Enforcing Safety Rules in Summer is Challenging
Summer is the “high season” for construction and maintenance. It’s time to pave our roadways, stripe them, install crosswalks, pour sidewalks and take a stringent approach to building and property maintenance.
Inevitably, public risk professionals deal with public works departments who choose to go it alone to “get the job done.” More often than not, risk managers hear the complaints of limited funding and resources, and of a lack of understanding by risk professionals that corners have to be cut wherever possible in order to meet deadlines.
I’m particularly fond of the hot sultry days that are perfect for roof repair. We all get that priceless phone call from the community called “Man on the Roof.”
The phone rings and a lady on the phone commends me for the bare-shirted muscular employee on a city building roof enjoying the sun. “Dear … your employee is in fantastic shape and lovely to look at, but shouldn’t you be out there reminding him to wear his safety gear?”
Risk professionals need to personalize their safety message to a level of understanding that each employee can rationalize, understand and make part of their persona.
“Yes, Madam. Might you tell me the location of my employee?”
As you get to the job site you find your employee shirtless, barefooted, in shorts and sitting on the edge of the roof’s eves … throwing OSHA to the wind and every other safety talk you ever gave.
Patience is a virtue … sometimes.
Paving you ask? Shorts, T-shirts wrapped around heads and not a safety vest in sight … they’re too hot in the summer and interfere with tan lines as a matter of practicality, we are told.
And those “flags and signs” you recently purchased to inform the public to be wary, to keep a distance and to stay out of the construction zone? They are often considered trivial because they are too difficult to remember on a hot summer day.
As safety professionals, we all strive to promote and enforce lifesaving “Rules of the Road” before, during and after our projects. Our law enforcement folks try and intercede when they pass by or receive complaints when we can’t get there fast enough.
A poignant and effective sign promoted by the National Work Zone Safety Information Clearinghouse I often see in roadwork is “Slow Down – My Mommy (Daddy) Works Here.” It serves a reminder to the general public and more importantly our public works professionals that their lives are important.
You’ll note, I’ve identified folks as “public works professionals.” It’s an argument I often have with employees who are out on the road maintaining highways, fixing buildings and improving infrastructure.
I advocate respect and a recognition that public works is difficult work. It’s often dirty and messy and well, it’s work that requires perseverance in the worst of weather when we need them the most.
Safety is personal because it belongs not only to the employee, but to their partners, spouses, extended families and their dogs and … even their tarantulas.
Risk professionals need to personalize their safety message to a level of understanding that each employee can rationalize, understand and make part of their persona.
Safety needs to be a language unto itself that is universally accepted as the norm.
Grow Operations Coming to Terms With Risk
As the legal cannabis industry matures, its crop producers and retail shops are increasingly adopting risk management practices that include greater attention to worker safety.
The expanding size and sophistication of grow operations, greater scrutiny from regulatory agencies, crime, potential labor union involvement, and even workforce-retention concerns, are rapidly driving adoption of safety practices ignored when mom-and-pop size operations dominated.
“I see it happening very quickly,” said Justin S. Moriconi, an attorney at Segal McCambridge Singer & Mahoney who advises marijuana industry clients.
“I have seen a huge uptick in standard operating procedures to deal with issues, such as how much weight one [marijuana grow operation] worker can move at one time.”
The shift is driven in part by the industry’s rapid evolution, as more states allow recreational and medicinal marijuana production and sales.
In some East Coast states, for example, there are only a few legal grow operations, but they are very large, requiring millions of dollars in investment. It’s also a business model increasingly driven by players with multi-state operations.
While such operations don’t typically hire someone with a risk management title, like larger corporations might, they are paying greater attention to insurance purchasing and risk mitigation practices than the smaller operations that dominated the early years of legal cultivation limited to California, Moriconi said.
“When you are dealing with that level of money investment, certainly you are going to be much more attuned to risk management … and making sure everything is going as planned,” he said. “I am seeing a lot of that.”
On the West Coast, Moriconi is witnessing changes as he tours expanding cannabis operations.
A year ago, he toured a grow facility with the walls and floor painted white to boost light reflection that can improve plant yield and thus, the bottom line.
But the paint made for a slippery floor surface for workers tending plants.
“They had done that, not thinking about the production workers walking around this grow operation picking all the dead leaves off, watering the plants, and doing all the things that need to be done to cultivate this product and they were slipping occasionally,” Moriconi said.
During a more recent visit to the same facility Moiconi noticed a slip-resistant floor had been installed, although the slip resistant material remained white.
Jennifer Martin, a cultivation consultant at marijuanapropagation.com, said ergonomics are a key topic she speaks on before industry groups because at many commercial cultivation sites she sees plants on the ground. That forces workers to constantly bend down.
She advises raising the plants on stands to eliminate strained backs while increasing worker productivity.
“Even among younger workers I am seeing knee and back problems from them doing it that way,” Martin said. “So that is the first thing I say when I go in. Not only so the workers won’t be stressed, but so they can do a better job growing the plants because you can see them better when you are looking across [plants] instead of down at them.”
Other risks that grow operation workers face include exposure to chemicals and intense, hot lighting systems.
“Once the unions get involved in this you will have no shortage of claims.” — Justin S. Moriconi, attorney, Segal McCambridge Singer & Mahoney
One emerging workers’ comp risk involves the long hours workers spend hand-trimming leaf matter away from the valuable cannabis buds, several sources said. It is typically a manual job with a potential for repetitive-stress injuries and lacerations.
“I know we have had claims associated with that,” said Jim McMillen, director of safety services at Pinnacol Assurance, a Denver-based insurer of Colorado workers’ comp risks. “Probably the most severe claim we have had with that type operation was an amputation — a finger.”
Unions Stepping In
The spectrum of sophistication among operations means some growers remain primarily focused on the basic task of product production without considering worker safety.
But as more grow operations evolve from bachelor-pad like environments to sophisticated concerns, said Martin, she is seeing greater attention paid to ergonomics and worker comfort.
Risk-mitigation efforts she sees include helping workers with posture, enforcing rest breaks, and hiring masseuses to ease shoulder and wrist strains.
Greater scrutiny from OSHA, state agricultural agencies and state marijuana control boards are helping drive the improvements, Martin said. Like employers in other industries, cannabis operations also adopt safety measures to eliminate employee turnover and retain valuable workers, she added.
Labor union pressures could also drive worker safety improvements. Notably, the 33,000-member United Food and Commercial Workers International Union is recruiting medical marijuana workers under a “Cannabis Workers Rising” program.
Moriconi expects to see the union active in Eastern states, such as Pennsylvania, which are adopting medical marijuana laws and already have an extensive organized labor presence.
In smaller mom-and-pop operations, younger workers may have accepted cash or product as wages and are not likely to report an injury claim, Moriconi said. But that will change.
“Once the unions get involved in this you will have no shortage of claims,” Moriconi said. “They are not going to take product. You will be dealing with different checks and balances to make sure you have the safety and risk management built in.”
The recent murder of a security guard at a Colorado marijuana shop, meanwhile, added to criticisms that increasing retail outlet security measures often focus on protecting the cash-only businesses’ cannabis product and money rather than workers.
But overall, the risks faced by cannabis retail shops generally mirror those experienced at other retail stores with an elevated exposure profile, sources said.
McMillen at Pinnacol likened the risk level to other businesses interacting with the public and handling cash, like liquor stores or taxi cabs.
The approximately 200 marijuana retail dispensaries insured by California State Compensation Insurance Fund report injuries consistent with other businesses classified as retail operations, a SCIF spokeswoman said.
“It was primarily slips, trips and falls,” she said. “In terms of the injuries, it was strains and sprains.”
Buyers Beware: General Liability Outlook May be Shifting
The soothing drumbeat of “excess capital” and “soft market” to describe the general liability (GL) market is a familiar sound for brokers and buyers. Emerging GL trends, however, suggest the calm may not last.
Increasing severity of GL claims may hit some sectors like a light rain at first, if they have not already, but they could quickly feel like a pelting thunderstorm in others. A number of factors could contribute to the potential jump in GL prices for certain industry segments or exposures, possibly creating “micro” or niche hard markets in the short-term, and maybe even turning the broader market over the longer-term.
“There are trends we’re seeing that will play out slowly. Industries that carry more general liability exposure will and have been hit first and hardest, but it won’t apply across the board initially,” said David Perez, Senior Vice President and Chief Underwriting Officer, for Liberty Mutual Insurance’s National Insurance Specialty operation. “There is ample capital in the market today, which allows a poor performing account to move its policy frequently from carrier to carrier. Poorer performing classes, however, will likely face increased pricing for GL policies and a reduction in capacity.”
The good news for buyers is that they can take action today to lessen the impact these trends and the evolving market may have on their GL programs.
David Perez on the state of the GL market.
Medical and Litigation Trends Drive Severity
One factor increasing claim severity is the rising cost of health care, driven both by greater demand and by medical inflation that is growing faster than the Consumer Price index.
The impact of rising medical costs on commercial auto is well-known. Businesses with heavy transportation exposures are finding it more difficult to obtain coverage, or are paying more for it.
That same trend will impact general liability, just on a slower and more fragmented basis.
“In light of these trends, brokers and buyers should seek to understand how effectively their current or potential insurers defend GL claims, particular in using evidence-based medicine to assess and value the medical portion of a claim, and how they can provide necessary care to claimants while still helping clients control their total cost of risk.”
— David Perez, Senior Vice President & Chief Underwriting Officer, National Insurance Specialty, Liberty Mutual Insurance
“It takes longer for medical inflation to register through the tort system in general liability than it does in auto liability (AL) because auto claims are generally resolved more quickly,” Perez said. “But the same factors affecting severity in AL also exist in GL and as a result, it’s foreseeable that we will not only see similar severity trends in GL, but they may in fact be worse than we’ve seen in commercial auto.”
Industries with greater exposure to severity in general liability claims should be the first wave of companies to notice the impact of medical inflation.
“Medical inflation will drive up costs across the board, but sectors like construction and product manufacturing have a higher relative exposure for personal injury lawsuits.”
The impact of medical inflation on the GL market.
Beyond medical inflation, two litigation trends are increasing GL damages. First, plaintiffs’ lawyers are seeking to migrate the use of life care plans—traditionally employed only for truly catastrophic injuries—to more routine claims. Perez recalled one claimant with a broken thumb and torn ligaments who sought as much as $1 million in care for the injury for the rest of his life.
Second, the number of allegations of traumatic brain injuries (TBI) in GL claims is growing. It can be difficult to predict TBI outcomes initially and poor outcomes can be expensive and long tailed.
“In light of these trends, brokers and buyers should seek to understand how effectively their current or potential insurers defend GL claims, particular in using evidence-based medicine to assess and value the medical portion of a claim, and how they can provide necessary care to claimants while still helping clients control their total cost of risk,” notes Perez.
Changing Legal Landscape
Medical inflation and litigation trends are not the only issues impacting general liability.
Unanticipated changes in court interpretations of policy language can throw unexpected pressure on GL pricing and capacity.
Courts sometimes issue rulings interpreting policy language in a manner that expands coverage well beyond the underwriter’s original intent. Such opinions may sometimes have a retroactive effect, resulting in an immediate impact on not only open, but also closed cases in some circumstances.
Shifts in the Marketplace
In addition to facing price increases, GL brokers and buyers will be challenged by slightly shrinking capacity due to consolidation and repositioning among carriers in the marketplace. “Some major carriers have scaled back their GL writing, resulting in a migration of experienced senior management. As these executives leave, they take their GL expertise and relationships with them, resulting in fewer market leaders and less innovation,” Perez said.
“Additionally, there are new carriers coming into the business that may not have the historical GL loss data to proactively identify trends or the financial strength and experience to effectively service their GL customers and brokers. Both trends make it important for brokers and buyers to work with an insurer that is committed to the GL market and has the understanding and resources to help better manage risks impacting customers.”
Last year saw a high level of mergers and acquisitions in the insurance industry. Buyers should take advantage of that disruption to re-evaluate their needs and whether their insurers are meeting them. Or better yet, anticipating them.
What’s a Buyer to Do?
Buyers—and their brokers— should look to partner with insurers that can spot emerging trends and offer creative solutions to address them proactively.
What should buyers and brokers do, given the trends facing the GL market?
“Brokers and buyers should value insurers that have not only durability and a long history in the general liability business, but also a strong risk management infrastructure,” Perez said. “Your insurer should be able to help you mitigate your specific risks, and complement that with coverage that works for you.”
Beyond robust GL claims and legal management, Liberty Mutual also provides access to one of the insurance industry’s largest risk control departments to help improve safety and mitigate both claim frequency and severity.
In addition, notes Perez, “Even if a company has a less than optimal loss history in general liability, there can be options to provide adequate coverage for that company. The key is to partner with an insurer that has the best-in-class expertise, creativity, and flexibility to make it happen.”
By working closely with their insurers to understand trends and their potential impacts, brokers and buyers can better prepare for the possible GL storm on the horizon.
To learn more about Liberty Mutual’s general liability offering, visit https://business.libertymutualgroup.com/business-insurance/coverages/general-liability-insurance-policy.
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.