Risk Insider: Warren Berey

The Importance of Duty of Care for International Employers

By: | March 6, 2017 • 2 min read
Warren Berey is SVP of Multinational Insurance at Generali Global Corporate & Commercial U.S.A., overseeing the development of international casualty and package insurance solutions for U.S. companies and U.S. subsidiaries of foreign companies. He can be reached at [email protected]

Among the more difficult tasks corporate risk managers face is identifying possible threats to employees that engage in business travel and international assignments.

While most firms ostensibly recognize that they have a moral obligation to ensure the safety of employees working in foreign areas, some do not understand the scope of these responsibilities and are ill prepared to deal with the possible fallout of disaster scenarios.

This may seem like a straightforward issue that any qualified risk management team should be able to handle on its own, but it’s not. Implementing a comprehensive program to ensure appropriate worldwide coverages and services that address potential scenarios is a complicated, detailed process.

Putting together the right solution often requires a tremendous amount of input from risk management experts inclusive of experienced global brokers and insurers that work on behalf of a given company on a case-by-case basis.

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Quite simply, there is no one-size-fits-all risk management solution to ensure all duty of care obligations are met around the world. What qualifies as reasonable coverage in one country or for one organization’s needs may be entirely inadequate in another instance.

Therefore, risk managers must go the extra mile to ensure their international workforce is fully protected. If they don’t, the company could face long, drawn-out lawsuits capable of inflicting tremendous financial and reputational damage. While there are obvious risk management protections, lawsuits can arise from a wide range of occurrences – from everyday accidents to complex global threats.

In fact, there are countless instances where organizations failed to implement adequate risk management policies to address their duty of care and keep employees safe with respect to the potential hazards of each location. The fallout of such failures is severe, not only for families who have experienced devastating loss, but also for companies forced to deal with the legal, financial and reputational consequences.

This may seem like a straightforward issue that any qualified risk management team should be able to handle on its own, but it’s not.

Therefore, the importance of comprehensive international risk management policies to address adequate duty of care responsibilities should be abundantly clear. And in order to implement the best solutions, it is essential to partner with the right insurer.

Working with an experienced carrier with a global network that can coordinate local policies around the world ensures flexible, cost-effective solutions that optimize coverage and service. Unfortunately, companies often develop patchwork strategies that rely on fragmented programs put together by unrelated insurance brokers and carriers, which can lead to inefficiencies and dangerous gaps in coverage.

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Experienced global insurers utilize a mature network of providers to ensure service, regulatory and legal compliance, risk engineering, and expert claims handling. Further, companies with a seasoned network have local operations that rely on established strategic relationships with thoroughly vetted legal, security, medical and other providers. This in turn allows carriers to offer flexible solutions, optimize the response to damages and threats, keep claim expenses in line and policy costs competitive.

Having the right resources in place can mean the difference between an expensive payout and walking away from a questionable lawsuit or fraudulent claim.

More from Risk & Insurance

More from Risk & Insurance

Robotics Risk

Rise of the Cobots

Collaborative robots, known as cobots, are rapidly expanding in the workforce due to their versatility. But they bring with them liability concerns.
By: | May 2, 2017 • 5 min read

When the Stanford Shopping Center in Palo Alto hired mobile collaborative robots to bolster security patrols, the goal was to improve costs and safety.

Once the autonomous robotic guards took up their beats — bedecked with alarms, motion sensors, live video streaming and forensics capabilities — no one imagined what would happen next.

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For some reason,  a cobots’ sensors didn’t pick up the movement of a toddler on the sidewalk who was trying to play with the 5-foot-tall, egg-shaped figure.

The 300-pound robot was programmed to stop for shoppers, but it knocked down the child and then ran over his feet while his parents helplessly watched.

Engaged to help, this cobot instead did harm, yet the use of cobots is growing rapidly.

Cobots are the fastest growing segment of the robotics industry, which is projected to hit $135.4 billion in 2019, according to tech research firm IDC.

“Robots are embedding themselves more and more into our lives every day,” said Morgan Kyte, a senior vice president at Marsh.

“Collaborative robots have taken the robotics industry by storm over the past several years,” said Bob Doyle, director of communications at the Robotic Industries Association (RIA).

When traditional robots joined the U.S. workforce in the 1960s, they were often assigned one specific task and put to work safely away from humans in a fenced area.

Today, they are rapidly being deployed in the automotive, plastics, electronics assembly, machine tooling and health care industries due to their ability to function in tandem with human co-workers.

More than 24,000 robots valued at $1.3 billion were ordered from North American companies last year, according to the RIA.

Cobots Rapidly Gain Popularity

Cobots are cheaper, more versatile and lighter, and often have a faster return on investment compared to traditional robots. Some cobots even employ artificial intelligence (AI) so they can adapt to their environment, learn new tasks and improve on their skills.

Bob Doyle, director of communications, Robotic Industry Association

Their software is simple to program, so companies don’t need a computer programmer, called a robotic integrator, to come on site to tweak duties. Most employees can learn how to program them.

While the introduction of cobots into the workplace can bring great productivity gains, it also introduces risk mitigation challenges.

“Where does the problem lie when accidents happen and which insurance covers it?” asked attorney Garry Mathiason, co-chair of the robotics, AI and automation industry group at the law firm Littler Mendelson PC in San Francisco.

“Cobots are still machines and things can go awry in many ways,” Marsh’s Kyte said.

“The robot can fail. A subcomponent can fail. It can draw the wrong conclusions.”

If something goes amiss, exposure may fall to many different parties:  the manufacturer of the cobot, the software developer and/or the purchaser of the cobot, to name a few.

Is it a product defect? Was it an issue in the base code or in the design? Was something done in the cobot’s training? Was it user error?

“Cobots are still machines and things can go awry in many ways.” — Morgan Kyte, senior vice president, Marsh

Is it a workers’ compensation case or a liability issue?

“If you get injured in the workplace, there’s no debate as to liability,” Mathiason said.

But if the employee attributes the injury to a poorly designed or programmed machine and sues the manufacturer of the equipment, that’s not limited by workers’ comp, he added.

Garry Mathiason, co-chair, robotics, AI and automation industry group, Littler Mendelson PC

In the case of a worker killed by a cobot in Grand Rapids, Mich., in 2015, the worker’s spouse filed suit against five of the companies responsible for manufacturing the machine.

“It’s going to be unique each time,” Kyte said.

“The issue that keeps me awake at night is that people are so impressed with what a cobot can do, and so they ask it to do a task that it wasn’t meant to perform,” Mathiason said.

Privacy is another consideration.

If the cobot records what is happening around it, takes pictures of its environment and the people in it, an employee or customer might claim a privacy violation.

A public sign disclosing the cobot’s ability to record video or take pictures may be a simple solution. And yet, it is often overlooked, Mathiason said.

Growing Pains in the Industry

There are going to be growing pains as the industry blossoms in advance of any legal and regulatory systems, Mathiason said.

He suggests companies take several mitigation steps before introducing cobots to the workplace.

First, conduct a safety audit that specifically covers robotics. Make sure to properly investigate the use of the technology and consider all options. Run a pilot program to test it out.

Most importantly, he said, assign someone in the organization to get up to speed on the technology and then continuously follow it for updates and new uses.

The Robotics Industry Association has been working with the government to set up safety standards. One employee can join a cobot member association to receive the latest information on regulations.

“I think there’s a lot of confusion about this technology and people see so many things that could go wrong,” Mathiason said.

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“But if you handle it properly with the safety audit, the robotics audit, and pay attention to what the standards are, it’s going to be the opposite; there will be fewer problems.

“And you might even see in your experience rating that you are going to [get] a better price to the policy,” he added.

Without forethought, coverage may slip through the cracks. General liability, E&O, business interruption, personal injury, cyber and privacy claims can all be involved.

AIG’s Lexington Insurance introduced an insurance product in 2015 to address the gray areas cobots and robots create. The coverage brings together general and products liability, robotics errors and omissions, and risk management services, all three of which are tailored for the robotics industry. Minimum premium is $25,000.

Insurers are using lessons learned from the creation of cyber liability policies and are applying it to robotics coverage, Kyte said.

“The robotics industry has been very safe for the last 30 years,” RIA’s Doyle said. “It really does have a good track record and we want that to continue.” &

Juliann Walsh is a staff writer at Risk & Insurance. She can be reached at [email protected]