Bringing Focus to Broad Challenges
Target’s roughly 341,000 employees perform a wide array of tasks. In its nearly 1,800 retail locations, they stock shelves, walk the aisles assisting customers and man the cash registers, sometimes staying on their feet for hours on end. In the company’s 38 distribution centers, they move large pallets and work side by side with heavy machinery.
Target also operates in 49 of the 50 United States. As any national company can attest to, this presents regulatory complexity, as no two states are the same when it comes to safety regulation, health care resources and workers’ compensation law.
The safety and workers’ comp challenges, to say the least, are broad.
Then, the retail giant underwent a companywide reorganization in March 2015, which left the risk management department with fewer team members, and just as much work to accomplish. The team is responsible for safety, claims, finance and insurance across the corporation.
“We had an opportunity to help team members learn new skills and expand their knowledge base,” said Jodi Neuses, safety director, Target. “From the safety team’s perspective, we had to do some cross-training so that everyone had a well-rounded understanding of our risks on both the retail and the distribution side. We no longer had specialized experts in just one part of the business.”
The same was true on the workers’ comp side of the equation.
“We were fortunate to have team members who were specialists in workers’ comp claims and have previously been adjusters,” said Amanda Lagatta, Target’s director of insurance and claims. “We had people with similar skill-sets work together to apply those skills in new ways.”
The team also began re-evaluating whether it was utilizing its third-party vendors in the most efficient way.
“We made several changes with our claims vendors and managed-care vendors, so that we were fully leveraging all the services they provide,” Lagatta said.
Neuses and her team turned to professional associations like the American Society of Safety Engineers and the Minnesota Safety Council to stay updated on the latest guidelines and training. Vendors and professional groups have become a regular source of expert advice for the safety team.
Rebuilding the expertise of the safety and workers’ comp team offered an opportunity to view the company’s challenges with a fresh perspective. It opened their eyes to new ways to improve their programs.
The workers’ comp claims team, for example, made greater use of predictive analytics to streamline and expedite its processes.
“This is a service that we think is unique to us, and has really evolved to become a central part of our advocacy program.” — Amanda Lagatta, director of insurance and claims, Target
Originally, the analytical tool was used to determine at the outset the level of adjuster that should be assigned to a case. It was meant to direct the right level of expertise to a claim. The problem with that model, however, is that it touches a claim only once and does not account for how the claimant’s experience changes over time.
“We subsequently updated the model so that it looks at a claim at different points throughout its lifecycle, not just at the start,” Lagatta said. “As things change, we’ll evaluate the use of a return-to-work coordinator, and when we should call a roundtable to discuss a claim’s progress to develop a new strategy or get different people involved.”
Diving deeper into claims data also helps the safety team pinpoint where injuries are happening, so they can focus prevention efforts where they’re needed most.
Stronger Safety Culture
A culture of safety devoted to keeping team members and guests safe is a critical goal for Target. Efforts are focused on creating a top-down culture of safety throughout the company, including leading off meetings at distribution centers with safety messages, and leveraging an ergonomic specialist to consult on workstation design and merchandise presentation to minimize injury risk. The team also engages the “assets protection” leader at every retail location to take on the role of “safety captain” to reinforce a culture of safety in their stores.
Huddles — how the Target store teams refer to their twice-daily gatherings — and Start Up Messages, in which managers communicate the company’s safety message before the day begins and lead their teams in stretching and other warm-up exercises, are another key feature of the safety program.
Signage in stores and distribution centers remind employees of hazards and safety practices they should follow to mitigate them. Training programs for powered equipment were simplified and adjusted to allow trainers and supervisors to control when an employee is ready to be certified and move on to independent work.
“Safety is mission-critical,” Neuses said. “We try to be proactive and continually reinforce that message.”
Unfortunately, even the most thorough safety program can’t prevent all accidents. When an injury does occur, Lagatta and her team ensure that the worker is treated with respect and care — and treated quickly.
When a team member is injured on the job, they often don’t know how to navigate the workers’ comp system or how exactly the claims process works. Confusion and frustration can add to the employee’s stress and lead them to delay seeking care.
As part of an initiative to build a more formal, advocacy-based claims model, Target instituted a Workers’ Comp Assistance Center with the help of its TPA, Sedgwick Claims Management Services.
“This is a service that we think is unique to us, and has really evolved to become a central part of our advocacy program,” Lagatta said. “Someone from the assistance center — not the claims adjuster — will reach out to the team member and make the first contact with them. Their job is to reassure the team member that we care and we’re there for them, to familiarize them with the workers’ comp process and answer any questions.”
Those initial calls are also an opportunity to collect additional information about the claimant and the injury. That data is entered into the predictive modeling system and used to direct the right resources to the case.
Return-to-work coordinators are another critical component of the advocacy approach, and the retailer’s return-to-work program is a differentiator in the industry.
The risk management team has identified suitable light-duty positions for injured workers, and provides 12 weeks of modified duty payroll to support the stores using this program. But sometimes follow-up surgeries are necessary, and recovery can be a difficult road. Post-surgery, injured employees may receive another 12 weeks to accommodate the additional treatment.
Third-party service providers again play an important role in this process. Nurse case managers liaise with physicians and human resource departments to gather the information they need, and keep all parties on the same page. For example, they can analyze an injured team member’s abilities and investigate worksites to determine what is safe and suitable.
“We really rely on our vendors to help navigate that process and make informed decisions,” Lagatta said. “We’re fortunate to have partners we can trust, so we can maximize the impact of our department.”
Since implementing these changes in safety, claims management and return-to-work, Target has seen reductions in claim frequency, length and cost, and has improved the experience for its injured workers. &
Read more about the 2016 Teddy Award winners:
Bringing Focus to Broad Challenges: Target brings home a 2016 Teddy Award for serving as an advocate for its workers, pre- and post-injury, across each of its many operations.
The Road to Success: Accountability and collaboration turned Hampton Roads Transit’s legacy workers’ compensation program into a triumph.
Improve the Well-Being of Every Life: Excela Health changed the way it treated injuries and took a proactive approach to safety, drastically reducing workers’ comp claims and costs.
The Family That’s Safe Together: An unwavering commitment to zero lost time is just one way that Harder Mechanical Contractors protects the lives and livelihoods of its workers.
More coverage of the 2016 Teddy Awards:
Recognizing Excellence: The judges of the 2016 Teddy Awards reflect on what they learned, and on the value of awards programs in the workers’ comp space.
Fit for Duty: 2013 Teddy Winner Miami-Dade County Public Schools is managing comorbid risk factors by getting employees excited about healthy living.
Saving Time and Money: Applying Lean Six Sigma to its workers’ comp processes earned Atlantic Health a Teddy Award Honorable Mention.
Caring for the Caregivers: Adventist Health Central Valley Network is achieving stellar results by targeting its toughest challenges.
Advocating for Injured Workers: By helping employees navigate through the workers’ comp system, Cottage Health decreased lost work days by 80 percent.
A Matter of Trust: St. Luke’s workers’ comp program is built upon relationships and a commitment to care for those who care for patients.
Keeping the Results Flowing: R&I recognizes the Metropolitan Water Reclamation District of Greater Chicago for a commonsense approach that’s netting continuous improvement.
Advocacy at the Forefront
Kudos to employers who are building injured-worker advocacy programs.
They recognize that employees thrust into complex workers’ comp systems too often experience fear, uncertainty and frustration — emotions that deter optimal claims resolutions.
It’s refreshing to hear success stories about employer advocacy efforts, particularly because the workers’ comp blogosphere has been clogged with stories lamenting the dysfunction of the workers’ comp system.
But by devoting resources to advocacy, employers are taking their best shot at providing workers with a better claims experience, rather than just fretting about the system’s problems and failures.
The good news is that employers adopting advocacy are applying real creativity and deriving better outcomes from their efforts.
The fact is that advocacy, a.k.a. getting injured workers the appropriate attention they deserve, should have been work comp’s prime directive all along. Escalating complexity has obscured that over time.
The good news is that employers adopting advocacy are applying real creativity and deriving better outcomes from their efforts.
Target, a 2016 Teddy Award winner, for example, experienced lower litigation rates and decreased claims costs when it built an advocacy program.
Target, which already had a strong workers’ comp program, enhanced its offerings with additional advocacy efforts that helped solidify a caring culture as a hallmark of the program.
At this year’s National Workers’ Compensation and Disability Conference® & Expo, a panel of employer speakers will explain how their advocacy efforts help keep injured workers’ welfare a top priority.
There are good reasons why employers are reporting success from advocacy efforts that include making sure claimants understand how the system works and what resources are available to them.
Consider that a 2014 Workers’ Compensation Research Institute study found trust in the workplace an important predictor of claims outcomes. To reach its conclusion, WCRI evaluated workplace trust by asking claimants whether they feared being fired post-injury.
Fear of being fired led to a four-week increase in disability durations, WCRI found.
And fear is just one among several emotions that can push injured workers to lose faith in their medical care, grow frustrated with their claims adjusters and seek attorney representation.
But helping injured workers understand that their employers are engaged in their care and will provide any hand-holding needed to navigate workers’ comp systems is bound to improve outcomes.
Hats off to those employers who understand this and are putting great effort into helping alleviate their workers’ concerns. &
Mind the Gap in Global Logistics
Manufacturers and shippers are going global.
As inventories grow, shippers need sophisticated systems to manage it all, and many companies choose to outsource significant chunks of their supply chain management to contracted providers. A recent survey by market research firm Transport Intelligence reveals that outsourcing outnumbers nearshoring in the logistics industry by 2:1. In addition, only 16.7 percent of respondents stated they are outsourcing fewer logistics processes today than they were three years ago.
Those providers in turn take more responsibilities through each step of the bailment process, from processing, packaging and labeling to transportation and storage. Spending in the U.S. logistics and transportation industry totaled $1.45 trillion in 2014 and represented 8.3 percent of annual gross domestic product, according to the International Trade Administration.
“Traditionally these outside parties provided one phase of the supply chain process, perhaps transportation, or just warehousing. Today many of these companies are extending their services and product offerings to many phases of supply chain management,” said Mike Perrotti, Senior Vice President, Inland Marine, XL Catlin.
Such companies are known as third-party logistics (3PL) providers, or even fourth-party logistics (4PL) providers. They could provide transportation, storage, pick-n-pack, processing or consolidation/deconsolidation.
As the provider’s logistics responsibilities widen, their insurance needs grow.
“In the past, the underwriters would piecemeal together different coverages for these logistics providers. For instance, they might take a motor truck cargo policy, and attach a warehouse form, a bailee’s form, other inland marine products, and an ocean cargo form. You would have most of the exposures covered, but when you start taking different products and bolting them together, you end up with gaps,” said Alexander McGinley, Vice President, US Marine, XL Catlin.
A comprehensive logistics form can close those gaps, and demand for such a product has been on the rise over the past decade as logistics providers search for a better way to manage their range of exposures.
“Traditionally these outside parties provided one phase of the supply chain process, perhaps transportation, or just warehousing. Today many of these companies are extending their services and product offerings to many phases of supply chain management.”
–Mike Perrotti, Senior Vice President, Inland Marine, XL Catlin
A Complementary Package
XL Catlin’s Logistics Services Coverage Solutions takes a holistic approach to the legal liability that 3PL providers face while a manufacturer’s stock is in their care, custody and control.
“A 3PL’s legal liability for loss or damage from a covered cause of loss to the covered property during storage, packaging, consolidation, shipping and related services would be insured under this comprehensive policy,” McGinley said. “It provides piece of mind to both the owner of the goods and the logistics provider that they are protected if something goes wrong.”
In addition to coverage for physical damage, the logistics solution also provides protection from cyber risks, employee theft and contract penalties, and from emerging exposures created by the FDA Food Modernization Act.
This coverage form, however, only protects 3PL companies’ operations within the U.S., its territories and possessions, and Canada. Many large shippers also have an international arm that needs the same protection.
XL Catlin’s Ocean Cargo Coverage Solutions product rounds out the logistics solution with international coverage.
While Ocean Cargo coverage typically serves the owner of a shipment or their customers, it can also be provided to the internationally exposed logistics provider to cover the cargo of others while in their care, custody, and control.
“This covers a client’s shipment that they’re buying from or selling to another party while it’s in transit, by any type of conveyance, anywhere in the world,” said Andrew D’Alessio, National Ocean Cargo Product Leader, XL Catlin. “When provided to the logistics company, they in turn insure the shipment on behalf of the owner of the cargo.”
The international component provided by ocean cargo coverage can also eliminate clients’ fears over non-compliance if admitted insurance coverage is purchased. Through its global network, XL Catlin is uniquely positioned as a multi-national insurer to offer locally admitted coverages in over 200 countries.
“In the past, the underwriters would piecemeal together different coverages for these logistics providers. For instance, they might take a motor truck cargo policy, and attach a warehouse form, a bailee’s form, other inland marine products, and an ocean cargo form. You would have most of the exposures covered, but when you start taking different products and bolting them together, you end up with gaps.”
–Alexander McGinley, Vice President, US Marine, XL Catlin
A Developing Need
The approaching holiday season demonstrates the need for an insurance product that manages both domestic and international logistics exposures.
In the final months of the year, lots of goods will be shipped to the U.S. from major manufacturing nations in Asia. Transportation providers responsible for importing these goods may require two policies: ocean cargo coverage to address risks to shipments outside North America, and a logistics solution to cover risks once goods arrive in the United States or Canada.
“These transportation providers are expanding globally while also shipping throughout the U.S. That’s how the need for both domestic and international logistics coverage evolved. Until now there have been few solutions to holistically manage their exposures,” D’Alessio said.
In another example, D’Alessio described one major paper provider that expanded its business from manufacturing to include logistics management. In this case, the paper company needed coverage as a primary owner of a product and as the bailee managing the goods their clients own in transit.
“That manufacturer has a significant market share of the world’s paper, producing everything from copy paper to Bible paper, wrapping paper, magazine paper, anything you can think of. Because they were so dominant, their customers started asking them to arrange freight for their products as well,” he said.
“These transportation providers are expanding globally while also shipping throughout the U.S. That’s how the need for both domestic and international logistics coverage evolved. Until now there have been few solutions to holistically manage their exposures.”
–Andrew D’Alessio, National Ocean Cargo Product Leader, XL Catlin
The global, multi-national paper company essentially launched a second business, serving as a transportation and logistics provider for their own customers. As the paper shipments changed ownership through the bailment process, the company required two totally different types of insurance coverage: an ocean cargo policy to cover their interests as the owner and producer of the product, and logistics coverage to address their exposures as a transportation provider while they move the products of others.
“As a bailee, they no longer own the products, but they have the care, custody, and control for another party. They need to make sure that they have the appropriate insurance coverage to address those specific risks,” McGinley said.
“From a coverage standpoint, this is slowly but surely becoming the new standard. A logistics form on the inland marine side, combined with an international component, is becoming something that a sophisticated client as well as a sophisticated broker should really be asking for,” McGinley said.
The old status quo method of bolting on coverage forms or additional coverages as needed won’t suffice as global shipping needs become more complex.
With one underwriting solution, the marine team at XL Catlin can insure 3PL clients’ risks from both a domestic and international standpoint.
“The two products, Ocean Cargo Coverage Solutions and Logistics Service Coverage Solutions, can be provided to the same customer to really round out all of their bailment, shipping, transportation, and storage needs domestically and around the globe,” D’Alessio said.
The information contained herein is intended for informational purposes only. Insurance coverage in any particular case will depend upon the type of policy in effect, the terms, conditions and exclusions in any such policy, and the facts of each unique situation. No representation is made that any specific insurance coverage would apply in the circumstances outlined herein. Please refer to the individual policy forms for specific coverage details. XL Catlin, the XL Catlin logo and Make Your World Go are trademarks of XL Group Ltd companies. XL Catlin is the global brand used by XL Group Ltd’s (re)insurance subsidiaries. In the US, the insurance companies of XL Group Ltd are: Catlin Indemnity Company, Catlin Insurance Company, Inc., Catlin Specialty Insurance Company, Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., and XL Specialty Insurance Company. Not all of the insurers do business in all jurisdictions nor is coverage available in all jurisdictions. Information accurate as of December 2016.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with XL Catlin. The editorial staff of Risk & Insurance had no role in its preparation.