Risk Assessment Symposium Risk Assessment Insurance Industry Perspective Flint Walton, Loss Prevention Technical Services Mgr. Missouri Employers Mutual SAFETY IN THE WORKPLACE

Vehicles Falls from height Slips/Trips Material handling Ergonomic Factors Equipment Sub-contractors Unusual items Aircraft Longshore / Jones Act Electrical – Lockout Machine Guarding Industrial Hygiene Asbestos Repetitive Motion Air  Dust  Welding  Painting  Silica Noise What we look for…

LP Reports

Description of Operations Accuracy of Class Codes – Light/Avg/Heavy Exposures/Controls Safety program review – OSHA? Review of loss trends – Do they even know? Loss Management – more detail upcoming Claims Management – (not covered today) Management Commitment Safety opinion of the Business Industry Rating compared to competitors Insurance Risk Assessment

Recommendations Urgent – Immediately Dangerous to Life & Health Critical – Insurability issue, major physical hazard and/or major management deficiencies Important – Serious Injury, High Frequency & Impacts Insurability Advisory – No follow-up Management Attitude Impact ratings and account scoring

Understanding & Controlling E-Mod & Premium Cost Loss Mgt. Strategies:

Experience Rating uses your companies past “experience” (losses) to project future losses. Compares your losses to the average company in your classification of business. Companies within the most recent 24 months of the experience period develops a subject premium of at least $7,000. Or an average annual subject premium of at least $3,500. Experience Rating

Allows for debits and credits Gives companies influence on their final premium Provides incentives for safety Produces a net premium cost that is the best indicator for the companies potential for incurring claims E-mod Purpose

Grading Your E-Mod ABCDF Saving Money Losing Money

Manual Premium E-ModE-Mod ImpactPremium $100,000.75($25,000)$75,000 $100, None$100, $25,000$125,000 E-Mod = Money Mod

Min Mod.72 Max Mod 5.06 What does this mean?

Based on 3 years

2020 before it is gone Injuries affect your E-Mod rate! Get ready for E-Mod hit! Incident Underwriter Action

The more important fact to Experience Rating is that the incident did occur. Therefore, the Plan gives greater weight to accident frequency than to incident severity. Example of Frequency vs. Severity No. Of Claims Cost per Claim Total Cost Employer A 1 $50,000 $50,000 Employer B 10 $5,000 $50,000 Which company is safer? At which company would you have greater chance of having a claim? How does it work?

What is the Split Point? Split Point

Capping of Claims One very large claim may be due to just bad luck. Individual claim is capped. Missouri’s accident limitation is: State Per Claim Accident Limitation $281,000 State Multiple Claim Accident Limitation $562,000 USL&HW Per Claim Accident Limitation $475,500 USL&HW Multiple Claim Accident Limitation.... $951,000

Individual Loss State Accident Limit Ratable Individual Loss Primary LossExcess Loss $325$281,000$325 $0 $15,000$281,000$15,000$13,500$1,500 $500,000$281,000 $13,500$267,500

NCCI changed the Experience Rating Plan formula effective January 1, Changing the primary/excess loss split point and the maximum debit modification formula to maintain the Plan’s optimal performance. Previously, < or = $5,000 is primary – full weight in formula > $5,000 is considered excess - partial weight. Split Effective…

The $5,000 split point has not changed for 20 years. Average dollar amount per claim has tripled. The result is less weight to each employer’s actual experience and the individual employer experience modifications have gravitated toward the all-risk average over time. Split point change

Split Points now

Retroactive Rebalance 2015 E-Mod 1.00

Exp Rating Adj ERA changes were approved in Missouri and went into effect 7/1/11. Retroactive – all past losses in the calculation Changes primarily affect Medical Only claims. 30% weighting factor for medical-only claims. Meaning the experience rating values (past claim costs) will be adjusted to reflect a 70% reduction in the claim costs of each medical-only claim. Reduces the impact of medical-only claims on the experience rating modification.

Med-Only vs Indem

RTW

On NCCI E-mod sheets Column 6 Only one injury type per claim 1 = Death 2 = Permanent Total Disability 5 = Temporary Total or Temp Partial Disability 6 = Medical Only 7 = Contract Medical or Hospital Allowance 9 = Permanent Partial Disability Column 7 O = Open F = Final/Closed Injury Classification

Weighting Average amount of claims relationship to Med-Only/Indemnity >weight to Excess Losses

Confused? Statute of Limitations

Safety Pays:

Impact on Mod

Primary vs Excess

Cause of Losses

Trending

E-Mod Minimum Mod RO or NO L O S S E S MEDONLYMEDONLY INDEMNITYINDEMNITY NO R T W SAFETYSAFETY UW C R E D I T FREQUENCYFREQUENCY UW D E B I T S TIERSTIERS NO C O I $1000$1000 D&AD&A SEVERITYSEVERITY $$$ $$$$

On it 1 year; $15,000 account; $1M 35

New Hires Importance of Orientation Safety Training New hires are more likely to be injured on the job during the first days of employment or job transfer. Nearly half of MEM claims each year are people at their job less than one year. We assume they know and they won’t ask either.

Drugs don’t work here Incident Management Program - Drug Policy Drug Free Workplace, implement a substance abuse policy. Denies or reduces benefits by up to 50% in instances of positive post-accident drug tests by assuming the drugs or alcohol were the proximate cause of the injury. Section  Post-Incident (workers’ compensation)  Pre-Employment  Random/Probable Cause  Not just DOT

Amelia Fisher, 17 – Grassy, MO 40

Accountability Incident Management Program – Safety Policy Safe Workplace, Implement a Safety Policy If the employee fails to use safety devices provided by the employer or fails to obey safety rules, compensation is reduced by %. Section  Initial Employee Orientation Training  Signed Receipt of Employee Manual  Ongoing Safety Training Logs

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Enforcement Incident Management Program – Safety Policy, (cont.) Recent Court of Appeals decisions reinforce the statutory burden of proof on an employer in showing they “…made a reasonable effort to cause its employees to obey the safety rule” Section  Initial Employee Orientation Training  Signed Receipt of Employee Manual  Ongoing Safety Training Logs

Thanks! It doesn’t hurt anyone to

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