Controlling the Total Cost of Risk Health, Safety and Well Being - - PowerPoint PPT Presentation

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Controlling the Total Cost of Risk Health, Safety and Well Being - - PowerPoint PPT Presentation

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Controlling the Total Cost of Risk Health, Safety and Well Being Future Liability and Business Impact Graham Heath & Richard Brough Aon Risk Solutions Aon UK Limited is authorised and regulated by the Financial Conduct Authority Liability

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Aon UK Limited is authorised and regulated by the Financial Conduct Authority

Health, Safety and Well Being Future Liability and Business Impact Graham Heath & Richard Brough Aon Risk Solutions

Controlling the Total Cost of Risk

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Liability Market & Current Issues

  • Liability as a class is seen as a “toughening” market with more information being

requested on renewals and new business.

  • Insurers trying to reduce risk to their book by becoming more conservative in the

business they are writing

  • Good deals are available for the right risk to the right market supported by good Risk

Management and Claims history

  • Recent changes to legislation - MoJ Reforms and Enterprise Bill

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Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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The Cost of Occupational Injuries and ill health

  • Worldwide nearly 2.2m people a year die due to occupational injuries and ill health,

and cost is equal to around 4% of Global GDP , or £1.5 trillion ( International Labour Organisation )

  • In UK , cost to society of accidents, injuries and ill health was £13.4bn, of which ill

health contributed £8bn ( HSE 2012)

  • The cost to EU Member states of all work related injuries and diseases range from

2.6% to 3.8% of their respective GDP ( EU – OSHA )

  • 3000 deaths in the UK p.a. from asbestos-related diseases – predicted to rise to

10000 by 2020

  • Stress recently overtaken musculo-skeletal causes as foremost cause of workplace

absences

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Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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Challenges

  • Ageing workforce / rising retirement age
  • Exacerbating poor background health status in some areas
  • Lowered productivity
  • More time off
  • Heightened propensity to submit EL claims?
  • More exposure to long tail liabilities
  • Challenging economic climate
  • Heightened propensity to submit EL claims?

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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Hidden Costs of Accidents and Ill Health

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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Compensation Time lost from work by injured Economic loss to family Lost time by supervision Cost of hiring a new person Damage to tools and equipment Time damaged equipment is out of service Failure to fill orders Overhead cost (while work was disrupted)

Like icebergs, hidden costs of incidents are not visible on the surface but exist just the same

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The True Cost of EL Claims/Incidents

  • Accident Investigation/Administration
  • Downtime/ reworks/lost production
  • Damaged Equipment
  • Etc
  • PLUS:
  • Claims Culture/Piggy back claims
  • Reserving/Premium costs
  • Self Insured Retention
  • Working relations and social climate
  • Organisation image
  • Presenteeism

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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Controlling the Total Cost of Risk

  • Good health and safety performance = Good claims performance???????

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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Food Client Site Comparison

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

7 2.54 3.05 4.37 3.59 4.90 1.74 3.04 £13,782 £16,001 £28,003 £18,584 £29,735 £16,257 £22,215

£- £5,000 £10,000 £15,000 £20,000 £25,000 £30,000 £35,000 £40,000 £45,000 £50,000 £55,000 £60,000 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50 8.00 8.50 9.00 9.50 10.00

2006 2007 2008 2009 2010 2011 2012

Cost per 100,000 hrs worked Claims per 100,000 hrs worked

Site 1

Claims per 100,000 Hrs worked Cost per 100,000 hrs worked

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Food Client Site Comparison

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

8 0.57 0.35 0.52 0.00 0.31 0.36 0.00 £10,483 £1,467 £7,507 £- £5,965 £2,987 £-

£- £5,000 £10,000 £15,000 £20,000 £25,000 £30,000 £35,000 £40,000 £45,000 £50,000 £55,000 £60,000 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50 8.00 8.50 9.00 9.50 10.00

2006 2007 2008 2009 2010 2011 2012

Cost per 100,000 hrs worked Claims per 100,000 hrs worked

Claims per 100,000 Hrs worked Cost per 100,000 hrs worked

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Case Study - Good Performance

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

9 0.47 0.57 0.23 0.33 0.45 1.04 0.06 £6,378 £5,335 £2,187 £2,639 £6,490 £9,557 £995

£- £5,000 £10,000 £15,000 £20,000 £25,000 £30,000 £35,000 £40,000 £45,000 £50,000 £55,000 £60,000 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50 8.00 8.50 9.00 9.50 10.00

2006 2007 2008 2009 2010 2011 2012

Cost per 100,000 hrs worked Claims per 100,000 hrs worked

Claims per 100,000 Hrs worked Cost per 100,000 hrs worked

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Example of Poor Performance

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

10 8.28 7.47 7.26 7.78 £50,940 £47,862 £62,392 £148,988

£- £25,000 £50,000 £75,000 £100,000 £125,000 £150,000 £175,000 £200,000 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50 8.00 8.50 9.00 9.50 10.00

2009 2010 2011 2012

Cost per 100,000 hrs worked Claims per 100,000 hrs worked

Claims per 100,000 Hrs worked Cost per 100,000 hrs worked

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Drivers to the Cost of Claims

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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Health and Safety Management

  • Risk Assessments
  • Safe Working Procedures
  • Training
  • Compliance Monitoring
  • Review

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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Health and Safety Culture

  • Address non-compliant behaviours
  • Minimise risk-taking
  • Encourage positive behaviours
  • Develop engagement / involvement
  • Enhance communication
  • Needs to be embedded within the health and safety management system

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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Claims Management

  • Not just about when a letter of claim arrives
  • Risk assessments, SSW’s, Training
  • Compliance monitoring
  • Quality and organisation of records
  • Quality / robustness of accident investigation process
  • Integrated management: H&S, Operations, HR, Occ. Health

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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Claims Culture

  • Internal claims meetings involving Production, HR, H&S and Occ. Health
  • Tracking of claims and claims levels
  • Do Production Managers identify staff with history of multiple accident / claims

records?

  • Robust accident investigation system in place
  • Consistent approach with disciplinary matters
  • Input from HR (absence management, disciplinary etc)
  • External claims meetings with insurers
  • Wellness / wellbeing campaigns
  • Addressing morale issues
  • Staff involvement / engagement

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

Case Study

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Summary

  • To effectively control total cost of risk requires a sophisticated understanding of the

driving factors

  • Control of the driving factors requires cohesive, integrated approach

Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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