Transportation Source of Highest Injury Exposure
Workers’ compensation claims attributed to motor vehicle accidents are more severe than the average work comp claim, according to NCCI Holdings Inc. research. They account for a disproportionate share of severe workplace injuries. They are responsible for larger losses and have injury durations that are a third longer, an average, than for other types of accident causes.
They also take a toll on a range of occupations, not just truck drivers, such as home health nurses, sales representatives, police, and executives. The Bureau of Labor Statistics graphic above shows the proportion of workplace fatalities caused by transportation incidents in contrast to other causes of workplace deaths.
While the toll is gruesome, safety programs, such as those aimed at reducing distracted driving, can make a difference.
Law to Prevent Misclassification of Drivers Takes Effect
Nearly 40,000 employers misclassified more than 700,000 workers in New York between 2002 and 2005. The findings by Cornell University’s School of Industrial and Labor Relations has led to the enactment of a law aimed at curbing the practice among commercial goods transportation services employees.
“This new law amends the Labor Law and the Workers’ Compensation Law to establish a presumption of employment in the commercial goods transportation industry,” according to a bulletin on the New York Workers’ Compensation Board’s website. “The technical amendments were signed by Governor Cuomo on March 17, 2014. The new statute will take effect on April 10, 2014, and for workers’ compensation purposes, applies to accidents which occur on or after that date.”
The new law redefines “employee” in the industry. It states “any person performing commercial goods transportation services for a commercial goods transportation contractor is presumed to be an employee of that commercial goods transportation contractor. Commercial goods transportation contractor is broadly defined to include any sole proprietor, partnership, firm, corporation, limited liability company, association, or other legal entity permitted to do business within the state that compensates commercial vehicle drivers who possess any state-issued commercial driver’s license to transport goods in the state of New York.”
Because of the date of the legislation, any worker injured while performing services for a commercial goods transportation contractor on or after April 10 will be presumed to be the employee of the contractor for workers’ comp purposes. The commercial goods transportation contractor is responsible to compensate the driver for the injuries.
The Fair Play Act comes with some stiff penalties, including fines and jail time. Violators face civil penalties of up to $1,500 for a first violation and up to $5,000 for a subsequent violation within a five-year period. Those who willfully violate the law face civil penalties of up to $2,500 for the first violation per misclassified employee and up to $5,000 for each subsequent violation per misclassified employee within a five-year period.
In addition, employers who willfully violate the provisions of the law may be imprisoned for up to 30 days or fined up to $25,000. For a subsequent offense, the punishment increases to up to 60 days in jail and a fine of up to $50,000.
A Modern Claims Philosophy: Proactive and Integrated
According to some experts, “The best claim is the one that never happens.”
But is that even remotely realistic?
Experienced risk professionals know that in the real world, claims and losses are inevitable. After all, it’s called Risk Management, not Risk Avoidance.
And while no one likes losses, there are rich lessons to be gleaned from the claims management process. Through careful tracking and analysis of losses, risk professionals spot gaps in their risk control programs and identify new or emerging risks.
Aspen Insurance embraces this philosophy by viewing the data and expertise of their claims operation as a valuable asset. Unlike more traditional carriers, Aspen Insurance integrates their claims professionals into all of their client work – from the initial risk assessment and underwriting process through ongoing risk management consulting and loss control.
This proactive and integrated approach results in meaningful reductions to the frequency and severity of client losses. But when the inevitable does happen, Aspen Insurance claims professionals utilize their established understanding of client risks and operations to produce some truly amazing solutions.
“I worked at several of the most well known and respected insurance companies in my many years as a claims executive. But few of them utilize an approach that is as innovative as Aspen Insurance,” said Stephen Perrella, senior vice president, casualty claims, at Aspen Insurance.
“We do a lot of trending and data analysis to provide as much information as possible to our clients. Our analytics can help clients improve upon their own risk management procedures.”
– Stephen Perrella, Senior Vice President, Casualty Claims, Aspen Insurance
Utilizing claims expertise to improve underwriting
Acting as adviser and advocate, Aspen integrates the entire process under a coverage coordinator who ensures that the underwriters, claims and insureds agree on consistent, clear definitions and protocols. With claims professionals involved in the initial account review and the development of form language, Aspen’s underwriters have a full sense of risks so they can provide more specific and meaningful coverage, and identify risks and exclusions that the underwriter might not consider during a routine underwriting process.
“Most insurers don’t ever want to talk about claims and underwriting in the same sentence,” said Perrella. “That archaic view can potentially hurt the insurance company as well as their business partners.”
Aspen Insurance considered a company working on a large bridge refurbishment project on the West Coast as a potential insured, posing the array of generally anticipated construction-related risks. During underwriting, its claims managers discovered there was a large oil storage facility underneath the bridge. If a worker didn’t properly tether his or her tools, or a piece of steel fell onto a tank and fractured it, the consequences would be severe. Shutting down a widely used waterway channel for an oil cleanup would be devastating. The business interruption claims alone would be astronomical.
“We narrowed the opportunity for possible claims that the underwriter was unaware existed at the outset,” said Perrella.
Risk management improved
Claims professionals help Aspen Insurance’s clients with their risk management programs. When data analysis reveals high numbers of claims in a particular area, Aspen readily shares that information with the client. The Aspen team then works with the client to determine if there are better ways to handle certain processes.
“We do a lot of trending and data analysis to provide as much information as possible to our clients,” said Perrella. “Our analytics can help clients improve upon their own risk management procedures.”
For a large restaurant-and-entertainment group with locations in New York and Las Vegas, Aspen’s consultative approach has been critical. After meeting with risk managers and using analytics to study trends in the client’s portfolio, Aspen learned that the sheer size and volume of customers at each location led to disparate profiles of patron injuries.
Specifically, the organization had a high number of glass-related incidents across its multiple venues. So Aspen’s claims and underwriting professionals helped the organization implement new reporting protocols and risk-prevention strategies that led to a significant drop in glass-related claims over the following two years. Where one location would experience a disproportionate level of security assault or slip & fall claims, the possible genesis for those claims was discussed with the insured and corrective steps explored in response. Aspen’s proactive management of the account and working relationship with its principals led the organization to make changes that not only lowered the company’s exposures, but also kept patrons safer.
World-class claims management
Despite expert planning and careful prevention, losses and claims are inevitable. With Aspen’s claims department involved from the earliest stages of risk assessment, the department has developed world-class claims-processing capability.
“When a claim does arrive, everyone knows exactly how to operate,” said Perrella. “By understanding the perspectives of both the underwriters and the actuaries, our claims folks have grown to be better business people.
“We have dramatically reduced the potential for any problematic communication breakdown between our claims team, broker and the client,” said Perrella.
A fire ripped through an office building rendering it unusable by its seven tenants. An investigation revealed that an employee of the client intentionally set the fire. The client had not purchased business interruption insurance, and instead only had coverage for the physical damage to the building.
The Aspen claims team researched a way to assist the client in filing a third-party claim through secondary insurance that covered the business interruption portion of the loss. The attention, knowledge and creativity of the claims team saved the client from possible insurmountable losses.
Modernize your carrier relationship
Aspen Insurance’s claims philosophy is a great example of how this carrier’s innovative perspective is redefining the underwriter-client relationship. Learn more about how Aspen Insurance can benefit your risk management program at http://www.aspen.co/insurance/.
Stephen Perrella, Senior Vice President, Casualty, can be reached at Stephen.email@example.com.