Michelle Kerr

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]

The Driverless Future

Autonomous Risk

When self-driving vehicles meet the sharing economy, numerous industries will need to brace for change; insurance among them.
By: | October 1, 2016 • 10 min read
A driver, right, gets his hands off of the steering wheel of an autonomous vehicle during its test drive in Singapore Wednesday, Aug. 24, 2016. The world’s first self-driving taxis, operated by nuTonomy, an autonomous vehicle software startup, will be picking up passengers in Singapore starting Thursday, Aug. 25. The service will start small - six cars now, growing to a dozen by the end of the year. The ultimate goal, say nuTonomy officials, is to have a fully self-driving taxi fleet in Singapore by 2018, which will help sharply cut the number of cars on Singapore’s congested roads. (AP Photo/Yong Teck Lim)

Outside of the rare Google car sighting, autonomous vehicles, or A.V.s, have mostly been the domain of futuristic action movies. That fictional future, though, is now.


A limited number of autonomous Volvo XC90s will be on the road this year. Audi’s self-driving A8 limousine is due out in 2017. Tesla plans to have fully autonomous vehicles available in 2018. Top executives at Ford and GM expect to launch fully autonomous vehicles by 2020. The U.S. Secretary of Transportation said at the 2015 Frankfurt Auto show that he expects driverless cars to be in use all over the world by 2025.

The twist, however, is that by 2025, the dominating force driving sales of those vehicles will most likely be commercial or public fleet operators, rather than private individuals.

VIDEO: Uber driverless takes to the streets in Pittsburgh.

While carmakers have been perfecting all this autonomous technology, the rest of the world was getting cozy with Zipcar, Car2Go, Uber and Lyft. Now those two disruptive concepts are merging, and the result is a seismic shift in the world as we know it.

Because driverless cars eliminate human error and human foibles like road rage and texting while driving, accident rates are expected to decline. Combined with an overall decrease in ownership, some say that will — eventually — cause a drastic upheaval in the auto insurance industry.

“Right now … everybody’s wringing their hands,” said John Lucker, global advanced analytics & modeling market leader with Deloitte Consulting.

John Lucker, global advanced analytics & modeling market leader, Deloitte Consulting

John Lucker, global advanced analytics & modeling market leader, Deloitte Consulting

“Half of all premiums are going to disappear! The industry’s going to blow up! The personal lines market is going to disappear! And we’re saying, ‘Well, time out everybody.’ ”

The likely reality is more nuanced. Deer will still dart into the road in the blink of an eye. Stray softballs and golf balls will still take out windshields. Car theft isn’t going away. And of course, machines can malfunction or be hacked. Insurance will remain as necessary as ever, but coverage needs will shift in a variety of ways.

“There’s going to be a blurring of the distinctions between various types of commercial insurance and personal insurance,” said James Guszcza, U.S. chief data scientist for Deloitte Consulting.

Sorting through it all is going to be incredibly complicated for carriers, as personal ownership slowly gives way to increased commercial ownership, in the form of driverless “Uber armies” or large A.V. fleets. There will also be a long period when non-autonomous, semi-autonomous, and fully autonomous vehicles will all be in the mix to varying degrees.

“Until all of the vehicles on the road are autonomous, how do you mix and match this?” asked Lucker.

“Your car is acting on its own, then it crashes into somebody who’s driving. How do you figure out who’s at fault? And then, is it a software issue? Is it your liability because you [own the car]? Was it the fault of the [human driver]?

“I don’t think that these things are going to go away,” Lucker said. “There’s obviously a blending of commercial auto, personal auto, potentially E&O for software developers, potentially some sort of product liability risk if a sensor didn’t work properly on the autonomous vehicle … there’s a lot of stuff going on here that traditionally has always been assumed to be a simple personal auto coverage.”

“This is a spectrum,” said Guszcza, “and we’re moving along that spectrum.”

How Quick a Shift?

Opinions vary widely on how fast this transformation will come to pass. Looking out to 2025, “you are going to find universally available cheap automotives, but those are probably going to be bought by self-drive fleet-manager-as-a-service type companies,” said Chris Smedley, CEO of Digital Habitats Corp. and longtime technology entrepreneur.

“Most of us are going to pay for transportation on a per-use basis.”

The rise of mobility as a service (MaaS) is taking hold quickly, and human drivers are indeed being pushed out. Uber CEO Travis Kalanick expects the entire Uber fleet to be driverless by 2030. The foundation is already being laid.

“I can’t imagine how many years it’s going to take for there to be mechanisms where police or road construction can be updated in real time to the point where true autonomous vehicles can navigate.” —John Lucker, global advanced analytics & modeling market leader, Deloitte Consulting

In August, the MIT-born company NuTonomy launched a test fleet of six self-driving taxis in a small section of Singapore, with human drivers on board to take over if necessary. Uber and Volvo also announced plans to launch a fleet of 100 self-driving Uber vehicles in Pittsburgh by the end of summer. The goal is to eliminate human drivers altogether — eventually.  Once that happens, Uber’s Kalanick said, its service will be so inexpensive and broadly available as to make personal car ownership obsolete.


Researchers seem to agree. A 2015 Barclay’s report concluded that auto sales will dip by as much as 40 percent within the next 25 years, as traditional ownership gives way to family autonomous vehicles, shared autonomous vehicles, and autonomous vehicle pooling (think Waze Carpool with no drivers). Barclays estimated that one shared, pooled vehicle could do the work now accomplished by 17 vehicles.

But there’s a silver lining for car manufacturers. A January 2016 McKinsey report suggested that the decline in private vehicle sales will be offset by increased sales of commercially and publicly owned shared fleet vehicles. Those vehicles will need to be replaced far more often due to heavy usage. The report concluded that overall global car sales would drop from the current annual growth rate of 3.6 percent to 2 percent by 2030.

The bottom line is that until somebody figures out how to make Star Trek’s transporter beam a reality, cars and trucks will still be the lifeblood of commerce and society. It’s the way we use them that’s about to shift in a variety of ways, and every manner of industry will need to assess how the shift will affect them.

Like falling dominoes setting off chain reactions, the mobility revolution will strike blows across multiple industry sectors.

Impact Across Industries

The beleaguered petroleum industry is in for more pain, because a steadily growing percentage of new autonomous cars will be electric. The taxi industry, already ailing, appears to be doomed.

James Guszcza, U.S. chief data scientist, Deloitte Consulting

James Guszcza, U.S. chief data scientist, Deloitte Consulting

The parking industry will take heavy hits — who needs a parking space when you Uber to work? Even those who do choose to buy their own autonomous cars won’t need to park — they can just send their cars home to wait.

Prevailing wisdom says that accidents will decline sharply as A.V. usage increases, which could send the $62 billion repair industry into a tailspin. Automotive computer repair will move to the fore as collision repair needs shrink.

Car-sharing and ride-hailing services, now the disruptors, will become the disrupted unless they evolve as Uber is already trying to do. The traditional car rental industry will also be forced to adapt or die.

The same changes will drive a new dynamic in public transportation as well. In fact, it’s already begun.

In April, the City of Beverly Hills, Calif., unanimously passed a resolution to develop a public transportation system consisting of driverless municipal shuttles. The idea is spreading. All seven finalists in the U.S. Department of Transportation’s 2016 Smart City Challenge submitted proposals that included semi- or fully autonomous vehicles.

Columbus, Ohio, winner of the $50 million challenge, plans a fleet of connected, electric, autonomous shuttles to ferry people around its business district. Other cities’ proposals included plans to shuttle people between transit hubs and airports autonomously, or to have self-driving vehicles handle deliveries and municipal transportation of materials.

For the average business, this shifting dynamic will be a mixed bag. Eliminating drivers will obviously have a significant impact on the cost of transporting or delivering products. However, as new players enter the autonomous on-demand fleet space, trying to grab for market share, choices for business leaders could become cloudy.

“There’s going to be a blurring of the distinctions between various types of commercial insurance and personal insurance.” — James Guszcza, U.S. chief data scientist, Deloitte Consulting

How do you properly vet your vendor? How much do you know about their parts and programming and how safe or reliable their driverless units are? It remains to be seen whether a company could be held responsible if a fleet vendor’s car were to cause life or property damage while delivering its products.

It will likely take decades of litigation to achieve any clarity on these types of liability issues.R10-1-16p28-30_1Driverless6.indd

Deep, Deep Data

The upside for both insurers and insureds is that the newest automotive technologies — and the data they collect — will create transparencies to a degree barely ever imagined before.

The new wave of vehicles will be equipped with ever-more-sophisticated sensors and telematics, enabling an unprecedented degree of precision in adjusting as well as pricing, said Lou Brothers, senior manager, West Monroe Partners.

In the event of a crash, adjusters will simply download both vehicles’ “black box” data and know instantly what happened and why, improving accuracy and eliminating the need for investigations.

“The device knows,” said Brothers.

Lou Brothers, senior manager, West Monroe Partners

Lou Brothers, senior manager, West Monroe Partners

“It knows what it did, it knows what the other driver did, it knows what you did. And if the other car’s a smart car, we know all the components … the friction on the road, the speed, the position of the gas pedal and brake pedal, deceleration patterns … now there’s no question about who’s at fault.”

On-board technology will give underwriters access to more varied and deeper layers of data, potentially enabling them to fine-tune premiums specific to actual usage, said Brothers.

“Lou’s driving on I-78 heading west out of New York through the Holland Tunnel. Say we know that on the entry point on the Holland Tunnel, he has a 2 percent greater chance of a side-by-side collision because of the funneling that happens there. Therefore for that period of time, instead of paying $3.00 for insurance he’s going to pay $3.50 for insurance — just for that 10 minute period.

“We know everything about the car, where it is, how long it’s there for, we know the accident statistics of all of those different areas — you could really drive yourself into a very detailed, nuanced view of this one driver, in this one car, in this one scenario, at this moment.”

Admittedly, said Brothers, that capability is still a long way off. “The amount of computation, the amount of analysis and of thought that would have to be put into those risk models would be insane,” he said.

“We’re talking about … driving down to the statistic of one.”

But when it happens, it presents some very attractive possibilities for the businesses that will be entrusting their products to autonomous on-demand fleets.

If allowed access to the data collected from commercial fleets, companies would be able to make better decisions about the risk level of each provider, and even about the routes traveled by vehicles being used to conduct their business.

It could also drive a conversion to usage-based automotive insurance, giving commercial fleet owners more power to control their premiums and offer more competitive rates to customers.

Imagine a carrier sending a message that said, maybe you should consider these alternate routes because they’re safer. Or maybe suggesting taking a longer route because it’s better paved or lowers the overall risk of the route.

In the end, money talks, said Brothers. If your carrier told you that if you were to leave 10 minutes earlier every day, your premiums would go down $80, chances are good that you’d leave 10 minutes earlier.

“That kind of real-time alert could be a very positive thing that I think people would welcome.”

Infrastructure Lacking

Risk managers trying to map out how the mobility shift will impact their organizations still have some time to get a handle on it. Despite the current race to put autonomous vehicles on the road, some believe the pace of change will be slow because the infrastructure to support a driverless world doesn’t exist, and few are talking about how to create it.


That’s why projects like NuTonomy’s Singapore test and the Uber/Volvo Pittsburgh venture make sense, because they’re constrained to areas that can be mapped precisely.

The trickier problem is that even keeping vehicles to proscribed routes won’t eliminate unknowns, experts said.

“Let’s say a sinkhole gets formed because of a massive rainstorm,” said Lucker. “How are the police going to alert this global GPS repository that Maple Street is now closed, so every single car knows not to turn down Maple Street?

“Worse, what if there’s an obstacle or accident halfway down a road, the cars don’t know that, and a whole string of cars goes down the road and they form a traffic jam. How will the cars sort out how to get out of there?

“There is no mechanism to create the global GPS database repository of changing road conditions and changing obstacles that an autonomous car is going to have to have access to in real time in order for something to be truly autonomous,” Lucker said.

“I can’t imagine how many years it’s going to take for there to be mechanisms where police or road construction can be updated in real time to the point where true autonomous vehicles can navigate.” &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]
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Terrorism Risk

Fear Takes No Holiday

When businesses are affected indirectly by a terrorist attack, their losses can fall through the many cracks that exist in terrorism insurance policies.
By: | September 20, 2016 • 12 min read
French military patrol near the Eiffel Tower the day after a series of deadly attacks in Paris , November 14, 2015.      REUTERS/Yves Herman - RTS6ZSC

In April 2013, an explosion rocked the street in front of the Charlesmark Hotel, a boutique property on Boylston Street in Boston that overlooked the finish line of the Boston marathon. In the chaos that ensued, the FBI closed a 12-block radius around the blast scene. Five hotels were completely locked down, including the Charlesmark, Mandarin and Lenox hotels.


Strictly from an insurance standpoint, the hotels, restaurants and businesses in that 12-block radius may have been the lucky ones. Direct impact to their operations would have at least given them access to insurance recovery for physical damage or for business interruption due to civil authority action, assuming they had the right coverages in place.

But what about the businesses outside that radius? No doubt their revenues suffered in the days and weeks that followed, as media coverage fanned the flames of fear, keeping Boston’s terrorism connection alive in the minds of the public.

It’s likely that few, if any of them, had language in their insurance policies that would help offset their losses while Boston struggled to regain some normalcy.

The volume of terror attacks has increased worldwide in a short period of time. At the time of this writing, three U.S. attacks with potential connections to terrorist organizations took place within a single 12-hour span on Sept. 17.

Fear has become one of the most challenging market conditions facing business that rely on travel and tourism. Gaps in coverage can take companies by surprise when high-profile events suppress travel, tourism and the general flow of commerce.

“There’s no question that the hospitality industry is affected by fear, as much or more than the event itself,” said Chad Callaghan, principal of Premises Liability Experts, based in Atlanta. Callaghan served Marriott International Inc. for 35 years, as vice president of safety and security.

Business hubs rebound more quickly, because business travelers can’t stay away for long. But companies dependent on leisure travelers for revenue can take heavy hits, depending on the nature and severity of an attack in their vicinity. It’s hard to calculate what the financial impact would be of a major attack at Disney World, or at the primary airport of the host city of the Super Bowl a week before the event.

“Terrorism is the thing that scares everybody,” said Joe Addison, executive vice president at JLT Specialty USA, “People don’t want to walk down Las Vegas Boulevard when two weeks ago there was a truck bomb there, and every time they look at a truck they’re going to worry, ‘Is there one in there?’ ”

Financial Toll

Following the November 2015 terrorist attacks in Paris, bookings at luxury hotels in the city fell by 50 percent. Within days of the Brussels terror attack, hotel occupancy plunged from 82 percent to 25 percent across the city.

Jan Schnabel, managing director and director of risk management with Hub International’s Hospitality Practice

Jan Schnabel, managing director and director of risk management with Hub International’s Hospitality Practice

“Acts of terrorism have a lingering negative impact on revenue that simply can’t be recovered,” said Jan Schnabel, managing director and director of risk management with HUB International’s hospitality practice.

“The hundreds of billions of dollars that are lost in overall revenue in the tourism and hospitality world following an attack is inconceivable.”

The World Travel & Tourism Council estimates that it takes a region, on average, about 13 months to get back to normal following a terrorist attack. In the grand scheme of things, that’s not long. But it can still take a mighty toll.

And booking and cancellation stats don’t really give a complete picture of what hotels may face in the immediate wake of a terrorist attack, when trying to serve the limited guests they do have.

“It’s a tough thing for risk managers to really wrap their minds around,” said Sheri Wilson, national property claims director for Lockton.

“What if I can’t get laundry? What if the roads are closed so I can’t get the people in? What if I can’t get fresh fruit in?” Hotels may need to spend a considerable amount to get the goods and services they need.

Terrorism coverage for such losses and unexpected expenses is a tricky beast. Coverage under standard property policies is typically limited to property damage and business interruption related to property damage. It also relies upon the event to be certified as an act of terrorism by the U.S. Secretary of the Treasury.

“If you elect coverage through TRIPRA, or one of the other national terrorism pools, there may be limited or no cover depending on your underlying property policy and how the terrorism ‘pool’ ultimately responds,” said Steve Truono, vice president of global risk management and insurance for Starwood Hotels & Resorts.

Business interruption (BI), or time element coverage, can be triggered by other situations such as evacuation orders, transportation interruptions or power outages. Contingent BI can come into play as well, in some cases.

“I rely on housekeeping to keep my hotel open but if housekeeping [can’t get to work] because of a terrorist attack, I could, as a hotel owner, have [CBI] coverage,” said Wilson.

“Once the terrorism is certified, all of the coverages in the policy come into play.”

Consider the Boston marathon incident, said Christian Waeldner, vice president, crisis management and political risk at Starr Cos.

“You had a bunch of restaurants and hotels in close proximity to the finish line who were indirectly impacted by the bombing. … It took a quite some time for life to get back to normal in the city center after the bombing and that’s a huge financial impact.”


Waeldner said Starr Cos.’ cyber and terror response product includes contingent BI that can be triggered by a terrorist event within two miles of an insured’s property, even if they are not directly impacted.

But it’s important to remember that the Boston bombing was never declared a terrorist act. Products such as Starr’s or Lockton’s new terrorism crisis solutions offer more comprehensive coverage that doesn’t require the Secretary of the Treasury to certify an act of terrorism.

Stand-alone terrorism policies often have a distinct advantages for insureds, said John Welty, practice leader for SUITELIFE from program administrator Venture Insurance Programs.

“The hundreds of billions of dollars that are lost in overall revenue in the tourism and hospitality world following an attack is inconceivable.” — Jan Schnabel, managing director and director of risk management with HUB International’s Hospitality Practice

“A stand-alone terrorism insurance program can help to reduce the gray areas of where our standard insurance policies are providing coverage,” he said.

“Depending on the policy form obtained, you may find some coverage for cancellation of booking or non-physical damage,” added Truono, but “a lot depends on your business exposures, what markets you buy from, and how much you’re willing or able to spend.”

Even in cases where one has cancellation of booking included in their terrorism policy, it is very likely that the coverage is sublimited, well below the several hundred million dollars of limits you may have for direct property damage, he said.

Loss of attraction is a specialized time element coverage that may provide some relief. But like cancellation of booking, the coverage is typically subject to low sublimits and is often subject to annual aggregate, not per occurrence, limits as well.

Risk managers should keep in mind that it can be complicated to prove a loss, said Turono.

“As risk managers, we have to be able to support the loss and demonstrate that the loss of net income was a result of the terrorist act, despite no physical damage to one’s own property.

“For example, in the hospitality industry, we would need to show that the reduction in room occupancy, RevPAR and ultimately net income, is a direct result of the terrorist act which results in interruption of our business due to guests’ or customers’ inability to freely and safely access the hotel.

“Likewise, loss emanating from leader property interruption (airport, convention center, etc.) ingress-egress, and/or military-civil authority may also support the basis for a claim.”

Customized Coverage

“The terrorism policies are pretty staid and strict and there’s a lot that they don’t cover,” said a Western U.S. risk management professional for a large resort and casino operator.

That can potentially leave risk managers on the hot seat if the C-suite assumes that buying any kind of terrorism policy means the company will be covered no matter what the circumstances.

“The worst thing is to have your boss think that, ‘oh we have terrorism coverage so anything that happens around here might be covered,’ because that’s not necessarily the case,” the risk manager said.

But the marketplace is changing for the better.

Sheri Wilson, national property claims director, Lockton

Sheri Wilson, national property claims director, Lockton

We’ve gone from basic terrorism add-ons that most owners didn’t even look twice at [to] new offerings in the marketplace that are more comprehensive because of events such as [those in] Orlando and San Bernardino,” said Sean Spagnoli, vice president and client executive for HUB International’s hospitality practice.

“The notable changes are the new contingent products where you don’t have to have damage just to your location. It can be an event that happens anywhere from a 5 to a 50 mile radius.”

One such product from Florida-based New Paradigm provides parametric and contingent terrorism coverage for business income, extra expense, loss of attraction and brand protection. Coverage triggers can include terrorism occurring within a predetermined radius from insured locations, or occurring at other predetermined locations that could cause a loss.

“It will allow you to pick and choose different hotels and different scenarios,” said the Western U.S. risk professional, and it also offers the kind of capacity he needs for a large organization.

For many companies, said Addison, that kind of capacity is the key.

“Someone like MGM or Caesars … the amount of money going through those facilities a day — $10 million in coverage isn’t going to cut it. If they were to have a substantial event in Vegas and people just cancelled their reservations and were scared to go there, they’re going to need more like a quarter billion, half a billion.

“If they go from a 90 percent occupancy down to 60, that’s a lot of revenue because they’re making money from the food, they’re making money from the gambling. Then the question is — how long does it take before it comes back? Before people feel safe again?”

“Imagine if you were a company in Las Vegas and [after a terrorist event] you had to tell your shareholders that you didn’t have coverage for that, and your share price drops 20 percent.” — Joe Addison, executive vice president, JLT Specialty

These conversations need to happen with the CFO, experts agreed.

Finance and risk management need to look closely at what could make people afraid to come to your properties and how it would affect the balance sheet, or significantly impact share price or investor ownership value or dividends.


“Imagine if you were a company in Las Vegas and [after a terrorist event] you had to tell your shareholders that you didn’t have coverage for that, and your share price drops 20 percent,” said Addison.

When you look at what companies pay in property insurance, the potential financial exposure to non-physical could be so much bigger, he added. “You could lose a lot more by having occupancy at your hotel drop by 50 percent for three months.

“At the end of the day, the idea of something out of your control affecting your business scares the crap out of people.”

Risk Mitigation

Decisions about terrorism coverage, said experts, should be part of a larger process that includes a detailed risk assessment, the creation of a comprehensive crisis management plan specific to acts of terrorism, and simple measures to reduce the likelihood of becoming a target.

A good risk assessment doesn’t have to be expensive, time-consuming or interfere with operations, said Peter DiDomenica, former director of security policy at Boston’s Logan International airport, and president of security firm Quantum Innovation Corp. It can be as straightforward as reviewing the geography and physical layout of the property and evaluating existing training and security measures.

“It’s going to give you a road map for everything else.”

Most U.S. hotels and resorts haven’t undergone the level of “hardening” common in many other countries, but it’s important to take all reasonable measures, experts said.

“We have hundreds of thousands of people at a hotel,” said the resort and casino risk manager. “If someone just starts shooting, you can have a huge loss of life that impacts your property, your workers’ comp, your liability and your reputation worse than anything else.

Steve Truono, vice president of global risk management and insurance, Starwood Hotels & Resorts

Steve Truono, vice president of global risk management and insurance, Starwood Hotels & Resorts

“The reputation is the thing that is very difficult to do anything with. So it makes sense to do as much as you can on the front end because you’re limited in what you can do after something happens.”

That said, most U.S. property owners are reluctant to anything that might appear extreme.

You want to “harden your properties, but do it in a soft way,” said Tarique Nageer, leader for U.S. property terrorism placements with Marsh USA. “By the nature of hotels, you can only do so much because they’re free-flowing places so you don’t want to impede guests or visitors … so you’ve got to weigh those needs.”

There are surprisingly simple ways to improve a property’s risk profile, said DiDomenica. Just trimming the hedges could be enough to “make it less inviting in terms of the physical environment for someone who’s going to do surveillance or plan an attack,” he said.

Staff members can also play a key role in helping to thwart an imminent attack, said Reggie Gibbs, senior underwriter and product manager with Starr Cos. In hotels, for example, they have the best handle on typical guest behavior and what might constitute a red flag.

“They can spot when a car is parked in an unusual place,” he said. “They know when a guest has been in a room for an extended amount of time and for some reason isn’t letting housekeeping in to clean.”

Brokers and insurers are key partners throughout the process. They have the experience to help insureds assess and quantify risks and coverage parameters. Truono, for instance, asks brokers to explain coverage through hypothetical claim scenarios.

“I don’t want to solely focus on coverage terms, but I also want to understand how the policy will be interpreted in the event of a claim. I want to understand how and if a claim will be covered, because in the end, that’s the inherent risk transfer value and what we are buying.”

An Evolving Risk

The forms and manifestations of terrorism keep changing, said Truono, and risk managers must continue to ensure their prevention and risk mitigation strategies evolve as well.


“A truck bomb is one type of an event with specific control countermeasures,” he said. “A lone-wolf or individuals who enter a hotel with IEDs [improvised explosive devices] or automatic weapons, however — that’s a totally different type of event requiring  specialized tactics and controls, and it’s necessarily more difficult to manage.”

“How do you protect yourself against situations where someone just wants to kill people rather than destroy a building?” asked Nageer.

The harsh reality is that no one and no place is immune from terrorism acts.

“We must remain vigilant, aware and informed,” said Truono. “We need to continue to educate our people and enhance our prevention and response strategies. Our practices, processes, priorities and physical plants must be dynamic and continually adapt to ever-changing landscape and information.”

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]
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Safety Research

Investing in a Safer Future

Nine projects being funded by the Ohio BWC strive to create safer workplaces in Ohio and across the rest of the country.
By: | August 15, 2016 • 8 min read
Care Worker Helping Senior Woman To Get Up

The Ohio Bureau of Workers’ Compensation made plenty of headlines with its billion-dollar rebates to employers. But few are aware of how the BWC is also giving back to its employees — by investing heavily in their long-term health and safety.


Part of that effort is the establishment of a research grant program, funding short-term projects that identify practical solutions to workplace hazards.

The BWC created partnerships with educational and research facilities across the state in an effort to find solutions for some of the most intractable worker health and safety problems.

“I wanted to get on the offensive side of safety and not just respond to accidents or injury types,” said former BWC Administrator and CEO Stephen Buehrer, who launched the research grant program.

“We believe these dollars are well invested in fostering research at world class institutions that could shed light on how injuries may be prevented in the future,” said the BWC’s current Administrator and CEO, Sarah Morrison.

“There is no place better than Ohio to conduct innovative research that could have an impact in workplaces across the country.”

Sarah Morrison, administrator and CEO, Ohio Bureau of Workers' Compensation

Sarah Morrison, administrator and CEO, Ohio Bureau of Workers’ Compensation

The BWC sent out an RFP to research institutions throughout Ohio, seeking projects that could be completed in 12 to 18 months within a budget of $250,000. With input from the National Institutes for Occupational Safety and Health, they ultimately selected nine projects to fund, for a total just topping $2 million.

“These researchers are working directly with employers in Ohio, and we expect that there will be some direct benefit in preventing occupational injuries and illnesses as a result of [these projects],” said Abe Al-Tarawneh, BWC’s superintendent of the Division of Safety and Hygiene.

In addition, he said, each research team will disseminate its findings, results and recommendations, and make them available to employers throughout their respective industries.

Focus on Health Care

A sizable chunk of the $2 million for research was earmarked for projects related to health care fields. Injuries to health care workers, particularly those working in long-term care facilities, are of grave concern in Ohio and nationwide. Ohio has approximately 1,000 nursing homes, serving more than 80,000 residents.

“When we put out the request for proposal, addressing the health care industry was a priority,” said Al-Tarawneh.

Two of the selected proposals target safe patient handling practices. Al-Tarawneh said that in many cases, even in facilities that have sufficient patient handling equipment, workers tend not to use it because they perceive that it will slow them down or be inefficient.

A $250,000 grant to the University of Cincinnati will enable researchers to study the application of a training model that has been used extensively in Europe, particularly in the UK, with strong results. The model ties together cultural and behavioral issues, with a focus on hazard awareness and planning.

“They’re going to take it and essentially redesign it in a way that matches the standards that we have for health care in Ohio, and they’re applying it with 30 different nursing homes in the state,” said Al-Tarawneh.

Researchers will assess the existing training and equipment at those facilities, and customize the new training module for each one. They will then administer the training to employees at every facility, and follow up in six months to assess the effectiveness of the training. Based on those assessments, they’ll provide a new set of recommendations.

The resulting training program will be made available online.

Cleveland State University College of Science and Health Professions will also receive $244,000 to help faculty from four disciplines at CSU develop an innovative approach to prevent back injuries among nurse aides.

The Case Western School of Medicine will receive $250,000.00 to study the development of a Total Worker Health approach to addressing the socioeconomic factors impacting worker health and safety, particularly low-wage and job-insecure employees working in long-term health care facilities.

“Low wage and job-insecure employees tend to have a higher rate of occupational injuries and they tend to [have poor] health care and more prevalent chronic health issues,” said Al-Tarawneh.

Case Western researchers will work with 10 or 12 groups of people, providing training on healthy behaviors. They’ll follow up over the course of a year, and assess progress via an app designed for the purpose.

Abe Al-Tarawneh, chief of safety and hygiene, Abe Al-Tarawneh, BWC’s chief of safety and hygiene.

Abe Al-Tarawneh, chief of safety and hygiene, Ohio Bureau of Workers’ Compensation

Bowling Green State University’s Psychology Department was awarded a $250,000 grant for research into preventing injuries, assault and abuse of nurse aides working in long-term residential settings.

The project will target nurse aides in four facilities, implementing mindfulness-based interventions. Researchers will teach employees to use mindfulness techniques to handle the stressors of their jobs.

“There is a direct association between the job demands and the rate of injury,” said Al-Tarawneh. “So if you get workers to better understand how to cope with the stresses of their job demands, you can improve their well-being, which will result in reducing the propensity for them to get injured.”

Part of the project will involve teaching workers to use the same mindfulness techniques to de-escalate situations that lead to assault or abuse by residents.


“When you think about these different projects, each of them handles the [industry] from a different angle,” said Al-Tarawneh.

“So in two or three years, when our consultants are working with a health care facility or a nursing home, they’re going to be able to provide them with better training modules, with better understanding of the issues, with better tools so they can engage their employees and empower them.

“We’re hoping by the time we’re done that it will benefit the industry across the country.”

Benefits for Numerous Industries

Other BWC grants are exploring a variety of challenges for workers and employers.

Using sensors embedded in the insoles of shoes, researchers are recording data on balance and gait, and relating it to specific tasks, to assess at what point being unbalanced results in a fall. In the future.

The Ohio University College of Engineering and Technology received $245,000 to measure the impact of integrating safety and ergonomics into lean and Six Sigma processes already in place at Ohio manufacturers.

“One of the things that’s happened over the years of introducing lean concepts and Six Sigma concepts in manufacturing as well as other industrial sectors is they tend to eliminate waste,” said Al-Tarawneh.

“That can result in improving safety for employees, but it can also result in improving productivity to a level that sometimes employees cannot keep up with. So the idea is to bring in ergonomic concepts and embedding them into Six Sigma and lean manufacturing concepts.”

Researchers are working with 15 manufacturing firms across Ohio, stratified between small and large firms, and a final report will be available across the country.

The Case Western School of Engineering received a $250,000 grant to study the prevention of slips, trips and falls using wearable technology.

Using sensors embedded in the insoles of shoes, researchers are recording data on balance and gait, and relating it to specific tasks, to assess at what point being unbalanced results in a fall. In the future, explained Al-Tarawneh, “the system can communicate via something like an iWatch and warn the person that the way they’re doing things will result in slipping or tripping.”

Ohio State University has been awarded three grants totaling $577,595 to study diverse areas.

OSU’s Department of Integrated Systems Engineering is using a wearable quantifying tool called a lumbar motion monitor to gather real data about the forces exerted on the spine during pushing and pulling tasks.

Researchers will be developing a web-based tool that employers can use to assess the pushing and pulling tasks used at their facilities.

Subjects will simulate tasks common to workers in various industries, said Al-Tarawneh. The lumbar motion monitor and 42 sensor cameras are used to establish every movement in every direction to establish the stress of each movement on the spine. The results are compared to injury threshold data and will be used to create streamlined ergonomic standards for pushing and pulling tasks.

“It’s an amazing project,” said Al-Tarawneh. “It’s going to be an excellent advancement in the science.”

Stephen Buehrer, former administrator and CEO, Ohio Bureau of Workers' Compensation

Stephen Buehrer, former administrator and CEO, Ohio Bureau of Workers’ Compensation

Researchers will be developing a web-based tool that employers can use to assess the pushing and pulling tasks used at their facilities.

In the lab next door, researchers are studying powered torque wrenches, and the impact of the force and vibration of torque tools on the hands and arms of the user.

“Those forces, over time, can be really detrimental to the tissues and the nerves of the worker,” said Al-Tarawneh. “There is no specific standard for these torque tools to account for how the force of the tool transfers to the body of the user.”

The team will develop a dynamic rig for assessing powered torque tools as they are brought to market. Industry partners include Stanley Assembly Technologies, Honda North America, Inc. and General Motors.

A third project at OSU involves hazards in grain bin facilities on Ohio farms, assessing the training and PPE provided to workers, and identifying gaps that can be addressed. Al-Tarawneh said this project is an important way that BWC can reach out and work with smaller farmers to help prevent the kind of injuries that are sometimes overlooked.


“We’re going to fund this kind of thing every year,” former Administrator Buehrer told Risk & Insurance during a September 2015 interview.

“Our hope is that each year we’ll be rolling out a half dozen to a dozen sets of results that we can share with employers. Ohio BWC considers it a key part of its mission to take on some of the problematic workers’ comp challenges and really get ahead of the issues rather than just reacting to the injury type.”

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]
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