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Risk Insider: Scott Clark

TRIA Inaction is ‘Disconcerting’

By: | December 18, 2014 • 2 min read
Scott B. Clark is Risk and Benefits Officer at Miami-Dade County Public Schools. He can be reached at SClark@dadeschools.net.

As a member of the Risk and Insurance Management Society’s (RIMS) External Affairs Committee, chair of RIMS Political Action Committee Risk Pac, and a former president of RIMS, I was very saddened to see that Congress left Washington without providing an extension to the Terrorism Risk and Insurance Act (TRIA).

It is even more disconcerting because there appeared to be a compromise in the works between the House of Representatives version and the Senate version, which would have extended the Federal backstop for six years.

RIMS has worked diligently with key members of Congress and other support organizations to clearly articulate the challenges that employers and their risk managers would face if a Congressional extension of TRIA did not occur prior to the deadline of December 31, 2014.

As the nation’s economy is gaining some momentum after the significant challenges of the worst recession since the 1929 Depression, subjecting the business community to the potential significant impact of policy cancellations for terrorism coverage for property coverage as well as workers’ compensation coverage is absolutely unnecessary and a dereliction of duty on the part of Congress not to have taken action on TRIA.

Businessweek has now written that there is a potential cancellation of Super Bowl XLIX as a result of the backstop not being extended.

Speaker Boehner has gone on record that Congress will fix this as soon as Congress gets back to work in the new year, potentially with a retroactive date.

All that is fine but the bottom line is that this should not have happened and it is unfortunate that politics trumps rational decision-making, thus putting businesses in the cross hairs of potentially having lapses in coverage, which is essential to good business operations.

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Opioid Induced Pain

Opioid Paradox: The Drugs Can Cause Pain

Ironically, opioid pain medications can induce chronic pain rather than suppress it.
By: | May 12, 2014 • 3 min read
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Research suggests that the long-term use of opioid pain medications can paradoxically induce or worsen chronic pain instead of relieving it.

It is one more reason to cheer recent report findings that the nationwide rate of opioid consumption may no longer be trending upward, although it has not decreased significantly.

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By now, everyone in the workers’ comp industry should know that opioid pain killers are associated with longer claims durations, addiction, and overdose deaths.

But there is also a growing body of research on a phenomena called opioid-induced hyperalgesia that is associated with the long-term use of the pain medications. Marcos A. Iglesias, M.D., medical director for Midwest Employers Casualty Co., discussed this recently at the Risk and Insurance Management Society Inc.’s annual conference.

“A lot of claimants who are on high doses of opiods are still in a lot of pain. A big reason for that is the opioids. Once they are weaned off the opioids, they feel much better and their pain will actually decrease. So ironically, one of the ways to help their pain is to take away their painkiller.” — Marcos A. Iglesias

The condition is also called “paradoxical hyperalgesia” because a patient may experience more pain resulting from their opioid treatment rather than a decrease in pain. The phenomena can encourage dangerous dose escalation as doctors struggle to control a patient’s chronic pain.

It can also be difficult to distinguish whether a patient continues to experience chronic pain because of an increasing dose tolerance or because of opioid-induced hyperalgesia, according to literature on the topic.

The literature also states that opioid-induced hyperalgesia can worsen with increased opioid doses.

Dr. Marcos A. Iglesias, medical director, Midwest Employers Casualty Co.

Dr. Marcos A. Iglesias, medical director, Midwest Employers Casualty Co.

Dr. Iglesias said that opioid-induced hyperalgesia is another reason to stop providing the pain medications to certain patients.

“A lot of claimants who are on high doses of opiods are still in a lot of pain,” he said. “A big reason for that is the opioids. Once they are weaned off the opioids, they feel much better and their pain will actually decrease. So ironically, one of the ways to help their pain is to take away their painkiller.”

The good news, though, is that recent workers’ comp drug trend reports produced by pharmacy benefit managers show decreases in the amount of opioids prescribed to workers’ comp claimants.

St. Louis, Mo.-based Express Scripts, for instance, released its 2013 Workers’ Compensation Drug Trend Report in April. The report states that the “per-user-per-year” utilization of opioids decreased 3 percent from 2012 to 2013. Express Scripts attributed the decline to government, payer, and pharmacy benefit manager attention to opioid consumption.

Similarly, a 2014 Workers’ Compensation Drug Trend Report released in April by Westerville, Ohio-based Progressive Medical Inc. and PMSI states that 62.1 percent of injured workers prescribed medications in 2013 used opioids. That was down from 64.2 percent during the prior year.

The decrease is a “true success,” considering opioid consumption had been increasing during past years, said Robert Hall, M.D. and medical director for Progressive Medical and PMSI. But increased accountability and awareness on the part of prescribes as well as improvement in medical quality have helped counter the problem, he added.

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“Based on where things were headed [and] what we were seeing across the country, definitely the [growth] trend being stopped and taken in a different direction is a positive,” Dr. Hall said.

Yet the trend in opioid consumption can also be viewed as not having changed much.

Cambridge, Mass.-based Workers Compensation Research Institute recently looked at long-term opioid use in 25 states and compared the 2008/2010 time period to 2010/2012. It found a decrease within 2 percent in most of the states studied, but concluded that change amounted to “little reduction in the prevalence of longer-term opioid use.”

Roberto Ceniceros is senior editor at Risk & Insurance® and co-chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at rceniceros@lrp.com. Read more of his columns and features.
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Sponsored: Liberty Mutual Insurance

Passion for the Prize

Managing today’s complex energy risks requires that insurers match the industry’s dedication and expertise.
By: | December 10, 2014 • 6 min read

In his 1990 book, The Prize: The Epic Quest for Oil, Money and Power, Pulitzer Prize winning author Daniel Yergin documented the passion that drove oil exploration from the first oil well sunk in Titusville, Penn. by Col. Edwin Drake in 1859, to the multinational crusades that enriched Saudi Arabia 100 years later.

Even with the recent decline in crude oil prices, the quest for oil and its sister substance, natural gas, is as fevered now as it was in 1859.

While lower product prices are causing some upstream oil and gas companies to cut back on exploration and production, they create opportunities for others. In fact, for many midstream oil and gas companies, lower prices create an opportunity to buy low, store product, and then sell high when the crude and gas markets rebound.

The current record supply of domestic crude oil and gas largely results from horizontal drilling and hydraulic fracturing methods, which make it practical to extract product in formerly played-out or untapped formations, from the Panhandle to the Bakken.

But these technologies — and the current market they helped create — require underwriters that are as passionate, committed and knowledgeable about energy risk as the oil and gas explorers they insure.

Liability fears and incessant press coverage — from the Denton fracking ban to the Heckmann verdict — may cause some underwriters to regard fracking and horizontal drilling with a suppressed appetite. Other carriers, keen to generate premium revenue despite their limited industry knowledge, may try to buy their way into this high-stakes game with soft pricing.

For Matt Waters, the chief underwriting officer of Liberty Mutual Commercial Insurance Specialty – Energy, this is the time to employ a deep underwriting expertise to embrace the current energy market and extraction methods responsibly and profitably.

“In the oil and gas business right now, you have to have risk solutions for the new market, fracking and horizontal drilling, and it can’t be avoidance,” Waters said.

Matt Waters, chief underwriting officer of Liberty Mutual Commercial Insurance Specialty – Energy, reviews some risk management best practices for fracking and horizontal drilling.

Waters’ group underwrites upstream energy risks — those involved in all phases of onshore exploration and production of crude oil and natural gas from wells sunk into the earth — and midstream energy risks, those that involve the distribution or transportation of oil and gas to processing plants, refineries and consumers.

Risk in Motion

Seven to eight years ago, the technologies to horizontally drill and use fluids to fracture shale formations were barely in play. Now they are well established and have changed the domestic energy market, and consequently risk management for energy companies.

One of those changes is in the area of commercial auto and related coverages.

Fracking and horizontal drilling have dramatically altered oil and gas production, significantly increasing the number of vehicle trips to production and exploration sites. The new technologies require vehicles move water for drilling fluids and fracking, remove these fluids once they are used, bring hundreds of tons of chemicals and proppants, and transport all the specialty equipment required for these extraction methods.

The increase in vehicle use comes at a time when professional drivers, especially those with energy skills, are in short supply. The unfortunate result is more accidents.

SponsoredContent_LM“In the oil and gas business right now, you have to have risk solutions for the new market, fracking and horizontal drilling, and it can’t be avoidance.”
— Matt Waters, chief underwriting officer, Liberty Mutual Commercial Insurance Specialty – Energy

For example, in Pennsylvania, home to the gas-rich Marcellus Shale formation, overall traffic fatalities across the state are down 19 percent, according to a recent analysis by the Associated Press. But in those Pennsylvania counties where natural gas and oil is being sought, the frequency of traffic fatalities is up 4 percent.

Increasing traffic volume and accidents is also driving frequency trends in workers compensation and general liability.

In the assessment and transfer of upstream and midstream energy risks, however, there simply isn’t enough claims history in the Marcellus formation in Pennsylvania or the Bakken formation in North Dakota for underwriters to rely on data to price environmental, general and third-party liability risks.

That’s where Liberty Mutual’s commitment, experience and ability to innovate come in. Liberty Mutual was the first carrier to put together a hydraulic fracking risk assessment that gives companies using this extraction method a blueprint to help protect against litigation down the road.

Liberty Mutual insures both lease operators and the contractors essential to extracting hydrocarbons. As in many underwriting areas, the name of the game is clarity around what the risk is, and who owns it.

When considering fracking contractors, Waters and his team work to make sure that any “down hole” risks, be that potential seismic activity, or the migration of methane into water tables, is born by the lease holder.

For the lease holders, Waters and his team of specialty underwriters recommend their clients hold both “sudden and accidental” pollution coverage — to protect against quick and clear accidental spills — and a stand-alone pollution policy, which covers more gradual exposure that unfolds over a much longer period of time, such as methane leaking into drinking water supplies.

Those are two different distinct coverages, both of which a lease holder needs.

Matt Waters discusses the need for stand-alone environmental coverage.

The Energy Cycle

Domestic oil and gas production has expanded so drastically in the past five years that the United States could now become a significant energy exporter. Billions of dollars are being invested to build pipelines, liquid natural gas processing plants and export terminals along our coasts.

While managing risk for energy companies requires deep expertise, developing insurance programs for pipeline and other energy-related construction projects demands even more experience. Such programs must manage and mitigate both construction and operation risks.

Matt Waters discusses future growth for midstream oil and gas companies.

In the short-term, domestic gas and oil production is being curtailed some as fuel prices have recently plummeted due to oversupply. In the long-term, those domestic prices are likely to go back up again, particularly if legislation allows the fuel harvested in the United States to be exported to energy deficient Europe.

Waters and his underwriting team are in this energy game for the long haul — with some customers being with the operation for more than 25 years — and have industry-leading tools to play in it.

Beyond Liberty Mutual’s hydraulic fracturing risk assessment sheet, Waters’ area created a commercial driver scorecard to help its midstream and upstream clients select and manage drivers, which are in such great demand in the industry. The safety and skill of those drivers play a big part in preventing commercial auto claims, Waters said.

Liberty Mutual’s commitment to the energy market is also seen in Waters sending every member of his underwriting team to the petroleum engineering program at the University of Texas and hiring underwriters that are passionate about this industry.

Matt Waters explains how his area can add value to oil and gas companies and their insurance brokers and agents.

For Waters, politics and the trends of the moment have little place in his long-term thinking.

“We’re committed to this business and to deeply understanding how to best manage its risks, and we have been for a long time,” Waters said.

And that holds true for the latest extraction technologies.

“We’ve had success writing fracking contractors and horizontal drillers, helping them better manage the total cost of risk,” Waters said.

To learn more about how Liberty Mutual Insurance can meet your upstream and midstream energy coverage needs, contact your broker, or Matt Waters at matthew.waters@libertymutual.com.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.


Liberty Mutual Insurance offers a wide range of insurance products and services, including general liability, property, commercial automobile, excess casualty, workers compensation and group benefits.
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