Transcript Contemporary Liability & Safety Concerns

Telcom Insurance Group
Marilyn Blake, AU, CRM
2010 RMC
June 29, 2010
Goals of the Session
 Understanding the principles of Workers
Compensation Insurance
 Understanding how your Workers Compensation
Modification (Mod) factor effects the premiums you
pay
 Using Risk Management to identify trends and
training needs to reduce your “Mod”
Employees are Assets
 More than 3.7 million Americans suffered workplace
injuries in 2008 (3.9 on-the-job injuries per 100 workers
according to Bureau of Labor and Statistics) this is down
from 4.2 in 2007
 A typical injury can cost $28,000 in wage and productivity
losses, medical and administrative expenses, insurance
expenses, and other costs
 Improving workplace safety through training can improve
the bottom-line by improving your Workers Comp Mod
 Pro-active approach--not wait-and-see approach is
essential
Development of Coverage
Simply defined, workers compensation gives
compensation to a worker, one who performs labor
for another, for injuries and illnesses caused as a result
of that labor.
Workers compensation is really more like social
insurance, much the same as unemployment
compensation and social security. It is however, the
oldest form of social insurance.
Workers Compensation (WC) Defined
 WC: No-fault statutory benefits prescribed by
state law which are provided by the employer
to an employee (or their family) due to a job
related injury (including death) resulting from
an accident or occupational disease;
 Usually defined as sudden and accidental
Who is Covered?
With some exceptions, almost all employers and
employees are covered by workers compensation.
Each state has different definitions of employees and
most of the time situations like family-run businesses
or employers with only 1 employee are not required to
provide WC insurance for their employees.
What about Independent Contractors?
Independent contractors can raise issues. It is wise to make
sure that any independent contractors that you hire to
perform work for you have their own workers
compensation insurance. Most state laws make you
responsible for the payment of WC benefits to or for the
injured employees of any uninsured subcontractors.
The state legislatures that passed the laws intended them
to be construed liberally in favor of injured workers and
their families.
3 Major Parts to the WC Policy
 Part One- the insurer agrees to pay benefits imposed by the law of the
state , also called Statutory. Section 3A of the information page needs
to list all states where there is active work. It is intended to be the
sole-remedy for the injured employee.
 Part Two- protects the insured against liability imposed by law for
injury to employees in the course of employment that is not part of Part
One. It can include 3rd parties like family members bringing suit. This
coverage applies to damages in tort or other liability, as opposed to the
statutory liability.
 Part Three- provides other states insurance for states not covered by
Part One where a worker is injured.
Which States’ Benefits Apply?
 An injured worker can generally choose the most
favorable venue to seek WC benefits from and this
includes:
• The state of the employer
• The state of travel where the claim occurred
• The state of residence
• If all states are not listed in 3A of the info page
coverage can be declined
What is an Experience Mod?
The Experience Modification Factor is also known as
an Experience Modification Rating, EMR, Experience
Modifier, or just the Mod. This is an adjustment that is
made to the Workers Compensation insurance
premium of companies that meet or exceed a certain
size threshold. This threshold is measured in manual
premium and varies from state to state. But typically, a
company that has been paying $5,000 in manual
premium for the past few years or has paid $10,000 or
more in a single recent year qualifies to be experience
rated.
WC Mod Simple Definition
It is the number used to “fit” the cost of WC insurance
to the actual loss experience of an individual employer
by rating individual insureds, using past losses
compared to every $100 of payroll with similar WC job
classifications/codes within your specific state within a
specific timeframe.
WC Payments Include:
 Medical expenses (doctor’s visits, treatments, etc.)
 Indemnity (lost wages and disability ratings)
 Expenses (paid by the insurance company and NOT a part
of the Mod calculation)
 Medical costs escalate and affect the costs associated with
WC--just like in Group Health Plan
WC Rates Determined
Experience Modification - Your loss experience based
on industry class codes as relates to each $100 of
payroll, by state:
 1.0 means your experience is what is expected;
 over 1.0 you’ll pay a “surcharge” and
 under 1.0 you’ll get a reduction in the filed rates
Common Misconception
One common misconception is that these factors are
calculated by the state. In most states, this is not true.
Experience mods are calculated by rating bureaus. A
few states have their own rating bureau. But NCCI is a
private corporation, created and funded by member
insurance companies. It is approved by the states but is
not a governmental agency.
Non-NCCI States
California, Delaware, Indiana, Massachusetts,
Michigan, Minnesota, New Jersey, New York,
North Carolina, Pennsylvania, Texas, and
Wisconsin have their own government-run rating
bureaus that are separate from NCCI.
Rating Formulas
 Rating bureaus consider the following:
 Size of the company (payroll by class code)
 Possibility of unexpected accidents
 Differences between loss frequency (how often) and
severity (how much does it cost)
WC Common Class Codes
 7600 TELEPHONE OR TELEGRAPH CO./ ALL OTHER
EMPLOYEES & DRIVERS: Includes operation,
maintenance, extension of lines and making of service
connection. Not applicable to contractors. Including
installation, maintenance, repair and operation of
telephone lines and systems, remote transmission sites,
and central office switching equipment—including shop.
 8901 TELEPHONE OR TELEGRAPH CO./OFFICE OR
EXCHANGE EMPLOYEES & CLERICAL: The code includes
office or clerical operations of these entities.
 8742 is available for outside salespersons.
What Data is Used to Generate Your Mod?
 The data is based on 3 complete prior years’ (not
calendar years, unless that happens to be how your
policy year runs) incurred claims amounts, excluding
the most recently expired year as it is too new.
 Incurred claims amounts are the insurance company’s
best estimate, based upon the information known
about a claim, as to what the ultimate costs (not
including expenses) will be for medical and indemnity
costs.
 So, one bad year remains on your Mod for 3 years.
2010 Example of the 3 Prior Years
Claims experience period
2006
2007
2008
Excluded claims data
Year rate is applied to:
2009 (most recent year)
2010
WC Mod shows Medical & Indemnity
Calculations by Claim Number
 Indemnity: lost wages (66 2/3% or 70% up to a
maximum per state), temporary and/or permanent
impairment ratings as assigned by the medical
provider (assumed to be 100% unless previous medical
records show otherwise), and vocational rehabilitation
(to get a new job if they can’t go back to their old job
because of restrictions after they have reached
maximum medical improvement).
 Some states combine medical claims under $2000 into
one blanket total.
Excel:Sample Mod Worksheet
Claim #
Actual
Incurred
Injury Code Losses
Actual
Primary
Losses
bor24
6
1583
1583
1583
23925
5
11
1106
1106
1106
2689
2689
2689
TOTAL
Primary
Losses
Stablizing
Value
Ratable
Excess
Totals
ELR
Actual
2689
24245
0
26934
Expected
6611
24245
1590
32446
9%
Actual
Primary
Losses
Actual
Incurred
Losses
Actual
Ratable
Expected
Losses
Ballast
Actual Excess Exp Mod
17665
7963
0
0.83
Terms Defined by Column on the Mod
 Column 1 (Code)
Also referred to as "classification code," this is the four-digit number
that identifies the nature of your business. One or more class codes
may apply.
 Column 2 (ELR)
The expected loss rate is the amount of losses expected per $100 of
payroll. This actuarially derived factor is updated with each change in
rates in your state. The ELRs are in dollars and cents and, therefore, a
decimal point is implied before the last two digits. If the state changes
the ELP one year, it affects all 3 years being evaluated by that Mod.
 Column 3 (D Ratio)
The discount ratio is another actuarial factor updated with each change
in rates in your state. It determines the portion of losses that are
expected to be primary losses (the first $5,000 of each claim).
Terms Defined by Column on the Mod
 Column 4 (Payroll)
This is the amount of payroll reported by your insurer for each of the
class codes on your policy. A payroll total is provided for each policy.
 Column 5 (Expected Losses)
This is the dollar amount of the losses expected, based on your class
code and payroll amount. (Multiply the ELR from Column 2 by the
payroll divided by 100).
 Column 6 (Expected Primary Losses)
This is the portion of the expected losses that are expected to be
primary losses (the first $5,000 of each claim). (Multiply the expected
losses by the D ratio from Column 3).
Terms Defined by Column on the Mod
 Column 7 (Claim Data)
This column provides the claim numbers for the losses reported by
your insurer. Individual claims of $2,000 or less may be grouped
together for reporting purposes. These grouped claims are identified by
an asterisk in the O/F column, #8, with the number of grouped claims
in this column.
 Column 8 (IJ)
This is an injury code assigned to each claim by your insurer based on
the type of injury. For example, 1 represents a death; 6 represents
medical only
 Column 8 (O/F)
This represents the status of the claim, either Open (O) or Final/Closed
(F). The designations in Column 8 do not have an impact on the
experience modification calculation.
Terms Defined by Column on the Mod
 Column 9 (Actual Incurred Losses)
These are the losses for each claim. These are the dollars spent to pay
the claim. For open claims, it includes the money your insurer has set
aside for future payments on the claim.
 Column 10 (Actual Primary Losses)
For losses under $5,000, the entire amount is taken as the primary
value. For losses in excess of $5,000, only the first $5,000 is primary.
(Please refer to the explanation for Column 6).
Near the bottom of the rating sheet is a row of boxes (A) through (I).
These figures are both actuarially determined, and based on the
information provided above.
Which is more important—Frequency
or Severity?
 Frequency leads to Severity is the premise
 Because of their predictability, the Mod is affected
probably a bit more by many small losses than one
occasional large one. Large losses are usually capped
at approximately $125K on the Mod calculation.
Economic Trends that Affect the Mod
 Major World Events: OKC bombing, 911, BP oil spill
 Employment trends
 Medical costs escalate
 Legislative changes
 Political changes
 Stimulus $$$
Trending Benefits
 Basic tenant of insurance is that frequency leads to
severity
 Accident reports help gather information useful in
trending
 Time and place of accident
 Age of injured employee
 Length of time as an employee
 Cause code (type of injury)
 Identifying trends is key to developing training needs
and preventing/mitigating future accidents/injuries
Telcom’s WC Trends (2005-2009)
 Loss Frequency
 20% contact exposure
 29% material handling
 28% slips/trips/falls
 13% struck by/against
 10% equipment/tools
Telcom’s WC Trends (2005-2009)
 Incurred $$$ for Losses
 6% contact/exposure
 31% material handling
 41% slips/trips/falls
 11% struck by/against
 11% Equipment/tools
Telcom’s WC Trends (2005-2009)
 WC Injury Type Frequency
 5% skin disorders
 5o% sprains/strains/contusions
 7% fractures
 Less than 1% heart
 19% cuts/punctures/scrapes
 10% cumulative trauma
 9% other
WC Claims Management
 Employees should report claims promptly (end of
shift; w/in 24 hours to appropriate person); telco
should report just as quickly to carrier (even if for
information purposes/incident only)
 The average cost of a claim increases 3% for each day
the first report of injury is delayed
 20% increase when report filed after 7 days; 41%
increase when filed after 15 days
 Accident reports help track information for trending
WC Claims Management
 Return-to-Work/Light Duty programs
 Get the injured worker back to the their “work family”
doing something meaningful
 Not sitting around feeling more pain/thinking about
what they can’t do/watching commercials for TV lawyers
 Need detailed job descriptions for the medical provider
to determine the specifics of light duty
 Reduces the amount of $$ paid for WC as they are back
working for you
WC Claims Management
 Assigning a Nurse Case Manager to all lost-time WC
claims is important to Telcom and Great American
 Gets important medical and work restrictions related
information to your telecom contact within a short
period of time following an employee’s visits to the
doctor
 Helps the injured employee understand better what
the doctor is telling them and makes sure they are
taken care of
WC Claims Management
 Promote reasonable rewards
 Local gift cards if no accidents within a specific period of
time
 Make safety part of the evaluation process
 Make safety fun—games/trinkets
 Do Job Safety Analysis before beginning jobs
 Have a safety committee that reviews accidents and
near-misses
Job Safety Analysis (JSA)
 Used to identify existing and potential risks and take
corrective action prior to beginning a job
 Evaluate the equipment, procedures, and personnel
 Steps:
 Break down the job into steps
 Identify the hazards
 Evaluate the hazards
 Recommend safety procedures
 Revise as necessary
JSA Sample
JOB SAFETY ANALYSIS
Company:
Date:
Location:
Task:
Steps Taken To Perform Job
Potential
Accidents/Hazards
Recommendations to Eliminate Hazard or Reduce Potential Hazard
Please check all that apply to this job:
Hard Hat/Safety Glasses/Steel Toed Boots/Work Gloves/Fall Protection/Fire Extinguisher/Seat Belts/MSDS
Work Permits/LO/TO/Daily Inspections/First Aid Kit/Severe Weather/Backing Vehicles/Other
Please check all the potential hazards that apply to this job:
Driving/Fire /Explosion/Slip/Trip/Fall/Unqualified empl./Contractor/Power Lines/Back/Lifting/Falling Objects
Overhead Object/Unauthorized/Pinch Points/Equipment/Pressure/Other:
All personnel attending this safety meeting and all personnel, who arrive during the course of this shift, for the purpose
of conducting work for ____________ must read this JSA and sign it before beginning any work.
Name (Print)
Signature
Time of
Signing
__________________________________________________________________________________________________________________
___________________________________________________________________________________________________
Meeting
conducted by: ___________________________________________________________
If you have any questions concerning an unsafe act on the job, please begin by contacting your supervisor. The safety department is at
your disposal if your supervisor cannot address your concern. A copy of this form will be kept on file to help management establish
the safest working environment possible, so remember to return the completed form to your supervisor or the office at the end of
the day.
Accident Investigation Process
 Immediately or at the end of the shift, all employees should

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

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report accidents to their supervisor; where appropriate, the
supervisor or designated employee should notify your
insurance carrier
Investigate every accident as soon as possible while details
are still fresh
Get contact information and interview witnesses
Remember, “A picture is worth a thousand words”
Do drug & alcohol testing, if appropriate
Make recommendations to prevent/mitigate the same
accident from happening again
Investigation Guide
 Who, What, Where, When & Why
 Identify the people involved, the conditions, and
exactly what the accident/injury/damage consists of
 What is the corrective action?
 Follow-up and make sure the corrective action is done
Sub-Contractors & Your Mod
Don’t forget to get Certificates of Insurance from your
independent contractors as every independent
contractor can be construed as “your employee” if you
direct their work, if they use your tools, and sometimes
even if they work your hours/under your direction. If
they don’t have WC insurance or don’t have enough WC
insurance and they have an accident and have an
employee injured, it could become your accident and
affect your Mod. If they have their own insurance, this
helps their injured worker to have a source for
treatment that isn’t yours.
Risk Management & the Mod
In general, the key is to manage the risks and lessen
the impact on the WC Mod for both the human sake
and for the financial sake of the company.
Preventing accidents/injuries and mitigating the ones
that do occur, reduces your WC Mod and, therefore,
the amount that you pay for WC all the while
protecting your employees too.
Telcom--NTCA’s Risk Manager
 www.TelcomInsGrp.com for free forms on accident
investigation, job-safety-analysis forms, etc.
 Video library of more than 250 safety, management, and HR
training programs
 Trending and loss analysis services
 Telecommunications-specific business insurance for the
modern rural telecommunications company
Telcom is a member-benefit of NTCA!