Worker Can’t Pursue Legal Action After Denied Accommodation Request
In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.
He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.
Now he was ready to make his mark on the business world.
Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.
Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.
This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.
In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.
R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?
Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.
When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.
I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.
We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.
R&I: So Starr’s success has meant success for the Chinese insurance industry as well.
Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.
“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.
Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.
We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.
On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.
R&I: What’s your outlook on current trade relations between the U.S. and China?
Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.
President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.
R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.
Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.
They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.
R&I: What stands in the way of that happening?
Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.
For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.
The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”
So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.
R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.
Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.
R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?
Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.
It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.
R&I: Your op-ed was very enlightening on that topic.
Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.
R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?
Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.
R&I: And that’s because you are a private company?
Hank Greenberg: Yes. We attract a different type of person in a private company.
R&I: Do you think that enables you to react more quickly?
Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.
“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.
R&I: You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.
Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.
R&I: And that fateful decision the AIG board made really affected the course of the country.
Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.
From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.
R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.
In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.
Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.
Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.
R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?
Hank Greenberg: We did something last week.
On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.
Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.
R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.
Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.
R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?
Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.
How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.
More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.
One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.
So, change is inevitable. You need people who can deal with change.
R&I: Is there anything else, Mr. Greenberg, you want to comment on?
Hank Greenberg: I think I’ve covered it. &
Modular sleeping pods provide temporary accommodation for homeless people
This captioned movie shows how pods made from easy-to-assemble, CNC-cut wooden panels, designed by Reed Watts, are providing temporary accommodation for homeless people.
London-based architecture studio Reed Watts, created the "low-tech" modules offer accommodation to people who might otherwise be sleeping on the streets.
Read more about the sleeping pods ›
How reasonable is reasonable accommodation?
The Industrial Tribunal recently examined the concept of reasonable accommodation and what employers should do to cater for employees in an appropriate manner.
Facts
In June 2013 X was employed as a full-time creative web designer by Company Y. He earned a gross salary of just over €30,000 per year. Prior to being engaged by Company Y, X had informed them that he suffered from a heart condition.
After being employed for just under a year, X asked Company Y whether he could work from home as advised by his cardiologist. X stated that this arrangement would help to improve his heart condition, as it would result in less physical stress. X's cardiologist later emphasised during the proceedings that it was in fact the commute to work which had created the stress that led to the deterioration in X's health, not the work itself.
Company Y accepted X's proposal to work from home and stated that he could do so for a four-week trial period. The trial period went well and was extended indefinitely. All of the parties involved understood that working from home had aided in X's recovery. After a few months had passed, Company Y requested that X return to work in the office. Company Y gave him three options:
X refused all three options, as he was afraid that they would worsen his heart condition. This decision resulted in Company Y terminating him, stating that he had abandoned work.
X filed a case before the Industrial Tribunal claiming that he had been discriminated against due to his heart condition and unfairly dismissed.
Telework
The tribunal started off by stating that 'telework', as defined under Maltese law, is not an obligation on employers towards employees. 'Telework' is defined in the Telework National Standard Order(1) (TNSO) as:
a form of organising and, or performing work, using information technology, in the context of an employment contract or relationship, where work, which could also be performed at the employer's premises, is carried out away from those premises on a regular basis.
X's work fell within this definition while he was working from home. While the tribunal acknowledged that employers have the right to refuse any teleworking proposal, it stated that once an employer has agreed to allow employees to telework, these employees must be treated in the same manner as all other employees, in accordance with Article 9 of the TNSO.
After the initial discussion, Company Y had agreed to allow X to telework and had extended the original trial period. Therefore, the tribunal based its analysis on the fact that although X was a 'teleworker' as defined by law, he still had the same rights as on-site employees.
Disability
In order to decide on X's claims, the tribunal examined the Equal Opportunities Act (Chapter 413 of the Laws of Malta). The act defines 'disability' as:
a long-term physical, mental, intellectual or sensory impairment which in interaction with various barriers may hinder one's full and effective participation in society on an equal basis with others.
The tribunal stated that from the testimony given by X and his cardiologist, it believed that X fell under this definition, as his condition hindered him from full and effective participation on an equal basis with others.
Obligation to provide reasonable accommodation
The tribunal, quoting X's final submissions, referred to HK Danmark.(2) According to the tribunal, the European Court of Justice found that the concept of accommodation must be given a wide interpretation. The tribunal stated that from its findings, it was aptly clear that the company did not plan to introduce any form of teleworking policy. It continued by stating that a policy cannot be discriminatory, nor can the lack of policy. Further, the tribunal noted that employers must address any disadvantages to employees created by a policy.
Discrimination and reasonable decisions
The tribunal referred specifically to Article 7(1) of the Equal Opportunities Act, which states that no "employer shall discriminate on the grounds of disability against a qualified person with a disability in regard to – (e) any other terms, conditions and privileges related to employment".
It also referred to Article 7(2), which states as follows:
an employer shall be considered to discriminate on the grounds of disability against a person as referred to therein, if such employer unreasonably – (d) fails to make a reasonable accommodation for the disability of such a person, unless the employer can prove that the required alterations would unduly prejudice the operation of the trade or business run by such employer.
The tribunal went on to refer to Article 7(5) of the act to define the phrase "make a reasonable accommodation". According to the tribunal, in this particular circumstance, Article 7(5)(b) of the definition would apply:
structuring jobs, instituting part-time or modified work schedules, reassigning vacant positions, acquiring or modifying equipment or devices, appropriately adjusting or modifying examinations, training materials or policies, providing qualified readers or interpreters, and making any other similar alterations for a person with a disability.
The tribunal detailed how the different actions resulting in reasonable accommodation stated within the act should have been considered by the company. The tribunal went on to highlight that these actions were important when examining the case.
Although UK law, guidelines, judgments and similar tools are not binding on the Maltese judicature, they are commonly used – especially where the law or case law is silent on a particular matter. In this case, the tribunal referred to the Employment Statutory Code of Practice.(3) In particular, Section 6.28 of the code provides different factors which must be considered when deciding the reasonable steps an employer should have taken. The tribunal also quoted Section 6.29, which states that "the test of the 'reasonableness' of any step an employer may have to take is an objective one and will depend on the circumstances of the case".
Popularity with co-workers
The tribunal also referred to a UK Employment Appeal Tribunal judgment(4) to conclude that although X's working arrangements were unpopular with his colleagues, this was not a valid reason to alter X's working arrangements and that to do so would be considered discriminatory.
Industrial Tribunal's decision
The tribunal examined X's claims and decided in his favour, awarding him €20,000 for unfair dismissal and another €10,000 for discrimination by Company Y. While this award is unusually high when compared with other Industrial Tribunal awards over the years, it is unsurprising when compared with other recent judgments in which the Industrial Tribunal has granted compensation on the higher end of the spectrum.
Endnotes
(1) Telework National Standard Order, Subsidiary Legislation 452.104 of the Laws of Malta.
(2) HK Danmark v Dansk almennyttigt Boligselskab (C-335/11).
(3) Employment Statutory Code of Practice, Equality and Human Rights Commission.
(4) G4S Cash Solutions (UK) Ltd v Powell, UKEAT/0243/15.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
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