, the federal government or, exchange) will also be required to meet the contributions based on Modified Adjusted at their option, states, will set up health out-of-pocket requirements described. If Gross Income (MAGI) avoid paying insurance exchanges. The purpose of the not, they will pay an initial $3,000 annual additional direct taxes to the federal health insurance exchange is to provide tax for each employee who fails to meet the government. Those that fail to meet all or a mechanism for individuals and small requirement.

8 u Fedeli Factor Maximum Allowed Out-of-Pocket Costs Based on Income – Family of Four The Role of the Employer Under the law, employers are allowed to A B C D E purchase health insurance directly from Federal 2012 Income Maximum Estimated Average Maximum insurers, self-fund their health benefits or Poverty Thresholds Annual Family Premium Premium Annual Family Level Premium Subsidy or Norm** Out of Pocket not offer a health plan. An employer faces (MAGI)* Tax Credit the following choices and consequences (2 % to 9.5% - beginning January 1, 2014: sliding scale) • Offer a health plan with minimum 100% $23,050 $441 $13,657 $14,098 $3,966 coverage standards (essential benefits) and is “affordable” 133% $30,656 $587 $13,511 $14,098 $3,966 – No Tax 250% $57,625 $4,438 $9,660 $14,098 $5,950 • Offer a plan that is not “affordable” – Tax 400% $92,200 $8,379 $5,719 $14,098 $11,900 • Offer a plan that is less than * MAGI – Modified Adjusted Gross Income, a new definition under ACA. See the white paper on The Fedeli Group 60 percent of the actuarial value website for a detailed definition. ** Kaiser Family Foundation, 2011 norm for employers with 1-199 employees. of the minimum coverage standards (essential benefits) – Tax allow this practice. By specifying required coverage amounts • Offer no health insurance Under the law, employers are now through either the employer “participate or plan – Tax allowed to differentiate “employee only be taxed” rules or the individual mandate, premiums” by up to 30 percent based the federal government is attempting Notes: For the second and third items above, on participation in bona fide wellness to prevent “leakage” from the health premium contributions from the employee programs. The wellness program must offer insurance system. cannot exceed a certain percentage of income a reasonable chance of improving health or based on a sliding scale that ranges from 2 preventing disease. Next Steps for Employers The underwriting requirements imposed percent to 9.5 percent. If these requirements are With the passage of ACA and the Supreme under ACA change the very essence of how not met, a tax is triggered. The tax calculation Court ruling, many believe that most insurers will retain and gain customers. is $2,000 per full-time employee or $3,000 per employers will eliminate their employee Some have commented that insurers will be full-time employee who receives a tax credit or health insurance programs. But it is more moving from the business of “risk selection” premium subsidy, whichever is less. likely that there will be a mixed response as to the business of “risk management.” In calculating employer tax liability, the first the course of action will vary substantially 30 full-time employees are removed from the by type of employer. calculation. Also, part-time employees (those The Individual Mandate The Supreme Court ruling of June 28 working fewer than 30 hours per week) are The Supreme Court’s decision to uphold increases the probability that, through a excluded for purposes of any tax calculations. the individual mandate means that every political process, Congress could dismantle American must demonstrate that he or parts of the law using the “taxing provisions” Health Coverage she has health insurance, or pay a tax that cited by Chief Justice John Roberts. Underwriting Requirements in 2014 will range from $95 per adult Regardless of the political process, we Under ACA, insurance companies to $285 per family. The tax will increase believe that now is the time to carefully are severely restricted in how they can substantially in both 2015 and 2016. By evaluate your situation. Enough is known underwrite health plans. Insurers cannot 2016, the tax will be $695 per adult and about the law that a strategic discussion and deny or underwrite coverage because of $2,085 for a family, or 2.5 percent of planning process are warranted. health status or health condition. income, whichever is greater. After 2016, The Fedeli Group is prepared to assist For the small-group market (defined the tax increases annually based on the Cost you with a health care reform assessment as as fewer than 100 full-time employees in of Living Index. part of our ongoing commitment to client 2016), premiums will be based on adjusted The individual mandate provisions of the stewardship. This assessment includes an community rating rules, eliminating current law require that individuals have a health analysis of wages, type of work forces, benefit practices of requiring individual or employer insurance plan that is at least at the “bronze plan designs, demographics, type of health health statements. level.” The Bronze Level Plan is at 60 plan funding, competition for talent and For large group customers (100 full-time percent of the actuarial value of the essential benefit philosophy. Ultimately, these factors, employees and above), overall premium benefits package. Keep in mind that subsidies combined with an analysis of the tax impact rates are generally based on historical and tax credits under the exchange rules are to your organization, will help you decide on claims experience. The law continues to based on a 70 percent actuarial value. the direction you must take. u

www.thefedeligroup.com u 9 10 u Fedeli Factor Steely Resolve // cover story

Steely resolve Jaime Vigil makes sure his customers are part of every step at Republic Steel By Mark Scott

aime Vigil tries to spend as little of quality steel is it’s like a made-to-measure his time as possible in conference suit that you buy,” Vigil says. “We take rooms. The president and CEO of the time to understand the customers’ JRepublic Steel would much rather requirements and their very specific needs be out on the front lines with his employees for the performance of the product. Our where the products are made. engineers spend long hours with our “He’s able to captivate large groups of customers’ engineers, and together, we come people,” says Francesco DiGiannantonio, up with a recipe that meets their needs. CFO at Republic Steel, speaking about We’ve been able to execute on those recipes Vigil. “He can capture them with his over and over again.” thoughts and his directives and then, in a Vigil is proud of the strong lines of moment, be able to get down to the details communication that have been built and walk the shop floor to explain it to throughout the years with employees, everyone. He’s just inspiring.” with customers and with partners such as Vigil and DiGiannantonio are united in The Fedeli Group to consistently exceed their belief that employee engagement is vital expectations in every way. to the success of the business. Despite what “We take our customers’ voices back to you may think, steel is a complex product the shop, and then we make their steel,” that has a wide variety of properties. You may Vigil says. “That is the key for us; it drives think that if you’ve seen one steel bar, you’ve our strategy and our business. If we started seen them all, but to Vigil and his team, to deviate from customer needs, we would nothing could be further from the truth. It’s lose touch and potentially lose our main a material that must be customized in every differentiator. So we are very careful to case to exacting specifications. always have the voice of the customer in “The different thing about special bar everything we do.” photo : jeff downie

www.thefedeligroup.com u 11 cover story // Steely Resolve photo : jeff downie

It’s a personal attention to detail that Vigil feels the same way. locally. We’re focused on delivery and that’s hasn’t gone unnoticed by his peers and his “The Fedeli Group and Nick Fedeli one of the common denominators between friends, such as Nicholas U. Fedeli, vice represent all of the values that we represent, The Fedeli Group and Republic Steel.” president of The Fedeli Group. and they are always willing to go the extra As Vigil looks at the fruits of all of “Jaime is a pioneer in leading Republic step,” Vigil says. this dedication to service delivery, he is Steel,” Fedeli says. “He has surrounded The result of this hard work and particularly proud of the relationships himself with a very strong and competent collaboration is a collection of hundreds Republic has built with Japanese auto team with a shared vision.” of years of combined experience at Vigil’s manufacturers working in the United States, Fedeli and Vigil work together, despite disposal that allows him and his company which historically have remained close with the difference in what each business does, to convey a sense of true expertise to assure steel producers in Japan. to stay ahead of changes and keep their customers their order is in good hands. “The Japanese companies are used to a respective businesses poised for success. “Fedeli brings phenomenal value via very specific quality they receive from their “Any time you can build a strong the service they offer us and the value suppliers back in Japan,” Vigil says. “For business relationship on the foundation of proposition of being able to manage and many years, they preferred importing steel a personal relationship, it is really special,” maintain costs,” says DiGiannantonio. “The from Japan to keep the same consistent Fedeli says. “We share the same core values way I like to think about it is that we’re a quality of their steel. We’ve learned their in life and in business.” global-minded organization that acts very culture and practices and have been able to

12 u Fedeli Factor “Fedeli brings phenomenal value via the service they offer us and the value proposition of being able to manage and maintain costs.” – Francesco DiGiannantonio CFO at Republic Steel

consistently replicate the quality they get in hurt too badly if a particular industry goes automotive was bad one year, we had the Japan. We’ve been able to represent them into a slump. other three markets that we served in a very locally, saving them the transportation costs The Fedeli Group was instrumental significant manner, as well.” and other logistical issues.” in helping with both strategies, says The commitment to fiscal responsibility, Republic’s focus on quality means it is DiGiannantonio. customer diversity and staying out of not the cheapest steel supplier out there, Fedeli assesses enterprise risk debt can be tied back to Republic’s parent but that isn’t the company’s goal. Vigil is management from the strategic level company, Industrias CH, S.A de C.V., confident customers appreciate the value of down to the tactical transactions of which bought the steelmaker in 2005. a product that is built with so much thought managing premiums and claims. It’s that “When you have debt, you have so many and care. comprehensive level of service and frequent variables that you need to deal with, and “We try to sell a package,” Vigil says. client communication that makes Fedeli it takes your focus away from running the “We want our customers to sleep at night stand out, says DiGiannantonio. business,” Vigil says. knowing the product they are buying This isn’t to suggest that Republic is every day from Republic Steel will give immune to hard times; diversification Committed to Northeast Ohio them no problems and will keep the and partnership with Fedeli just put the Running the business is something Vigil is relationship with their customers in the company in a better position to more constantly trying to perfect. He says there best condition.” effectively deal with a challenge and quickly is always room for improvement in terms bounce back. of relationships with Republic’s customers. Preparation helps “We’ve never tied ourselves to a specific The company also continues to reinvest in Republic stay on top market,” Vigil says. “We get a portion of its infrastructure to make sure employees our business from automotive, but we also Midway through 2008, it was hard to have top-quality equipment to do their jobs. get business from construction, energy and imagine things could get any better at Vigil wants people to know Republic capital goods. That’s helped us to be a lot Republic Steel. more flexible with the business cycles. If Continued on next page “We were having what many people called the best year in the history of the steel industry,” Vigil says. Republic’s special bar quality steel was in high demand, and the sky was the limit. Fast facts about steel And then, suddenly, it all changed. “A couple months later, we were all saying • More than 80 million tons of steel are recycled each year in North this was the worst we had seen it,” Vigil says. America. For every ton of steel recycled, 2,500 pounds of iron ore, 1,400 “That change was very difficult to react to.” pounds of coal and 120 pounds of limestone are conserved. Republic The global recession had hit, and businesses everywhere were forced to Steel uses about 1 million net tons of recycled steel in an average year. slash costs and lay off employees. Republic • Steel products can be recycled repeatedly without loss of strength. had to reduce headcount, too, but the company endured thanks to two risk- • A total of 83,000 tons of steel was needed for the Golden Gate Bridge in management strategies that were already San Francisco. firmly in place when the downturn began. • About 75 percent of all major appliances comprise steel. One is Republic’s commitment to keep external debt off its balance sheet, and Source: American Iron and Steel Institute, www.steel.org the other is the diversity of its customers, which keeps the company from getting

www.thefedeligroup.com u 13 cover story // Steely Resolve

Umberto Steel has strong roots in Northeast Ohio Fedeli, Right and only has plans to strengthen those Honorable roots in the years ahead. Tony Blair, “We are very committed to Northeast Nick Fedeli Ohio,” he says. “This is where our origins and Jaime Vigil are as a company. We believe the strategic at Cuyahoga locations we have here will serve us for ages Community to come in helping us achieve the growth College we expect from our company.” The Fedeli Foundation’s Group will be a big part of that future and Presidential the growth Republic hopes to achieve. Scholarship “They have a great reputation in this Luncheon. market and very strong relationships,” DiGiannantonio says. “We want to be photo : courtes y T ri -C viewed as world class and best in class, and aligning ourselves with a firm like Fedeli is regional economy,” Vigil says. and Vigil is confident it will be well worth critical for us.” Since 2005, Republic has invested the investment. Vigil says the company is doing nearly $130 million in new equipment and “Our customers need additional product,” whatever it can to build on its successful processes in Northeast Ohio. Next on the Vigil says. “We believe the economy and past and ensure a healthy future for both agenda is a new furnace at the Lorain Hot markets we serve will be requiring that the company and the region. This includes Rolled Bar Plant. capacity in the next two years. The energy sponsorships with The Cleveland Clinic, When the work is done in mid-2013, the market is developing, and we expect the the Rock & Roll Hall of Fame, Flashes facility will produce 1 million tons of steel automotive industry to continue to grow. of Hope and other civic organizations in and employ 450 people, most of whom will All those things are very exciting, and it’s Northeast Ohio. be new employees. very exciting for Republic.” “As an employer of thousands of “That million tons will, in fact, almost Even more exciting for Vigil, the new employees and more to come, we want double the output that we have right now,” furnace will be built without taking on to be part of the economic engine on Vigil says. any debt. a business-to-business level that is Customer demand for Republic’s steel “It makes me very proud to continue to contributing billions of dollars to the was the impetus behind the Lorain project, build on a strategy that has worked so well for our group,” he says. So how does Republic do it? At a time when so many businesses are struggling A long and proud history to make ends meet, how does this steel company remake a plant and hire 450 Republic Steel was established in September 2011 when the former people without taking on any debt? Republic Engineered Products changed its name to reflect its rich history Vigil says it comes down to following and forward-thinking approach. a low-risk strategy in which the company Industrias CH, S.A de C.V., a rapidly growing steel producer and grows with its own cash flow and doesn’t processor based in Mexico City, acquired the company in July 2005. take unnecessary chances. Republic is a subsidiary of Grupo Simec, Guadalajara, Mexico, of which ICH “We’re always in control of our operations,” Vigil says. “We don’t have is the majority owner. covenants that we need to deal with.” The company traces its roots back to 1886 with the establishment of What it does have is a strong partner Berger Manufacturing Co. in Canton, Ohio. Berger later became part of in The Fedeli Group to help tackle any Republic Steel Corp., the sprawling steelmaker organized by financier Cyrus challenge that may arise. Eaton in 1930. “We can demonstrate to our underwriters Throughout the 1900s, Republic Steel was instrumental in fighting a that we’re doing the right thing in the most war and building a nation. Its bar products were instrumental in developing effective and efficient way,” DiGiannantonio America’s automotive, agricultural and aerospace industries. says. “That’s been the experience that I’ve had with The Fedeli Group across the board on all our various exposures.” u

14 u Fedeli Factor Profile: Dr. Jerry Sue Thornton

Leading with an open ear

How Jerry Sue Thornton focuses on Dr. Jerry Sue communication and Thornton collaboration to grow Tri-C and the region By Jessica Hanna

erry Sue Thornton says she strives to be a collaborative leader. This is an important quality to Jhave as president of Cuyahoga Community College as the school – Ohio’s first and largest community college – continues to step up its efforts to engage Northeast Ohio students, schools and businesses. “That’s part of why I was so interested in Cuyahoga Community College, because it seemed to have a culture of collaboration, of working together – realizing none of us has all the resources we need to get the job done,” says Thornton, who’s been president since 1992. With two decades of prior community college experience in various capacities, Thornton has been pivotal in building upon Tri-C’s national reputation for fostering collaborative, mutually beneficial relationships with the local community. “Having personal and professional skills to work with people, negotiate and find common ground becomes extremely important to achieving success,” she says. “You have to hone your own collaboration, starting when president The firm works with Tri-C’s wellness communication skills, with listening and CEO Umberto Fedeli and his wife programs and risk management department probably being No. 1, because so much hosted the school’s first Spring Scholarship – part of various investments Thornton of what we do is consultative and asking, Fundraiser after Thornton became makes to ensure the college is at optimum ‘What is it that you need?’” president, continuing as he and Thornton performance. The Fedeli Group has joined in on this served on various committees together. Continued on next page photos courtes y of T ri -C

www.thefedeligroup.com u 15 Profile: Dr. Jerry Sue Thornton

Dr. Jerry Sue Thornton oversees continued expansion at “It’s really clear to Tri-C. She is pictured (right) at us that we’re a the 2010 Center community college, for Creative Arts grand opening where our students event with former student Emily are local and their Mehltretter. intent is to stay local.”

Thornton is leading the college to reach four main goals: • Promote student success by increasing the number of people who have access to higher education • Bolster student success by increasing Foundation to support its efforts, enabling fit. Its fourth campus opened in Westlake rates of graduation and workforce the college to send professionals to schools in January 2011 to offer a closer option to training certification to work with guidance counselors in students in the surrounding community, • Enhance middle education to prepare advising students what courses they should and it now serves more than 2,400 students. students for higher education through take to better prepare for higher education. college preparatory courses and advising High school students also have the Connecting students • Collaborate with small and medium- option to take an early Tri-C course with local companies sized business to close the workforce through dual-enrollment to get a taste of More than 85 percent of Cuyahoga skills gap and better prepare students to collegiate-level work. Community College graduates continue enter the local workforce to live and work in Northeast Ohio due in Offering more than 140 career and Enhancing student success large part to Thornton and her staff’s efforts technical programs and liberal arts curricula Thornton ensures that Tri-C maintains to connect students with local companies and more than 600 non credit workforce and an active role in students’ education once during and after their academic tenure with professional development courses, Cuyahoga they enroll, so their chances for successful the school. Community College is helping new and graduation and job placement increase. “It’s really clear to us that we’re a existing workers obtain the skills they need Students have access to a variety of community – and we really stress that word to succeed at an institution with one of the resources, such as financial assistance and ‘community’ – college, where our students lowest college tuition rates in Ohio. tutoring services, and get an academic are local and their intent is to stay local,” outline for degree completion. Thornton says. Paving the way “It’s important, like a road map, to help The relationships Thornton and Tri-C for higher education students determine where they want to have built with local businesses also open Tri-C works closely with area high schools go – their end goal, what kind of job they up numerous opportunities for internships in recruiting students to consider post- might want, what kind of major they might and apprenticeships for the school’s secondary education. be interested in,” Thornton says. “We then students, with more than 5,000 currently “We want as many high school graduates plot out a course, an academic plan that participating in one of the nearly 80 career to continue on to college as possible,” helps them follow our outline schedule programs the school offers. Thornton says. for completion.” “That gives students an edge in not But the college doesn’t just cater to Tri-C continues to look for better ways only knowing the local companies but the high school seniors; it starts working with to meet student needs, offering evening and companies knowing their work ability,” students as early as kindergarten. Tri-C weekend classes for working professionals Thornton says. recently received a grant from the Cleveland and even adding campuses when it sees To ensure businesses are getting top-

16 u Fedeli Factor notch talent and that students are prepared Tri-C looks to expand upon its partnership with either Umberto or someone to enter the workforce, Tri-C teaches collaborations with area businesses to at the company,” Thornton says. “The tone workplace skills in addition to technical further strengthen the vitality of the is set at the top with Umberto Fedeli, who skills. The school also places follow-up calls region. The Fedeli Group is a partner in is very engaged in a lot of great community- after students are hired. these efforts. based causes across health issues, across “That communication linkage becomes “It’s through our mutual interest in education, you name it. They are helping, critically important as a feedback loop for community activities that often we’re in are engaged in that, and so are we.” u us,” Thornton says. “We want as much information about how our students are performing once they’re hired, and we have a willingness to take those students back and continue their training if they’re falling short of what a company desires.” Building up Northeast Ohio businesses Thornton continues to look for better ways to serve workforce needs to grow the region. In August, the school opened its Advanced Technology Training Center on its metropolitan campus. The LEED Gold-certified building focuses on training in energy and emerging technologies with programs such as advanced metals joining, alternative energy and sustainability, cyber technology and construction engineering. The school also offers business services in areas such as business acceleration, technical consulting, and facility and lab rental. “Positioning our institutions to understand how to be good partners with business and industry locally is very important,” Thornton says. “The new building will have a lot of hands- on opportunity with state-of-the-art equipment, and that’s a prototype building we will be looking at putting on our other campuses in the future.” Thornton and Tri-C’s efforts go even further. Cleveland is the seventh city to receive a grant to offer the Goldman Sachs 10,000 Small Businesses investment program, thanks to the school’s efforts. “It’s Dr. Jerry Sue Thornton with designed to help small business owners with keynote speakers from the Cuyahoga Community College limited resources to grow their businesses. Presidential Scholarship We’ll be working with COSE as a partner Luncheon: Dr. Condoleezza Rice, and the Urban League and the Hispanic 2010; General Colin L. Powell, Chamber of Commerce to access small, USA (Ret.), 2007; and Oprah minority or female-owned businesses to Winfrey, 2002. help them grow to the next level by working with the business owner,” Thornton says.

www.thefedeligroup.com u 17 Employee Benefits

Health care reform affects voluntary benefits By Melissa McClain with Nathalie Lacouture

• Some health insurance carriers may Melissa McClain, only offer “low option” plans for those CEO of The As most coverage participating in the exchange. For McClain becomes voluntary, example, in Massachusetts, a state that Group LLC has its own health insurance exchange, employees are most plans include high deductibles. • Many employers will reduce benefit increasingly responsible levels for cost containment purposes or for covering their own to avoid the “Cadillac” tax. Rich benefit plans will become cost prohibitive, even financial risk. for employers that have maintained them until now. As most coverage becomes voluntary, benefits will most certainly provide a employees are increasingly responsible for solution to employers in shaping their covering their own financial risk. When benefit strategies in the new health care paying for their own benefits, employees landscape. may feel more invested in the process, and Both employers and employees are as a result, expect greater choice. They becoming increasingly interested in voluntary want to select benefits they believe are benefits. According to the MetLife 10th most suited to their age, lifestyle and family Annual Study of Employee Benefit Trends, situation. Because they are paying for the 41 percent of employers already consider benefits themselves, they consider it fair to or most employers, the offering voluntary benefits a “significant benefit be a larger part of the decision process. of voluntary benefits has become strategy,” a 9 percent increase over 2010, and Although voluntary benefits have a long part of a comprehensive benefit 62 percent expect that the importance of history, their growth in the past decade is F strategy. Employers are using these benefits will grow. most attributable to the evolution of health voluntary benefits to control costs, acquire Although health care reform legislation insurance over the same period. During services at no or low cost (including does not specifically address voluntary this timeframe, most health plans stopped benefit communication services and benefits, some of the consequences of health providing first-dollar coverage. Voluntary benefit administration tools) and address care reform will certainly promote greater benefit growth is likely to be fueled further the unique needs and demands of their interest in these plans, including by health care reform and provide a means workforce. the following: to assist employees as most transition to As employers face the likely changes that • Gaps in health insurance coverage will plans with fewer benefits. health care reform will cause, voluntary increase. Voluntary benefits are paid for by

18 u Fedeli Factor employees, and thus do not increase employer benefit costs. However, they do provide financial support to employees Employer Advantages Employee Advantages with out-of-pocket medical and non- medical costs. Critical illness, a benefit that - A valued employee benefit with - Increased financial security experienced a 20 percent growth in 2011, no direct employer cost - A convenient, low cost way according to a recent Eastbridge Consulting - Promotes increased awareness to prepare for unexpected Group survey, typically pays a benefit upon of employer benefit plans when life events diagnosis for conditions such as heart linked with a core benefits - Enhanced understanding of attack, stroke or end-stage renal disease. An communication strategy the entire employer benefit accident plan pays benefits in the event of - Increases productivity by program when properly an accident for initial treatment, emergency reducing financial stress on communicated room expenses, hospital stays and follow- employees and their families up care. In both cases, these plans help employees cover out-of-pocket costs, crossing multigenerational needs such as the employee nearing retirement concerned expand employee benefit communications. for two reasons: 1.) Some employees were about a family history of heart disease vs. On behalf of one of our hospital clients, concerned with the potential higher out-of- the employee with three children active in The McClain Group recently was tasked pocket costs; and 2.) Some employees had team sports. with creating and delivering specific misconceptions about how the plan worked. As voluntary benefit plans aid employees, messaging to increase participation in The first strategy we recommended was the they also provide assistance for employers. a hospital client’s home host plan. The addition of a voluntary benefits plan available The Bank of America Merrill Lynch 2012 host plan offers services almost exclusively with the home host plan for employees Workplace Benefits Report focused on through physicians and facilities that are concerned about out-of-pocket costs. The benefit communication as a key component part of the hospital, thus keeping dollars second was a benefit communication plan to for successful employee recruitment and within its system. allow every employee to learn about the value retention. The study also found that 70 The hospital’s leaders believed that of the home host plan and how it may work percent of employers believe they need to employees currently were not participating for the employee and his/her family. The plan itself had no benefit changes and was one of four available options. By the end of the open enrollment period, participation in the home host plan doubled to 60 percent of all employees. Employers are likely to experience an even greater need to communicate benefit changes and strategies to employees, including the impact of health care reform and its consequences for their own benefit plans. Access to quality benefit counseling provides: • A greater understanding of health care reform • A positive employee interpretation of Fedeli Voluntary their employer’s objectives and decisions Benefits Expert • An opportunity for employees to Nathalie Lacouture mitigate financial risk through the and her family. availability of voluntary benefit plans Continued on next page

www.thefedeligroup.com u 19 Employee Benefits

Continued from previous page healthier employees are involved, and the • A means of maintaining or enhancing percentage of the employee population employee loyalty and retention. participating may be low. Education, with Benefits drive employee loyalty, second or without financial incentives, can greatly only to income. Employee education can be increase employee engagement. expensive, but employees who understand In the face of health care reform, and appreciate their employer’s benefit voluntary benefits will continue to increase offering experience greater job satisfaction in importance for employer benefit and are more likely to remain with their strategies. The McClain Group is pleased current employer. Voluntary benefits can to be working with The Fedeli Group serve as a funding mechanism for this valuable in developing effective and appropriate education and communication process. voluntary benefit plans.u Health care reform also will provide the What message would employer with an ability to differentiate Melissa McClain is CEO of The McClain employee premiums based on wellness Group LLC, a voluntary benefits and benefit you like to deliver? program involvement. As a result, some communications firm that she founded. With If you had 10 minutes to employers will seek to offer these plans but 15 years of voluntary benefits experience, need a strategy to ensure that employees McClain has worked for two of the top five communicate personally actually participate. voluntary benefits carriers. She provides with each of your associates, Voluntary benefits could fund a expertise regarding product design and would you talk about: campaign to increase wellness program underwriting standards and the development participation. Wellness benefits available of employee benefit communication and • Culture wellness programs. She has worked with on most voluntary plans could serve as an a wide range of employer sizes, from 10 • Benefit plans additional financial incentive for employees to 10,000 benefit-eligible employees. The to participate in employer plans. McClain Group partners with The Fedeli • Expectations Traditionally, employers have Group to offer implementation, education • Company Direction struggled to ensure solid participation and communication solutions for their clients in wellness programs. Often, only the developing voluntary benefit programs.

UNISONBrokers: International Insurance Resource The magnitude of global commerce and investment insurance resource based in Hamburg, Germany. continues to increase. Since the early 1990s, there Through this relationship we are able to gain greater has been a six-fold increase in annual foreign direct access to international markets while developing a investment to and from the U.S. (source: Commerce thorough understanding of local country regulations, Department). Many Fedeli Group clients are requirements and customary business practices. experiencing their greatest growth in international The Fedeli Group is the exclusive representative for markets. In response to the needs associated with UNISONBrokers in the State of Ohio. this growth, The Fedeli Group has developed an affiliation with UNISONBrokers, an international

20 u Fedeli Factor Bench Strength: Rob Snyder Environmental impact

ob Snyder is an environmental Snyder notes that in the early 1980s, risk management specialist. But the U.S. Environmental Protection how he got there has much more Agency, as well as state agencies, began Rto do with jet propulsion. imposing regulations on many of his clients, “It all came together because of my dramatically affecting how they did business. technical training as a research engineer,” Prior to regulation and enforcement, the says the vice president of environmental industry, for the most part, dealt with the risk management with The Fedeli Group. financial risk associated with processed “I was a graduate engineer in the aerospace chemicals and waste streams on its own. The field, involved in research and development, impact of prior sins from operations didn’t so I was very comfortable with jet fuels become evident until owners attempted to and the kinds of crazy sights, sounds and transfer or sell their plants’ assets. smells that come from labs and machinery. Rob Snyder “Then, the owners find their assets have When you get into an industrial setting, become liabilities, and before they can do you see the processes behind those sights, anything about it, they must go through sounds and smells and how they can really business to me?” They often reply, “Because the onerous process of finding out just how pose an environmental and financial risk I have finally found someone who really contaminated the properties are and the to businesses.” When Snyder asks new understands technically what I do and how cost of cleanup,” Snyder says. clients, “Why did you decide to move your to protect me.” Continued on next page

www.thefedeligroup.com u 21 Bench Strength: Rob Snyder

Continued from previous page Snyder says. “The Phase II assessment is mergers, acquisitions and divestitures. Insurance as protection of great importance in helping me design • Environmental contractors and Environmental insurance is the means an insurance program that meets the professionals – Includes consultants, by which a property owner can transfer stakeholder’s needs with correct coverage. chemical recyclers, environmental various forms of environmental risk to the I craft coverage, limits, deductibles and contractors, disposal facilities, landfills, balance sheet of another entity, namely an policy terms as we explore various options and hazardous materials and waste insurance company. to solve complex indemnification problems transporters. “Instead of setting a large amount of with cost-effective insurance. It is also • Emerging Markets – Energy and the money aside in an escrow account to fund important to buyers who may become oil and gas industry, which includes the environmental indemnification in a sellers one day that these policies be environmental hazards related to deep deal, consider environmental insurance,” transferable to a future buyer.” well and horizontal drilling, along with Snyder says. “Buyers, sellers and lenders hydraulic fracturing/fracking. each have specific needs in securing a Four Practice Areas “We’re dealing with many concerns successful transaction.” The environmental Snyder’s insurance and risk management common to property owners at the time historic concerns at a site can easily tank an specialization encompasses four primary they consider selling mineral rights for otherwise good deal. It is common practice areas: exploration and production,” Snyder says. for lenders, buyers and sellers to begin the • Manufacturing – Risks include process “It has become more and more important environmental due diligence with a Phase I chemical storage and processing, waste to our clients, as well as property owners of investigation, also called an environmental stream and transportation risk associated Ohio and neighboring states, to understand site assessment. This evaluation of land with manufacturing and distribution. the financial risk associated with the use and improvements identifies areas of • Real estate – Involves the specialized expected economic activity in our area. environmental concern. What follows field of brownfield redevelopment, That is why The Fedeli Group is focused is the Phase II regimen of sampling and transformation of abandoned industrial on energy and the emerging oil and gas testing. “It’s all in the details of the report,” sites to their highest and best use, markets.” u

www.tri-c.edu | 800-954-8742

13-2930 Fedeli Group 7.25x4.75 Ad.indd 1 10/4/12 1:38 PM

22 u Fedeli Factor Bench Strength: Nathalie Lacouture Sense of community

athalie Lacouture doesn’t work specifically with nonprofits, but community causes have become a Nmajor component of her work. “People who work “I am a mom of three and a Latina, so part of my passion is getting out in the for nonprofits are community and doing things for women generally not people who and minorities,” says the senior account executive and voluntary benefits specialist have high incomes or big for The Fedeli Group. “I have worked with a number of organizations, including the paychecks. Money isn’t Hitchcock Center for Women, Akron- why you go to work for Canton Regional Foodbank, the Akron Metropolitan Housing Authority and the a nonprofit.” Girl Scouts of North East Ohio.” – Nathalie Lacouture In her role at The Fedeli Group, Lacouture has made it her mission to work Nathalie with nonprofit organizations to find benefits Lacouture solutions that fit the often limited budget of the benefits being offered at the workplace. nonprofits while still answering the needs of Many times employees do not have a firm the people who work for them. for people who could be financially wiped grasp of the coverage being offered, the “People who work for nonprofits are out if an accident or critical illness happens choices they have, or even how much their generally not people who have high incomes to them. In the event of a critical illness employers contribute toward their benefits. or big paychecks,” she says. “Money isn’t why or accident, policyholders receive cash When employees understand their benefits you go to work for a nonprofit. From what I benefits they can use for any personal living packages, employers are truly promoting a have seen, nonprofit employees work really expenses. This coverage is attractive to healthy work environment, where employees hard and long hours. Given that, I want to employers because there is no direct cost to can make informed wellness insurance and help nonprofit employers provide strong them. Likewise, the coverage is attractive financial decisions. benefits packages for their employees.” to employees because it is affordable and provides a safety net in terms of financial Making life easier Leading voluntary benefits protection.” Ultimately, Lacouture is driven by a desire Lacouture’s passion for helping to serve Lacouture notes that voluntary benefits to make life a little easier for the clients she the needs of the community is a driving isn’t a new concept, but there has been a serves. Her experiences as a previously single reason behind The Fedeli Group naming resurgence in the sale of these plans. The parent encompass every aspect of her life, and her the director of the firm’s recently products available now are more affordable she realizes any help she can offer to families formed voluntary benefits department. than their predecessors. They also cover will be gratefully received. Any moment not The department provides supplementary many more conditions and health issues. spent worrying about finances or insurance insurance solutions for people who would They often include a wellness incentive to is another moment spent being a mom, dad, otherwise have minimal health coverage. promote employee wellness activities. As husband or wife – the jobs that really matter. “They’re designed to complement employers are always looking for ways to “I realize every minute counts,” Lacouture existing health insurance and help minimize make their employees more health conscious, says. “I have a very structured schedule, and the financial impact that can come from the wellness facet has been an attractive I have to make the most of the time I have. out-of-pocket costs that the majority of feature. New enrollment strategies can also It’s a balancing act between work and home. people have with their insurance,” she says. be extremely beneficial for employer and I love it, but I’ve had to work hard. The good “Examples include critical illness insurance employee alike. Along with rolling out the thing is my kids have seen how hard I’ve had and accident insurance. These insurance voluntary benefits, employers can choose to to work, and even though we’ve struggled policies are designed to help people who have benefits counselors, at no additional at times, we have done pretty well. It shows don’t have a ton of savings in the bank or cost, who will educate employees on all of them hard work pays off in the end.” u

www.thefedeligroup.com u 23 Risk Management Workers’ compensation A challenging road ahead

By Tim Moroney, Risk Management Advisor and Director of Risk Placement, The Fedeli Group

help in designing and implementing strategies compensation is available exclusively through to mitigate workers’ compensation costs. Our a state fund. Benefit levels under workers’ technical team has years of experience in this compensation are determined by each state’s area, assisting companies that have thousands legislative body. of employees across the country. The National Council A Brief History on Compensation Insurance According to some historians, the concept As workers’ compensation laws were of workers’ compensation can be traced adopted in the early part of the last century, back to ancient Sumeria (pre-2000 BC). the National Council on Compensation Others point to the early days of pirating, Insurance (NCCI) was formed in 1919 as when spoils were shared with sailors injured a cooperative effort to coordinate industry during raids. Early English common activities with ratemaking agencies and law dealt with compensable injury for regulatory bodies in the different states. employees, provided they found a way Today, this nonprofit industry group collects Tim Moroney around the following defenses: data covering more than 4 million workers’ 1) Contributory Negligence – If an employee compensation claims and 2 million insurance was in any way responsible for the injury, policies. NCCI provides the following for hile Ohio is a so-called there was no recourse. most of the states and insurance carriers: “monopolistic state” when it 2) The “fellow servant rule” – If a fellow • Analysis of industry trends in workers’ comes to securing workers’ employee was responsible in any way for the compensation costs W compensation coverage, many injury, the employer was not at fault. • Workers’ compensation insurance rate and clients have substantial workforces outside 3) “Assumption of risk,” under which the loss cost recommendations the state. For these employers, workers’ employee willingly accepted the risk. • Workers’ compensation manuals inclusive compensation insurance is mostly accessed The first comprehensive U.S. workers’ of classifications and rules through the private insurance market. This compensation law was passed in Wisconsin • Experience Modification Factors market has been relatively stable in terms of in 1911, and within a decade, 45 other states pricing and access for at least the past five to passed similar laws. By 1948, all states, Premium Calculations seven years. including the territories of Alaska and Hawaii and Loss Control Within the past 12 months however, the had enacted workers’ compensation laws. Workers’ compensation premiums are workers’ compensation market has changed The central tenet to these laws was that determined by multiplying payroll for each dramatically. Not only are premium rate of no-fault insurance. Employers gained classification of employee by the appropriate increases of 5 percent to 25 percent common, the notable benefit of tort exemption for state rate. Premiums are adjusted by a number but the availability of coverage has declined. employee injuries covered under the law. of criteria, including workers’ compensation In addition, changes to how experience The employee gained a system that dealt claims history, experience modification modification factors are calculated (factors with the financial consequences of an injury factors, credits for a drug free workplace, and used by the insurance industry to develop in an expedient manner. Today, 46 states loss control policies and procedures. premium rates) will further aggravate pricing allow the insuring of workers’ compensation Fundamental safety standards, processes for certain types of employers. by private insurance carriers or a competitive and procedures go a long way toward With no immediate relief in sight, clients state fund. In four states (Ohio, Washington, preventing injuries while minimizing are increasingly asking The Fedeli Group to North Dakota and Wyoming), workers’ financial loss. While OSHA provides a

24 u Fedeli Factor First and foremost to regulatory framework for injury prevention, methodology, half of all policyholders will employers should consider additional effective loss control / see an experience modification decrease of approaches and strategies. injury prevention is 2 points or more; more than one-third will First and foremost to effective loss establishing a management experience a swing of + 2 to -2 points; and control / injury prevention is establishing culture of “safety first.” one in seven policyholders will experience a a management culture of “safety first.” A modification increase of 5 points or more. safety culture is more than written procedures As an example, a one point upward change and manuals. Instead, it reflects a sincere for insured programs or self-insurance, if on a 1.0 factor would change the experience commitment to safety starting with the eligible, are ways to achieve either direct cost modification factor to 1.1. CEO. Under this type of culture, workers savings or to take advantage of the cash flow There are 11 states for which experience are encouraged to identify safety issues, be aspects of alternative design. modifiers are developed separate from NCCI empowered to address immediate issues on and the new methodologies will not apply. the line or in the field, and to have regular Experience Modification However, a number of these states are also and open dialogue with supervisors. Factors – Substantial Changes making changes to their methodologies. The Beyond culture, it is important that an Beginning in 2013 non-NCCI states are Indiana, Massachusetts, organization document and enforce safety The NCCI recently announced a change North Carolina, New York, Texas, programs. Also, establishing a rigorous in how experience modification factors Wisconsin, California, Delaware, Michigan, hiring process that includes drug testing are determined. These changes are being New Jersey and Pennsylvania. and thorough background checks is critical. implemented in 2013. The last time any Once onboard, workers should be engaged changes were made to the factors was in Pragmatic Steps to Address in ongoing safety training as part of their 1993. Driving the change in experience Workers’ Compensation Challenges job requirements. modification factors is an attempt to better The market for workers’ compensation has When an accident or injury does occur, align actual losses by type of occupation. gone from stable to volatile in a short period “getting after it” immediately, staying on Rapidly increasing medical costs over the past of time. Many employers are currently top of treatment throughout the process, 20 years are a major factor in changing the struggling with large premium increases at and, where possible, having a return- factors. The factors are still being finalized. renewal. We recommend that employers do to-work program all help control the But based on what we know, it is our the following: ultimate financial outcome. Delays in expectation that claims frequency will drive 1. Review current loss control strategies. accident reporting and investigation tend the modification changes to a greater extent When prices were flat, loss control may to compound the issues. Employees who than in the past. have been less of an issue. feel that an employer is looking out for Employers with a frequency of claims 2. Make sure your broker and consultant them from the onset are less likely to seek between $5,000 and $15,000 will most have expertise in the nuances of the advice and counsel of an attorney. The probably be negatively impacted by the workers’ compensation laws and insertion of this one dynamic into a claim can new factors. We expect the construction requirements throughout the country. In greatly escalate costs. Prompt investigation and light manufacturing industries to a “monopolistic” state such as Ohio, the of any claim can provide insight into how to experience the most significant upward level of expertise is not widespread. prevent similar accidents from occurring. movement in pricing. 3. Explore alternative funding approaches Actively managing the claims process will Under the changes, the per-claim and determine if they make sense for your help shorten the life of the claim. Supervisors threshold for which losses are fully accounted operation. who are supportive of injured workers can for in the experience modification calculation 4. Confirm that your current insurer is help reduce the length of absence. Anecdotal will be increased from $5,000 currently to committed to “staying the course” experience indicates that employees who $15,000 over a three-year period. The loss with you. are off work for a period of three months or threshold will be $10,000 in 2013, $13,500 The Fedeli Group realizes that the more are 50 percent less likely to return to in 2014, and $15,000 in 2015 and beyond. challenges in the workers’ compensation work at all. At this time, it is not possible to calculate market are having a direct effect on the Alternative program design or financing with certainty upcoming 2013 experience bottom line of many organizations. By of your workers’ compensation program modification rates, as the weighting factors being proactive and seeking prudent yet is another aspect where direct savings can and the expected primary losses used in out-of-the-box solutions, we can assist in be achieved. Depending on the size of the the methodology have yet to be firmly mitigating these challenges. There is an operation, “standard premium” for insured established. upside to every risk and we have helped programs may not be the most effective Experience modification factors generally many of our clients identify, understand manner of risk transfer. Deductible levels fall in a range of 0.5 to 4.0. The “norm” is and achieve it because of our experience and ranging from $1,000 to as much as $500,000 1.0. NCCI has projected that under the new expertise in these areas. u

www.thefedeligroup.com u 25 Client Stewardship

Client Stewardship Holding us accountable to our commitments

ime and time again, we hear from time is saved, mistakes are reduced, executive overview, a financial review, a prospective clients that what they communication is enhanced and graphical presentation of the program want most from their insurance objectives are better realized. We call this design, claims and administration T advisor is proactive advice, timely client stewardship. review, and a goal-setting section. In service and excellence in delivery. To At The Fedeli Group, client addition, the report provides a current achieve such a standard takes a disciplined stewardship includes the production of an perspective on industry developments approach to client engagement, practices Annual Stewardship Report. This report and trends. that include a commitment to basic, yet is designed for the senior leadership of Client stewardship holds us essential, project management tools such an organization, enabling them to have a accountable to our commitments as meeting agendas, meeting notes and an succinct, yet thorough, understanding of and ensures that you are getting the agreed-upon work plan. their insurance program. maximum value from your insurance By following these basic steps, The stewardship report includes an program. u

26 u Fedeli Factor In the Kitchen: With the Fedeli Family

What’s Cooking?

Lucia and Lorry Fedeli plan and organize a variety of Italian fare Stuffed shells

Marinara sauce: 2 tablespoons olive oil 2 chopped onions 1 lg. can crushed tomatoes Salt and pepper Garlic powder Fresh basil Combine ingredients and let simmer for about an hour. Add basil right before done.

Shells: Barilla jumbo shells 3 cups Miceli’s ricotta cheese 2 cups Miceli’s mozzarella Left to right: Tim Pistell, former CFO of Parker Hannifin, Mal Mixon, chairman of the board and CEO of Invacare; Ed Crawford, chairman and CEO of Park Ohio; and Wayne cheese Hellman, president and CEO of Advanced Lighting Technologies and his wife, Diana ½ cup Parmesan cheese ½ cup Romano cheese ½ cup chopped fresh parsley he Fedeli Group is known for calendar. Then I look at it to see how Salt and pepper its mouth-watering authentic many guests we’re expecting.” Italian meals, which range from Although the system is designed to keep Boil the jumbo shells for about T 15- to 25-person corporate things running smoothly, that isn’t always 10 minutes, then drain. Stuff lunches to political dinners and everything the case. The number of guests can change with combined cheeses. Spread in between. daily due to cancellations or additions, sauce on bottom of baking pan, The events keep Lorry Fedeli, sister of which is why Fedeli doesn’t plan her menu then place shells on top. Cover CEO Umberto Fedeli, busy. She, along in advance. She shops about three to four shells with remaining sauce. with her mother, Lucia, and another times per week to get seasonal, fresh foods Bake covered for about 20 employee keep the kitchen humming to and designs the five- to six-course meals minutes at 400°. Remove shells, meet the needs of The Fedeli Group’s daily with whatever she has in stock. sprinkle mozzarella on top and hungry guests. But while The Fedeli Group’s meals bake uncovered another 10 “In our system, we have a guiding keep Fedeli on her toes, she has only one minutes until melted. Makes calendar,” says Lorry Fedeli. “If an goal in mind. about 24 shells. associate invites someone to lunch, he “As long as my brother is happy,” she u

top photo da v id richard / middle : jim baron or she picks a day and writes it on the says, “that’s what I aim for.”

www.thefedeligroup.com u 27 Crowne Centre 5005 Rockside Road, Fifth Floor Independence, OH 44131 www.thefedeligroup.com

A Challenging Time in Health Care Demands a Trusted Resource for Your Employee Benefits

An Expert Advisor on the Affordable Care Act

• Financial and tax impact assessment

• Wellness strategies and the law

• Cost control and claims management

• Regulatory compliance review and tracking