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 [email protected]

More from Risk & Insurance

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Risk Management

The Profession

Pinnacle Entertainment’s VP of enterprise risk management says he’s inspired by Disney’s approach to risk management.
By: | November 1, 2017 • 4 min read

R&I: What was your first job?

Bus boy at a fine dining restaurant.

R&I: How did you come to work in this industry?

I sent a résumé to Harrah’s Entertainment on a whim. It took over 30 hours of interviewing to get that job, but it was well worth it.

R&I: If the world has a modern hero, who is it and why?


The Chinese citizen (never positively identified) who stood in front of a column of tanks in Tiananmen Square on June 5, 1989. That kind of courage is undeniable, and that image is unforgettable. I hope we can all be that passionate about something at least once in our lives.

R&I: What emerging commercial risk most concerns you?

Cyber risk, but more narrowly, cyber-extortion. I think state sponsored bad actors are getting more and more sophisticated, and the risk is that they find a way to control entire systems.

R&I: What is the riskiest activity you ever engaged in?

Training and breaking horses. When I was in high school, I worked on a lot of farms. I did everything from building fences to putting up hay. It was during this time that I found I had a knack for horses. They would tolerate me getting real close, so it was natural I started working more and more with them.

Eventually, I was putting a saddle on a few and before I knew it I was in that saddle riding a horse that had never been ridden before.

I admit I had some nervous moments, but I was never thrown off. It taught me that developing genuine trust early is very important and is needed by all involved. Nothing of any real value happens without it.

R&I: What about this work do you find the most fulfilling or rewarding?


Setting very aggressive goals and then meeting and exceeding those goals with a team. Sharing team victories is the ultimate reward.

R&I: What is the most unusual/interesting place you have ever visited?

Disney World. The sheer size of the place is awe inspiring. And everything works like a finely tuned clock.

There is a reason that hospitality companies send their people there to be trained on guest service. Disney World does it better than anyone else.

As a hospitality executive, I always learn something new whenever I am there.

James Cunningham, vice president, enterprise risk management, Pinnacle Entertainment, Inc.

The risks that Disney World faces are very similar to mine — on a much larger scale. They are complex and across the board. From liability for the millions of people they host as their guests each year, to the physical location of the park, to their vendor partnerships; their approach to risk management has been and continues to be innovative and a model that I learn from and I think there are lessons there for everybody.

R&I: What is the risk management community doing right?

We are doing a much better job of getting involved in a meaningful way in our daily operations and demonstrating genuine value to our organizations.

R&I: What could the risk management community be doing a better job of?

Educating and promoting the career with young people.

R&I: What have you accomplished that you are proudest of?

Being able to tell the Pinnacle story. It’s a great one and it wasn’t being told. I believe that the insurance markets now understand who we are and what we stand for.

R&I: Who is your mentor and why?


John Matthews, who is now retired, formerly with Aon and Caesar’s Palace. John is an exceptional leader who demonstrated the value of putting a top-shelf team together and then letting them do their best work. I model my management style after him.

R&I: What is your favorite book or movie?

I read mostly biographies and autobiographies. I like to read how successful people became successful by overcoming their own obstacles. Jay Leno, Jack Welch, Bill Harrah, etc. I also enjoyed the book and movie “Money Ball.”

R&I: What is your favorite drink?

Ice water when it’s hot, coffee when it’s cold, and an adult beverage when it’s called for.

R&I: What does your family think you do?

In my family, I’m the “Safety Geek.”

R&I:  What’s your favorite restaurant?

Vegas is a world-class restaurant town. No matter what you are hungry for, you can find it here. I have a few favorites that are my “go-to’s,” depending on the mood and who I am with.

If you’re in town, you should try to have at least one meal off the strip. For that, I would suggest you get reservations (you’ll need them) at Herbs and Rye. It’s a great little restaurant that is always lively. The food is tremendous, and the service is always on point. They make hand-crafted cocktails that are amazing.

My favorite Mexican restaurant is Lindo Michoacan. There are three in town, and I prefer the one in Henderson as it has the best view of the valley. For seafood, you can never go wrong with Joe’s in Caesar’s Palace.

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]