Many companies do not keep claims information internally. They simply defer this record-keeping process to their insurance provider. However, there are several benefits to tracking this data in-house.
While it may be a bit of an adjustment at the start, you will quickly see a return on your investment as your risk management department and your organization as a whole benefits.
4 Reasons to Track Claims In-House
1. Track incidents as well as claims
If you don’t record or manage information in-house, it is likely that records are only created when you need to report a claim to your insurance provider. This means that you will only gather data on claims, where a formal case is brought against you, and not incidents.
However, incidents are the number one indicator of claims and can allow you to prevent predictable losses.
2. Identify trends and decrease losses
Having ownership of claims data means you can incorporate incidents and self-insured claims into your overall risk analysis. This will give you a more accurate and complete picture of where your risks lie and what trends are present.
For example, if ten people slip on your front step and you only record the one who tries to sue you, you would have no idea that there was historical data that could have predicted and prevented this outcome. With this tactic, you can better identify issues before they become claims and implement proper mitigation techniques, making occurrences less frequent and less severe.
Without tracking information in-house, this type of analysis is impossible.
3. Receive better insurance premiums
Insurance companies want to insure businesses that have “good” risk – those that they feel will have a minimum amount of losses.
A loss ratio is the premium paid divided by the cost of claims incurred. A low loss ratio will make your company attractive to insurers, which will result in competition over your account and lower premiums. Also, managing claims in-house will allow you to raise your deductible to the optimum level. The general principle is: the higher the deductible, the lower the premium.
By analyzing past losses in conjunction with insurance premium quotes for different deductible options, it becomes clear which deductible is best. If you raise this amount and agree to pay a higher portion of claim costs, the insurer will provide a discount on the premium payments in return.
Assuming you are financially able to pay this higher deductible, this strategy will save you money in the long run as the monthly savings will likely outweigh the higher cost if an accident occurs.
For more information on how strategically raising your deductible lowers premiums and saves your company money, check out this article. Internally handling claims data also means that you will have a complete and accurate record of losses if you decide to switch insurance providers.
4. Ensure compliance and productivity
It will be easier for your employees to understand the purpose and benefits of risk management practices if data is easily accessible. Compiling data and reports will be less time-consuming, as you will not have to rely on anyone but your internal risk management team.
Employees in other departments may also be more comfortable working with people within your company than those from an external insurance provider.
In some cases, you might end up being responsible for insuring contractors or workers who should have their own insurance. The issues can be complicated when you have outside workers performing jobs on your property without clearly defined roles and responsibilities.
Subcontractors, casual laborers, or other non-employees bring with them a whole new set of liability issues above and beyond your own business operations. If they aren’t your employees, you may have a difficult time controlling their actions and preventing the liability problems they create. Theoretically, workers and subcontractors are responsible for their own actions, but they might not have the resources to cover their negligent acts.
Insuring subcontractors and contractors
Contractors and subcontractors should have their own liability insurance, but it’s up to you to make sure they have coverage in force before they begin working for you. You can do this by requiring a certificate of insurance from their insurance company.
You might also require that independent contractors name your company as an additional insured on their liability policies. If you allow an uninsured contractor to work on your property, you’ll be making a choice to accept their liability exposures, whether intentionally or not.
Define responsibilities in a contract
A written contract is a great tool for documenting responsibilities and minimizing hassles related to insuring contractors and their liability exposures. Before a subcontractor begins working for you, you should execute a formal contract that reviews duties, expectations, requirements, and costs.
Your contract should also include hold harmless, duty to defend, and indemnification clauses. These compel a contractor to be responsible for the damages and injuries they cause. They also require them to indemnify your company for costs incurred because of their actions. Even if a subcontractor has no insurance, you’ll have a right of recovery for your costs to pay or defend claims because of their negligence.
Insuring casual laborers and non-employees
One concern with casual laborers or non-employees is that they may actually be employees by definition. The IRS topic, “Employee or Independent Contractor? Know The Rules” should help you determine if your arrangement with casual laborers and non-employees constitutes an employer/employee relationship.
The key issues involve your financial and physical control over a worker’s activities and your working or contractual relationship. If your workers meet IRS employee guidelines, you may be legally responsible for their on-the-job actions even if you don’t consider them employees. In addition to their liability exposures, you may also be responsible for their unemployment, workers’ compensation and other compulsory benefits.
You can’t eliminate all contractor-related liability issues
You should choose your subcontractors and casual workers carefully. Their actions may cause liability issues you can’t avoid. Connecticut and Massachusetts Premises Liability Statutes require you to maintain your property and warn of dangerous conditions or hidden hazards. Even if a negligent subcontractor, casual worker, or non-employee has liability insurance and you have a contract in place, as a property owner, you’ll always have some responsibility for their actions.
Plan ahead
Sometimes responsibility issues don’t come up until after a subcontractor or worker causes damage or injuries while they’re working on your property. That’s why you should address key responsibility issues ahead of time. Consider reviewing any liability or employee vs non-employee concerns with your legal representative.
When considering how to create a psychologically healthy and safe work environment, it does require a high level of innovation or new thinking. One can simply look at how workplaces have been addressing physical health and safety for the past several decades.
There are two well-established methods to proactively address health, safety and wellbeing in the workplace: 1) Risk Management, and 2) Wellbeing Promotion. If you consider the public health model[1] approach to disease prevention, wellbeing promotion can be considered a primary prevention intervention, suitable for 100% of employees to reduce illness risk and promote positive mental health. Risk management can be considered a secondary prevention initiative, to identify at-risk employees and groups, and reduce the likelihood and consequence of illnesses.
While risk management and wellbeing promotion activities can be carried out independently of each other, when used together, they increase the chances of positive employee mental health outcomes. Where they fail to prevent a stress-related illness occurring, tertiary prevention interventions should be made available, including counseling (e.g. Employee Assistance Programs), and injury management and return to work provisions.
While risk management and wellbeing promotion activities can be carried out independently of each other, when used together, they increase the chances of positive employee mental health outcomes.
Method 1: Risk Management
Risk Management in relation to psychological health, safety and wellbeing involve four steps[2]:
1. Identify psychosocial hazards – find out what could cause harm, considering recognized psychosocial hazards (e.g. role overload, role clarity, job control).
2. Assess risks if necessary – understand the nature of the harm that could be caused by the psychosocial hazards, the likelihood of it happening and the amount of harm that could be caused.
3. Control risks – implement the most effective control measures that are reasonably practicable in the circumstances.
4. Review hazards and control measures to ensure they are working as planned.
Figure 1: The Risk Management Process
As figure 1 above demonstrates, the risk management process also requires management commitment and consultation with employees, including Health and Safety Representatives (HSRs) if they exist.
When controlling risks (step 3), it is important to reduce risks using higher order controls wherever possible. The Hierarchy of Controls applied to Total Worker Health by the National Institute for Occupational Safety and Health[3] provides a conceptual model for prioritizing efforts to advance worker safety, health and wellbeing (see figure 2 below). Controls and strategies are presented in descending order of anticipated effectiveness and protectiveness. It is an easier model to apply to psychological health and safety than the original hierarchy (which is more specific to physical hazards).
Figure 2: Hierarchy of Controls Applied to Total Worker Health (NIOSH)
FlourishDx helps employers follow a risk management process for the identification and mitigation of psychosocial risks. The platform contains the “Work Design Survey”, which is a short battery of survey scales (86 multiple choice items) to assess employee perceptions of common psychosocial hazards.
Consistent with best practice, and the Thrive at Work framework (developed by the Future of Work Institute at Curtin University), the Work Design survey also assesses positive characteristics of work that promote flourishing, as well as steps taken by the employer to mitigate illness.
Consulting with employees during the risk management process, including the identification of hazards is a WHS legal requirement. The FlourishDx Work Design survey facilitates this process at scale and across geographical diverse work groups.
Method 2: Health Promotion
Workplace health promotion is the process of fostering healthy workplace policies and supportive environments, enhancing positive social conditions, building personal skills, and promoting healthy lifestyles[4]. Physical health promotion at work typically focuses on the five pillars of good health, often abbreviated with the acronym “SNAPS”:
smoking cessation,
nutrition,
alcohol consumption,
physical activity, and
sleep
Health promotion at work typically focuses on policies, education, and behavior change programs to promote the development of these five pillars.
Martin Seligman (often referred to as the godfather of positive psychology – the branch of psychology concerned with wellbeing), has identified five pillars of mental health, often abbreviated with the acronym PERMA[5]:
positive emotions,
engagement (flow),
positive relationships,
meaningfulness, and
accomplishment
To promote positive mental health in the workplace, employers should introduce policies, education, and behavior change programs aimed at assisting employees to develop these pillars. But where to start?
FlourishDx contains the “Flourish Survey”. It is a short survey to assess the degree to which individuals have developed PERMA. This can be used as a needs analysis, to determine priorities for intervention at either an individual or group level. At a workplace level, the Flourish Survey results are a leading indicator of mental health, as it has been shown that people with well-developed PERMA are less susceptible to mental illness, and more likely to be flourishing.
Workplace injuries can happen in any industry, and they can be costly, inconvenient and debilitating to both employees and the company as a whole.
Travelers, which provides workers’ compensation insurance, analyzed its claims data to find the most common on-the-job accidents and injuries. Here are the most frequent workplace injuries, according to the company’s recent Injury Impact Report:
Strains and sprains
Cuts or punctures
Contusions (bumps and bruises)
Inflammation (e.g., tendinitis)
Fractures
The leading causes of these injuries include material handling (32 percent); slips, trips and falls (16 percent); being struck by or colliding with an object (10 percent); accidents involving tools (7 percent); and traumas occurring over time (4 percent).
According to Travelers, it’s important to focus on protection and recovery techniques in the workplace to prevent injuries and minimize their effects if they do occur.
“The most common injuries we see can often be prevented if the proper safety measures are in place, if safety issues are promptly addressed and if leaders continuously emphasize a culture of safety with employees,” Woody Dwyer, second vice president of workers’ compensation and risk control at Travelers, said in a statement.
To help prevent workplace injuries, Travelers recommends that employers hire only the candidates who are truly qualified for the job and understand the safety hazards involved. From there, workers should participate in safety programs and training sessions. Leaders should also provide support to employees, ensuring appropriate communication regarding safety measures, Travelers representatives said.
If an accident or injury does happen, it’s important to put your employees on the path to recovery as quickly as possible, Dwyer noted.
“Even seemingly minor injuries, such as strains or sprains, can substantially impact an employee and slow a business’s operations and productivity,” Dwyer said.
By supplying the proper equipment and support to your employees, you can help them to recover more quickly.
The report was based on the analysis of more than 1.5 million workers’ compensation claims filed between 2010 and 2014 by various businesses and industries.
Employers are on the front lines of nipping one particular sort of workers compensation fraud in the bud: the incident that never happened or one that is being exaggerated, according to panelists on a session on fraud at the 38th annual International Risk Management Institute Construction Risk Conference.
Weighing in on what employers can do to prevent fraud at the onset of a claim, especially on a construction site where the landscape alters daily and the workers — witnesses — on the site can change from day to day, the first step is to gather facts with an effective reporting system and immediate documentation, the presenters said Monday at the conference in Houston.
“It’s important when these claims occur to collect information, because it might not be there when you go back to get it,” said Melissa Schultz, co-founder of Chicago-based SitePatterns LLC, which markets incident-reporting software for the commercial construction industry.
Simplified and immediate incident reporting is a must, said Ms. Schultz, who spent several years on construction sites in risk management and workers compensation.
“You want to make sure (your system) is asking the right questions … You don’t want (the form) to be 15 pages long. You want something they can complete, easily fill out and is easy to understand,” she said. “It’s important that you get those reports early and review them.”
Witness statements are just as important, as subcontractors who witnessed the incident might not be working on-site later on when an employer needs more facts on a claim that is likely being inflated, according to presenters.
“Pay attention to the witness statements,” said Patrick Duggan, Chicago-based vice president of risk for Power Construction Co. LLC. Mr. Duggan said employers sometimes go back to investigate when a simple claim becomes more complex — with a surgery looming or a plaintiff’s attorney asked for a large lump sum — and it’s sometimes too late to gather facts.
Ms. Schultz said to make sure witnesses are separated and provide accounts individually — as stories start to sound “more similar” the closer the witnesses are before reporting.
Making it routine for site safety coordinators and other supervisors to take photographs of scenes is another step, she said. “Job sites changes quickly … if you go back days later to take photos, chances are it will not look the same,” she said.
She recalled one claim where a subcontractor reported that he fell down a staircase. A supervisor was able to take video of the stairwell with his phone immediately after the incident. Weeks later the injured worker’s attorney called with a claim that the stairwell was full of “gushing” water, she said.
“I gladly shared that video with that attorney,” Ms. Schultz added.
Incident-reporting culture on-site is another factor in preventing fraudulent claims, she said. “You want to make sure you communicate the process regularly,” she said. “You want to make sure that you remind the field how to fill out that report.”
Supervisors can become more used to the incident-reporting process and can think of it as “more than just checking the boxes,” she said. “They start anticipating the things you will need,” she added. The supervisor who took video of the stairwell, for example, did so immediately without having been asked to do so, she said.
Brian Koch, Chicago-based partner/shareholder with Wiedner & McAuliffe Ltd., said early documentation, including photographs, can also work in reverse: helping to prove a legitimate claim that an employer deemed possibly fraudulent, thus cutting down on legal costs.
He told the story of a subcontractor who was injured within his first few hours on a job site — sometimes a telltale sign of fraud, but not in this case, he said. A photograph of a tear in some anti-slip skids on the floor helped show how the worker did, in fact, trip. Attorneys saved the company “a lot of energy and expense” in seeing what happened immediately with photos taken of the site as evidence — part of a claim that the worker would have likely fought if the employer had denied it, according to Mr. Koch.
Many employers are wondering what level of tolerance they should implement for cannabis use in the workplace. What do they do if an employee is impaired on the job?
It’s important to recognize that just because marijuana is legal does not mean employees can be impaired in the workplace. Just like alcohol, it is not acceptable for an employee to be under the influence on company time, and this is very clear in the new laws.
However, zero tolerance may not be the best route unless employers can absolutely prove that sobriety is a bona fide occupational requirement. Otherwise, a dismissed or disciplined employee could file a human rights or wrongful dismissal lawsuit — and they may win. Employers should check with their lawyers for a case-by-case analysis of tolerance levels.
Some lawyers have recommended a “low-tolerance” policy: addressing the concern if and when it appears and only moving forward to dismissal when there is a repeat violation. Consider this: an employee goes out for lunch one day and has a couple of drinks before returning to work. If this becomes a regular occurrence and lowers performance, it may be necessary to have a conversation and move towards termination if the situation doesn’t change. However, the employee would likely not be immediately dismissed for a one-time occurrence. The same idea may be applicable to marijuana use.
In addition, employers must consider the use of medical marijuana. Cannabis consumption with a prescription has been legal since 1999 for the treatment of various disorders and conditions. While medical marijuana in the workplace may not be new, employers must be careful not to discriminate against these users with new tolerance policies. They must accommodate medical marijuana to the point of “undue hardship”. Consider asking these employees what accommodations they need and what tasks they are able to perform, and make any necessary changes to their duties.
2. Safety
In particular circumstances, employers do have the right to implement a zero-tolerance policy. In “safety sensitive” positions, such as those involving driving or the operation of heavy equipment, employees must be strictly sober for the protection of themselves and others. In these situations, employers can place a ban on cannabis consumption (similar to alcohol consumption) during work hours or in a designated time period before work begins.
Once again, employers are required to accommodate medical users. For example, an employee could be transferred to a different role that is not safety sensitive.
3. Drug testing
Testing for cannabis impairment has not been fully addressed by the government prior to legalization. There are a few key issues in this area:
THC (the component of marijuana that makes a user impaired) stays in the body much longer than other substances such as alcohol. Its presence in the body does not necessarily mean that the user is currently impaired.
The Charter of Rights and Freedoms would likely prevent any kind of random drug testing in the workplace from being lawful. This would be seen as an invasion of employees’ privacy rights.
Drug testing is currently only permitted in very specific employment situations, where safety is a key issue or there are reasonable grounds (for example, if there has been an incident or there is a strong reason to believe the employee is under the influence).
Until there are federal regulations in place to resolve these uncertainties, employers should be very cautious in implementing marijuana testing. In the meantime, they can use assessments of behavior and conduct in place of a hard test. If an employee is regularly underperforming and showing signs of impairment, it may be time to have a conversation. For a more in-depth discussion on drug testing in the workplace, check out this Huffington Post article.
4. Creating new policies
An employer should consider implementing new workplace policies to address the legalization of marijuana. After carefully constructing a tolerance policy considering all of the above factors, employers must ensure it is well-known. For example, employees could receive training on the new policy and marijuana use. The policy should also be displayed and distributed to each employee, perhaps through email.
The tolerance policy must clearly define what is acceptable and what behaviors may be grounds for disciplinary action or dismissal. Doing so ensures the employer will have a strong defence if and when actions are necessary.
Cannabis consumption must also be considered in other workplace policies, such as smoking in designated areas on company property and scent-free policies.
5. Marijuana Stigma
Many members of Canadian society may stereotype marijuana users. These users are assumed to look and behave in a certain way. Now that recreational cannabis is legal, these ideas may become stronger.
As an employer, be careful not to make assumptions about employees. While some managers may not agree with marijuana usage, it is now legally permitted. This means employees cannot be judged on their personal choice as long as it doesn’t impact their ability to do their job. There won’t necessarily be any of the attendance or performance issues that employers fear. Take these situations on a case-by-case basis, similar to any other performance problem.
In certain face-to-face professional settings, employee marijuana consumption may create reputational issues. In these circumstances, employers must carefully construct tolerance policies to find the balance between employees’ choices and customer opinions.
Whenever new legislation comes in, organizations as well as the rest of society must go through an adjustment period. While adapting to marijuana legalization, employers should consult with lawyers before making policy decisions or changes.
By carefully considering new policies and employee safety, employers are prepared to face the risks of cannabis legalization. Ideally, severe issues will not arise and employers can mainly continue as normal. But as in any risk situation, it always pays to be proactive.
