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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The Profession

Curt Gross

This director of risk management sees cyber, IP and reputation risks as evolving threats, but more formal education may make emerging risk professionals better prepared.
By: | June 1, 2018 • 4 min read

R&I: What was your first job?

My first non-professional job was working at Burger King in high school. I learned some valuable life lessons there.

R&I: How did you come to work in risk management?

After taking some accounting classes in high school, I originally thought I wanted to be an accountant. After working on a few Widgets Inc. projects in college, I figured out that wasn’t what I really wanted to do. Risk management found me. The rest is history. Looking back, I am pleased with how things worked out.

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


I think we do a nice job on post graduate education. I think the ARM and CPCU designations give credibility to the profession. Plus, formal college risk management degrees are becoming more popular these days. I know The University of Akron just launched a new risk management bachelor’s program in the fall of 2017 within the business school.

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

I think we could do a better job with streamlining certificates of insurance or, better yet, evaluating if they are even necessary. It just seems to me that there is a significant amount of time and expense around generating certificates. There has to be a more efficient way.

R&I: What was the best location and year for the RIMS conference and why?

Selfishly, I prefer a destination with a direct flight when possible. RIMS does a nice job of selecting various locations throughout the country. It is a big job to successfully pull off a conference of that size.

Curt Gross, Director of Risk Management, Parker Hannifin Corp.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

Definitely the change in nontraditional property & casualty exposures such as intellectual property and reputational risk. Those exposures existed way back when but in different ways. As computer networks become more and more connected and news travels at a more rapid pace, it just amplifies these types of exposures. Sometimes we have to think like the perpetrator, which can be difficult to do.

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

I hate to sound cliché — it’s quite the buzz these days — but I would have to say cyber. It’s such a complex risk involving nontraditional players and motives. Definitely a challenging exposure to get your arms around. Unfortunately, I don’t think we’ll really know the true exposure until there is more claim development.

R&I: What insurance carrier do you have the highest opinion of?


Our captive insurance company. I’ve been fortunate to work for several companies with a captive, each one with a different operating objective. I view a captive as an essential tool for a successful risk management program.

R&I: Who is your mentor and why?

I can’t point to just one. I have and continue to be lucky to work for really good managers throughout my career. Each one has taken the time and interest to develop me as a professional. I certainly haven’t arrived yet and welcome feedback to continue to try to be the best I can be every day.

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

I would like to think I have and continue to bring meaningful value to my company. However, I would have to say my family is my proudest accomplishment.

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

Favorite movie is definitely “Good Will Hunting.”

R&I: What’s the best restaurant you’ve ever eaten at?

Tough question to narrow down. If my wife ran a restaurant, it would be hers. We try to have dinner as a family as much as possible. If I had to pick one restaurant though, I would say Fire Food & Drink in Cleveland, Ohio. Chef Katz is a culinary genius.

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

The Grand Canyon. It is just so vast. A close second is Stonehenge.

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


A few, actually. Up until a few years ago, I owned a sport bike (motorcycle). Of course, I wore the proper gear, took a safety course and read a motorcycle safety book. Also, I have taken a few laps in a NASCAR [race car] around Daytona International Speedway at 180 mph. Most recently, trying to ride my daughter’s skateboard.

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

The Dalai Lama. A world full of compassion, tolerance and patience and free of discrimination, racism and violence, while perhaps idealistic, sounds like a wonderful place to me.

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

I really enjoy the company I work for and my role, because I get the opportunity to work with various functions. For example, while mostly finance, I get to interact with legal, human resources, employee health and safety, to name a few.

R&I: What do your friends and family think you do?

I asked my son. He said, “Risk management and insurance.” (He’s had the benefit of bring-your-kid-to-work day.)

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