loss prevention as a cost control exercise. speakers: bill hettrick president/ceo, hettrick, cyr &...

Loss Prevention as a Cost Control Exercise

Loss Prevention as a Cost Control ExerciseSpeakers:Bill Hettrick President/CEO, Hettrick, Cyr & Associates

Jeff BarkerDirector of Insurance, JELD-WEN, IncModerator:Peter WillittsPresident,Liberty Mutual Management

Perspectives Given TodayBillSafety & Risk Control Service Provider PerspectiveConstruction & General IndustryUSA CompaniesApproximately 50,000 Employees Proven Programs across Multiple Captives and Self InsuredJeffRisk managerSingle manufacturing perspective24 countries 22,000 employeesGrown primarily through acquisition

Hiring Practices Post Injury ManagementClaims ManagementInternal Safety Circles & Committees Employee TrainingEmployee MaintenanceProgram Audits & InspectionsWorker Observations & CounselingPerformance & MeasurementWritten Safety ProgramsSupervisor Training & AccountabilityFleet Safety/AutoGeneral LiabilityPropertyLegalLoss Control Through Effective Best PracticesBest Practices Focus on:ProgramsPoliciesWorkplace

Focuses on key elements of a true safety cultureMember/Company Developed & ApprovedCaptive members are Audited Internally/Externally to Best PracticesNon-compliance is tracked, trended, and reported to Captive members/managementLoss Control Best Practices

Benchmarking Management by MeasurementEmployee MaintenanceLegalHiring PracticesClaims & Success Alerts as an Accident Prevention ToolEmployee Weekly Safety Huddles (Tool Box or Lunch Box)Peer to Peer - Safety & Risk Managers Semi-Annual Workshops Sharing of Resources & IdeasCaptive Appreciation & Recognition of Employee Safety C.A.R.E.S.Proven & Effective Best Practice Examples

Measures results of captive and individual members, departments, and/or facilities against tangible goals & industry averagesDevelops accountability by member, department and facilityBenchmarks 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 workedLost Time Frequency Case Rate per $1,000,000 payrollNon-$0 Auto Frequency per 10 Insured VehiclesAuto Liability Loss Rate per Insured VehicleOSHA Recordable Incidents per 100 FTEs (200,000 Hours)Individual Tracking of Member Loss Pics with DevelopmentLag Time ReportingManagement by Measurement - Benchmarking

Tracking Captive Members or Facilities Against Captive Goals

Note: Information contained in this chart is for example purposes only and does not reflect actual company data

Establishing Timely Reporting as a Best PracticeNote: Percentages do not represent actual practices, this is for example only information

Benchmarking TransparencyNon $0 Claim Frequency per 200,000 Hours Worked

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

1st Quarter (0 -20)Resilient (Mostly Bumps & Bruises)2nd Quarter (21 39)Soft Tissue InjuriesHalf Time (40 41)Injured Reserve3rd Quarter (42 60)Lost Time Injuries4th Quarter (61 80)Season-ending InjuryOvertime (81 85)Debilitating InjuryDouble Overtime (85+)Injury Game Over!Evolution of an Injury

Human MaintenanceMechanical Machine Human MachineMost difficult to properly diagnoseMost expensive machine to fixToughest machine to get back on the road

Maintain EquipmentMaintain GroundsMaintain BuildingMaintain VehiclesPreventative Maintenance

Employee Maintenance

WE ARE ALL ATHLETES IN LIFE

Prepares the Body For Physical WorkIncreases FlexibilityEnhances Body MechanicsCreates Body AwarenessReduces Risk of Soft Tissue InjuryPhysically & Mentally Prepares Employees for their WorkdayStarts Work on a Positive NoteReduces Stress & TensionIncreases AlertnessPre-Shift Stretching DesignImprovements in Health, Morale, & Productivity result over time

A national trucking company implemented the Pre-Shift Stretch Programin 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 Systemcertified athletictrainer through OAI.National Trucking Company 4,000+ Drivers

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 workmans 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 ~

One of OAIs 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-timeHMS certified athletic trainers onsite at various locations. Their current savings has been in the millions of dollars.Midwest USA Utility Company 8,500 Employees

Legal Best Practice as a Loss ControlBegins 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 WCReview of Contractual Obligations by members/companies: Real Estate, Purchase Orders, Employment/HR, General Services, Products, Sub-contractorsExamineindemnification 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 RequirementsStatutes of Limitations by member locationIdentify StrategyDevelopment of Best Practices, putting captive in less legally vulnerable position

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 heightAny water infiltration incidentGeneral liability claim over 25KPreventable auto accident claim Property damage in excess of 25K Any claim that provides a value to the members at large

Claims Alerts to Prevent Incidents & Accidents?

A five (5) minute Safety Huddle is an informal safety discussion presented to employees as refresher training within their departments.Safety Huddles are run by Department Managers, Supervisors, Safety Committee Members, or Field/Shop Personnel.Talks focus on a specific workplace hazard, department incident, OSHA topic, or any relevant safety matter.A 5 minute talk every week provides over four hours of refresher training a year.Five Minute Safety HuddlesBenefits: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.

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.Information Sharing & Development

Project C.A.R.E.S Captive Appreciation and Recognition of Employee Safety 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.

Frequency: Monthly

Criteria: Each captive member submits an employees 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.

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.

Project C.A.R.E.S.

COORDINATION OF SERVICES

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 Two92% of members and companies performing better than their individual loss pics Supervisor/Foremen testimonials within captive most powerful, Charlie the Superintendent.

Proven Results: All HC & A Captives & Self Insured Programs

Best PracticesDedicated Loss Control ManagersHiring PracticesRisk Management ManualContracts and Certificates of InsuranceSilo BreakdownEPAQ (Environmental Project Assessment Questionnaire)Engineering InvolvementProduct DevelopmentQuality & ProductionIncident InvestigationJWReportItBenchmarking Driving Competition

Dedicated Loss Control GroupSix dedicated individualsLife Safety (W/C) primary focus followed by property, motor vehicle and general liabilityAdministrative conduit for facility challengesTrain the Trainer techniques and topicsSemi Annual site visits to each locationAudit reports solution orientedRelationship with facility managementGeneral Manager accountability sheet

General Manager Accountability SheetNon-Negotiables of Risk Management supported by Executive Management

Safety Programs & Annual Training (P&G 301, RMM)YesNo1. 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)

Hiring Practices2004 Safety InitiativeWCIR of 16.0 (1,979 claims)Open Claim Volume of 735Accrual of $18.5MAnalysis of dollar impact led to identification of two lead offenders:Employees in their first six months of hireRepeatersResult 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 FraudWork Place ViolenceSubstance AbuseTheftDependability

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 conductedW/C Fraud, Theft, and Substance Abuse three leading categories

Chart1

10026

38593

Sheet1

Cautions10026

Without Cautions38593

Cautions53810026

With209538593

9488

36498

Sheet1

Sheet2

Sheet3

Hiring Practices, cont.Basic Skills

Hiring Practices, cont.Over 19,000 test administered since 2005

19% did not meet the minimum of 70% correct

Chart2

1455

344

Basic Skills Test Results

Fail: 19%

Pass: 81%

Drug Test Results

Negative - Diluted43

Negative1937

Positive61

Pending18

Cancel28

Refusal1

Waiting3

Total2091

Drug Test Results

0

0

0

0

0

0

0

Drug Test Results (2091 Specimens)

Basic Skills Test

Pass1455

Fail344

Total1799

Basic Skills Test

0

0

Basic Skills Assessment Results

Pass 81%

Fail 19%

Sheet3

Hiring Practices, cont.Overall Results of Safety InitiativeWCIR of 4.1(338 claims)Number of open claims 290Accrual of $8MTranslates into a $45M savings

Chart1

16

11.32

9.42

6.46

5.44

4.82

4.08

WCIR

Sheet1

2003200420052006200720082009

WCIR1611.329.426.465.444.824.08

Sheet1

WCIR

Sheet2

Sheet3

Risk Management ManualOnline resource for all facilities in one locationPrograms address a variety of risks from workers compensation, motor vehicle, property and general liabilityGives JELD-WEN standard unless regulatory requirements are higherExamples of programs:Hot WorkSprinkler Maintenance and Testing requirementContractor SafetyErgonomicsRisk Management Manual Program Example

Contracts & Certificates of InsuranceFive person contract review committeeLegal (contract attorney)Operational Vice PresidentTreasury/AccountingTaxRiskPhilosophy shift toward solidifying every relationship with a contactSpecific insurance requirements and limits for suppliers/contractorsTrack suppliers/contractors for compliance

Silo BreakdownConnecting and sharing information between business units, divisions, facilities, and departmentsEngineering Involvement Review plans for plants and equipment prior to being builtOn the same team for process improvementsEPAQ (Environmental Project Assessment Questionnaire)Filled out prior to any project or process changes occurRisk Management automatically sent a copy

Silo Breakdown, cont.TransportationDriver tracking, classification & approvalPoint system for violationsNumber of vehicles provided electronicallyProduct Development & Production

Incident InvestigationEach near-miss, incident or claim is investigated regardless of line of coverageIdentify whether it was an unsafe act or unsafe conditionIdentify root cause and preventive actions to be implementedReviewed by safety committee and general manager or divisional vice presidentAids in claim management

JWReportItInternal claims and risk management systemOver 600 users from safety coordinators, risk management staff, general managers, and divisional vice presidentsFive primary functionsClaim entering and managementFacility AuditTraining and TrackingDocument ManagementDeductible and Monthly Billing

BenchmarkingWCIRMonthly reports sent to all General Managers, Divisional Vice Presidents, & Executive ManagementUniversal definition of what is included in the calculationGlobal AuditCompliance 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

Are injured workers labor hours included in facility labor hours. (Temporary or sub contractors are not included)

Did the employee receive medical treatment from a professional medical provider on site or off site? (Some facilities have professional medical providers on site)

Has the reported incident been accepted by a regulatory agency. (A confirmed denial may be decided over a period of time)

Record as a JELD-WEN Incident

Yes

Yes

Yes

Yes

Challenges for ImplementationCost vs. BenefitCorporate Sheriff MentalityWork Place CultureSilo Kingdom EffectTop Down SupportU.S. vs. International

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