Florida Worker’s Compensation Joint Underwriting Association Safety Committee April 26 Teleconference Recap

A meeting of the Florida Worker’s Compensation Joint Underwriting Association (“FWCJUA”) Safety Committee (“Committee”) took place on Thursday, April 26, 2007.

The key topic of discussion was the Cause, Frequency and Severity Analysis conducted pursuant to the FWCJUA’s 2007 Business Plan (“Plan”), which states that the FWCJUA will “promote loss prevention and safety in the work place of [its] policyholders.”

The Plan requires the FWCJUA to analyze causes of loss and modify the safety program to satisfy any deficiencies given the FWCJUA’s book of business. This Analysis was completed by FWCJUA staff and St. Paul Travelers (“Travelers”) personnel, and it was reported that it complies with and satisfies the FWCJUA’s policy. The following is a brief summary:

 

Volume of Business

• Statistically, the number of policies in force during 2006 decreased to 3,950, compared to 5,246 for policy year 2005 and 5,950 for policy year 2004

• The number of engineering surveys also decreased significantly to 577 during calendar year 2006 as compared to 902 in 2005 and 750 in 2004

• The drop in surveys is attributed to a drop in claims

• The focus has been surveying the construction trades (67% of all surveys were on construction risks)

Composition of Business

• The FWCJUA writes mainly minimum premium policies, which are 37.9% of the business, up from 36.2% in 2005 and 31.5% in 2004

• These policies are primarily generated from the construction trades

• The FWCJUA is writing at least some risks that adhere to the principles for a drug-free workplace. In addition, there is an increase in safety programs and 4% of the FWCJUA’s policyholders receive the safety credit

Risk Distribution

• 66% of the policies are in the high hazard classes

• Risk distribution by hazard code remained constant from 2005 to 2006

Claim Counts

• The number of claims reported in 2006 decreased to 492

• This decrease compares favorably to the policy reduction the FWCJUA’s book of business has experienced from 2006 to 2005

• Over 60% of all claims were lost time claims and the average size of the claims has remained at or below the prior year’s average

• Out of the 8,816 claims filed since the FWCJUA’s inception, there were only 280 claims open as of December 31, 2006, of which 21 had been open prior to 2003

• Over the last three (3) years, the construction industry has accounted for 73.8% of the claims and 78.3% of the claim payments on minimum premium policies

• The FWCJUA’s goal has always been to close claims and settle as soon as possible, and claims are being closed much faster than before the enactment of the 2003 reforms

Claim Reporting

• The FWCJUA has experienced late reporting of claims since inception

• Health care providers are a source of the late claims because they report claims after determining who they think has coverage

• Nearly 11% of all claims are reported over sixty (60) days after the date of loss, and this accounts for 13% of claim payments

• There has been an increase in the number of claimants that are classified as illegal aliens in policy year 2006

Severity

• Since inception, the FWCJUA faces a severity rather than a frequency problem

• 76% of the loss payments over the last three (3) years have related to claims totaling $50,000 or more

• The type of business written is typically small construction and transportation risks, including clean-up operations and supervisory clerical personnel

• The principal causes of the severity problem are (1) falling from roofs and second/third level floors; (2) being struck by falling objects; and (3) motor vehicle accidents

• The percentage of serious injury claims in 2006 remained fairly constant as compared to 2005

• There were 365 claims of which 29 were serious injury claims in 2006, compared to 528 claims of which 41 were serious injury claims in 2005

Frequency

• The frequency data, like the severity data reflects the concentration in the construction and related trades

• The principal causes of the frequency problem are (1) strain from lifting; (2) falling; and (3) being struck by falling objects

It was stated that the key to improvement is the promotion of loss prevention and safety programs. A motion was passed that the Committee recommend to the Board of Governors (“Board”) that letters be mailed to all FWCJUA policyholders, outlining the various resources available on the Travelers Risk Control website (www.riskcontrol.com) at no additional cost. The Committee suggests that the letter be mailed with a sample of the Risk Control News Brief, which may also be accessed electronically.

The Committee passed a motion to recommend to the Board the mailing of various Risk Control online resources along with the Employer’s Affidavit and Quarterly Tax Form reminders. An example of what could be contained in the safety reminder is the 2007 Safety Webinar Series. This new series gives policyholders the opportunity to hear presentations from industry experts over the internet, at no additional cost.

The Committee passed a motion to withdraw the 2006 recommendation that language addressing safety be added to premium bills. The reasoning given is that employees or potential claimants would not necessarily be the ones reviewing the information. Instead, the Committee would like to concentrate on the awareness and education approaches discussed above.

Elissa Pacheco, Chairperson of the Committee, proposed that loss control surveys be performed at least once every three (3) years for policies under $25,000 in premium, but sooner if there is a claim. Ms. Pacheco also proposed that severity and frequency surveys be performed by premium ranges rather than by class codes, beginning next year. The Committee adopted both proposals and will be presenting them to the Board.

 

Should you have any comments or questions on the above information, please do not hesitate to contact this office.