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Monthly Archives

May 2008

May 01
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WORKERS COMP RATE CUTS COULD BOOST PREMIUMS

By Risk Management Bulletin

Reforms in state Workers Compensation laws, together with improvements in workplace safety, are driving down Workers Comp rates — a trend that, ironically, could lead to more workplace accidents — and, thus, higher premiums. Warns Institute of Workers Comp Professionals co-founder Frank Pennachio, “Declining rates act as blinders for many employers. With lower prices, it’s easy to shift focus away from injury management and cost-containment to other, more pressing business.”

Pennachio points out that every business has its own Comp experience modification rating (“mod”): a discount from, or a premium added to, the average rate paid by other businesses in its class. Because your mod is based on the cost record of your business, the more effective your workplace safety program, the greater your discount, and the lower your rates. To keep your mod (and, thus, your rates) under control, we’d recommend these guidelines for keeping tabs on claims:

  • Go beyond comp rates to use a “big picture” approach that focuses on the total cost of workplace accidents by including such factors as lessened productivity, overtime, and decreased customer service and satisfaction.
  • Make sure that every job in your businesses is categorized accurately by hiring an independent auditor, rather than relying on the insurance company’s audit. If you’re a contractor, for example, the clerical person who manages your truck repair schedule is obviously at a much lower risk for an on-the-job accident than a roofer would be: giving them the same rating just because they both work for you will drive up your premium.
  • Because a history of small, recurring claims can have a greater impact than one large one, pay special attention to repeat accidents, which insurance companies see as a warning sign of a recurring problem.
  • Look into state-run safety programs, such as a drug-free workplace program, that might offer Comp rate discounts.
  • Consider state-authorized industry groups that pool their risks to enjoy lower ratings.

Last, but not least, don’t view Workers Comp as a price-driven commodity. Our risk management professionals work with leading insurers to ensure that you benefit from the product best suited to your needs. We’d be happy to offer recommendations on improving your mod — the most effective way of driving down your costs in the long run. Just give us a call.

May 01
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REDUCE BOOMER DISABILITY CLAIMS BY STRENGTHENING WELLNESS PROGRAMS

By Employment Resources

If you haven’t considered the “graying” of the current workforce, perhaps you haven’t reviewed current Department of Labor statistics:

  • The median age of all U.S. employees is 40.4 years.
  • The median age of employees in public administration is 43.8 years.
  • The median age is 43.5 years in education and 43.0 years at transportation and utility companies.

Compare this data with a statistic provided by UnumProvident, a Tennessee-based group health insurance underwriter. They found that an increase of just one year in the median age of employees could increase claim costs anywhere from 4% to 8%. This is just a sampling of the findings that resulted from their recent study entitled “The Health and Productivity in the Aging American Work Force: Realities and Opportunities.” The population for the study came from UnumProvident’s disability database. Their research included 26.8 million covered individuals and approximately 178,000 employer policyholders.

Although the study revealed that workers age 40 and older display a lower incidence of work injuries, short-term disability, and unscheduled absences than their younger colleagues do, the average amount of time older workers miss because of an injury or illness is almost a third more. The study went on to note that the middle-aged workers account for 50% of all short-term disability claims, and almost 75% of long-term disability claims.

The main reasons for long-term absences for this employee demographic include problems with the musculoskeletal and circulatory systems in addition to mental diseases and cancer. Risk factors such as smoking, lack of exercise, and obesity can lead to healthcare costs for the middle-aged workers that are nearly 300% higher than for younger employees.

The challenge for employers with a significant middle-aged population is to find a methodology to keep their experienced workers, but not subject themselves to the high cost of disability claims in doing so. The answer to the problem lies in establishing wellness programs that meet the health needs of your aging workforce.

The University of Washington Health Promotion Research Center offers the following suggestions for creating an aging workforce wellness program:

Adopt and Implement Policies and Programs Proven to Work.

  • Provide smoking cessation counseling and medications.
  • Provide breast, cervical, and colorectal cancer screening, and blood pressure and cholesterol risk detection and management.
  • Institute physical activity and healthy eating promotion, with emphasis on weight control.
  • Facilitate smoking bans and stair-use reminders.

Align Employee Incentives toward Receiving Services and Participating in Programs.

Reduce or eliminate cost-sharing — Reducing out-of-pocket costs has been proven to increase use of breast cancer screening and tobacco cessation treatment. Reducing or eliminating these costs for other known high-value services, such as screens for blood pressure, cervical cancer, cholesterol, and colorectal cancer could increase their use as well.

Provide Easy Access and Use — Reducing structural barriers such as location, hours of operation, and availability of childcare has been shown to increase participation in breast and colorectal cancer screening. Creating or improving access to places for physical activity, including walking, also increases the potential for employees to participate.

Communicate “Why” and “How” Information and Track Results

Offer compelling insight, rationales, and guidance for using health promotion services and activities — Motivating employee participation requires communicating about why and how to use the policies and programs being offered. Specifically, Health insurance benefits that include no-cost screening and smoking cessation are more likely to be used if they are promoted using standard marketing and communication principles.

Assess employee needs — Surveys, such as Health Risk Assessments (HRA), can generate information on employee health status and health risks that helps employers make smart, targeted health promotion investments. Survey data, which should be anonymous to the employer, will also establish benchmarks against which employers can assess the effectiveness of their investments over time.

May 01
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COMMUNICATION IS CRUCIAL IN BENEFITS ENROLLMENT

By Employment Resources

Any benefits or human resources professional who has been through an open enrollment season knows the importance of communication in ensuring that the enrollment process goes smoothly and successfully. Yet, overall, employers still have work to do in crafting and delivering communications that engage employees and result in their careful and considered selection of benefits.

A survey from the Guardian Life Insurance Company found that almost half of employees spend little or no time reviewing their benefits options each year. On average, the survey found, employees spend 1.4 hours reviewing benefits selections, compared with the 2.8 hours they spend preparing and filing taxes and the 4.9 hours they spend on holiday shopping. The result, according to the survey, is a basic misunderstanding about the advantages of group benefits products. For example, though 70% of surveyed employees said they knew the differences between Group and Individual Life insurance coverage, almost half of these employees said they thought a medical exam was required to enroll in Group Life insurance. And, though two-thirds of employees said they knew the differences between Group and Individual Disability coverage, almost half believed they needed a medical exam to enroll in the group plan. For both of these coverages, medical underwriting is not typically required. Furthermore, nearly a quarter of the employee-respondents thought that Group Disability coverage would be more expensive than an individual disability product.

Employers recognize these communications challenges. A survey from human resources consultant Watson Wyatt found that communications challenges topped the list of employer concerns during the most recent annual benefits enrollment period, with 63% of surveyed firms citing employee communication as a top challenge. More than a third (36%) cited more fully engaging employees in the enrollment process as a top challenge. In contrast, the surveyed employers were highly satisfied with the transactional aspects of benefits enrollment, with 75% being satisfied or very satisfied with the completeness and accuracy of the selections made (the average company reported that two-thirds of employee enrollments were completed on the Web).

Many of the employers reported employee concerns with those parts of the enrollment process that require employees’ thoughtful decision making — contributions to Health Spending Accounts, choosing between different plans, coordinating with a spouse’s plan. Also, 28% cited the complexity of the enrollment process as an employee concern, while 27% cited employee challenges grappling with plan changes.

The past several years have seen the continued shift of responsibility to workers for an increasing number of decisions involving employee benefits. Clearly, this shift heightens the need for communications that not only inform employees, but also engage them as involved, educated decision makers. Now is a good time to critically review your last open enrollment period, talk with employees about their experiences, and assess both the successes and failures of the process. The information that you glean can be invaluable as you craft communications for the next enrollment period.

May 01
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2008 FUNDING LIMITS FOR HSA ACCOUNTS

By Employment Resources

For 2008, the contribution limit for an individual with self-only coverage under a qualifying high deductible health plan is $2,900. For an individual with family coverage, the limit is $5,800.

A qualifying high deductible health plan, for 2008, is defined as a health plan with an annual deductible greater than or equal to $1,100 for self-only coverage, or $2,200 for family coverage (unchanged from 2007). The limit on annual out-of-pocket expenses is $5,600 for self-only coverage, or $11,200 for family coverage.

The current limits and corresponding 2007 limits for self-only and family coverages are compared in the chart below.

  2007 2008
Self-only coverage minimum deductible $1,100 $1,100
Self-only coverage maximum out of pocket $5,500 $5,600
Self-only coverage maximum HSA contribution $2,850 $2,900
Family coverage minimum deductible $2,200 $2,200
Family coverage maximum out of pocket $11,000 $11,000
Family coverage maximum HSA contribution $5,650 $5,800
Catch-Up Contributions (age 55 or older) $800 $900
May 01
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KNOW HOW TO LIMIT INJURY AND EXPOSURE IN A CHEMICAL SPILL

By Workplace Safety

No one plans on a chemical spill but because accidents can occur, the time to figure out how to manage a chemical spill isn’t after a spill happens but before. Because different chemicals can have different harmful effects and must be handled in a unique way, contingency planning is the best way to minimize potential problems.

It goes without saying that our work around hazardous substances should always be designed to minimize the risk of their accidental release. Prior to working in a specific environment around specific chemicals, you should make sure you understand the physical, chemical and toxicological properties of the potentially hazardous substances and the appropriate emergency procedures including:

  • How to report the emergency involved (ie. chemical spill, fire and/or injury).
  • The location and use of emergency first aid equipment.
  • The location and use of spill control equipment and fire extinguishers.
  • Contact information for those responsible for the work site.

Handling a spill depends greatly on the scope of the chemical release, other hazardous conditions present and the type of chemical. Always adhere to the specifics of the safety program. Some general safety guidelines for small spills that are not immediately dangerous to the environment or individual’s health include:

  • Notifying other personnel in the area about the spill and any appropriate evacuation needs.
  • Attending to any individuals who have been injured or potentially exposed.
  • Taking appropriate measures, without the risk of injury or contamination, to confine the spill.
  • Cleaning up and disposing of the spill contents using appropriate procedure.

Remember that more widespread or dangerous spills or conditions require a different approach including:

  • Notifying other personnel about the spill and to evacuate the area.
  • Immediately attempting to remove or protect victims in a manner that doesn’t risk additional injury or contamination. Request help if necessary.
  • Locating to a safe area and calling 911 to report the emergency.
  • For dangers that extend beyond the immediate environment, activating any fire or safety alarms, evacuating the wider vicinity and securing any entrances into the area.

If hazardous or regulated materials are unintentionally released to the environment, special regulatory reporting might be required. Be sure to note as best you can the chemicals involved, the quantities released and the time of the incident so it can be reported accurately to the appropriate environmental agencies.

Although chemical spills are not intended, by taking safety measures, their scope and impact can often be limited.

May 01
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KNOW AND AVOID THE HAZARDS OF WORKING AROUND FLOOR OPENINGS

By Workplace Safety

Each year many deaths and injuries during construction projects are associated with floor openings. These accidents occur because of openings that are not properly covered or because hole coverings are constructed of unsafe material. Additionally, poor lighting and work materials could make a floor opening difficult to see and over time, workers might become accustomed to an opening and forget about it altogether. The biggest danger is falling from a high elevation. There’s also the danger of heavy objects falling through the opening and striking someone working below.

OSHA defines a floor opening as, “An opening measuring 12 inches or more in its least dimension in any floor, roof, or platform through which persons may fall.” Whenever working around floor openings, certain safety procedures need to be taken to meet or exceed OSHA standards.

Railings and toeboards should be built on all exposed sides of a floor or stairway opening, except at the stairway entrance. A “standard railing” consists of top rail, mid rail, and posts, and should have a vertical height of 42 inches from the upper surface of the top rail to the floor, platform, runway, or ramp level. The nominal height of the mid rail is 21 inches. A “standard toeboard” is 4 inches nominal in vertical height, with not more than ¼-inch clearance above floor level.

OSHA allows that floor openings may be covered securely rather than guarded with rails. When the floor opening cover is removed, a temporary guardrail should be in place, or an attendant shall be stationed at the opening to warn employees and others in danger.

Floor hole covers must be constructed from a material that is capable of supporting the maximum weight required, especially if they’re located in a roadway. The covers should be secure and not easily dislodged. The same is true for smaller openings. These measures will ensure the safety of the workers and reduce the hazards that floor openings can pose.

If you’re working in new construction it’s a good idea to identify floor holes as they’re created by installing guardrails and/or hole covers immediately. At existing building sites ensure safety by surveying the site before beginning work and as the work progresses.

Remember that if you are working around a floor opening you are at risk. Leaning over a hole to tighten or loosen a bolt or pulling on a rope with their back to a floor opening is dangerous. One moment of forgetfulness or loss of balance might send you falling through the opening.

For more information about working around floor openings see OSHA regulation 1910.23.

May 01
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FOLLOW THE SIGNS TO SAFETY WHEN DRIVING IN CONSTRUCTION ZONES

By Workplace Safety

Each year hundreds of American construction workers are killed in traffic accidents while they are on the job. So many have been killed that a special work zone safety awareness week has been created. A mobile memorial containing the names of people killed in construction work zones was unveiled in Washington, D.C. in April 2002 and every year since has been on display in various states during the awareness week.

However, it’s not just construction workers who have been maimed or killed. In 2002, 1,181 people were killed in motor vehicle crashes in work zones and more than 52,000 people were injured. According to transportation safety officials, four out of five work zone fatalities are drivers and passengers.

The good news is that after years of steadily increasing numbers of accidents and fatalities in construction zones, public awareness is increasing and the numbers are beginning to drop. In 2003, for the first time in more than five years, the number of fatalities decreased from the previous year to 1,082 deaths.

If you want to avoid becoming a construction zone statistic here are a few tips. First of all obey all signs, especially the ones advising you to slow down. Always stay within the posted speed limits. Always follow the flag person’s direction. They are your guides to help you navigate safely through the construction zone.

Secondly, stay alert and watch for moving workers and equipment. Don’t tailgate the car in front of you or try to pass a slower moving vehicle. Ensure that there is a safe distance between your vehicle, and everything else. Be prepared to stop at any moment and with little notice.

Thirdly, take your time. If you are traveling through a construction work zone, plan ahead, you might be a little delayed. But if it’s unexpected, then just relax and go with the flow.

Finally, pay attention. Now might not be the best time to make phone calls or eat lunch. You’ll need all your faculties to watch the road conditions for mud, gravel, rough surfaces, potholes or craters. Watch out for merging traffic, especially when traffic is reducing to fewer lanes. When taking detours through residential areas, be very cautious and watch out for children.

If you follow these easy tips and all signs and directions, you should be able to drive safely through any construction zone. Take your time and arrive alive.

May 01
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USE ERGONOMICS TO PREVENT CONSTRUCTION SITE INJURIES

By Construction Insurance Bulletin

Musculoskeletal injuries, which are injuries to the muscles, joints, or bones, are the most common injury problem in the construction industry. Ergonomics, a branch of industrial hygiene, identifies the risk factors that can cause these injuries and seeks to develop solutions to prevent their occurrence. Ergonomic changes, generally, are not expensive and can be very simple.

There are four main risk factors that cause musculoskeletal injuries:

  • Awkward posture — positions that cause the body to stretch itself to the extreme, like overhead reaching, bending, stooping, and twisting.
  • Forceful exertion — movements that require extreme force like pushing or pulling.
  • Repetition and duration — performing the same movements over and over for an extended period of time.
  • Contact stress — continuous pressure on the body from a hard surface or sharp edge.

Overcoming these risk factors starts with proper planning. The first consideration should be to minimize the time workers spend manually handling heavy materials. This can be accomplished by making sure crane time is available, forklifts are used as often as possible, and materials are delivered close to the work area. Materials that are not in use should be stored so they’re accessible and easier to reach, but not in the way of ongoing work. Try not to store materials above shoulder height or at ground level. You also need to ensure that walkways are clear so carts and dollies can be used easily to transport materials.

The next consideration is the kinds of tools and equipment being used. Ergonomically designed tools have a lighter weight, require less force to operate, fit the hand better, and are more comfortable to use. Workers should use carts, dollies, and hoists to move materials as much as possible rather than relying on physical strength. They should also use handles when carrying loads and protective equipment, such as kneepads and shoulder pads, to reduce the contact stresses of kneeling work or carrying materials. It’s also important to establish a weight limit for heavy loads above which an employee is required to seek help from a co-worker if a load needs to be moved.

Training is the third consideration in any effective ergonomics program to combat musculoskeletal injuries. Teach employees to incorporate stretching programs before work begins each day to help lessen the instances of injury. Workers and foremen should also be trained on how to identify ergonomic risk factors and how to report them. Finally, instill in your workers that they must report injuries no matter how slight as soon as they happen. They should never try to “work hurt.”

May 01
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THE IMPORTANCE OF ACCIDENT INVESTIGATIONS IN PREVENTING FUTURE ACCIDENTS

By Construction Insurance Bulletin

The old saying that “those who do not learn from history are doomed to repeat it” is indeed applicable to an organization’s safety program. The best way to avoid future accidents is to examine why and how an accident occurred. Only then can you determine effectively how to keep a similar accident from happening again.

A thorough accident investigation should be designed to objectively gather information and not to place blame. Accidents are generally complex incidents in which multiple factors, both indirect and direct, can lead to a failure of people, equipment, or the work environment. An effective investigation should reveal what happened so that new safety protocol or training can be developed from the findings.

The following tips can help you conduct an accident investigation effectively:

  • Make sure the site is safe to enter before initiating an investigation.
  • Secure the area and do not disturb the scene if it is safe to do so.
  • Make sure the individuals involved in the accident get appropriate medical care.
  • Following an event, begin the investigation as quickly as possible in order to secure the site and have access to as much information as possible.
  • As part of your safety program, define protocol for employees to follow when dealing with an accident site in order to preserve it for investigation.
  • Also as part of your safety program, develop accident investigation checklists and guidelines so that the correct protocol is followed.
  • Have materials on-hand which would be needed to conduct an investigation should an accident happen. Such materials might include a camera and film or video recorder and blank tapes, protective equipment, notebook and pens, any necessary accident checklists or report forms, containers for preserving evidence, and a measuring tape.
  • Identify all possible witnesses and interview them as quickly as possible following the incident, while it’s fresh in their minds. Also interview those who were present prior to the incident or arrived shortly after.
  • When conducting an interview, ask questions that will garner a comprehensive picture of the accident, series of events leading to the accident, and surrounding conditions including the condition of any equipment, the weather, instructions from supervisors, and the protocol under which employees were operating.
  • Use a camera, video camera or sketches to document the accident site;
  • Preserve evidence.
  • Analyze all the gathered information to establish exactly how the accident occurred and what steps need to be taken to prevent it from happening in the future.
May 01
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MAKE A PROFESSIONAL SURETY BOND AGENT A PART OF YOUR ADVISORY TEAM

By Construction Insurance Bulletin

Surety companies typically issue surety bonds through surety bond producers, also known as agents or brokers. A surety bond producer will know and understand different bonding companies’ underwriting standards and practices, and can match the needs of a contractor with the right surety company.

One of the surety bond producer’s most important functions when working with contractors is to prepare them for the surety company’s prequalification process. The producer starts by reviewing financial documents that the contractor will submit. This includes an analysis of the contractor’s working capital, net worth, and current revenue. The producer will also examine completed contracts, current contracts, and proposed bids.

After reviewing the data, the producer can discuss with the contractor the amount of risk they are taking on their total work program, and the profitability of that work.
After completing this analysis, the producer will recommend a line of surety credit to help the contractor avoid overextending. The producer will also format the contractor’s submission to meet the surety company’s requirements, and guide the contractor through the presentation.

An important part of the producer’s job is to maintain communication, both with — and between — the contractor and surety company. The first line of communication is with the contractor itself through site visits and visits to the contractor’s office. The second line of communication is between the contractor and the surety company through periodic reports on work progress, financial performance, and business plans.

Because of the important role the surety bond producer plays as an external advisor, choosing the right producer is an important task for a contractor. According to the Surety Information Office, a surety bond producer should have these qualities:

  • A reputation for integrity and respect in the industry.
  • A personal interest in the contractor’s success.
  • An ability to build solid relationships with surety underwriters.
  • An understanding of the construction industry and the construction management process, including estimating, bidding, building and cost control systems, as well as an understanding of basic credit principles.
  • Knowledge of accounting and finance, especially construction accounting procedures, and the ability to analyze financial statements, work-in-progress, and cash flow.
  • Knowledge of construction, subcontracts, and contract law.
  • Authority to issue bonds on the surety’s behalf (within limits).
  • An awareness of local, regional, and national construction markets.
  • Experience in strategic planning and management practices to promote successful contracting.
  • An active role in the construction community through involvement in and support of local and national construction and surety industry associations such as the National Association of Surety Bond Producers (NASBP), the Associated General Contractors of America (AGC), and the Associated Builders and Contractors (ABC).

Consider this checklist of qualities, and recommendations from your associates in the industry, when choosing this important advisor for your company.

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