Public Risk March 2015 by Moire Marketing Partners

Published by the Public Risk Management Association

www.primacentral.org

MARCH 2015

Choices Help Public Entities Limit Liabilities While

PROTECTING RETIREE BENEFITS

PERSONAL USE OF PUBLIC ENTITY VEHICLES MODERNIZING CLAIMS

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Volume 31, No. 3 | March 2015 | www.primacentral.org

The Public Risk Management Association promotes effective risk management in the public interest as an essential component of public administration. PRESIDENT Regan Rychetsky, ABCP Director, HHS Enterprise Risk Management and Safety Texas Health and Human Services Commission Austin, TX

CONTENTS

PAST PRESIDENT Betty Coulter Director of Risk Management and Insurance University of North Carolina at Charlotte Charlotte, NC PRESIDENT-ELECT Dean Coughenour, ARM Risk Manager City of Flagstaff Flagstaff, AZ

6 CHOICES HELP PUBLIC ENTITIES LIMIT LIABILITIES WHILE PROTECTING RETIREE BENEFITS

By Sam Fleet

DIRECTORS Ed Beecher Risk Manager City of Pompano Beach Pompano Beach, FL Terri Evans Risk Manager City of Kingsport Kingsport, TN Scott Kramer Risk Manager Montgomery County Commission Montgomery, AL Amy Larson, Esq. Risk and Litigation Manager City of Bloomington Bloomington, MN

10 PERSONAL USE OF PUBLIC ENTITY VEHICLES

Scott Moss, MPA, CPCU, ARM-E, ALCM P/C Trust Director CIS Salem, OR

By Aaron Stone

Tracy Seiler, ARM-P Director of Risk Management Services Texas Association of Counties Austin, TX

15 MODERNIZING CLAIMS

NON-VOTING DIRECTOR Marshall Davies, PhD Executive Director Public Rick Management Association Alexandria, VA

By Jose Tribuzio

EDITOR Jennifer Ackerman, CAE Deputy Executive Director 703.253.1267 • jackerman@primacentral.org

ADVERTISING Donna Stigler 888.814.0022 • donna@ahi-services.com 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.

IN EVERY ISSUE 4 News Briefs | 19 Advertiser Index | 20 Member Spotlight

MARCH 2015 | PUBLIC RISK

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Message from PRIMA President Regan Rychetsky, ABCP

EMERGENCY PREPAREDNESS!

s I am writing this, an icy winter storm has its grip from New England to the Carolinas. Major power outages, downed power lines and large trees are just the notables. Public risk management professionals face many challenges in jobs, but one of the biggest is dealing with man-made and natural disasters. I am fortunate to be employed with an agency that has a role in statewide preparation for, response to and recovery from man-made and natural disasters, and I believe we as risk managers need to diversify to include this in our skillset. From wildfires, tornadoes, flash floods and winter storms; to domestic or foreign acts of terrorism; to hurricanes or nor’easters, our services can be invaluable. In the last few years we have seen Hurricane Ike devastate the Texas coast and Superstorm Sandy wreak havoc on the east coast; both causing billions of dollars’ worth of damage and tremendous loss of life and personal loss. The hazards these storms bring can be unique; human/ animal remains, downed power lines, submerged debris with nails, broken glass and other sharp objects which can cause wounds and expose the worker to MSRA; extreme cold to extreme heat and humidity; and these are just a few of the hazards your workers will encounter. While most municipalities have emergency managers posted to the local and state emergency operations centers for preparation, response and recovery; risk managers must still work to create safety plans for their employees who will be part of preparation, response and recovery efforts of their employer and knee deep in the debris.

As a nation, we have seen an increase in rolling brown outs and black outs during extreme heat and cold, taxing our infrastructure and creating new risks to identify and determine mitigation strategies to reduce loss. We must also be vigilant regarding man-made disasters, seen as recently as the Boston Marathon bombing of 2012. Keeping employees and the general public safe during these and similar special events is, and will continue to be, one of the biggest challenges we face. It is imperative that today’s risk manager diversify to be viable to their employer in preparation, response and recovery from man-made and natural disasters.

While most municipalities have emergency managers posted to the local and state emergency operations centers for

I encourage you to learn more about emergency management and the incident command system. Facilitate communication with your emergency management partners and develop a hazard analysis for your entity. Learn what exposures your workers will face based on the hazards you have identified. Develop safety plans for staff that will need to respond to such hazards…utilities, power, fire, police and EMS to name a few. Winter is still here, but spring storms and hurricane season are fast approaching, so be prepared.

preparation, response

Regards,

be part of preparation,

and recovery; risk managers must still work to create safety plans for their employees who will

response and recovery efforts of their Regan J. Rychetsky, ABCP 2014–2015 PRIMA President Director, HHS Enterprise Risk Management and Safety Texas Health and Human Services Commission

employer and knee deep in the debris.

MARCH 2015 | PUBLIC RISK

News Briefs

NEWS

BRIEFS SNOW PLOW TRACKING APPS KEEP CITIES ACCOUNTABLE As another storm flung snow at Chicago, Alexandra Clark wondered how she'd get to work. Like an increasing number of snowbound city dwellers, she had a ready tool at hand: an app that tracks hundreds of city snowplows in close to real time. But something seemed out of whack. “Plow tracker said my street was plowed an hour ago—Pull the other leg,” the 31-year-old video producer tweeted at the mayor's office, including a photo of her snowed-in street. Timesfreepress.com reports that across the country, local leaders have made plow-tracking data public in free mobile apps, turning citizens into snow watchdogs and giving them a place to look for answers instead of clogging phone lines at city call centers to fume. Chicago and New York introduced apps in early 2012, and Seattle has gotten into the game, as have some places in Maryland and Virginia. Boston briefly experimented, too, though their site was so popular it crashed during a February 2013 storm, hampering the response effort. The city hasn't made another attempt. The apps tap into GPS data already collected by the city to direct plows, so no extra money is spent in the creation. It's a politically deft move by cities where bungled storm responses have cost officials their jobs, and a way to show skeptics that plow drivers are working hard—and not just clearing the streets of the wealthy and well-connected. But in New York and Chicago, in particular, the tech savvy have scrutinized the sites. Armed with the ultimate proof—the cities' own data—they've needled public officials about snow-cleanup shortfalls on social media. “It puts a lot of pressure on everybody involved to be more responsible and to be more accountable,” said Priscilla Dixon, a Chicago lawyer who has used the app and is a believer in engaging the city via social media.

MICHIGAN COUNTY DEBUTS TEXT-TO-911 SYSTEM For some emergencies, calling 911 isn't the most feasible option. You could risk tipping off your location to a home burglar. You could be stuck in backcountry, where the cell phone signal is so weak that a call won't connect. Or perhaps, you can't hear. In these and other cases, texting can be a lifesaver. In Oakland County, it's about to become an option, reports the Detroit Free Press. “We want to have the latest and best technology that will allow us to help people when they call 911, or text 911, or make any contact to get help,” Oakland County Sheriff Michael Bouchard said. In the first three months of 2014, there were 21,683 attempts to text to 911 across the U.S., with 272 of them in Michigan, according to TeleCommunication Systems, the company working with Oakland County and wireless service providers to enable text-to-911. But the usual response was a bounceback message: “Make a voice call to 911 for help; text to 911 is not available.” Through most of Michigan and the U.S., calling 911 is the only reliable way to get emergency help from police, fire or emergency medical services, despite the widespread use of cell phones that text and send photos and video. It's only for Short Message Service; no iMessages or SnapChats. And they're asking people to use it only in a pinch. “Call when you can; text when you can't,” said Mel Maier, chief of emergency management operations for the Sheriff's Office. The text-to-911 service works much like any text-message conversation, with the operator using a web browser to respond within seconds. Officials emphasize that it's much more efficient to have a phone conversation if possible. But even a text of “Help,” and nothing else, will generate a response to the location triangulated using cell towers—as is done now with phone conversations, Maier said. Because of cooperation with service providers such as Verizon Wireless and technology already in place, text-to-911 won't be any more expensive to operate than the existing service. “There's no extra cost right now for the county to incur on this,” Maier said.

PUBLIC RISK | MARCH 2015

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THE NEXT DIMENSION IN EMERGENCY PLANNING HAS ARRIVED Using about $140,000 in Homeland Security funds, Pittsburgh officials have purchased two high-tech cameras that can record and plot three-dimensional digital images that will serve as blueprints in emergency situations. “The idea is that if an event happens, we have real-life [images]. This is what it looks like inside,” said Raymond V. DeMichiei, deputy director of the city’s Office of Emergency Management and Homeland Security. “We can use it for planning wherever a natural or man-made event may occur where you need to have that information in order to undertake emergency operations.” The main sites are described as “Critical Infrastructure/Key Resources,” DeMichiei said. The list will include stadiums, arenas, schools, malls, dams, bridges, power facilities and water treatment plants, reports the Pittsburgh Post-Gazette. “We did some of this in 2009, when Homeland Security came in and did it for us in preparation for the G20 [Summit],” DeMichiei said. “But the technology has improved. It’s a lot better way to get a feel for where you’re at and what you’re doing if you have a three-dimensional image rather than a two-dimensional piece of paper.”

“SWAT teams want to have a tactical advantage. The better information you have, the better the tactics can be and the higher the probability of success.” The cameras also can be used at crime and accident scenes to accurately record aspects and dimensions that usually would take officers hours to get and sometimes get wrong. The two cameras will be used throughout Region 13, which includes 13 counties in Western Pennsylvania covering 9,550 square miles, with a population of more than 3 million, and more than 700 local municipalities. DeMichiei said it’s likely that one camera will stay in Allegheny County and the other one will be rotated to the others. Richard P. Policz, operation and training officer for Greene County Department of Emergency Services, looks forward to mapping schools. “The teams are going to be able to visualize the inside of the school on a computer before they make entry,” he said. “Once we go through and do this, instead of having to take our new people on a tour somewhere, we can have this and take them on a virtual tour without their having to leave the comforts of the fire station.”

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MARCH 2015 | PUBLIC RISK

Choices Help Public Entities Limit Liabilities While

PROTECTING RETIREE BENEFITS By Sam Fleet

PUBLIC RISK | MARCH 2015

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ublic entities are charged with a dizzying array of tasks and responsibilities, the breadth and scope of which continually change as a result of the volatile environments they operate in and the many groups they reach. While no public entity ever sets out with the intent of being a retireeÂ benefits administrator, this obligation is a reality may face. And the employees who serve public entities are a dedicated group, people whose livelihoods reflect an extension of their employers. Eventually, however, workforces age out. As these employees enter their retirement years, the extended healthcare benefits that they continue to receive long after their work has ended will pull more time and resources away from the public entitiesâ&#x20AC;&#x2122; core focus. And this requirement toÂ meet the healthcare obligations of their former employees with less time and fewer resources, and often in more challenging financial landscapes, can create a squeeze that becomes exponentially tighter.

Additional requirements, including the need to list future retiree benefit obligations on balance sheets already tightened by smaller budgets, uncertain economic conditions and eroding tax bases, only creates a more challenging situation. What options exist for a public entity when it cannot ignore the very core and certain benefits that former working professionals depend on and have been working toward? This quandary has forced many public entities to devote greater focus on how to cover the escalating costs associated with other post-employment benefits (OPEB) obligations in a cost effective way. The use of Medicare Exchanges (a separate concept from healthcare exchanges that several states have established to manage individual plans in accordance with the Patient Protection and Affordable Care Act) have become increasingly popular in the private sector, a concept which began roughly 10 years ago and includes an employer-defined

stipend that each retiree can use while selecting from multiple options, including Medicare Supplemental insurance, Medicare Advantage and Medicare Advantage Prescription Drug Plans. Those employers that have elected to pursue Medicare Exchanges have seen mixed results. The advantages for employers are real and identifiable; there are cost certainties that are determined by set pricing that can then be multiplied by the number of active retirees, and the employer is also released from group plan restrictions and requirements established by ERISA. There are, however, some drawbacks, particularly for public entities. Retirees, many of whom endured the lower scale of wages throughout their careers in the public sector for the sake of the lucrative post-retirement packages that awaited them following retirement, are left to make difficult

MARCH 2015 | PUBLIC RISK

Choices Help Public Entities Limit Liabilities While Protecting Retiree Benefits

It’s a solution that satisfies and balances both sides of the equation, delivering public entity employers and their retirees the healthcare benefit outcomes they each want and need.

and often confusing marketplace-related decisions for themselves. With no clear direction on the various ways benefit plans differ and the subtle nuances associated with plans that may, on the surface, appear similar, the process can be confusing and frustrating. This is especially true for a retiree population that, more often than not, simply wants “the same thing they’ve always had.” This confusion is then passed on to staffers at public entities with already strained resources, in the form of meetings, phone calls or online resources, all of which can be overwhelming by an increasing number of retirees in need of assistance. This is often made more difficult by the frustration exacerbated retirees feel while they attempt to make decisions in an area in which they have had no knowledge or experience.

THE BEST OF BOTH WORLDS However, because the healthcare industry continues to evolve in an effort to cope with these changes, there are now options that can help public entities navigate the challenges their retirees face—plans that are insufficient for their required needs, high out-of-pocket costs, incomplete coverage—while also mitigating the drain on employers’

PUBLIC RISK | MARCH 2015

time and financial resources. Hybrid plans help public entities reduce costs, administrative burdens and eliminate OPEB liabilities. At the same time, the retirees are better protected through a simplified process that offers customized packages that match the existing benefit plan to which they are accustomed with the option to search the Medicare marketplace if they so choose. The advantages of a private Medicare exchange with a custom option for both groups run deep. Because this hybrid model can be ERISA exempt, administrative filings and the associated liabilities can be eliminated. And, if the public entity is under court order or is obligated by grandfathered requirements, a benefit plan can be customized to match the current plan design. In addition, the hybrid approach takes over the role of assisting retirees. The hybrid approach also provides complete call center support, with experienced licensed benefit advisors, as well as online support for technology-savvy seniors. Retirees enjoy a number of benefits as well. Medical plans can be secured with multi-year guarantees, which provides financial stability over time because the plans are not continually exposed to fluctuations in the open market. A choice of plans also can be presented to meet various criteria for individual pricing and coverage—including a more robust pharmacy benefit, often an important consideration as retirees age and cope with increasingly chronic medical needs. All of these choices can be developed with composite national pricing, insulating the coverage from changes that could arise because of age, gender, ZIP code, health condition and weight/smoking status. A comprehensive third-party consulting service also helps restore peaceof-mind for the retiree while simultaneously eliminating

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WHAT PUBLIC ENTITIES WANT

WHAT RETIREES DEPEND ON

• Reduction of liability and balance

• The same or better coverage as their

sheet stability

current plan

• Reduced administrative workload

• A feeling of support from their former employer

• A feeling of good will from retirees

• Clarity in plan offerings and coverage stability

and the community

• Someone they can turn to for clear, concise answers

administrative burdens for the public entity while restoring a feeling of good faith that comes with knowing former employees are taken care of.

A PRIVATE MEDICARE EXCHANGE WITH CUSTOM OPTIONS— A BETTER WAY FOR PUBLIC ENTITY EMPLOYERS AND RETIREES While the economic turbulence of the last eight years has spared few groups, if any, public entities have endured the roughest ride, for the longest time, regardless of size or location. These trials have been made even more challenging with the implementation of the 2006 Government Accounting Standards Board regulation (GASB 45), which forced public entities to release estimates of liabilities related to future retiree health and dental benefits. And the numbers have been daunting. The Private Medicare Exchange model with a custom option outlines a strategy that identifies the needs of a retiree population and provides them with a subsidy to purchase healthcare coverage with a guaranteed, customized option that meets the individual’s’ specific needs while reducing any added administrative burden. The approach outsources administration, provides real dollar savings, eliminates confusion and can match current plans including the option to maintain full Rx coverage through the donut hole. It’s a solution that satisfies and balances both sides of the equation, delivering public entity employers and their retirees the healthcare benefit outcomes they each want and need. Instead of a standardized Medicare Exchange approach, public entities are free to structure a customized alternative that gives former employees a free market option

to pick an individual plan or selecting a custom-designed individual plan that is similar to their current coverage. This assimilation of the group plan approach with the added benefit of individual choice satisfies the needs of retirees who don’t want to change what they have now, creating an effective and efficient solution for everyone. Samuel Fleet is the president of AmWINS Group Benefits.

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MARCH 2015 | PUBLIC RISK

PERSONAL USE OF

Public Entity Vehicles By Aaron Stone

ocal governments often issue their employees company cars for use for work-related travel. Sometimes personal use of these vehicles is sanctioned for specific jobs, such as local law enforcement or municipal works, but other times employees simply use the vehicle for personal reasons due to lack of supervisory or other oversight, which can expose local governments to multiple liabilities. So while government entities can see numerous benefits by allowing employees to use cars for personal use as well as work, they must also consider risks that may be involved and ensure specific policies and procedures outlining use of company vehicles.

PUBLIC RISK | MARCH 2015

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Law enforcement entities have allowed personal use of vehicles for decades… Under such plans, a local government entity assigns every police officer a car, rather than maintaining a pool of cars, and LAW ENFORCEMENT USE Law enforcement entities have allowed personal use of vehicles for decades. The practice first started in Lexington, Kentucky in the 1970’s, and is often referred to as the “Lexington Plan” or “Take Home” plan. Under such plans, a local government entity assigns every police officer a car, rather than maintaining a pool of cars, and allows the officer to use the car for both work and personal reasons. The officer keeps the car at his or her home while off-duty and is generally expected to park the car in some conspicuous place. Some of the many benefits of this method are: • Crime prevention. Criminals are less likely to commit crimes in areas with an obvious law enforcement presence. • Quicker response time to critical incidents. Officers have all the equipment they need in their car and do not need to go to the station to gear up. • Extended vehicle life. Officers are more likely to maintain “their” car when they view it as a personal car and not simply for work. • Cost savings and fewer overtime hours or benefits. Officers are considered on-duty when they sign onto the Mobile Data Terminal (MDT) or computer system in their vehicles and, under IRS regulations, officers may be exempt from paying taxes on the use of their vehicles. However, the benefits of this type of vehicle program must be weighed against the potential costs, such as the increased liability exposure for accidents resulting in

personal injury and/or property damage. For example, consider the scenario in which an officer has finished his/ her shift and is returning home in an assigned squad car. The officer runs a red light and causes an accident resulting in significant personal injuries to occupants of the other vehicle. Regardless of whether the officer is on-duty or not at the time of the accident, the employing entity may be responsible for the damages. Further, if the officer is injured by the negligence of the other driver, the entity may be exposed to an Uninsured or Underinsured Motorist claim. Compare this to a similar scenario under which the officer is driving his personal car home after completing his shift and causes the same accident. Presumably, the officer’s personal insurance carrier, not the municipality’s, will respond to covered losses.

allows the officer to use the car for both work and personal reasons. The officer keeps the car at his or her home while off-duty and is generally expected to park the car in some conspicuous place.

GENERAL MUNICIPAL USE Employee usage of municipal vehicles usually falls into one of two categories: assigned use of a specific vehicle similar to the police officer “take home” plan discussed; or, specific, limited use of a pool vehicle for job-related matters. In the first category, the municipality generally limits participants to key employees (e.g. Mayor, Fire Chief) or to positions that require a great deal of local travel. In the second category, the municipality maintains a pool of vehicles for employee job-related usage. The employee is required to check out the vehicle and then return the vehicle at the conclusion of its use. Similar to law enforcement agencies, municipalities create these programs based on a perceived cost savings or on a specific job-related basis. Assigned use vehicle programs are

MARCH 2015 | PUBLIC RISK

Personal Use of Public Entity Vehicles

subject to benefits and costs similar to those discussed for law enforcement. Pool vehicle use programs, however, can result in additional costs. Employees may be more inclined to engage in personal use of the vehicle as they are frequently out of sight of their immediate manager. Personal errands are likely to result in additional mileage put on the vehicle and additional maintenance costs. Also, the increased mileage exposes the employee (and others) to the increased potential for accidents.

PERSONAL CLAIMS ARE ENTITY CLAIMS Major claims involving unauthorized personal use of entity vehicles are common and the costs to the entity can be substantial. Employees often do not realize that their entity could be responsible for the damages resulting from an accident, if the employee is found at fault. Regardless of fault, an entity will still incur some costs associated with the accident, including any deductible.

PUBLIC RISK | MARCH 2015

Employees using entity vehicles for personal use without the consent of their employer are putting the employer at risk to possibly pay damage amounts up to the total limits of their insurance policy. It is also worth noting that a public entity’s loss experience can be affected for many years to come. Some of the more common scenarios where claims are generated in the personal use category include: • • • • •

Commuting to and from work Vehicles taken home for on-call service capability Taking children to school Lunch breaks and General personal errands not connected with work

Frequently, the accidents arising from these scenarios occur because either they have not been anticipated, or proper procedures have not been implemented to protect the entity against them. The presence of passengers in a company vehicle further complicates matters. It is difficult enough to contemplate and limit the exposure presented by the use of company vehicles, but entities must also consider the potential additional exposure passengers present. All passengers are potential future litigants, including family members, friends and acquaintances. This added exposure may include claims asserted under negligent driver theories, added uninsured or underinsured exposures or claims presented under med-pay or personal injury protection coverages. These exposures

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Personal Use of Public Entity Vehicles

Allowing local government employees to use government owned vehicles makes sense for many municipalities. Permitting employees personal use of those vehicles can also make sense and benefit both the employees and the entity. However, despite these benefits, local governments must also consider the risks that may be involved and try to mitigate these risks through the practice and enforcement of specific policies and procedures outlining use of company vehicles.

mount quickly, emphasizing the importance of implementing procedural safeguards.

HOW TO AVOID THE RISK The simplest way an entity can avoid risks related to vehicle use is to prohibit the personal use of entity-owned vehicles. In many instances, however, total prohibition is not feasible. Therefore, to better manage the potential exposures, municipalities should create and enforce specific policies, procedures and guidelines covering an employee’s personal use of an entity vehicle. These guidelines may include the following: • A policy specifying what is considered personal use of the entity’s vehicles, including what is permitted and what is not. • Authorized drivers. Generally, the employee should be the only authorized driver. This authorization may be extended in limited emergency situations. • Authorized passengers. • Personal use of entity vehicles requires prior written approval. • The same entity driving restrictions apply off-duty as they do while on-duty. • Typical exclusions for entity vehicles: • No hitches, racks, or plows • No towing of boats, trailers, or campers • No for-profit use

Regardless of the type, any public entity vehicle program should be regulated and have a specific, written policy regarding who is entitled to participate in the program, a list of allowed uses and prohibited uses, and discussion of any applicable tax issues, including clear directives that the employee is ultimately responsible for any such tax issues if applicable. The most important thing is to anticipate this troublesome issue and to limit unauthorized personal use of company vehicles by enacting protective measures before a major accident occurs. Allowing local government employees to use government owned vehicles makes sense for many municipalities. Permitting employees personal use of those vehicles can also make sense and benefit both the employees and the entity. However, despite these benefits, local governments must also consider the risks that may be involved and try to mitigate these risks through the practice and enforcement of specific policies and procedures outlining use of company vehicles. Aaron Stone is the vice president of claims for OneBeacon Government Risks.

Specific procedures should be in place for reporting any accident, contacting the police, and preserving evidence.

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MODERNIZING CLAIMS

By Jose Tribuzio

inancial pressures and strategic objectives are driving many public risk managers to seek a modern claims platform that is native to the Internet. In order to upgrade, some organizations are leveraging cloud-hosted solutions as an option, which essentially allows them to subscribe to a new solution. In today’s typical claims department, there is more work and increasingly data to manage than in years past. The sheer volume of claims and a lack of automation can prevent staff from being able to focus on the tasks that can truly impact costs and outcomes. In addition, these departments are hampered by bottlenecks in processing efficiency, including manual, paper-based operations. In this article, we’ll examine the drivers leading organizations to modernize. We’ll look at key criteria for a new platform, strategies for successful implementation and configuration, and the benefits that can be reaped by making this transition.

MARCH 2015 | PUBLIC RISK

Modernizing Claims

A modern claims platform will support an organization’s ability to grow and expand. To do this effectively, the platform must meet two key requirements—provide in-depth claims-handling functionality and system flexibility—both factors help organizations deliver a highly sophisticated claims strategy.

DRIVERS TO MODERNIZE Maintaining outdated platforms is an expensive endeavor. It can consume as much as 80 percent of IT budgets, while the systems themselves force organizations to resort to laborintensive workarounds. For instance, legacy systems have a cumbersome data analysis process, in which IT resources spend significant time and effort in generating queries and reports. However, first attempts often don’t yield the required information, so several queries must often be run before organizations can obtain useful information. Public risk managers are also challenged to comply with new and changing regulatory requirements, and with older systems, they often must wait for changes to be programmed and delivered in new versions of the software. Today, a modern platform can be responsive to changing needs. The architecture leverages sophisticated business intelligence (BI) tools, so organizations can quickly spot vital opportunities to impact efficiency and the bottom line. Contemporary systems also allow organizations to implement changes on the fly, configured by business users rather than busy IT staff. This type of flexibility empowers organizations to continually rethink and reengineer workflow to meet evolving requirements.

CRITERIA FOR A MODERN PLATFORM A modern claims platform will support an organization’s ability to grow and expand. To do this effectively, the platform must meet two key requirements—provide in-depth claims-handling functionality and system flexibility—both factors help organizations deliver a highly sophisticated claims strategy. From an architectural standpoint, a modern platform must scale well, handling both a large volume of transactions and a large number of users.

PUBLIC RISK | MARCH 2015

These platforms tightly integrate data, systems, and people to facilitate streamlined workflow and enhanced decisionmaking. They must offer a wide range of integration options, including pre-built connectors, batch processing, Web services, and other custom interfaces. Integration is essential to connect claims with other internal and external stakeholders. Modern equates to continued innovation, and as such, these platforms must be able to adopt new features, tools, and capabilities. Newer solutions also incorporate business intelligence (BI) and data mining tools. BI can revolutionize the way organizations analyze data and predict trends. These tools deliver the information that’s needed to improve results and minimize risk. They often use data cubes to pre-aggregate information and generate reports at amazingly fast speeds and with dynamic viewing capabilities, helping organizations make critical risk management decisions. Implementing a new system can be expensive, resource intensive, and disruptive to day-to-day operations. Not surprisingly, many projects fail—while others fall behind schedule or don’t provide the anticipated benefits. An experienced solutions provider will outline an in-depth implementation plan and walk organizations through the process to avoid common missteps. Many vendors use an agile implementation process, which is iterative and incremental, thereby enabling the vendor to expedite the delivery of requirements, incorporate changes, and reduce the risk of project delays or going over budget. A typical implementation can take six to eighteen months, depending on the scope of the project, the lines of insurance included, and the number of systems being

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replaced. Many organizations chose a phased implementation approach, so they can deploy the solution sooner— perhaps with one or two lines of coverage. This means they can reap an immediate return, while gaining hands-on experience with the system for enhanced configuration for the next phase of implementation.

CONFIGURATION TO MEET YOUR NEEDS Time and consideration should be given to configuration. A claims department must consider what screens are important, as well as whether they may need to collect unique information through customized screens and data fields. Business rules should be set up to manage and automate workflow, as well as to trigger alerts for events that require supervisory review. In addition, reports should be configured, so once the system goes live, they’ll be ready and can be automatically delivered to relevant stakeholders. Establishing user rights and restrictions also helps facilitate quality control in the claims process. Management may want to restrict user rights and access within the system, according to the type of user. For example, they could assign full, partial, or read-only access. One organization granted nurse case managers access to only the case management portion of claim files. Another restricted inexperienced adjusters from setting high reserves or significantly increasing reserves. Instead, these actions required supervisor review and approval before they could be finalized.

CONSIDER THE CLOUD In the current climate of constrained budgets and stretched resources, cloud-hosted solutions are enabling organizations to subscribe or essentially “rent” software and IT infrastructure, and there’s often potential for additional IT benefits. Through cloud-hosted solutions, organizations can offload many IT functions, thereby becoming more agile. Since this type of solution is paid for on a subscription basis, organizations aren’t faced with large upfront capital investments. System maintenance and upgrades are outsourced to the software provider, and organizations have access to the latest version of the software.

KEY BENEFITS TO MODERNIZATION As more organizations modernize, they’re beginning to realize the broad range of benefits that can be achieved, including: • Reduced claims costs. Modernization enables an organization to better manage claims costs and outcomes. Organizations will have the reporting tools they need to identify high-cost areas and take advantage of opportunities for savings. • Leveraging data. Systems often include BI tools that enable organizations to dig deep into claims data to uncover meaningful patterns that can lead to improved claims decisions. • Introducing new coverage. When public entities incorporate a new line of coverage, they can quickly configure their operations to handle these new claims. A modern platform makes such updates quick and easy. • Enhanced service. A modern platform helps organizations facilitate responsive and personalized service both to their internal and external stakeholders. • Improved efficiency. Organizations have increased the efficiency and productivity of claim departments, particularly with the use of business rules for task automation and document management for paperless claims processing. With these improvements, organizations have seen a significant return on investment.

Through cloud-hosted solutions, organizations can offload many IT functions, thereby becoming more agile.

When evaluating a cloud-hosted solution, public entities should verify that the vendor has a highly secure and reliable cloud environment, so they experience little to no downtime.

MARCH 2015 | PUBLIC RISK

Modernizing Claims

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• Leveraging IT benefits. Due to the superior design of modern systems, IT departments benefit from the ease of maintenance, security, and upgrades. Staff member are freed up to spend more time on strategic initiatives, such as consulting with agencies on how to launch new risk management programs. • Easing the burden of compliance. Continuing to comply with new and changing regulations can be an administrative and financial burden. Compliance is complex, but modern systems automate, streamline, and facilitate the process.

KEEPING PACE FOR THE FUTURE WEBINARS 2015 • March 18 – Enterprise Risk Management: Basic Principles • May 13 – Marketing Your Insurance Program • July 15 – Ergonomics & Injury Prevention • September 16 – Social Media Horror Stories: Don’t Become One! • November 18 – Employment Practices Liability: Mitigating Risks

PRIMA ANNUAL CONFERENCES June 7–10, 2015 PRIMA 2015 Annual Conference Houston, TX George R. Brown Convention Center

Public risk managers must strive to continually optimize their claims process. Leveraging modern technology is a primarily means to this end. The IT strategies discussed in this article are making it easier to administer and automate complex claims transactions, which involve multiple parties, multiple systems, and various regulatory concerns. As adopters have found, the more complex and cumbersome the claim, the greater the opportunity for modern systems to improve efficiency, savings, and outcomes. These platforms also incorporate data mining and dynamic reporting to enable organizations to obtain “insights” that further improve claims performance. Recognizing that more organizations are looking to upgrade, a solution must fit a vision for the future, meaning it must have powerful features and an extraordinary level of flexibility. In the end, there is no blanket solution, but organizations need infrastructure that is capable of accommodating ongoing change in the insurance market. Jose Tribuzio is the founder and CEO of Systema Software.

June 5–8, 2016 PRIMA 2016 Annual Conference Atlanta, GA Hyatt Regency Atlanta June 4–7, 2017 PRIMA 2017 Annual Conference Phoenix, AZ Phoenix Convention Center June 3–8, 2018 PRIMA 2018 Annual Conference Indianapolis, IN Indiana Convention Center

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MARCH 2015 | PUBLIC RISK

Member Spotlight

POLICE WORKERS’ COMP BENCHMARKING HELPS CITY OF EUGENE ZERO IN ON COST DRIVERS features a member who has gone above and beyond in a feature column titled “Member Spotlight.” Do you know someone who deserves recognition, has made a contribution or excelled in their profession? If so, we’d like to hear from you for this exciting column, as PRIMA shines the spotlight on its members. To be considered for the Member Spotlight column, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

had the highest number of claims per 100 officers, but the lowest average cost per claim. Arrests and training were the top two activities at the time of injury for all four cities. Knee injuries were the most frequently injured by part by both Eugene and the pool as a whole.

“Having benchmark data was important to identify areas to focus on for improvement,” said Myrnie Daut, risk services director. “By pooling workers’ compensation claims data from a number of similar entities, we were able to identify patterns that would not be obvious if were only looking at our own loss history.”

Physical fitness injuries had the highest average claims cost of training injuries—$4,031, compared to $2,934 for all other training injuries. In response, risk services recommended instructing officers in proper exercise techniques as well as limiting certain practices such as maximum lifting and competitions among officers.

The Division’s risk services coordinator, Paul Furnari, collated and analyzed data from many municipal police departments around the state of Oregon. The project includes data on more than 2,400 workers’ comp claims filed by Oregon law enforcement officers from Eugene, three other cities and two insurers, between July 2008 and November 2013.

“Many large studies of police injuries focus on high severity, low frequency incidents, such as gun shots or motor vehicle fatalities,” said Daut. “Our study is unique because we also evaluated the high frequency/low severity hazards that are not often addressed in other studies.”

The key findings of the study showed that Eugene’s police department, compared to the three other cities in the study,

“

An analysis of the data by the Risk Services Division provided insight into the cause of some injuries and recommendations for ways to prevent them.

For more information on the City of Eugene’s police workers’ compensation benchmark study, contact Myrnie Daut at myrnie.l.daut@ci.eugene.or.us.

By pooling workers’ compensation claims data from a number

“

Each month, Public Risk

hen the Risk Services Division of the City of Eugene, Ore., presented its annual workers’ compensation claims data to the chief of police, it showed a department with claims and costs higher than other city departments. The police chief asked Risk Services how Eugene’s police department compared to police departments in other cities. Unable to find relevant benchmark data of police injuries, the Risk Services Division decided to conduct its own research.

of similar entities, we were able to identify patterns that would not be obvious if were only looking at our own loss history.

Myrnie Daut, risk services director

PUBLIC RISK | MARCH 2015

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