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The State of the Labor Shortage in the Oil and Gas Sector

March 14, 2020

Although the oil and gas industry is an integral part of global commerce, it may come as a surprise to many that this industry faces significant challenges, including economic downturns, increasing exploration and production costs, and decreased reliance on fossil fuels. Perhaps the biggest challenge within this industry is that of recruiting and retaining skilled workforces. U.S. Risk Underwriters, a leading specialty lines underwriting manager, knows that to overcome this challenge, the oil & gas industry must take the steps needed to find, train, and retain skilled laborers. By failing to address the labor shortage, energy producers face threats to business continuity, not to mention skyrocketing expenses.

Why is There a Labor Shortage in the Energy Sector?

In 2019, Accenture Strategy conducted a study on the oil and gas industry and the growing labor shortage. The report produced by the firm indicated that the energy industry will face a shortage of up to 40,000 qualified employees by the year 2025.

Several factors have contributed to the labor shortage within the energy production sector. The underpinnings for this labor shortage began during the economic downturn taking place in 2014-2015. At that time, the oil and gas industry slashed its workforce, cutting nearly half a million jobs in the process. Boom and bust cycles since then have alternately expanded and contracted the industry workforce.

Until very recently – with the global COVID-19 pandemic reducing oil and gas demands — the energy industry was seeing substantial increases in demand on both the production and consumption levels, and these demands spurred hiring surges. Unfortunately, the experiences of the past have led to a decline in skilled laborers. Many workers who were forced out of the industry in 2014 went back to school or took on jobs in other markets. In other cases, where production demand is strong, the talent market is saturated, making it difficult for even the largest energy producers to find skilled workers.

Other factors influencing the labor shortage include:

• High turnover rates, especially as energy producers poach employees from rival firms by hiking wages to encourage recruitment.
• A shrinking talent pool, with many workers seeking more stable employment or retiring from the industry.
• Production tariffs creating economic uncertainty within the industry.
• A reduction in qualified candidates coming from schools and universities.
• Hiring delays, even when qualified candidates are identified and recruited.

Overcoming Recruitment Challenges in the Energy Sector

The oil and gas industry regularly experiences a boom and bust cycle, alternately expanding and contracting the workforce as energy market demands fluctuate. Even when the market is booming, recruitment and retention can be challenging for even the most dedicated talent manager. Employee shortages represent a business risk, according to U.S. Risk Underwriters and other energy industry partners. These risks can negatively impact production, resulting in significant economic hardships. Faced with labor shortage challenges, including a lack of qualified individuals, talent recruiters must be willing to leverage new strategies to find and attract top talent. These strategies include:

• Eliminating focus on saturated markets: Many energy production companies attempt to recruit from geographic areas with saturated employment markets, such as areas with existing oilfields or oil-producing shales. To counter this saturation, recruiting from outside the region can bring in new talent.
• Increasing attention on industries with transferable skill sets: Savvy talent recruiters have discovered untapped pools of candidates when they look outside the energy industry itself. Individuals with transferable skills, such as sales and business development, technical/engineering experience, or management, can easily make the transition to the oil and gas sector.
• Improving candidate training programs: Training programs, particularly those that allow for employee/staff development, have been shown to increase recruitment and retention rates among companies which take advantage of them. The energy industry is no exception; when employees feel as if their needs are being met, they are more likely to remain in a position.
• Utilizing technology for recruitment: Energy companies have a variety of digital tools that can be leveraged to attract top talent and to retain them once they have been recruited. Social media, cloud-based collaborative environments, and even training/development programs developed by peer groups and streamed online have been shown to improve recruitment and retention rates.

By thinking outside the box, and by taking advantage of new recruitment tools and strategies, the oil and gas industry will be able to meet workforce demands. Overcoming the challenges posed by the labor shortage is paramount to the continued success of this sector, regardless of economic conditions or market forces. ◼

Claims, Hazards, and Trends in the Oil and Gas Industry

March 3, 2020

The global energy industry is one of the most important parts of the world economy. Consumers and businesses alike depend on the production of oil and gas for transportation, heating, and manufacturing. New oilfields and gas deposits are continually discovered, helping to secure a stable energy future for the world’s producers and those who rely on energy production. The oil and gas industry is known for significant risk exposures, however, and specialty insurance providers like U.S. Risk Underwriters know that insurance claims in this industry can be complex. Here is an in-depth look at some of the potential hazards faced by the energy, oil and gas industry and the trends that are shaping the industry’s insurance future.

Hazards in the Oil and Gas Production Industry

The oil and gas production industry has long been known for certain risk exposures – exposures that have proven costly for the companies that specialize in energy exploration and production. Environmental incidents have cost billions of dollars in litigation and cleanup expenses, and with new technologies being adopted by the industry, even more potential hazards have come into existence. Some of the most common hazards in the energy industry include:

• Well blowouts
• Drilling rig damage
• Explosions and fires
• Subsurface/subsea pollutant discharges
• Injuries or deaths of production workers
• Contamination of waterways and water aquifers

One of the emerging risks faced by the energy production industry is centered on the production process known as hydraulic fracturing, commonly referred to as “fracking”. After an oil or gas well is drilled, high-pressure mixtures of water and chemicals are pumped into the well to release petroleum products from the rock. The petroleum is then collected at the surface. Because fracking is relatively new, some of the risks associated with this method are poorly understood. Risks associated with fracking include:

• Earthquakes
• Chemical pollution of potable water supplies (aquifers)
• Collapse of subsurface rock formations

In 2019, a fracking operation in China led to a series of earthquakes that killed two individuals and destroyed numerous homes and businesses. The incident incurred about $2 million in losses and caused operations to cease. Similar incidents have affected communities in the United States and in Europe. In portions of the United Kingdom, fracking has been banned until suitable risk management practices are developed.

Emerging Risk Management Practices

Oilfield workers are perhaps the most important part of energy production. While automated equipment has reduced some of the risks associated with energy production, workers are still called upon to undertake many operations that have the potential to cause injury. Energy production workers are at risk of slip and fall injuries, electrocution, burns, and crushing injuries, not to mention repetitive-use injuries that can interfere with health and safety of affected workers. One of the emerging risk management practices in this industry has been the adoption of ergonomics, or the practice of designing workplace equipment and systems to reduce injury. Ergonomics have the potential to dramatically reduce injury claims in the energy industry. The solutions for this sector include:

• Training employees on safe working practices.
• Identifying potential risks, then reducing or eliminating those risks.
• Implementing ergonomic equipment and workplace layouts to improve safety, comfort, and function.
• Ensuring the presence of signage and lighting to alert workers of hazards.
• Establishing ergonomics policies at all levels of the operation.

By reducing the chance of injury, energy production companies can also reduce injury claims, thereby saving money on insurance premiums. Protecting workers from injury should be the foremost consideration in any industry, but are especially important in the hazardous work environments of the energy sector.

The Need for Specialized Knowledge in the Energy Insurance Sector

The energy production industry is made up of complex interconnected parts that must all function smoothly in order to meet demands. Because this industry is so complex – and because insurance claims may run into the millions or even billions of dollars – it demands specialized knowledge on the part of insurance professionals. U.S. Risk Underwriters and other firms must possess a thorough understanding of the oil and gas industry, including:

• Upstream and downstream exploration and extraction systems
• Equipment considerations
• Explaining policy language
• Adjusting insurance claims
• Environmental and safety risks associated with energy production

Successful insurance professionals serving the energy industry must be well-versed in all aspects of production, from initial drilling of wells to the production practices, transportation of products, and abandonment of wells when their service lives have been completed. Claims processing for this industry requires the ability to work with disparate interests, including insurance carriers, brokers, and insureds.

The world depends on the production of oil and gas to drive commerce and to support economies in every community. By adopting industry best practices, the energy industry can continue to perform its vital role while protecting workers and the environment from risks. ◼

Cyber Liabilities in the Financial Sector

February 24, 2020

Across industries, cyber crimes are on the rise. As businesses shift to digital systems for managing data, personnel, and customer records, cybercriminals have increasingly targeted these systems. The financial sector was especially hard-hit in 2019, with numerous highly-publicized data breaches and cyberattacks well in excess of any other industry. U.S. Risk Underwriters, a specialty provider of risk management solutions for various industries, believes that financial institutions need to understand cyber liabilities to better protect their assets and their customers’ sensitive data from loss. By understanding the risks, financial firms can implement the risk management solutions needed to reduce exposure to cyber threats.

Cyber Attacks on Banking Institutions

Attacks by cybercriminals on the financial sector have increased in recent years, and have accounted for billions of dollars in losses. This sector was the target of over 25% of all malware attacks in 2019, well above percentages in any other industry. Attacks have ranged from relatively small to those that have national or even international ramifications. Two attacks on a smaller bank in Virginia in 2016 and 2017 netted criminals over $2 million alone; criminals were able to gain access to customers’ debit card numbers, allowing them to make unauthorized ATM withdrawals across the United States.

Money is not the only target of criminals – consumer data is often just as lucrative. Financial institutions such as JPMorgan, Heartland Payment, and credit monitoring giant Equifax were all targeted by cyber criminals within the past decade, resulting in the theft of hundreds of millions of customer records. Industry analysts have calculated the per-record cost of losses at $336; when millions of records are stolen in a cyber breach, the numbers add up quickly. In addition to the records themselves, totaling billions of dollars in losses, companies victim to cyber criminality must often pay for forensic investigations, consumer credit monitoring, and regulatory penalties, costing millions of dollars more each year.

Common attacks against financial institutions include:

• Malware/Trojans: Illicit programs or code inserted into banking computer systems, including mobile banking apps and ATMs.
• Distributed Denial of Service (DDoS): Flooding banking systems with fake requests, in effect making the whole system come to a grinding halt and interrupting business continuity.
• Ransomware: Attackers hold data hostage with release contingent upon payment of a ransom fee.
• SMS verification code intercepts: Criminals gain access to customer accounts by intercepting the verification codes sent by text during mobile banking operations.
• Social engineering hacks: Criminals posing as fellow employees convince banking officials and clerks to reveal system passwords, allowing these criminals to gain access to internal computer systems.
• Card skimmers: Devices used to steal customer data from magnetic strips on ATM cards.

Fighting Cyber Criminality in the Financial Sector

The foundation of any risk management strategy in the business world is liability insurance. Financial institutions are no exception; they rely on general and professional liability insurance to cover against many risks. Cyber liability insurance is a more recent development, with hundreds of insurers and brokers, including U.S. Risk Underwriters, offering this unique form of insurance protection. Cyber liability insurance covers losses associated with data breaches or monetary theft resulting from cyber criminality, and the recovery efforts needed to protect consumer data. These policies typically also include coverage for business interruption.

Financial institutions like banks and investment firms need to implement other risk management strategies in the face of cyber threats. These strategies can include:

• Routine monitoring of computer systems for unauthorized access.
• Updating hardware and software to the latest security standards.
• Implementing multi-factor authentication protocols for mobile banking apps and online banking services.
• Adding new technologies, such as chip cards and dynamic customer verification, to thwart criminals.
• Training employees on safe computing practices, including avoiding falling for phishing or social engineering hacks.

With a proactive approach to security, and with the protection of cyber liability insurance solutions by U.S. Risk Underwriters and other insurance firms, financial institutions can work to prevent expensive losses related to computer crimes. The annual savings alone make it worthwhile to pursue cyber security in the financial sector – companies may save millions or even billions of dollars while maintaining consumer trust in these important financial institutions. ◼

The Risk of Employee Theft and Crime in Financial Institutions

February 11, 2020

Financial institutions around the world face significant risks in their operations – both externally and from within. Employee theft and crime, including fraudulent activities, are believed to be the largest risks banks and other financial services firms face. Despite numerous safeguards, financial institutions are vulnerable to criminal activity of employees, who often have access to customer accounts as well as transaction and personal data that can be used for illicit means.

The Threat from Within: Employee Crimes in Banking and Finance

In 2018, the Association of Certified Fraud Examiners (ACFE) published Report to the Nations: 2018 Global Study on Occupational Fraud and Abuse. This study covered employee fraud across 24 industries, but the financial services sector was especially hard-hit by fraud committed by those working within organizations. Employees committing theft or fraud in banking ranged from bank tellers to executives and board officers.

The average loss to financial institutions was about $110,000 per employee fraud case in a period from January 2016 to October 2017; a total of 366 cases was tallied in this period by the ACFE. Millions or even billions of dollars in losses are at stake. Common crimes committed by employees in the financial services field include:

• Skimming funds from inactive accounts.
• Monitoring activity of customer accounts, then skimming funds from those perceived as unmonitored (typically those owned by elderly customers).
• Creating fraudulent accounts using stolen personal information from customers, then using these accounts as repositories for skimming operations.
• Artificially inflating or adjusting sales figures to collect sales rewards.
• Reversing the fees from non-sufficient funds charges, then redirecting those refunds to personally created fraudulent accounts for access by the employee.
• Selling personally-identifying information, including bank account, Social Security, and credit card numbers to criminals for profit.
• Counterfeiting documents for the purposes of creating or accessing accounts.

Employee theft and crime does not only result in financial losses. The reputational damage to financial institutions can be staggering, resulting in loss of business continuity and potentially billions of dollars in regulatory penalties and lost sales, not to mention a severe loss of confidence among customers.

Controlling Employee-Related Crime in Financial Institutions

Faced with threats from employee criminal activity, financial institutions have turned to technology solutions to combat fraud. Employee monitoring can take several forms in banking institutions, including surveillance cameras as well as automated fraud monitoring programs. Automated transaction and account monitoring typically looks for activities such as:

• Unusual account access, particularly those accounts that have been dormant for months or years as well as access outside of normal business hours or from locations outside the institution.
• Unusual account activity, including frequent transfers of funds away from accounts or transactions occurring at strange times of the day or night.
• Ledger transfers to employees’ personal accounts.
• Any transfers from customer accounts to employee personal accounts.
• Excessive cash deposits or transactions occurring in employees’ personal accounts.
• Automated account monitoring systems are very sophisticated, and can identify many fraudulent activities. They are not foolproof, however, and financial institutions need to take additional precautions to thwart criminal activity.

Know Your Employee Programs: Stopping Criminal Activity in Financial Institutions

In recent years, financial institutions the world over have implemented so-called “Know Your Employee” (KYE) programs to combat fraudulent activity. The goal of these programs is to identify certain risk factors centered on employees, including:

• Employee working backgrounds
• Susceptibility to embezzlement or money laundering schemes
• Conflicts of interest
• Credit and financial histories, including significant debt or personal business losses
• Criminal histories

It can be argued that the best way to prevent employee theft is to carefully evaluate employees before they are hired. In the financial services field, extensive criminal and financial background checks are an integral part of the risk management process. U.S. Risk Underwriters and many other insurance industry experts agree that by weeding out employment candidates with criminal histories, fraud can be reduced.

KYE programs are not only for prospective employees, however. Smart financial institutions will also use these programs to continually evaluate and monitor current employees, including those in leadership and management roles. These practices go hand in hand with automated account monitoring, and together can reduce the financial and reputational impacts financial institutions face as a result of employee-related crime. ◼

Breaking Down Financial Institution Bonds

February 4, 2020

Financial institutions face many risks in their business operations, including risks that come from both external and internal sources. One of the primary emerging internal risks plaguing the financial services industry is that of employee dishonesty, which can take several forms. While many safeguards are in place, risk management experts like U.S. Risk Underwriters know that certain types of insurance policies can protect against the illegal acts employees commit in financial institutions. These policies are referred to as financial institution bonds. Here is a look at financial institution bonds, how they work, and what they mean for business continuity in the financial industry. 

Before delving into financial institution bonds and how they work, it can be valuable to understand a broader category of business insurance known as fidelity bonds. In simple terms, fidelity bonds protect against the monetary or physical losses resulting from employees’ fraudulent activity. Fidelity bonds provide coverage for a range of losses, including:

• Employee theft
• Employee forgery
• Embezzlement
• Fraudulent trading practices

Financial institution bonds are a form of fidelity bond, or a type of business insurance designed to protect companies in the financial services field. In addition to providing coverage for the risks illustrated above, financial institution bonds also provide loss coverage for fraudulent account activity, such as employees creating false customer accounts or skimming from inactive existing accounts. There are four main types of financial institution bonds, each designed for specific financial entities. The four main financial institution bonds are:

• Form 14: For investment banks and companies, stock exchanges, stock brokerages, and mutual funds, among others.
• Form 15: For loan and small-business finance companies as well as mortgage and real estate investment trusts.
• Form 24: For commercial banking on the national level as well as for U.S. subsidiaries of foreign banks, trust companies, title insurance companies, and similar large-scale financial operations.
• Form 25: For insurance companies and reinsurance firms. 

According to the Association of Certified Fraud Examiners (ACFE) in their groundbreaking study entitled Report to the Nations: 2018 Global Study on Occupational Fraud and Abuse, the financial services sector is especially susceptible to fraud, facing billions of dollars in losses each year due to illegal employee activity. Financial institution bonds, then, offer a counterpunch to rising levels of employee fraud. 

Banker’s Blanket Bonds: Unique Fidelity Bond Coverage

In addition to financial institution bonds as a means of insurance protection for companies in the financial services industry, there is another fidelity bond option. This is called the Banker’s Blanket Bond, or BBB. These bonds are obtained from insurance brokers like U.S. Risk Underwriters and many others. Just like other fidelity bonds, they provide coverage against losses resulting from dishonest or illegal employee activity.

Banker’s blanket bonds typically provide coverage against:

• Financial losses from employee forgery
• Cyber fraud
• Damage or loss of physical property
• Extortion
• Dishonest employee acts

The key difference with banker’s blanket bonds is that coverage is only provided if employees have committed dishonest acts for personal gain. In other words, dishonest or fraudulent acts committed to make the financial institution appear more financially stable are not covered. Banker’s blanket bonds are also considered first-party insurance, as they cover the institution and its assets itself, not the assets of account holders or shareholders. In many states, these bonds and other forms of fidelity bond protection are required by law. In other states, while not required, financial institution bonds offer valuable protection for business interests and the assets held by financial firms. 

It is important to understand that fidelity bonds, particularly financial institution bonds, are not credit insurance. These insurance protections do not offer credit to the financial firm, nor do they assume the credit risks of borrowers affected by fraudulent employee activity. Many financial institutions will also opt for specialized credit insurance to fill the coverage gaps inherent in financial institution bonds and other fidelity bonding solutions. ◼

Important Workers’ Compensation Coverage Considerations for 2020

January 21, 2020

Workers’ compensation insurance and other forms of occupational insurance are part of the business landscape for thousands of employers. Typically required by state regulations, these valuable insurance options provide protection for both employees and the companies they work for. At their best, occupational insurance plans like workers’ comp provide financial support in case of workplace-related injury or illness, helping to cover the medical expenses and lost wages of employees injured on the job. As with any government regulations, changes for 2020 may affect workers’ comp and related workplace safety programs. Here is a look at the trends and changes business owners need to know as we enter into the new year.

Trends in Workers’ Comp Fraud and Billing Errors

At the 2019 National Workers’ Compensation and Disability Conference and Expo (NWCDC), leading occupational insurance regulatory professionals spoke at length about some of the most important trends in 2019 and into 2020. One of the most prominent was that of fraud. In a panel discussion entitled “Regulatory Compliance Trends for 2019 and Beyond”, billions of dollars in losses due to workers’ comp fraud and associated medical billing errors were reported in 2019. Some of the most common areas of fraud were:

• Insufficient documentation of employee injuries
• Invalid or falsified diagnoses of injuries
• Mismatching of ER services
• Up-coding or billing out of order

In many cases, medical billing errors were not the result of fraudulent activity. Still, regulators are concerned that the high rates of errors indicated that fraud is occurring and may be hard to spot.

Medical Marijuana Trends: Clouds of Confusion

With more states passing legislation legalizing medical marijuana and even recreational marijuana use, worker’s compensation program administrators have faced new challenges. A major part of the confusion surrounding marijuana use for employers is the disconnect between state and federal legality; while in many states, marijuana use is legal, it remains illegal on the federal level.

Complicating matters further is that courts have been inconsistent in their rulings regarding employees’ use of marijuana for medical purposes, even when such use was under the care of a qualified medical professional. Occupational insurance industry analysts suggest that confusion will continue well into 2020, but recent federal legislative efforts may finally erase some of the challenges employers experience when balancing employee safety and medical care for injured workers.

Presumption Laws: Expanding Coverage for At-Risk Workers

In 2019, new laws changed how workers’ compensation benefits applied to workers in the public sector. Presumption laws were originally enacted to benefit first responders such as law enforcement officials and fire/rescue personnel. In simple terms, any diseases or injuries occurring are presumed to be work-related, provided there is no compelling evidence to the contrary. Rising cancer and respiratory disease rates among first responders spurred the passage of these laws.

2019 was significant for the occupational insurance industry because presumption laws are now expanding into other industry sectors, not only for public servants like teachers and corrections staff but also personnel who maintain vehicles and other equipment. Certain states – particularly Colorado and Georgia — have enacted lump-sum payouts to cover the costs associated with medical expenses in diseases like cancer or PTSD rather than providing benefits through the state workers’ comp benefit program.  It is expected that other states will pursue new presumption laws and lump-sum benefits programs in the coming year.

Pricing: Good News for Employers

The occupational insurance industry has seen substantial changes in pricing and availability in 2019. According to panelists sponsored by the Marsh Workers’ Compensation Center of Excellence, workers’ comp pricing declined by an average of 5% in the later part of 2019. In addition, employers in excess of 70% reported renewals at previous years’ costs or even less.

One of the drivers of this trend is the increased availability of plans. Many commercial insurers are adding workers’ comp plans to help balance declining profits, particularly in general liability and automotive insurance sectors. This is a complete reversal from trends in years past, when some of the largest insurers shunned workers’ comp, fearing regulatory hurdles and poor profitability.

Another driver for lower costs of occupational insurance is the adoption of safety-oriented workplace cultures across industries. Safety programs have been proven to reduce injury rates, thus reducing claims against workers’ comp policies. This trend should continue into 2020 and beyond. Employers are gaining a return on investment in these safety programs and are enjoying better pricing of insurance as a result. ◼

How Sleep Impacts Workers’ Compensation Claims

January 14, 2020

It’s no surprise that America’s workforce is fatigued. Long hours on the job and the demands of family life have created situations where workers have become overtired. Tired workers are more likely to make mistakes on the job, and these mistakes can result in injury. Chronic lack of sleep has also been pinpointed as a cause for numerous health concerns. In all, the lack of sleep among America’s workers has led to a rise in workers’ compensation claims. Occupational insurance plans like workers’ comp provide benefits for those employees injured at work, but it is imperative for business owners and managers to understand the relationship between poor sleep habits and an increase in injury claims.

Sleep Deprivation and Chronic Tiredness

According to an investigative article published by the Huffington Post, it is estimated that up to 40% of Americans are not getting enough sleep. Adequate sleep is defined as seven or more hours of uninterrupted sleep each night. When workers are not adequately rested, certain effects manifest themselves:

• Poor sleep habits are directly related to chronic illnesses like heart disease, diabetes, obesity, and high blood pressure.
• Those not getting adequate sleep are far more likely to have cognitive impairments going beyond grogginess; sleep deprivation can cause long- and short-term memory loss, poor decision-making abilities, motivation, and lack of attention.
• Tired people are estimated to cause up to 100,000 motor vehicle accidents each year in the U.S., resulting in thousands of injuries and as many as 1500 deaths annually.
• Overtired workers may make critical errors and mistakes. One research article published in the Archives of General Psychiatry suggests that insomnia/lack of adequate sleep results in nearly 275,000 workplace accidents each year and costs companies in excess of $30 billion in injury claims. An estimated $63 billion in lost productivity further points to the need for business owners to address tired workers.

These effects are aggravated by the sheer numbers of people suffering from a lack of sleep. The U.S. Centers for Disease Control and Prevention (CDC) estimate that 50-70 million adults in the United States have some type of sleep or wakefulness disorder. These staggering numbers point to sleep deprivation as not only a public health and safety concern, but also a dangerous risk for businesses across the country.

Occupational Insurance Claims on the Rise

Employers throughout the United States are faced with rising injury claims on workers’ comp and other occupational insurance policies. An analyst for insurance company MetLife estimates that companies pay an additional $1200 in medical and lost wage costs per sleep-deprived employee each year.

With almost 275,000 workplace accidents related to lack of sleep among employees each year, many resulting in injuries to workers, insurance costs have skyrocketed. Premiums for occupational insurance plans are tied to the number and frequency of claims, among other factors. For companies that experience high levels of sleep-deprived workers, these costs can quickly become overwhelming.

Combatting the Risks of Tired Employees

Thankfully, industry analysts believe that implementing solutions for chronically-tired workers is one of the easiest things to address, and by doing so, employers can improve employee health and productivity. Solutions for employers include:

• Training employees on proper “sleep hygiene” practices, such as following sleep routines, avoiding caffeine, alcohol, and heavy meals before bedtime, managing stress, and seeking medical help when needed.
• Implementing routine rest breaks for employees. This includes meal and other breaks spaced out over the morning and afternoon.
• Setting maximum work hour limits – in a culture that prides itself on working long hours, this aspect can be difficult for employers to implement, but the struggle is worth the payoff in the end. Work hour limits can be set for either daily or weekly maximums. Workers who feel that employers are addressing the work/life balance report increased job satisfaction, and that ultimately influences worker retention rates.
• Providing compensatory time for employees – employees who must work additional hours or shifts should be given compensation hours. This serves as an incentive to take breaks away from work, which can help improve productivity while reducing on-the-job tiredness and the accident risks associated with tiredness.

By combatting sleep deprivation in workers, employers can help better protect employees from injuries and illnesses. These solutions also keep overhead costs in check, such as occupational insurance claims and annual premiums. Together, employers and employees can find ways to finally beat sleep deprivation, benefitting both groups and ensuring a productive and safer workplace. ◼

Workers’ Compensation and Long-Term Occupational Illnesses and Injuries

January 7, 2020

Workers’ compensation and other forms of occupational insurance provide financial support for employees injured in the course and scope of their duties. Nearly every state requires employers to carry some form of this valuable insurance, which is designed to cover the costs associated with lost wages, medical expenses, and in some cases, long-term disability. Each occupational insurance policy is different, however, and both employers and employees must better understand the potential limitations of coverage for injuries and illnesses resulting in the need for long-term care.

Long-Term Injuries and Illnesses: Occupational Insurance Coverage

It is a common misconception that workers’ compensation insurance only covers employees who have an accident at work. Injuries and illnesses do not have to be caused by an accident for the employee to be eligible for coverage under state occupational insurance statutes; injuries resulting from repetitive stress or motion are typically covered by most states’ plans. Illnesses received from workplace conditions, such as exposure to environmental or chemical substances that lead to illness, are also typically covered. These illnesses can include:

• Heart and circulatory system conditions
• Lung diseases such as asthma, respiratory inflammation, and cancer
• Digestive disorders occurring from stress or from environmental/chemical contaminants

Illnesses and injuries received as a result of workplace conditions – both exposure and in repetitive motions – are considered long-term incidents, as symptoms may not appear for months or years. Recovering from these workplace-related illnesses may also take a significant amount of time, necessitating the support of occupational insurance coverage.

Eligibility for Long-Term or Permanent Disability

Workplace-related injuries or illnesses sometimes result in the need for long-term care. In worst case scenarios, such workplace incidents may make the employee unable to return to work. In these cases, workers’ comp insurance may provide long-term or permanent disability benefits. To be eligible for long-term or permanent disability under occupational insurance, the employee must:

• Be able to prove the injury or illness was work-related.
• Demonstrate the nature of the injury or illness and how severe it is.
• Whether the injury or illness makes it impossible for the employee to return to his or her duties, or if certain medical restrictions impair the ability of the worker to go back to work.

Unless the injury or illness was self-inflicted, or such injury/illness resulted from the worker engaging in illegal substance use or activity, workers’ comp typically provides coverage for medical expenses and lost wages. This is also true of injuries/illnesses that result in long-term impairment or disability.

There are two major categories of permanent disability when it comes to calculating benefits: permanent total disability and permanent partial disability. For permanent partial disabilities, there are both scheduled and unscheduled losses. Scheduled losses are those that appear on in state workers’ comp laws, while unscheduled losses do not appear on a state’s list and may be more difficult to calculate. Not all states may use an impairment rating to calculate benefits for unscheduled losses, and may instead measure loss of future earning capacity, wage losses, and factors like age, training, and education.

Claiming a Long-Term Work-Related Injury or Illness

For employees, it can be difficult to pinpoint the causes of an injury or illness, particularly for those exposed to hazardous workplace conditions. Documenting the injury or illness may require the assistance of a qualified medical professional. Other employees in the workplace who exhibited similar symptoms may also be used to gather documentation as proof the workplace itself or prevailing conditions led to the injury.

Each state has different rules governing occupational insurance claims. For employers and employees, the state’s workers’ comp agency may be consulted for specifics. Long-term injuries and illnesses are an unfortunate part of the employment landscape, but injured workers can take comfort in knowing that their medical and long-term care/rehabilitation expenses are covered by many occupational insurance plans. ◼

Trucking and Fleet Risk Management Strategies

December 17, 2019

Among business operations, trucking companies and fleet management firms face some of the most diverse and dynamic risks. Transportation is inherently risky, with many moving parts coming together to transfer cargo and personnel across the country. Unfavorable road conditions, vehicle breakdowns, logistical concerns, weather, regulatory compliance – each of these represents a significant challenge for transportation-oriented businesses. U.S. Risk Underwriters, a leading provider of specialty insurance solutions for the transportation industry, knows that fleets must adopt risk management strategies not only to protect cargo and employees but to minimize the liabilities that can negatively impact future business. 

Foundations of Transportation Risk Management

For trucking and fleet management companies, risk management is a fundamental component of business protection that provides incredible value and flexibility to those companies taking advantage of its potential. In simple terms, fleet risk management is the process by which risks are identified and steps are taken to reduce or eliminate those risks. Every transportation company is different and will have different risk exposures. Still, there are several crucial elements trucking companies and fleet operations should include in risk management, such as:

• Defining organizational responsibilities and leadership roles in managing risks.
• Developing leadership support for the risk management process.
• Creating communication tools/channels for all stakeholders.
• Using risk management practices as a trust-building tool with vendors, staff, and drivers.
• Using risk management to allocate funds appropriately for the risks involved.
• Allowing risk management practices to influence decision-making processes.
• Applying lessons learned across the board, helping to promote a safer, more resilient organization.

Risk Management for Drivers

Drivers form the core of any fleet operation. Their driving practices and adherence to both company policies and state/federal regulations is of the utmost importance; failing to do so could result in significant losses to cargo, vehicles, and personnel. Key risk management strategies for drivers include:

• Maintaining vehicles with routine safety checks.
• Adhering to company-specified following distance practices.
• Avoiding unnecessary roadside risks (traveling in inclement weather, slowing down in work zones, etc.).
• Implementing strict technology rules, such as forbidding the use of mobile computing devices while on the road. Texting and making phone calls while driving is responsible for a sizeable percentage of accidents, yet these incidents are easily avoided by encouraging drivers not to use such devices. 
• Training and retraining on practices like defensive driving and blind-spot detection. 
• Wearing seatbelts when operating vehicles.
• Fostering a safety-oriented culture among drivers and support personnel with rewards systems for maintaining safe practices.

Managing technology-related risks by installing hands-free communication devices is a relatively inexpensive practice that can reduce on-the-road accidents. Making sure drivers are following hours of service rules to combat fatigue-oriented incidents is another great practice, protecting drivers and their cargo from injury or loss.

Drivers and managers alike should be aware of the potential for hefty fines and penalties for noncompliance. Highway safety agencies and the state/federal Departments of Transportation have the authority to levy stiff fines against drivers and fleet companies for violating established standards. These fines can drive up overhead costs, not to mention influencing insurance premiums over time.

Finally, it is important that transportation company owners and leaders stress that nothing is so important that drivers must take risks to meet deadlines. U.S. Risk Underwriters, risk management professionals, and transportation industry experts agree that ignoring risks to satisfy clients when hazards are present is a recipe for disaster. Many drivers feel pressure to spend more time on the road than is safe to meet demands. This is especially true in the winter months when road conditions are poor. Unfortunately, driver stress comes with a heavy cost in terms of accidents and property damage, injury, and deaths. Communicating delays with vendors and suppliers in advance of deadlines can mitigate some of these risks, ensuring that drivers can continue their journeys without the undesirable stress associated with time-sensitive deliveries. ◼

Distracted Driving: A Rising Issue in Transportation

December 10, 2019

The rise of technologies like mobile computing, onboard navigation, and infotainment systems have given rise to new risks on America’s roadways. Distracted driving is a growing issue across transportation sectors, resulting in billions of dollars in injuries, property damage, and lost revenue each year. Transportation insurance brokers like U.S. Risk Underwriters know that fleet managers must understand this emerging risk as a means of combating the expenses and liabilities associated with distracted driving. By gaining an understanding of distracted driving’s impact, transportation-oriented businesses can better protect drivers, vehicles, and cargo from loss.

Distracted Driving by the Numbers

According to the National Highway Traffic Safety Administration (NHTSA), distracted driving is defined as any activity that takes a driver’s attention away from navigating roads safely. Attention can be lost when drivers are eating or drinking, talking to passengers, or by operating music-playing and mapping devices, just to name a few of the many potential distractions available. Within these distractions, texting on mobile devices is perhaps the most common source of driving incidents. 

These incidents have taken a deadly toll on America’s roads. A study of roadway fatalities conducted by the NHTSA showed that:

• 9% of all fatal crashes in 2017 were reported as being caused by distracted driving.
• 3166 people were killed in motor vehicle crashes in 2017 by distracted drivers.
• 434 of the 2017 deaths were the result of cell phone activity while driving, including texting and making calls.
• Of the group of 3166 people who lost their lives in 2017, 599 of the deaths were of non-occupants, such as pedestrians, bicyclists, and others.
• In total, nearly 3000 fatal crashes were caused by distracted drivers in 2017. 

While the numbers are not yet available, transportation safety experts agree that these numbers are expected to rise in the coming years, especially as mobile computing devices become more ubiquitous in daily lives. 

Legal Considerations for Fleet Operations

A patchwork of varying state laws governing the use of cellphones and other mobile computing devices can make adherence to the law difficult. To help streamline this potential source of confusion, the Federal Motor Carrier Safety Administration implemented regulations that forbid all commercial drivers to text or otherwise use hand-held mobile phones while operating vehicles.

Penalties for violating the law may be steep: drivers caught texting while driving can be fined in excess of $2700 per infraction, while trucking companies that require drivers to use hand-held phones may face significant civil penalties – up to $11,000 per incident. While the financial penalties for texting or calling on mobile phones may be shocking, it is important for fleet owners and truck operators to understand that the human toll is far more expensive. Distracted driving can result in serious injury or death for the vehicle driver as well as anyone involved in a crash. 

Establishing a Safety-Oriented Transportation Culture

It is no secret that mobile devices and onboard navigation/infotainment systems have revolutionized the transportation industry. Drivers can now stay in contact with fleet managers and vendors, and they can find their destinations more easily than ever before. All that connectivity comes at a cost, however, and that is the looming risk of distracted driving.

The key to a robust risk management program is understanding risks, then creating solutions. U.S. Risk Underwriters and transportation experts know that implementing safety-oriented cultures can substantially reduce the risks associated with distracted driving. In fact, the subject was a primary topic of discussion at the National Transportation Safety Board’s roundtable discussion in the spring of 2019. Major takeaways and tips from the discussion included:

• Preparing drivers in advance of trips by providing maps, overnight stays, and scheduled rest breaks to minimize reliance on mobile devices.
• Self-correcting/self-policing policies; if drivers observe others using mobile devices while driving, they should take steps to correct those behaviors. 
• Instilling a sense that no load is more important than the safety of drivers and the general public. 
• Implementing hands-free mobile devices wherever possible, knowing that these devices minimize, but do not eliminate, distracted driving.
• Providing training on defensive driving tactics to avoid crashes with other distracted drivers.
• Broaching the subject of distracted driving and its consequences at regular staff/driver meetings. Awareness of the issue is a major part of the battle to overcome this risk. 
• Creating a rewards program for drivers who adhere to company safety policies. 

A few major transportation companies are also adding fleet management systems that predict distracted driving behaviors and help to prevent crashes in the future. The technology behind these systems is still in its infancy, and expenses are keeping many fleet owners from adopting them currently.

Distracted driving will continue to negatively impact property, productivity, and human lives until wholesale solutions are implemented. As the transportation industry adopts safety practices to reduce the effects of distracted driving, America’s roadways will become safer places for everyone. ◼ 

Winter Safety Hazards in the Transportation Industry

December 3, 2019

Winter weather creates unique challenges for the transportation industry. Poor driving conditions, freezing temperatures, and an increased risk of injury are all associated with winter storm activity. The transportation sector already faces numerous risks in its daily operations, and these risks are only compounded in the winter months. U.S. Risk Underwriters, a leading provider of specialty insurance solutions for the transportation industry, knows that fleet owners and operators should be aware of winter-related risks. With this knowledge, drivers and related personnel can be better protected no matter what winter brings. 

Winter Hazards: Risks for the Transportation Industry

Our nation depends on the smooth and efficient flow of goods from manufacturing and shipping centers to end users. The trucking industry bears the brunt of this operation, moving goods on the highways and byways of the United States. When winter approaches, however, this efficient flow can be compromised, putting personnel and cargo at risk. Physical risks are not the only consideration when winter weather threatens; it is estimated that inclement weather costs the industry up to $3.5 billion each year in shipping delays, supply chain interruption, and shortages of goods. 

The primary risk associated with winter weather is unfavorable driving conditions. Winter storms can dump feet of snow and ice on road surfaces, creating hazards that can make transportation all but impossible. Reduced visibility due to blowing snow and rain can interfere with the ability of drivers to see other vehicles on the road, and accidents tend to skyrocket in winter months. Add in slippery road surfaces and it is clear that traveling on roadways can be extremely challenging even for the most experienced vehicle drivers. 

Slip and fall injuries when entering or exiting vehicles also contribute to lost productivity in winter months. Drivers and personnel at shipping/delivery facilities are at risk of injury if storm conditions produce ice and snow. Another winter-related risk is that of “cold stress” injuries; when personnel are subjected to prolonged periods of exposure to freezing conditions, they may develop injuries like:

• Frostbite
• Chilblains
• Hypothermia
• Respiratory inflammation

Overcoming Winter-Related Transportation Risks

The key to successful risk management for transportation-oriented businesses is that of adequate preparation for winter conditions. U.S. Risk Underwriters and other insurers know that by altering operations in advance of winter weather, companies can better handle the risks transporters face during the winter months. 

Unfortunately, many transportation operations must continue regardless of weather conditions. To overcome any issues with shipping delays or shortages, warehouses or distribution centers are a smart solution. Located strategically, these facilities can keep the flow of goods moving to store shelves. Transportation companies should stock warehouses and distribution centers in advance of winter storms.

Drivers who expect unfavorable driving conditions in winter may need to adopt certain safety practices in order to navigate safely. The American Trucking Associations has provided drivers with a series of tips designed to help. These tips include:

• Avoiding extreme conditions whenever possible, using route mapping and weather forecasting tools when storms approach. 
• Removing accumulations of snow and ice from vehicles and facilities to minimize slip and fall hazards and to ensure great visibility on the road.
• Preparing driver emergency kits with salt or sand, shovels, warm clothing, and non-perishable food/water supplies.
• Pulling over and remaining with the vehicle if conditions warrant. Drivers must be comfortable enough to use their own judgment – on-time deliveries simply aren’t worth the risk if conditions are dangerous. 
• Adjusting travel schedules to maximize daylight and to reduce delays associated with winter weather. Leaving early can be the key to minimizing the stress associated with tight delivery schedules. 
• Increasing distance between vehicles on the road and slowing down when traveling, allowing for more time to react to worsening driving conditions. On slick roads, following distances may need to be doubled or even tripled and speed decreased accordingly. 

Finally, communication between stakeholders is critical. Delays due to poor weather conditions are inevitable, so by letting vendors know of any potential delays can help minimize any effects these delays cause. Shipment tracking and monitoring tools provide excellent communication between shippers and vendors and should be leveraged all year long, but especially in wintertime. With these tips and an eye toward safety, transportation companies can continue to provide their valuable services even if road conditions become hazardous during winter. ◼

Challenges in Implementing Risk Management Measures

November 19, 2019

Risk management is a fundamental component of every business or organization. Identifying risk exposures, then creating solutions to help mitigate or reduce those exposures, is an important tactic designed to keep overhead costs in check. U.S. Risk Underwriters, a leading provider of specialty insurance programs for commercial operations, understands that while risk management strategies are critical, implementing these measures can pose significant challenges. In this guide, we will explore some of the challenges business owners face as they create workable risk management plans to protect business assets and employees.

Evolving Challenges in Risk Management

An important part of the business model is to predict any potential changes that will affect operations. In the business world, nothing remains the same for long, with new trends and evolving strategies coming each year. Risk management exhibits the same fluctuations, requiring business owners to forecast the types of risks they may face and preparing accordingly. 

One of the emerging challenges for businesses include the shift to digital service delivery and the data security considerations this model brings. This challenge is often referred to as cyber risk, and its impact on business continuity cannot be overstated. Another is increased compliance oversight on the part of governmental organizations and an ever-increasing level of scrutiny by competitors. 

Other challenges that necessitate risk management practices include:

• Changing economic conditions
• Loss or damage to corporate reputations
• High-profile product recalls
• Acts of terrorism or violence
• Failure to create innovation in a given sector
• Employee attrition, particularly within top talent
• Third-party liabilities

Risk management, then, becomes a type of competitive advantage; forward-thinking companies will use the tools of risk management as a means of getting ahead or staying ahead of their competition. 

Implementing Risk Management: More Challenges for Business Owners

Now that we have a better understanding of the challenges employers face in their daily operations, including evolving risk exposures, it is clear that risk management is a crucial part of the successful business model. Unfortunately, the process of implementing risk management practices in the workplace presents its own share of challenges.

The primary challenge is in recognizing the value of risk assessment. Organizations often focus on day-to-day operations, putting off risk assessments until it is too late. Many companies fail to see the value in identifying risk exposures, particularly from a compliance perspective, yet failing to do so can have catastrophic results in terms of regulatory penalties. 

Data collection and analysis forms the backbone of risk assessment, and many companies have discovered that the sheer volume of data needed to properly evaluate operational risks can be daunting. It takes a top-down approach to accurately leverage data in mitigating risks, methodically evaluating each component until patterns are revealed. It is critical that the “right” data is collected in the process as well. U.S. Risk Underwriters and other risk management service providers recommend discontinuing the use of employee surveys and questionnaires; these traditional tools often provide easy answers but tend to hide underlying conditions that lead to workplace risks.

Once risks are identified and evaluated, the final challenge becomes implementing strategies designed to mitigate those risks. Business leaders need to understand that not all risks can be avoided. Prioritizing those risks that have strategic importance to the organization can increase the perception of value in the risk management process. Often, companies focus on high impact/low probability risks instead of those smaller, but more immediate, risk exposures that can interfere with daily operations. By learning to prioritize what is actually important and what needs immediate attention has the benefit of helping business leaders take the necessary steps to ensure business continuity.

Risk management is a complex process that serves to protect business interests from both common and unlikely risks. The process can take time to implement, and there may be many starts and stops along the way. Business-oriented insurance firms like U.S. Risk Underwriters know that despite these challenges, the process provides incredible value to those companies that work to incorporate risk management strategies into their operations. To overlook this valuable process can be a recipe for failure. ◼

Winter Forecast: Workers’ Compensation Claims Likely to Rise

November 12, 2019

The winter months are notorious for presenting extra challenges to business owners. Cold weather brings seasonal risks to employees of any organization, and occupational insurance claims typically rise as a result. While workplace injuries can occur at any time of the year, winter’s unique risks require employers to take additional measures to keep employees safe. With winter-oriented safety strategies, employers can better manage workers’ compensation and occupational insurance costs. 

Winter Insurance Claims by the Numbers

Winter weather often means an increase in employee injuries. In years where there have been severe winter storms, workers’ comp claims in several northern states far outpaced national averages. For example, the winter of 2015 saw that in Michigan, about 30% of all workers’ comp claims were related to slip and fall injuries. This rate was twice the amount of the previous year. In Indiana, about 37% of all workers’ comp claims filed in 2015 were related to severe winter weather. 

Winter Hazards for Employees

As winter approaches, employers need to be aware of certain workplace risks that come with freezing temperatures. Snow and ice accumulation around workplace entrances, parking lots, and sidewalks are perhaps the biggest risk. Slip and fall injuries generally see a sharp uptick in the winter months, especially if severe storms and cold lead to significant snowfall. 

If workers are required to drive vehicles or equipment as part of the work duties, winter weather increases the risks associated with vehicle operation. Snow, poor visibility, and slick surfaces all contribute to dangerous driving conditions. As a result, workers’ comp claims for drivers and off-site employees tend to increase during winter.

One commonly overlooked risk factor is that of cold stress injuries. These injuries tend to affect workers who are exposed to cold temperatures, such as those employees who work outside on construction sites, airport facilities, shipping hubs, and as first responders. Cold stress injuries can take many forms, including:

• Hypothermia
• Frostbite
• Trench foot
• Chilblains
• Respiratory inflammation

It is important to note that cold stress injuries don’t only occur in the winter months; workers in cold storage facilities may also be injured through repeated or prolonged exposure to cold temperatures, even in the summer. Still, this type of injury is far more common in winter, and occupational insurance claims often skyrocket as a result. 

Managing Winter-Related Employee Injury Risks

Employers have a duty to provide safe workplaces for their employees. At any time of year, keeping workers safe should be a priority. In the winter months, however, business owners have an additional incentive: keeping general liability and occupational insurance costs down. This incentive is achieved through managing winter-related injury risks, thereby reducing the number of injury claims. Here are some tips for insurance agents to share with their clients:

• Snow and ice accumulation should be handled before it causes slip and fall hazards. Shoveling or plowing parking lots, sidewalks, and entrances is a great practice, as is salting pedestrian areas to melt ice. 
• Making sure lighting is adequate, especially near entrances and in parking lots.
• Encouraging employees to take precautions like using handrails or by wearing slip-resistant footwear when winter weather creates hazards.
• Posting signs and notices to warn employees about potential hazards. 

To reduce instances of cold stress injuries, it is imperative that employers take safety steps to prevent injury in the first place. Providing periodic indoor breaks for workers out in the cold is a smart solution. Another is by providing personal protective equipment — such as refrigerator jackets, overalls, and hand coverings — for those workers who are exposed to freezing temperatures.

With these solutions, employers can better control occupational insurance costs by reducing or eliminating the workplace hazards that go hand in hand with winter weather. If injury risks are reduced, so too are injury claims. ◼

Property Insurance Claims to Be on the Lookout for as Temperatures Drop

November 5, 2019

Property owners face many risks throughout the year. Claims for property damage can occur for any number of reasons, and it is important to understand that some arise during the winter months. Winter weather can wreak havoc on commercial and residential properties alike; deferred maintenance issues may suddenly cause significant damage as the temperature drops. Severe weather, including ice and heavy snow, may also cause unforeseen damage that isn’t likely in warmer weather. U.S. Risk Underwriters, a leading provider of specialty insurance products, understands that insurance agents should be on the lookout for certain winter-related property insurance claims. By becoming aware of these winter-oriented problems, agents can better prepare their clients, no matter what Mother Nature dishes out.

Common Cold-Weather Insurance Claims Related to Snow/Ice

Freezing winter weather can bring with it the potential for serious property damage. Snow accumulation is perhaps the most common risk property owners may face in winter, and its potential for damage cannot be overlooked. Roof failure is a common occurrence after winter snow storms; snow may appear light and fluffy, but in actuality produces substantial strain on roof surfaces. According to an article published in USA Today, a 10-inch snow accumulation equals about five pounds per square foot of roof surface. The average building roof can support about four feet of fresh snow. If the roof already has significant snow accumulation, if there is ice present, or if the total snowfall exceeds the capacity of the roof, it can and will fail. 

Ice is even heavier, and an ice storm can coat roofs and surrounding structures with a heavy layer. A common failure point is when wet snow and rain freezes when the needle drops; water expands as it freezes, opening up cracks in masonry, roofing surfaces, and structural supports. Ice can also block off drainage systems, resulting in “ice dams” that force water into the interior of buildings via ceilings and walls.

Snow and ice accumulation on overhanging trees often leads to winter-related damage claims. Trees may break or fall onto building roofs, causing significant damage. This is especially true when trees surrounding a structure are in poor health or have not been pruned by qualified tree professionals. 

Insurance Claims Related to Freezing Temperatures

Snow and ice are not the only perils that may lead to an increase in property insurance claims. U.S. Risk Underwriters and many other insurance providers know that freezing temperatures contribute to damage while also raising the possibility of personal injury. 

Freezing temperatures can burst pipes, creating situations that may damage or destroy significant interior portions of buildings and their contents through flooding. A burst pipe in an unoccupied structure, or over a weekend, can be especially devastating. This risk is compounded by failures in heating systems; if a building’s heating system is not working, the potential for frozen or burst pipes rises.

Frost heave, or the condition where water seeps into small cracks and expands as it freezes, is yet another risk factor that may lead to an increase in property damage claims. Frost heave can damage walls, foundations, and building supports, leading to unsafe conditions. If frost heave damages sidewalks, tripping hazards may result in visitors to a property being injured. Claims against property insurance may occur if someone is injured. 

Preparing for the Worst in Winter Weather

Insurance agents can help their property clients prepare for the winter months by recommending preventative measures to reduce the instances of insurance claims. These measures include:

• Insulating pipes from freezing.
• Ensuring heating systems are working correctly to prevent freeze damage.
• Removing accumulations of snow and ice from roofs as needed.
• Pruning or removing dead trees around the property.
• Checking that insurance coverage is adequate to protect against expensive property damage claims.

With these steps, property owners are better prepared to face the perils that only winter weather can bring. ◼

The Most Important Steps in Developing a Risk Management Plan

October 22, 2019

For any business, risk management is the cornerstone of success. Reducing or eliminating risk exposures helps to drive down overhead expenses, including insurance claims, property loss or damage, and liability. A risk management plan consists of multiple interrelated parts that must all work together to achieve the desired outcome. Organizations often do not understand the best ways to develop a comprehensive risk management plan, however, and the complexity inherent in such plans can be the “make or break” aspect that negatively affects business operations. U.S. Risk Underwriters, one of the nation’s leading providers of specialty insurance solutions, knows that risk management plans are fundamental in business. Here is a look at some of the most important steps to consider when developing a risk management plan for your organization.

Step 1: Identifying Risks

No matter what type of business you operate, there are inherent risks you face. These can be both expected and unforeseen risks. To begin the risk management plan, it is crucial that you identify any risks that could potentially impact your operations. Hazard assessments can uncover areas that present injury risks to employees, such as:

• Trip and fall hazards of wiring, equipment, and floor surfaces.
• Electrocution hazards.
• Fire hazards, such as the presence of flammable materials near heat sources.
• Ventilation hazards, particularly in industrial or manufacturing operations.
• Moisture hazards that could contribute to slip and fall injuries, equipment damage, or mold growth.
• Procedures and processes that present workplace injury hazards, including the proper operation of specialized equipment.
• The possibility of unforeseen risks such as natural disasters, fire, or storm events that can put personnel and facilities in peril.

Risks in the workplace are not only physical; it is imperative that business owners understand that personnel can present their own set of risks. Identifying potential risks through the use of hiring practices such as drug screenings and background checks can ward off some of these risks.

It is a good idea to bring all stakeholders into the risk identification process. Personnel may have unique insights into areas that may need attention – those that could cause injury in the workplace. Allowing workers to participate in the risk management process also helps to foster a culture of workplace safety.

Step 2: Analyzing and Evaluating Risks

Now that risks have been identified, the next step in the risk management process is to analyze and evaluate each identified risk. Analyzing risks consists of determining the likelihood of a risk in creating a negative situation, such as a worker injury, reduced productivity, or property damage, and the consequences that may come from the risk. Evaluating risks can help facility managers make important decisions, such as whether a risk is an acceptable exposure or if it warrants further investigation. Many business choose to rank risks using a scale, with minor risks receiving a low ranking and more serious risks getting high priority rankings. 

Step 3: Reducing or Eliminating Risks

Your organization has taken the time to identify potential risks and to evaluate the impacts those risks may have on workplace safety and productivity. Now the process to mitigate those risks begins. Risk management’s primary goal is to reduce or eliminate risk exposures, helping to keep operations running smoothly and to keep overhead costs down. Hazards that could lead to a worker injury can often be reduced or eliminated relatively quickly, such as removing slip or trip hazards, ensuring adequate work lighting, and providing personal protective equipment (PPE) for operations that may be dangerous. Other risks may require additional steps to mitigate, such as employee training and retraining programs. Workplace safety depends on training. U.S. Risk Underwriters and risk management associations agree that training programs can help to foster a culture of safety in and around the workplace, regardless of industry.

Step 4: Monitoring 

One of the areas that is commonly overlooked in the risk management process is the concept of monitoring and reviewing the risk plan. Risks come and go, necessitating the continued monitoring of the workplace environment. In other words, once the plan is developed and implemented, the work isn’t over.

One of the leading practices of successful companies is periodic risk assessment, identifying new risks and informing team members of risks that no longer pose significant threats to the operation. Audits of risk management plans and practices are also a good idea; U.S. Risk Underwriters recommends at least quarterly audits to ensure that risks are being managed appropriately. Finally, documenting all steps in the risk plan, including the reporting of workplace injuries and “near miss” incidents can be a valuable learning tool for businesses of any type. These reports point the way toward continued risk identification and elimination, helping to keep the workplace as safe and as risk-free as possible. ◼

Occupational Accidents, Injuries, and Illnesses That Are Not Covered by Workers’ Compensation Insurance

October 15, 2019

Businesses around the world have a duty to their employees to provide safe workplaces free of the hazards that can result in injury. Workplace injuries are some of the most costly incidents that employers face; even in low-risk professions, work-related injuries account for billions of dollars in lost productivity each year. Workers’ compensation and occupational insurance plans help to defray some of the costs associated with workplace injuries, providing coverage for medical expenses and lost wages. Unfortunately, not all injuries are covered by workers’ compensation, and it is imperative that employers understand what is and what is not covered.

Workers’ Comp Plans: What is Covered

To gain a better understanding of workers’ compensation (workers’ comp) and occupational insurance, it can be valuable to learn what is typically covered by these insurance solutions. Typically, these insurance plans are considered “no-fault”; in other words, it doesn’t matter who or what caused the injury, only that the injury occurred on the job.

For the most part, workers’ comp provides coverage regardless of the circumstances that have led to an injury, provided the injury was incurred within the course and scope of one’s employment. Injuries that occur on work premises, even if the employee is clocked out for the day, are also typically covered under most states’ workers’ comp guidelines. Off-premises injuries, such as employees traveling between work sites as part of their duties or as part of work-related travel, may also receive coverage. Courts generally agree, typically siding with the injured worker. If work duties and/or workplace conditions led to the illness or injury, employees can receive insurance coverage.

It is important to note that coverage extends to so-called “occupational diseases”, or those health conditions that are the direct result of exposure to certain workplace conditions. Communicable diseases passed through needle pricks in the healthcare sector, asthma from exposure to fumes, or heat-related illnesses in physically-demanding work conditions are examples of occupational diseases typically covered under workers’ insurance plans.

Workers’ Comp Exclusions

Workers’ comp and occupational insurance cover a broad range of work-related injuries and illnesses. However, as with any insurance plan, there are exclusions. Employers and employees alike need to understand these potential areas of exclusion in order to better manage the risks associated with work operations.

Some common workers’ comp coverage exclusions include:

• Injuries/illnesses outside the workplace: Employees commuting to and from the office or workplace often believe they are covered if they become injured; insurance policies typically exclude coverage from these claims. 
• Pre-existing physical or mental health conditions: If an employee had a pre-existing medical condition, he or she may not receive workers’ comp coverage for the condition, as it existed outside the course and scope of duties. There may be exceptions; check with plan language for specifics. 
• Injuries received as a result of fighting or horseplay: Even if these injuries occur in the workplace, they are not covered under workers’ comp plans. 
• Certain mental health conditions: Work can be stressful, and cumulative stress may result in a worker’s inability to complete his or her tasks. Unfortunately, work-related stress incidents are not always covered. Check with specific plan language for coverage of injuries related to workplace stress.
• Injuries/illnesses occurring as a result of drug or alcohol use: Occupational insurance and workers’ comp plans typically have stringent restrictions on coverage for employees who were under the influence of drugs or alcohol and became injured on the job. 

Occupational insurance and workers’ compensation insurance plans are designed to provide coverage for injuries and illnesses occurring in the workplace. These valuable protections help to manage risks and give employees compensation for medical expenses and lost wages. Most insurance plans have broad coverages, but employers need to be aware that not every injury or illness is covered. Armed with this knowledge, employers can take the steps needed to make their workplaces as safe as possible for their valued employees. ◼

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