Risk Focus: Professional Liability

Incivility’s Growing Risk

Increasing levels of incivility in society are leaching into the workplace and bruising employers’ bottom lines.
By: | October 12, 2017 • 5 min read

Workplace incivility is on the rise.

Workplace violence — a frequent outcome of incivility — is reported to cost $4.2 billion dollars a year and claims 1,000 lives annually. The Journal of Nursing Administration reports incivility is often responsible for lost productivity, high turnover, low morale, reputational damage, workers’ compensation claims and lawsuits.

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Toronto-based Bar-David Consulting, which helps firms create civil work environments, finds a direct connection from incivility to harassment and bullying and finally physical violence. That link constitutes “a big risk management worry,” said Lori Severson, health care loss control consultant, Lockton Companies.

In 1998, 49 percent of workers reported rude treatment at least once a month. In 2016, 62 percent said the same, according to research conducted by Christine Porath, associate professor, McDonough School of Business, Georgetown University, and Christine Pearson in the Harvard Business Review.

Michigan State University research found incivility is spreading, racking up an average annual impact of $14,000 per employee in lost production and work time.

Increasingly, Severson said, organizations are adopting strategies from the health care industry, generally considered the “gold standard of workplace safety.”

Some insurance products are adapting to a broader spectrum of risks. For example, some employment practice liability coverage will respond to bullying allegations, said Paul Marshall, managing director, McGowan Program Administrators. And some workplace violence policies added threat protections. “Now it will respond to just a threat,” he said.

Daniel Gugala, executive vice president and general counsel, Crisis Prevention Institute

All organizational change, including zero tolerance for uncivil behavior that can escalate into violence and lawsuits, begins at the top, wrote Valerie Keels, head of DC office services, Gavi, and member of the Society for Human Resources Management’s HR Disciplines Expertise Panel, in an e-mail interview.

“The CEO, president or other high-level authority figure in the organization must not only practice this behavior but also advocate for it publicly and often,” then follow up with organizational policies and procedures.

“Then the line managers and employees must be educated and trained about what civil behavior does and does not look like,” Keels wrote.

Uncivil behavior can often be subtle and unconscious. “Think of the manager who sends emails during a presentation … or the team leader who takes credit for good news but points a finger at team members when something goes wrong,” wrote Porath.

A Not-So-Hidden Liability Risk

Workers get on each other’s nerves, bringing personal habits into the workplace. They decorate their workspaces with photos of wives in bikinis, religious articles and political paraphernalia.

Most companies already have anti-harassment policies in place that define which personal items employees can and can’t have in the workplace, said Allison West, Esq., principal, Employment Practices Specialists, LLC, which might cover the issues of swimsuit photos and religious articles.

“You can reduce the risk with training, but you’ll never eradicate it. You can’t force people to be civil.” —Daniel Gugala, executive vice president and general counsel, Crisis Prevention Institute

A complete ban on personal items would be overkill, said West. But private employers have legal grounds to take that draconian step, since first amendment rights do not apply in the private workplace except for collective actions under labor laws, according to Katherine Stone, distinguished professor of law, UCLA School of Law.

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Then there are snubs, unreturned emails and unacknowledged efforts.

If incivilities relate to gender, religion, race or any constitutionally protected groups, “that raises serious HR concerns and some liability exposure for the company,” said Stone.

Cases that “go beyond rolled eyes into marginalizing or excluding a co-worker because of race or gender can be a liability if the behavior is interfering with the person’s ability to do the job and succeed in the workplace.”

In those cases, she said, “there can be liability if the company knows about it and does nothing to stop it.”

The Equal Employment Opportunity Commission Task Force on the Study of Harassment in the Workplace recommends civility training and bystander intervention training as part of a holistic harassment prevention program.

Most large employers understand the importance of safety, said Sam Estreicher, professor of law, New York University School of Law and director of its Center for Labor and Employment.

Sam Estreicher, director, Center for Labor and Employment, New York University School of Law

“An organization that’s willing to commit resources to how people communicate — both how they deliver and receive messages — may keep in check those who don’t have the propensity to follow the right path,” said Daniel Gugala, executive vice president and general counsel, Crisis Prevention Institute, an international training organization specializing in the safe management of disruptive and assaultive behavior.

“You can reduce the risk with training,” he said, “but you’ll never eradicate it. You can’t force people to be civil.”

You’re Fired

Employers have a legal obligation to run a safe workplace. Social media lifted the veil of privacy from off-duty behaviors, and sometimes those behaviors result in termination.

For example, at least four white nationalists who demonstrated in Charlottesville, Va., lost their jobs after being identified through Twitter.

This poses the question: Are legal but unsavory activities with a controversial group outside the office grounds for dismissal?

For public sector employees, no, said Stone, because of first amendment protections. However, employment in the private sector is “at will,” giving employees fewer protections.

The law varies by jurisdiction, but in general, private employers do not monitor employees’ behavior outside the workplace, said Estreicher. “Policing behavior outside the workplace is generally counterproductive.” Overzealous employers, he said, “will be clobbered in litigation.”

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Again, there are exceptions, Estreicher said, especially where employers perceive potential harm to their brand. Say an employee identified as attending a white supremacy rally is a supervisor, not “just a guy on the line,” the employer should bring him in for a talk. “You say, ‘You’re acting as my agent and you’re putting my company in a bad light.’ That would be consistent with a reasonable civility policy,” said Estreicher.

Civility, Stone said, “is in the eyes of the beholder” and some types of employee activities that might appear uncivil can trigger the protection of labor laws.

“The law allows employees to criticize their employer about working conditions, sometimes loudly and profanely. Some might consider those protests to be uncivil, disruptive or inappropriate.”

To merit legal protections, those kinds of behaviors would rise above “one disgruntled person griping, but trying to get colleagues to join the conduct as a protest,” Stone said. &

Susannah Levine writes about health care, education and technology. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Property

Insurers Take to the Skies

This year’s hurricane season sees the use of drones and other aerial intelligence gathering systems as insurers seek to estimate claims costs.
By: | November 1, 2017 • 6 min read

For Southern communities, current recovery efforts in the wake of Hurricane Harvey will recall the painful devastation of 2005, when Katrina and Wilma struck. But those who look skyward will notice one conspicuous difference this time around: drones.

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Much has changed since Katrina and Wilma, both economically and technologically. The insurance industry evolved as well. Drones and other visual intelligence systems (VIS) are set to play an increasing role in loss assessment, claims handling and underwriting.

Farmers Insurance, which announced in August it launched a fleet of drones to enhance weather-related property damage claim assessment, confirmed it deployed its fleet in the aftermath of Harvey.

“The pent-up demand for drones, particularly from a claims-processing standpoint, has been accumulating for almost two years now,” said George Mathew, CEO of Kespry, Farmers’ drone and aerial intelligence platform provider partner.

“The current wind and hail damage season that we are entering is when many of the insurance carriers are switching from proof of concept work to full production rollout.”

 According to Mathew, Farmers’ fleet focused on wind damage in and around Corpus Christi, Texas, at the time of this writing. “Additional work is already underway in the greater Houston area and will expand in the coming weeks and months,” he added.

No doubt other carriers have fleets in the air. AIG, for example, occupied the forefront of VIS since winning its drone operation license in 2015. It deployed drones to inspections sites in the U.S. and abroad, including stadiums, hotels, office buildings, private homes, construction sites and energy plants.

Claims Response

At present, insurers are primarily using VIS for CAT loss assessment. After a catastrophe, access is often prohibited or impossible. Drones allow access for assessing damage over potentially vast areas in a more cost-effective and time-sensitive manner than sending human inspectors with clipboards and cameras.

“Drones improve risk analysis by providing a more efficient alternative to capturing aerial photos from a sky-view. They allow insurers to rapidly assess the scope of damages and provide access that may not otherwise be available,” explained Chris Luck, national practice leader of Advocacy at JLT Specialty USA.

“The pent-up demand for drones, particularly from a claims-processing standpoint, has been accumulating for almost two years now.” — George Mathew, CEO, Kespry

“In our experience, competitive advantage is gained mostly by claims departments and third-party administrators. Having the capability to provide exact measurements and details from photos taken by drones allows insurers to expedite the claim processing time,” he added.

Indeed, as tech becomes more disruptive, insurers will increasingly seek to take advantage of VIS technologies to help them provide faster, more accurate and more efficient insurance solutions.

Duncan Ellis, U.S. property practice leader, Marsh

One way Farmers is differentiating its drone program is by employing its own FAA-licensed drone operators, who are also Farmers-trained claim representatives.

Keith Daly, E.V.P. and chief claims officer for Farmers Insurance, said when launching the program that this sets Farmers apart from most carriers, who typically engage third-party drone pilots to conduct evaluations.

“In the end, it’s all about the experience for the policyholder who has their claim adjudicated in the most expeditious manner possible,” said Mathew.

“The technology should simply work and just melt away into the background. That’s why we don’t just focus on building an industrial-grade drone, but a complete aerial intelligence platform for — in this case — claims management.”

Insurance Applications

Duncan Ellis, U.S. property practice leader at Marsh, believes that, while currently employed primarily to assess catastrophic damage, VIS will increasingly be employed to inspect standard property damage claims.

However, he admitted that at this stage they are better at identifying binary factors such as the area affected by a peril rather than complex assessments, since VIS cannot look inside structures nor assess their structural integrity.

“If a chemical plant suffers an explosion, it might be difficult to say whether the plant is fully or partially out of operation, for example, which would affect a business interruption claim dramatically.

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“But for simpler assessments, such as identifying how many houses or industrial units have been destroyed by a tornado, or how many rental cars in a lot have suffered hail damage from a storm, a VIS drone could do this easily, and the insurer can calculate its estimated losses from there,” he said.

In addition,VIS possess powerful applications for pre-loss risk assessment and underwriting. The high-end drones used by insurers can capture not just visual images, but mapping heat, moisture or 3D topography, among other variables.

This has clear applications in the assessment and completion of claims, but also in potentially mitigating risk before an event happens, and pricing insurance accordingly.

“VIS and drones will play an increasing underwriting support role as they can help underwriters get a better idea of the risk — a picture tells a thousand words and is so much better than a report,” said Ellis.

VIS images allow underwriters to see risks in real time, and to visually spot risk factors that could get overlooked using traditional checks or even mature visual technologies like satellites. For example, VIS could map thermal hotspots that could signal danger or poor maintenance at a chemical plant.

Chris Luck, national practice leader of Advocacy, JLT Specialty USA

“Risk and underwriting are very natural adjacencies, especially when high risk/high value policies are being underwritten,” said Mathew.

“We are in a transformational moment in insurance where claims processing, risk management and underwriting can be reimagined with entirely new sources of data. The drone just happens to be one of most compelling of those sources.”

Ellis added that drones also could be employed to monitor supplies in the marine, agriculture or oil sectors, for example, to ensure shipments, inventories and supply chains are running uninterrupted.

“However, we’re still mainly seeing insurers using VIS drones for loss assessment and estimates, and it’s not even clear how extensively they are using drones for that purpose at this point,” he noted.

“Insurers are experimenting with this technology, but given that some of the laws around drone use are still developing and restrictions are often placed on using drones [after] a CAT event, the extent to which VIS is being used is not made overly public.”

Drone inspections could raise liability risks of their own, particularly if undertaken in busy spaces in which they could cause human injury.

Privacy issues also are a potential stumbling block, so insurers are dipping their toes into the water carefully.

Risk Improvement

There is no doubt, however, that VIS use will increase among insurers.

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“Although our clients do not have tremendous experience utilizing drones, this technology is beneficial in many ways, from providing security monitoring of their perimeter to loss control inspections of areas that would otherwise require more costly inspections using heavy equipment or climbers,” said Luck.

In other words, drones could help insurance buyers spot weaknesses, mitigate risk and ultimately win more favorable coverage from their insurers.

“Some risks will see pricing and coverage improvements because the information and data provided by drones will put underwriters at ease and reduce uncertainty,” said Ellis.

The flip-side, he noted, is that there will be fewer places to hide for companies with poor risk management that may have been benefiting from underwriters not being able to access the full picture.

Either way, drones will increasingly help insurers differentiate good risks from bad. In time, they may also help insurance buyers differentiate between carriers, too. &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected]