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At a Glance

High Levels of Worker Stress Erode Workplace Safety

Stress

As the nature of work changes at break-neck speed, job stress poses a threat to workers and their employers, the National Institute for Occupational Safety and Health reports. “It is widely believed that job stress increases the risk for development of back and upper extremity musculoskeletal disorders.” And although additional research is necessary, NIOSH says there is growing concern that stressful work conditions interfere with safety practices and set the stage for accidents.

Meanwhile, the infographic above compiled by the American Psychological Assn. earlier this year shows that, on average, Americans’ stress levels are far higher than they believe is healthy.

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Claim Trends

Indemnity Claims Up for Calif. Private Self-Insured Employers

While medical-only claims are declining for private self-insured companies in California, indemnity claim frequency has seen the biggest jump in 10 years.
By: | July 25, 2014 • 2 min read
chart with opposing arrows

In 2013, private self-insured companies registered the biggest increase in indemnity claim frequency in the past 10 years, according to a new report. At the same time, the incidence of medical-only claims declined.

Otherwise, the latest reports show “virtually no change in claim frequency in 2013.” Also flat was the average paid and incurred amounts per claim noted in the first reports for 2013 compared to the previous year.

The summary by the California Workers’ Compensation Institute is based on data compiled by the Office of Self-Insurance Plans. It reflects the experience of private self-insured employers who covered nearly 2.09 million California employees last year — down from 2.12 million employees in the 2012 initial report.

“The number of workers’ compensation claims reported by California’s private self-insured employers was down about 2 percent in 2013,” the summary says, “but for the fifth year in a row, private self-insured claim frequency was flat, as a marginal decline in the medical-only claims rate was offset by a slight uptick in the indemnity claims rate.”

There were 76,015 private self-insured claims last year — 1,542 fewer claims than in the 2012 initial report. However, “with the number of covered employees down, the private self-insured claim frequency rate held steady,” the report explains, “coming in at 3.64 claims (2.22 medical only and 1.42 indemnity) per 100 employees — almost identical to the 2012 rate of 3.65 claims (2.33 medical only plus 1.32 indemnity) per 100 employees.”

Looking at aggregate claim frequency rates from 2004-13 shows most of the decline in frequency occurred after the 2002-04 legislative reforms. For the last nine years the frequency rate has remained below 4 claims per 100 covered employees, the report says. Most of the fluctuation reflects changes in medical-only claim frequency even though “in 2013, indemnity claim frequency registered the biggest increase in the past 10 years while the incidence of medical-only claims declined.”

The OSIP data shows the number of indemnity cases reported in 2013 was 29,573 — up from the 28,065 cases in 2012 and higher than the 29,026 cases reported in 2011.

In terms of loss payments, the total as of the end of last year for private self-insureds was $180.9 million, or 2.8 percent less than in 2012. The total incurred — paid losses plus reserves for future payments — was 580.5 million for 2013, about 14.1 million or 2.4 percent lower than the initial incurred amount reported for 2012 claims.

CWCI’s analysis of more developed data confirms that reductions in average loss per claim combined with lower claim volume to push losses to a post-reform low in 2005. “By 2006, however, both average paid and average incurred losses began to trend up sharply, driving up private self-insured’s total losses even as claim volume continued to fall,” the report explains.

Nancy Grover is co-Chair of the National Workers’ Compensation and Disability Conference and Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at riskletters@lrp.com.
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Sponsored Content by ACE Group

5 & 5: Rewards and Risks of Cloud Computing

As cloud computing threats loom, it's important to understand the benefits and risks.
By: | June 2, 2014 • 4 min read
SponsoredContent_ACE

Cloud computing lowers costs, increases capacity and provides security that companies would be hard-pressed to deliver on their own. Utilizing the cloud allows companies to “rent” hardware and software as a service and store data on a series of servers with unlimited availability and space. But the risks loom large, such as unforgiving contracts, hidden fees and sophisticated criminal attacks.

ACE’s recently published whitepaper, “Cloud Computing: Is Your Company Weighing Both Benefits and Risks?”, focuses on educating risk managers about the risks and rewards of this ever-evolving technology. Key issues raised in the paper include:

5 benefits of cloud computing

1. Lower infrastructure costs
The days of investing in standalone servers are over. For far less investment, a company can store data in the cloud with much greater capacity. Cloud technology reduces or eliminates management costs associated with IT personnel, data storage and real estate. Cloud providers can also absorb the expenses of software upgrades, hardware upgrades and the replacement of obsolete network and security devices.

2. Capacity when you need it … not when you don’t
Cloud computing enables businesses to ramp up their capacity during peak times, then ramp back down during the year, rather than wastefully buying capacity they don’t need. Take the retail sector, for example. During the holiday season, online traffic increases substantially as consumers shop for gifts. Now, companies in the retail sector can pay for the capacity they need only when they need it.

SponsoredContent_ACE

3. Security and speed increase
Cloud providers invest big dollars in securing data with the latest technology — striving for cutting-edge speed and security. In fact, they provide redundancy data that’s replicated and encrypted so it can be delivered quickly and securely. Companies that utilize the cloud would find it difficult to get such results on their own.

4. Anything, anytime, anywhere
With cloud technology, companies can access data from anywhere, at any time. Take Dropbox for example. Its popularity has grown because people want to share large files that exceed the capacity of their email inboxes. Now it’s expanded the way we share data. As time goes on, other cloud companies will surely be looking to improve upon that technology.

5. Regulatory compliance comes more easily
The data security and technology that regulators require typically come standard from cloud providers. They routinely test their networks and systems. They provide data backups and power redundancy. Some even overtly assist customers with regulatory compliance such as the Health Insurance Portability and Accountability Act (HIPAA) or Payment Card Industry Data Security Standard (PCI DSS).

SponsoredContent_ACE5 risks of cloud computing

1. Cloud contracts are unforgiving
Typically, risk managers and legal departments create contracts that mitigate losses caused by service providers. But cloud providers decline such stringent contracts, saying they hinder their ability to keep prices down. Instead, cloud contracts don’t include traditional indemnification or limitations of liability, particularly pertaining to privacy and data security. If a cloud provider suffers a data breach of customer information or sustains a network outage, risk managers are less likely to have the same contractual protection they are accustomed to seeing from traditional service providers.

2. Control is lost
In the cloud, companies are often forced to give up control of data and network availability. This can make staying compliant with regulations a challenge. For example cloud providers use data warehouses located in multiple jurisdictions, often transferring data across servers globally. While a company would be compliant in one location, it could be non-compliant when that data is transferred to a different location — and worst of all, the company may have no idea that it even happened.

3. High-level security threats loom
Higher levels of security attract sophisticated hackers. While a data thief may not be interested in your company’s information by itself, a large collection of data is a prime target. Advanced Persistent Threat (APT) attacks by highly skilled criminals continue to increase — putting your data at increased risk.

SponsoredContent_ACE

4. Hidden costs can hurt
Nobody can dispute the up-front cost savings provided by the cloud. But moving from one cloud to another can be expensive. Plus, one cloud is often not enough because of congestion and outages. More cloud providers equals more cost. Also, regulatory compliance again becomes a challenge since you can never outsource the risk to a third party. That leaves the burden of conducting vendor due diligence in a company’s hands.

5. Data security is actually your responsibility
Yes, security in the cloud is often more sophisticated than what a company can provide on its own. However, many organizations fail to realize that it’s their responsibility to secure their data before sending it to the cloud. In fact, cloud providers often won’t ensure the security of the data in their clouds and, legally, most jurisdictions hold the data owner accountable for security.

The takeaway

Risk managers can’t just take cloud computing at face value. Yes, it’s a great alternative for cost, speed and security, but hidden fees and unexpected threats can make utilization much riskier than anticipated.

Managing the risks requires a deeper understanding of the technology, careful due diligence and constant vigilance — and ACE can help guide an organization through the process.

To learn more about how to manage cloud risks, read the ACE whitepaper: Cloud Computing: Is Your Company Weighing Both Benefits and Risks?

This article was produced by ACE Group and not the Risk & Insurance® editorial team.


With operations in 54 countries, ACE Group is one of the largest multiline property and casualty insurance companies in the world.
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