6 Workers’ Comp Risks for the New Economy
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2018 is shaping up to be a year of historic shift for U.S. manufacturing. Tax reform, favorable regulatory changes, advances in industrial technology, and an improving economy and unemployment rate all present opportunities for organic growth.
“Many manufacturers expect to increase sales in 2018, both domestically and abroad,” said Stacie Graham, Senior Vice President and General Manager, National Insurance, Central Division, for Liberty Mutual Insurance. “Recent tax and regulatory changes in particular present opportunities to increase exports to international markets.”
But there are persistent operational challenges that could block manufacturers from seizing these opportunities. An industry-wide talent shortage and skills gap hinder growth potential for U.S manufacturers. To overcome them, apprenticeships and efficiency tools like co-bots could be the way forward.
According to a 2017 report by Deloitte and The Manufacturing Institute, the U.S. manufacturing industry could be short by about two million workers over the 2015–2025 period.
“The labor participation rate will continue to drop through 2026 according to the Bureau of Labor Statistics. This shift is largely driven by aging workers who are retiring—and there isn’t enough new talent in the pipeline to replace them,” Graham said.
The manufacturing sector — like many others– needs to invest more in attracting and training talent. Some of the difficulty could stem from what Graham called an “image problem.”
“There’s a perception that manufacturing is not a viable career path, because automation is taking over, or because it’s dangerous, or simply because many jobs on the factory floor seem repetitive,” she said. Less than five in 10 Americans surveyed by Deloitte believe manufacturing jobs are interesting, rewarding, clean, safe, stable, or secure.
The increasingly technical nature of manufacturing work may also present challenges, as potential job candidates may not have the right skills.
Manufacturers are feeling the pinch. In a recent survey by the National Association of Manufacturers, companies indicated that attracting and maintaining a quality workforce is a top challenge.
Now is the time for manufacturers to address these operational challenges so they can be successful in the long term.
When it comes to training new skills, earlier is better for both employees and businesses. Manufacturers that invest in apprenticeship programs targeting younger applicants can help to teach the necessary skills to a pool of talent early in their career journeys.
For example, Germany adopted an apprenticeship model in the mid-2000s, which helped decrease the youth unemployment rate from a high of 15.9 percent in 2005 to 6.6 percent in 2017. In the U.S., the youth unemployment rate reached 10.1 percent in 2017.
“There is a big opportunity to tap into that pool,” Graham said. “And if apprentices have good experiences, they’ll spread the word among their peers, helping to cultivate a continuing pipeline of talent.”
Talent development and training may not completely bridge the gap created by a mass exodus of retirees, and that’s where collaborative robots —or co-bots — come into play.
As the name suggests, co-bots work alongside human workers, not replace them entirely.
By performing tasks that pose ergonomic or other safety risks to employees, co-bots can free up employees for higher-level thinking tasks like quality control or the actual programming of co-bots.
“Co-bots boost worker efficiency and can reduce the total number of employees on the floor,” Graham said, but they don’t come without their own challenges.
Brokers can play a key role in helping their clients take advantage of the efficiency gains promised by co-bots while mitigating the risks. Here are five areas brokers should address with their clients to help them effectively implement co-bot technology:
The right insurer can help brokers address these areas and help their clients take advantage of the business opportunities ahead.
Liberty Mutual’s team of risk control consultants can help create company-specific safety checklists to help ensure that co-bots don’t present a bigger threat than opportunity.
“Members of our risk control team specialize in manufacturing. They sit on health and safety committees and take part in discussions about standards for industrial robots and co-bots,” Graham said. “They help ensure we’re keeping up with industry changes so we can provide the right guidance.”
Industry-specific expertise is complemented by broad range of coverages, from standard to E&S lines, offered by Liberty Mutual and Ironshore, now a Liberty Mutual company.
“We have such a wide breadth of products available for manufacturers, from small and mid-size to very large. Whether it’s a guaranteed cost policy or a loss responsive policy, we can build a program that makes the most sense for that company,” Graham said.
Liberty Mutual also offers specific endorsements for industrial equipment, metal, plastics, and food manufacturers, including commercial general liability enhancements and E&O coverage claims-made and defense within limits.
“Our job is to make it easy for brokers to find the right mix of coverage and services their clients need to be successful. “We’re able to do that with our risk control resources and flexibility in building program structures that work.”
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.
I was a margin clerk in financial futures at Kidder Peabody & Company.
R&I: How did you come to work in risk management?
While I was at General Dynamics working in HR, the opportunity to transition to risk management was afforded to me. I was very fortunate that the risk manager at the time took a chance on me and taught me so very much. Coming from a manufacturing facility with multiple unions helped prepare me for any situation.
R&I: How has your experience in human resources helped your career in risk management? What do the positions have in common?
I believe my HR background has helped my risk management career immensely. Both areas are interrelated. People are fundamental to accomplishing goals and people can help or hinder those results. Human resources is tasked with bringing in and nurturing the right people, and risk management is tasked with keeping them safe.
R&I: What is the risk management community doing right?
Education, keeping up with industry trends and having resources available to better prepare organizations. There is always something new or a new way to view a situation.
R&I: What kind of resources can risk managers bring to the table?
Data and analytics have come so far, and the systems out there are able to drill down into good quality information that can be used more effectively.
R&I: What could the risk management community be doing a better job of?
Within the community, we all understand the role of risk management, but getting organizations to understand the importance of considering risk during the strategic decision-making process as opposed to treating it like an after-thought can be a challenge. Risk should be involved in day-to-day operations — not just when a problem arises.
R&I: What was the best location for the RIMS conference and why?
San Diego. The proximity to the city, community and culture was great.
R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?
The emergence of cyber security.
R&I: What emerging commercial risk most concerns you?
Catastrophic events, both natural and manmade, are becoming more of a norm of late. We need to look at analytics and the role they play in understanding these disasters and subsequent losses to help organizations prepare, manage and recover from these types of events.
R&I: What insurance carrier do you have the highest opinion of?
We have always valued relationships. We have a few long-standing partners that immediately come to mind. FM Global, Great American and Safety National have all been immensely important to our company and our growth.
R&I: How much business do you do direct versus going through a broker?
All through a broker.
R&I: Is the contingent commission controversy overblown?
If you have trust and faith in your broker and they have full disclosure, then yes, it is overblown. But I have seen the cost of hidden commissions and the effect on the bottom line.
R&I: Who is your mentor and why?
I had a mentor early on in my career in HR, Marie Haggerty. She instilled in me the mindset to speak up and be heard and not to shy away from an adverse opinion but to be strong in my convictions.
R&I: What have you accomplished that you are proudest of?
Being awarded FM Global’s Highly Protected Risk award in 2011. The award is granted when a location has no human element recommendations, no uncontrolled high-risk exposures and no other major loss exposures. Mohegan Sun has worked hand-in-hand with FM since 2000 on loss prevention recommendations and improvements. Our engineering team as well as our fire department have been instrumental in our ability to achieve this award. We have always tried to meet or exceed the advice we receive from FM’s engineers. This has made our property better protected as well as helped to keep our premium in line.
R&I: How many e-mails do you get in a day?
R&I: What is your favorite book or movie?
I only read nonfiction and personal development books. Katie Couric’s “The Best Advice I Ever Got: Lessons from Extraordinary Lives” is one of my favorites.
R&I: What is your favorite drink?
Coffee and water.
R&I: What is the most unusual/interesting place you have ever visited?
The Pearl Harbor memorial. I love history and to stand over the Arizona was humbling.
R&I: What is the riskiest activity you ever engaged in?
R&I: What about this work do you find the most fulfilling or rewarding?
That I can make a difference in either a safer workplace or on the bottom line, and that every day is different. I love the diversity of what I do and the constant change and ability to continue to grow and learn.
R&I: What do your friends and family think you do?
I definitely get the deer in the headlights look when I tell people what I do — I don’t think any of my family or friends truly understand it.