Taking a Bold Hold on Risk Management: Q and A with Clay Shelton, KA Insurance
Clay Shelton has made a career of helping others manage risk. As a 25-year insurance veteran, with 10 years at Kraus-Anderson Insurance, Shelton has managed claims, safety and other significant risk management initiatives for large national clients; managed the development and integration of key practices into the agency; and provided valuable insight throughout the Kraus-Anderson family of companies.
Q: How far back does your relationship with KA go?
CLAY SHELTON: Over 25 years. As an underwriter at St. Paul Fire & Marine (now Travelers), I wrote the first insurance policies for KA. During that process I met and forged relationships with Dennis Diessner, Brian Kampf and former Risk Manager; Gordon Olsen. I was immediately impressed with their professionalism and commitment to high quality work.
Q: You have been instrumental in working with some of KA Insurance’s most important clients in their loss prevention efforts. Talk about that.
CLAY SHELTON: We are able to assist subcontractors and other businesses implement safety protocols that protect the wellbeing of their employees and make the businesses attractive to underwriters. This leads to reduced insurance costs and long-term relationships. For our client Culligan, I have developed a dashboard system for them to easily monitor insurance performance across their 32 locations.
Q: What are some specific areas where you provide insight and assistance to KA Construction and other operations?
CLAY SHELTON: At KA I maintain relationships with all of our primary underwriters. I also manage and monitor insurance performance in regards to cost, claims and coverage. I report results to senior management at KA Companies and develop strategies to improve or correct as needed. I review insurance provisions within contracts with owners and suggest negotiating points for project managers and KA Legal. I’ve helped KA launch our Subcontractor Default Strategy, which allows us to be compensated for the risk of non-performance by our subcontractors. Over time I’ve investigated and analyzed other insurance strategies that we have not yet chosen to implement. Also, we are staying close to KA Development as it grows. Because they are not insurance experts we look for insurance and risk management products that support their growth plans and protect against unexpected losses.
Q: How do you interface with the KA safety team, and the subcontractor teams KA works with?
CLAY SHELTON: I am a big supporter of the safety professionals at KACC and at KA Insurance. They are encouraged to support each other in their efforts. The KACC personnel see KA Insurance clients on KA job sites. I ask Jay, Jake and Ethan to call KA Insurance when they see one of our customers ignoring or resisting expected safety standards. Conversely, I ask Troy, Neil and Sara to contact KACC when they spot safety problems at a KA job site. This mutual agreement to support each other is beneficial to all parties.
Q: How does KA’s extremely low EMR provide advantages for KA, and by extension our clients and business partners?
CLAY SHELTON: KA’s low EMR is a result of the increased emphasis placed on the safety of our own employees and all workers on a KA job site. Our commitment to safety combined with proactive management of the claims that do occur has led to a fabulous EMR. This allows us to manage our cost of insurance and successfully bid work in a very competitive environment. These benefits are a byproduct of the most important thing – our workers go home to their families in the same condition that they showed up for work.
Q: Talk about Subcontractor Default Insurance, and its impact.
CLAY SHELTON: Subcontractor Default insurance is helping transform KA’s management of subcontractors. We utilize SDI on as many jobs as possible. The biggest change to our operation is that we now pre-qualify subcontractors that work on our SDI jobs. This means that we review the sub’s financial condition, their commitment to safety and their dedication to quality as part of the contract award process. Subcontractors who pass all of these tests work on the job without any special conditions. We implement risk mitigation plans and/or require surety bonds from subcontractors who don’t score well. This increases our confidence that we have hired subcontractors who are likely to perform on time, on budget with the expected quality and safety standards that top performers in the construction industry expect.
Q: What has been your role in the development of KA Insurance’s cost containment approach?
CLAY SHELTON: KA Insurance has always provided the critical services of COMPTROL; claims management and safety leadership. When we purchased Minnesota Insurance Brokers several years ago we married our services with their private customer portal, which organized all of our client’s Workers Compensation information. This helps our clients take a more formalized approach to managing their Workers Compensation results. We have supported many clients in lowering their EMR.
Q: Talk about your involvement in KA’s joint venture contracts.
CLAY SHELTON: Over the years KA has joint ventured with several partners. We find that KA generally has a better understanding of insurance and risk management issues that most. Therefore we tend to take charge of designing project insurance standards that reduce risk to both partners in the project. The proper selection of insurance also reduces the possibility of disagreements with our JV partners, which is good for everyone.
Q: How do you assist with KA’s subcontractor pre-qualification process?
CLAY SHELTON: My contribution is in the development of the process and identifying the information we need to capture. Anne Filas and Spencer Williams conduct the actual analysis with oversight from Logan Carter and John Rogoz.
Q: What trending topics are on the horizon in risk management? How is KA Insurance anticipating these demands?
CLAY SHELTON: The construction industry has focused on safety for many years by establishing job site rules, creating new employee orientations and discussing safety topics regularly. The more recent trend is to provide a similar level of attention to quality issues. These are expensive insurance claims that typically also have expensive legal bills. They also negatively impact the reputation of all involved parties. Nowadays all responsible contractors are putting more resources towards avoiding quality problems. This includes documenting work and conversations with architects and engineers, understanding what is to be built and performing inspections throughout construction.