Transcript The Bermuda Market in 2005

Loss Prevention as a Cost
Control Exercise
Loss Prevention as a Cost Control
Exercise
Speakers:
Bill Hettrick
President/CEO,
Hettrick, Cyr & Associates
Jeff Barker
Director of Insurance,
JELD-WEN, Inc
Moderator:
Peter Willitts
President,
Liberty Mutual Management
Perspectives Given Today
Bill
Safety & Risk Control Service Provider Perspective
Construction & General Industry
USA Companies
Approximately 50,000 Employees
Proven Programs across Multiple Captives and Self Insured
Jeff
Risk manager
Single manufacturing perspective
24 countries
22,000 employees
Grown primarily through acquisition
Loss Control Through Effective Best
Practices
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Hiring Practices
Post Injury Management
Claims Management
Internal Safety Circles & Committees
Employee Training
Employee Maintenance
Program Audits & Inspections
Worker Observations & Counseling
Performance & Measurement
Written Safety Programs
Supervisor Training & Accountability
Fleet Safety/Auto
General Liability
Property
Legal
Best Practices Focus on:
Programs
Policies
Workplace
Loss Control Best Practices
• Focuses on key elements of a true safety culture
• Member/Company Developed & Approved
• Captive members are Audited Internally/Externally to
Best Practices
• Non-compliance is tracked, trended, and reported to
Captive members/management
Proven & Effective Best Practice
Examples
• Benchmarking – Management by Measurement
• Employee Maintenance
• Legal
• Hiring Practices
• Claims & Success Alerts as an Accident Prevention Tool
• Employee Weekly Safety Huddles (Tool Box or Lunch Box)
• Peer to Peer - Safety & Risk Managers Semi-Annual Workshops –
Sharing of Resources & Ideas
• Captive Appreciation & Recognition of Employee Safety –
C.A.R.E.S.
Management by Measurement Benchmarking
• Measures results of captive and individual members, departments,
and/or facilities against tangible goals & industry averages
• Develops accountability by member, department and facility
• Benchmarks calculated by payroll or hours worked. Examples
include:
– Loss Rate per $100 of Payroll (WC, GL)
– Incurred Cost per FTE (WC,GL)
– Non $0 Claims Frequency per $1,000,000 in payroll (WC, GL)
– Days Away from Work Rate per 200,000 hours worked
– Lost Time Frequency Case Rate per $1,000,000 payroll
– Non-$0 Auto Frequency per 10 Insured Vehicles
– Auto Liability Loss Rate per Insured Vehicle
– OSHA Recordable Incidents per 100 FTE’s (200,000 Hours)
– Individual Tracking of Member Loss Pics with Development
– Lag Time Reporting
Tracking Captive Members or Facilities
Against Captive Goals
Non $0 Auto Frequency Rate Per 10 Vehicles & Liability Loss Rate Per Vehicle
$900
3
$829.00
Liability Loss Rate Per Vehicle
$800
$700
Non $0 Auto Frequency Rate Per 10 Vehicles
$1,000
2
$557.00
$600
$500
1.85
$400.00
$400
1.35
1
$300
1.00
$200
$100
$0
0
Captive Member
Auto Liability Loss Rate
Captive Average
Captive Goal
Non $0 Auto Frequency Rate
Note: Information contained in this chart is for example purposes only and does not reflect actual company data
Establishing Timely Reporting as a
Best Practice
Claims Reporting Practices - WC, Auto, GL
80%
Best Practice Standard
Captive Member
49%
29%
62%
Captive Member
20%
22%
22%
69%
Captive Member
0%
10% 10%
40%
18%
60%
16%
13%
80%
100%
% Claims Reported within X # of Days
% Claims Reported < 3 days
% Claims Reported 3-10 days
% Claims Reported > 10 days
Note: Percentages do not represent actual practices, this is for example only information
Benchmarking Transparency
Non $0 Claim Frequency per 200,000 Hours Worked
30
25
20.5
20
15
14.13
10.62
10
7.98
7.5
7.09
5.97
5
4.35
4.09
3.43
1.5
1.35
0
0
Captive Member
0
Program Goal - 6.0
0
Captive Average - 5.0
0
The Importance of Employee
Maintenance
• The first of the Baby Boomers reached age 63 in 2009.
• As baby boomers approach retirement, they will comprise
a greater percentage of the workforce.
• Will present a greater challenge to manage workplace
safety, mitigate risk, and prevent injuries.
• Employee Maintenance programs must be part of the
forward thinking to maintain standards of fitness for duty
Approximately 1.4 million claims are filed annually in
the USA as a result of sprains, strains, and
overexertion, accounting for a direct cost of over 25
Billion dollars
Evolution of an Injury
1st Quarter (0 -20)
Resilient
2nd Quarter (21 – 39)
Soft
Half Time (40 – 41)
Injured
3rd Quarter (42 – 60)
Lost
4th Quarter (61 – 80)
Season-ending
Overtime (81 – 85)
Debilitating
Double Overtime
(85+)
Injury
(Mostly Bumps & Bruises)
Tissue Injuries
Reserve
Time Injuries
Injury
Injury
– Game Over!
Employee Maintenance
“Human”
Maintenance
 Mechanical Machine
–Maintain Equipment
–Maintain Grounds
–Maintain Building
–Maintain Vehicles
–Preventative Maintenance
 Human Machine
–Most difficult to properly diagnose
–Most expensive machine to fix
–Toughest machine to get back on
the road
Welcome to Stretch Coach Train The
Trainer!!!
“WE ARE ALL ATHLETES IN LIFE”
Pre-Shift Stretching Design
• Prepares the Body For Physical Work
• Increases Flexibility
• Enhances Body Mechanics
• Creates Body Awareness
• Reduces Risk of Soft Tissue Injury
• Physically & Mentally Prepares Employees for
their Workday
• Starts Work on a Positive Note
• Reduces Stress & Tension
• Increases Alertness
Improvements in Health, Morale, &
Productivity result over time
National Trucking Company –
4,000+ Drivers
A national trucking company implemented the Pre-Shift Stretch Program in
2007, and saw a 62% injury reduction within the first year. (This company
utilizes a blending of the Pre-shift Stretch and a part-time onsite Human
Maintenance System certified athletic trainer through OAI.
Testimonials
“The results of implementing the Occupational Athletics Program have exceeded our
expectations. Mark Everest does a great job sending a motivational message to our
employees to change their lifestyle behaviors. We have seen a decrease in our
workman’s compensation claim costs of 77% through the involvement of our employees
in the Pre-Shift Stretch Program. Additionally, the continual maintenance of the program
has created a culture of wellness. We had 6% of our employees quit smoking and 16%
went on the weight loss programs. Results of the Health Risk Assessment, year after
year, show that their total lifestyle scores improved significantly. Our employees are
happier and healthier. This has been a great return on investment.”
~ Penny Pilafas, V.P. Human Resources ~
Midwest USA Utility Company – 8,500
Employees
One of OAI’s largest single clients, this Midwest Utility company
implemented the Pre-Shift Stretch in 2005 and because they had such
significant results (a 50% reduction in soft tissue injuries), they added
several full-time HMS certified athletic trainers onsite at various
locations. Their current savings has been in the millions of dollars.
Legal Best Practice as a Loss Control
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Begins with identification of claims and exposures, looking for
claim patterns, just as we do in safety, where do risks come
from?
Main Focus on CGL & Property, but also Auto and WC
Review of Contractual Obligations by members/companies:
Real Estate, Purchase Orders, Employment/HR, General
Services, Products, Sub-contractors
Examine indemnification language and check to be sure that
indemnification liability is limited to the extent the loss is due to
member's negligence
Certificates of Insurance Requirements
Statutes of Limitations by member location
Identify Strategy
Development of Best Practices, putting captive in “less legally
vulnerable” position
Claims’ Alerts to Prevent Incidents &
Accidents?
• Purpose of claims’ alert program is to;
 Inform & educate captive members of potentially large claims that
have occurred at other facilities.
 Provide a detailed sequence of events, root cause analysis, and
preventative measures to help everyone educate employees and
prevent a reoccurrence.
 Can be utilized as a tool box, lunch box, safety huddle, or shift
talk where applicable.
• Criteria for a claim to become a “Claim Alert” in a
Construction Captive (example):
 All falls over 6’ in height
 Any water infiltration incident
 General liability claim over 25K
 Preventable auto accident claim
 Property damage in excess of 25K
 Any claim that provides a value to the members at large
Five Minute Safety Huddles
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A five (5) minute Safety Huddle is an informal safety discussion
presented to employees as refresher training within their
departments.
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Safety Huddles are run by Department Managers, Supervisors,
Safety Committee Members, or Field/Shop Personnel.
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Talks focus on a specific workplace hazard, department incident,
OSHA topic, or any relevant safety matter.
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A 5 minute talk every week provides over four hours of refresher
training a year.
Benefits:
100% Comprehension – All adults have a 5 minute
attention span.
Positive communication between management &
labor.
Keeps safety as a priority as a constant refresher
24/7.
Information Sharing & Development
• Safety & Risk Management Peer to Peer
Meetings
– Primary goal is to establish an internal network of safety
professionals and risk managers who share common
workplace perils within the captive.
– Peer to Peer extended to Store Managers, Operations
Directors, Department Managers, Superintendents, HR
Directors, Safety Committee Chairs, etc.
– Meetings are held 1-2 days.
– Outside speakers selected based on topics and specific
training requirements of meeting.
– Conducted Regionally or Nationally a minimum of twice
per year.
Project C.A.R.E.S.
Project C.A.R.E.S – Captive Appreciation and Recognition of Employee Safety
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Objective: Giving recognition to those who put forth added effort in the workplace
everyday to ensure not only their own safety, but that of the entire department or crew.
These employees go above and beyond to ensure the workplace is as safe as
possible, and truly make safety a number one priority. The efforts these employees
put forth on a daily basis, improves safety for all and deserves recognition.
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Frequency: Monthly
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Criteria: Each captive member submits an employee’s name based upon criteria
developed by Captive Loss Control Committee. Recipients of the CARES Award are
eligible on a frequency of once per policy year.
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Award: Those selected receive recognition in the monthly captive newsletter which is
discussed and displayed in all location. In addition, a gift certificate for $50.00 to a
local restaurant and a polo shirt displaying the captive name, with the slogan
“C.A.R.E.S”.
COORDINATION OF SERVICES
Loss
Control
Provider
Claims
Managers
Insurance
Carrier
Captive
Members
Actuarial/
Investment
Bankers
Captive
Managers
Insurance
Brokers
Proven Results: All HC & A Captives & Self
Insured Programs
• Some captive members (size dependent) making more in
captive distributions than operational profits (2009)
• Loss ratios reduced by 57%
• Claims’ frequency decreased by 38%
• Have First VT Captive to receive a return in Year Two
• 92% of members and companies performing better than
their individual loss pics
• Supervisor/Foremen testimonials within captive – most
powerful, “Charlie the Superintendent”.
Best Practices
• Dedicated Loss Control Managers
• Hiring Practices
• Risk Management Manual
• Contracts and Certificates of Insurance
• Silo Breakdown
– EPAQ (Environmental Project Assessment Questionnaire)
– Engineering Involvement
– Product Development
– Quality & Production
• Incident Investigation
• JWReportIt
• Benchmarking – “Driving Competition”
Dedicated Loss Control Group
• Six dedicated individuals
• Life Safety (W/C) primary focus followed by
property, motor vehicle and general liability
• Administrative conduit for facility challenges
• Train the Trainer techniques and topics
• Semi – Annual site visits to each location
– Audit reports – solution oriented
– Relationship with facility management
– General Manager accountability sheet
General Manager Accountability Sheet
• “Non-Negotiables” of Risk Management supported by Executive
Management
Safety Programs & Annual Training (P&G 301, RMM)
1. Management conducts and documents monthly employee safety training concerning all the
applicable topics listed in the RMM tab 5 in order to meet the annual training requirements.
(Note: Your Field Service Manager will help you determine the applicability of specific safety
programs to your facility and operations.) (301-A, 2 & RMM tab5)
2. All required safety training is documented in ClaimDesk Training Tracking.
3. The facility incorporates safety topics into the daily or weekly production/quality meetings. (Best
Management Practices)
4. The Lockout/Tagout Program is fully implemented. (RMM tab 11)
5. The Personal Protective Equipment (PPE) Program is fully implemented. (RMM tab
12)
6. The Hazard Communication Program is fully implemented (MSDS). (RMM tab15)
7. There is an Emergency Preparedness plan in place that adequately addresses all foreseeable
scenarios that could affect the facility. (RMM tab18)
8. The JELD-WEN Ergonomics Program is fully implemented. (JELD-WEN Ergonomics
Program)
Yes
No
Hiring Practices
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2004 Safety Initiative
– WCIR of 16.0 (1,979 claims)
– Open Claim Volume of 735
– Accrual of $18.5M
– Analysis of dollar impact led to identification
of two lead offenders:
1) Employees in their first six months of hire
2) Repeaters
•
Result was emphasis on pre-employment,
training, & re-emphasis on substance abuse
testing
Hiring Practices, cont.
• Insight Integrity Test – weed out potential problem
employees before they begin employment
– Workers Compensation Fraud
– Work Place Violence
– Substance Abuse
– Theft
– Dependability
Hiring Practices, cont.
“Is your current use of illegal drugs or alcohol affecting your job
performance?”
• A. No, I do not report to work with illegal drugs
or alcohol in my system.
• B. No, because I perform well even with illegal
drugs in my system.
• C. A little, but my performance is acceptable.
• D. I have been told that my job performance is not
very good when I have reported to work with
drugs or alcohol in my system.
Hiring Practices, cont.
• From 2004 to 2010 over 48,000 tests conducted
• W/C Fraud, Theft, and Substance Abuse three leading
categories
21%
Cautions
Without Cautions
79%
Hiring Practices, cont.
• Basic Skills
Hiring Practices, cont.
• Over 19,000 test administered
since 2005
• 19% did not meet the
minimum of 70% correct
Basic Skills Test Results
Fail: 19%
Pass: 81%
Hiring Practices, cont.
• Overall Results of Safety Initiative
– WCIR of 4.1(338 claims)
– Number of open claims 290
– Accrual of $8M
Translates into a $45M savings
WCIR
18
16
16
14
11.32
12
9.42
10
WCIR
8
6.46
5.44
6
4.82
4.08
4
2
0
2003
2004
2005
2006
2007
2008
2009
Risk Management Manual
• Online resource for all facilities in one location
• Programs address a variety of risks from workers
compensation, motor vehicle, property and general
liability
• Gives JELD-WEN standard unless regulatory
requirements are higher
• Examples of programs:
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–
–
–
Hot Work
Sprinkler Maintenance and Testing requirement
Contractor Safety
Ergonomics
Risk Management Manual Program Example
Contracts & Certificates of Insurance
• Five person contract review committee
– Legal (contract attorney)
– Operational Vice President
– Treasury/Accounting
– Tax
– Risk
• Philosophy shift toward solidifying every
relationship with a contact
• Specific insurance requirements and limits for
suppliers/contractors
• Track suppliers/contractors for compliance
Silo Breakdown
• Connecting and sharing information between
business units, divisions, facilities, and
departments
• Engineering Involvement
– Review plans for plants and equipment prior to
being built
– On the same team for process improvements
• EPAQ (Environmental Project Assessment Questionnaire)
– Filled out prior to any project or process
changes occur
– Risk Management automatically sent a copy
Silo Breakdown, cont.
• Transportation
– Driver tracking, classification & approval
– Point system for violations
– Number of vehicles provided electronically
• Product Development & Production
Incident Investigation
• Each near-miss, incident or claim is investigated
regardless of line of coverage
• Identify whether it was an unsafe act or unsafe
condition
• Identify root cause and preventive actions to be
implemented
• Reviewed by safety committee and general
manager or divisional vice president
• Aids in claim management
JWReportIt
• Internal claims and risk management system
• Over 600 users from safety coordinators, risk
management staff, general managers, and
divisional vice presidents
• Five primary functions
– Claim entering and management
– Facility Audit
– Training and Tracking
– Document Management
– Deductible and Monthly Billing
Benchmarking
• WCIR
– Monthly reports sent to
all General Managers,
Divisional Vice
Presidents, & Executive
Management
– Universal definition of
what is included in the
calculation
• Global Audit
– Compliance with top 14
Risk Programs
Does the incident involve an
employee reported injury or
illness alleged to be a result
of work or work environment
Yes
Are injured workers labor
hours included in facility
labor hours. (Temporary or
sub contractors are not
included)
Yes
Did the employee receive
medical treatment from a
professional medical
provider on site or off site?
(Some facilities have
professional medical
providers on site)
Yes
Has the reported incident
been accepted by a
regulatory agency. (A
confirmed denial may be
decided over a period of
time)
Yes
Record as a JELD-WEN
Incident
Challenges for Implementation
• Cost vs. Benefit
• Corporate “Sheriff” Mentality
• Work Place Culture
• Silo “Kingdom” Effect
• Top Down Support
• U.S. vs. International