The three winners of the Excellence in Workers' Compensation Risk Management Awards, sponsored by NU and the National Council on Compensation Insurance, traveled to Orlando in August to share their successful strategies with risk-manager attendees at the Workers' Compensation Educational Conference.
The audience at the high-energy session heard first from the Grand Champion, Limbach Facility Services, a specialty contractor and maintenance firm. Scott Wright, the firm's senior vice president of legal services, started by comparing the construction-safety practices of yesteryear with those in place today.
His first slide: a famous, Depression-era image of New York construction workers sitting unharnessed on a beam hundreds of feet above the pavement—with no hard hats on.
Today, of course, regulations are far stricter. But that doesn't mean accidents don't happen; in fact, 774 construction workers died in 2010.
And while construction is infinitely safer these days, injuries are still seen as largely unavoidable—but not at Limbach, where safety is an obsession at all levels of the company and is most passionately embraced by CEO Charlie Bacon, who is determined to achieve what some consider impossible: the elimination of all injuries.
Limbach is not there yet, but it's getting close. Among the many charts that Wright shared: In 2002, its aggregate losses were nearly $3.5 million. The figure was below $500,000 in both 2009 and 2010—and is just above zero this year. And the number of days lost has dropped from just under 1,200 in 2004 to about 300 last year.
Critical to this achievement is the company's "We Care" culture. At the session, Wright outlined the "whatever is necessary" approach Limbach has taken to foster an injury- and incident-free workplace.
Among its many best-in-industry safe-work practices: dedicated safety managers at every branch; safety expectations clearly articulated to customers and subcontractors; job-site safety walks; monthly safety audits; and safety alerts that are issued when "near misses" occur.
Next to take the stage was Dale Lindstrom, director of insurance and risk management for Vestas American Wind Technology. Lindstrom started by identifying the three pillars of developing and sustaining a robust safety culture: endorsement from executive management; a professional health and safety department; and employee commitment.
As with Limbach, Vestas has adopted the stance that all injuries can be prevented—even when doing the dangerous work taken on by its employees, which includes repairing complex wind turbines, located hundreds of feet above the ground in remote locations where severe weather is always a risk. The work is done inside tight compartments around high-voltage equipment.
In 2009 Vestas began an aggressive, multiyear program to improve its Workers' Comp performance—and the company's investment in training has really paid off. The number of claims from March 1, 2009 to Feb. 28, 2010 was 104; over the same time period in 2011-2012, the number dropped to 41. Total incurred costs over the same time periods declined from more than $750,000 to under $200,000—while the number of employees increased by about 20 percent.
Lindstrom also engineered a significant change in the program structure, moving from a large-deductible ($250,000) program to a group captive, Columbus Insurance Ltd.
And despite his successes over the past three years, Lindstrom still has an impressive to-do list. Now, he is focused on reducing soft-tissue injuries by getting employees to adopt "MoveSMART" techniques; reducing the injuries that can come with items being dropped from heights; and improving emergency rescue and response operations in the remote locations where Vestas operates.
The final winner to speak: Mike Tilley, vice president of Workers' Compensation at Kelly Services—a leading global provider of workforce solutions that generated 2011 revenue of $5.6 billion.
The crucial Workers' Comp dilemma faced by Kelly is not extreme work environments (although it does place a high percentage of workers at manufacturers), but the sheer size of its operations: Kelly issued 342,000 W-2 forms in 2011.
But on that astounding figure, Kelly recorded just 4,400 claims—and its forecasted, fully developed loss rate for 2011 is only 1.1 percent of temp payroll (vs. a rate near 4 percent in 1992).
One key to Kelly's Workers' Comp program is quick reporting of claims: 80 percent of its claims are reported within five days—as opposed to an average of nine for its third-party administrator's book of business. This allows for quicker adjudication, shorter durations, faster closures and lower severities.
Another important part of the strategy: charging back claim activities to local operations.
And as with Limbach and Vestas, Kelly has the support of its C-suite.
Other elements of Kelly's award-winning program: looking for savings in what the company pays to its medical-bill review provider; aggressively denying inappropriate claims; and sophisticated measurement tools.
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