Meeting Sponsor Joint Chapter Meeting 3.10.2011 Joint Chapter Meeting 3.10.2011
Jan 03, 2016
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Joint Chapter Meeting3 . 1 0 . 2 0 1 1
Joint Chapter Meeting3.10.2011
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Agenda
• 8:45 – 9:15 Registration & Coffee Service• 9:15 – 9:30 Welcome, Introductions, WA PRIMA’s Treasurer’s Report • 9:30 – 10:30 Hot Topics and Legislative Issues Impacting the Public and Private Sector
– Moderator: Jeff Hollingsworth, Risk Manager Port of Seattle– PRIMA Speaker: Candice Bock, Legislative and Policy Advocate, State and Federal Relations
Association of Washington Cities– RIMS Speaker: Darrell Brown, ARM, Senior Vice President and the National Workers’
Compensation Practice Leader at Sedgwick Claims Management Service, Inc. • 10:30 – 10:45 Break • 10:45 – 12:00 Utilizing Benchmarks, Metrics and Analytics to Manage Risks
– Moderator/Speaker: Keith M. Higdon - Senior Vice President, Sedgwick Claims Management Services, Inc.
– PRIMA Speakers: • Drew Zavatsky, State of Washington Office of Financial Management, Loss Prevention
Program Coordinator • Jeff Hollingsworth, Port of Seattle Risk Manager
• RIMS Speakers: • Keith M. Higdon - Senior Vice President, Sedgwick Claims Management Services, Inc.• Katrina A. Zitnik, Director of Workers’ Compensation, Costco Wholesale
• 12:00 – 1:00 Lunch
Meeting SponsorHot Topics and Legislative Issues
Impacting the Public and Private Sector
C a n d a c e B o c k | D a r r e l l B r o w n
Hot Topics and Legislative Issues Impacting the Public and Private
SectorC a n d a c e B o c k | D a r re l l B ro w n
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Tort Reform Legislation
• SHB 1719 - limiting liability for employers for unauthorized passengers in employer vehicle
• HB 1681 – limiting liability respondent superior
• HB 1679 – limiting liability for offender supervision
• SSB 5605 – limiting liability for governments– Investigation of child abuse or neglect– Offender supervision– Joint and several
Association of Washington Cities
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Personnel Legislation
• SSB 5354/SHB 1445 – expanding presumptive disease designation for police and fire
• HB 1444 – continuing death benefits upon remarriage
• SB 5160/HB 1450 – Increasing the death benefit for public employees
• HB 1487 – Workers Compensation Retro Programs
Association of Washington Cities
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Public Records
• SHB 1899 and SSB 5685 – No daily penalty option for Public Records Act violations
• SSB 5098 – Exempts personal information for participants in community programs (e.g., kids in parks & rec)
• SB 5022 -- Clarifies one year statute of limitations
• SB 5693 – Metadata fix. Defines “copy.”
• SSB 5025 – No penalties for inmates unless agency acted in bad faith
Association of Washington Cities
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Other Liability Issues
• HB 1559 – limiting liability for design professionals
• SB 5310 – False Claims Act
• SB 5387/HB 1670 – regulation of government risk pools
Association of Washington Cities
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Medicare Reporting and 2011 Legislation
D a r r e l l B r o w n
Medicare Reporting and
2011 Legislation Darre l l B rown
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Medicare Reporting- What happens now that reporting has started?
• Claim files
• Queries
• Stability of website
• Working with CMS/COBC
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What we should continue to think
about?
• Workers’ Compensation ORM Clean Up of 2010
• Future Medical States
• Increased MSP Recovery Efforts
• Delayed Liability Reporting
• MARC 2011 Legislation
• Penalties
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2011 Legislative Activity – Other
States
• National – HR 623
• Illinois – SB 1349
• Oklahoma – HB 1286
• Kansas – HB 2134
• Georgia – SB 7
• Maryland – HB 889 / SB 413
• Missouri – HB 162
• Montana – HB 334, SB 243, HB 71
Meeting SponsorUtilizing Benchmarks, Metrics
and Analytics to Manage RisksKeith Higdon | Jeff Hollingsworth | Katrina Zitnik | Drew
Zavatsky
Utilizing Benchmarks, Metrics and Analytics to Manage RisksKeith Higdon | Jeff Hollingsworth Katrina Zitnik | Drew Zavatsky
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Benchmarking
• Definition of a benchmark - a standard of excellence, achievement, etc., against which similar things must be measured or judged. –www.Dictionary.com (http://dictionary.reference.com/browse/benchmarking)
• Two types of commonly benchmarks– Past performance – GOAL oriented– External data sources such as industry and other peer
definitions – OPPORTUNITY/EXPLANATION oriented
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Benchmarking to Past Performance –
Program Evaluation
Baseline
Monitoring
Impact Assessment
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Benchmarking to External Data Sources – Peer
Comparison• Generally a starting point, NOT an end point• What is the driver?
– Industry issue– State issue– Program issue
• What is a peer? Items to consider– Industry classification– Operating divisions– Employee size– Exposure distribution
• Data Sources– Third-party organizations– Third-party administrators/Carriers
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Benchmarking Challenges
• Data challenges– Internal – what, where, and how?– External – what is the correct comparison?
• Point-in-time versus trending
• Variability of averages– Trends– Outliers
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Data Lifecycle
Capture
Storage
AccessAnalysis
Deployment
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Case for Trending
Data Set 1 Shows a Reduction in the Average - Data Set 2 Shows an Increase in the Average
$0
$5,000
$10,000
$15,000
$20,000
$25,000
Period 1 Period 2 Period 3
Dataset 1
Dataset 2
Data Set 1 Shows an Increase in the Average - Data Set 2 is a More Flat Average
$0
$5,000
$10,000
$15,000
$20,000
Period 1 Period 2 Period 3
Dataset 1
Dataset 2
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TPA Example
• Database records– Workers’ compensation = 14.6 million– Liability (all lines) = 6.6 million– Disability = 3.0 million
• Economics of 2008– Decline in volumes in some industries and lines– Increases in severity in key areas of others
• Outcome– Validated single client experience– Identified intervention opportunities
• Regional• Client specific
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Aviation Seaport Real EstateCapital
Development
King County Voters Commissioners
CEO
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Shilshole Bay Marina
Fishermen’s Terminal
Grain TerminalSea-Tacoma Airport
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Benchmarking Challenges
• When to Benchmark?• What Metrics To Use?
– Create your own metric and then benchmark?– Use a “standard” benchmark and match data
• How to Collect the Data?– Ask the Right Questions– Insurance Surveys
• Who To Benchmark Against? – Yourself year to year– “Like” organizations
• Validation of Results? • What Do You Do with the Results?
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Cost of Risk Benchmark
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00 Port Cost of Risk (Per $1000 Revenue) Port COR/$1000 Rev
AV - COR (Per Revenue)
Non-AV COR/$1000 Rev
Revenue $250 to $500 - RIMS Survey
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Cost of Risk Deconstruct
Per $1000 Revenue
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
Workers Compensation
Property Program
Liability Program
Risk Management Department
Outside Services
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RIMS Benchmark COR Per $1000 of Revenue
• 2009 All Industry = $10.35 (Reference RIMS)– Under $ 1 Billion Revenues = $14.86– Greater $ 1 Billion Revenues = $5.24– $250 Million to $500 Million = $12.59
• 2009 Government/Non-Profit (Ranked 7th)– $10.64 (Largest Drop in 2009 of 29%)
• Port of Seattle– Total = $12.52 (2009) and $10.18 (2010)– Aviation = $9.44 (2009) and $8.64 (2010)
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Internal Budget Metrics
Key Indicators 2010 YTD 2009 YTD
Automobile Incidents 75 preventable out of 112 total or a 35% increase through December of 2010 (unfavorable)
53 preventable out of 107 total through December of 2009
Incurred Auto Liability Costs $11,110.00 as of 12/31/2010 a 60% favorable decrease
$30,000
Overall Liability Reserves Account 22035
$10.8 million through 12/31/2010 a 150% increase from 2001 (unfavorable)
$4.3 million
Property Insurance $1.262 million (down 1% favorable)
$1.279 million
Liability Insurance $682,000 (up 3% unfavorable)
$665,000
Overall Cost of Risk $10.18 /$1000 revenue as of 12/31/2011 (favorable)
$12.52/$1000 revenue 2009 Port Wide
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Est $-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
Property Insurance Premium versus Port Insurable Values
Property Non-EQ Insurance Premium
Property Value x $1000
Year to YearBenchmark
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0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Est
Liability Insurance Premium Versus Port Indicators
Liability Insurance Cost Passengers Sea-Tac TEUs Seaport Revenue x 100
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10.4
14.2
12.2
12.8
9.89.3
7.96.6
7.9
6.6 6.5
6.6 7.1
5.97.4 7.16.7 6.3 6.1 5.7 5.3 5.0 4.8 4.6 4.4 4.2 3.9
0
10
20
'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 07 08 09
Safety Evaluation Process
Port Commission Resolution 3213Zero (0) Accident Goals 1996
Spirit & Wellness
1st Safety Leader Kickoff
SafetyLeaders Team
National Average
Injury Rates 1996 - 2009
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Benchmarking Takeaways
• Know your data, your sources, and validate.
• Know your peers at PRIMA, RIMS, etc
• Know where to pull data from your company
• Be very careful with insurance surveys
• Use indicators to tie metrics that matter to your
Sr./Executive Management team
• Change your metrics to reflect your operations
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Company Profile
• 3rd Largest Retailer in US
• 7th Largest Retailer in World
• $139M avg. sales/Warehouse
• 425 Locations with 110K EE in US
• 33M Households with 61M Members
• $79 Billion in Sales
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WC Program Overview
• Self insured in all states• 9 Corporate Staff• Part of HR – report to
AVP of benefits• About 8,500 claims/year
– 35% in CA = $12k/claim– 65% in AOS = $10K/claim
• Ultimate Costs = about $90M/year
• Partners– SCMS is TPA– Bunch is medical
management and bill review
– Aetna is PBM– Pre Care for onsite PT in
WA, OR, NY, NJ, and IL– WorkCare for II Line– Kaiser is in MPN in CA
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Benchmarking – Past Performance
Goal Oriented
• Challenges:– Consistency & Predictability– Manage each policy year to hit the loss pick
• About $265M in outstanding reserves– Understand the costs by state
• 36 states to choose from– Determine appropriate program design
• Ideas/Suppliers/Solutions• Practical for location
– Measure results • ROI
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Past Performance
• Goal/Results Oriented– Ultimate Loss Cost by policy year
• Quarterly analysis– Set each policy year budget
• Determine focus years– State specific loss rates
• Determine focus states– Reports
• Track paid/incurred• Track payments by pay code by state
– Know status at the end of each 4 week period
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Actual vs. Predicted
As of FY11 P5
FY09 Predicted Actual Difference
Incurred 25,150,204 25,407,666 257,462
Paid 14,392,267 13,583,801 (808,466)
California
AOS
FY09 Predicted Actual Difference
Incurred 38,748,693 39,387,717 994,024
Paid 30,245,783 29,387,059 (858,724)
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State Specific Loss Rates
As of FY10 P12
NY 4.71 MI .86
NJ 4.66 UT 1.12
WA 3.75 VA 1.26
IL 3.58 MD 1.30
HI 3.31 FL 1.72
3 Year Average
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BenchmarkingExternal Data
Sources• Opportunity/Explanation Oriented
• Networking with peers
• Comparative Studies– AON – compares ultimate outcomes
• SCMS or Bunch BOB– Average costs– Similar employers/exposures
• WCRI– State System Studies
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Washington State Risk Management
Two major initiatives:1. Administer the State Insurance Liability Fund (self-
insurance)2. Administer the State Loss Prevention Program
Major Risk: No sovereign immunity!
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Washington State Risk Management – the impact of liability
FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
FY To-tal
39057061 17882951 29622398 19562689 39360030 48014760 57271598
$5,000,000
$15,000,000
$25,000,000
$35,000,000
$45,000,000
$55,000,000
$65,000,000
$75,000,000
Incident Types for Tort Indemnity Payouts by Fiscal Year - Total Payouts
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Washington State Risk Management
Available data:
1. Tort claims database
(payouts)
2. Loss prevention review law
(serious incidents)
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Washington State Risk Management
Loss Prevention Drill-down
050
100150200250
Types of Deaths Re-ported, FY 2008-2009
0200400600800
1000
Types of Injuries Re-ported, FY 2008-2009
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Washington State Risk Management
Loss Prevention Lessons Applied
FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 $-
$10,000,000.00
$20,000,000.00
$30,000,000.00
$40,000,000.00
$50,000,000.00
$60,000,000.00
Tort Indemnity Payouts by Fiscal Year
Vulnerable Children and Adults Highway Fatalities and InjuriesParolees and inmates FY Total Payout
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Washington State Risk Management
The Real Answer
FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 20080.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
% of Total Indemnity Payout by Category
Vulnerable Children and Adults Highway Fatalities and InjuriesParolees and inmates All Other Payouts
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Thank You | Questions?
Joint Chapter Meeting3.10.2011