Climate Risk Liability

Climate Change Hits the Courts

In a first-of-its-kind development, an insurer is suing municipalities for breaching their duty to prepare their infrastructure for climate-related exposures.
By: | May 21, 2014 • 2 min read

Municipalities have plenty of reasons to be receptive to the idea of public-private partnerships to further the cause of climate resiliency.

Add one more to the list: In a first-of-its-kind legal move, Farmers Insurance is suing Chicago and about 200 local municipalities for allegedly failing to adequately prepare for the impact of climate change.


The impetus for the lawsuit is the losses related to a storm that hit the Chicago region on April 17, 2013. The storm shut down major expressways and flooded hundreds of basements and streets, leaving some areas accessible only by boat.

Farmers claims that the defendants failed to “implement reasonable pre-storm practices” and breached their duty to upgrade sewer and water systems — the source of much of the property damage suffered by Farmers policyholders during the storm.

“If Farmers is successful, that might lead other insurers to file subrogation class actions,” Wystan Ackerman, a partner at Robinson & Cole LLP, told Law360. “But Farmers will face significant challenges in this first-of-its-kind suit.”

Ackerman told the publication that he expects insurers to take a wait-and-see attitude before joining the lawsuit.

“Insurance companies might be comfortable joining the case and [taking] advantage of the work that Farmers is doing if it is able to successfully pursue the case,” Ackerman said to Law360.

The lawsuit cited the Chicago Climate Action Plan as evidence that the towns knew of the danger of increasingly heavier storms.

Cash-strapped municipalities are already wrestling with costs related to climate change. If this lawsuit signals a shift in insurer strategies for mitigating climate change losses, the costs of such lawsuits will likely be passed along from both ends to double-whammy property owners and businesses, in the form of higher insurance premiums and an increased tax burden.

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.


That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.


Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]