Risk Management User Group

Wednesday, January 28, 2004

Welcome

Michael L. Hay, CGFM, CPPM

Please hold questions until the end of all presentations.

Meeting Agenda

     8:30-8:40 – Welcome 8:40-8:55 – Short Term Special Events, General Liability 8:55-9:10 – Review of SORM 200 Data 9:10-9:40 – Claims 9:40-10:00– Trend Analysis & Accident Investigation

Meeting Agenda

     10:00-10:15 – Break 10:15-11:00 – Life Safety Code 101, 2003 Update 11:00-11:15 – SORM Fraud Team 11:15-11:30 – Loss, Damage, & Destroyed Property 11:30-12:00 – Questions & Comments

Short Term Special Events, General Liability

Steven E. Haynes, ARM GRS Insurance Services, LLC

State Office of Risk Management Master Short Term General Liability Insurance Program

 Background and Purpose  Key Elements of Program • Outside Users of State Owned Facilities • State Employees Using Third Party Facilities  Program Highlights • Types of Events Available • Underwriting Guidelines • Coverages, Limits, and Pricing



Application Process



Key Contacts



Marketing Material



Summary and Questions

SORM 200 Loss Data Summary

Sally Becker CPCU ARM

History

   Annual Report to SORM FY02 – change in data collected – Loss type – – Loss cause Retain from year to year – Update previously entered data February, 2003 – availability to enter all year long

Overall

Data – FY02 vs. FY03

FY02

1636

FY03

1839

Change %

12% No. of Losses Open Closed Amt. Pd.

Res/Dmds 823 813 852 987 5,665,120 5,193,833 615,379,653 1,048,355,943 -8% Lawsuits 759 636 -16%

Automobile Liability

FY02 FY03

No. of Losses Open Closed 382 165 217 363 115 248 Amount Paid Avg. Pd./Cld.

991,501 4,569 524,462 2,115 Resr./Demands 3,255,914 1,998,551 Lawsuits 159 59

Change %

-5% -47% -54% -63%

No. of Losses Open Closed Amount Paid Avg. Pd./Cld.

Resr./Demands Lawsuits

Inattention

FY02

291 124 167 799,050 4,785 1,594,948 124

FY03

260 87 173 317,604 1,085 886,693 42

Change %

-11% -60% -77% -66%

No. of Losses Amount Paid Avg. Pd./Cld.

Resr./Demands

Backing

FY02

36 45,497 1,819 509,372

FY03

38 37,966 1,085 1,825

Change %

6% -17% -40%

Automobile Physical Damage

FY02 FY03 Change %

115% No. of Losses Open Closed Amount Paid Avg. Pd./Cld.

Resr./Demands 135 10 125 227,140 1,817 56,834 290 63 227 436,667 841 216,332 92% -54%

No. of Losses Amount Paid Avg. Pd./Cld.

Collision

FY02

104 187,114 1,970

FY03

183 190,903 1,414

Change %

76% 2% -28%

General Liability (Third Party)

No. of Losses Open Closed Amount Paid Avg. Pd./Cld.

Resr./Demands Lawsuits

FY02

610 380 230 921,198 4,005 456,981,573 401

FY03

367 215 152 406,325 2,673 652,382,766 197

Change %

-40% -56% -33% -52%

Employment Practices

No. of Losses Open Closed Amount Paid Avg. Pd./Cld.

Resr./Demands Lawsuits

FY02

289 185 104 1,232,270 11,848 114,687,704 148

FY03

308 200 108 2,059,177 19,066 8,248,000 181

Change %

7% 67% 61% 22%

Discrimination - Race

No. of Losses Amount Paid Resr./Demands

FY02 FY03

66 41,000 88 206,700 0 1,106,750

Change %

33% 404%

Retaliation

FY02 FY03

No. of Losses Amount Paid 28 98 16,031 1,540,000 Resr./Demands 1,100,000 4,630,000

Change %

250% 9506%

No. of Losses Open Closed Amount Paid Avg. Pd./Cld.

Resr./Demands

Property

FY02

78 15 62 720,967 11,629 169,910

FY03

118 29 89 669,089 7,518 212,852

Change %

51% -7% -35%

FY98 FY99 FY00 FY01 FY02 FY03 Total:

Data by Date of Loss

# Losses 71 115 315 619 1246 1075 3441 Paid 1,320,193 743,620 2,545,921 3,011,974 1,603,445 Resr./Demands 106,458,574 3,142,602 56,609,046 73,565,875 542,820,186 1,354,722 880,839,313 10,579,875 1,663,435,596

FY98 FY99 FY00 FY01 FY02 FY03 Total:

Automobile Liability

# Losses 14 15 51 109 317 237 743 Paid 19,035 86,897 140,434 398,482 591,728 249,387 1,485,963 Resr/Demands 8,574 0 543,032 1,100,594 2,862,151 740,114 5,254,465

FY98 FY99 FY00 FY01 FY02 FY03 Total:

Auto Physical Damage

# Losses 1 2 2 34 152 233 424 Paid 125 284 1,160 97,544 222,626 151,165 472,904 Resr/Demands 0 0 0 0 70,036 102,582 172,618

FY98 FY99 FY00 FY01 FY02 FY03 Total:

Employment Practices

# Losses 16 15 46 136 250 128 591 Paid 235,000 71,000 1,812,622 416,700 471,817 82,750 3,098,889 Resr/Demands 105,750,000 100,000 0 4,483,000 12,102,704 500,000 122,935,704

General Liability (Third Party)

FY98 FY99 FY00 FY01 FY02 FY03 Total: # Losses 16 43 139 242 343 180 963 Paid 9,850 156,719 207,373 709,614 118,136 Resr/Demands 700,000 3,042,602 15,821,014 61,511,786 517,112,291 69,211 531,919,146 1,270,903 1,130,106,839

FY00 FY01 FY02 FY03 Total:

Property

# Losses 8 8 76 104 196 Paid 10,332 578,259 146,381 655,084 1,390,056 Resr/Demands 0 0 170,010 212,752 382,762

Important



UPDATE INFORMATION

512-936-1573 Fax: 512-370-9037 [email protected]

Terry G. Myers Director of Claims Operations

Claims Cost

Cost to the Claims Fund vs Per Claim Costs

1

st

Qtr FY04 Update



Medical and Indemnity costs through the end of the 1 st Qtr FY04

–

Fewer open claims

–

Significantly lower costs

1

st

Qtr FY04 Update



WCRI

–

Cost of WC Claims in Texas

–

Future Comparison with SORM Claims Costs

Claims Operations Reorganization



Realignment of State Agencies HHSC



Three Indemnity Claims Teams HHSC, TDCJ, ALL OTHERS

Combined Medical Management with Medical Only Claims Team



Medical staff and senior adjusters



Eight (8) medical only adjusters

ACCIDENT INVESTIGATION/TREND ANALYSIS ON-LINE TRAINING

Leonard Zolondek

Events & Training

Safety Puzzle

OVERVIEW



INVESTIGATION PROCESS

 OBJECTIVE  WHAT 

ROOT CAUSE ANALYSIS



TREND ANALYSIS

PROCESS

WHAT

Accident Causation Theories

There are a variety of theories on accident causation that can be grouped into the following categories: •Domino Theories which view accidents in three phases: pre-contact, contact and post-contact. •Multiple Causation Theories which view causes based on a variety of factors such as man, machine and the environment. •Psychological/Behavioral Causation Theories which focus on human behavior as the major cause of accidents •Energy Related Causation Theories which view accidents as a result of energy that is out of control.

ROOT CAUSE ANALYSIS

 SCIENTIFIC PROBLEM SOLVING METHODS – –

Fault Tree Analysis

http://reliability.sandia.gov/Reliability/Fault _Tree_Analysis/fault_tree_analysis.html

– –

Fish Bone Diagram

http://www.pathmaker.com/resources/tools /cause.asp

Ladder in Doorway No Barrier Signs No Policy Forklift Brakes Defective Brake Maintenance Delayed Lack of Personnel Forklift Hits Ladder Forklift Couldn’t Stop Or Cooking Oil on Floor Housekeeping Inadequate No Enforcement Forklift Going Too Fast Speed Limits Not Enforced No Enforcement

Fishbone Analysis

Lamp Won’t Work

Power Bulb Lamp Won’t Work Plug/Cord Lamp

Power

Loose Burned out

Bulb Lamp Won’t Work Plug/Cord Lamp

Power Plug/Cord Bulb

Loose Burned out Corroded Missing Switch Broken Switch

Lamp Lamp Won’t Work

Unpaid Bills Switches Storm

Power Plug/Cord Bulb

Loose Burned out Corroded Missing Switch Broken Switch

Lamp Lamp Won’t Work

Unpaid Bills Switches Storm Dogchewed Unplugged

Power Plug/Cord Bulb

Loose Burned out Corroded Missing Switch Broken Switch

Lamp Lamp Won’t Work

TREND ANALYSIS

 IDENTIFY BASIC FACTS  SHOW POSSIBLE PATTERNS/TRENDS  ESTABLISH PRIORITIES FOR SAFETY ACTIVITIES

ASWG CODES Effective June 1, 1997 the Commission adopted revised Advisory Statistical Work Group (ASWG) codes for Nature of Injury, Part of Body, and Cause of Injury. These code changes aligned the Commission's reporting requirements with the International Association of Industrial Accident Boards and Commissions (IAIABC) Electronic Data Interchange (EDI) reporting standards. The ASWG codes are available to EDI participants through the IAIABC. If a carrier or trading partner has previously purchased an IAIABC Implementation Guide, the IAIABC will provide a list of all the ASWG codes as an update to the Guide. If you are interested in purchasing an Implementation Guide, you can contact the IAIABC directly at 1201 Wakarusa Drive C-3, Lawrence, Kansas, 66049 or by phone (785) 840-9103. The IAIABC has also made the codes available via their website at www.iaiabc.org. Once you have reached their web page, choose the EDI folder and available options will be listed.

Examples of categories to include in the analysis should at least be the following: A. Department: B. Job Title: C. Agent Involved: (ironing press, material cutter, fabric rolls, sewing machine, and clothing bundles) D. Experience: (1-5 years, 6-10 years, etc.) E. Body Part: (hand/fingers, back, leg, head/neck, arm and foot) F. Accident Type: (caught between, struck-by, struck-against, lift/lower, push/pull, etc.)

CAUSE OF INJURY – FY 01 & FY 00

As of August 31, 2001

35 30 25 20 15 10 5 0 FY 01 FY 00 Aggr 11 31 Slip/Fall 3 21 Misc 2 11 Cut 0 1 Cghting/ Btwn Rept Motion 3 2 2 0 Jumping Vehicle 2 0 1 0 Lifting Pushing Sports 2 0 1 0 1 0

8 6 0 FY 01 FY 00 4 2 14 12 10 16 CAUSE OF INJURY BY DEPARTMENT FY 01 & FY 00

As of August 31, 2001 AGGRESSION

Acute 2 14 IBP 1 6 MIMR 1 2 ITR 2 3 Ger/Med 1 1 CAU 4 4 Extnd 0 1

6 CAUSE OF INJURY BY DEPARTMENT FY 01 & FY 00

As of August 31, 2001 STRAINS

3 2 5 4 1 0 FY 01 FY 00 Hskgf 0 5 FdSvc 2 2 ITR 3 1 CSD 0 1 Rehab 3 1 Med Rec 1 0 Acute 2 0 Maint 1 0

Break Time!

See you at 10:15!

Fraud Investigations

Gary Ingram Julie Herrera

Workers’ Comp. Fraud

Workers’ Compensation Fraud is committed when a person(s) knowingly or intentionally misrepresents, conceals, or omits a material fact to either obtain or deny workers’ comp benefits.

Workers’ Comp. Fraud (cont’d)

Fraud is committed if a person knowingly or intentionally:     Makes a false or misleading statement.

Misrepresents or conceals a material fact.

Fabricates, alters, conceals, or destroys a document Conspires to commit an act described by the events above.

Fraud Investigative Unit

      Investigate allegations of fraud Validate SIBS, TIBS, and Death Benefits info Validate suspect travel and prescription reimbursements Assist DA’s and TWCC in prosecution of fraudulent claims Assist the claims adjusters, agencies, and claimants Assist SORM in obtaining information that is utilized at BRC’s and CCH’s

Useful Tool

EMPLOYEE’S RIGHTS AND RESPONSIBILITIES FORM

Recent Trends

Military

What to do when you suspect fraud or abuse.

 Call SORM’s Investigators – – Gary Ingram – (512) 936-1450 Julie Herrera – (512) 936-1521  Call your SORM adjuster or our main # – (512) 475-1440

Lost, Damaged, & Destroyed Property

Patricia O’Hara Systems Analyst (512) 936-1500 [email protected]

Benchmarks

    The State Auditor’s Office (SAO) recommended that SORM create benchmarks for LDD property.

Benchmarks will be based on the Class Code of assets, and an overall agency percentage.

An agency should have procedures for safeguarding assets. Risk Managers can contact their agency’s property manager.

We should have the benchmarks in place this spring.

Appropriation Reduction

 The Comptroller was charged by the 77 of FY02 and was continued by the 78 Act.

th th legislature to reduce an agency’s appropriations by 50% of the value of lost property, if the percentages are in excess of the American Society for Testing and Materials (ASTM) standards. This was implemented at the end Legislature in Article IX, Sec. 11.03 of the General Appropriations *Implementation Guidelines for General Appropriations Act, Art. IX, §9.03, 77th Leg., R.S. -- Appropriation Reductions for Lost Property http://www.window.state.tx.us/comptrol/san/fm.notices.date.html/fm02/fm0 2-47.html

LDD Definitions

 Class Codes  Disposal Methods  Lost Damage & Destroyed Property  Historical Cost vs Depreciated Value  Property level vs. Component level

LDD Process

 Missing Property  Stolen Property  Damaged/Destroyed Property  Negligence

Useful Websites

SPA Class Codes and Annual Financial Report (AFR) Categories:

http://www.window.state.tx.us/comptrol/san/spa/spa_class_codes afr_cats.html

SPA Disposal Methods for Fixed Assets:

http://www.window.state.tx.us/comptrol/san/fm_manuals/spa_man/spa_user 2000/spauser_appd1.html

Missing, Damaged or Stolen Property Report:

http://www.window.state.tx.us/taxinfo/taxforms/74-194.pdf

Useful Websites (cont’d)

State Agency’s Property Managers

http://www.window.state.tx.us/comptrol/san/agency_co ntact_list/spa/st_agy_spa_contacts.html

State Auditor’s Office Report

http://www.sao.state.tx.us/Reports/report.cfm/report/0 1-032

Questions & Comments?

Risk Management User Group

Thank you for attending.

See you on April 28 th , right here!