What’s the Risk? Your Clients’ “In-Practice” Risk Management Plans Will Have a Big Say in Future Claims Against Them

When it comes to accidents involving heavy equipment, few make the neck hairs of investigators stand on edge quite like crane and rigging incidents.

It was just such an event that recently resulted in a fatality. As the accident unfolded, part of the equipment’s heavy frame broke free and crashed into the cab, killing the operator.

When investigators showed up, they found that the crane had toppled forward and was resting with its treads pointing skyward.

“We got out to the site within 24 hours of first notice of this accident, knowing that there was a catastrophic accident involving a crane that turned over lifting a load from the building ” explains Arthur Kirkner, vice president of claims, NBIS, a claims expert and thought leader inside the construction and transportation arena.

“From our early investigation, we found that the lift plans may not have been followed and the supposedly “known weight” of the object to be lifted was in fact unknown, it was not the crane operator’s fault and that there were many other deficient variables discovered ,” said Kirkner, who recently paired up with William Smith, executive vice president, risk management, to take a deep dive inside the construction and transportation vertical and tighten their focus on heavy construction equipment and the complexities that often surround the realm’s “loss events.”

Together, the two executives— each with extensive experience in the transportation and heavy construction industries—use the crane example as a case study to educate NBIS agents on risk management principles and help them to stay up to date on the latest best practices as well as government and regulatory changes.

“We consider ourselves a risk management company that supplies a lot of information to the industry that we insure,” said Smith, a former crane operator who’s credited with developing an industry-acclaimed Risk Management Support System (RMSS) that has allowed NBIS to set itself apart from other insurers inside the heavy construction sector.

Smith referenced the below diagram illustrating how a risk management plan is the central component of the approach that NBIS has worked to embed across the industry as it serves its agents and their clients. Titled “The Risk Management Cycle,” the diagram reveals what Smith says is the philosophy that NBIS seeks to instill in its agents.

“What you’ll find is that our approach really views risk management as pushing out into the safety and culture, claims, contract work tickets, and the insurance policy,” said Smith, who incorporated a number of handy checklists within the presentation, including one that agents can use when they are visiting a work site of a current or future client.

“Take notice of the yard and the equipment, as well as the shop itself and their attention to record keeping. Consider security: Do they have fencing? Do they have cameras? Do they have lights?” advises Smith, who encourages agents to make note of a firm’s ownership structure.

“Sometimes the ‘culture of safety’ is driven by a firm’s ownership. You should take note of whether a firm is family-owned and has been handed down from one generation to the next or if private equity is now involved,” explains Smith, who advises agents to take advantage of a number of search tools, beginning with the website of the Occupational Safety & Health Administration (OSHA), which enables visitors to conduct an “establishment search” that can quickly reveal any OSHA citations a particular company has received.

“We don’t want to see any more than two serious citations within the past 3 years for any one business, because if it’s more than that, the frequency reveals something—and we recommend that our agent work with their client to help them get things right,” said Smith, who believes much can be revealed by a company’s own internal knowledge of OSHA guidelines.

“Management and supervisory knowledge of OSHA laws and procedures is important to companies because that’s what they are going to be cited for and measured by when it comes to employee safety,” said Smith, who also advises agents to be certain to perform additional “CSA searches” using the website of the Federal Motor Carrier Safety Administration (FMCSA).

Using the below checklist, Smith highlighted a number of best practices designed to help the client companies of agents mitigate exposures, including having their employees from the CEO on down appropriately trained regarding safety rules and procedures.

• Management & Supervisory knowledge of OSHA laws and requirements
• Employers should ensure that employees from the CEO on down receive appropriate training regarding safety rules and procedures
• Safety rules and procedures should be published, understood, enforced, and accepted by all. (The company and you are protected by your decisions and actions every minute every day)
• Compliance with safety procedures must be monitored, recorded and documented in a system maintained by the company
• Companies should have a system available to employees to anonymously report unsafe work conditions
• Companies should involve the employees in designing training programs and ensure them that there is no retaliation against an employee who reports a safety breach in good faith

Offering business insights related to insurance claims, Kirkner broadened the breadth of the webinar’s discussion as he zeroed-in on the unique complexities of industry-specific claims.

“What we find is that very often it all comes back to the risk management plan, and when we have a claim, we ask the question, ‘How do we tweak the plan to minimize the next loss, so that the plan is even better than it is now?,’” explains Kirkner, who says that NBIS will send a rapid response and early recognition team to accident sites and currently employs a number of certified forensic investigators.

When an “alert” comes in, Kirkner says, NBIS has an approach that is unique to the industry and its client base.

“If, for instance, we see the word ‘collapse’ along with ‘load’ or ‘rigging,’ our management is alerted and we determine what action needs to be taken to address the exposure,” said Kirkner, who adds that the process of internal alerts also notifies the underwriter and the broker of the potential exposure.

Kirkner also supplied a checklist detailing how the structure of an NBIS Preferred Contract allows agents to further manage risk after a loss.

“Over the past 18 months, our insureds were involved in various litigations in which there was $105 million paid in settlements—and because these insureds had preferred contracts in place, they paid zero dollars because we were either dismissed from the litigation voluntarily or our tender was accepted and someone else paid on behalf of our insured instead of their policy,” said Kirkner, adding that the firm paid $1.1 million in legal fees over the same period and recouped $510,000 in fees.

Additionally, Kirkner said, certain new standards are bringing greater visibility into crane operations – such as ANSI B30, a standard that NBIS’s Smith helped to co-develop.

“Generally, in the past if something happened with a crane, the crane operator was at fault, but the B30 standard really helped to define the different responsibilities and distinguish between the crane operator, the rigger, and the lift director, as well as the site supervision,” said Kirkner, who credits the updated standard with having saved NBIS $800,000 over the past 6 to 12 months.

So how should agents begin the process of getting more involved with their clients? “At the start of the process, ask your clients what types of contracts they are being asked to sign when they want to get on a job site and take a close look at the language that is being used on the job ticket or lease agreement,” Kirkner said.

In response to the same question, Smith once more emphasized the risk management plan and how it could become a door-opener for new business with both new and existing clients:

“Take a look at existing clients, take a look at future clients that you would like to bring into your business, and begin by taking a look at their CSA scores. Ultimately, you don’t know what you don’t know, but when we partner with agents we begin by supplying them with the tools that they need to assess a firm’s safety culture through an inside and outside view of a risk management plan.”

Our program managers and experienced risk managers look forward to working with you and your clients. Visit www.NBIS.com for more details on how to become an NBIS agent and Experience the Difference ™ today.

Click here to view the archived webcast