Commercial claims involving injuries or fatalities

February 12, 2024

Share on LinkedIn Share on Facebook Share on X

As major loss adjusters, one of the most significant aspects of our career is producing a positive outcome for all on a claim. In many cases, this means that the impacted business was returned to its pre-loss state with their insurance policy having responded and delivered without complications. On the flip side, there are downsides to working in this field. One being that we do handle claims that involve serious injuries and, at times, fatalities. During these unfortunate incidents, acting with empathy is essential. 

Whilst the insurance claim becomes a secondary focus, there is often a linked catastrophic effect on the insured business as a consequence of the incident. There could be significant monetary sums at risk with linked factors, such as job security for the insured’s workforce and, indirectly, to employees of those in their supply chain. The claim must still be prioritised and taken care of. 

In this blog, we’ll discuss how an injury or fatality affects the handling, timescales and progress of a major loss involving property damage and business interruption. We will also shed light on some of the issues affecting liability covers. 

Dealing with delays

In some cases, adjusters may not be permitted access to parts of the loss location until authorities such as the police, fire services, crown office and the Health and Safety Executive (HSE) complete their enquiries. This leads to significant delays in assessing the extent of damage, advising insurers of reserves, implementing loss mitigation measures and, importantly, undertaking enquiries required to consider policy liability such as compliance with applicable endorsements and warranties. Delays and linked denial of assessment/inspection of evidence can also hinder subrogation enquiries. 

One scenario that is all too familiar is when a government agency removes and retains a key item as evidence — say a machine which exploded — until their investigation and potential court case is complete. What this means for the claim is that the extent of the damage to the machine might not be known and also hindering the insurer who may needto understand why it exploded before they can confirm acceptance of policy liability. Similar considerations apply to CCTV footage showing the cause of damage and other critical policy liability information. The time period until the subject items are made available for inspection, if at all, can sometimes be several years. The issue to address is how the claim can proceed, as it’s often unreasonable for a policyholder to wait for the item or information to become available to insurers. 

Allowing insurers to make an informed decision on policy liability is the goal, but it’s not always achievable. As a result, they may experience a significant delay in the acceptance, increased property costs and losses or a diminishing business interruption (BI) Maximum Indemnity Period (MIP).

Managing media attention 

In some circumstances, there will be unwanted albeit not unexpected media attention on the incident. Direct approaches are often made to loss adjusters for commentary while on site. Loose comments and inaccurate press reports can appear, which cause confusion and sometimes paint a false impression on, for example, the circumstances of an incident, the housekeeping of the business and the cause of damage. At Sedgwick, our experts have experience handling losses of sensitive nature, including potential media exposure.

Whilst no one can foresee or should expect a claim to involve an injury or fatality, business interruption MIP’s should always be generous and allow for claims not always moving at the pace “normally” expected.

Considering cover 

Where cover for statutory defence costs features in the policy (and it typically does), it is imperative that policyholders benefit from the urgent instruction of a specialist solicitor. This specialist can support them in the face of statutory investigations and create a legally privileged framework, as well as the instruction of appropriate experts to examine and preserve evidence. This ensures that their position is protected relative to any potential prosecution, which could have serious financial and reputational repercussions for the business, and in extreme cases result in action taken against individuals under the terms of the Corporate Manslaughter and Corporate Homicide Act 2007. For that reason, when an incident of this nature occurs, it is no exaggeration to say that, other than the emergency services, a policyholder’s first call should be to their liability insurer.   

Somewhat frustratingly, after the insurer acts promptly to protect their policyholder, a clash between their interests may follow. This introduces a scenario whereby a solicitor whose fees are being paid by the insurer obstructs their ability to fully investigate and understand their policyholder’s liability in the event of a claim. This is borne out of the legal privilege curtain required to protect the policyholder’s investigation and ensure it can be conducted in an objective fashion without risk of its findings being used as evidence against them.    

In this scenario, it is necessary to work as closely as possible with the policyholder and solicitor to secure copies of factual documents that do not require protection from privilege, as well as any information that can be provided in the course of discussion. It is typically with the assistance of the solicitor — who will be in contact with the likes of the police and HS — that access can be obtained to evidence that has been seized during the course of their investigations.   

Early, critical actions aside, in the event of a claim that must be settled, it is to be expected that significant damages will feature, with some notable jurisdictional differences. Navigating these types of issues across the different classes of cover requires skilled and experienced adjusters. Sedgwick’s major loss teams have unparalleled capacity to support on a nationwide, multi-jurisdictional basis.     

Learn more > Contact [email protected] or [email protected].

The basics of product liability for injury and damage claims

January 25, 2024

Share on LinkedIn Share on Facebook Share on X

As adjusters and claims handlers, we frequently encounter claims relating to alleged defects or failures of products or services. In addition to common law duties and bespoke contracts entered into, there is legislation to consider, depending upon whether the claimant is a consumer or another business. In this blog, we highlight consumer rights and protections related to goods and services, as well as the nuances of business-to-business claims.

Claims from consumers

The Consumer Rights Act 2015 (CRA 2015) brings together the rights and remedies previously contained under a number of pieces of legislation relating to the sale of goods and supply of services, as well as unfair terms in a contract. Of note to the types of claims we typically encounter, the Act addresses when goods are deemed to be faulty in some manner or means. 

Goods 

CRA 2015 contains implied terms (s. 9 – 18), which include that goods sold must be:

  • Of satisfactory quality;
  • Fit for their particular purpose, being one for which goods of that kind are usually supplied, or which the parties knew the consumer intended it to be used for; and
  • As described.

In the event any of these terms are not met, CRA 2015 sets out the remedies available to the consumer (s. 19 – 24), which typically require the trader to refund, repair or replace the goods. 

Services 

The provision of services is also addressed by CRA 2015, containing implied terms (s. 49 – 53) that they must be:

  • Performed with reasonable care and skill;
  • Performed in accordance with any information, whether verbal or written, provided to the consumer regarding the service to be provided; and
  • Performed within a reasonable time.

What we are more typically concerned with is the consumer’s right to rely upon these breaches as in effect giving rise to a breach of contract, and so giving them a right to pursue other remedies available to them under contract law, e.g. damages (s.1(40 + 227) of the Explanatory Notes). 

Any attempts by a trader to insert terms that limit their liability for breaches of these terms, among others, is not binding upon the consumer, i.e. is in effect prohibited (s.31 + s.57) in all but very limited circumstances. This is further addressed by whether a term is deemed unfair (s.61 – 76) specifically if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.

The Consumer Protection Act 1987 (CPA 1987) allows consumers to bring claims arising from a defect in a product without a contract existing between the parties. Its broad aim is to protect consumers from unsafe products and misleading advertising. It also gives them the right to claim compensation for injury or damage caused by defective products (s.2). In that regard, it conveys a strict liability upon producers as defined in s.1(2), those who hold themselves out as producers and UK importers.

Establishing whether the insured satisfies one of these categories is crucial to any investigation, both to determine if they owe a strict liability, or if another party does to whom the claim can be redirected. Whilst CPA 1987 does not require a consumer to demonstrate negligence, they must prove the existence of a defect and its effect. In practice, producers and importers may wish to be closely involved in any forensic investigation and initiate it, without delay, if there is any doubt about the presence of a causal defect.

CPA 1987 restricts damage giving rise to liability (s.5) to death or personal injury, or any loss or damage to property which is for private use, occupation or consumption. 

In many respects, CPA 1987 is a better tool for consumers when they wish to claim for injury or property damage which they believe arises from a defective product. Sometimes it enables them to circumvent a convoluted contractual/supply chain, albeit it does not prevent them from pursuing contractually derived remedies under CRA 2015 instead or as well.

Business-to-business (B2B) claims

Most of the Sale of Goods Act 1979 (SGA 1979) and the Supply of Goods and Services Act 1982 (SGSA 1982) still applies to B2B contracts, albeit note that only (s.11A – 11L) of the latter, relating to supply of goods, applies in Scotland.

SGA 1979 sets out implied terms (s.10 – 14), to include that goods must be of satisfactory quality, considering factors such as safety and durability, to name a few. 

SGSA 1982 contains similar requirements relative to the transfer or hire of goods, as well as addressing the supply of services (s.12 – 16). Implied terms include that the supplier will carry out the service with reasonable care and skill and carry out the service within a reasonable time.

Of course, what constitutes compliance with such terms is subjective, and it is important to carefully consider the bespoke contractual arrangements entered into between the parties in any given contract. There is greater scope in B2B relationships for the parties to contract as they see fit, and shape the allocation of risk and liability, subject to the terms of the Unfair Contract Terms Act 1977 (UCTA 1977). For example, it is not possible to exclude liability for negligence causing death or personal injury, however, it is possible for the parties to agree that one will indemnify the other for that liability. 

When assessing any onerous contractual obligations for the purposes of UCTA 1977, consider whether they pass the reasonableness test (s.24), which incorporates guidelines (Schedule 2) — considering the relative bargaining positions of the parties and whether an inducement was given to agree a certain term. Such considerations aside, the courts are generally reluctant to interfere with the manner in which parties of commensurate status choose to contract with one another, making interpretation of their intentions particularly important. 

Looking ahead

When dealing with any claim relating to the sale or supply of goods and services, carefully consider the nature and status of the contracting parties, the relevant legislation, and any bespoke contractual terms that feature. In particular, understanding the difference between contracts involving consumers and business-to-business relationships is critical. 

Learn more > contact [email protected] or [email protected].

Prioritizing loss prevention

January 24, 2024

Share on LinkedIn Share on Facebook Share on X

Employee injuries, and even fatalities, are unfortunately a common occurrence in the United States. According to the Occupational Safety and Health Administration (OSHA), 5,190 workers — or an average of 15.03 per day — died on the job in 2022. Employers reported to OSHA about 2.8 million injury cases in 2022, averaging 7,671 per day. 

Organizations seeking to better protect their people and reduce their loss costs will be well served to develop a loss prevention playbook. In this blog, I’ll highlight some strategies for prioritizing prevention and bringing your organization’s playbook to fruition. 

Historical analysis

As Maya Angelou said, “You can’t really know where you are going until you know where you have been.” Being proactive in safety requires an initial analysis of past losses, identified by line of coverage (workers’ compensation, general liability, auto, etc.), location and risk class. The purpose of such analyses is to determine accident trends through frequency (number of losses) and severity (dollar amounts) from a historical perspective. Of course, the frequency and severity of accidents affect organizations’ insurance premiums based on carriers’ underwriting parameters, as well as experience modifiers through the National Council on Compensation Insurance (NCCI) for workers’ comp premium promulgation.

According to H.W. Heinrich’s theory of industrial accident prevention, illustrated by the safety pyramid, frequency is the first indicator — regardless of severity. The pyramid depicts a relationship of one serious injury accident to 10 minor injury accidents, 30 damage-causing accidents and 600 near-misses. Simply put, for every 600 near-misses ($0 severity), there will be 30 accidents (low value severity), 10 minor accidents (low-to-moderate value severity) and one serious accident, potentially including death (major value severity). 

Injury trends may include several common causes, such as slips-and-falls, being struck by various objects, chemical exposures, and motor vehicle accidents. Another aspect of trending involves multiple accidents at the same customer/employee location or involving the same individuals. Let’s say an analysis reveals that a single individual was involved in 18 motor vehicle accidents; this indicates a clear need for driver safety training and counseling, and employee termination may even be warranted. Using Heinrich’s safety pyramid, even if all the collisions were minor in nature, it would not be a question of if a potentially catastrophic accident will occur, but when.

Reactive, then proactive action plans

After reviewing past losses, an action plan should be developed to address the trends identified in the analysis process. Although this method is reactive, it is a necessary step toward being proactive in preventing future accidents. Like Maya Angelou’s quote, once you understand where your losses have occurred, you are better prepared to prevent them from happening again. 

Through accident investigation and root cause analysis — both of which are designed to prevent future occurrences — you can begin the proactive phase of your safety program. This can be achieved with a few standard techniques that are effective in reducing accident frequency and severity. These are the basis of what’s referred to as loss control. The hierarchical order of loss control is as follows:

  • Engineering controls: These are physical methods to reduce or mitigate the risks associated with various work activities. This can include workplace redesign or modification of various work areas to reduce hazards: slip-resistant flooring/mats, machine guarding, increased ventilation, proper chemical storage, guardrails and barriers, bottleneck clearance and preventive maintenance. 
  • Administrative controls: These focus on work practices and can involve process training, workflow adjustments, job rotation, limiting access to hazardous areas, policies and procedures, and, in some cases, changing work behaviors. 
  • Personal protective equipment: The final recourse after engineering and administrative controls have been exhausted, PPE can include fall protection, hard hats, gloves, safety glasses/goggles, respiratory protection, hearing protection and protective clothing. 

Monitoring and evaluation

Once analysis is complete and controls are in place, the next step involves monitoring all phases that have been developed, implemented, and enforced. Most organizations undertake an assessment period to allow feedback from all stakeholders on the effectiveness of the program and determine what improvements to pursue. 

Expectations of positive results in terms of loss reductions must be tempered by scrutiny and patience. Typically, a new or revised safety program will yield benefits 2-3 years after implementation and cannot be rushed to the desired conclusion. 

One keynote to the methods and techniques discussed here relates to insurance carriers’ response to the initial changes. As part of the usual underwriting processes, any advances in an organization’s loss control or safety program — regardless of immediate results — are viewed positively and may be reflected in renewal premiums. As an example, two years into a revised risk management program on which I worked with an oil and gas company, the organization saw its workers’ compensation premium reduced by 42%, from $9 million to $5.2 million! 

Although safety programs are generally viewed as an expense center in the world of profit and loss, I encourage clients to consider just how much profit margin would allow for a $3.8 million increase in net income. What’s more, safety efforts are designed to protect the most valuable resource of all — human health and welfare.

Learn more — read about how Sedgwick’s risk services can improve your workplace safety program 

Targeting programs on another level: paths to improving workforce well-being and productivity

January 22, 2024

Share on LinkedIn Share on Facebook Share on X

Unplanned employee absences — whether due to on-the-job injuries, physical or mental health conditions, family care needs or personal circumstances — are on the rise. Hyper-targeted programs are emerging as an effective way to help employers improve employee outcomes and productivity, control costs, and promote well-being.

Rising absenteeism and its costs

In the post-pandemic world, employees are absent from work much more often than in the past. According to the U.S. Bureau of Labor Statistics, about 7.8 million workers missed work in January 2022 because they had an illness or injury, needed medical attention or had to attend an appointment. This number has more than doubled since January 2021 where 3.7 million workers had similar absences. 

Nearly 4.2 million workers, or 3.3% of the American workforce, worked part-time in January 2022 for the same reasons — the second highest-ever percentage since data collection began in 1976.

The rise is likely due to a mixture of societal factors, such as the normalization of working from home during the COVID-19 pandemic, decentralized employees working remotely or on hybrid schedules, increasing instances of debilitating stress and mental health issues, and inadequate support for employee health and wellness. On-the-job injuries, another driver of absenteeism, are also on the rise. Sedgwick’s U.S. book of business for 2022 reflected an overall increase of 6.4% in workers’ compensation claims compared to 2021.

The costs associated with absenteeism are steep. In 2020, the Integrated Benefits Institute (IBI) found that employee absences cost U.S. employers around $575 billion, or $3,900 per employee. The study also found that, for every dollar U.S. employers spent on healthcare benefits, an additional 61 cents was spent on illness-related absence, disability and reduced work output.

To counter this trend, organizations are embracing targeted workforce programs that enhance the employee experience, ensure employees feel supported and cared for, and promote talent attraction, retention and development. Many such programs can be organized into two categories: those that lead with empathy and those that leverage data. 

An empathy-led approach

A 2023 Mercer global talent trends report found that out of 11,000 employees surveyed, only 2 of every 5 employees reported feeling like their company meets all their needs. If employers seek to understand their employee’s full lives, they can better safeguard their emotional, physical, social and financial well-being.

Leading with empathy means focusing on the whole person and considering — without prejudice — all factors that might affect how employees navigate systems and progress toward resuming a full and productive life. To that end, employers are designing programs that recognize the range of challenges employees are dealing with, while offering a touchpoint of caring. 

One popular strategy for infusing empathy into workforce programs is the development of employee personas, or semi-fictional profiles that represent one segment of an employee population. Employers can use workforce demographics to craft these personas, based on a range of characteristics: employee age and stage of life, location, educational background, tenure, life experience, family status and other attributes. 

Employers can then build narratives around these personas to understand how various employee groups might be affected by specific scenarios. How a certain employee group might deal with an injury, illness or disability, for example, or how they might engage with their benefits, the healthcare system or other technology platforms. 

A data-driven approach

You can’t fix what you don’t know; that’s where reliable data comes in. Harnessing employee on-the-job injury and absence utilization data can pinpoint improvement areas and help inform decisions on workforce wellness initiatives, benefits design, timely interventions and more. As employees’ family health and wellness concerns are increasingly diversified and complex, employee data can also be an invaluable resource for curating programs that provide holistic support.

Employers can also leverage employee wellness data from biometric screenings — or clinical assessments conducted by trained professionals at the worksite or a designated provider’s office — that identify and monitor certain health conditions. Data from biometric screenings provide employers with a baseline assessment of the overall health of their workforce. 

Yet according to a 2022 KFF report, only 24% of small organizations and 45% of large organizations offer biometric screenings to their employees. By instituting such screenings and analyzing employee data collected through them, employers can better tailor their preventative programs and intervention offerings — such as smoking cessation, weight management or lifestyle coaching.

The best of both worlds

The true ideal for tailoring employer-provided programs brings together both approaches — leading with empathy and leveraging data — to meaningfully improve employee outcomes. As technology evolves, opportunities abound to connect empathy with process so systems can be more easily navigated, and initiatives be tailored further to individual needs. Ultimately, the goal is for employers to promote productivity and well-being, create personalized and efficient end-user experiences, and provide a higher level of care to their valued employees.

> Learn more — check out an expanded version of this article in Sedgwick’s digital magazine, edge, issue 22

Demystifying presumptions in workers’ compensation

January 3, 2024

Share on LinkedIn Share on Facebook Share on X

Workers’ compensation systems in the U.S. date back to the early 1900s – the first comprehensive law protecting injured workers was passed in Wisconsin in 1911. By mid-century, all states had introduced legislation that began the framework for today’s modern system regulating wage benefits and medical care for occupational injury and disease. 

Though changes have been made in the century since its inception due to cultural, generational and technological changes in the workplace, the system has stayed true to its original construct: to be an equitable balance between the interest of the employee and the employer.

Disease has historically not been widely compensable without evidence-based demonstrations or legislative definitions. But for certain job roles and for certain diseases — depending on the state’s presumptions laws — employees may be eligible for benefits without the need to prove causation, bypassing the normal claims process. 

Presumption in workers’ compensation is a small area of workers’ compensation law that has significant implications on how legislators, workers and insurers move forward. This blog will give an overview of this topic.

What is a presumption? 

A presumption, simply stated, is an inference as to the existence of one fact from the proof of another. Within the context of workers’ compensation, presumption statutes state that certain diseases are more likely to occur with workers in certain employment exposures given the specific physical and emotional demands of their work, but causation as arising directly from work may be difficult to prove.

The claimant must first establish that the presumption applies, and that the condition arose or developed out of and during their term of employment or, in certain jurisdictions, within a certain time frame after retirement. Under a presumption law, upon proving these facts, the disease is presumed to be compensable. Employees can then move forward through the claims process and receive benefits.

What determines eligibility for presumptions?

State governments set workers’ compensation statutes and determine eligibility for presumptive benefits. Every state has its own unique workers’ compensation landscape and by consequence its own unique set of presumption laws. 

Presumptions in workers’ compensation apply primarily to certain public entity employees, such as first responders — police officers, emergency medical technicians and firefighters – and apply for certain conditions or diseases these employees may encounter as a risk during their term of employment.

Some examples include:

  • For firefighters, 26 states have enacted workers’ compensation statutes that cover one or more types of cancer, while 21 states have statutes that cover respiratory disease; 
  • For police officers, 11 states have enacted workers’ compensation statutes that cover heart or vascular diseases, and 7 states have statutes that cover mental health and PTSD; 
  • For EMTs, 12 states have enacted workers’ compensation statues that cover blood and infectious diseases. 

Who in the workers’ compensation system do presumptions affect?

While the specifics of eligibility by profession, by disease/injury, and from state to state, presumptions impact several groups of people:

Injured workers – As the claimants, injured workers benefit from these laws. Presumptions redistribute the balance in favor of the injured employee, provided they meet the criteria for eligibility. 

Employers and insurers – Presumptions increase coverage areas for employers and workers’ compensation insurers if they are required to provide benefits. Presumption statutes typically cover injury/disease that are a part of everyday public health issues with disputable connections to the work environment. Therefore, a risk that employers can not address solely from a safety prevention standpoint and a risk that is challenging for insurers to allocate for because of the tenuous connection to employment exposure. 

Medical professionals – Workers’ compensation claims must be supported by medical evidence. Presumptions may influence how healthcare providers diagnose and report injuries and diseases.

Legal professionals – Attorneys are crucial in interpreting their state’s workers’ compensation regulations and applying presumption law, serving as an advocate for their clients’ interests.

What causes challenges or controversies in presumptions?

At its most basic concept, presumption statutes alter the burden of proof. As previously noted, for coverage under workers’ compensation, when an employee is diagnosed with a disease or injury, the employee must prove that the disease or injury arose out of and in the course of their employment. With presumptions, half of the required equation is met by statute since presumption statutes assume a causal connection between the injury/disease and the employment. 

Presumption statutes are typically applicable to only certain employee classifications. Compensability presumptions typically apply to specific employment genres: police officers; firefighters; and first responders. These distinctions create different classifications of injured workers that have a lower threshold to prove compensability than the general employee. 

Presumption statutes also potentially broaden workers’ compensation coverage beyond what are employment related risks for which employers have no ability to control or prevent. Such broadening could generate the perception that the focus of workers’ compensation is moving towards “socialization of risks” and less on the distinctions of work-related risk and its attendant focus on a safe and productive work environment.

In recent years, legislators and politicians have increased activity in using and expanding presumptions – this is especially pressing with COVID-19 in the rearview, which accelerated and evolved expectations regarding how openly infectious diseases are considered. Every year, there is more legislative activity around presumptions not just for first responders and public service providers but expanded even broader in the healthcare industry. 

Presumptions are a timely and hot topic as state legislative sessions resume in the new year. Once again, states will be evaluating changes and expansions to their workers’ compensation laws, which will have ripple effects that impact everyone in the ecosystem. 

Learn more > Read the workers’ compensation flyer here.

Unconditional: treating injured workers with care and empathy

July 17, 2023

A closeup of three people holding hands.
Share on LinkedIn Share on Facebook Share on X

Suffering a workplace injury can be a very stressful experience. Going from fully functional to incapacitated in the blink of an eye, combined with angst and uncertainty about the future, makes for a very difficult time for an injured worker.

Adding more pressure to an already challenging situation is the complicated workers’ compensation system, which can be confusing to navigate. In the traditional model, many injured on the job were left feeling that their overall well-being was dismissed, while all that mattered was the operational impact. Today, employers and service providers are leaning into an advocacy-based approach, in which each employee is not just an asset but a human being deserving of empathy and assurance. This blog will highlight some of the ways we can provide injured workers with compassionate care focused on their individual needs.

Clinical support

A hallmark of quality care is ensuring that injured workers have access to the medical resources needed to maximize their recovery, optimize their experience, and produce the best outcome. Sometimes that means guiding them to top-performing physicians with experience in occupational medicine or specialty care; other times, it means advising those with minor injuries to pursue first aid or thoughtful self-care instead of unnecessary, unpleasant and costly trips to an emergency room. Clinical consultation and evaluation at the first notice of injury helps to ensure that appropriate care is delivered at the appropriate time. It also gives injured workers peace of mind they’re doing the right thing, will receive the right care, and won’t have to worry about out-of-pocket treatment costs. With nurses rated as America’s most honest and ethical professionals in Gallup’s survey for more than 20 years, this early engagement can bring added trust to the claim process from the outset.

Case management is another strategy for getting injured workers the care and support they need. Drawing on their clinical training, nurse case managers are ideally positioned to work with treating physicians, employers, claims examiners and others to coordinate proper medical care for injured workers. In case of a severe, complex or catastrophic injury, a field case manager can be on site at the hospital or medical appointment to advocate for the injured worker, help them navigate the health care system, and provide a sympathetic ear. Having a nurse case manager in their corner — whether in person or a phone call away — can make all the difference for an injured worker and their family, who are looking for a personal connection during a very overwhelming time.

Recognizing the need for holistic care following an injury, behavioral health support is a key element of the advocacy model. Behavioral health specialists offer clinical expertise and guidance for injured workers and can help in identifying other related issues that should be addressed to maximize physical and mental/emotional recovery. Behavioral health support is particularly important in claims involving trauma, violence, mass casualties and other catastrophes, or psychosocial concerns like substance abuse, financial difficulties or family/relationship challenges. All of these factors, as well as anxiety or fear about returning to work, can impede healing and negatively affect overall well-being if left unchecked. Behavioral health specialists serve as caring advocates for injured workers, imparting coping skills that promote resilience and providing supportive assistance to help them overcome any barriers on the road to recovery.

Advocacy and empathy

From the first notice of injury to the end of the claim, the tone of every interaction should be supportive rather than adversarial. Employees may come into the claims process with a perception that the workers’ compensation system is “out to get them”; each positive touchpoint can chip away at that negative view, instead replacing it with confidence that the claims team is there to help. Clear, empathetic and frequent communication with the injured worker conveys accountability for their role in the process and their commitment to providing every available support resource throughout the journey.

Claims professionals may touch dozens of workers’ comp cases a day, but it’s likely those injured workers are going through this experience for the first time in their lives. They are scared about their health, their livelihood and taking care of their families. They’re worried about who will pay their medical bills and what they need to do next. In the advocacy model, claims professionals are charged with building trust and rapport with injured workers and enlisting the right clinical resources to support their recovery. By showing they care, claims and clinical professionals have the capacity to allay injured workers’ fears and bring a hefty dose of sensitivity and understanding to an unexpectedly difficult period.

Caring counts

Treating injured workers with care and empathy is not only the right thing to do; it also affects how claims ultimately resolve and yields great results for employers. Data shows that taking a holistic approach to workers’ compensation reduces claim durations, medical and indemnity costs, litigation rates and lost productivity. The advocacy model cuts down on friction in the process and significantly improves employees’ post-injury experience.

Additionally, advocacy helps to prevent employees from never returning to their jobs. Getting employees back to work after they’ve recovered from injury has always been important in workers’ comp, but it’s taken on greater significance in today’s tight labor market. Many of the jobs that are hardest to fill involve potentially dangerous work. The people in those roles perform critical societal functions but are more susceptible to injury. With many employers and industries already scrounging, they cannot afford for skilled talent to unnecessarily depart from the workforce. They also cannot afford to risk further injuries to other employees, so modifications should be considered as part of the overall solution. If talented individuals in these short-handed industries do sustain injuries on the job, they must be treated in a way that reflects the true value they bring to the table — because caring counts.

There is much discussion today about the potential impact of artificial intelligence on workers’ compensation. We’re already discovering some of the ways AI can help us boost claims efficiency and leverage data for better outcomes. But however helpful the technology may be, it can never replace the value of human connection and empathy when it matters most.

Some of these concepts were previously shared in a session presented in conjunction with the State of Louisiana’s Office of Risk Management at the spring conference of the Louisiana Public Risk Management Association (PRIMA).

Learn more — read about Sedgwick’s workers’ compensation and managed care solutions designed to help employers take exceptional care of their workforce when job-related injury or illness occur

5 ways to minimise the risk of hindsight biases in personal injury investigations

June 1, 2023

The inside of a commercial building.
Share on LinkedIn Share on Facebook Share on X

When it comes to personal injury investigations, hindsight biases can lead to inaccurate assessments of causation and fault. Hindsight bias is considered a psychological phenomenon that occurs when people evaluate past events and overestimate their ability to predict the outcome based on what they know now, instead of what they knew at the time. This can make it difficult to accurately assess the facts of a case and can lead to errors in judgment.

If adjusters and experts are influenced by hindsight bias, they may be more likely to miss pertinent factors of the claim and incomplete or incorrect information may be obtained. In this blog, we explore why it is important to consider hindsight biases in personal injury investigations and discuss several approaches to minimise the risk.

Argo Managing Agency Ltd v Al Kammessy (2018)

In the matter of Argo Managing Agency Ltd v Al Kammessy — where an individual slipped and fell on a wet area at a shopping centre — litigation hindsight was considered in the primary judge’s findings. CCTV footage of the incident illustrated that the centres’ first cleaner inspected the incident scene at 10:35am. At 10:43am, a second cleaner, Mr. Nguyen, passed the area. A minute later, the respondent walked past the area, slipped, and fell. The NSW District Court primary judge determined that the cleaning contractors did have an adequate system of cleaning in place; however, also found that Mr. Nguyen was negligent by passing the incident scene and not having observed the spill that was on the floor. The matter was then heard by the NSW Court of Appeal. The issue on appeal was based on the finding that Mr. Nguyen should have detected and cleaned the spill, had he acted with reasonable care. The Court of Appeal overturned the decision of the District Court.

Of note regarding litigation hindsight, the judge held that it was not appropriate to use the benefit of hindsight to conclude that Mr. Nguyen failed to identify the hazard. Of further interest was the judge’s finding that the duty of Mr. Nguyen to the respondent was to exercise reasonable care to identify and remove hazards, not to guarantee that all hazards would be removed.

Minimising the risk of hindsight biases

During a personal injury investigation, Sedgwick’s experienced team of adjusters examine the incident from different angles to help reduce the influence of hindsight bias. By considering multiple perspectives, our adjusters can identify aspects that may have been missed or overlooked, leading to a more accurate understanding of the situation. While hindsight bias can be a significant challenge in personal injury investigations, there are five ways adjusters can minimise the risk of them occurring.

  1. Be objective. Our adjusters approach investigations without any preconceptions, assumptions or judgments.
  2. Avoid asking leading questions. Doing so can provide the interviewee with a particular direction or suggestion or cause them to remember events in a certain way, leading to incorrect or incomplete recollections of events.
  3. Take a methodical and systematic approach. The process of gathering evidence is crucial in investigations. Our adjusters collect all relevant information systematically, including physical evidence, photographs, witness statements and medical records. This approach ensures we consider all aspects of the incident, reducing the possibility of overlooking important information that may be critical to the investigation.
  4. Maintain awareness of hindsight bias during the investigation process. Our adjusters constantly remind themselves and their interviewees that the information provided is based on their recollection of events at the time, rather than their current knowledge of the incident. Doing so promotes information sharing based on the interviewees original perception of the situation.
  5. Consider alternative explanations or hypotheses of the incident. Our adjusters are experienced enough to be open minded to any ideas relayed that may challenge their current understanding of the event and test their assumptions — reducing the risk of bias and ultimately, enhancing the accuracy of their conclusions. We also cross-reference information provided by different witnesses and through the examination of physical evidence to ensure accuracy.

Key takeaways for loss adjusters

At Sedgwick, our team of personal injury adjusters understand that when investigating personal injury claims, we must be mindful that our inquiries are retrospective. The question of what a reasonable person facing a foreseeable risk of injury would have done with that risk should always be a consideration, whilst at the same time keeping in mind the altering effects of hindsight. We take into consideration that we are garnering evidence on an incident that occurred in the past, through today’s lenses. With that, comes the risk of bias.

Avoiding hindsight bias is challenging, but if we stay objective, avoid leading questions, take a methodical and systematic approach, and maintain awareness, we can minimise the risk.

Sedgwick has a highly experienced team focused on the investigation of personal injury claims. To learn how our experts can support your organisation, email [email protected] or [email protected].

Learn more > read the liability flyer 

Automation in claims is not an all-or-nothing prospect

March 30, 2023

Share on LinkedIn Share on Facebook Share on X

Against the backdrop of a tight labor market and consumer expectations of instant gratification, many customers are eagerly looking for ways to bring greater efficiency to the claims process without sacrificing the end-user experience.

Oftentimes, automation — having technology tools perform tasks normally done by humans — is presumed to be the answer they’ve been seeking. While automation has much to offer the claims space, I often remind our clients, colleagues and business partners that it doesn’t have to be all or nothing.

It is unrealistic to think that today’s machines can handle complex claims from start to finish without any human intervention. However, strategically automating administrative components of claims adjudication (rather than the entire process) can offer the desired efficiency benefits while preserving the personal involvement of a trained professional.

Strategic opportunities

In response to customer demand and to optimize our workflows, Sedgwick has successfully employed automation technology in several areas of claim processing.

Eligibility confirmation: Before processing any claim, we must be sure that the person filing the claim is eligible for the benefits they’re requesting. We’re now able to automate this for certain programs and lines of business, thanks to our intelligent smart.ly platform and the use of application programming interfaces (APIs).

For example: A residential policyholder from one of our U.S. carrier clients enters information into smart.ly about storm-related damage to their home. Using an API to securely connect to our client’s systems, we can instantly validate the homeowner’s policy coverage. Then, smart.ly checks the Federal Emergency Management Agency (FEMA) database to confirm that the location was in a natural disaster zone on the date in question.

Expediting eligibility confirmation enables us to help policyholders faster; that’s especially important during a catastrophe, when people may need temporary housing, repairs or other forms of urgent assistance.

Rules-based decisioning: Using this automation tactic, we can combine multiple data points from a claim and factor them against a “truth table” to determine whether there are clear reasons to either approve or deny the request. Our talented people continue to conduct quality control, but we’ve found a very high level of reliability running certain types of claims — such as warranty or product recall — through a decision engine as part of the adjudication process.

Document validation: Many of the absence cases we handle are prompted by pregnancy. To activate their employer-provided leave benefits, employees must submit medical documentation regarding the pregnancy from their treating physician. As soon as an employee uploads their documents to smart.ly, artificial intelligence tools “read” them like a human being would — whether they’re saved in PDF, image or text-based format. In a matter of seconds, AI digitalizes the content and validates whether all required documentation has been provided.

This expedited process gives our clients’ employees instantaneous information and simple steps to follow at a time in their lives when they have far more important things on their minds.

Value calculations: Automation technology lies at the heart of our innovative solution for fast tracking low-complexity residential property claims.

A client’s policyholder who incurred relatively minor water damage to their home logs onto smart.ly and answers a series of targeted questions regarding their claim. Intuitive scripts prompt the policyholder to upload photos of the damage and provide the dimensions of the affected spaces via their mobile device. Smart.ly then uses the information submitted, the relevant policy language and an independent construction industry pricing database to calculate the value of the loss and propose a settlement amount within 24 hours! The policyholder can then accept the offer (which is validated by an adjuster prior to payment) and pursue restoration and repairs through our contractor network, or they can opt for further review by the appropriate claim specialist. (The current offering focuses on water damage, and we’re aiming to add wind and hail damage to the model in the near term.)

Our ability to automate value calculations enables insurers to process low-complexity residential claims at a fraction of the cost and in much less time than traditional handling methods; it also reduces the time it takes impacted homeowners to get claims resolved and get back to normal after a loss.

Building confidence in automation

While everyone is seeking to maximize efficiency, appetites for trusting automation and reducing human involvement in the claims process vary greatly by organization. As a service provider, we at Sedgwick must understand the culture of each client and their willingness to embrace these kinds of technology-driven solutions.

In my experience, there are two key elements to successfully implementing automation on a client’s program:

1. Data transparency and availability: We must be able to powerfully demonstrate which aspects of automation are highly reliable and working well for a program and which need to be tweaked further. We cannot and should not expect savvy clients to simply take our word for it.

2. True partnership: The implementation of automation always works best when the client is heavily engaged in the experimentation process. This helps us gauge their openness to these innovative solutions and where it’s best to maintain human involvement in the handling of their claims.

Finally, it’s important to note that automation is not the right solution to every claim challenge. Incidents involving bodily injury, large-value losses and high complexity, to name a few, are not the best places to apply these tactics. Organizations and service providers must also recognize the emotional attachments that various scenarios entail in order to determine how to balance the perks of efficiency with the irreplaceability of the human touch.

Learn more — read about Sedgwick’s people first, tech forward and data driven digital experience

Managing lost workdays and medical costs with nurse triage

March 16, 2023

Share on LinkedIn Share on Facebook Share on X

On-the-job injuries present a variety of challenges for impacted employees and their employers.

In today’s podcast we are joined by Beth Burry, managing director, clinical programs and Jo Copeland, SVP design and strategy who discuss what clinical consultation nurse triage services offer the injured worker and the employer organization when unexpected incidents occur. They also weigh in on how nurse triage can support the claims handling process and the injured employee experience.

Listen to the full conversation on the podcast here.

Reevaluating no-fault auto insurance: a tale of two PIP states

December 19, 2022

Share on LinkedIn Share on Facebook Share on X

By Chris Frechette, vice president, liability practice

The promise of savings and disenchantment with the time and cost of litigating automobile claims in the courts gave rise to “personal injury protection” (PIP) and a “no-fault” approach to auto insurance in the 1970s.

Under this system, the injured party receives benefits from their own insurer, regardless of fault, and an at-fault driver can only be sued under certain exceptional circumstances. As hoped, early assessments of state-specific PIP programs showed that disparities in compensation became more balanced, claim payments were issued faster, and avoiding the expensive legal process yielded cost savings.

But by the mid-1980s, no-fault states had generally higher costs and, consequently, higher insurance premiums than states that had not adopted no-fault — results that countered the selling point of cost savings. Popular support declined, and some insurers even exited the market. What once glittered had lost its luster.

In the years since, various societal and market changes have driven an overall rise in auto insurance costs. Premium disparities across U.S. states remain, but PIP states no longer dominate the side of the spectrum with the highest premiums; they now fall more evenly among the rest — due in large part to lessons learned and refinements made by those that chose to stick with it.

Is the PIP scale tipping back in the other direction? What might the future hold for no-fault auto insurance? The current-day tale of two contrasting state programs offers a glimpse at what may lie ahead in this ever-changing arena of liability claims.

Michigan

In 2019, Michigan had the highest auto insurance premiums in the country. It remained the only no-fault state providing medical benefits with no limits and, with no pricing controls, had some of the nation’s highest costs. The state legislature passed comprehensive bipartisan reforms, known as Public Acts 21 and 22. Primary changes aimed at cost reduction included choice of coverage levels for PIP (with minimums), mandatory rate reductions required of carriers and a medical fee schedule reducing provider fees by as much as 45%.

The acts created nearly $3 billion in funds that were returned to over 7 million policyholders. Proponents assert that the reforms have allowed residents to choose policies that better fit their individual needs, driving habits and budgets; reduced overinflated medical costs; and curtailed fraud. Auto premiums dropped 18% from 2019 to 2020 — the largest reduction in the U.S. that year — taking Michigan out of the No. 1 spot.

Florida

Although the number of drivers and number of automobile accidents in the state of Florida stayed relatively constant, the frequency and cost of PIP claims have grown exponentially in recent years. Despite passing 2012 legislation aimed at reducing fraud and lowering costs (PIP accounted for only 2% of all insurance premium in the state, yet generated almost half of all fraud referrals), fraud is still prevalent. Florida carries the highest auto insurance premiums in the nation, despite being one of the only states not to require bodily injury (BI) insurance.

SB54 was introduced last year to end PIP and replace it with mandatory BI coverage. The bill was vetoed by Gov. Ron DeSantis, citing concerns over unintended consequences. Proponents argued the measure would have lowered premiums, while opponents contended exactly the opposite. Florida continues to maintain the highest rates of fraud, litigation and lawsuit abuse in the nation — bolstered by third-party bad faith suits and lack of conventional limitations of legal fees.

Analysis

Examining the tale of Michigan and Florida reaffirms that PIP, like any other coverage, exists within a system with disparate and changing influences. Accordingly, it is neither hero nor villain on its own; it’s simply one component of a larger structure — one that can, on its own, be executed poorly or executed well.

  • Michigan’s reforms appear to have reduced abuse and expanded choices, resulting in cost reductions. Work remains in other areas of the system driving premium, including reducing the number of uninsured drivers and examining rating factors. While a true cap was not established, the costs and benefits of Michigan’s PIP component have improved.
  • In Florida, the latest decision reflects that it may not be an all-or-nothing choice between PIP and BI coverage(s). Insurance premiums in Florida are influenced by weather exposures, traffic congestion from visiting drivers, unusually high numbers of younger and older drivers, a high percentage of uninsured drivers and the highest litigation and fraud rates in the country.

In context, PIP can be part of a state’s overall automobile insurance system without single-handedly skewing premiums. Equally clear is that market factors have changed and continue to change. When PIP was first introduced, it briefly succeeded in reducing litigation rates, but in time, the variances diminished. Early in the history of PIP states, medical costs remained aligned with claims in tort states, but by 2000, medical costs under PIP had more than doubled by comparison — contributing to some states choosing to drop and others to reform PIP. Reforming states borrowed lessons from workers’ compensation medical fee management and added other mechanisms that have brought about more controls against abuse, greater predictability and reductions to premiums.

Today’s broader societal and market environment continues to be influenced by increasing medical costs, growing litigation rates and bigger jury awards as a result of social inflation and other factors. Leveraging data and reflecting on the history and lessons learned in auto no-fault, the timing may be ripe for another re-evaluation. By integrating limits and removing incentives for fraud and other abuse, short of broader tort reform, reformed PIP may once again present a tool worth considering but for new reasons.

The cost of litigation has changed. Redefining table stakes for what is litigable with the proper controls for managing medical expense may provide enhanced value while reducing costs if it’s part of a fully considered and well-integrated program structure.

Learn more — read our commentary paper by Chris Frechette for a more thorough analysis of the history of no-fault auto insurance and PIP’s prospects for the future

New year, new e-scooter liability rules and regulations

December 9, 2022

Share on LinkedIn Share on Facebook Share on X

Electric scooters (or e-scooters) have become increasingly popular. Several commercial operators have established themselves — in cities and residential areas — as a method of transportation that can be rented using a mobile phone application. According to sales figures from the electronics industry, there are hundreds of thousands of privately owned e-scooters. Beginning 1 January, all e-scooters must have statutory liability insurance in Norway. Just like cars, there are different types of potential damage to consider.

Existing rules and regulations

The growing popularity of e-scooters has created some new challenges that require regulations to protect drivers and other parties. During the past year, a 12-year age limit has been introduced in Noway to use this mode of transportation and if you are under 15 years old, you must wear a helmet. No more than one person can be on the e-scooter at any given time, and the same blood alcohol limit for cars was also placed on e-scooters. The use of a mobile phone while driving can be fined, an upper speed limit of 20 kilometers per hour has been set, and we have seen news articles about the police enforcing these rules.

New rules to consider

Additional rules will apply from 1 January 2023, when it will also be required by law for private individuals to have liability insurance on this type of vehicle. Many insurance companies will have a new product to offer to customers. Products that now need to be insured include e-scooters and other small electric motor vehicles, such as segways and hoverboards. The consequences of failing to insure these vehicles can be significant.

Claims handling

At Sedgwick, we have thoroughly prepared for the new rules and my team is ready to deal with upcoming liability casesE-scooters are covered by the Car Liability Act, so we will assess liability in the same way we assess liability in the event of a car accident. That is, it is not necessary to be grossly negligent or intentionally inflict harm in order to have a claim brought against you. A little inattention is enough for the mishap to be a fact. It is liability insurance that becomes required by law and it does not include compensation for your own vehicle, but the damage you are unfortunate to inflict on others or someone else’s property.

Other types of damage

Unfortunately, personal injuries also occur on e-scooters. We will likely see injuries where the driver is injured and other instances where the driver has inflicted injuries on others, such as collisions with pedestrians. With the new statutory insurance, you get both follow-up and costs covered, it provides security and it ensures that necessary treatments can be carried out.

Injuries do not have to occur solely as a result of accidents or collisions. There have been reported cases where scooters have caught fire, and the consequences can be costly. Moreover, in these situations there may arise a need to place responsibility or follow up with a demand for recourse. In other instances, damage may occur to someone else’s property. Examples of this may be damage to fences, gardens and other things where we need professional assessment of the claims received.

Insuring e-scooters in 2023

Hundreds of thousands of e-scooters are currently sitting in private homes without insurance. Therefore, it becomes a significant task to ensure that people know that they must have a liability insurance from beginning 1 January. If you do not, you are financially responsible and the costs can be considerable, even for seemingly minor damages. For more information, contact [email protected].