Workers' Comp Strategies

Cutting Down Agriculture Risk

Injury rates are coming down but workers’ comp premiums have yet to budge.
By: | December 1, 2013 • 7 min read

Fatalities and injuries among forestry and agricultural workers have dropped significantly in recent years, but those occupations still rank among the nation’s most lethal. Unfortunately, the safety improvements contributing to that decrease don’t necessarily translate to lower workers’ compensation rates or fewer claims, according to experts.

The Bureau of Labor Statistics rates logging as the country’s most dangerous job, with 128 fatalities per 100,000 full-time workers in 2012. Agriculture ranked ninth, with 21 fatalities, 9 percent lower than in 2011. The fatality rate for all U.S. workers was 3 per 100,000 full-time workers in 2012.

Insurance and academic experts attribute the improvements to safety technology and a vigilant focus on safety. However, “employee-oriented” workers’ compensation laws in some states, combined with rising medical costs, pressure carriers to raise rates, said Don Winn, managing director, Agriculture and Food Practice Group at Arthur J. Gallagher. “Carriers still tend to operate at underwriting losses,” he said. Medical costs account for around 70 percent of workers’ compensation expenses.

Well-run producers with favorable loss ratios can minimize those increases, Winn said. A determination of “well-run” includes safety protocols and implementation, buy-in from workers, and infrastructure to support a multi-lingual workforce. “Then they have positive results.”

R12-13p40-42_06_inDep.inddWorkers’ compensation claims and premiums cost the agriculture industry at least $4 billion per year in direct and indirect costs, said Stephen Reynolds, director of the High Plains Intermountain Center for Agricultural Health & Safety in Colorado, one of 10 regional centers funded by the National Institute for Occupational Science & Health (NIOSH) to research and recommend interventions to reduce agricultural and forestry injuries and illnesses.

Producers eat most of that cost in premiums, Reynolds said, but insurance carriers, taxpayers, and the food-buying public also pay. Injured workers and their families pay a huge cost in suffering and lost earnings.

Safety in the Woods

Agriculture and forestry environments include row crops to stockyards, and mountainous forests to sawmills. Each has its own risks. The most expensive claims for loggers, said John Lemire, director of loss control at Forestry Mutual, a North Carolina insurance company, are the million-dollar loss-of-limb cases both state and federal OSHA safety protocols seek urgently to avoid. Fully mechanized environments are the safest, where workers stay as much as possible inside the air-conditioned cabs of loaders, cutters, and skidders.

Thanks to member companies’ strict adherence to safety protocols and a financial self-interest in controlling exposure, Lemire said, Forestry Mutual’s claims dropped from 642 in 2004 for all their lines of business (trucking, logging, pallet mills and sawmills) to 210 in 2013.

Premiums for workers in a fully mechanized environment are fairly inexpensive, Lemire said, ranging from $8-$20 per person. That rate can soar to $50 per person, depending on the state, for workers using chainsaws on the ground.

Cutting trees from the safety of an enclosed, air-conditioned cab is more possible in the flat terrains of the Southeast, such as North Carolina and Georgia, than in the hardwood-rich mountains of the Northwest, where loggers are obliged to use chain saws and other dangerous equipment on steep and uneven terrain.


Even among those natural dangers, said John Hansen, senior safety management consultant at the Montana Logging Association, his organization has avoided fatalities for a number of years by adhering to state and federal regulations and using proper protective equipment for eyes, ears and legs. Loggers keep a close watch on overhead hazards — especially “widow makers,” branches caught on the top of trees that can crush workers below at any moment — and maintain a proper distance from falling trees.

According to Hansen, heat exposure, and slips, trips and falls account for many claims, as do bee stings. Highway accidents involving logging trucks account for many of the fatalities attributed to the industry.

The most frequent claims in agricultural settings result from slips, trips and falls; muscular and skeletal injuries from bending, lifting and stooping; skin diseases; and respiratory diseases caused by dust, bacteria and ammonia, such as those that afflict livestock and poultry farmers in enclosed facilities, Reynolds said.

Heavy equipment injuries, especially tractor rollovers, are a pervasive risk for agricultural workers, who are seven to eight times more likely to be killed on the job as the general working public. Those who work with livestock are at the greatest risk of injury and fatality, Reynolds said.

Controlling workers’ compensation costs for all of them starts with a demonstrated commitment by leadership to safety, said David Douphrate, assistant professor at the University of Texas School of Public Health. The second step is an accurate risk exposure assessment strategy and the third is safety training.

“Training makes a big difference,” Douphrate said. The perfunctory programs of the past — a 20-minute training video and a manual gathering dust on the shelf — aren’t nearly adequate for an increasingly immigrant workforce with low literacy and unpredictable language skills. “We need to stop training workers and start educating them, so they know why we’re telling them to do their jobs in a certain way.”

R12-13p40-42_06_inDep.indd“We need to stop training workers and start educating them, so they know why we’re telling them to do their jobs in a certain way.”
—David Douphrate, assistant professor, University of Texas School of Public Health


Successful training programs universally include incentives, rewards and reprimands, said Gallagher’s Winn, and should be included in performance assessments. “You call out the guy who jumps off the equipment to save time and reward the one who uses the ladder.”

Refining the Message

Changing the safety culture demands figuring out what is important to farmers, said Julie Sorensen, a Ph.D. in epidemiology and deputy director of the Northeast Center for Agricultural and Occupational Health.

“Risk management is easy and cost-effective for farmers,” she said. “They know what they should and should not be doing, but they are not a risk-averse population.”

While promoting Rollover Protective Structures (ROPS), a highly successful shared-cost NIOSH tractor safety intervention program to prevent tractor rollovers, her organization learned that farmers fear permanent disability more than death, and they’re concerned about keeping their workers, wives and grown children safe while operating tractors.

Armed with that information, the Northeast Center created a marketing strategy that shows a farmer in a wheelchair and emphasizes safety to dependents. “We couldn’t look at the issue from our perspective,” she said. “We had to look from theirs.”

While producers can control their safety practices, they can’t control the legislative environment where they operate. California Senate Bill 863, which took effect in January, makes broad changes to that state’s workers’ compensation system, including increased benefits to injured workers.

As in other industries, employers, insurers and most often workers themselves aim for a prompt return to work after an illness or injury, even if they can’t return to their original jobs.


“There’s always something a recovering worker can do around a farm,” Douphrate said, but logging operations could offer fewer alternate duties.

Agriculture and logging are targets for insurance fraud because they employ many low-wage seasonal earners with low literacy and few employment options — itself motivation to seek alternate income sources.

To smoke out malingerers and fraudulent claims as well as to provide appropriate medical care to legitimately injured workers, the Georgia-based third party administrator Broadspire uses a proprietary software system that guides adjusters through telephone interviews, conducted in the claimant’s own language.

The software poses a set of questions to capture the psychosocial aspects of a claim that could indicate fraud or exaggeration: Do you smoke? Are you diabetic? Do you hate your boss? How bad is your pain?

Responses, said Donnie Gray, senior vice president of Casualty Claim Operations, trigger related questions. The software flags inconsistencies between the answers and notes by medical professionals and case managers.

The best strategy for controlling workers’ compensation costs, said Bob Bollinger, a North Carolina attorney who represents injured workers, is to neutralize hazards on the front end. Once workers are hurt, he said, treat them well. Call them, take them to the doctor, don’t deny legitimate claims.

“My clients come to me because they’re angry and feel their employer is treating them unfairly. Keep lawyers out of it,” he 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

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.


Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.

R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.


We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?


Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.


Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.


More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]