IRMI Update—Issue #42
An E-mail Newsletter for Risk and
Insurance Professionals
ISSN: 1530-7948
June 4, 2002
In This Issue
Colleague,
Many good things happen as the result of the work of risk management
and insurance professionals, but the most important one of all is
the lives we save. Whether you are a risk manager who works directly
with safety programs or an insurance broker or underwriter who simply
encourages the executives at the companies you insure to pay more
than lip service to safety, you are saving lives. Too often, those
with an indirect impact on safety forget about this important aspect
of their work. Don't let this be the case with you. Take pride in
knowing that good risk management keeps people alive and well.
Along that line, Janine Reid recently published a compilation
of proven methods to eliminate construction industry fatalities.
Each of the 89 tips was contributed by an experienced risk professional.
There is something in this book for almost anyone who manages construction
risks, and I liked it so much we are making it available through
our website. Follow this link to learn more about
Saving Lives! Proven Methods to Eliminate
Job-Site Fatalities or to order your copy.
We have many registrations for our seminars on Group Captives
and Other ART Solutions for the Middle Market, but there is still
room remaining at each location. To learn more or to reserve your
spot, follow this link.
Thank you very much for your support and confidence, and best
wishes for a wonderful summer.
All the best,
Jack
Jack P. Gibson
President
IRMI
Four Ways To Control WC Costs.
After being involved in WC in 15 different states over the years,
I have noticed that there are four critical keys to keeping WC costs
under control. These keys are time-tested and will work in most
states. They are:
- timely first reporting of claims,
- immediate medical control,
- return-to-work programs, and
- employee treatment.
The timely first reporting of claims not only allows the employee
to receive benefits soon after his or her accident, but also authorizes
the adjuster to start the investigation of the claim. Mailing in
first reports to your insurer loses valuable time on all claims.
Report all claims online or fax them. The first 72 hours of a WC
claim sets the tone for the claim and greatly influences the reserves
on the file.
Controlling the medical portion of the claim is a challenge,
especially in a state where the employee has a choice of medical
treatment. However, most of the time, the employee will consent
to see a physician that the employer recommends. Industrial-minded
medical treatment can be accessed in almost all areas of the United
States.
If an employer refuses a modified or full duty return to work
for an employee, the file will usually turn out to be considered
permanent total. Refusing an employee with a full duty return to
work will usually result in the insurer reserving the file as a
permanent total status. The reserves can increase exponentially.
A functioning return-to-work program can substantially reduce the
number of permanent total disability claims.
The employer must treat the out-of-work employee well to avoid
attorney involvement and other problems. Communicate that you care.
For example, sending an e-card is an economical way to show an injured
employee that his/her coworkers are thinking of him/her. E-cards
are free or can be purchased for a very economical cost. Almost
everyone has an e-mail address today. A regular card through the
mail is just as effective.
By: James J. Moore, AIC, MBA
President
J&L Insurance Consultants, Inc.
E-mail:
Suggest a Risk
Tip. Future issues of IRMI Update will include more risk
tips from our readers. Send us a practical tip (less than 300 words)
for identifying and managing risks, buying insurance, managing claims,
or filling gaps in insurance coverages. We'll give you credit for
your contribution.
There are now 294 articles on IRMI.com, and many more are in
production. Below you'll find summaries of some recent additions
with links to the articles.
-
The Language of Enterprise Risk Management—Jerry
Miccolis summarizes the terminology common to companies
that practice ERM, which forms a large part the
emerging global "language of risk."
-
Heavy Equipment Theft and Solutions—In
this first of four articles, David Shillingford
addresses the size and nature of the equipment theft
problem and how to align prevention with business
goals and the function of management.
-
Contractual Liability and the CGL Policy—What
is meant by contractual liability and how it actually
works is not always well understood. In this new
column, Craig Stanovich helps clear up the misconceptions.
-
Considering
Self-Insuring WC in a Tight Market?—Martin
McGavin examines the reasons self-insurance can
be less expensive, its intangible benefits, and
how to perform a cost-benefit analysis between insurance
and self-insurance.
How To Evaluate a Group Captive.
The hardening market has people looking for innovative solutions.
However, a bad decision can cost much more than a 300 percent premium
increase! A new seminar from IRMI, "Group Captives and Other ART
Solutions for the Middle Market," will explain how group captives
and rent-a-captives work and how to determine whether they are right
for your company (or your clients). Designed for busy executives
(only 2 days out of the office and 1 night in a hotel), this seminar
will equip you to make the right decision.
In IRMI
Update #41, Jack Gibson wondered how firms determine the best
way to spend their loss control dollars. He cites the 2002 Liberty
Mutual Workplace Safety Index as providing an example of how what
some might consider a considerable loss exposure (repetitive motion
injury) may in reality prove insignificant. In answer to the question
what data to use and how to analyze it, several readers expressed
their views, relating their own experiences. Below are a few of
the responses.
- The most accurate way to evaluate an individual
facility's loss exposure is to start with its history.
Good workers compensation data can pinpoint exactly
where resources should be spent. Frequency of injuries
can pinpoint machines, people (i.e., repeaters),
departments, processes, and even time of day. (One
large boy's facility found staff injuries occurred
most frequently on Sunday evening. Pizza and videos
scheduled for Sunday afternoon resulted in a sharp
reduction in injuries.)
Adding first-aid logs to this history can be
very valuable. A small cut can be very close to
a severed tendon and yet goes unnoticed. Often sources
of cuts are very easy to reduce and efforts in this
domain go a long way toward showing commitment for
employee well being. (One facility had 60 cuts 1
year and the accepted viewpoint was "We expect that,
we're a die shop." Concerned management, communication
to employees that this was not an acceptable cost
of doing business, and the implementation of a monitored
cut-log reduced those cuts to 23 the following year
with nearly 0 capitol investments!)
Data is only as good as the time taken to gather
it, the systems available to store, sort, and report
it, and the expertise of the people reading it.
Nothing should keep us from going forward to the
limits of our resources in each of those areas.
An often-overlooked resource is the employees
themselves. Ask the question "Where should the most
experienced or trustworthy person be working?" The
responses often result in improved machine guarding
or redesign of procedure. It doesn't hurt to remember
that those experienced people are the ones at risk
and also the ones most valuable to an organization.
Improvements in productivity, profitability, and
morale often result from that same question!
Right after a major accident an entire organization
usually pulls together to keep it from happening
again. Very often the investigation following the
injury turns up a history of near misses or minor
injuries under exactly the same circumstances. It
is very exciting when the whole organization pulls
together for a near miss or even potential injury,
without the pain and cost of the severity! Employees
know where the risks are. The benefits of listening
to them are too well known to even begin to list.
And, yet, often the largest area of benefit is to
find and remove the barriers for this communication!
There are experts in every field. Very often
the experts in accident prevention are free and
already "on staff" with the company's insurer or
agency. Requesting those resources may result in
a more focused expenditure of company resources
on site-specific exposure and less spent on perceived
industry risk.
—Ted A. Buchanan, Technical Services Representative,
Acordia
- I am a safety/risk professional in the food
processing industry. We like to use the OSHA 300
logs, as well as the last 3-5 years' workers compensation
loss data, to justify spending loss control dollars.
These two sources of data give the frequency and
severity of losses, measured in raw numbers and
costs respectively. This information can then be
presented to upper management and used to justify
different projects, programs, etc.
In trying to be proactive, we like to complete
periodic facility audits, either by myself with
other management personnel and/or by outside consultants.
The source of data that often works well here is
to quote the cost of a Cal-OSHA citation for the
problems noted. For example, if a machine guard
is missing, that would be a serious citation, and
would result in a fine of a minimum of $7,000-$25,000
maximum penalty, with the base rate starting at
$18,000. I can cost justify a lot of machine guards,
etc., against numbers like these. Regulatory compliance
isn't the proper moral reason to cost justify things,
but in today's world, the hefty fines get upper
management's attention and often provide the justification
needed to get things done.
These three sources of data have helped us create
written policies, training programs, and capital
projects (i.e., a loss control program) that has
been successful in reducing the frequency and severity
of injuries and associated costs.
—Ray Moltrum, ARM, Safety Coordinator,
California
Natural Products, Lathrop, California
- The Liberty study does not surprise me at all.
The hysteria over repetitive motion injuries was
driven by the misbegotten ergonomic Standard OSHA
almost implemented. The focus of OSHA has never
been "LOSS DRIVEN" or at least work comp loss driven.
Soft tissue strains due to material handling have
always been the most frequent type of lost time
injuries. However, when OSHA through ANSI attempted
to address the subject, they realized it was a very
difficult and more complex issue than they were
willing to study. OSHA has reacted to high-profile
accidents with enforcement campaigns for trenching,
fall protection, confined space, etc., but they
continue to avoid the fundamental question of, "How
much can a worker safely lift?"
I recently accompanied a general contractor client
through a comprehensive OSHA inspection at one of
their projects. The officer seemed to be intent
on issuing citations for lack of a hearing conservation
program. As we discussed the issue, I was shocked
by his lack of knowledge of basic industrial hygiene,
and when I told him that less than 1 percent of
all work comp dollars paid is attributed to hearing
loss, he stated it is an area on which "they" had
told him to focus.
I develop action plans for several dozen accounts
annually. If there are claim issues, I analyze all
past claims looking for frequency or trends/common
root causes and then for severe claims and their
causes. Over time, we usually run out of reactive
issues and then we do a brainstorming session to
identify proactive areas on which to focus (rocket
science it's not).
—George Robben, Loss Control Manager,
Cragin
& Pike, Las Vegas
A subscription to IRMI Update is absolutely free. Use the
e-mail registration form
to initiate or terminate your subscription.