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A West Virginia manufacturing company wanted to communicate more effectively and implement a holistic benefits package to compete with other surrounding employers. Cottingham & Butler’s employee benefits team got to work by utilizing our unique benchmarking tool to analyze the data and bring various plan options to best fit their employees. Following the employer’s decisions to ensure their employees were appropriately covered by the non-medical lines of coverage, the next most important component was communicating the wonderful enhancements and allowing employees to use technology to enroll versus the outdated paper enrollment forms. They used Cottingham & Butler’s proprietary enrollment text system called BETSY. Our Results Paid Life & Disability Review We reviewed the company’s paid life insurance and disability to restructure the plan and adequately insure employees. This led to a $9M increase in life insurance protection and a weekly income protection increase of $30k. Open Enrollment Solutions After we implemented our easy-to-use and efficient open enrollment solution, BETSY, we were able to move away from the dated paper enrollment process, which allows employees the ability to enroll anywhere at any time and creates administrative ease for HR staff. Enhanced Benefit Plan Communications By offering a wide variety of communication mediums in phased approaches, there was a 100% completion rate and over 50% enrollment in all coverages. Enrollment Satisfaction & Utilization Employees reported back appreciating the upgrades to the communications and benefit plan, according to the employee feedback survey.

After several years of balancing the lose-lose situation of healthcare cost increases and employee satisfaction, a Wisconsin school district decided it was time to do something truly different to change the trajectory of its future. Cottingham & Butler’s benefits team pointed out that a leading driver of the district’s cost was not the cost per person for insurance, but rather the number of people being covered by the district plan, due to the generous health plan design offered which is attracting the employees’ families. Instead of the district increasing costs for those families or penalizing working spouses, as many other employers would do in this situation, Cottingham & Butler introduced an innovative alternative option to the district, the Family Advantage Health Plan (FAHP). If an employee selects another employer-sponsored health plan, other than the school district’s, the FAHP provides families an opportunity to have 100% of their out-of-pocket expenses paid for by the district, ultimately saving these employees over $5,000 annually in healthcare expenses, while simultaneously saving the district over $10,000 per employee. A true win-win benefit. Our Results Immediate Cost Savings Given the 20% reduction in enrollment, the district saved $307,000 in premiums alone that would have been paid to the insurance company. Added Employee Value For the 90 members enrolled in the FAHP, the district paid $104,500 in deductible and out-of-pocket expenses, which now can be used by employees for other expenses. Improving Overall Risk By aligning risk and incentives, the district dramatically improved the risk of their group and future insurance costs by experiencing a reduced loss ratio of 116% in 2021 to 65% in 2022.

A multi-national company, with about 2,000 employees had been experiencing an increase in costs without receiving creative solutions from their current broker. Cottingham & Butler’s in-depth analysis of benchmarking comparison, cost, communication, and compliance discovered areas of optimal improvement. It was revealed that there was room for superior service capabilities and financial opportunities that could be implemented within the current program to provide cost-reducing solutions and a streamlined transition plan. Our Results An Overall Plan Evaluation We reviewed all of the company’s current offerings, coverages, and administrative practices under applicable laws and determined many areas of improvement. A New & Better Benefit Program We implemented a new benefits administration system, and communication plan and expanded to 10 new carriers and 20 lines of coverage to provide employees with a choice where it matters. Taking the Steps to Reduce Cost To reduce costs, we conducted an eligibility audit on spousal surcharges, transitioned coverages to better network discounts and services, reduced administrative spending, stepped away from a broker benefits system, and implemented an in-house benefits administration team. Providing Value & Cost Savings Solutions We were able to implement and execute a 3-year strategic plan that saved money and provided additional value to both the employees and the employer. Within the first year alone, they saved over $1M.

A Midwest Native American Tribe was facing an unsustainable increase in their health insurance costs. Cottingham & Butler’s tribal nations team was invited to conduct our 3C’s analysis, where we benchmark coverage, cost, and consumption. This analysis leads to identifying areas of opportunity and developing targeted quantifiable recommendations. Medicare Like Rates We successfully implemented Medicare Like Rates (MLR) for all eligible claims for both facility and professional services. This strategy has hit $10M in savings in just the first 3 years. Sponsorship We implemented a marketplace program for short-term and ongoing high-cost claimants. This has led to $8M in savings within the first 3 years. Out-of-Network Reference-Based Pricing This pricing was implemented for large out-of-network spend and is primarily used for mental health and substance abuse. This addition has led to $1.2M in savings. Pharmacy Benefits Optimization A change in their Pharmacy Benefits Manager was recommended. The new Pharmacy Benefit Optimizer (PBO) was implemented with better pricing and traditional rebates on in-house claims leading to $600K in savings.

A county in northeastern Wisconsin was facing a 6% increase in their health insurance costs. Cottingham & Butler's public sector team was invited to conduct our 3C's analysis, where we benchmark coverage, cost, and consumption compared to peer counties and municipalities in the area. This analysis leads to identifying areas for opportunity and allows us to make targeted quantifiable recommendations. Pharmacy Contract Review We renegotiated the pharmacy benefit manager contract, moving from a 3-year to a 1-year contract. We also introduced step-therapy and coupon tracking on medications that led to $115k in savings. Tenure-Based Opt Out We implemented a $5,000 cash opt-out based on tenure. This was an added benefit offered to employees with over 20 years of service to the County that led to over $84k in savings. High-Performance Network We recommended that the County introduce a tiered high-performance network, incenting members (but not mandating them) to use high-quality, low-cost providers leading to over $280k in savings.

We’re all too familiar with the challenges the construction trades are facing going into the next 24-month cycle. Labor shortages, supply chain disruptions, hard cost escalations, soft cost inflation, and logistics issues with CDL shortages— it seems the only things we’re not short of are challenges these days. Thankfully, too much opportunity is a great challenge to have IF we remember the nature of the opportunity can change the risks it carries with it. Retainage is one of those risks. It’s expected. You try to get it waived or redline it and hope nobody catches it on the signed copy but, more often than not, it’s just another accepted part of the cost of doing business. Remember, though, it’s a percentage, so it scales. As your costs scale, so does the impact on your cash flow. As an example, say you’ve got a $30,000,000 project that would have been a $26,000,000 project last year; the project has a 5% retainage and a 10-month window to substantial completion. First, the obvious. At the end of this project last year, you would have floated a total of $1,300,000. But this year, due to the cost explosion, you’re floating an extra $200,000 ($1,500,000). Again, this variance scales. In other words, on how many projects will this be a factor? 3 projects mean you’re floating $600,000 more this year than last year. Is your liquidity ready to carry that extra burden on cash flow? In January of this year, AGC released a finding indicating that 89% of their responding members had reported experiencing delays on their projects. It would be impractical not to consider the impact of delays. In the above $30,000,000 example, you’re running off $3,000,000 a month which includes your 5% retainage. After five months, you’ve got $750,000 out when that delay hits. On top of the liquidated damages, how long can you float that extra retainage? Time to hit the usual place, the bank line….that's what it's there for, right? Unfortunately, you must remember that the Fed just raised interest rates and has more increases scheduled. Don’t let a profitable year turn into a painful search for the hole in your pocket. If you’re interested in best-in-class tools to avoid these hurdles, we’re just a phone call away. Ken Fontana, Surety Manager Cottingham & Butler’s Risk Management Division 563.587.6341 | kfontana@cottinghambutler.com Ken began his career in the insurance industry in 1996 at the corporate offices of Horace Mann Insurance. After relocating to Wyoming, he spent several years managing corporate safety programs, insurance, and claims as the RMO for a nationally exposed company engaged in numerous state and federal contracts including operations at three military bases, the Denver Federal Center, and HUD program management. He has been a licensed insurance agent for 20 years with the last 10 focused strictly on contract and commercial surety. Ken’s relationships with the nation’s top sureties and his experience give him a uniquely well-rounded approach to your overall surety, bonding, and subcontractor default insurance needs.

When you're looking for a solid bonding relationship, shouldn't it be built on a complete risk review and not simply on a complete financial review? Sure, your financials are strong, but they can be misleading or downright unreliable if your surety team hasn't gone beyond just delivering a bond. Imagine facing an uncovered loss with a full backlog and no money to prosecute the work. It's bonded work and that means the surety must step in and complete it; you didn't forget you personally indemnified that bond, did you? Imagine facing a serious loss where your limits were adequate to your company's net worth 3 years ago but haven't contemplated that new $4,000,000 in revenue you've added since then. Are you a bigger target at $6,000,000 revenue than you were at $2,000,000? You've bonded these jobs, and you've produced a clear, contractual financial guarantee in which you are fully indemnifying the surety both corporately and personally. When you set those insurance limits, didn't at least part of that calculation take into consideration the corporate veil, your protections personally against liability? Of course they did. Did you adjust those limits when you took on a project which, through that personal indemnity pierces the veil and leaves you personally exposed? This is piercing the veil from the inside. You may not experience a loss that can break through the veil head on but an uncovered loss or a loss with inadequate limits can wreak havoc on current operations and leave you staring down the barrel of a sizeable bond loss. You might enjoy personal protection from the veil on the insurance claim but what if that claim wipes out the working capital in your company? The surety still has your personal indemnity option to complete that work and pay those subs on your behalf. How's that veil doing? In most cases, it's not that one swift blow. It's usually a long-term effect of your company under siege where you and your senior management lose focus on critical day-to-day management and new growth as your energy and money pour into defending what you've built. Performance, morale, cash flow, revenue..... the spiral can be awful. We have the experience and the rounded team who will provide this in-depth review. The people who are not merely up-to-date on emerging risks but up-to-date with how fluid those risks are when considered by a company heavily involved in modern construction. The Bond Producer will get you the bond and call it a success and, yes, we do that too. We "get the bond" every day, and most days, on an hourly basis. The Surety Advisor delivers that bond along with these and other critical services that should be the standard, but we all know aren't. From clients just starting out and in search of their first $300,000 bond, to firms with over 100 years in contracting and bond lines in excess of $150,000,000, we have the experience, team, and drive to deliver beyond the bond. Ken Fontana, Surety Manager Cottingham & Butler’s Risk Management Division 563.587.6341 | kfontana@cottinghambutler.com Ken began his career in the insurance industry in 1996 at the corporate offices of Horace Mann Insurance. After relocating to Wyoming, he spent several years managing corporate safety programs, insurance, and claims as the RMO for a nationally exposed company engaged in numerous state and federal contracts including operations at three military bases, the Denver Federal Center, and HUD program management. He has been a licensed insurance agent for 20 years with the last 10 focused strictly on contract and commercial surety. Ken’s relationships with the nation’s top sureties and his experience give him a uniquely well-rounded approach to your overall surety, bonding, and subcontractor default insurance needs.