Danger in the Cockpit
Improved risk management, advances in computer technology and an industry-wide focus on training and analysis transformed commercial aviation safety in recent decades, placing it among the safest industries in the world for both staff and customers.
Pilots now have their every input monitored and analyzed. This enables retraining of bad habits and a common aspiration to fly “the perfect flight.”
Improved airplane construction and in-flight safety systems also reduce the likelihood of system malfunction to a miniscule level.
However, a spate of unusual events in 2014 and 2015 serve as a tragic reminder of the ever-evolving challenges facing risk managers.
“Airlines are very determined when it comes to safety and security threats — they are constantly trying to mitigate risk, are very proactive in dealing with threats as they arise, and money is no object when it comes to implementing new safety measures.” — Nigel Weyman, CEO of aerospace, JLT
In July 2014, Malaysia Airlines Flight 17 was shot down over Ukraine by a rogue Russian missile, killing all 298 passengers, and just four months later the same airline’s Flight 307 simply disappeared — prompting many to speculate that its pilot committed suicide, taking 239 passengers with him.
This once inconceivable scenario occurred again less than a year later. In March of 2015, Germanwings co-pilot Andreas Lubitz locked himself in the flight deck and deliberately crashed Flight 9525 into a mountain in the Alps, killing 150 people.
Lubitz reportedly endured severe depression in the weeks leading up to the crash, but his doctors never told Lufthansa, his employer.
Within days of the Germanwings disaster, the vast majority of airlines introduced a rule that there must always be two members of crew in the flight deck at any one time (“two-pilot rule”), while the shooting down of Malaysia Airlines Flight 17 prompted carriers to re-evaluate routes, security threats and safe altitudes over certain geographical areas.
“Airlines are very determined when it comes to safety and security threats — they are constantly trying to mitigate risk, are very proactive in dealing with threats as they arise, and money is no object when it comes to implementing new safety measures,” said Nigel Weyman, CEO of aerospace at JLT.
Malicious Acts Offset Operational Safety Achievements
“The whole airline industry is benefiting from an improved period of operational safety, but malicious acts, from pilot suicides to the deliberate or accidental shooting down of aircraft, seem to have taken the place of expected operational losses, creating a sad counterbalance to what would otherwise be a very encouraging period for the sector.
“Psychological and terrorist losses are difficult to predict,” Weyman said.
Aviation regulatory bodies are currently discussing, with input from airlines and pilots, whether to make the two-pilot rule mandatory, but not all airlines buy into the logic behind it, according to a pilot for one of the world’s leading airlines, who wished to remain anonymous.
“My airline has been reluctant to implement [the two-pilot rule], and even Lufthansa resisted it initially before backing down due to media pressure,” he said, warning that implementing a “knee-jerk reaction” could increase an aircraft’s vulnerability to terrorism.
“There are in excess of 35 million commercial flights globally each year and only one known case of pilot suicide in European airspace history, so you have to weigh up the risks,” he said.
“If a terror organization wanted to plant a sleeper on a plane, it is far easier for a radicalized person to be employed as cabin crew than to pass the pilot exams.
“Many of my colleagues feel safer trusting the pilot community, and keeping the flight deck a pilot-only environment, as the chance of a pilot committing suicide is so slim it is not worth the risks associated with giving crew access to the flight deck.”
It could be argued that some aspects of the Germanwings disaster are rooted in the industry’s reaction to 9/11.
Following that attack, all airlines installed armored flight deck doors to prevent terrorists entering the cockpit — making it virtually impossible to break in if a suicidal pilot decided to lock themselves in.
There’s the rub; in mitigating one risk, you often create new ones.
“You can’t eliminate every risk from every aviation operation, no matter how miniscule those risks might be, and that’s why people buy insurance,” said Weyman.
Insurance Protection for Malicious Acts
Malicious acts by either staff or third parties are currently covered under stand-alone hull war policies, though passenger liability is covered under airlines’ standard hull liability programs.
Weyman noted that, in spite of a number of significant losses between 2013 and 2015, rates continue to slide.
“This is partly because we brokers have argued that these were very unusual events, the industry has closed the door on this happening again, and the world moves on,” he said.
“Mathematically, rates probably should have increased, but the aviation market is very competitive and overserved with capacity, preventing underwriters from reacting to these events.”
“Insurers,” said Richard Power, founding partner of specialist aerospace underwriter Altitude Risk Partners, “must determine whether the recent spike in this kind of incident is a temporary anomaly or whether it is indicative of heightened risk going forward.”
Power noted that the subjective nature of the risk — and the fact that pilot trade unions have resisted the introduction of psychometric testing and the sharing of pilots’ medical information with employers — make it extremely difficult to predict how frequently malicious acts will occur or how effective new security measures will be in preventing future incidents.
“One option may be for the insurance industry to exclude malicious acts from the standard hull liability policy,” Power said.
“Unlike modeling the frequency of losses caused by mechanical failure or human error, underwriters are now faced with the challenge of pricing a much less tangible and quantifiable risk, and it may therefore be necessary to separate malicious acts out into its own separately rated policy, as is done with hull war.”
Power added, however, that brokers and clients have no incentive to accept such changes in the current environment.
The aviation insurance industry is awash with capacity and aviation insurers are under pressure to broaden terms while cutting their cost base, giving them little room for leverage.
Spotting the Warning Signs
So far, there has been no repeat of the Germanwings disaster.
While it is impossible to tell whether a similar incident would have occurred without the new two-pilot rule, the tragedy has undoubtedly brought pilot mental health firmly into the spotlight.
“The best way to prevent another Germanwings is to catch the problem at its source and stop troubled individuals from flying,” the pilot said.
His airline has increased the psychological component of its annual medical checks.
“The best way to prevent another Germanwings is to catch the problem at its source and stop troubled individuals from flying.” — anonymous pilot
It created a new “well-being officer” role, and encourages staff to “self-regulate” by coming forward with concerns about either themselves or others without fear of judgment or punishment.
French air crash investigators in March called on aviation authorities around the world to take this one step further by loosening existing privacy laws to allow doctors to inform airlines if a pilot is mentally unstable.
This clearly presents a complex ethical conundrum.
On a practical level, the pilot said, it is essential that troubled pilots are able to seek counseling confidentially.
“The emphasis has to be on the pilot being able to pick up the phone and talk about their problems and get advice,” he said.
“If they think what they say will be reported back to the airline, they may fear they are risking their careers and decide not to make the call at all, which is far more dangerous.”
However, he added, it is important to keep the risks in context.
“Aviation is so safe now,” he said.
“We dedicate a huge amount of time and resources to identifying and removing what minute risks exist, with the aim of making every flight so accurate that the chances of a crash are one in a billion.”
Technological advance has provided both consumers and businesses with a variety of shiny new gadgets and services. However, as the rise of cyberattacks has underlined, it has also provided society’s undesirable elements new means of creating nuisance or committing crime.
The growing popularity of unmanned aerial vehicles (UAVs) — aka drones — is a case in point. Their powerful video cameras open up a whole new world of photographic opportunities. Insurers and loss adjusters are finding them a valuable aid in claims investigation. Unfortunately, drones are also increasingly intruding on people’s privacy, crashing into buildings and intruding on aircraft flight paths.
The problem of rogue drones is on the rise on both sides of the Atlantic. In the UK, the British Airline Pilots Association (BALPA) this month called for research by the government and safety regulator the Civil Aviation Authority (CAA) into the impact of a drone hitting a plane or helicopter, following a spate of near-misses at Heathrow and other UK airports.
BALPA believes that the impact of a drone colliding with an aircraft could smash the windscreen or, worse, that their lithium batteries could trigger an engine fire.
Even more alarming was the January report “Hostile Drones: The Hostile Use of Drones by Non-State Actors Against British Targets” published by security think-tank Oxford Research Group, which warned that “drones are a game changer in the wrong hands.”
The report assessed the design and capabilities of more than 200 unmanned aerial, ground and marine systems and also how drones had been used by activists, terrorists and organised crime groups.
“Drones are a game changer in the wrong hands.”
“Drones are being used by individuals beyond authorized and accepted use,” the report’s authors concluded. “There is particular concern [they] will be used as affordable and effective airborne improvised explosive devices (IEDs), as well as concern regarding the decentralisation and democratisation of intelligence, surveillance and reconnaissance (ISR) capabilities.”
The list of potential targets for flying bomb attacks included foreign embassies, nuclear power stations, a G7 summit or the prime minister’s car. “The UK government, police, military and security services will need to introduce countermeasures to reduce or mitigate the risk of commercially available drones being used for attack,” the report concluded.
Those recommended included the licensing of drones and defenses such as laser systems to protect targets, radio frequency jammers and authorization for the police and army to shoot down any suspect drone.
From Eagles to Bazookas
Meanwhile, initiatives to defend against rogue drones are a mixture of the surreal and James Bond movie. Police in the Netherlands have joined forces with Guard From Above, which describes itself as “the first company in the world to use birds of prey to intercept hostile drones”.
GFA held an international press day earlier this month to demonstrate how trained eagles can be used to snatch a rogue drone in mid-air. This company assures doubters that this “lo-tech solution to a hi-tech problem” is perfectly feasible as the birds’ “incredible visual acuity” enables them to hit the drone without being injured by the rotors.
A more hi-tech solution has been developed by the European aerospace conglomerate Airbus, which last September unveiled its counter-UAV system. Based on a combination of radars, infrared cameras and direction finders, the system can identify possible rogue drones from a distance of up to 10 kilometres (6 miles), determine their threat potential and bring them down if needed.
“Furthermore, the direction finder tracks the position of the pilot who subsequently can be arrested,” Toulouse, France-based Airbus stated. “Since the jamming technology contains versatile receiving and transmitting capabilities, more sophisticated measures like remote control classification and global positioning system [GPS] spoofing can be utilized as well. This allows effective and specific jamming and also a controlled takeover of the UAV.”
More 007-type technology has come from this month’s UK launch of the SkyWall 100 anti-drone net bazooka. Developed by the Northumberland-based start-up OpenWorks Engineering, the concept behind the system is to capture a rogue drone in a net and deliver it intact with a parachute, via a combination of compressed gas-powered smart launcher and an intelligent programmable projectile.
SkyWall 100 is the first release in a planned series of systems; described as a “man-portable handheld launcher that is highly mobile and a cost effective way of dealing with the drone threat.” In the pipeline are SkyWall 200, a semi-permanent device that can be carried by two people and the SkyWall 300, a permanent installation with a fixed mechanical turret.
Each of these initiatives could be contenders for the S100,000 prize offered last November by MITRE Corp for novel ways to detect and identify suspicious small drones and “interdict those that present a safety or security threat”. Participants had until early February to submit a white paper outlining their approach and the most promising entries will be demonstrated early in the fall.
To Better Control Total Workers Comp Costs, Manage Physical Medicine
Soaring drug prices get all the attention in the workers comp space. Meanwhile, another threat has flown under the radar.
More than 50 percent of lost time workers compensation claims involve physical medicine — an umbrella term encompassing physical therapy, occupational therapy, work conditioning, work hardening and functional capacity evaluation.
Spending on physical medicine accounts for 20 to 30 percent of total workers compensation medical costs, a percentage set only to increase in the coming years. Despite the rapid growth of this expense, very few employers are engaged in discussions around how best to manage it.
“Now is the time to take a look at physical medicine and think about how it impacts total cost of risk,” said Frank Radack, Vice President & Manager, Liberty Mutual Insurance, Commercial Insurance – Claims Managed Care. “Employers should investigate comprehensive solutions to keep costs manageable and to deliver quality, evidence-based care to injured employees.”
Liberty Mutual’s Frank Radack defines physical medicine and why it is so important in managing total workers compensation costs.
Upswings in both pure cost and utilization of physical medicine are driving the spending surge. State fee schedule changes are largely responsible for increases in cost. California, for example, has increased the cost of physical medicine services by 38 percent over the past two years, and will increase it a total of 64 percent by the end of 2017. North Carolina changed its approach to its fee schedule effective June 1, 2015, resulting in an almost 45 percent increase in the cost of the average physical therapy visit.
Increased utilization compounds rising prices. Low severity claims like soft tissue injuries typically involve physical therapy, especially when co-morbid conditions threaten to slow down recovery.
“When co-morbids are present, like obesity, more conditioning is necessary for recovery from injury,” Radack said. “With people staying in the workforce longer, we see these claims more often because these types of injuries and co-morbid conditions become more common as people age.”
De-emphasis on surgery also bolsters physical therapy prescribing as patients seek less invasive treatments that might enable a faster return to work, even in a light or transitional duty role. Sometimes, patients with a minor injury might seek out physical therapy on their own as a precaution after an injury or under the mistaken belief it will hasten recovery, even if evidence-based guidelines don’t call for it in every treatment plan.
“Now is the time to take a look at physical medicine and think about how it impacts total cost of risk. Employers should investigate comprehensive solutions to keep costs manageable and to deliver quality, evidence-based care to injured employees.”
–Frank Radack, Vice President & Manager, Liberty Mutual Insurance, Commercial Insurance – Claims Managed Care
“Without proper claims management procedures, some physicians might be inclined to prescribe physical therapy as a palliative measure, even when it doesn’t provide much benefit to the patient,” Radack said.
Brokers and buyers may not be able to do much about fee schedule changes, but they can partner with an insurer that better manages utilization through a multi-faceted claims system, qualified network vendors, data analytics, and peer interventions.
The keys to better managing the soaring cost of physical medicine.
“There is an opportunity to move physical medicine spending into network solutions and partnerships,” Radack said. A strong, collaborative network is key to maintaining direction over treatment decisions.
Liberty Mutual uses a proprietary data analytics program to study its providers’ prescribing and referral patterns and their outcomes. It then builds a network of point-of-entry general practitioners with a proven track record of optimal outcomes.
“The treating physician is a gatekeeper to other services, so it’s important to start there in terms of establishing a plan and making sure evidence based guidelines are followed,” Radack said.
Radack and his team use similar data analysis and partnerships to deploy networks pertaining only to physical medicine, so it can identify physical therapists who understand the occupational space and are focused on effective Return-to-Work (RTW). A provider who doesn’t understand RTW, or even know that the employer of an injured worker has a modified RTW program, may over-utilize PT. Getting employees with soft tissue injuries back into the work place is critical for delivering the best possible medical outcome and a timely recovery.
These therapists know the value of adjusting a treatment plan based on a patient’s progress, which often cuts unnecessary appointments and therapies.
“Our data analytics program is built internally by people who are aligned with the claims organization,” Radack said. “These insights drive our ability to shape networks and direct injured workers to providers with proven outcomes.”
Peer-to-peer interventions also play a big role in adjusting provider behavior and ensuring adherence to evidence-based guidelines. Liberty Mutual’s in house regional medical directors can bring their expertise to bear on challenging claims and discuss how to redirect treatment to meet these guidelines. Liberty Mutual also partners with experts to build networks of physical medicine and physical therapy providers who deliver quality outcomes cost-effectively and to asses a patient’s progress, working with providers to identify and resolve treatment issues.
Sharing information and measuring performance in these settings helps to change the environment around physical medical care. For example, interventions that steer physical therapists back to established, evidence-based medical treatment guidelines often reduce the use of passive therapy treatments, like hot and cold packs, which are not as effective and can slow down recovery.
“Active therapies that get people moving often help them get them back to work faster and at a lower cost,” Radack said. Utilization review also helps to identify unnecessary treatments and signals the insurer to communicate evidenced-based expectations with the therapist or prescribing physician.
Solutions in Action
Physical therapy offers great value in spite of rising prices — but only if it’s managed carefully.
An example of the benefits of managing physical medicine.
Take for example the case of a worker with a shoulder injury. In an unmanaged situation, a physical therapist may prescribe 12 appointments, and the injured worker will go through all 12 sessions with no pre-approval of the treatment plan and no interim checkup.
In a managed situation, the physical therapist may only prescribe eight sessions, because she understands the benefits of a faster return to work and sees that guidelines don’t dictate a full 12 sessions for this injury. Halfway through the eight sessions, she checks in on the patient’s progress and determines that only two more sessions are necessary given the recovery and the medical guidelines; and so adjusts the treatment plan to a total of six sessions.
In this scenario, managed care saves the cost of six sessions over the unmanaged situation, and the employee gets back to work faster with a healthy shoulder.
Ultimately, workers comp buyers can achieve cost savings by making treatment decisions that optimize patient outcomes, rather than cut pure cost. To achieve that, every player — point-of-entry physicians, physical therapists, medical directors, claims managers and patients — need to shoot for the common goal of shortening recovery time by following evidence-based medical guidelines.
“When medical experts and network vendors work in concert with each other, along with data analytics and research to back them up, we can drive down utilization while improving outcomes,” Radack said. “All of these working parts together are the solution to managing physical medicine costs.”
To learn more about Liberty Mutual’s Workers Compensation solutions, visit https://www.libertymutualgroup.com/business-insurance/business-insurance-coverages/workers-compensation
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.