Public Risk July 2017

PUBLISHED BY THE PUBLIC RISK MANAGEMENT ASSOCIATION JULY 2017

STRIVING FOR

EXCELLENCE Five Steps for Strengthening Collaboration Between Risk Management and Safety PAGE 6

ALSO IN THIS ISSUE

PROPERTY VALUATION & DATA COLLECTION: Knowledge Is Savings

PAGE 10

THE BREAKTHROUGH IMPACT OF TECHNOLOGY ON CATASTROPHIC CLAIMS PAGE 16

The Public Risk Management Association promotes effective risk management in the public interest as an essential component of public administration.

JULY 2017 | Volume 33, No. 6 | www.primacentral.org

CONTENTS

PRESIDENT Amy J. Larson, Esq. Risk and Litigation Manager City of Bloomington Bloomington, MN PAST PRESIDENT Terri L. Evans Risk Manager City of Kingsport Kingsport, TN PRESIDENT-ELECT Jani J. Jennings, ARM Insurance & Safety Coordinator City of Bellevue Bellevue, NE DIRECTORS Brenda Cogdell, AIS, AIC, SPHR Risk Manager, Human Resources City of Manassas Manassas, VA

Striving for Excellence:

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FIVE STEPS FOR STRENGTHENING COLLABORATION BETWEEN RISK MANAGEMENT AND SAFETY

By Jason Franks

Scott J. Kramer, MBA, ARM City/County Director of Risk Mgmt Montgomery County Commission Montgomery, AL Forestine Carroll Risk Manager Memphis Housing Authority Memphis, TN Sheri Swain Director of Enterprise Risk Management Maricopa County Community College District Tempe, AZ Lori J. Gray Risk Manager County of Prince William Woodbridge, VA Donna Capria, CRM, CIC, AINS Risk & Insurance Coordinator WaterOne of Johnson County Lenexa, KS NON-VOTING DIRECTOR Marshall Davies, PhD Executive Director Public Risk Management Association Alexandria, VA EDITOR Jennifer Ackerman, CAE Deputy Executive Director 703.253.1267 • jackerman@primacentral.org ADVERTISING Jennifer Ackerman, CAE 703.253.1267 • jackerman@primacentral.org

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Property Valuation & Data Collection: KNOWLEDGE IS SAVINGS

By Brian Roe

IN EVERY ISSUE

16

The Breakthrough Impact of Technology on Catastrophic Claims

By Zack Craft

| 4 NEWS BRIEFS | 19 ADVERTISER INDEX

Public Risk is published 10 times per year by the Public Risk Management Association, 700 S. Washington St., #218, Alexandria, VA 22314 tel: 703.528.7701 • fax: 703.739.0200 email: info@primacentral.org • Web site: www.primacentral.org Opinions and ideas expressed are not necessarily representative of the policies of PRIMA. Subscription rate: $140 per year.

Back issue copies for members available for $7 each ($13 each for non-PRIMA members). All back issues are subject to availability. Apply to the editor for permission to reprint any part of the magazine.

POSTMASTER: Send address changes to PRIMA, 700 S. Washington St., #218, Alexandria, VA 22314.

Copyright 2017 Public Risk Management Association

JULY 2017 | PUBLIC RISK

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Further your public sector risk management education without leaving the office!

This Webinar series features top presenters delivering risk knowledge to your desktop!

PRIMA’S 2017 RISK MANAGEMENT

WEBINAR SERIES PRIMA WEBINARS ARE FREE FOR MEMBERS! Visit www.primacentral.org today to register for individual Webinars or for the entire program!

J U LY 19 | 1 2 : 0 0 P M – 1 : 3 0 P M E ST HOW ORGANIZATIONAL CULTURE AFFECTS RISK MANAGEMENT SPEAKERS: Joey Sylvester, Director Strategic Initiatives and Special Projects, Gallagher Public Sector, Arthur J. Gallagher & Co. Shannon Gunderman, Administrative Services Director, Yuma County, AZ DESCRIPTION: How strongly organizational culture affects our daily work lives is often misunderstood.

The way we perceive our work is shaped by the organization’s culture. Much has been written about organizational culture’s relationship to leadership, strategy, vision and core values, but comparatively little is discussed about its link to risk management. Presenters will discuss organizational culture, how it relates to risk management, how it can enhance or inhibit processes such as the implementation of enterprise risk management (ERM) and practical strategies for dealing with cultural issues.

AT T E N D E E TA K E AWAYS :  Describe and define organizational culture  Learn how culture can inhibit or enhance ERM  Identify practice strategies for dealing with organizational culture

For more information, or to register, visit primacentral.org/webinars.

MESSAGE FROM PRIMA PRESIDENT AMY J. L ARSON, ESQ.

W

Don’t Settle for Good Enough

ow, can you believe it’s already the beginning of July, and that the conference we had been waiting for in Phoenix for over a year has come and gone? What a great conference!

Whether it be the keynote or other educational sessions (I learned something in every single one), the exhibit hall or social events where I’m able to reconnect with friends both old and new, I always come back from the conference energized to implement some of the ideas and strategies I learned that will help me be the best public risk manager that I can be.

A special thanks to Jani Jennings, 2017 Conference Chair, and the Conference Planning Committee for all of their work to provide us with such great educational opportunities!

Ed Hochuli, our Wednesday keynote speaker, talked about what he called the Average Joe Principle. To paraphrase Mr. Hochuli: Success is a choice, and most people settle for good enough. If we accept “good enough,” then we won’t be more than average.

While I was listening and thinking about what he was saying, I kept coming back to all of the ways that I depend on PRIMA to help me succeed in my day-to-day activities; but I also thought about how much PRIMA depends on each of its members to be able to succeed and become the premier educational resource in the field of public risk management. It is the work of PRIMA’s members, committees, board of directors and staff that makes this organization the educational resource for public risk management. In the upcoming year, consider submitting a session proposal for the 2018 Annual Conference,

It is the work of PRIMA’s members, committees, board of directors and staff that makes this organization the educational resource for public risk management… Remember, without our members, PRIMA will not be successful.

Please consider being part of the success and helping PRIMA be more than average.

volunteer to moderate a session at the 2018 Annual Conference, write an article for the Public Risk magazine, participate on PRIMAtalk, submit ideas for podcasts or webinars, and volunteer for a committee or taskforce (if you have experience with cyber liability, I’d love to hear from you)!

As I said at this year’s Annual Conference, I am honored to have been installed as the 2017–2018 PRIMA president. My goals for the upcoming year include discussing how we might partner with the Department of Homeland Security to promote cyber liability resources available to the public sector, as well as working with the education committee and loss control sub-committee to continue the work that has been started to develop loss control resources.

Remember, without our members, PRIMA

will not be successful. Please consider being part of the success and helping PRIMA be more than average. If you have ideas you’d like to share, please contact me at alarson@bloomingtonmn.gov.

Amy J. Larson, Esq. Risk and Litigation Manager City of Bloomington Bloomington, MN

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NEWS BRIEFS

NEWS Briefs

IN MOST STATES, A SPIKE IN “SUPER COMMUTES” OVER 90 MINUTES LONG The number of commuters who travel 90 minutes or more to get to work increased sharply between 2010 and 2015, a shift that traffic experts, real estate analysts and others attribute to skyrocketing housing costs and a reluctance to move, born of memories of the 2008 financial crisis.

In all but 10 states, the number of “super commuters” increased over the period, and in California, Hawaii, Massachusetts, North Dakota and Rhode Island, it grew by more than 40 percent, according to census data.

The growth came amid an overall increase in the number of commuters as the economy improved, but the increase in the number of people with the longest rides, 23 percent, was almost three times the increase in the number of those with shorter commutes, close to 8 percent.

People with 90-minute commutes still represent a small share of commuters—ranging from 1 percent in Nebraska to nearly 6 percent in New York. But analysts say the spike in long trips reflects several broader trends in the economy.

After years of sharp rent increases, service workers can’t compete for urban apartments near their jobs. Those who found new jobs after the recession may not feel secure enough yet to move closer to work, especially as prices soar near job centers.

The term “commuter” includes anybody who has a job and doesn’t work at home.

In tech job centers like Seattle and San Francisco, low-income workers are moving farther and farther away while high-income workers can still afford to live close to work, according to a 2015 Zillow study that looked at changes through 2014.

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“While commute times for higher-income earners hasn’t changed much over the past 10 years, commutes are getting longer and longer for low-income workers,” said Lauren Braun, a Zillow spokeswoman.

The number of super commuters grew in a variety of jobs, from lawyers and computer scientists to teachers, cooks, janitors and maids, according to a Stateline analysis of census data provided by ipums.org at the University of Minnesota.

Even among those who could afford to live anywhere, more are choosing faraway places because they can telecommute much of the time, said Mitchell Moss, an urban policy professor at New York University’s Rudin Center for Transportation Policy and Management who has studied super commuters.

Among elementary and middle school teachers, for instance, super commuters increased by 26 percent from 2010 to 2015. Police officers similarly saw a 31 percent increase in super commuters.

“The real change is that the suburbs have been eclipsed,” Moss said. “People are moving directly from the city to the hinterlands.”

Oil and gas workers were the most likely to have super commutes, at 19 percent in 2015, while 18 percent of aircraft pilots and 16 percent of elevator repairmen faced rides of 90 minutes or more. On the other hand, fewer than 1 percent of telemarketers and funeral embalmers who commute to work faced rides of 90 minutes or more.

NEITHER MALE NOR FEMALE: OREGON THE FIRST TO LET PEOPLE IDENTIFY AS ‘NONBINARY’ ON IDS

Nevada Republican Gov. Brian Sandoval has signed legislation that will require new school buses to be equipped with seat belts.

Oregon became the first U.S. state to allow residents to identify as “nonbinary,” neither male nor female, on their driver licenses and identification cards in a decision by The Oregon Transportation Commission.

More than a dozen children were injured in a school bus crash in May in Las Vegas, and in the last seven months, students in Massachusetts and Tennessee have been killed or injured in school bus accidents.

Beginning July 1, Oregonians will be able to choose “X” for sex Instead of “F” or “M” on their licenses and identification cards.

Applicants will have to pay replacement or renewal fees.

The Nevada legislation, which was passed overwhelmingly by the Legislature, requires that any new school bus purchased by a school district on or after July 1, 2019, be equipped with a shoulder-harness-type safety belt assembly for passengers.

Transgender and intersex Oregonians say the change validates their identities and makes them safer as they hand over their licenses at restaurants, health clinics and airports. Oregon Department of Motor Vehicles officials say they received little opposition to the change, which they first announced plans to carry out last summer. Of 83 comments, both written and oral, only 12 people opposed the change.

Nevada joins six other states—California, Florida, Louisiana, New Jersey, New York and Texas—in enacting laws requiring seat belts on the big yellow school buses that most students ride. In Louisiana and Texas, however, the requirements are contingent upon funds being appropriated by the state, and that hasn’t happened.

Advocates for seat belts on school buses say they should be required to protect children from being seriously injured or killed in crashes. Opponents say school buses are already very safe and question whether children can quickly unbuckle and evacuate in some emergencies. School districts also are concerned about the estimated $7,000 to $10,000 cost of adding seat belts to a new bus.

The testimony offered “important insight into some DMV customers that according to one of the witnesses are as common as redheads,” said Tom McClellan, the division administrator for the department. “People didn’t share their testimony. They shared their stories. They told us of their struggles so we would understand the need.”

The rule change follows a historic precedent set last year when a Multnomah County Circuit

“

Court judge allowed Portland Army veteran Jamie Shupe to legally identify as neither male nor female. Legal experts believed the ruling was a first in the United States.

An estimated 20,000 Oregonians identify as transgender, according to The Williams Institute at the University of California-Los Angeles. A 2015 nationwide survey of 28,000 transgender people found that more than a third identified as neither male nor female.

Since Shupe’s win, judges in Polk and Benton counties have allowed transgender Oregonians to change their legal gender to neither male nor female.

California legislators also are considering a bill that would allow drivers to register as “nonbinary.” In Oregon, the change does not require a legislative vote because state law does not stipulate that a driver has to choose male or female.

Commissioner Sean O’Hollaren said he was glad the state had embraced the change.

“I hope those who will use X as an identifier will feel an element of comfort moving forward,” O’Hollaren said. “It’s something we’re not only doing because legally our hand is forced. It’s something we should do because it’s the right thing to do.”

I hope those who will use X as an identifier will feel an element of comfort moving forward… It’s something we’re not only doing because legally our hand is forced.

It’s something we should do because it’s the right thing to do.

“

SEATBELTS NOW MANDATED ON SCHOOL BUSES IN NEVADA

Commissioner Sean O’Hollaren

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STRIVING FOR EXCELLENCE Five Steps for Strengthening Collaboration Between Risk Management and Safety

BY JASON FRANKS

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N THEIR EFFORTS TO REDUCE THE FREQUENCY AND SEVERITY OF WORKPLACE INJURIES AND ILLNESSES, a growing number of public sector risk managers are recognizing the value of collaborating with safety professionals within their organizations.

By working together, the two disciplines can drive better outcomes; accelerate improvements in accident reduction and worker safety; facilitate the development and implementation of a safety culture; and elevate worker morale, performance and job satisfaction.

Although these benefits align with the overall objectives of both disciplines, arriving at true teamwork may require breaking through longstanding barriers that have separated the two functions, including different reporting structures, data requirements, and time horizons for achieving objectives, as well as the lack of internal structure to facilitate collaboration.

Risk managers can lead efforts to overcome these barriers and drive success across their organizations. Here are five best practices for kick-starting or enhancing collaboration with safety.

 RECOGNIZE THAT EFFECTIVE SAFETY INITIATIVES START AT THE TOP. Given the demands of their day-to-day responsibilities, risk management and safety departments might not have the bandwidth to collaborate or the structure to facilitate the sharing of information and responsibilities.

However, a mandate from the top can change that and motivate operational departments across the organization to contribute to a culture of safety.

“Safety has to come from the top down,” said Britney Gallagher, workers’ compensation manager for the Port of Seattle. “If leaders throughout the organization are not committed to creating a safe work environment, it limits our ability to incentivize change and take on safety initiatives.”

Getting buy-in from the top isn’t necessarily, easy, though. Gallagher said while the port’s CEO—who hails from the manufacturing industry—is focused on safety by his own accord, not all organizations are that lucky, and some leaders might need to be convinced.

She said executives, directors and departmental managers need to be shown the significant

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STRIVING FOR EXCELLENCE

management, Family Care Act and the Family Medical Leave Act.

“Safety should be driven by a desire to keep your customers and employees safe, but without a doubt, safety can be dollar driven, too… It absolutely has an impact on the bottom line...and that fact often gets leadership listening more closely.”

achievements that can be made when you fully integrate safety, workers’ compensation, risk management, human resources, legal and labor.

“Safety should be driven by a desire to keep your customers and employees safe, but without a doubt, safety can be dollar driven, too,” Gallagher said. “It absolutely has an impact on the bottom line...and that fact often gets leadership listening more closely.”

 FORMALIZE SAFETY PROCESSES TO FOSTER COLLABORATION.

While initiating an organization-wide safety culture must start at the top, formal processes are also needed to ensure that otherwise disparate departments collaborate, take action and are held accountable.

However, putting formal processes in place can be a challenge, too. At the Port of Seattle, even though the risk and safety departments are inherently collaborative, they still struggled to overcome procedural barriers that were inhibiting information sharing and follow-through.

“Our directors have a long history of working together. We come from a place of collaboration,” Gallagher said. “But without a proper structure to share and respond to information about safety

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hazards or incidents, our collaborative nature still wasn’t driving optimal performance.”

Gallagher said the port’s web-based risk management information system (RMIS) has been a force in bringing the two groups together. Both the safety and risk departments use a singular system that opens the lines of communication between the groups; automates processes; and triggers next steps so everyone is apprised of any hazards or incidents, and their related responsibilities.

 DON’T OVERLOOK THE NEED TO MEET FREQUENTLY.

While technology can bring groups together, it can’t replace the importance of regular meetings.

Be sure risk management and safety departments have a framework to meet on a scheduled basis to review trends and become actively engaged with organizational changes that have implications for safety and risk management.

Gallagher said the safety and risk management teams at the Port of Seattle meet quarterly to discuss what’s on both sides of the house.

The two teams also collaborate on numerous activities where responsibilities overlap, including claims, risk and safety training, labor negotiations, data integration with internal and external partners, employee benefits, disability

They also have a formal structure in place to team up on certain investigations like motor vehicle accidents, equipment incidents, facility maintenance issues, or new facility construction projects.

She said the formalized meeting and collaborative investigation structure protects against the teams getting stuck in silos as they try to accomplish their day-to-day work that is often independent of one another.

 SHARE INFORMATION AND PROMOTE TRANSPARENCY.

While good old-fashioned meetings can’t be replaced by technology, they certainly can be enhanced by the data outputs and information sharing that stems from technology. In fact, the information captured, documented and shared via technology can set the agenda for those face-to-face collaborative opportunities.

For the City of Albuquerque ramping up information sharing was conducted in a two-stage process. According to Brett Frauen glass, Albuquerque’s assistant risk manager, the first stage encompassed increased “collaboration and setting the intention with an expanded loss prevention staff and sharing our cost-of-risk calculation with department heads.”

Next came the capture and distribution of data from the city’s risk management information system to provide what Frauenglass describes as “a more fine-grained picture, which has really increased our profile, status and acceptance of our ideas, helping us maintain a downward trend in accidents and reduction of related costs.”

Similar to the Port of Seattle, the City of Albuquerque’s risk and safety teams—along with other departments—use the same web-based

risk management information system to collaborate and set priorities, said Frauenglass.

He explained that their technology’s claims data visualization capabilities help highlight problem areas to loss prevention and safety compliance specialists. And in turn, they have more information to give individual departments.

“It’s actually been quite amazing,” he said, “because when you start to bring colorful charts and graphs that show dollar amounts, people really begin to listen, recognize the importance of it and come up with ideas.”

Because different functions don’t have identical data capture and reporting needs, risk management should partner with safety to identify and evaluate the entity’s data and statistical analysis requirements and capabilities. Accident, injury and other reports may be customized to accommodate the program needs of both safety and risk management. At the same time, collaborate on articulating what’s needed to customize workflow and interface with other systems to minimize manual data entry and avoid duplicate work.

With the overall success of both risk management and safety dependent upon the capabilities of the information technology used for claim administration, they should work together (and consider involving other departments as well) in identifying risks to be analyzed at the RFP stage for selecting a RMIS provider.

“Software can really be a solution—especially if it has the ability to reach across some of the silos so they can collaboratively set priorities and be more proactive about what needs to be addressed,” Frauenglass said.

 FACILITATE RATHER THAN DICTATE.

Creating an effective safety culture requires the engagement of departmental and operational professionals at all levels. According to Frauenglass, risk management and safety professionals should seek to serve as facilitators so solutions

are generated, embraced and implemented at the operational level.

“We’re primarily facilitators when it comes to safety and loss prevention,” he said. “The department has to run the show, but we can deliver value. When we bring information to them that indicates how much better they’re doing than last year, they get bragging rights. That’s the big reward at the end of all this.”

As risk management and safety team up and collaborate with operational departments, they can track success as well as identify opportunities for improvements. For instance, productivity and accident reduction gains achieved in one area may be applicable to others.

By listening to internal customers, risk management and safety can help facilitate further improvements in safety performance. Some of this might call for wider information capture and reporting, which may require further customization of the entity’s risk management information system. For example, the Port of Seattle made sure its risk management information system made it easy for field workers to report incidents—and even near misses—and then automated task assignments to ensure there was follow up on all reports.

“Our employees feel like we value their contributions,” Gallagher said. “With (our technology), they know when a near miss or hazard is reported, it won’t fall through the cracks because of communication breakdowns or procedural barriers. As a result, they report more, and we can prevent injuries. This has had a positive impact on employee morale, which can often influence their commitment to workplace safety.”

PROOF COLLABORATION WORKS

At the Port of Seattle, the collaborative nature has certainly prompted measurable results, said Gallagher. In the nine-month period after the risk and safety departments worked together

to formalize safety processes and improve access to more robust safety analytics, the port experienced a 19 percent reduction in the OIR, 15 percent reduction in LWICR, and 37 percent reduction in cost.

“Analytics give us pertinent information we need to intervene before a hazard causes an injury,” Gallagher said. “We’re able to focus our efforts on preventing incidents, instead of reacting to them. Being proactive and collaborating with our front line supervisors, tenants and employees has created a new culture committed to having our employee’s go home safely. We have seen a great reduction in the overall number of claims filed, severity of claims filed and an overall reduction in claims costs.”

Collaboration among departments at the City of Albuquerque has also produced measurable results: In less than five years, the city has reduced its number of workers comp claims by almost one-third—from more than 1,000 annually to around than 700, according to Frauenglass.

“As soon as we set the intention, increased our presence, and began showing people what their losses were, everyone brightened up and said: ‘Let’s get to work and fix that!’ Now, we are at the stage where people are looking for more fine grained improvements. They’ve got benchmarks in place. It’s really been transformational for certain departments in the city.”

For both the City of Albuquerque and the Port of Seattle, information technology has been a vital element in promoting collaboration and driving their success.

Gallagher said: “It’s impossible to know everything and remember everything. You need a wide amount of information and knowledge available to you to have an impact on safety. And you can’t do that with a paper file system.”

Jason Franks is a senior client executive at Origami Risk.

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Property Valuation & Data Collection:

KNOWLEDGE IS SAVINGS

BY BRIAN ROE

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NSURERS, BROKERS AND UNDERWRITERS RELY ON PROPERTY DATA FOR RISK MANAGEMENT PURPOSES. Only when the data is accurate, thorough and current can an entity ensure it is receiving the best coverage.

Inflated property values can result in excessive insurance premiums. Undervalued property leads to inadequate coverage that can be disastrous in the event of a loss. Further, when there is a lack of or missing data, risk models will default to a worst-case scenario. Obviously none of these scenarios are ideal; thus, the critical nature of methodical data collection.

WHERE TO START

Before diving into collecting new data, take a step back and determine the existence and completeness of the information you already have and whether it is reliable, that is, current and accurate. Some things to consider: The source of the values: Oftentimes (too many times) historical cost data and/ or approximations from the accounting department or facilities manager are used. The problem here is twofold: 1) Historical cost information may include an accumulation of costs for renovations/improvements, etc. It does not reflect retirements of those repetitive costs, thus resulting in inflated costs and 2) Approximations are just that—approximate and therefore not accurate, which means they may not reflect “today’s costs” in terms of replacing building materials in like kind and quality.

Financial reporting and fixed asset records: Are you relying on an inventory/valuation from 10+ years ago? It is likely that data from even five years ago may have changed enough to affect your valuation and thus your coverage.

How historical and unique/ornate buildings are being valued: Are you basing building value on replacement or reconstruction costs? This is particularly important for historical or unique/ ornate buildings as oftentimes certain materials, items, etc. are no longer available or are very expensive to obtain. Examples include building materials such as Dade pine, dimensional lumber and certain Italian marble from several quarries.

NEXT STEPS

Identify your areas of need and the definitions/ premise of your values.  Determine the property to be included.

What buildings will be a considered?

Only permanently constructed buildings?

Will sheds, playground equipment and the like be included? Will you include site improvements such as yard lighting, retaining walls, surface parking lights, fencing, etc.?

Different organizations will make different business decisions as to inclusions, which is acceptable as long as you are consistent for all locations owned or leased throughout your organization.

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PROPERT Y VALUATION & DATA COLLECTION: KNOWLEDGE IS SAVINGS

Typically the best place to start is determining what to include in your

submission by asking your property insurance broker… Knowing what a particular carrier or underwriter is looking for in an accurate submission

could have a significant impact not only upon the cost and coverage but also on the terms and conditions that the carrier extends to you.

 Review your insurance policy definitions and insurance exclusions.

• Replacement cost is the cost to construct or replace, at one time, an entire building of equal quality and utility. Modern materials and current methods, designs and layouts are utilized to estimate current replacement cost. Replacement cost does not take into consideration improvements necessary to conform to revised/updated building codes, demolition/debris removal, site accessibility/work, reuse of building components/services, overtime, bonuses for labor, soft costs, extraordinary fees, premiums for materials or other contingencies. For insurance purposes, the costs for labor, materials, overhead, profit and fees are those in effect at the time of the loss.

• Reconstruction cost is the cost to replicate, at current prices, using like kind and quality materials, construction standards, design/layout and workmanship.

Reconstruction costs also include a number of site-specific and process-related costs that are experienced when rebuilding after a loss. These additional expenses are related to repair/restoration contractors, construction process, time urgency, limited site mobility, adjoining non-construction areas, insured’s property, economies of scale, dangerous/hazardous materials and mold concerns.

• Standard Insurance Exclusions (e.g., underground piping, foundations, footings, excavation, grading, etc.)  Establish what underwriting data is required.

This is critical as the requirements not only vary among underwriters but also

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among types of properties, regions and other delineations. For example, in Florida underwriters will have concerns regarding hurricanes (wind-resistant windows, roofs, etc.), while in California underwriters will want to know if buildings are earthquake safe (structure concerns). It is important to verify with the underwriter what information they will need.

WHAT TO INCLUDE IN YOUR SUBMISSION

Today, when an insured receives a request for a statement of values from their broker or insurance carrier, the savings and the best terms are typically in the details of that submission; not the details of the policy, but the underlying data an insured provides to its broker for submission to the markets. Knowing and understanding what you should be submitting for your property insurance quotes—especially if you have substantial property in catastropheprone areas—can lead to better pricing and more favorable coverage terms. This can benefit you in the long run from a risk management perspective.

Typically the best place to start is determining what to include in your submission by asking your property insurance broker. In most instances, your broker knows the carriers that are best suited to your needs and understands the specific approach to underwriting and catastrophe-prone property that those individual carriers may have. Knowing what a particular carrier or underwriter is looking for in an accurate submission could have a significant impact not only upon the cost and coverage but also on the terms and conditions that the carrier extends to you.

It is important to remember that uncertainty adds cost and can limit coverage terms. It is advisable to ask your broker what specific information the carriers are looking for that will have the greatest impact on cost and terms—having solid, supportable valuation, construction, occupancy, protection and exposure data is a great start.

Collecting and providing secondary exposure data can really pay dividends. Information such as construction condition, roof pitch, fire/intrusion protection, location, etc. might not appear to be important, but in most instances it will be.

There are many secondary exposure data points that when collected and submitted will provide the underwriter with a better understanding of the exposure they are looking to insure.

Understanding the risk allows underwriters to have confidence in your submission. If you provide the information that an underwriter is looking for, they know they are dealing with someone who has a vested interest in doing their part. Think of it this way…if an underwriter is looking at your submission for the first time and it is sub-par, it’s like showing up to a professional job interview in shorts and a t-shirt.

Put on the suit! First impressions are lasting; a positive one will benefit you in the long run.

IDENTIFY OUTLIERS— WHAT TO LOOK FOR

• Identify high and low values ($ per square foot); that is, what’s your “deductible”?

• Construction classes vs. occupancy: Determine if the construction class makes sense for the occupancy of a building (e.g., house being fire resistive, water tank or tower being joisted masonry, etc.).

• Rounded square footages: This is of great concern from an appraiser’s perspective.

Rarely is a building, say, 5,500 sf. More likely it is something like 5,582 sf. That difference matters. This information must be accurate.

• Replacement or reconstruction cost: As previously discussed, this is an area that is critical to be defined. Replacement (modern kind / modern quality) and reconstruction (like kind/like quality) result in vastly different values.

CROSS-SECTIONS

Identify a cross-section of property to be inspected. Many think if they do an appraisal, they have to appraise everything, which can be overwhelming. However, this is simply not the case. A wise yet manageable approach includes the following: • Sample common occupancies. Utilize a variety of building styles, types, construction materials, internal finishing, HVAC systems, etc.

• Identify unique, ornate or monumental/ historical buildings as these buildings typically have significantly higher construction costs and associated values.

• Develop costing models for secondary buildings based upon recent construction projects and apply those costs to the appropriate buildings in the portfolio.

your information is lacking, physical inspections may be required and you may want to perform a pilot study prior to implementing a programwide appraisal.

These efforts can be completed with the assistance of or in collaboration with an experienced valuation consulting firm.

ADDITIONAL APPRAISAL BENEFITS

Besides collecting the building and structure data that the underwriters are looking for and obtaining accurate values of the buildings and structures, conducting an appraisal has additional benefits. When is the last time you verified all of your addresses? Are all of the street names correct with the appropriate street, avenue, circle, etc. properly classified?

Are you 100 percent sure that all of your buildings are reported to you and listed on

your Statement of Value (SOV)? Appraisals for large property organizations, especially municipalities and school districts, often find buildings and sites that are not scheduled on their SOV. Conversely, appraisals often identify buildings that were demolished or sold that are still listed on the SOV. An appraisal is a great tool for updating your inventory of properties and verifying your assets.

DATA’S BENEFITS

The benefits of accurate, thorough and current data are, at minimum, fourfold. Solid data will result in cost savings, enhanced terms, more comprehensive coverage and superior claims settlement. Why settle for anything less when the data is there, waiting to be collected?

Brain Roe is a managing director with CBIZ Valuation Group’s Tangible Assets practice.

We are grateful to the men and women who serve our communities.

MODEL FOR SUCCESS

Start by identifying any areas of concern.

Despite what many think, there really is a lot that you can do yourself/internally. Once you have completed this review, reach out to a valuation professional to assist with the areas you’ve identified as a concern and perform a sampling of physical inspections.

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THE BREAKTHROUGH IMPACT OF TECHNOLOGY ON

Catastrophic Claims

BY ZACK CRAFT

F

EW INJURIES IN WORKERS’ COMPENSATION ARE AS HEARTBREAKING AND AS COMPLICATED AS CATASTROPHIC CLAIMS. This is when an injury is so severe that the worker’s life is changed in an instant, and there is often little to no hope of recovery. Not only is the individual likely to be on permanent disability, the impact on the family is catastrophic as well.

Over time, without a means of continuous in-home monitoring, the injured worker’s condition can worsen and may require more intensive medical care and assistance.

Wearable and smart technology can make a significant difference in managing the ongoing care of injured workers who have suffered a catastrophic injury. Once discharged from the hospital, it is critical that the patient complies with clinical recommendations to ensure optimal outcomes. In order to monitor their condition, smart devices and products can be placed into the home setting, transmitting data to the care team; through the data, the team can receive updates on the injured worker’s health and activities. This smart technology can also dramatically improve the quality of life for the injured worker by developing the ability to function independently, which may, in turn, require less in home care.

With appropriate communication and injured worker-focused data collection, you can alleviate privacy concerns so injured workers are willing to wear and use such devices with family approval.

There are three areas in which this technology can be utilized: rehabilitation equipment, “smart” home environments, and data monitoring and reporting.

APPLICATIONS IN REHABILITATION EQUIPMENT

After an injured worker suffers a catastrophic injury, he or she may be confined to a wheelchair.

Spending the majority of the day in a seated position can lead to additional health complications, such as pressure sores, severe edema and postural deformities. The next generation of wheelchairs offers a variety of options for a claimant’s mobility needs like Bluetooth capability, which can assist the injured worker with everyday functions, such as opening a door or turning on the lights in their home.

Wearables can track how much a wheelchairbound injured worker is physically exerting themselves. For example, a “smart” wheelchair can now report back on how many times someone is propelling in his or her wheelchair. Such data can determine whether or not the wheelchair is being used correctly, which can lead to adjustments in an injured worker’s clinical plan.

Exoskeletons, a headline-making wearable product line, are giving people a greater sense of independence and the ability to walk upright

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THE BREAKTHROUGH IMPACT OF TECHNOLOGY ON CATASTROPHIC CL AIMS

THE STATE OF WEARABLE TECHNOLOGY IN 2017 • Wearable technology is becoming increasingly invisible, making the devices more appealing to non-techies.

• Wearables are becoming “smarter.” New devices and applications are coming into the market that can integrate data from multiple sources, including social media accounts.

• Skin patches can detect chemicals in the body, which can help individuals with heart disease; sleep sensors can effectively diagnose sleep conditions, such as sleep apnea; epileptic patients can be monitored and data can be uploaded to any smartphone in order to monitor and predict seizures.

• Wearable devices can help monitor serious health conditions, such as diabetes, respiratory conditions or rehabilitation from a stroke.

• Wearables are becoming more user-friendly, more fashionable, easier to use and less visible.

• Virtual reality is gaining traction as part of the wearables world, with devices such as VR headsets hitting the market. Analyst firm CCS Insight expects sales of VR and AR to reach 24 million devices by 2018, equating to more than $4 billion.

again. Exoskeletons, which fit primarily on the pelvis and legs, can be used by injured workers that have suffered a spinal cord injury. For example, the exoskeleton can help someone walk more efficiently compared to a prosthetic leg because the structure is now taking pressure off the claimant’s hip, reducing risk of future injuries.

Tablets and other digital devices can aid those who suffer from brain injuries by testing cognitive abilities with the use of memory-testing games and applications. Injured workers with active brains will heal or reconnect much faster than their less neurologically active counterparts.

GPS-enabled devices and smart watches can provide directional assistance to injured workers suffering from traumatic brain injuries. The smart watch has the ability to tell the injured worker how to locate the doctor’s office, which provides a greater sense of reintegration into the community while simultaneously tracking the journey to ensure safety.

APPLICATIONS IN THE HOME

Post-discharge, injured workers with a catastrophic injury typically require an increased level of assistance in performing virtually every task.

Whether it’s turning on the lights or adjusting a thermostat, these everyday functions can prove to be extremely daunting for an injured worker.

Wearable and smart devices activated through voice commands can enable the individual to accomplish everyday responsibilities, such as answering the phone, regulating the climate and locking the front door. Achieving this level of independence can potentially reduce the need for in-home assistive care.

Tablets and smart phones are proving to be extremely useful in the home care setting as well.

In the past, if a patient wanted to ask a question or make sure he or she was doing an exercise correctly, the only option was to wait for scheduled in-person meetings with an appropriate caregiver, which delayed progress and recovery. But with the technology available in many tablets and smartphones, the injured worker is now able to connect almost instantaneously with someone from the care team via a video conferencing application. This constant connection also enables the injured worker to notify the care team of any problems while

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PUBLIC RISK | JULY 2017

allowing for the care team, patient and family to stay closely in touch with one another.

TRACKING HEALTH AND PHYSICAL CONDITION THROUGH MONITORING DEVICES When developing a treatment plan for injured workers who have suffered a traumatic brain injury or an injury affecting mobility, it’s critical to include recommendations for exercises. Many injured workers often become inactive due to their injuries. Wearables can play a role in promoting exercise by tracking their movements, as well as improving compliance with treatment plans. With sensors embedded into pieces of clothing, these devices can track metrics such as physical activity, heart rate, fatigue, stress and mood. This presents the care team with a more complete picture of the individual’s status.

This data can help the care team better track the injured worker’s health and physical condition in order to keep the claim moving forward, maintaining compliance and providing the appropriate level of care.

There’s no question that sleep plays an important role in one’s health, so sleep is especially crucial for an injured worker. If someone isn’t sleeping well, or they’re waking up every other hour in excruciating pain, chances are they are not going to comply with recommended exercises. However, a wearable can track and transmit sleeping data, illustrating a clearer picture of what’s going on at home for the clinical team.

Adjustments can then be made to the treatment plan.

EMBRACING THE NEW FRONTIER IN WORKERS’ COMPENSATION These devices may seem futuristic for the world of workers’ compensation, but the reality is that they are readily available today. With improved virtual monitoring and 24/7 data, individuals suffering from catastrophic injuries can enjoy more independence, maintain better health, avoid relapses and deterioration, reduce the need for in-home assistance and even ease some of the burden that family members experience.

Resource: Medium, Wearables — Hype or Hope?

Top 10 Trends in Wearables Zack Craft is vice president and national product leader at One Call Care Management.

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