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Risk Insider: Nick Parillo

Uncertainty in Oklahoma

By: | March 24, 2016 • 2 min read
Nick Parillo has over 40 years of insurance and risk management experience. He is VP, Global Insurance for Royal Ahold, N.V., and president of MAC Risk Management, Inc. and The MollyAnna Co., which provide claims and risk management products and services to Ahold USA, a subsidiary of Royal Ahold, N.V.

Much has been written recently about the Oklahoma Supreme Court’s decision to hear the appeal of a case — Vasquez v. Dillard’s — regarding the constitutionality of Oklahoma’s workers’ compensation “opt-out” provision.

For those businesses that pursued that option, the risks are substantial should Oklahoma’s highest court rule that opting out of workers’ compensation is unconstitutional.

Presently, only the Texas and Oklahoma legislatures have allowed businesses to opt-out of their respective state workers’ compensation systems and instead design and implement customized workplace injury plans for their employees.

How will the liabilities — for those claims reverting to the traditional worker’s compensation system — financially impact the balance sheet of those companies who opted out? Would those employers who have opted out be required to self insure the reverting claims?

To be sure, efforts are being made to extend the opt-out provision to other states but those efforts appear to be stalled until some of Oklahoma’s legal questions are answered.

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According to research performed by NPR and ProPublica, there are approximately 1.5 million workers in Texas and Oklahoma who do not receive state-mandated benefits under their respective state workers’ compensation regimes because their employers have chosen to opt-out.

Under the opt-out provisions, some benefits and benefit levels which are customarily provided under traditional state workers’ compensation programs may not be available to employees.

Those companies in Oklahoma that have chosen to opt-out are confronted with several financial uncertainties should the Supreme Court rule that the provision is unconstitutional.

Some of these uncertainties are:

• Will those claims, which have already been filed under the opt-out  provision, revert to the traditional workers’ compensation system and the benefits provided therein? Would such benefits be applied retroactively to the date of the accident?

• How will the liabilities — for those claims reverting to the traditional workers’ compensation system — financially impact the balance sheets of those companies who opted out? Would those employers who have opted out be required to self- insure the reverting claims?

• What happens to those companies who do not have the financial strength to self-insure such claims? Who will be responsible for the funding?

• If claims were denied under the opt-out system but would have been covered under the traditional workers’ compensation system, would such claims now need to be covered along with the attendant benefits?

Even if the Oklahoma Supreme Court upholds the constitutionality of the opt-out provision, the court may elect to modify certain provisions on constitutional grounds.

Much is riding on the outcome of the Oklahoma Supreme Court decision for those businesses who have chosen to opt-out.

For risk managers who may still be considering such an election, there are compelling reasons to assume a wait and see approach.

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

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But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

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Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

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

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]