Reaping the Rewards of Benefits Integration
Discussions at this week’s Disability Management Employer Coalition conference held in New Orleans included measures for keeping employees healthy, injury free, and on the job.
Conference participants also reviewed risk reduction, ease of administration, and cost saving advantages obtained by integrating absence management and disability benefit programs such as workers’ compensation, the Family and Medical Leave Act, and short-term disability offerings.
Proponents say integration makes sense because of overlaps among the range of programs under which workers can be absent and the cost to organizations regardless of the reasons for missed work days.
They also point to potential compliance risks when the administration of programs is segregated and improperly aligned.
“There is hardly any situation where there is just one perfect claim going on,” said Karen English, a partner at Spring Consulting Group. “If someone is [out] on workers’ comp, they are probably on FMLA [and] STD. Then we have all our concurrent leaves going on. So keeping workers’ comp to the side can actually be viewed as a risk to your organization.”
Failing to integrate can lead to lost opportunities, such as the ability to appropriately minimize the amount of time employees spend away from the job by concurrently running FMLA leave with a workers’ compensation absence.
“Just as an example, if you have a workers’ comp claim and that person is out eight weeks for a surgery, if you don’t run it concurrently, you are allowing that employee to come back from that workers’ comp claim and then go out for 12 additional weeks of FMLA time,” said Trina Mouton, manager of disability management and wellness at CenterPoint Energy.
“So it is really advisable to run those concurrently,” Mouton continued. CenterPoint experiences a 2-to-1 return on investment from its efforts, she added.
Employers speaking at the conference cited their gains from integrating programs, although their results are also influenced by several efforts including implementing return-to-work programs.
“We compare ourselves to the hospital industry in terms of [employee restricted-duty days] and lost time,” said Jane Ryan, return to work recovery and claims services at Mayo Clinic. “Our lost time rates are actually lower than the national industry [average] and I think that speaks to the ability we have to keep people at work or return to work early.”
“There is not one silver bullet or only one way to integrate benefits delivery. Every company is so different.” — Karen English, partner, Spring Consulting Group
The paths that employers take to integration and the programs they integrate vary considerably depending on each company’s needs, speakers said.
“There is not one silver bullet or only one way” to integrate benefits delivery, English said. “Every company is so different.”
English will join DMEC’s CEO, Terri Rhodes, in a discussion on how to integrate workers’ comp, disability, and leave programs on Dec. 1, at the National Workers’ Compensation and Disability Conference® & Expo that will also take place in New Orleans.
At the DMEC conference held this week, meanwhile, other discussion topics focused on specific illnesses and corresponding wellness efforts for keeping employees healthy and productive.
Diabetes, for example, impacts employers’ profitability by driving medical costs that are 2.3 times greater than for people without the illness as well as by increasing employee absences and work disruptions.
“There is no question that diabetes affects the bottom line,” said Matthew Ceurvels, director of disability products at Sun Life Financial. “Productivity can be impacted by presenteeism, when an employee is working sub-optimally, by ad-hoc absences, and by long-term absences when employees go out on a disability claim.”
More employer disease management programs focus on diabetes than on other common illnesses like asthma or heart disease, Ceurvels said.
Diabetes care, for example, is a key component of a wellness program CNIC Health Solutions Inc. offers its workers, said Linda Benedict, human resources manager for the third party administrator of employee benefit plans.
CNIC Health Solutions’ employee wellness program’s overall offerings include a recreation center, free access to a CrossFit trainer, encouragement to engage in desk exercises, and online health assessments tied to biometric screenings that provide employees with private information about their individual risk factors.
As part of its health plan, the company also provides free monitoring and testing supplies for diabetes sufferers along with a third-party tracking service for the diabetes testing results.
“We also offer a discount on what the employee pays for their portion of health insurance premiums,” Benedict said. “That is one of the biggest components of our wellness program.”
The discount works as an incentive, providing employees with a 25 percent health care premium reduction, first for participating in the biometric screening, and then as they maintain a certain screening result level.
That led to a 23 percent improvement in employee health risk over one year, as measured by the biometric screenings.
The wellness efforts have improved employee engagement and morale, lowered workers’ comp losses and reduced absenteeism, she said.
“One key metric for us is that in the last year and a half, we have not had one FMLA leave,” Benedict said. “It has really limited FMLA leave for our employees because they are more engaged. They are taking care and looking at their metrics, and sharing them with their physicians. It is really starting to pay off.”
Momentum Builds for Single Leave Mandate
Earlier this year I identified the key disability management-related themes of 2016. The trend of offering paid parental leave is now gaining momentum.
At the end of March, New York state became the fifth state to mandate this type of leave. The program provides employees up to 12 weeks paid time to bond with a new child or to care for a parent, child, spouse, domestic partner, or other family member with a serious health condition.
The duration of the leave doubles the six weeks allotted in California and New Jersey, and is triple the four weeks of paid leave Rhode Island offers.
New York’s law does away with many of the exceptions in similar laws. It will cover full-time and part-time employees, and there will be no exemptions for small businesses. Employees only need to be employed by the company for six months to be eligible.
This raises an important point. Most of the paid leave action is with large companies.
The law does allow employers to limit two employees from taking this benefit at the same time for the same family member, limiting exposure in the case of more than one family member working for the same employer.
Although New York’s paid leave law takes effect on January 1, 2018, it will be gradually phased in with only eight weeks of leave with a 50 percent of pay cap, increasing ultimately to the full 12 weeks at a 67 percent cap by 2021. As is the trend, this is an employee funded benefit through a weekly payroll tax of approximately $1 per employee.
In April, San Francisco’s Board of Supervisors passed the Paid Parental Leave Ordinance (PPLO), making it the first city in the country to enact such an ordinance.
This new law provides supplemental compensation for California employees receiving partially paid leave under California’s Paid Family Leave (PFL) law to bond with a newborn child or newly placed child for adoption or foster care, among other reasons.
During the leave period, the employer will be required to supplement employee pay, so the combination of monies received under the PFL (currently 55 percent wage replacement) and the PPLO will provide compensation equal to 100 percent of the employee’s gross weekly wage.
Payment is made from a worker-funded state disability program and calculated as a percentage of the employee’s wages (55 percent) subject to the maximum weekly benefit amount set by the PFL program. Very similar to the state PFL, there is a cap on the maximum weekly benefit amount of $924, which equates to an individual with a salary of $106,740.
San Francisco’s law will be phased in quickly. In January 2018, all companies with 20 or more employees, with any of those individuals regularly employed in San Francisco, will be required to comply.
Since February, there have been almost weekly announcements about employers adopting or improving their paid leave policies. Here is just a sampling:
- Twitter: 20 weeks of paid parental leave
- Wells Fargo: 16 weeks of paid leave
- Anheuser-Busch: 16 weeks of maternal leave; 2 weeks of paid leave for secondary caregiver (male or female)
Whether aimed at employee attraction or retention, paid leave is now becoming a “must-have” for large organizations.
This raises an important point. Most of the paid leave action is with large companies.
According to the American Action Forum, in companies with 500 or more employees, paid family leave rose a solid 5 percent, from 17 percent in 2010 to 22 percent in 2015. But in companies with fewer than 50 employees, the needle has only moved from 7 percent to 8 percent from 2010 through 2015.
The myriad of laws, regulations, and policies is creating an administrative burden for all companies. And, for many smaller employers, the varying laws and policies are creating an actual competitive disadvantage.
It is likely that employers of all sizes would welcome some consistency in these laws that are leaving some to ask, “Who is going to pay for all of this?”
Handling Heavy Equipment Risk with Expertise
What happens to a construction project when a crane gets damaged?
Everything comes to a halt. Cranes are critical tools on the job site, and such heavy equipment is not quickly or easily replaceable. If one goes out of commission, it imperils the project’s timeline and potentially its budget.
Crane values can range from less than $1 million to more than $10 million. Insuring them is challenging not just because of their value, but because of the risks associated with transporting them to the job site.
“Cranes travel on a flatbed truck, and anything can happen on the road, so the exposure is very broad. This complicates coverage for cranes and other pieces of heavy equipment,” said Rich Clarke, Assistant Vice President, Marine Heavy Equipment, Lexington Insurance, a member of AIG.
On the jobsite, operator error is the most common cause of a loss. While employee training is the best way to minimize the risk, all the training in the world can’t prevent every accident.
“Simple mistakes like forgetting to put the outrigger down or setting the load capacity incorrectly can lead to a lot of damage,” Clarke said.
Crane losses can easily top $1 million in physical damage alone, not including the costs of lost business income.
“Many insurers are not comfortable covering a single piece of equipment valued over $1 million,” Clarke said.
A large and complex risk requires a sophisticated claims approach. Lexington Insurance, backed by the resources and capabilities of AIG, has the underwriting and claims expertise to handle such large claims.
“Cranes travel on a flatbed truck, and anything can happen on the road, so the exposure is very broad. This complicates coverage for cranes and other pieces of heavy equipment. Simple mistakes like forgetting to put the outrigger down or setting the load capacity incorrectly can lead to a lot of damage.”
— Rich Clarke, Assistant Vice President, Marine Heavy Equipment, Lexington Insurance
Flexibility in Underwriting and Claims
Treating insureds as partners in the policy-building and claims process helps to fine-tune coverage to fit the risk and gets all parties on the same page.
Internally, a close relationship between underwriting and claims teams facilitates that partnership and results in a smoother claims process for both insurer and insured.
“Our underwriters and claims examiners work together with the broker and insured to gain a better understanding of their risk and their coverage expectations before we even issue a policy,” said Michelle Sipple, Senior Vice President, Property, Lexington Insurance. “This helps us tailor our policies or claims handling to suit their needs.”
“The shared goals and commonality between underwriting and claims help us provide the most for our clients,” Clarke said.
Establishing familiarity and trust between client, claims, and underwriting helps to ensure that policy wording is clear and reflects the expectations of all parties — and that insureds know who to contact in the event of a loss.
Lexington’s claims and underwriting experts who specialize in heavy equipment will meet with a client before they buy coverage, during a claim, or any time in between. It is important for both claims and underwriting to have face time with insured so that everyone is working toward the same goals.
When there is a loss, designated adjusters stay in contact throughout the life of a claim.
Maintaining consistent communication not only meets a high standard of customer service, but also ensures speed and efficiency when a claim arises.
“We try to educate our clients from the get-go about what we will need from them after a loss, so we can initiate the claim and get the ball rolling right away,” Clarke said. “They are much more comfortable knowing who is helping them when they are trying to recover from a loss, and when it comes to heavy equipment, there’s no time to spare.”
“Our underwriters and claims examiners work together with the broker and insured to gain a better understanding of their risk and their coverage expectations before we even issue a policy. This helps us tailor our policies or claims handling to suit their needs.”
— Michelle Sipple, Senior Vice President, Property, Lexington Insurance
Leveraging Industry Expertise
When a claim occurs, independent adjusters and engineers arrive on the scene as quickly as possible to conduct physical inspections of damaged cranes, bringing years of experience and many industry relationships with them.
Lexington has three claims examiners specializing in cranes and heavy equipment. To accommodate time differences among clients’ sites, Lexington’s inland marine operations work out of two central locations on the East and West Coasts – Atlanta, Georgia and Portland, Oregon.
No matter the time zone, examiners can arrive on site quickly.
“Our clients know they need us out there immediately. They know our expertise,” Clarke said. “Our examiners are known as leaders in the industry.”
When a barge crane sustained damage while dismantling an old bridge in the San Francisco Bay that had been cracked by an earthquake, for example, “I got the call at 6 a.m. and we had experts on site by 12 p.m.,” Clarke said.
In addition to educating insureds about the claims process and maintaining open lines of communication, Lexington further facilitates the process through AIG’s IntelliRisk® services – a suite of online tools to help policyholders understand their losses and track their claim’s progress.
“Brokers and clients can log in and see status of their claim and find information on their losses and reserves,” Sipple said.
In some situations, Lexington can also come to the rescue for clients in the form of advance payments. If a crane gets damaged, an examiner can conduct a quick inspection and provide a rough estimate of what the total value of the claim might be.
Lexington can then issue 50 percent of that estimate to the insured immediately to help them get moving on repairs or find a replacement. This helps to mitigate business interruption losses, as it normally takes a few weeks to determine the full and final value of the claim and disburse payment.
Again, the skill of the examiners in projecting accurate loss costs makes this possible.
“This is done on a case-by-case basis,” Clarke said. “There’s no guarantee, but if the circumstances are right, we will always try to get that advance payment out to our insureds to ease their financial burden.”
For project managers stymied by an out-of-service crane, these services help to bring halted work back up to speed.
For more information about Lexington’s inland marine services, interested brokers should visit http://www.lexingtoninsurance.com/home.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Lexington Insurance. The editorial staff of Risk & Insurance had no role in its preparation.