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SESSION 515 10:30-11:45AMMONDAY, JUNE 8, 2015

The Changing Face of Loss Control

The Changing Face of Loss Control

• Evolution• People• Process• Technology • Information Systems• Data Insight• Predictive Analytics

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The Evolution

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Code of Laws of

HammurabiKing of

Babylonia

2200 BC 1802

Factory Act

England

1887

Massachusetts

Inspections, Worker Hours and Machine Guarding Law

1911

Triangle Shirt

Factory Fire

1913

National Safety Council

20151875 1909 1911 1974

Explosive Act

Allegheny County

Pittsburgh Survey

American Society of

Safety Engineers

Safety and

Health Act

OSHA

?

The Past to Improve the Future

Code of HammurabiSection 229

If a builder builds a house for someone, and does not construct it properly , and the house which he

built falls in and kills its owner, then that builder shall be put to death.

Fundamentals of Loss Control• Loss control management has emerged as both a

distinct profession and also an operational management strategy for the greater protection of people, property, process and ultimately, profitability.

• Reasons for the increased importance attached to loss control includes concerns for quality of work life, enlarged liability awards, new technology, changes in the workforce, legal and regulatory requirements, inflation, medical research, international competition, energy conservation, and environmental protection.

• ….No longer second-class citizens, loss prevention and profit performance have become synonymous.

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Bird/Germain

Fundamentals of Loss Control• Management faces an overwhelmingly complex situation in

its efforts to prevent and control occupational injury and illness, property damage (including fire and explosion), security breaches, pollution and product liability.

• ….because of advances in technology, increased role of government agencies, increasing awareness on the part of individuals and communities of human rights, occupational health problems, environmental problems and the economic constraints of the past few years.

• ….it is imperative that management understand and accept its role in making the workplace as safe and healthy as possible as well as preventing and controlling all other associated losses.

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Ramsay – Forward…Bird/Germain

Sounds Familiar• Effectiveness

• Doing the right things• Efficiency

• Doing things right• Excellence

• Efficiently meeting effective goals, both short and long term

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• Practical Loss Control Leadership• Frank Bird and George Germain• 1st Published 1986 – 30 years ago• Captures 35 years of career experience beginning in 1950

• Has Loss Control changed over the years?

Do we think there has been a change?

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People• By accident / By degree• Skills / Competency

• Specialists• Administrative / Finance / Human Resource / Engineering

• Technical• Specialists

• Industrial Hygienists / Ergonomist / Security / Fire Protection• Baby Boomers 1940s-1960s - 45% and reducing

• 20 year talent pool delta• Gen X 1960s-1980s – 30%

• Smaller than Gen Y and Boomers• Millennials / Gen Y 1980s-2000s – 20% and

growing• Larger than Boomers 8

People

• Consulting• External

• 3rd Party Independent• Internal

• Safety Director/Supervisor

• Broker/Agency Loss Control

• Carrier Loss Control• Underwriting• Profit center

• unbundled service / fee for service

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Operations• Centralized• Decentralized• Efficiency• Scalable

People - Demographics• ASSE Loss Control Symposium – 2008

• 56% (of attendees) had more than 15 years experience• 25% between 20 and 30 years

• Economic changes• Consolidation, staff reductions, headcount management

• 2014/2015• 75% Symposium attendees now have over 20+ years

experience

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23%

18%15%

20%17%

14%

40%44% 44%

17%

22%

27%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2014 2012 2010

<4040's50's60's+

Loss Control Age Demographics

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People• Recruiting

• College Graduates• Insurance• Risk Management• Fire Prevention• Safety• Engineering• Military

• Retention and Development• Training and Orientation Academies

• Future Leaders / Early Career Development• Intern/Trainee/Consultant

• On-the-job (OJT) Training• Mentoring

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People• Skills – Sales & Consultative

– Interpersonal– Emotional Intelligence– Team– Listening– Empathy– Technical• Math and science, • Business and finance• Communications• Technology • Data Management

• Team Player – “Customer” Knowledge13

Industry Knowledge14

ConstructionManufacturing

TechnologyFinancial

Institutions Healthcare

Professional Services

Deep Expertise

Deliver Business Solutions

Energy

Transportation

Education

Entertainment

Real Estate

Process

The Risk Assessment Challenge

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Very Poor Inadequate

controls

Easy to Identify Easy to Identify

More Common:More Common:What is Adequate enough?What is Adequate enough?

Where/How do we draw the lineWhere/How do we draw the line

Average ControlsIn Place

Following Best

Practices

Risk Quality

0-------------------2.5-----------------5

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Very Poor Inadequate

controls

Following Best

Practices

Process

• Fundamentals of Loss Control• Business of Safety• Technology• Data/Analytics• Predictive modeling

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Process

• This is not OSHA• Loss Control is a business relationship

– Key line items in organizations budgets• Insurance Premiums, • Retained losses, • Claims & safety management

• Loss Control• Improves Profitability

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2020

Pre and Post LossLoss Control and Claims Management

Impacting Profitability

Pre-LossRisk

Control

Post-Loss Claims

ManagementBusines

s

Professional Expertise

Ergonomicsand Manual

Material Handling

Contractual Risk

Transfer

Driver Selection and MVRs

Property Protection

Business Continuity Planning

Risk Assessmen

te-Tools

Return to Work

RN Case Managers

Claim Handling Expertise

Data Management

RecoveryLegal

Services

Investigative Units

CommunicationCommunication

CollaborationCollaboration

Process

• Global Footprint• Regulatory/Legal• Headcount• Tools – Triggers for Assessment

• Desk Based• Onsite

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Technology and Data Gathering

• Technology• Drones• Telematics• Satellites• Surveillance• Handhelds• Apps– BuildFax – Social Media– D&B Financials and Business Reports

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A look into the future….or today??

• Risk Assessments• Dangerous / difficult to access

locations• Pre and post incident

• Structural • Infrastructure, access and communication • Environmental

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Drones - Unmanned Aerial Vehicles (UAV)

• Emergency response• Proactive plan development• Monitoring response team during recovery and rebuilding• Delivery of equipment and supplies

• Claim Management• Early reporting on extent of damage • Assist with timely and appropriate level of response needed• Reduces potential injury

• Claims adjusters & engineers• Response teams

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Drones - Unmanned Aerial Vehicles (UAV)

Telematics – Fleet Risk ControlUsage based auto insurance (UBI) - insurer’s provided devices connected to car computer systemMonitors:•When and where vehicle is driven / Length of Trips•Speed / Use of Seat belts•Engine temperature•“Acceleration events”

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Braking Acceleration

Lane Handling

Corner Handling

Speed Handling

Report&

Analyze

Telematics – Fleet Risk Control• Early indications….

• 20-33% reduction in crash rates for driver who are aware of installed device

• Risk models have been affirmed:• Younger drivers are high risk• Risk reduces through middle age • Increases again around 60

• 20% Drivers – High Risk 10X claim cost as Least Risky 20

• Challenges• Can you install on personal vehicle used for company business? • Do you share data with police? • What data does the device monitor?• Privacy considerations – top reasons consumers hesitate before using

telematics 26

Satellite• Construction• Dimensions

• Between the buildings• Elevation• Special hazard areas

• Flammable and combustible storage tanks

• Railroads• Roof• Equipment• Infrastructure• Traffic Patterns• Pedestrian/ Bicycle• Weather

Satellite

• Roof maintenance• Infrastructure• Business Traffic

Surveillance

• Surveillance and Digital Recording• Electronic Access• Fire / Life Safety

Tablets, Smartphones and Handhelds

• Surveys• Inspections• Assessments• Observations• Incident Investigations• Training

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• File Management• Policies/Programs, Contracts, Certificates

of Insurance, Medical Records• Photos/videos

• Task / Exposure Specific• Property, fire protection, life safety• Construction phases, • Vehicles• Regulatory (OSHA/DOT/EPA/JHA)• Noise, electrical, chemical, • Job hazard analysis

• Inventory Management• PPE• Safety supplies, • Fire protection equipment• Chemicals/SDS,

Aggregate, Track, Analyze, and Report

APPS – Data Collection

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BuildFax

• Building Permits• Property Condition• Major Structure Age

• Buildings• Electrical• Mechanical/HVAC• Plumbing

• Insurance• Values

• Underinsured

Dunn and Bradstreet Business Information Report

• Officer Profiles• Employee Count• Description

• Building & Location• Operations

• Subsidiaries• Financials

• Strength• Debt/ Liens• Payment History• Assets

• Legal Review• Risk Indicator

Social Media

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What does Risk Assessments look like in 2020?

• Liability claims and Yelp rating for Restaurants

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# of claims/Revenue

Information Systems

Centralized Data Collection and Analytics•Insurance Program Management / Analysis for Self-Insured Retentions•Statement of Values / Exposure Management•Property Management

• COPE (Construction, Occupancy, Protection, equipment)

•Equipment Inventory / Asset Tracking•Incident Reporting and Management•Claims Administration and Management •Certificates of Insurance•Fleet / Vehicle Management•Total Cost of Risk (TCOR) Analysis•Disability Management•Business Intelligence 36

Suppression system NOT serviced every 6 months, with prompt

correction of any deficiencies noted on the inspection report

Restaurants 10.2%

Real Estate 23.2%

Hotels 16.7%

Employees NOT formally trained in the use of portable fire extinguishers and

the manual release for the suppression system

Restaurants 9.6%Real Estate 19.1%Hotels 8.7%

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Data Insights

 Food Processing Manufacturing

Wholesale Distributors

Restaurant and Food Service

Real Estate

Hotels and Lodging

Performs Pre-employment Drug screening 59.2% 74.6% 68.3% 26.5% 41.3% 49.5%

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Data Insights

  ConstructionFood Processing

Metal Fabrication

Industrial Machinery manufacturing

wholesale Distributors

Formal Written Program for manual material handling (including rules and training) 67.2% 53.7% 47.4% 35.1% 55.0%

Other ConstructionWork Comp Assessments 2,996 1,829  Yes No Yes NoFormal Program for manual material handling

(including rules and training) 56% 44% 56% 44%Medical emergency plan in Place 81% 19% 83% 17%50% of the workforce is under the age of 50 88% 12% 95% 5%The Account Performs Pre-employment screening 65% 35% 75% 25%Senior management participates in serious

accident reviews 96% 4% 98% 2%Safety is a part of regularly scheduled operational

meetings 73% 27% 84% 16%

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Data Insights

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Risk ControlData Points

UW Predictive Models

Blended

Model

Pricing Guidance

for Underwriting

Predictive Analytics

Predictive AnalyticsEffective Return-to-Work Process in

PlaceLoss Ratio

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FrequencySeverity

Performs 50% worseWith out RTW

Performs 25% betterwith RTW

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Predictive AnalyticsLoss Ratio Impact of Effective MMH

Program

Loss Ratio 38% worsewithout MMH Program

Frequency

Loss Ratio

Predictive AnalyticsConstruction Materials NOT Moved More than 25

Feet

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Severity

Performs 25% worse

Performs 10% better

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Predictive AnalyticsPartial Factor Plot of LoB Grade

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Critical Element Question Yes No

Effective Manual Material Handling Program 0% + 37.7%

Work Travel Areas Have Adequate Lighting 0% + 44.0%

Designated Medical Facility 0% + 26.1%

Effective RTW Process 0% + 30.1%

Substance Abuse Policy In Place 0% + 20.2%

Workstations Designed to Sit and Stand - 27.3% 0%

Proof of Auto Insurance Required for HNO Vehicles - 5.6% + 21.4%

Rules On Use of Company Vehicles 0% + 43.3%

Management

Disciplinary Program Includes Safety 0% + 9.6%

Training In Organizational Safety Requirements 0% + 49.9%

Knowledge in Local/Fed Requirements 0% + 80.8%

Safety Program Matches Operational Needs 0% + 29.9%

Safety Is Part of Regularly Scheduled Meetings 0% + 24.0%

Predictive AnalyticsWorkers Compensation Loss Ratio Impact

Changing Faces of Loss Control

Risk 2015 and beyond• Reputational Risk• Cyber Risk • Economic and Regulatory• Global Economy

• Increased Competition• Supply Chain – Interconnectivity

• Talent Recruiting and Retention • Pandemics• Property Damage• Natural Disasters – Floods, Earthquakes, etc

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The Changing Face of Loss Control

• Evolution• People• Process• Technology • Information Systems• Data Insight• Predictive Analytics

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SESSION 515 10:30-11:45AMMONDAY, JUNE 8, 2015

The Changing Face of Loss Control