Spotlight on Sessions: Wednesday, Nov. 19
Improving Claim Outcomes / MM1
Today: 11 a.m. – 12:15 p.m.
Effective partnerships between employers and payers can make all the difference when it comes to delivering top quality care and achieving successful workers’ comp claim outcomes. Panelists include Randy Triplett, workers’ compensation & integrated disability manager at Goodyear, and Jane Ish, vendor and network programs at Helmsman/Liberty Mutual.
Workers’ Comp Insurance Exposed / PM1
Today: 11 a.m. – 12:15 p.m.
Leaders of the nation’s largest workers’ comp carriers reveal what lies ahead for insurance claims and underwriting. Panelists include Chris Irving of Travelers, Russell Johnston of American International Group, and Debbie Michel of Liberty Mutual; moderated by Eric Silverstein of Lockton.
Risk Scenarios Live! / CM2
Today: 2:30 – 3:45 p.m.
An expert panel analyzes the handling of a hypothetical, yet realistic, complex claim, depicting the event and navigating audience members through the claim’s potential pitfalls. Panelists include Tracey Davanport, director-national managed care at the Argo Group, Dr. Robert Goldberg, chief medical officer at Healthesystems; and Dr. Kurt Hegmann, director of The Rocky Mountain Center for Occupational & Environmental Health.
WC Programs Save Harley-Davidson $3.5M/ DM2
Today: 2:30 – 3:45 p.m.
The iconic motorcycle company has seen a 68 percent reduction in workers’ comp claims and a 63 percent drop in costs with its integrated approach to occupational and non-occupational injuries. Panelists include Harley-Davidson’s Sue Gartner, corporate health services HR manager; and Beth Mrozinsky, corporate safety and health HR director.
Learning From the Experts
A focus on employer experiences and expertise is a theme you’ll see throughout this conference. During our 31 breakout sessions, a plethora of employers join workers’ compensation and disability thought leaders to provide targeted insights into the obstacles they’ve faced and the strategies they used to achieve optimal outcomes.
John Smolk, principal manager of workers’ compensation for Southern California Edison joins a panel this morning discussing a workers’ compensation benchmarking study that looked at operational challenges and effective strategies to overcome them. [Session CM1, 11 a.m., Islander A&F].
Also this morning, Randy L. Triplett from The Goodyear Tire & Rubber Co. joins Jane Ish of Liberty Mutual Insurance to address outcomes-based medical networks. [Session MM1, 11 a.m., Islander I], and Bill Wainscott of International Paper teams up with attorney Jeffrey A. Kadis for an in-depth look at worker separation and how to conduct a global settlement to avoid litigation. [Session LR1, 11 a.m., South Pacific Ballroom D].
Later today, Jill Dulich of Marriott joins attorney Richard Lenkov to offer 10 ways employers can reduce — or eliminate — their legal expenses immediately. [Session LR2, 2:30 p.m., South Pacific Ballroom D].
Employers looking at the various risk financing options will find answers in an afternoon session with Mark Walls from Safety National [Session PM2, 2:30 p.m., Islander I], while employers with injured, absent or disconnected workers will appreciate the session on engaging such employees, presented by Kevin Confetti of the University of California along with Dr. Teresa Bartlett of Sedgwick. [Session DM1, 11 a.m., Islander D&E].
Managing medical costs — an increasingly complex task for most employers — is the target of a session specifically focused on the kind of cost control measures which can themselves become part of the problem. [Session MM2, 2:30 p.m., Islander G&H].
At today’s luncheon, conference co-chair Roberto Ceniceros will sit down with this year’s Teddy Award winners to delve into the secrets of their successful programs. A celebrated industry journalist, Ceniceros will be taking over the reins of the NWCDC for the 2015 conference.
And don’t forget to download the conference mobile app to plan out your session strategy and to visit with practitioners who just may have the solution to your biggest headache.
Construction’s New World
Get off a plane at Logan Airport and cross the harbor toward Boston and you will see construction cranes, a lot of them.
Grab an Amtrak train from Philadelphia into New York and pulling into Penn Station, you will see more construction cranes, many more of them. The same scene repeats in Denver, Los Angeles, San Francisco and Chicago.
All that steel and cable in the skyline signifies a construction industry that is growing again, after having the rug pulled out from under it in the Great Recession of 2008-2010.
The cranes these days look the same as cranes looked in 2008, but the risk management and insurance environment in construction is anything but the same now.
A variety of factors are now in play that have drastically changed construction risk underwriting, according to Doug Cauti, a senior vice president and chief underwriting officer with Boston-based Liberty Mutual’s construction practice.
Doug Cauti characterizes the current construction market.
Talent and Margins
For one thing, according to Cauti, the available talent pool in construction is nowhere near what it was pre-recession.
“When the economy went into its downturn, a lot of talent left the business and hasn’t returned,” Cauti said.
Cauti said recent conversations with large contractors in Ohio and Pennsylvania confirmed once again that contractors are facing a workforce that is either aging or very inexperienced. That leads to safety management and project quality concerns at just the moment in time that construction is rebounding.
Doug identifies one of the top risk management issues facing construction firms today.
Workers compensation risks in construction, already a problematic area, are seeing an impact from that dynamic.
Contractors are also facing much more competition. In the past, contractors might have bid on 10 jobs to get one, now they have to bid on 50 or 60 jobs to get one. That’s putting pressure on margins.
“There are a lot of contractors out there competing for business,” Cauti said.
“Margins are going up but not at the same rate as the industry’s recovery,” he added.
Financing and Risk Transfer
Another factor impacting the way construction risk is being underwritten is the size of projects and the way they are being financed. Construction’s recovery from the recession might be slow and steady, but the size of projects requiring risk management and insurance has increased substantially.
In 2010, there were 85 projects under contract nationally that were worth $1 billion or more, according to Cauti. One year later, the percentage of projects of that value or higher had grown by 30 percent, and the trend continues.
A lot of those projects are design-build, a relatively new approach to construction that Liberty Mutual has grown comfortable underwriting over the years. But design-build is still an additional complication, blurring the traditional lines of responsibility.
“We did it when the growth in contractor-controlled insurance programs happened, we did it with the evolution in design-build and we’re laying the groundwork to be a thought leader in public-private partnerships and integrated project delivery.”
– Doug Cauti, Chief Underwriting Officer, Liberty Mutual National Insurance Specialty Construction
Given the funding demands of these much larger and more valuable projects — many of them badly needed public sector infrastructure improvements — public-private partnerships, otherwise known as P3s, are now coming into vogue as a financing option.
But deciding how risk should be allocated, underwritten and transferred in this new arrangement between contractors, the state, and private partners is a relatively new and untested science.
As a thought leader in the underwriting of the design-build approach – and the more traditional design-bid-build – Cauti said construction experts within Liberty Mutual are growing their knowledge to stay in step.
“We did it when the growth in contractor-controlled insurance programs happened, we did it with the evolution in design-build and we’re laying the groundwork to be a thought leader in public-private partnerships and integrated project delivery,” he said.
That means attending relevant industry conferences like the annual IRMI Construction Risk Conference where Liberty Mutual has maintained a significant presence, and engaging in dialogues with contractors and government officials, and maintaining clear and active lines of communications with brokers.
Doug discusses emerging approaches to construction.
Legal and Regulatory
Another change that is creating challenges for construction risk underwriting, according to Cauti, stems from what’s happening in United States courtrooms.
Across the country, how a court interprets coverage can vary widely, especially in the area of construction defect.
“In the past, many jurisdictions viewed construction defect simply as shoddy workmanship and they had to go back and redo it,” Cauti said.
But now, on a state by state basis, courts are ruling that a construction defect is an accident under certain circumstances that may be covered by a contractor’s general liability policy.
In 2014 alone, according to Cauti, Supreme Courts in West Virginia, Connecticut and North Dakota ruled that construction defects can sometimes be considered accidents.
Cauti said doing business with a carrier that pursues contract clarity whenever possible – and that possesses an experienced claims team that can navigate the wide variety of state interpretations – is absolutely essential to the buyer.
Having claim teams not only dedicated to construction but also to construction defect, adds a lot of value to a carrier’s offering.
Doug outlines another top risk management issue facing construction firms in today’s booming market.
Now, as never before, contractors are relying on experienced construction insurance teams to help them address these complexities.
Insurers need to have the engineering expertise to analyze a project, to make sure the right contracting team is in place and to insure that risk exposures are being properly assessed. Another key in a construction insurance team, according to Cauti, is the claims department.
A Strategic Approach
The legal and financing changes that are taking place in the construction market, from a risk transfer standpoint, aren’t going to get ironed out overnight.
Cauti said it could be 10 years until the construction and insurance industries fully understand the complications of public-private partnerships and integrated project delivery, these approaches gain traction, and the state-by-state legal decisions that are causing so much uncertainty can be digested.
In the meantime, an engaged, collaborative approach between carriers, brokers, contractors, and their financing partners will be necessary.
Doug discusses how his area can provide value to project owners and contractors.
For more information on how Liberty Mutual Insurance can help assess your construction risk exposure, contact your broker or Doug Cauti at firstname.lastname@example.org.
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.