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

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

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

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

Hidden Costs of Accidents and Ill Health Compensation Like icebergs, Time lost from work by injured hidden costs of Economic loss to family incidents are Lost time by supervision Cost of hiring a new person not visible on Damage to tools and equipment the surface but Time damaged equipment is out of service exist just the Failure to fill orders Overhead cost (while work was disrupted) same 4 Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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

Controlling the Total Cost of Risk  Good health and safety performance = Good claims performance??????? 6 Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

Food Client Site Comparison Site 1 Claims per 100,000 Hrs worked Cost per 100,000 hrs 10.00 £60,000 worked 9.50 £55,000 9.00 8.50 £50,000 8.00 7.50 £45,000 Claims per 100,000 hrs worked Cost per 100,000 hrs worked 7.00 £40,000 6.50 6.00 £35,000 5.50 5.00 £30,000 £29,735 £28,003 4.90 4.50 £25,000 4.00 4.37 3.59 £22,215 3.50 £20,000 3.05 3.04 £18,584 3.00 2.54 £16,257 £16,001 2.50 £15,000 £13,782 2.00 1.74 £10,000 1.50 1.00 £5,000 0.50 0.00 £- 2006 2007 2008 2009 2010 2011 2012 7 Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

Food Client Site Comparison Claims per 100,000 Hrs worked Cost per 100,000 hrs 10.00 £60,000 worked 9.50 £55,000 9.00 8.50 £50,000 8.00 7.50 £45,000 Claims per 100,000 hrs worked Cost per 100,000 hrs worked 7.00 £40,000 6.50 6.00 £35,000 5.50 5.00 £30,000 4.50 £25,000 4.00 3.50 £20,000 3.00 2.50 £15,000 2.00 £10,483 £10,000 1.50 £7,507 1.00 £5,965 0.36 £5,000 0.57 0.52 0.35 £2,987 0.50 0.00 0.00 £1,467 0.31 0.00 £- £- £- 2006 2007 2008 2009 2010 2011 2012 8 Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

Case Study - Good Performance Claims per 100,000 Hrs worked Cost per 100,000 hrs 10.00 £60,000 worked 9.50 £55,000 9.00 8.50 £50,000 8.00 7.50 £45,000 Claims per 100,000 hrs worked 7.00 Cost per 100,000 hrs worked £40,000 6.50 6.00 £35,000 5.50 5.00 £30,000 4.50 £25,000 4.00 3.50 £20,000 3.00 2.50 £15,000 2.00 £10,000 £9,557 1.50 1.04 £6,378 £5,335 £6,490 1.00 £5,000 0.47 0.45 £2,187 0.57 0.06 0.50 £2,639 £995 0.33 0.23 0.00 £- 2006 2007 2008 2009 2010 2011 2012 9 Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

Example of Poor Performance Claims per 100,000 Hrs worked Cost per 100,000 hrs worked 10.00 £200,000 9.50 9.00 £175,000 8.50 8.28 8.00 7.78 7.47 7.26 7.50 £150,000 Claims per 100,000 hrs worked £148,988 Cost per 100,000 hrs worked 7.00 6.50 £125,000 6.00 5.50 5.00 £100,000 4.50 4.00 £75,000 3.50 £62,392 3.00 £50,940 £47,862 2.50 £50,000 2.00 1.50 £25,000 1.00 0.50 0.00 £- 2009 2010 2011 2012 10 Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

Drivers to the Cost of Claims 11 Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

Health and Safety Management  Risk Assessments  Safe Working Procedures  Training  Compliance Monitoring  Review 12 Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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

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

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

Case Study 16 Aon Risk Solutions | Global Risk Consulting | Risk Control & Engineering | November 2013

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