Teddy Award Winner

De-Clawing Risk

PetSmart cut workers' compensation costs while almost doubling in size.
By: | November 1, 2013 • 6 min read

PetSmart is growing so fast that it outgrew its insurance carrier’s workers’ compensation program.

Considering that its employees handle scaredy-cats, snakes and Chihuahuas fierce enough to take on Great Danes, developing a more robust safety program and a hands-on claims process for the expanded company was crucial.

The results of PetSmart’s complete overhaul of its workers’ compensation program — including switching carriers, which allowed the Phoenix-based company to use a third-party claims administrator — are impressive: a 51 percent reduction in the store injury incident rate since 2008, and an estimated $33 million in cost savings from reduced claim frequency. Those metrics and others make PetSmart a 2013 Theodore Roosevelt Workers’ Compensation and Disability Management Award winner.

David Jewell, PetSmart’s director of risk and insurance, said that while the company’s footprint rose from 826 stores in 2006, to its current count of 1,301 throughout United States and Canada, its workers’ compensation costs are now less than they were in 2008. This improvement is due to a lot of reasons — instituting a safety culture, establishing accountability for safety, working on an efficient risk finance arrangement, changing how the company handles claims and managed care, and putting in place a clinical consultation program.


“In retail, and more specifically in our unique business model, this is very important,” Jewell said. “For us to achieve a downward trend on workers’ compensation costs, at a time when the company has almost doubled in size, is an incredible achievement on the part of our team.”

The biggest challenge for PetSmart was that its insurance and risk finance structure were bundled with a middle market workers’ compensation carrier. The traditional arrangement precluded the use of a TPA. But with PetSmart’s workers’ compensation estimated costs rising an estimated 64 percent between 2005 and 2008, change was in order.

“We were spending all this money and we were unable to have the control and flexibility of having a dedicated unit of onsite claims professionals who would work directly with us,” Jewell said.

Unique Risk Exposures

Pet stores present unique risk exposures to customers and employees not normally faced by other retailers — risks such as animal bites and injuries requiring a high degree of specialized loss control and claims management strategies, he said. Grooming salons in every store and boarding facilities in 196 stores create an environment in which specialized care for animal-related injuries is necessary. The company also has a supply chain network of eight large distribution centers with high severity exposures of material handling.

In 2008, Jewell and his team negotiated an agreement with Memphis-based Sedgwick Claims Management Services Inc. for an unbundled claims arrangement, and also switched to a carrier that allowed for such an arrangement.

PetSmart corporate headquarters is now home to a Sedgwick national accounts manager and a working supervisor who manages liability claims, a return to work specialist, two multiline claims examiners and one general liability examiner.

“This allows PetSmart impromptu brainstorming and discussions on challenging claims and changes in protocol,” Jewell said.


R11-13p34-36_04PetTEDDY.indd“For us to achieve a downward trend on workers’ compensation costs, at a time when the company has almost doubled in size, is an incredible achievement on the part of our team.”
— David Jewell, director of risk and insurance, PetSmart

“Having them onsite makes it less expensive for PetSmart, financial issues are communicated quicker and claims get settled faster.”

Jewell’s vision for a better workers’ compensation program was “very well balanced,” said Sedgwick’s President and CEO Dave North.

“He wanted to structure a program that would, first and foremost, take care of associates working at PetSmart,” North said. “He also wanted to take some of the difficult health care decisions out of the hands of store managers while making sure they were informed on return-to-work dates and other information they need to know.”

One of the essential program features that PetSmart wanted upfront was a post-injury clinical triage program that was not “off-the-shelf” but rather very specific to PetSmart’s operations, he said. For example, if an associate was exposed to an injury that required a tetanus shot, the team would already be informed whether or not that associate was up-to-date on his or her vaccination.


Employees with up-to-date tetanus vaccinations often do not need to leave the store for treatment.

“It was this type of customization and this level of detail that really made the PetSmart program successful,” North said.

A Progressive Approach

Christine Lawson, assistant vice president, area claim manager of Willis’ Risk Control and Claims Advocacy practice, said that Willis nominated PetSmart for the Teddy Award due to PetSmart’s “extraordinarily progressive approach to enterprise risk management.”

In 2011, Willis expanded its long-term partnership with PetSmart to include all casualty lines, making Willis its exclusive broker for property and casualty lines, Lawson said. To support PetSmart’s efforts in enhancing its workers’ compensation program, Willis aided the company in developing a strategic risk plan with three primary goals: clarification of PetSmart’s key financial and operational goals; definition of service objectives, activities, accountabilities, and deliverables to align with those goals; and establishment of specific and measurable metrics for each goal.

“Once we identified the goals, we worked hand-in-hand with PetSmart to drill down into areas that we could work together with PetSmart to improve,” she said.

Workshops were held involving cross-functional teams to develop and document mutual goals, metrics and accountabilities, Lawson said. Areas of improvement included a new risk management information system, identifying safety and claims process enhancements, and a cost-saving analysis from a claims perspective.

“Willis and PetSmart work as a team to continually assess PetSmart’s risk program and ways to be make it better than ever,” she said.

A Solid Safety Program

Another critical improvement of PetSmart’s workers’ compensation program was the implementation of a solid safety program, said Virginia Baba, risk management/claims manager for PetSmart.

Stores with high incident rates are identified and placed on corrective action plans within PetSmart’s safety training observation program, called STOP.

All stores are required to develop their own safety teams who meet regularly to discuss upcoming monthly safety topics, which are provided by the company’s safety and loss prevention team, she said. The store safety teams then talk about those topics with all store associates.

There are both pet safety and human safety topics for the stores, and a separate safety topic for the distribution centers. Pet safety topics would include proper pet restraint and recognizing signs of pet stress, while human safety topics would include eye safety, strain/sprain prevention, heat illness and forklift safety.


PetSmart’s formal safety program has given the company more control over claims “in some of the more challenging jurisdictions,” Baba said. For example, by having a strong safety culture and the right TPA in place, PetSmart was able to become successfully self-insured in the state of Washington. The company was also able to opt out of workers’ compensation in the state of Texas and develop its own benefit plan.

“An excellent safety program is crucial to managing work injury claims in either of these jurisdictions,” Baba said.

The company also developed an innovative return-to-work program, in which employees coming back for transitional duty can accept in-house charitable work assignments, such as taking care of animals in the stores’ Pet Adoption Centers manned by local nonprofit organizations.

“Some of these pets are in the adoption center 24/7,” she said. “If a nonprofit volunteer isn’t available, our associates help take care of the pets, review the adoption safety checklist, and sit at the table at the front of the adoption center to answer questions from pet parents or potential adopters.”

Employees in the transitional duty program may also perform safety checks throughout the store to help drive the company’s safety culture, Baba said.

Since the inception of the return-to-work program, there has been a 48 percent reduction in “average days on restricted duty” and a 70 percent reduction in the number of associates out over 90 days.

PetSmart is also implementing a new stand-alone risk management information system to track all incidents and costs, Jewell said. “PetSmart is establishing a road map for an enterprisewide incident reporting module for the future.”

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at riskletters@lrp.com.

More from Risk & Insurance

More from Risk & Insurance

2017 Risk All Stars

Immeasurable Value

The 2017 Risk All Stars strengthened their organizations by taking ownership of improved risk management processes and not quitting until they were in place.
By: | September 12, 2017 • 3 min read

Being the only person to hold a particular opinion or point of view within an organization cannot be easy. Do the following sound like familiar stories? Can you picture yourself or one of your risk management colleagues as the hero or heroine? Or better yet, as a Risk & Insurance® Risk All Star?


One risk manager took a job with a company that was being spun off, and the risk management program, which was built for a much larger company, was not a good fit for the spun-off company.
Rather than sink into inertia, this risk manager took the bull by the horns and began an aggressive company intranet campaign to instill better safety and other risk management practices throughout the organization.

The risk manager, 2017 Risk All Star Michelle Bennett of Cable One, also changed some long-standing brokerage relationships that weren’t a good fit for the risk management and insurance program. In her first year on the job she produced premium savings and in her second year is in the process of introducing ERM company-wide.

Or perhaps this one rings a bell. The news is trickling out that a company is poised to dramatically expand, increasing the workforce three- or four-fold. Having this knowledge with certainty would be a great benefit to a risk manager, who could begin girding safety, workers’ comp and related programs accordingly. But things sometimes don’t work that way, do they? Sometimes the risk manager is one of the last people to know.

The Risk All Star Award recognizes at its core, creativity, perseverance and passion. The 13 winners of this year’s award all displayed those traits in abundance.

In the case of 2017 Risk All Star winner Steve Richards of the Coca-Cola Bottling Company, the news of an expansion spurred him to action. He completely overhauled the company’s workers’ compensation program and streamlined its claim management system. The results, even with a much higher headcount, were reduced legal costs, better return-to-work experiences for injured workers and a host of other improvements and savings.

The Risk All Star Award recognizes at its core, creativity, perseverance and passion. The 13 winners of this year’s award all displayed those traits in abundance. Sometimes it took years for a particular risk solution, as promoted by a risk manager, to find acceptance.

In other cases a risk manager got so excited about a solution, they never even considered getting turned down. They just kept pushing until they carried the day.


Butler University’s Zach Finn became obsessive about what he felt was a lackluster effort on the part of the insurance industry to bring in new talent. The former risk manager for the J.M. Smucker Co. settled on the creation of a student-run captive to give his risk management students the experience they would need to get hired right out of college.

The result was a better risk management program for the university’s College of Liberal Arts and Sciences, and immediate traction in the job market for Finn’s students.

A few of our Risk All Stars told us that the results they are achieving were decades in the making. Only by year-in, year-out dedication to gaining transparency about her co-op’s risks and learning more and more about her various insurance carriers, did Growmark Inc.’s Faith Cring create a stalwart risk management and insurance program that is the envy of the agricultural sector. Now she’s been with some of her insurance carriers more than 20 years — some more than 30 years.

Having the right idea and not having a home for it can be a lonely, frustrating experience. Having the creativity, the passion and perhaps, most importantly, the perseverance to see it through and get great results makes you a Risk All Star. &


Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, perseverance and passion.

See the complete list of 2017 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.