Dan Sulzner, loss control representative, Midwest Employers Casualty Company, Chesterfield, Mo. An improving economy also comes as good news to safety and health professionals. As Sulzner relates, they were among the first to be let go and likely the last to be brought back to many companies.
"Safety is often a staff function, of HR or even production," he says. "Unfortunately, being one of those staff-type positions, if someone has to be cut, it's easier to cut safety first."
The elimination of many safety professionals in the last couple of years has taken its toll on the workplace. Sulzner says, for example, training on lockout/tagout many have been reduced to a 15-minute video.
"When you see other people get laid off, people want to do whatever they need to make a good impression. If that means they have to cut a few corners on safety, they'll do that," he says. "Many times a person doesn't lock out a major piece of equipment, and he losses his arm. He's not green; he's been on the job for 35 years."
Sulzner believes companies have started to turn the corner on reduced safety efforts. Those that are not yet rehiring professionals are at least turning to consultants for help.
Going forward, many employers may look to safety efforts as a means of cost containment. He says employers are starting to take a closer look at their facilities with high injury rates and holding managers accountable.
"They'll say, 'if I have a few locations I may look at my worst and allocate the costs associated with these claims back to these locations.' Maybe implement a chargeback system in an effort to make responsible those parties that actually have those losses," he says. "It could help the return-to-work process."
Mark Walls, AVP-Claims, Safety National, St. Louis.
A hardening market, state reforms, and legislation addressing undocumented workers will likely prevail later this year, Walls predicts. The system is at a crossroads, and there's ample evidence that rates will turn around soon.
"Look at what's happened in the last couple of years," he says. "Premiums have been holding flat. Loss ratios in several states have been over 100 percent for several years. Major carriers announced they are pulling back in the workers' comp space. All leads me to believe that we have to be near the end of this soft market cycle and rates will start to climb."
The economic realities hitting individual states will likely drive workers' comp reforms, he says. In Illinois, newly introduced legislation would impart significant changes to the workers' comp system.
"There's a recognition that you can't grow the economy in your state without creating jobs and it is difficult to create jobs in your state if your workers' comp system is viewed as having some of the highest costs in the country," he says. "That's one end of the spectrum."
At the other end of the spectrum is California, in which former Gov. Schwarzenegger vetoed repeated attempts to undo some of the reforms enacted several years ago. The election of Jerry Brown has created what Walls calls the fear factor.
"Everyone knows those bills are going to come through again, but what will Brown do? Nobody knows," he said. "If they were to enact reforms that significantly increase costs for employers, it could have a huge ripple effect on rates across the country."
Legislation addressing benefits to illegal aliens may also take center stage this year. Walls notes two states -- Montana and Georgia -- have proposals to deny benefits to undocumented workers.
"It's a very emotional, very political issue," he said. "I'm not sure how much of an impact it actually has on workers' comp."
Carla Wynn, associate vice president, strategic claims management, claims management, Aramark Corp., Philadelphia.
The increased severity despite decreasing frequency has prompted Wynn and her team to consider the drivers. She believes it may be a trickle-down effect of the economy into the workers' comp system.
"You've got some large states, such as California, continuing with furloughs. What does that mean?" she says. "If judges aren't hearing as many cases, it's tending to have an impact on claims duration."
Someone waiting to go to court is continuing to get their workers' comp benefits, she explains. "What's happening is closure ratios, the ability of a third-party administrator to close claims, has slowed and costs are starting to eek up as a result."
The aging workforce has also likely played into increased severity. Companies that have downsized have kept their more senior workers, many of whom are older.
"Typical frequency among those workers is low, so we don't have that many injuries," she says. "But when those folks do get injured, they're more costly."
Finally, Wynn says they are also somewhat perplexed by an increase in utilization among ambulatory and outpatient surgical centers. "A fractured ankle two years ago didn't have as many post-op visits," she says. "Utilization has gone up in the last year or so."
Coming up, Wynn is among those who believe discount-driven medical provider networks may become less in vogue. "I think we're going to see many more managed care companies and TPAs change their model from broad based PPO offerings to more outcomes based networks," she says. "The pendulum has started to swing in that direction."
Read more at the WorkersComp Forum homepage.
March 21, 2011
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