There are no hard statistics confirming a shortage of safety and health professionals, but there is a lot of circumstantial data.
An October 2011 study prepared for the National Institute for Occupational Safety and Health (NIOSH), for example, concluded that the need for health and safety engineers in 2011 and over the next five years “is substantially higher than the number estimated to be produced from … training programs.”
The U.S. Bureau of Labor Statistics predicts 11 percent growth in the number of health and safety engineers between 2012 and 2022.
In addition, a survey of members by the American Society of Safety Engineers (ASSE) found about 1 percent unemployment, and the 30 or so annual graduates of the University of Michigan Center for Occupational Health and Safety Engineering usually get hired before they graduate.
Some experts, however, say the shortage is not so much a lack of entry-level talent as it is of experienced safety and health professionals. They said that what organizations are missing are competent professionals who are knowledgeable about both the industry in question, and the resources and tools that professionals can offer.
As Skip Smith, senior director of risk management and insurance at HOA Inc. (Hooters of America) said in a recent Risk Insider article, “But these days, if you’re charged with overseeing a corporate risk management department, it is very difficult to fill a safety position. There are a limited number of qualified candidates with the required educational background, experience and unique set of skills.”
It takes time, obviously, to gain the credentials, experience and even the terminology necessary to make an impact on a worksite. But the clock may be ticking on the profession as baby boomers get ready to retire and the influx of professionals is lower than necessary to fill the gap.
One problem is the low visibility of the profession to most young people, said Stuart Batterman, director, University of Michigan Center for Occupational Health and Safety Engineering.
“Typically, they don’t recognize the opportunities that are available in this field,” he said. “It’s also not the kind of field that most people have prior exposure to.”
For some industries, such as construction, manufacturing, and oil and gas, the need may be greater than others. Obviously, that’s because such industries are more hazardous than some, but it’s also because these sectors are more likely to have the increased risk of ramping up or ramping down operations. When that happens, the danger increases.
New employees, round-the-clock operations, different locales — all of them add uncertainty and potential risk to organizations. The continuing increase of Spanish-speaking workers as well as those native in other languages also makes it harder to educate and train employees.
As the difficulty mounts in finding experienced environmental, health and safety (known both as EHS or HSE) professionals, the number of consultants and service providers to fill that void is growing. Insurance companies and brokerages as well provide risk control services to their clients.
But consultants are generally not on the jobsite every day and have less insight into the daily demands of an organization.
The age issue is not one that will go away anytime soon.
“We have got a graying population,” said Carl W. Heinlein, senior safety consultant, American Contractors Insurance Group, a captive owned by 41 contractors around the country. “I can probably think of seven great safety jobs that are currently available right now. They can’t find quality, experienced people to fill them.”
The 2011 NIOSH study, prepared by Westat, projected that about 10 percent of safety professionals would retire within the next year, and estimated that a “large number” of such professionals are over the age of 50.
It forecast that employers would hire more than 25,000 more over the next five years, but that colleges were expected to graduate fewer than 13,000 HSE professionals. And the report noted that enrollment was projected to slightly decline over a five year period.
Leaders in construction, oil and gas, and other industries, Heinlein said, “have been begging for quality safety folks.”
Those industries, in particular, are dangerous ones to be in. According to the Bureau of Labor Statistics, construction fatalities, while down 36 percent since 2006, still account for the highest number of fatal work injuries of any industry sector in 2013, the latest year for which results are available.
It’s more difficult to pin down the fatalities in the oil and gas industry as it is covered by several different BLS categories. Overall, construction and extraction occupations accounted for 818 fatalities in 2013, or 18 percent of all workplace fatal injuries. Transportation fatalities numbered 1,184 or 27 percent of all workplace deaths.
BLS indicates that organizations involved in oil and gas extraction have the highest percentage of EHS employment in the private sector, at nearly 1 percent of all positions. Another six-tenths of 1 percent are employed in petroleum and coal products manufacturing.
To be effective, health and safety professionals need hands-on experience in troubleshooting problems, said Scott Harris, director of EHS advisory services at UL Workplace Health & Safety.
“We really haven’t seen a shortage,” he said.
“When I am out talking to folks, they have never said to us, ‘We can’t find someone.’ I have heard often, ‘It’s hard to find a good one,’ meaning they are looking for certain key skills and the young people just don’t have them.”
The ability to research and “textbook knowledge” are what college graduates can bring to a job, he said, but they often lack industry experience, the ability to solve problems, people skills and presentation skills, so they can command attention during meetings.
It’s also important to understand the value of redesigning a process or engineering out the risk instead of focusing just on training and education, said Matt Kupiec, assistant vice president of construction risk engineering at ACE Group.
And, he noted, it’s not always necessary to re-invent the wheel. There are vendors and service providers that have created products to meet many safety demands.
It takes about two years for an entry-level person to become “well versed as a generalist.” — Brion Callori, senior vice president, engineering and research, FM Global
At FM Global, which focuses a lot of attention on commercial property risk, Brion Callori, senior vice president, engineering and research, noted that it takes time for property risk engineers to become fully proficient.
FM Global hires between 100 and 150 property risk engineers yearly.
There are two levels to proficiency, he said.
“We expect someone out of engineering school to think like an engineer. We have to give them cross-discipline training and have developed a hands-on training approach to expedite the process.”
It takes about two years for an entry-level person to become “well versed as a generalist,” he said, and then the carrier moves the focus to specific natural hazards, such as windstorms, power generation, chemicals, etc.
“It probably takes another three years of that to become top flight and really specialized in something,” Callori said.
One issue with the energy industry in particular, said Jay Doherty, partner, workforce sciences institute, Mercer, is the tremendous number of contractors on major projects, with investment levels ranging from $100 million to several billion dollars.
“You have less control and more variation in the skills, compliance and knowledge of safety [with contractors],” he said.
“The industry has, unfortunately, had incidents, serious incidents, more often with the subcontractors than with the prime contractor or operator.”
BLS statistics bear that out — for all industry sectors.
Fatal injuries of contractors accounted for 17 percent of all workplace deaths in 2013, and half of all contractors who were fatally injured were working in construction and extraction occupations.
The importance of experience when it comes to HSE professionals is not so much on the increasing compliance requirements but on problem-solving and prevention, Doherty said.
The career structure and the time to competence is complex for HSE, he said, because “the discipline is not simply defined by hierarchy or level. Often the best HSE experts don’t begin in that role.” Development requires broad knowledge not only of OSHA and other governmental regulations, but also knowing the protocols of companies and specific industries.
It also depends on the span of control, Doherty said. It takes more than HSE professionals to look after safety. Supervisors often perform a compliance role and when cost pressures reduce spans or there is simply a lack of experience in the workforce, there is greater likelihood of safety incidents, he said.
“Companies need to examine the career paths for their HSE professionals,” he said, “to make sure top talent is rewarded commensurate with other critical skills. That sends a clear signal of the priority placed on safety and the environment.”
But, some companies just don’t value the position enough. When times are tight, occupational health and safety professionals are often near the top of the chopping block, and many organizations continue to look at the profession as an expense instead of a way to improve production and margin.
“This is a margin-making opportunity. It’s an opportunity for a company to look at it more as a business asset than as a cost or expense of the operation.” — James Merendino, vice president and general manager, commercial insurance risk control services, Liberty Mutual
As UL’s Harris noted, the profession has its own gallows humor: It’s always safety first … unless it interferes with production or “gets in the way of something else.”
But, said James Merendino, vice president and general manager, commercial insurance risk control services, Liberty Mutual, effective safety and risk management strategies affect both the top and bottom lines of a company.
“This is a margin-making opportunity,” Merendino said.
“It’s an opportunity for a company to look at it more as a business asset than as a cost or expense of the operation.”
It’s more than ensuring regulations are complied with, he said. It’s making safety a strategic priority of the organization, which may result not only in fewer and less severe injuries, but also in lower insurance premiums, and better terms and conditions.
It also is less disruptive of production deadlines, and more protective of an organization’s brand and an industry’s reputation.
“Safety has to be elevated to the position that production is,” said George Cesarini, vice president of construction risk engineering, ACE.
“Organizations need to elevate safety from, ‘Insurance wants this’ or ‘OSHA wants this’ to elevating it to the same level as production, to making it a core value within the organization.”
Finding the experienced professionals to fill that role, however, may continue to be a problem.
Mitigating the Difficulties
In few sectors does true proportional risk management come into sharper focus than in midstream and downstream energy and process industries.
“We have always had a very difficult placement from an umbrella standpoint,” said one risk manager. “We have always had serious carrier issues because they don’t like the things we make and sell.”
Never mind that the client is a major global company with a significant volume of business; some carriers have treated that worldwide scope as just a greater exposure. For that client, Monica Brecka, Aon’s umbrella and excess casualty practice leader for the southern region, “came in and shook things up. She rearranged things in our large global placement. She coordinated all the various pieces into one cohesive program that was very different from what we had before. That drove significant savings,” the client said.
Another client was facing a renewal in which its carriers insisted upon an exclusion for one of its product lines, noting accurately that such an exclusion was widespread in the industry.
“Monica was able to secure our renewal without the exclusion,” said the insurance buyer.
“We did have to accept a higher integrated occurrence, but at a lower attachment level, which in the end, reduced our premium.”
Brecka also handled a spin-off for the same client. The outgoing operations were sold to another company, so there was no need to create interim structures, but “Monica effectively got an upfront return of premium for us on an anticipated but not assured basis.”
Informed insight is necessary to win the Power Broker® designation, and it is indicative of Tandis Nili’s work this past year.
“We had an umbrella carrier who was wanting to move up and we needed to understand what our options were,” said one risk manager.
“I wanted to know whether it would be best to take our current primary carrier up, replace the umbrella carrier, replace the primary carrier. Tandis provided this guidance, and with her law degree, I always feel comfortable with the contract review provided.”
The risk manager continued, “Tandis also kept us to zero collateral increase for our [workers’ comp policy] for five years straight. Exposures have certainly increased and the insurer has requested an increase most years.”
In another situation, Nili saw changes at a carrier obviate what had been a relationship so close that the carrier had accepted a personal letter of guarantee from the CEO of the insured in lieu of some standard requirements.
In the middle of renewal, new leadership took over and the underwriter balked at such a handshake agreement. Nili had to present the client as a new prospect, running actuarial analyses and modifying retentions and credit risk for the client. After long negotiations, the new management accepted the existing personal guarantee.
In a successful end to that tense and complex negotiation, Nili’s double challenge was not just to win for the client, but to win over the client.
Almost any broker can handle trouble, but it takes a Power Broker® to head it off at the pass.
“Mike was able to show us a problem with our property policy,” said one risk manager of Mike Perron, an energy and engineered risks team leader at Willis.
“The policy had a limit of $25 million per occurrence, which looked sufficient. However, the coverage was limited to the values reported at a given location.” Perron pointed out that the previous broker should have requested the carrier remove the limitation. Then he engaged colleagues to review the values reported on the insurance schedule at a handful of locations, to see if the values adequately represented true replacement cost values.
“This analysis suggested that the replacement cost values of several properties was larger than what was reported on our schedule,” the risk manager said. “Consequently, these properties were underinsured. This finding and analysis was instrumental in choosing to appoint Willis as our new broker.”
Another client noted, “Our situation is a little different as a lot of our policies are reverse flow. We have some local placements and some legacy issues. Mike has done well in trying to hunt down people to resolve really old items like remnants of failed insurers or the last collateral issue related to long-closed projects.
“Sometimes the ability to find the person that has the right connection from a previous life is a very valuable skill from the client perspective,” the client said.
A Key Team Member
Risk managers often say that Power Brokers are key members of their teams. One director of insurance said that David Robinson is “an essential part of our risk management department” who has helped minimize costs with fronting policies and the use of a captive.
The client cited a project that called for construction affecting public-works infrastructure.
“The governmental body was adamant about requiring a separate GL policy with dedicated limits and a very low deductible. The limits were high and the premium was also high.
“After weeks of discussions, the governmental body accepted a fronting policy, which was much cheaper and fell within our corporate philosophy of taking high retentions. David was instrumental in helping us persuade the governmental agency to accept the front and also working with our insurance company to provide the fronting policy,” the client said.
Despite the best efforts of Power Brokers and their clients, however, losses will occur.
One risk manager credited the smooth resolution of a significant claim to his broker.
“It was a large loss, and came just before our renewal,” said the risk manager. “David set up the whole recovery process, from cost center to work orders to handling key adjusters. And then he had to turn around and face a very tough renewal.”
The client was particularly impressed with “how David was able to go from the very granular claims process to the theoretical consulting work needed to help me do the market recon I needed to do.”
Crafting Custom Solutions
Creativity is a hallmark of Power Brokers, and Aon’s Stephen Stoicovy is a prime example. That came into play recently when navigating the endorsement language on one client’s commercial general liability policy.
“As a global company, these endorsements are not only used in the U.S. but worldwide,” the client said. “Stephen was able to broaden the additional insured endorsement on our commercial general liability policy.
“[That means] our carrier can now insure an entity who has an agency agreement with it under our liability program. In the past, those entities had to procure separate insurance even though our carrier indemnified the entity,” the client said.
One recent trend for energy companies is the growth of master limited partnerships (MLPs). The model works, but is a challenge for brokers in that ownership of assets, and their associated exposures, is often in flux among affiliated MLPs and the parent company.
“We had an original C-corp, and created multiple MLPs with different formats. It was a very significant reorganization,” said one client, explaining the changes Stoicovy helped to orchestrate.
“We wanted to approach the market as one organization, but each operating entity now had its own, very different risk profile. We wanted to gain as much economy of scale as we could, but still keep discrete risks separate,” the client said. “Also, the disposition of assets among the affiliated operating companies was frequently in flux.”
Integrated into Daily Processes
This past year was a tumultuous one in the energy sector. Outright takeovers gave way to frequent asset-based transactions. That put pressure on brokers to keep pace.
“From day one, René made it a point to understand all o2015f our operations and intimate business trading partners to ensure he was able to negotiate the best terms and conditions for us,” said one insurance manager of Aon’s René van Winden.
“He literally left no option off of the table when we challenged him for unique underwriting and coverage placements during recent acquisitions and divestitures for some of our sensitive risks. René has earned the complete support of our executive management who are very well versed in many different insurance levels,” the insurance manager said.
“That is important because we have a lean staff internally. René is able to anticipate our questions prior to being asked. He is integrated into our operations on our day-to-day processes and procedures.”
Other clients are a challenge because of their size. The oil and gas industry requires huge investments, and the capital spend for any major player pressures limits and placements. One client asked Van Winden to cut insurance costs by 30 percent, though the program was already competitive. Van Winden went to Bermuda and London for capacity but ultimately had to restructure retentions. He placed more burden on business interruption than on property damage. That change in structure ultimately yielded a cost reduction of 45 percent.
Healthcare: The Hardest Job in Risk Management
Radically changing cost and reimbursement models.
Rapidly evolving service delivery approaches.
It is difficult to imagine an industry more complex and uncertain than healthcare. Providers are being forced to lower costs and improve efficiencies on a scale that is almost beyond imagination. At the same time, quality of care must remain high.
After all, this is more than just a business.
The pressure on risk managers, brokers and CFOs is intense. If navigating these challenges wasn’t stress inducing enough, these professionals also need to ensure continued profitability.
“Healthcare companies don’t hide the fact that they’re looking to reduce costs and improve efficiencies in practically every facet of their business. Insurance purchasing and financing are high on that list,” said Leo Carroll, who heads the healthcare professional liability underwriting unit for Berkshire Hathaway Specialty Insurance.
But it’s about a lot more than just price. The complexity of the healthcare system and unique footprint of each provider requires customized solutions that can reduce risk, minimize losses and improve efficiencies.
“Each provider is faced with a different set of challenges. Therefore, our approach is to carefully listen to the needs of each client and respond with a creative proposal that often requires great flexibility on the part of our team,” explained Carroll.
Creativity? Flexibility? Those are not terms often used to describe an insurance carrier. But BHSI Healthcare is a new type of insurer.
The Foundation: Financial Strength
Berkshire Hathaway is synonymous with financial strength. Leveraging the company’s well-capitalized balance sheet provides BHSI with unmatched capabilities to take on substantial risks in a sustainable way.
For one, BHSI is the highest rated paper available to healthcare providers. Given the severity of risks faced by the industry, this is a very important attribute.
But BHSI operationalizes its balance sheet in many ways beyond just strong financial ratings.
For example, BHSI has never relied on reinsurance. Without the need to manage those relationships, BHSI is able to eliminate a significant amount of overhead. The result is an industry leading expense ratio and the ability to pass on savings to clients.
“The impact of operationalizing our balance sheet is remarkable. We don’t impose our business needs on our clients. Our financial strength provides us the freedom to genuinely listen to our clients and propose unique, creative solutions,” Carroll said.
Keeping Things Simple
Healthcare professional liability policy language is often bloated and difficult to decipher. Insurers are attempting to tackle complex, evolving issues and account for a broad range of scenarios and contingencies. The result often confuses and contradicts.
Carroll said BHSI strives to be as simple and straightforward as possible with policy language across all lines of business. It comes down to making it easy and transparent to do business with BHSI.
“Our goal is to be as straightforward as we can and at the same time provide coverage that’s meaningful and addresses the exposures our customers need addressed,” Carroll said.
Claims: More Than an After Thought
Complex litigation is an unfortunate fact of life for large healthcare customers. Carroll, who began his insurance career in medical claims management, understands how important complex claims management is to the BHSI value proposition.
In fact, “claims management is so critical to customers, that BHSI Claims contributes to all aspects of its operations – from product development through risk analysis, servicing and claims resolution,” said Robert Romeo, head of Healthcare and Casualty Claims.
And as part of the focus on building long-term relationships, BHSI has made it a priority to introduce customers to the claims team as early as possible and before a claim is made on a policy.
“Being so closely aligned automatically delivers efficiency and simplicity in the way we work,” explained Carroll. “We have a common understanding of our forms, endorsements and coverage, so there is less opportunity for disagreement or misunderstanding between what our underwriters wrote and how our claims professionals interpret it.”
Responding To Ebola: Creativity + Flexibility
The recent Ebola outbreak provided a prime example of BHSI Healthcare’s customer-centric approach in action.
Almost immediately, many healthcare systems recognized the need to improve their infectious disease management protocols. The urgency intensified after several nurses who treated Ebola patients were themselves infected.
BHSI Healthcare was uniquely positioned to rapidly respond. Carroll and his team approached several of their clients who were widely recognized as the leading infectious disease management institutions. With the help of these institutions, BHSI was able to compile tools, checklists, libraries and other materials.
These best practices were immediately made available to all BHSI Healthcare clients who leveraged the information to improve their operations.
At the same time, healthcare providers were at risk of multiple exposures associated with the evolving Ebola situation. Carroll and his Healthcare team worked with clients from a professional liability and general liability perspective. Concurrently, other BHSI groups worked with the same clients on offerings for business interruption, disinfection and cleaning costs.
Ever vigilant, the BHSI chief underwriting officer, David Fields, created a point of central command to monitor the situation, field client requests and execute the company’s response. The results were highly customized packages designed specifically for several clients. On some programs, net limits exceeded $100 million and covered many exposures underwritten by multiple BHSI groups.
“At the height of the outbreak, there was a lot of fear and panic in the healthcare industry. Our team responded not by pulling back but by leaning in. We demonstrated that we are risk seekers and as an organization we can deploy our substantial resources in times of crisis. The results were creative solutions and very substantial coverage options for our clients,” said Carroll.
It turns out that creativity and flexibly requires both significant financial resources and passionate professionals. That is why no other insurer can match Berkshire Hathaway Specialty Insurance.
To learn more about BHSI Healthcare, please visit www.bhspecialty.com.
Berkshire Hathaway Specialty Insurance (www.bhspecialty.com) provides commercial property, casualty, healthcare professional liability, executive and professional lines, surety, travel, programs, and homeowners insurance. It underwrites on the paper of Berkshire Hathaway’s National Indemnity group of insurance companies, which hold financial strength ratings of A++ from AM Best and AA+ from Standard & Poor’s. Based in Boston, Berkshire Hathaway Specialty Insurance has regional underwriting offices in Atlanta, Boston, Chicago, Los Angeles, New York, San Francisco, Toronto, Hong Kong, Singapore and New Zealand. For more information, contact firstname.lastname@example.org.
The information contained herein is for general informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any product or service. Any description set forth herein does not include all policy terms, conditions and exclusions. Please refer to the actual policy for complete details of coverage and exclusions.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Berkshire Hathaway Specialty Insurance. The editorial staff of Risk & Insurance had no role in its preparation.