The Newsletter of the American Association ofState Compensation Insurance Funds

January•February•March 2004 www.aascif.org

Oklahoma’s proactive teamwork pays off with good results

page 4

E-learningBlending online and traditional training

may be a better way to educate employees

Branding10 steps to branding your organization

Is this man really not able towork because of a back injury?

Fraud-fighting

From the AASCIF presidentThings change. The turnover rate in top leadership of our fund

members in the last year or two is probably at an historicalhigh. That brings other changes to our organizations.

Workers’ compensation loss trends have shifted for most ofus once again. For the most part, we’re explaining rising costs,lower investment returns and rising pricing, rather than deliv-ering good news via lower premium/assessment invoices to ourstakeholders and publicly celebrating our efficiency and costcontrol gains. That doesn’t mean we haven’t made the gains. Butthey may control the size of price increase, rather than produceprice declines.

Budget deficits in most states and shifting political windshave encouraged some private insurers to instigate for changesto many state fund organizations. Unable to grow where they’dlike or price as they’d like, these insurers seek to confine howstate funds operate. They seek to reduce capital resources ofstate funds or their ability to grow them.

Some of us have seen our customers’ changing needs lead toexpansion in where we operate and serve them. Or, we’vepushed for changes in how we govern ourselves to reduce vul-nerability to shifting political whim and increase accountabilityfor long-term financial integrity, service excellence and effi -ciency.

Most of us see a change in our organization’s range of risk.International terrorism was not on our radar until recent years.This has, of necessity, changed the scale and range of our riskassessment and—for many—also our public affairs involve-ment. We’re advocating at the federal level on issues, not just atthe state level. TRIA enactment has been a successful outcomethat will expire without our advocating extension.

I for one see this federal involvement as a permanent land-scape change. There are other issues coming that will, I predict,make federal-level politics a permanent part of our engagementin the public arena. Whether we like it or not.

How does AASCIF change to serve thesechanging concerns and pressing needs of itsmembers? This is much on my mind as I beginthe last of my two-year term. We have been anidea-sharing, networking, education-drivenorganization.

We should continue to be. There are changesthat have us less confined in the employers weserve and perhaps less comfortable about whomight be available to serve them. But our diver-sity has always been a source of challenge andgrowth.

Streamlining our AASCIF structure and efforts for the idea-sharing, networking and education our members value today isan ongoing challenge, especially when delivered via volunteereffort. But it’s a challenge to embrace, and one I hope we hereat “AASCIF Central” will help our organization meet for itsfuture vitality.

AASCIF has also been interested in facilitating joint advo-cacy on common issues. In the past, this was primarily byconnecting members who are facing similar issues at home.That networking approach has also worked for some federalissues. But will these issues be isolated and occasional as in thepast? Or will they become more frequent and require a broader-based, more systematic approach? I believe the probabilitiesfavor the latter, and we will probably be calling on our U.S.members more in the future to help on these important federalissues.

These are the issues before us, I believe. Difficult ones, yes,but things change, and AASCIF can change to address themeffectively.

PRESIDENTPatricia R. JohnsonMinnesota State Fund MutualBloomington, MN

FIRST VICE PRESIDENTRussell R. OliverTexas Mutual Insurance CompanyAustin, TX

VICE PRESIDENTKenneth J. RossNew York State Insurance FundNew York, NY

VICE PRESIDENTDennis W. SmithMissouri Employers Mutual InsuranceColumbia, MO

VICE PRESIDENTDoug M. SexsmithWorkers Compensation Board of ManitobaWinnipeg, MB

VICE PRESIDENTDonald A. SmithState Compensation Fund of ArizonaPhoenix, AZ

PAST PRESIDENTJohn T. LeonardMaine Employers’ Mutual Ins. Co.Portland, ME

SECRETARY/TREASURERFrances M. KaitalaMinnesota State Fund MutualBloomington, MN

AASCIF News is the quarterly publication of the American Association of StateCompensation Insurance Funds. Published in 2003-04 by Minnesota State FundMutual Companies, Bloomington, MN. Direct inquiries to AASCIF CommunicationsDirector Mark Ladwig, (952) 838-4270 or markla@sfmic.com.

Articles and other contributions to the AASCIF Newsor to the AASCIF website maybe emailed to info@aascif.org. Past issues of the AASCIF News are available onlineat www.aascif.org in the Library archives.

© 2004 American Association of State Compensation Insurance FundsAll rights reserved.

aascifofficers

Pat JohnsonAASCIF PRESIDENT

2003-2004

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SAFETY AND HEALTH

At this year’s AASCIF Safety and Health workshop, thefocus was on “Best practices.” To give those attending an

idea of what other state funds were doing in regard to loss pre-vention and best practices, the Safety and Health Committeecreated a survey questionnaire.

The survey, sent to workshop participants prior to the work-shop, entailed 19 questions, including information regardingtotal number of policies, total premium and staffing levels forloss prevention.

In addition, the following was obtained:

◆ Most organizations provide company vehicles for loss pre-vention staff, and others provide mileage reimbursement.

◆ Most organizations provide laptops, cell phones, pagers,TV/VCRs, sound level meters and CO monitors, and per-sonal protective equipment such as hard hats, eye and earprotection and safety shoes.

◆ Some provide digital cameras and LCD projectors for lossprevention consultants in the field.

The survey also asked:

“What entrance requirements do you require foryour loss prevention staff?”

Many participants responded that a minimum of a Degree inSafety and Health or loss prevention consultant experience isrequired. Additional training is provided by many funds.Training many times includes agency/loss prevention trainingthat lasted on average four to six weeks.

Training is also provided on the 30-hour OSHA Constructionand General Industry training course, safety management tech-niques and methods, hazard identification, behavioral basedsafety training, ergonomics, industry-specific safety training aswell as safety training provided by recognized safety organiza-tions.

“What is the workload and service threshold for your field staff?”

The consensus was that on average the field staff’s policyassignment consisted of approximately 175 accounts with aservice threshold above $20,000. However, some companiesprovide loss prevention service to any policyholder that requestsservice regardless of premium level.

“What performance measures do you use to evalu-ate your loss prevention staff?”

Most participants showed the greatest interest in this ques-tion, which generated a variety of responses:

◆ Quality of written reports and letters.◆ Customer satisfaction.◆ Quality of loss prevention service provided.◆ Average amount of quality loss prevention visits per week.◆ Reduction of losses for targeted accounts.◆ Retention of profitable policyholders.◆ Timeliness in the completion of assignments.◆ Field performance assessments.◆ Action/service plans that reflect the areas of need based on

loss trends and industry hazards.◆ Productivity.◆ Reduction in number of injuries by a set percentage.

The majority of participants who responded said their lossprevention staff devoted 95 to 100 percent of their field time toloss prevention and safety training. Some participants said theysee a greater frequency of requests for underwriting evaluations,underwriting related field visits, and policy retention visits,which have reduced the amount of time field staff has to provideloss prevention service.

Holdorf can be reached at aholdorf@nysif.com or (212) 587-5225.

LP staffCommittee survey shows varied practices among state funds in managing loss prevention staffsArmin HoldorfDirector, Field ServicesNew York State Insurance Fund

Increased premium levels from the hard market, rising medical andprescription drug costs, increased reinsurance costs, and changing

demographics are just a few of the challenges facing state insurancefunds.

Not uncommon as a result of escalating premium levels is the likeli-hood of increased numbers of fraudulent or exaggerated claims,increased policyholder fraud, and increased opportunities forprovider fraud. All of these underscore the need for state funds tomaintain a proactive and professional approach to fighting fraud.

The effects of workers’ compensation fraud are far-reaching andwell documented. Workers’ compensation fraud is estimated to bethe second largest white-collar crime in the nation, second only toincome tax evasion.

Workers’ compensation fraud exists when an individual intention-ally provides false information or lies to obtain something to whichthey are not entitled. Claimants, employers, medical providers andattorneys can commit workers’ compensation fraud.

Special unit createdAs Oklahoma’s largest workers’ compensation insurance provider,

CompSource Oklahoma is committed to fighting fraud. In 1993,armed with stiffer laws outlining fraudulent acts, CompSourceOklahoma’s board of managers took the initiative to create a SpecialInvestigations Unit. The results have been impressive. Cumulativesavings since inception of the SIU total $18.4 million. On average,the SIU has achieved annual savings of approximately $1.7 million.

Recent fraud statistics:

AUDIT AND STATISTICS

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Oklahoma’s proactiveteamwork pays offwith good results

Total new cases 97 129 88

–From fraud hotline 28 26 34

–Identified by CSO 69 103 54

–From other sources 8

Cases closed 81 109 90

Charges filed 13 23 23

Savings $2,376,082 $3,320,734 $1,622,397

Nine months endedSept 30, 2003 Year 2002 Year 2001

Fraud-fighting

Steve HardinDirector, Special Investigations and Internal AuditCompSource Oklahoma

These results represent fraud cases only and do not reflect 500 to600 surveillances assigned by the SIU each year to assist the ClaimsDivision in the defense of exaggerated claims.

Fighting fraud requires a proactive team approach that includespartnering with concerned policyholders, the Oklahoma state attor-ney general’s office, and the workers’ compensation professionals atCompSource Oklahoma. Cooperation and communication are thekeys to success.

How it worksA process for detecting, investigating and prosecuting workers’

compensation fraud has been developed that efficiently managesresources and utilizes a variety of technological tools:

◆ Detection. A 24-hour toll-free hotline and a website fraudreporting form allow anyone with knowledge of workers’ compensation fraud to anonymously report the activity directlyto the SIU.

With assistance from our Information Services Division, a computer program was developed to detect fraud by monitor-ing newly filed claims and red-flagging those that meetpre-established criteria that indicate the possibility of fraud. TheSIU provides on-going training to our Claims Division to assistthem in spotting potential fraudulent claims. Informationregarding fraudulent activity can also be received from ourPolicyholder Services Division and through contacts developedby investigators.

Full-color posters and a video of actual fraud cases have beendeveloped with help from the Communications and MediaDepartment to educate policyholders and the public in generalabout workers’ compensation fraud.

◆ Investigation. The SIU uses the latest in technological tools toaccumulate evidence for prosecution. Investigators obtain sur-veillance video of physical activity or work the claimant maybe performing while receiving workers’ compensation benefits.The investigators then gather documents including medical andemployment records, depositions, and witness statements. Theyalso research the claimant’s background through a variety ofinformational services to which the SIU is connected viamodem or the Internet. Once all evidence has been gathered, itis provided to the assistant attorney general assigned to the SIU.

◆ Prosecution. The assistant AG reviews the case to determinewhether sufficient evidence exists to warrant filing charges. If it does, charges are filed and arrest warrants are issued. Theassistant AG prepares and presents the case for prosecution,which can involve hearings, jury trials and appellate proceedings.

The Oklahoma state attorney general’s office has filed charges on135 of the fraud cases referred by the SIU. Many have resulted inprison time.

In 2001, the SIU received a Governor’s Commendation Awardrecognizing its impressive fraud-fighting efforts and results.

Teamwork, persistence payoffOne recent case highlights the teamwork and dogged persistence

exhibited by CompSource Oklahoma’s fraud-fighting team.Following up on an investigation started in 1998, an investigatorentered the female claimant’s name into a common Internet searchengine. The responses were interesting.

The claimant, who was receiving permanent total disability ben-efits for back injuries from a slip-and-fall accident, was supposedlyconfined to a wheelchair, yet she was listed as an officer of an outdoorrecreational club.

Surveillances were set up. The videos reflected the claimant dis-playing some amazing physical abilities for someone in her allegedcondition, such as mountain hiking, carrying heavy items, and repeat-edly bending beyond 90 degrees. Similar activity was videotaped atother club events.

Working with the claims adjuster, the SIU set up several doctorvisits with the claimant. Surveillance videos showed the claimantarriving at the doctor’s office in her handicapped-equipped van andwheeling out of the van in her wheelchair. The claimant told thedoctor she was mainly dependent on the wheelchair for mobility. Theclaimant performed the show for the doctors two more times.

Armed with this information, the CompSource Oklahoma ClaimsDivision and our representing attorney worked to settle the claimwithout making any additional payments to the claimant. Savings ofmore than $400,000 were realized. Criminal charges are pending.

The SIU and other workers’ compensation professionals atCompSource Oklahoma will continue to work together proactivelyin the fight against fraud through the ongoing use and developmentof technological tools, experienced claims examination, and theaggressive pursuit of information provided by concerned policyhold-ers and other members of Oklahoma communities.

Steve Hardin can be reached at Steve_H@compsourceok.com or (405) 962-3819.

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6

HUMAN RESOURCES

As a member of the Baby Boom generation, I remember whenI first sat down in front of a computer. I knew it could do a lot

of incredible things and that I would be able to produce more workmore effectively. I just wasn’t sure how to get started.

Now, Boomers like myself and our Silent Generation co-workers work side by side with Generation Xers and Yers whoknew how to operate computers before they could ride a bike. Yet,despite the proliferation of computers throughout workplaceseverywhere, we are still learning the best ways to use this technol-ogy in our training and development opportunities.

Three learning approachesE-learning is a relatively new and powerful way to deliver

employee training, but it is not always the most effective method.To understand why, it helps to review the three basic approachesto learning:

◆ Asynchronous learning. Self-paced, unscheduled, not in realtime, not instructor-led, learner-controlled. Examples includebooks, tapes, CD-ROMs, articles, Internet-based onlinecourses, and Internet reference sites.

◆ Synchronous learning. Real time, instructor- or facilitator-led, scheduled, instructor-controlled. Examples includeclassroom training (large/small group), 1-on-1 coaching ormentoring, teleconferenced presentations, “webinars,”closed-circuit satellite broadcasts.

◆ Blended learning. Combination of asynchronous and syn-chronous approaches. An example is pre-class readingassignment (asynchronous), followed by classroom discus-sion and application (synchronous), post-class follow-upmaterials (asynchronous) and review/renewal sessions (syn-chronous).

Each approach has inherent advantages and disadvantages (seechart on next page). Most training and development experts rec-ommend the blended approach to benefit from the advantages ofboth approaches.

For example, an employment law course for managers andsupervisors might use a blended learning approach. Students couldcomplete an overview of employment law online through an e-

learning provider to learn the factual elements of the law andfollow that with a facilitated classroom session including discus-sion and application exercises.

Research studies show that a blended approach increases thelearning retention of students and decreases the time it takes toapply classroom learning in the workplace (Thompson Study2002, and Online Learning Magazine summer 2002).

E-learning has enormous potential, but how do we get started?

Six stepsThere are six key steps that can help set your e-learning in

motion, according to Jim Councelman and Angelle Lafrance, man-agers at Development Dimensions International.

1. Work with IT.Meet your new best friends in the information technology

department. It is critical to get the IT folks involved early in theprocess, and address technology requirements and issues at thebeginning of the project.

2. Pilot, pilot, pilot. Make sure the technology and learning processes work the way

they should before rolling the e-learning program out to themasses. Well-conducted pilots can have the added advantage ofcreating success stories for internal marketing.

3. Use a blended approach.Since most of us are social learners, a blended approach incor-

porating both instructor-led and online training usually works best.

4. Motivation through accountability.If you want learners to buy into and use e-learning, give them a

reason to do so by making them accountable for the learning.You’ve heard it before: What gets measured and recognized getsdone.

5. Get your leaders on board. Management support is critically important to e-learning

success. As learning moves from the classroom to the desktop andcloser to the job, managers need to facilitate a learning environ-ment and help learners manage their time.

6. Provide support. These can include tools and communication vehicles that are

well suited to electronic delivery such as job aids, tips and hintsand FAQs. But also be sure to make available “live” support suchas facilitators or managers, especially in the early going.

E-learningBlending online and traditional training may be a better way toeducate employees; weigh pros, cons to find the right balanceLynette CaldwellSenior Manager, Human ResourcesTexas Mutual Insurance Company

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HUMAN RESOURCES

ResourcesE-learning has received a high degree of attention in the past

few years with the explosive growth of the Internet. A vast numberof providers of Internet-based training are now available online.

Potential e-learning training partners include GeoLearning.com;24/7 University; DDI.com; and Aegis Learning Group. Manyother e-learning sites are out there. Type “e-learning” into yourfavorite search engine, and pick the program that best meets yourneeds.

Remember to consider all learning alternatives before choos-ing which method you will use. If you choose e-learning, makesure it is the best fit for your subject and audience. If you take careof the needs identified above, you will increase the likelihood thatyour e-learning initiatives will be successful.

Lynette Caldwell can be reached at lcaldwel@texasmutual.com or(512) 404-3941.

Pros

Flexibility. Learners can chose what, where and when to study.

Convenience. Learners can fit learning into their schedules, on demand.

Efficiency. E-learning can be delivered to learners’ desktops or remote locations; reading materials can be studied virtually anywhere at any time.

Fit. E-learning can be a good fit for certain learningstyles.

Effectiveness. Some content lends itself to an asynchro-nous approach very well; e.g., technical material.

High touch. Classroom allows for group interaction anddiscussion; coaching builds 1-on-1 relationships.

Application. Practice in applying concepts facilitateslearning.

Q&A. Group learning facilitates the opportunity to ask questions and gain deeper understanding.

Feedback. Instructor, coach or peer feedback helps the learner apply new concepts.

Good fit. Certain learning styles go well with thisapproach.

Effective. Classroom learning and coaching can be effective for so-called “soft skills” training.

Best of both. When blended effectively, the strengths ofeach approach can offset weaknesses of the other.

Cons

High attrition. Between 50 to 90 percent incompletionrate.

Ineffectiveness. One study suggests that e-learning is significantly less effective than classroom for complexmaterial.

Inconsistent quality. Some online training providers arebetter than others.

Competing priorities. Desktop-based learning programs are frequently pushed aside by “real” work.

Learning in a vacuum. Self-paced learners have littleopportunity to discuss concepts, practice application orreceive feedback.

Availability. Not all computer systems have capacity fore-learning programs.

Resources. Program administration may require dedicated personnel.

Obsolescence.E-learning resource center materialsbecome dated quickly.

Inconvenient. Events are not always scheduled at convenient times or locations for learners.

Event-based. Learning can be a discrete event withoutproper post-class follow up and support.

Time. Events may take longer than asynchronous learning.

Bad fit. Scheduled courses may not meet the needs of thelearning community.

Instructor variability. Some instructors are more effec-tive than others.

Administration. Course calendars, rosters and logistics require time and effort.

Worst of both. If poorly executed, one may suffer withall or some of the disadvantages of both approaches.

Approach

Asynchronous learning

Synchronous learning

Blended learning

Pros and cons

8

COMMUNICATIONS

Branding10 steps to branding your organization and servicesGina SimonsAdvertising and Promotions ManagerCalifornia State Compensation Fund

“An orange…is an orange…is an orange. Unless, of course, that orangehappens to be Sunkist, a name 80 percent of consumers know and trust.”

–Russell L. Hanlin, CEO Sunkist Growers

One of the most important activities anorganization can undertake is the devel-

opment of its brand. A brand defines yourorganization or product. It tells your cus-tomers what to think about it, how to feelabout it, why to use your product. It commu-nicates all the things your customers rely onyour product to deliver.

A brand, then, is a promise toyour customers.

Since the brand setsexpectations forcustomers, it mustbe derived fromtraits of the

organization.

Creating an idealized image for yourcompany and then trying to make the productlive up to this contrived standard would be agrave error. If your product fails even once,you’ve lost your customers’ trust and it is dif-ficult to win them back. A brand centered onproduct benefits and organizational charac-teristics is going to communicate ideas thatthe product can deliver.

The chicken or the egg? Does the brand drive the company, or does

the company drive the brand? When thebrand is derived from organizational charac-teristics, product benefits and corporateculture, it becomes indistinguishable fromthe product and from the company itself.Whether the brand drives the company orvice verse is no longer discernable or impor-tant. The product is the brand.

So, you want to brand your company.Where do you start? At the beginning, ofcourse, by looking inward.

Step 1: Taking stock

Invest in research and analysis to get to theroot of your organization to define who youare as a company. Then ask the tough ques-tions:

Does the public have a clear idea of whoyou are and what you stand for? Is thepromise you make to your customers oneyou can keep? Is it a promise your customers

actually want? Who are your targets andwhat do they think of you? Which of theseperceptions help your business and whichones hinder you? What self-perceptionshamper your business?

At this stage, you should also take the timeto review previous market research, cus-tomer satisfaction studies, response to youradvertising campaigns, and the like.Consider conducting interviews and focusgroups with key individuals in your organi-zation. Talk to your customers and partners.Find out what these groups “know” aboutyour organization, and compare theirresponses. How does the internal perceptionof the organization’s image compare withthat of your strategic partners and your cus-tomers?

This exercise can be time-consuming andcostly, but it will net you a clear understand-ing of your organization and help you craft abrand that is true.

Step 2: Strategic analysis

Review industry research, perform a com-petitive analysis, and most importantly, talkto your constituencies. Listen to their opin-ions and analyze their perceptions.

What are they looking for? What do theythink of your company? How does thiscompare with what you expect they wouldsay?

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Step 3: Brand identity

The brand identity is the true essence ofthe brand, the core idea about your productthat you want to communicate to your cus-tomers.

Utilize research data and analysis to helpyou identify a set of individual characteris-tics that comprise your brand. Thesecharacteristics represent what the brandstands for—the ideals that your customerwill believe about your organization and willcome to expect from your product.

The brand identity, then, is a covenant ofsorts, a promise to your customers andemployees. Select characteristics that makeyour organization unique and that can formthe strongest foundation for your brand.

Step 4: Brand personality

If your organization were a person, whatwould she or he be like?

Anthropomorphizing the brand adds tone,texture and color to an intangible. Try todefine your organization as if it were a realperson. What personality traits best defineyour organization? Your product?

Step 5: Value propositions

Head, heart, and gut.

A brand’s value proposition is a statementof the functional and emotional benefitsdelivered by the brand that provide value tothe customer.

There are three types of benefits that drivepurchase decisions: functional, emotionaland self-expressive.

Functional benefits are based on productattributes that provide functional utility tothe customer. These benefits appeal to thecustomer’s head.

Emotional benefits provide a positivefeeling and appeal to the heart.

Self-expressive benefits appeal to the gutand communicate one’s self-image.

Use your research and analysis to deter-

mine the benefits your product delivers, anddon’t ignore the head, heart, and gut.

Step 6: The brand statement

This is the definition or articulation of thebrand itself.

The brand statement is focused on a singleaspect that can be communicated crisply andeffectively to all targets. It reflects the brandidentity and value proposition and usuallydemonstrates an advantage over competingbrands.

Step 7: Develop marketing strategies

Construct a marketing plan with fore-thought and balance. Where are you today?Where will you be in 12 months? In 24months? In 36 months?

Design your strategies and tactics aroundthe needs of your target market and all yourconstituencies. The result will be a plan thatwill allow your positioning to evolve whileit is still firmly grounded in the brand.

Step 8: Explore your logo

Your logo tells a story. It is an integral partof the visual elements configured to commu-nicate your brand positioning.

Assess its readability, ease-of-use, andconsistency of application. Consider thecolor palette, typography format, and style.

Evaluate whether the logo is aligned withyour new brand. Does it still convey thebrand personality, brand identity, and valuepropositions you have set forth? Don’t beafraid to fine-tune it.

Step 9: Develop a brand book

The vehicle that communicates the brandclearly and consistently to everyone in yourorganization is the brand book. This is wherethe brand is set forth with guidelines for staffto help them represent the brand in everycustomer encounter. The brand book ensuresthat your staff speaks in a single voice aboutyour organization.

Step 10: Get out there!

Now that you’ve established your brand,take it out and show it to the world.

Encourage your employees to live up tothe brand promise in everything they do.Create awareness with revamped advertis-ing, public relations, and sales material thatrepresents the new, REAL you. Employ thebrand book to communicate the brand iden-tity to staff and constituencies.

Consider whether it may have other audi-ences or uses. Does it make sense todistribute the brand book to your customersas part of your brand launch? Might there besome political benefit to sharing the brandbook with your investors or regulators?

Finally, feel good about what you havedone: You’ve made an impact on your busi-ness that will last years into the future.

Branding does more than just help sellyour product; it helps communicate a unifiedcorporate direction to the organization. Itgives real meaning to the work your staffdoes and instills pride and sense of purpose.It ensures that the people in your companyspeak in one voice and that they believe inthat voice.

Gina Simons can be reached at (415) 565-1768or gmsimons@scif.com.

Blacks Law Dictionary defines subrogation as, “The substitu-tion of one person in the place of another with reference to a

lawful claim, demand or right, so that (s)he who is substituted suc-ceeds to the rights of the other in relation to the debt or claim, andits rights, remedies, or securities.”

Workers’ compensation subrogation can be extremely lucrativeand clearly can benefit the insured as well as the insurer’s bottomline.

Assessing subrogation is not always that easy. This is especiallytrue if the claim handler lacks a multi-line background or theproper training to identify subrogation potential. Effective train-ing can be extremely beneficial. Some tips for the novice follow.

All claims should be reviewed for subrogation potential.Subrogation is most easily identified in automobile accidents andslips-and-falls. Machinery claims can be a challenge, but well-trained loss prevention staff can certainly assist in attempting toidentify third-party liability.

Preserving evidenceAdvising an insured to preserve the evidence is also tantamount

to investigating third-party liability. When a claim is received withsubrogation potential, educating the insured as to the importanceof preserving evidence, obtaining manuals, obtaining receipts ofrecent purchases, or work orders for something recently repairedis extremely important. Any contracts should also be reviewed forpossible third-party liability.

Good investigation is the key. Obtaining statements from theappropriate parties concerning the specifics of the claim can aid inpreserving the details while still fresh in the mind as well as detail-ing specifically what occurred to cause the injury and create thethird-party liability. Photographs and diagrams of the scene arebeneficial. Police reports should always be obtained for review.

Slips-and-fallsWith slip-and-fall claims, statements are a good idea; so are

photographs, preferably taken close in time to the event.

CLAIMS AND REHABILITATION

SubrogationDetailed investigation by trained staff can yield good results

Susan Lemos, AIC, AIM, AISClaims SupervisorRhode Island Beacon Mutual Insurance Company

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Any corrective actions taken by a property owner shortly afteran injury-causing event could also allude to liability. Identifyingthe property owner is also important for notification purposes.

If the insured contracts with an independent contractor to plowor otherwise maintain the property, these independent contractorsshould be identified for notice purposes, and any written agree-ments with the insured should also be obtained for review.

MachineryMachinery claims can sometimes be a challenge even to the

most experienced claim handlers. Many times the insured hasmodified the machine themselves, sometimes creating the injury-causing situation.

Care must be taken in investigating these claims so the insuredis not found to be liable in some way for the injury, or grossly neg-ligent, potentially creating common law liability under CoverageB of most standard workers’ compensation policies.

Here again, statements are extremely beneficial in preservingthe facts. Photographs, diagrams, manuals and recent work ordersor rental agreements can lead the way to identifying potential thirdparties.

Loss prevention staff are usually quite adept at helping identifythe injury-causing hazards that potentially open up third-party lia-bility.

Construction sitesConstruction site accidents are also a challenge. It is extremely

important to identify all the parties on the site and to identify whois responsible for what. The general contractor should always beidentified.

Any contracts between the insured and any other party on siteshould be reviewed since often there are hold harmless agreementswhich could impair pursuit of viable subrogation.

Pursuing subrogation with construction site accidents can alsobe a sensitive matter with the insured. Often there are business

relationships which the insured does not wish to adversely affect.

OSHA investigations of construction site accidents should beobtained for review. These are generally available by writing toOSHA requesting a copy of the report. These reports are usuallyquite thorough and usually have digital photographs taken closeto the event, thus preserving the scene. These reports are also rel-atively inexpensive, usually just the copying cost.

Statements and photographs most definitely should be obtained.

Education and timelinesStaff should be educated to identify third-party liability either

by experienced multi-line adjusters/supervisors or by enrollmentin insurance classes, preferably those dealing with liability, includ-ing torts, contract and statutory liability.

Supervisors should also be diligent in reviewing claims forpotential third-party liability. This should occur early on in theclaim. In this way, if additional information is needed to supportthird-party liability, it can be obtained before it is too late.

There are also timelines to pursuing third-party liability, includ-ing statutes of limitation. Early notice to the responsible partyshould be stressed. The insured should be made aware of the ben-efits to pursuing subrogation, despite the insured’s businessrelationships with responsible third parties. Educating the insuredto these benefits is a must and will go a long way to maximizingsubrogation potential.

Susan Lemos can be reached at slemos@beaconmutual.com or (401) 825-2910.

aroundaascif

AlbertaOn Nov. 6, Alberta announced its 2004premium rates, which will increase from$1.89 to $1.98 per $100 of insurableearnings. Although not all provinceshave officially announced their rates,early numbers indicate that Alberta’srates will be second lowest amongCanada’s provinces. Despite the rateincrease, 43 percent of employers willsee a reduction in their premiums in2004. The number of workers andemployers continues to grow in theprovince while the lost-time claim rateis down to 2.8 per 100 workers. Albertaattributes this decrease to the work-force’s commitment and focus on safety.

Alberta’s economy is experiencingsteady growth reflected in the growth ofinsurable earnings. The year-end fore-cast for 2003 is $44.4 billion—an 8.6percent increase from 2002. Trends todate also show a forecasted provincialwage growth of 2.9 percent, and work-force growth from 1.34 million workersto 1.47 million.

ArizonaAs California politicians look atArizona’s workers’ compensation systemas a model for their state to follow, theSan Diego Business Journal invited SCFof Arizona’s President and CEO DonSmith to address its Workers’Compensation Reform seminar Nov. 12.The educational event attracted morethan 1,100 California business leadersseeking answers on how to right thatstate’s troubled work comp system.

A month earlier, the InternationalAssociation of Business Communicatorsawarded SCF of Arizona three SilverQuill Awards of Merit at its regionalconference in Austin, Texas. Winningentries were for SCF’s external publica-tion AZ@Work, its 2002 Annual Report,

and its public relations campaign to con-vince policyholders to call, write, fax ore-mail legislators and convince them notto support attempts to sell off SCF’sassets.

ColoradoThe communications team at Colorado’sPinnacol Assurance, which handles allinternal and external communications,earned awards in three different compe-titions in 2003. In July, the team wontwo APEX 2003 Awards of Excellencefor its redesign of company informationalmaterials and for Pinnacol Assurance’sprint advertising campaign. In August,Pinnacol Assurance’s 2001 AnnualReport earned a third-place award in theAASCIF 2003 Communications Awards.In September, the team was awarded aSilver Pick Award from the PublicRelations Society of America for itsinternal communications efforts sur-rounding Pinnacol Assurance’s 2002move to Lowry. The PRSA awardshonor the best public relations programsand components and the people respon-sible for creating them. PinnacolAssurance’s communications team is ledby Corinne Mahoney and includesMichelle Barnes, Terry Eldrige, IvanHurtado and Mary LaLone.

KentuckyKEMI again sponsored the WomenLeaders in Insurance, Challenges &Rewards conference in October. Morethan 200 participants met in Louisvilleto discuss women’s challenges andrewards in the insurance industry. Thisyear’s keynote speaker, Connie Glaser,author of several books including WhatQueen Esther Knew, challenged womento: have mentors and be mentors, stepup to the plate and stand up for theirconvictions, and take control of their

lives and dictate their own paths.

KEMI unveiled a new policy and proce-dure tracking system on its Intranet. Thesystem holds company policies and pro-cedures in one central location andallows administrators to make readingassignments. Once employees completean assignment, they are required to elec-tronically sign off, acknowledging theyread and understood it. The systemincludes a searchable library of policiesand procedures.

MaineMEMIC Safety Academy has earnedauthorization from the InternationalAssociation of Continuing Educationand Training to provide continuing edu-cation units to those completing theacademy’s safety workshops. MEMICSafety Academy is the first entity inMaine and is one of just four insurers inNew England to earn this authorization.Each year nearly 10,000 workers com-plete safety workshops through MEMIC,which are free to policyholders.

MEMIC will host 500 of its policyholders’top managers at its annual MEMICComp Summit. The two-day conferenceis free to policyholders. The eventincludes seminars on the insurance mar-ketplace, the regional economy and howcommunication enhances workplacesafety and risk management programs.Breakout sessions will include an explo-ration of the relationship between work-place culture and safety as well as a session on ergonomics. The claims man-agement track includes a program on thediagnosis and treatment of occupationalexposure injuries.

MarylandIWIF recently created a third-partyadministration division, Lighthouse RiskSolutions Inc., to address the growing

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claims management and loss controlneeds of medium to large self-insuredcompanies in Maryland. IWIF’s newdivision will operate as a non-risk-bear-ing profit center providing an additionalstream of revenue for the company.Lighthouse Risk Solutions will initiallymarket fee-based claims managementand loss control services.

To promote on-the-job safety amongMaryland working teens, IWIF devel-oped a teachers’ guide, Train theTrainer: Safety for Young Workers. The

guide helps vocational-technical highschool teachers incorporate job safetyinto their curricula. It provides tip sheetsand other support materials to helpteachers educate students about theirrights to work in a safe environment,about the latest safety requirements, andhow to prevent industry-specific injuriesin jobs that typically employ teens.Expanding the scope in 2004, IWIF willlaunch a poster campaign and brochurethat directly targets working teens.

MinnesotaAn overall average increase of 9.7 per-cent is anticipated in the cost of cover-age in 2004 for policyholders of StateFund Mutual. The biggest driver of pric-ing increases is steeply rising medicalcosts, which are being studied by a statetask force in preparation for legislativeaction expected in the ‘04 session.

Online reporting of claims hit a weeklyrecord-high of 52 percent duringOctober. Online reporting typically has

BATON ROUGE—Louisiana Workers’ CompensationCorporation reached out to the community this year by hosting agolf tournament to benefit Louisiana’s newest charity, Kids’Chance of Louisiana. The tournament, held Oct. 6, raised morethan $20,000.

Launched in Louisiana by the Louisiana Bar Foundation, Kids’Chance provides educational scholarships to children whoseparents or guardians have been killed or permanently and totallydisabled in work-related accidents in the state. The charity wasstarted by the Georgia Bar Association and is now in 23 states.

The tournament idea came from LWCC’s board of directors,who wanted to find a worthwhile cause directly related to workers’compensation.

“Since LWCC is a workers’ comp company and we’ve handledthousands of lost-time claims over the years, we know very wellthe position a family can be in when a parent is badly hurt or killedon the job. That is why we thought Kids’ Chance would be aperfect fit for our charity golf tournament,” said Robert Levy,LWCC’s director of communications.

To raise awareness and money for this worthy cause, LWCC,the state’s largest writer of workers’ compensation insurance,designed a golf tournament with a unique twist to better competewith some 50 other charity tournaments in the Baton Rouge area.

It was an invitational geared toward business and communityleaders as well as insurance agents, and was offered free to thegolfers. LWCC’s communications department organized and ran

the event, along with the help of LWCC and Kids’ Chance volun-teers the day of the tournament.

The LWCC-Kids’ Chance Invitational Golf Tournament drew106 players and nearly 40 corporate sponsors, including top spon-sors Davis Hamilton Jackson and Associates, AFM International,Merrill Lynch Private Client Group, Milliman USA, GuyCarpenter and Company, and Wright and Percy Insurance. Thesponsorships funded most of the tournament revenues, and playersmade substantial tax-deductible contributions as well throughgolfing contests, mulligans and a raffle.

The $20,000 raised for the charity, which is in its first year inLouisiana, will fund scholarships next school year for qualifiedapplicants.

Even though workers’ compensation insurance provides finan-cial assistance to families when a parent is hurt on the job, thereare still unmet needs, like school tuition. This charity fills animportant gap by making scholarships available to Louisiana res-idents between ages 16 and 25. Applicants must demonstratefinancial need as well as meet other qualifications.

Any accredited Louisiana university, community, technical orvocational college, or state-approved proprietary school qualifies.Scholarships may be used for tuition, books, fees, room andgeneral living expenses.

Louisiana benefit raises school tuition money for children of injured workers

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aroundaascif

been running around 45 percent over thepast several months. Overall, the rate ofreports submitted online has more thandoubled in the past two years.

SFM had focused on engineering out ofits workflow unnecessary documentretention. The cost of imaging technologyhas now declined to a level where StateFund Mutual considers this more reli-ably cost effective for further gains.Imaging will be implemented in claimsoperations starting in January 2004.

MissouriMEM’s rates will increase an average4.8 percent in 2004, the lowest increasein three years. Depending on the lossexperience in each rate classification,some rates will increase and others willdecrease. Contributing factors for theincreases include medical and indemnitybenefits, which rose approximately 12percent during the year, and continuinghigh reinsurance costs.

To further enhance service, MEM isincreasing the premium limit for busi-ness that can be submitted for issuewithout prior quoting on iNet, its e-busi-ness website. Beginning with Jan. 1 newbusiness, accounts less than $25,000 canbe submitted for issue on iNet, up from$10,000.

As the Missouri Division of Workers’Compensation begins penalizing lateclaims reporters—be it insurance com-panies or employers—MEM will be pro-moting the importance of timely report-ing to policyholders. To expedite claimsreporting, MEM offers 24-hour onlineclaims reporting, as well as reporting byphone and fax.

New Mexico President and CEO Chris Krahling ispleased to announce that Robert J.Kellogg officially assumed his role as

COO on Oct. 13 and Louis Volk IIIassumed his role as CFO on Oct. 20 forNew Mexico Mutual Group. Kellogg’sexperience includes COO of a workers’compensation and medical malpracticeinsurance company, president and CEOof a regional multi-line mutual insurancecompany and most recently managingpartner for a financial and insuranceconsulting firm to client CEOs, seniormanagers and board members. Kelloggspecialized in developing strategies forcapital enhancement, organization gov-ernance, structural alternatives andstrategic financial planning. Volk hasmore than 20 years of financial experi-ence. Volk comes from the St. JosephHealthcare Systems, where he held sev-eral positions from senior accountant,accounting supervisor, director of budgetand reimbursement, director of planning,director of financial services, vice presi-dent and CFO and most recently seniorvice president and CFO.

New YorkNYSIF’s new interactive services,eBILL and CONNECTS, are now avail-able to all policyholders online, makingworkers’ compensation account manage-ment easier for customers. NYSIFeBILL allows access to a detailedaccount summary of up-to-date transac-tions. Customers can check posted pay-ments, balances, minimum due, duedate, and view or print any of theirbilling statements —without the need tocall NYSIF.

CONNECTS (Clients on Net-NYSIFElectronic Claims Tracking System)gives policyholders an online claimsmanagement tool through access to asummary screen of information generatedby NYSIF’s electronic Claims HandlingSystem.

NYSIF also is rolling out a multi-phased

electronic quote and application processthat will interface with its PremiumCalculator and Loss Control Informationsystems to facilitate workflow, improveservice, prevent quote “shopping” andensures accurate, uniform pricing.

Six more NYSIF employees have earnedthe Workers’ Compensation CertifiedProfessional designation by the AmericanSociety of Workers’ CompensationProfessionals.

North DakotaWorkforce Safety and Insurance, formerlyNorth Dakota Workers’ Compensation,is in the process of searching for a newexecutive director and chief executiveofficer. A search committee was put inplace by the Board of Directors inNovember. WSI’s website,WorkforceSafety.com, will be utilized toadvertise the position and gatherprospective names and resumes fromcandidates. The search committee willnarrow the field of applicants and submitthree names for the Board to consider.Board Chairman Dave Ystebo hopes tohave someone in place to run the organi-zation by March or April. Currently WSIis being managed by a committeeappointed by the Board consisting offive executive vice presidents.

Northwest Territories/NunavutDavid Clark has been appointed presi-dent and chief executive officer of theWorkers’ Compensation Board of theNorthwest Territories and Nunavut.Clark was vice president of operationsfor Nunavut. He brings six years ofcombined WCB experience with theboard and previously the WHSCC ofNewfoundland and Labrador. Clark hasalso served as assistant deputy ministerfor Occupational Health and Safety forthe government of Newfoundland andLabrador.

Nova ScotiaDavid Stuewe, CEO of the Workers’Compensation Board of Nova Scotia,has accepted a secondment to theFaculty of Management’s Centre forRisk Management at DalhousieUniversity. Nancy MacCready-Williams,vice president, Client Services, has beenActing CEO this fall. Stuart MacLean,Prevention and Assessment Services,will assume the Acting CEO role inJanuary 2004. During this period theBoard will undertake a search for a newCEO.

Canada’s highest court has found thatcertain sections of Nova Scotia’sWorkers’ Compensation Act and theFunctional Restoration ProgramRegulations violate the CanadianCharter of Rights and Freedoms by dis-criminating against injured workers. Thecourt also found that the Workers’Compensation Appeals Tribunal has theauthority to determine questions of con-stitutional law.

Following extensive consultation withworkers and employers across NovaScotia, the WCB has recommended toGovernment changes to the province’sworkers’ compensation system. Keyamong the recommendations is anincrease in the annual indexing of work-ers’ compensation benefits to help pen-sions better keep pace with inflation,and elimination of the three-worker rule.Repealing this rule will ensure all work-ers in industries where workers’ com-pensation is required are covered in theevent of a workplace accident.

OklahomaCompSource Oklahoma employeesillustrated their giving spirit in a verytangible way by raising nearly $40,000

during July and August as one of thelocal pacesetters for Oklahoma’s StateCharitable Campaign, which benefitsUnited Way. CompSource has estab-lished a consistent history of generosityto the community through the UnitedWay campaign. Because of its prior suc-cesses, CompSource OklahomaPresident and CEO Terry McCullar wasselected chairman for the 2003 UnitedWay Pacesetters program for all stateagencies. The $40,000 was raisedthrough personal pledges and depart-mental fund-raisers. CompSourceemployees continue to set an admirablegoal for other agencies to emulate.

Rhode IslandThe Rhode Island Workers’Compensation Act was amended withminimal changes. This year’s legislativeinitiative focused on securing statutorilymandated workers’ compensation cover-age in response to The Station nightclubtragedy. The Workers’ CompensationCourt now has the power to adjudicatesuch issues. The consequences for nothaving insurance were toughened withcriminal penalties, and the duties ofinvestigation and enforcement are nowsplit between the Department of Laborand Training and the Workers’Compensation Court. In addition, thepower of the director to suspend theoperation of a business has been bothbroadened and toughened. Additionalchanges to the Act:◆ Should there be a dispute betweeninsurers regarding who is responsible forpaying benefits to an injured worker, butno dispute on the workers’ entitlementexists, the Workers’ Compensation Courtshall choose one of the insurers at a pre-trial hearing.

◆ The director of the Department ofLabor and Training will now commuteclaims, presently being reimbursed outof the old “Second Injury Fund,” toclose some longstanding claims.

◆ The 1990 definition of “gate” was pre-served for another three years.

◆ Physician reimbursement in the areaof specific compensation brought physi-cian charges for loss of use and MMIopinions into the fee schedule.

◆ Insurance carriers obligated to paybenefits due to the “coverage under”statute now can recoup those benefitsfrom the uninsured employer.

West VirginiaOn Oct. 1, the Workers’ CompensationDivision, formerly under the direction ofthe Bureau of Employment Programs,became a stand-alone agency known asthe Workers’ Compensation Commission.Patterning its operation after a corporatestructure branded by a new logo, the

commission is headed by an executivedirector answerable to a board of man-agers. The establishment of the commis -sion is a result of major reform legisla-tion passed in July that included numer-ous benefit and financial revisions toassist the agency in its efforts to regaincontrol of the system and reduce itsunfunded liability.

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CorrectionThe October AASCIF News’ pictures ofwinners of the 2003 communicationscontest incorrectly identified the gentle-man who received the first place“Information Kits” award for BritishColumbia. Pictured was Dave Blais.

American Association of State Compensation Insurance Funds P.O. Box 580500Minneapolis, MN 55458-0500

Website www.aascif.orgEmail info@aascif.org

Administered 2003-2004 by Minnesota State Fund Mutual Companies

2004 AASCIF ANNUAL CONFERENCE

August 1-4, 2004Minneapolis, Minnesota

Your host: Minnesota State Fund Mutual CompaniesQuestions, contact Julie Conzemius at (952) 838-4245

AASCIF annual conference