Brian Gianfelice, Director of Corporate Claims, Hostess Brands

What is the most common injury among your workers?

Strains and sprains are most common, resulting from any number of reasons including physically demanding work activity, chronic health conditions and an aging workforce.

What is your view on the current Worker's Comp market?

The Worker's Comp market is currently good, with carriers trying to get small rate increases. Coverage generally is available, but large deductible programs require good financials in order to get the best credit terms, which was a challenge for Hostess as conditions deteriorated.

What are some trends that concern you with regards to their potential impact on rate?

Indemnity costs have risen by about 47 percent, and medical costs have jumped close to 100 percent in the past decade. Today we also have Obamacare, the fiscal cliff, Medicaid expansion and a bad economy. The National Council on Compensation Insurance (NCCI) may be recalculating its Experience Modification Factor that may cause premium increases for companies with high loss rates. According to the NCCI, accident frequency has also risen for the first time in five years.

What is your strategy in dealing with rising costs?

Searching for and identifying opportunities to improve performance is the name of the game. Deliberate, focused and comprehensive reviews of all compliance, operational and strategic risk are a must. Understanding claims transformation is a big deal when dealing with many different lines of insurance, such as self-insured Worker's Comp or Self-Insured Retention (SIR) for legacy claims going back 10-20 years.

How do you fight losses?

Combating claims leakage is a huge way to mitigate losses. Traditionally, claims leakage means paying loss or allocated loss adjustment (ALAE) expenses that either didn't have to be paid or were paid over the necessary amount. I say there is “soft” and “hard” leakage. An example of soft leakage is a situation where compensability was accepted without a thorough investigation or contact with all parties to a claim. Examples of hard leakage can be very different. One is the continuation of Temporary Total Disability (TTD) after a claimant returns to work. Another can occur when a TPA must accept compensability because they missed a statutory deadline or paperwork filing.

Who are your favored W.C. carriers, and why?

In no particular order, they are Liberty Mutual (diverse product/policy offerings; strong underwriters; excellent loss-prevention capabilities; focus on outcomes,), Ace (diverse products; flexible program structure; unbundled claims handling) and XL (for the same reasons as with Ace).

Have any state-level reforms impacted your business strategy?

Any time there's a new state regulation it affects our business. Employer choice of medical provider is a good example. Twenty-eight states have put limitations on an employee's choice of medical provider, which is a good opportunity to develop strong and meaningful provider relationships.

Becky Robinson, Risk Manager, Hobby Lobby

What is the most common injury among your workers?

From a frequency standpoint, the majority of issues that we have are lacerations because we have a lot of glass in our stores, and incidents sometimes occur although we provide gloves.

Is an ageing workforce a challenge for you, and how are you managing this?

We have an older workforce with some individuals, especially in the logistics department, who have grown with the company. You have to address every incident as a case-by-case basis and consider how Medicare affects each one. We are also revamping our inner protocol to target certain conditions that could complicate claims from a cut or infection, for example diabetes.

What is your view on the current Worker's Comp market?

The market is becoming very tight, and I do believe that there will be rate increases, but not to the level we saw five or ten years ago.

We are self-insured in Ohio, where there has been a significant rate increase. We could have moved out of state but we like to keep with the carriers who already know our business, so we increased our self-insured retention (SIR) limits.

We have also seen a severity increase in medical costs. It used to be unusual for us to have claims over $100,000, but now we are frequently seeing numbers from $500,000 to a million dollars. This is challenging because carriers will judge our losses based on that severity.

What is your strategy in dealing with rising costs?

If we can raise our deductible as we did in Ohio, we would like to do that, but we also have an internal claims system that captures all of Hobby Lobby's claims activity. We forecast our own trends, look at where our issues are coming from and implement practical solutions like enhancing job training and safety procedures.

Have any state-level reforms impacted your business strategy?

Illinois had a significant reform last year that would allow companies to develop their own PPO networks to manage care. Oklahoma is now considering legislation that will tremendously impact our operations there, which is moving from a court system in which a judge interprets the law according to each case, to an administrative system where you can carve out your own administrative program to apply to all cases. This would remove uncertainty in the claims handling process, and it would certainly benefit us.

Denise K. Evans, Director of Workers' Compensation Claims, Staffmark

What are the key trends you are seeing in the Workers' Compensation arena, and how are you responding to them?

From a claims-management perspective, it is more challenging to control costs due to rising medical expenditures. We are seeing medical costs surpassing the indemnity expense in claims.

Personally, we advocate buying directly from a manufacturer, down to the screws used in a surgery. You can do this by calling doctors for a list of what they would need for the surgery. We then go through a company that has a direct link to manufacturers (we use Medicalservicequotes.com which is a free service to employers).

As an example, hospitals are able to mark up prices on certain procedures without any caps. We have seen situations where they have significantly inflated the cost of an implant. In one instance we purchased an implant for $25,000. The hospital errantly sent us an invoice for the same implant—in the amount of $88,000.

Which are your favored Workers' Compensation carriers and why?

We just switched carriers to Ace and we've been very impressed thus far. They were very diligent in assisting with the transition to our new TPA.

What are you keeping an eye on in terms of state regulation?

We are waiting to see how California's recent reform shakes out. The next two years will determine how effective the reform is in decreasing claims costs. Their claims costs are, on average are three to four times that of any of the other state.

Is opioid and painkiller addiction something that is of concern to you?

Every employer is battling this problem. We have an opioid watch in place with our Pharmacy Benefit Manager: When opiods are prescribed, we review with the doctor about whether the patient really needs them. We try to catch addiction before the meds are prescribed, rather than after it becomes a problem.

Marcin Plonka, Corporate Risk Manager, Americas, SAP

What is your view on the current Worker's Comp market?

I would say we are not necessarily in the midst of a hard market, but looking at past data, there is some firming. Due to medical inflation and high unemployment, the combined ratio for Workers' Comp insurance has deteriorated. When I spoke with our brokers about this issue, they indicated that the combined ratio for Workers' Comp in 2012 is estimated to be in the area of 117. This, coupled with lack of investment income and low interest-rate environment, has caused carriers to see increases between 5 to 10 percent.

Other factors are hikes in state assessments and contributions to 2nd-injury funds (a fund that allows employers to hire previously injured workers who would be disabled by a second incident). The silver lining for risk managers is there is still good amount of marketplace capacity.

Are there any regulatory that you are watching closely?

There was a recent opinion in the Texas Supreme Court regarding the applicability of attorney-client privilege in connection with Worker's Comp claims. In this case, an injured employee filed a bad-faith claim against its carrier, XL, which was escalated to the Supreme Court. The Court determined that any communication between the carrier and the employer was not subject to attorney-client privilege. This is important to SAP because when you litigate insurance claims in Texas, any communication between carrier's counsel and insured is subject to discovery by the other party to the lawsuit.

Most important is the Workers' Comp legislation reform in California that passed in 2012 in an effort to create efficiency in the state's system by reducing costs and increasing benefits for disabled/injured employees.

Are there any Workers' Comp reforms that you are planning to carry out within your organization?

We are monitoring the development of employee concentration. If a large population of employees is located in one factory/office, and all were to be impacted by one incident like a natural catastrophe or terror attack, it would hugely impact the organization and the claims to be paid out under the W.C. program.

Timothy East, Director of Corporate Risk Management, The Walt Disney Company & Chair, California Self-Insurers Security Fund

What is your view on the current Worker's Comp market? Is it hardening?

The Worker's Compensation market can be challenging because inefficiencies result in a high cost of claims administration. We're not seeing any price spikes, but it's certainly not a soft market. A quality risk with a good underlying safety culture will produce efficient pricing in the market today.

How do you see employers battling rising costs?

Many employers in the U.S. are sticking to the basics: staying on top of claims, aggressive return-to-work or job-accommodation programs, promoting safety, and avoiding needless delays in making decisions about compensability.

Have any state-level reforms recently impacted your business strategy?

Disney has always been actively involved in Worker's Compensation reform in California, and we were able to provide input on SB 863 [which increased permanent disability benefits by about 30 percent and created a payment program for permanently injured workers]. SB 863 promotes a more efficient W.C. system by promoting improvements in the lien-resolution system, improving access to medical-provider networks, and reviews decisions made by doctors through an independent medical review.

Is an ageing workforce a challenge for you, and how are you managing this?

I often hear about rising issues with age and obesity, but all the research I've seen has indicated that older workers bring more safety awareness and experience with them, so they usually have a lower injury rate although the injuries themselves may be more severe.

Is opioid addiction resulting from W.C. pain treatment an issue for you?

Opioids are an area where we definitely must see some improvement. In the future, I hope we see more use of databases like California's Controlled Substance Utilization Review and Evaluation System (CURES). Medication is not the answer to every problem, and doctors must monitor what their patients are taking to limit over-use and over-prescription.

Jim Recchia, Director of Risk Management, Beam Inc. (producer of spirits such as Jim Beam and Maker's Mark)

What is your view on the current Worker's Comp market?

The market in general is hardening, which is impacting Worker's Compensation premiums. Coverage is not difficult to get if, for the most part, the risk is predictable from an underwriting standpoint.

How are you responding to this hardening?

With increased premiums, one definitely wants to consider the obvious: higher retentions. The market increases are not significant—but they are enough to make a risk manager consider retaining more risk, if feasible.

Who are your current favored W.C. carriers and why?

I really do not have a favored carrier, but there are Third Party Administrators I would consider as preferred due to the customer focus and approach, such as Broadspire Services and Sedgwick Claims Management Services.

Do you think enough companies are doing enough to educate employees about injury prevention?

Many Risk Managers are aware of the importance about preventative care and the dramatic impact it can have on reducing Workers' Compensation costs. However, too many take for granted the security and safety of employees in white-collar office scenarios. They can be subject to cumulative trauma from repetitive motion, neck strains from poor posture, and workplace violence. Workers in white-collar jobs put a company at the same, if not greater exposure, than a factory or plant worker because of the way that laws are generally interpreted against employers. Companies should look at the exposure in an office building the same way they should look at a plant.

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