Struggling With Stress
Stress is an invisible illness. Untreated, it eats away like a cancer at our health and well-being, with one in five in the U.S. reporting extreme stress, and accounting for one in four workforce absences in the U.K.
Precise estimates are difficult to come by, but it’s suggested that 90 million workdays are lost each year due to stress-related issues. According to the American Physiological Association, the top three causes of stress are money, work and the economy — all inter-related.
As we struggle to cope at a personal level, at best we become grouchy; at worst we lay awake at night, eat badly, or damage our relationships.
For many, admitting to stress is seen as a weakness. But we treat this illness like an old friend. We develop coping mechanisms, even discuss the benefit of stress in our lives which makes us more competitive, gives us “an edge,” and accept that stress is just part of an increasingly performance-orientated workplace.
We say that stress isn’t about the job or the workplace, it’s all about the individual. In other words, we accept that stress is ‘our’ fault, not the employers.
I don’t buy that thinking. Employers owe a duty of care to their staff, which extends to their employees’ mental health. They can’t sit back and react, they need to be proactive and be up to speed with the latest in occupational health.
Stress may be temporary or permanent, and employment-induced stress may be difficult to prove with certainty — but increasing workforce analytics may start to give valuable clues.
The absence of physical conditions often make the case difficult to prove and foreseeability is often a consideration. But it’s clear that the law on liability for stress at work is continuing to mature and as more recent cases are beginning to show, this is a developing area and one which we are likely to need to contend with in the future.
Isolation and Insecurity
For the teleworker, the problem of stress can become acute. Teleworkers are as equally affected as office workers by politics, deadlines, lack of guidance or training, or sometimes bullying — perhaps more so.
They often feel they must give more to be recognized, whilst at the same time personal contact with their work colleagues other than by telephone is often reduced.
What looks like an easier life with more personal flexibility can in fact be one of isolation, insecurity and lack of personal contact. I’d argue that homeworking creates an increased environment for work-related anxiety.
It’s a potentially growing problem, which is set to rise as mobile technology improves and the difficulties of commuting increase. Employers think teleworkers are 30 percent more effective — and we are all increasingly likely to be forced into that avenue.
Failure to have adequate processes in place not only leave the employers open to claims for stress-related illness, but also exposes their insurers, who may lack any sort of reliable data, records or consistent approaches.
For homeworkers, “out of sight” shouldn’t mean “out of mind.”
Union-Related Regulations Increase
The National Labor Relations Board surprised virtually no one when it issued a trio of pro-employee decisions as 2014 drew to a close, according to employment-law experts.
But it’s anyone’s guess what will happen after a coalition representing an array of industry sectors and businesses filed suit in the U.S. District Court for the District of Columbia to stop the NLRB from moving forward with its “ambush-elections” rule, which it issued on Dec. 12.
In each of the board’s decisions — regarding employee use of company email for union organizing; the NLRB’s so-called “quickie-election” rule; and changing its standard for deferral to arbitration awards — the board basically told affected employers they will have to adjust to the enhanced union organizing efforts within their workforces.
“It’s not unprecedented to see a rush of substantive NLRB decisions at the end of the year, especially with a board member leaving,” said Steve Bernstein, a partner in the Tampa, Fla., office of Fisher & Phillips, referring to outgoing member Nancy Schiffer, whose term ended Dec. 31.
“They had a full quorum [five voting members] and an upcoming changeover in Congress, so given the Board’s makeup [three Democrats, two Republicans] and based on earlier actions no one is surprised with the flurry of decisions favoring employees.”
“There has always been tension between employer-property rights and union-access rights, and this is more of the same.” — Steve Bernstein, partner, Fisher & Phillips
Bernstein, in fact, characterized the email decision as “seven years in the making,” with labor unions working to get a Bush administration NLRB rule overturned since the day President Barack Obama took office.
“This decision is the culmination of those efforts,” Bernstein said.
What’s most important, he said, is where the email decision fits into the context of other NLRB decisions, and to what extent it’s part of the broader trend of eroding employer property rights.
“There has always been tension between employer-property rights and union-access rights, and this is more of the same.”
Employers Losing Control
Patrick Muldowney, a partner at Baker Hostetler in Orlando, Fla., said the main takeaway on the email decision is that employers are losing even more control over what occurs in their workplaces, including the ability to enforce their email policies.
“Apart from the idea that this is the employer’s [email] network, its asset, it also gets into the idea of what is work time and potentially opens up significant access to unions and union sympathizers,” Muldowney said.
“There are employers that do have very strict ‘business only’ policies regarding email, and they have always been difficult to police, but [employers] still had the right to do so,” he says. “Now, in light of the board’s decision, that can be more of a risk.”
Muldowney says employers must tread carefully when reviewing or even becoming aware of employees’ emails, especially regarding employee discipline. They need to know if an email is an exercise of Section 7 rights.
“Employers must review their policies and amend them so they are not subject to attack by unions after an unsuccessful election.” — Patrick Muldowney, partner, Baker Hostetler
“Employers must review their policies and amend them so they are not subject to attack by unions after an unsuccessful election,” he said.
Legal experts also said the decision probably will raise questions about the definition of “nonworking” time, because the NLRB decision stated that workers only have the right to use the company email system for the labor-related issues during nonworking time, “unless an employer can show that doing so would hurt production or discipline.”
Joel Barras, a partner and employment attorney at Reed Smith in Philadelphia, said the email decision also raises a potential litigation issue.
“An employer’s communication system may also become an incredibly effective tool used to recruit members to form or join class-action cases,” he said.
While the NLRB said its “quickie-election” rule was simply “modernizing its processes,” legal experts said that reducing the time between the filing of a petition and a union election denies employers an adequate chance to stage an anti-union campaign prior to employee voting.
This rule goes into effect on April 14.
The average time for the election process is now somewhere between 38 and 42 days, experts said. The new rule can drop that number to as few as 10 or 20 days, which critics contend, creates an “ambush-election” scenario — and is a serious setback for employers trying to respond to worker demands and union promises.
The third key NLRB decision changed the standard for deferral to arbitration awards for employees who allege they suffered retaliation or reprisal for engaging in union and/or protected concerted activity in violation of the National Labor Relations Act.
The NLRB ruled that employers urging deferral to an arbitration award now must prove that the “statutory issue” was presented to the arbitrator, that the arbitrator considered the statutory issue, and that NLRA law “reasonably permits” the award.
The rule gives the NLRB more discretion whether to exercise deference to arbitration procedures, Muldowney said.
“The standard used to be deferring to an arbitration award when it wasn’t clearly repugnant to the NLRA,” he said. “You might say this gives an employee another bite at the apple if they are not happy with an arbitration outcome. The board has said it no longer needs to automatically defer to arbitration decisions.”
It’s unclear whether the new Congress, with both bodies now controlled by the GOP, will make it tougher for the NLRB’s employee friendly decisions.
Muldowney said that Obama administration nominees may face a tougher approval process.
“It won’t be as easy to get more hardcore pro-union members through the Senate,” he said. “Or, nominees for the board could become collateral damage relating to whatever battles Congress has with the president regarding other issues — the immigration executive order, for example.”
Barras doesn’t expect current board members to be swayed by the GOP-controlled Congress, which he said, only has two levers it can pull: not approving a presidential nominee or withholding funding. The latter probably will not happen, he said.
For now, Barras recommends that organizations review personnel policies and adopt and/or strengthen existing union avoidance programs, as waiting for a petition to be filed might be too late.
“You have to stay on top of it,” he said.
2015 General Liability Renewal Outlook
There was a time, not too long ago, when prices for general liability (GL) insurance would fluctuate significantly.
Prices would decrease as new markets offered additional capacity and wanted to gain a foothold by winning business with attractive rates. Conversely, prices could be driven higher by decreases in capacity — caused by either significant losses or departing markets.
This “insurance cycle” was driven mostly by market forces of supply and demand instead of the underlying cost of the risk. The result was unstable markets — challenging buyers, brokers and carriers.
However, as risk managers and their brokers work on 2015 renewals, they’ll undoubtedly recognize that prices are relatively stable. In fact, prices have been stable for the last several years in spite of many events and developments that might have caused fluctuations in the past.
Mark Moitoso discusses general liability pricing and the flattening of the insurance cycle.
Flattening the GL insurance cycle
Any discussion of today’s stable GL market has to start with data and analytics.
These powerful new capabilities offer deeper insight into trends and uncover new information about risks. As a result, buyers, brokers and insurers are increasingly mining data, monitoring trends and building in-house analytical staff.
“The increased focus on analytics is what’s kept pricing fairly stable in the casualty world,” said Mark Moitoso, executive vice president and general manager, National Accounts Casualty at Liberty Mutual Insurance.
With the increased use of analytics, all parties have a better understanding of trends and cost drivers. It’s made buyers, brokers and carriers much more sophisticated and helped pricing reflect actual risk and costs, rather than market cycle.
The stability of the GL market also reflects many new sources of capital that have entered the market over the past few years. In fact, today, there are roughly three times as many insurers competing for a GL risk than three years ago.
Unlike past fluctuations in capacity, this appears to be a fundamental shift in the competitive landscape.
“The current risk environment underscores the value of the insurer, broker and buyer getting together to figure out the exposures they have, and the best ways to manage them, through risk control, claims management and a strategic risk management program.”
— David Perez, executive vice president and general manager, Commercial Insurance Specialty, Liberty Mutual
Dynamic risks lurking
The proliferation of new insurance companies has not been matched by an influx of new underwriting talent.
The result is the potential dilution of existing talent, creating an opportunity for insurers and brokers with talent and expertise to add even greater value to buyers by helping them understand the new and continuing risks impacting GL.
And today’s business environment presents many of these risks:
- Mass torts and class-action lawsuits: Understanding complex cases, exhausting subrogation opportunities, and wrangling with multiple plaintiffs to settle a case requires significant expertise and skill.
- Medical cost inflation: A 2014 PricewaterhouseCoopers report predicts a medical cost inflation rate of 6.8 percent. That’s had an immediate impact in increasing loss costs per commercial auto claim and it will eventually extend to longer-tail casualty businesses like GL.
- Legal costs: Hourly rates as well as award and settlement costs are all increasing.
- Industry and geographic factors: A few examples include the energy sector struggling with growing auto losses and construction companies working in New York state contending with the antiquated New York Labor Law
David Perez outlines the risks general liability buyers and brokers currently face.
Managing GL costs in a flat market
While the flattening of the GL insurance cycle removes a key source of expense volatility for risk managers, emerging risks present many challenges.
With the stable market creating general price parity among insurers, it’s more important than ever to select underwriting partners based on their expertise, experience and claims handling record – in short, their ability to help better manage the total cost of GL.
And the key word is indeed “partners.”
“The current risk environment underscores the value of the insurer, broker and buyer getting together to figure out the exposures they have, and the best ways to manage them — through risk control, claims management and a strategic risk management program,” said David Perez, executive vice president and general manager, Commercial Insurance Specialty at Liberty Mutual.
While analytics and data are key drivers to the underwriting process, the complete picture of a company’s risk profile is never fully painted by numbers alone. This perspective is not universally understood and is a key differentiator between an experienced underwriter and a simple analyst.
“We have the ability to influence underwriting decisions based on experience with the customer, knowledge of that customer, and knowledge of how they handle their own risks — things that aren’t necessarily captured in the analytical environment,” said Moitoso.
Mark Moitoso suggests looking at GL spend like one would look at total cost of risk.
Several other factors are critical in choosing an insurance partner that can help manage the total cost of your GL program:
Clear, concise contracts: The policy contract language often determines the outcome of a GL case. Investing time up-front to strategically address risk transfer through contractual language can control GL claim costs.
“A lot of the efficacy we find in claims is driven by the clear intent that’s delivered by the policy,” said Perez.
Legal cost management: Two other key drivers of GL claim outcomes are settlement and trial. The best GL programs include sophisticated legal management approaches that aggressively contain legal costs while also maximizing success factors.
“Buyers and brokers must understand the value an insurer can provide in managing legal outcomes and spending,” noted Perez. “Explore if and how the insurer evaluates potential providers in light of the specific jurisdiction and injury; reviews legal bills; and offers data-driven tools that help negotiations by tracking the range of settlements for similar cases.”
David Perez on managing legal costs.
Specialized claims approach: Resolving claims quickly and fairly is best accomplished by knowledgeable professionals. Working with an insurer whose claims organization is comprised of professionals with deep expertise in specific industries or risk categories is vital.
“We have the ability to influence underwriting decisions based on experience with the customer, knowledge of that customer, and knowledge of how they handle their own risks, things that aren’t necessarily captured in the analytical environment.”
— Mark Moitoso, executive vice president and general manager, National Accounts Casualty, Liberty Mutual
“When a claim comes in the door, we assess the situation and determine whether it can be handled as a general claim, or whether it’s a complex case,” said Moitoso. “If it’s a complex case, we make sure it goes to the right professional who understands the industry segment and territory. Having that depth and ability to access so many points of expertise and institutional knowledge is a big differentiator for us.”
While the GL insurance market cycle appears to be flattening, basic risk management continues to be essential in managing total GL costs. Close partnership between buyer, broker and insurer is critical to identifying all the GL risks faced by a company and developing a strategic risk management program to effectively mitigate and manage them.
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.