Workers' Comp Unlocked: Your Most Controllable Cost of Risk Revealed by Dan Petrillo, Work' Comp Specialist

Are you a business owner or manager looking to save tens to hundreds of thousands of dollars on workers' comp? Then tune in to the latest episode of the Red-Bearded Risk Guy Podcast, where Joshua Keene, AKA The Red-Bearded Risk Guy, talks to Dan Petrillo, a shareholder at Laporte Insurance in Portland, Oregon, and an expert in helping businesses navigate the tricky world of workers' comp.

Dan draws on his 8 years of experience doing loss control at SAIF Corporation, Oregon's main workers' compensation carrier, to reveal behind-the-curtain strategies that can help you reduce costs and increase revenue. He explains how Oregon's unique workers' comp structure can lead to businesses leaving money on the table, and how there are many things you can control to prevent injuries and control the costs of claims when they occur.

Dan covers a range of topics, including the true costs of workers' comp risk, the importance of injury prevention and building a safety culture, and strategies for controlling claims, including return-to-work programs, established relationships with medical clinics, and clear processes for reporting and seeking medical attention. He also explains how all of these factors factor into your "X-Mod" or Experience Modification Rating, and how a poor mod can disqualify construction companies from certain opportunities.

The key takeaway from this episode is that your workers' comp program is your most controllable cost of risk, and how it's managed can have a big impact on profitability, for better or worse. This information will be valuable to business owners, HR managers, safety managers, CFOs, or anybody running a business with 50+ employees. Don't miss out on this valuable conversation with Dan Petrillo on the Red-Bearded Risk Guy Podcast.

Transcript

Transcript: Provided by YouTube Improved version coming soon!

00:00
hello everybody and welcome back to another episode of the red bearded wrist guy with Joshua Keane I'm your host and I had an awesome conversation with Dan Petrillo the man I consider to be the authority in Oregon on helping businesses navigate their work comp and he's a shareholder here at LaPorte and one of my main mentors but prior to becoming an agent he spent eight years doing lost control at safe which is Oregon's main workers comp carrier and he gave us a peek behind the curtain on some work comp strategies that can be
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used not only to reduce your costs but these strategies can even increase your revenue and so tune in we cover some great topics from money being left on the table with your work comp program to just the things that you can control and as you listen along I think one of the key takeaways you're going to get out of it is that work comp is your most controllable cost of risk and how it's managed can have a major impact on the profitability of your business for better or worse so if you get value out of this be sure to share it with your
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friends like comment leave a review and stand by for a great conversation with Dan hello and welcome to the Redbeard risk guide podcast a show that helps business owners and Leaders with companies of 50 to 250 employees to protect their people profits and public relations we help business owners maximize profits by minimizing their total cost of risk your host Joshua Keane also known as the red bearded risk guy is a commercial insurance and benefits and risk management expert in the Pacific Northwest but he has dedicated his
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career to helping businesses stay ahead of emerging business Trends on all business related challenges not just risk and insurance so we will get into interviews with industry experts on everything from strategy and growth to sales and marketing corporate risk management commercial insurance and even motivation these weekly conversations will provide actionable advice on the latest trends challenges and opportunities facing the business Community if you want to stay ahead of the curve and strategically position
02:04
your business for Success then this podcast is for you tune in to the red bearded risk guy and join the conversation today and also while you're at it be sure to like subscribe follow and leave a review thanks for being here [Music] foreign [Music] podcast with Joshua Keane I am a insurance producer at Laporte Insurance in Portland Oregon and today I'm going to be interviewing Dan Petrillo he's one of the shareholders here at Laporte but we're going to be focusing on workers comp because that is his background
03:03
um if there ever were an organ expert on workers comp he's who I think of when it comes to that has a years working for safe organs work comp provider but um I'll I'll go ahead and hand it over to him and let him introduce himself tell us a little bit about as much personal background as you want to share with the audience and then go right into your professional background and how you ended up here awesome well I appreciate being here Joshua um and happy that you're here at Laporte this is uh we're
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building out a great team here and as you mentioned I'm one of the managing shareholders here at the agency and love getting you know young ambitious smart hungry producers that can you know help our customers and bring in the right kind of customers we want to be working with so um I've been a Laporte eight years previous to my time as an agent I worked as a loss control consultant or a safety consultant at safe Corporation so that's Oregon's state-owned work comp insurance provider so it's monoline just
04:09
workers compensation it's a just a great public private hybrid um that exists in kind of unique there's several other states that have a state fund as sometimes it's called but Oregon is definitely a beacon in terms of the overall landscape of workers comp in across the country so I started there in 2008 and I had a previous background in the non-profit sector so I spent almost a decade as a non-profit leader managing programs and then an executive director as well and I decided to leave that and I went safe in a training
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program so they have a and it continues to have a loss control training program where they bring in anywhere from six to ten new trainees and spend a year really spending time in technical skill building around safety and it's a safe strategy to to Really backfill and perpetuate the safety Consultants within safe so there's probably I'm going to say 40 to 50 across the entire company along with their Association partners and like every other industry you've got retired retirements happening so
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they've had kind of an Innovative way to think about how they were going to fill those retirements and they really wanted to build out a strong Consultant Group with folks that didn't necessarily have the risk engineering environmental health and safety background but we wanted to train to it so I was in the inaugural group back in 2008 and it was just a fantastic experience I loved learning about businesses and extremely you know curious about how businesses work operations work and then of course getting into the the actual risk side of
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it it was just a phenomenal training ground so over the course of my seven years at safe um I ended up managing a uh a large book of business uh in the Portland metro area with larger businesses I was there a signed consultant with safe and so that's where I got to work with lots of agents and agencies across the region got to understand kind of what the role of the agent is um and how I could potentially help well it opened my eyes to how I could help on the agency side with my knowledge skills background and then kind of the
06:41
Consulting skills so uh 2015 is when I started here at LaPorte and I do quote unquote specialize in workers comp but um it's you know probably about a third or a quarter of what I do overall but it is a significant portion and I get a lot of questions and understand how the system works and how safe works and um yeah um lots lots to talk about with regards to workers comp definitely definitely adds uh you could spend hours on that topic Alone um and uh you know we talk about safe being kind of a model for other around
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the country as far as a work comp provider but um it's almost like they are a model for how you perpetuate and how you keep keep your business operating at that level for the future because it seems to be a major uh Gap you and I run into it with clients a lot where it's like they don't have much of a plan for uh what happens after everybody leaves so that's that's huge absolutely yeah yeah awesome um so you've kind of touched on it a little bit but let's uh let's go ahead and jump into the weeds with it in in
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terms of uh workers comp in the state of Oregon it's it's kind of unique having the safe program so just kind of give us an overview of workers comp in Oregon so the the workers comp Marketplace in Oregon I think is very unique comparatively to other states and I think it's good to understand what's happening in other states comparatively um both from a service rate uh Etc so we are like I said a model for a lot of other states in terms of how a public-private State state-run Insurance Fund Works um
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we have either the second lowest or maybe even the lowest at this point uh actual rates across the country so about half of the states in the country are have a rate making body that they report to called ncci which is the National Council and Compensation Insurance so we're in ncci state so our rates are developed through ncci ER mods are developed at an individual business level through ncci um safe has been a big part of driving down rates in general um within within the work comp system so you you begin with what's called a pure
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rate and that is really developed based on the average cost of claim within a certain class code so part of you know quote unquote managing rates and driving those rates down started with legislative reform around the work comp system back in the 90s but since then you know we've been probably on a 25-year trend of of year-over-year rate decrease and a lot of that has to do with how claims are managed safety programs that are voting plays in terms of prevention um but we do we've got a very very low rate structure comparatively
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State of California as an example I use that because they're they're close geographically their rate structure on different class codes are oftentimes double triple what the rates are in Oregon and that has everything to do with both the legislative reforms for the work comp system but also the average loss cost of a claim um really drives that rate structure um so that being said safe is extremely competitive right so it's not monopolistic state of Washington is monopolistic where you don't have an
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opportunity or a choice to go out to What's called the voluntary Market you have to go through the state-run government-owned uh Illinois program there's four monopolistic states in the country Washington North Dakota Wyoming and Ohio are the four states um so Oregon is we're kind of wedged between California and Washington um we do have voluntary Market but safe has a significant premium share uh in market share overall with the work comp business a lot of it has to do with the rate structures and it also has to do
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with the service um and on top of everything else uh being a state-owned non-profit they continually have a dividend that they're they're kicking back to their policyholders and that gets voted on by the board of directors every late summer early fall and um that's been that's been significant because that can be anywhere from 20 to 30 percent of annual premium right so all of a sudden when you add that in other insurance carriers really cannot compete with that so it's um it's it's a
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good model works well definitely definitely um so it one thing that's kind of coming up for me as you as you mentioned that um you know they are they are super competitive and uh it usually doesn't make sense to um to be with another carrier in Oregon besides safe um but I think you and I are kind of leading the witness here a little bit but we've We've ran into situations where that actually kind of creates some issues uh in terms of like the behavior it drives with us the agents and handling work comp can you speak to that
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a little bit so that that's a good point um and that's something where I saw opportunity before I came over to the agency side so I worked with um every major agency in in the metro area and and for the most part the state actually because I worked a lot outside of the region as well when I was at safe um the dynamic that I saw and experience is workers comp from the agent perspective is in the state of Oregon is oftentimes looked over it's um kind of the last line of insurance that's really thought about
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um you're not you're not shopping it you're not taking your client out to Market and and looking at competitive options really because if you're worth say if you're not going to find a more competitive option um so what does that mean it means there's a service Gap I I would say when it comes to workers comp um within the state of Oregon uh from from Agents you know most agents for the most part now I'm not here to disparage my competition I just you know I look at it because I I did work deeply in the
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environment working with agents uh working with clients um and I saw I saw a real Gap so oftentimes what ends up happening is the agent is like well you're with safe safe has a great service team they've got dedicated uh obviously claims but they've got dedicated return to work and they've got dedicated vocational rehab team they've got a dedicated loss control team um they do a great job so what am I going to do as an agent really you know um and that's kind of how businesses have been conditioned that there's
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really hey I won't say doing great um I shouldn't have to worry about it so where the opportunity is is um I view workers compensation as the most controllable line of insurance that exists and I believe that to be true um even in a state where we've got low comparatively low rate structures um there's still lots of opportunity to drive that lower from a from a premium standpoint but also uh to provide services and interventions plans of action that can really help our clients prevent the claims from
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happening managing the claims after they've happened because that's one thing that I talk to my clients a tremendous amount about is how do we actually effectively manage a a work comp claim you know it's like well you've got privacy issues you've got employees that work directly with the insurance carrier so what could I possibly do well there's actually a lot you can do that have end up having a major impact on the outcome of the claim right so a lot of times where I get called in on for help on claim
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situations are those you know the 10 percent of claims that drive 90 of the headache for clients claims on sound wise they just can't seem to get to closure you've got you know independent medical exams flying around you've got all of a sudden Injured Workers got a an attorney and you can't talk to them the claims gestures can't talk to them so and it just seems to drag on and on and on and on and it's frustrating it's frustrating for everybody involved so um lots of opportunity to talk about how to
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manage claims on the front end effectively through some of the actions that employers can take whether that's where you treat for an injury what kind of relationship you have with a medical provider before the injury happens what kind of Return To Work Program what kind of light duty programs are you accessing each which is the employer at injury program there's there's a lot of programs available but a lot of it has to do with education and understanding how the system works how I can best manage this because you know just we all
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see the direct cost of a work comp claim it's much more difficult to quantify the indirect costs that includes you know all those things that are not budgeted for all those things that are below the surface when it comes to a claim that makes it really really challenging to just eat the cost of that and there is there's an absolutely huge cost it's usually you know I tell I tell my clients that it's essentially two-thirds of the cost of the claim yeah is are those indirect costs so so can you give some specific examples one that
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comes to mind is um you know you just have that worker not working and you have lost productivity but right um what are some examples of things that the that aren't obvious to the business owner or maybe they are but they're not obvious to the agent they're dealing with in terms of what they're losing by having a costly work comp claim or a drawn out workout work comp claim well there's there's a lot of a lot of reasons obviously from the business standpoint why you don't want that you
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know aside from the cost of the claim itself um you know that's that's obvious that's a direct cost even though the insurance provider is paying that claim you know um and I can illustrate very very clearly how it's going to come back in a cost structure to make that up um yeah and that's that's through both the experience rating modifier as well as through some subjective pricing that the insurance carrier um puts on puts on the premium development so um why aside from that um you've got some some levers you can
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pull uh and really try to manage ahead of time one of those things is you know what is your return to work program what's your light duty jobs do you have a bank of those ready to go are you sending a you know a potential job description a light duty job description with the injured worker at the time that they get treated right so that you know you really want to minimize that that downtime between when they get when they first get treatment um to when the insurance providers on notice uh you know there you want to
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keep that claim uh without any time loss if possible that's that's the real key to the whole equation when it comes to minimizing um the impact of of claims and injuries is if you can bring them back to light duty you've got a meaningful job description uh that that the provider can sign off on maybe even at the time of the injury so you're not starting to pay time loss on the insurance claims because that has implications both on a direct impact on the the actual cost of the claim because now you're
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paying two-thirds of their what they would have been receiving their average weekly wage um and that's just that's coming directly from the carrier and it's you know oftentimes can be the most significant portion of a claim so if you can minimize that you can bring them back to a modified job that's within their restrictions um a you're keeping that claim uh from having time loss and now all of a sudden you've got the opportunity to actually reimburse that claim right so that's a whole nother lever you can pull and and
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some people some I would say business owners know about the non-disabling claims reimbursement program and that's that's a that's a program that exists in the state of Oregon right and um safe does a good job of you know giving you the business owner the opportunity to reimburse those claims but essentially what what you're doing on that is your um if you're buying down your experience rating mod that's kind of what it comes down to so you're reimbursing those claims um that are that are quote unquote
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medical only that means there's no time loss associated with them um you're buying those down and keeping those dollars out of the experience rating equation right and that's generally speaking that's a two to three times Roi in terms of the the ratio of what you're paying out versus what you're going to get back um so generally speaking you know you've got to generate enough premium for that to make sense um you know generally speaking I tell people twenty thousand dollars in annual
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premium which most of our clients are are meeting that threshold so that's a great way and you know we can actually illustrate a um a return on investment analysis of what that looks like you know if they are or they're not if they are you can show okay how is that what are the dollars I'm saving from from participating in this program and reimbursing these claims um so just kind of you know going back to the original question around how do we minimize the impact of claims um that's that's one piece of it
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um being a good member kind of the the business World um or our our community because it's not it's not just bad for the business to have that person out of work for a long period of time it's really bad for the employee themselves too um and so it absolutely is and there's there's there's multiple studies that have been done uh with regards to that so the longer someone is out of work the more difficult it is to get them back to uh their original position their original position of uh pre-injury it
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just takes longer so there's there's the physical healing piece you know obviously being active within your restrictions of course is going to be beneficial uh there's also the psychological piece you know from a mental health standpoint um being engaged actually getting up and going to work every day rather than just sitting on the couch and watching Judge Judy and and just you know waiting for your paycheck to come in yeah right yeah outside of a few individuals that are shooting for that that I mean there are
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those people but yeah most people that's going to weigh on you pretty hard over time yeah on the couch yeah especially a lot of the trades guys we work with and people like that that are used to being out working with their hands and kind of building the world and yeah absolutely and so without um getting too into it um it is kind of a boring detail but we're throwing around assuming our business owners most of them know what we're talking about when we say EMR or X Mod or experience moderating but just
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real quickly um give a description of what that is and um then maybe we can move into some examples of sure you know more more into the Weeds on how we're controlling that or how your clients can control that Stone experience rating modifier is exactly what it sounds like it's a modifier so it gets it gets calculated um in the equation of Premium development right so it is the way that the insurance carrier takes your claims history to help you know either give you a debit or a credit based on your history
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so one thing that I've I've always told I've I've told my clients and Prospects when I'm talking to them if they don't understand what the experience rating modifier is everybody knows on the personal Auto Insurance that you've got essentially three years of your claims history that comes into the equation when any auto carrier on on your personal Auto is uh going to rate you right and that's kind of an automated system they're going to pull in there's a public database of the
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claims that you've had and they're going to pull that in and they're going to rate you based on that um similarly the business side for workers compensation The Experience rating modifier is going to take three years of claims history right and you're going to they're going to develop a a modifier so it always starts at a 1.
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0 that's average for your industry so you're going to be benchmarked against other uh other businesses in your industry so that's that's where the benchmarking happens so you're going to look at the payroll and um by class code and develop a determination of what's the expected number of claims that you're going to have and in that three-year period now this I'm being very basic about the whole thing but in that three-year period are you are you having more claims than expected or fewer claims than expected and there's different
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types of claims from you know Medical Only claims to a disabling claim to a claim that's got permanent partial disability to a claim that's got permanent impairment to a fatality I mean there's all the claims are rated a little bit differently but there's an expectation and it's all Based on data of what they would expect and when I say they the rate making body is called National Council on Compensation Insurance ncci so that's who that's who makes these rates and that's who
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determines your your experience rating modifier in the state of Oregon um so every year that experience rating modifier or ERM is determined on an annual basis by ncci so they're going to take all the claims data that comes in from the insurance carrier uh six months prior to your renewal date and they're going to calculate what that experience rating modifier is so as I said one is average for the for your industry for every industry depending on your claims history that number either goes up or goes down so when it goes down that
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becomes a credit modifier right so if you've got a 0.8 mod you're going to have a 20 credit when that premium is getting developed right so if you've got a a 1.2 mod you're going to have a 20 debit when that premium is getting developed so you can see pretty clearly the impact it has on on the premium you pay yeah so um that's why it's really important to control the claims as best you can both from the frequency of the claims and the severity of the claims um so lots again lots of tools that can
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be utilized to help do that but that's you know ultimately how does that how do they charge you back for claims that happen mostly through the mod mostly through the mod now there's other other elements within the pricing structure the insurance carrier and we can talk about that too uh because that's one of the elements that we do a lot of work on you know is educating on how that works um in understanding where you're where you're priced and how do you get improved pricing so um and are you you're referring to the
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the tears within okay so yeah I know it's we're don't have a visual and we're getting into the weeds here but the best we can let's let's touch on that because I think that's the kind of the unknown part both the customer I'm dealing with usually isn't aware of that piece and uh most even other not again not to be disparaging but a lot of insurance agents don't even know about those tiers or how how you can influence them so yeah no that's a great Point um because you know along with other
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lines of insurance workers comp it's it's not always clear um you know in a proposal it's never shown you know it's really an internal mechanism used by the insurance carrier um to price them price the the policyholder adequately right so generally speaking now as I'm speaking in general um those those pricing decisions are going to be pretty conservative right um because you know this is my personal opinion um just knowing the state of Oregon that you know work work comp is quote unquote inexpensive comparatively
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um policyholders are if they're with safe they're getting a dividend um pricing I'd say in general is pretty conservative right so give you the example of of the dynamic it's safe so safe has eight pricing tiers um they just added a new one for 2023. so why do they have so many well it's part of the state Charter for why safe exists is they want to provide workers compensation at an affordable rate to as many policyholders across the state as possible that's why they exist right so they've got to have the you know the the
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pricing models to support that both on the the kind of the the credit side where you've got a really really clean um great business with great safety programs you don't want to overcharge them right on the flip side they also want to bring as many businesses out of the assigned risk pool as possible right so they signed risk pool is in the state of Oregon it's the insurance of Last Resort right so workers compensation is uh it's a compulsory coverage it's required by law if you've got employees but if you're
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either new in business in a high high risk type of industry or you know you've got terrible claims experience for whatever reason um and no no insurance carrier really wants to write you they don't want to underwrite your risk you end up going to the assigned risk pool now because of underwriting guidelines from a lot of insurance carriers that say no um safe has you know really made it a part of its mission to provide coverage with an adequate price to to some to a lot of those risks that otherwise wouldn't be able to get
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coverage in What's called the voluntary Market um so you know you've got 200 plus insurance carriers that are are rated or filed to provide Insurance in the state of Oregon most of those are non-competitive if you're qualified to be with safe um but uh you know if you're in the sign risk school you're still going to look and try to get coverage outside of the assignment pool because rates there are triple what what the voluntary Market is oftentimes there's a lot of additional uh penalties and um it's it's
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challenging it's challenging to be there it's a massive massive cost so I'm just kind of giving context around why the safe have so many pricing tiers is you know they want to be as flexible as possible so it makes it I mean it it is unique in that it gives that you know either the newer business or newer business that's high risk is usually how it'll be or you know maybe they've been around for a few years but they had that one-off really bad traffic accident that or you know and it's giving them a
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chance to stay in the pool um but it's also giving the people in the pool that are doing a really good job um an opportunity to be in it without really being punished if you will for the bad behaviors of the other insured so it's um whereas usually you know we've all gotten those increases on our auto insurance renewal or whatever and then you call your agent and they say oh well you know people in your neighborhood had a lot of claims and it's like well I didn't I was perfect and right um so
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it's actually unique in that it gives ensures a way to kind of you know benefit from being as good as they are um and uh yeah so that's that is you know we're both we love safe but it's just a nice perk um and uh we we've talked a little bit about you know both the indirect you know the lost time and all those scenes and the direct effect the premium itself how we can affect the premier itself um on bottom line but yeah and I don't even know if this is the right way to ask this but what about like Top Line
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because that X Mod there's things that it can rule you out on if you're over a one in terms of opportunities Association things like that can you speak to that a little bit absolutely yeah that's a great point so um it can become a a cost um a serious cost outside of Premium development so you know as you know we work with a lot of contractors trade contractors uh in particular can be subject to this so generally speaking if you're working with a large GC um they're going to require you to have
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a mod of one or below right so just the opportunity to bid on work as you talk about um generally speaking the large more sophisticated GCS are going to require that because that's a it's an indicator of the type of business you are and so they use it as a screening tool you know they use it as a screening tool a qualifier um including other things like your Dart rate which has to do with your your OSHA recordables um so that's that's one piece the other the other element is um within safe there's about 20 group
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programs um in a group program uh is is really looking at all the different associations that partner with safe to give a rating discount to their members right so example um Obi Oregon business industry um what else is there there's there's again there's about 20 of them associated general contractors AGC um there's OTA Oregon trekking Association there's there's many many trade associations that you should bring a benefit to their safe premium development if they're members now to be to qualify for that program
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you've got to have a 1.0 mod um generally speaking I think they're all a 1.0 mod and then you've got to have your frequency and severity of claims less than the industry average so they want the high performing groups right so that um that upfront discount it varies from Association to Association and it changes on an annual basis um so as an example with with AGC associated general contractors they have an upfront uh rating discount uh that can be anywhere from two to ten percent sometimes higher than that actually in
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addition to that AGC has a program that's it's called a group retro and that's a retrospective rating program that really gives the members discounts after the policy period is closed based on their claims experience so kind of easy way to think about it it's the only group retro program that exists within safe and it's highly advantageous to the policyholders so it's really what drives membership with AGC the association um because it is extremely beneficial to the to the contractors that are in that
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program so anyways that goes back to your your mod question and how that impacts you know the ability to to secure business and and you know maximize top line revenue great well let's um you know let's talk a little bit then about we're talking about the the facts and how it works but let's let's talk about the rubber meeting the road you can either use a specific example from memory because I know you've helped a lot of accounts with these or let me kind of just run a scenario by say I'm like a a concrete
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contractor in Oregon and um I've just added my 30th employee but we've had some we're profitable we're doing good we're we're getting work but um we just grew so fast that we weren't thinking about getting these policies in place and processes in place for safety and things like that so um you sit down with me my losses are a mess my mods are 1.
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4 I'm paying 40 then what's average for a concrete contractor and then there's all the other indirect stuff that's affected me that we talked about um what's that look like in terms of um developing a plan or how we fix that um common scenario and common scenario for particularly contractors that have grown quickly um you know even with covid our contracted clients have not slowed down and and that's been fantastic for them um obviously the challenges around Workforce and labor is probably the biggest biggest thing that they're
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facing um so when it comes to the insurance side and workers comp and safety there's a lot we can do and a lot we that we do do I mean this is why I think we really shine in the marketplace as you know probably the largest locally held independent agency in in the state in the region um it's this this model when we can sit down and not only help a client let's just take this this concrete contractor as an example analyze what's happening educate what's happening educate on what's Happening and the implications of
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those claims um lack of programs lack of formal protocols it's common because what ends up happening is when you grow to a certain point you've got to build out infrastructure right and that's where we can we can come in and be helpful and quite honestly this is where we really shine is with with growing companies that that need formal programs and an understanding and quite frankly a sophistication level needs to get bumped up um so that starts with education so you know I would lay out exactly how
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how the the policies are working in terms of the insurance end of it uh the implications of you know the claims um and then really giving resource and um guidance around programs and policies and maybe even hiring decisions um where I where I want to be and where I want you know our agents like yourself to be is to really be a part of the risk management team you know with that client and that could be definitely long term for sure but really in these in these kind of Choke points where they really need help right
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um You You embed yourself so so that's going to be could be you know trying to influence them on on hiring a formal safety person right or taking that that quasi-hr person that's also doing bookkeeping and maybe they need to focus solely on HR right so how do they do that um well first you know you kind of look at what's the need it needs assessment of that I'd say that formal position and duties and you know implications that they don't do that um but really again resources from an agency standpoint that we give Visa VR
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portal that's a huge huge element um I'll sell that because it's it's something you too anyway so tell us about insource because it's it is kind of the Magic Bullet as to how we solve these problems so yeah it is in source is our branded risk management portal that we give uh our clients access to at no charge um so really what what it is it's a safety compliance um and compliance across lots of different areas from you know OSHA dot benefits compliance on the on the on the employee benefit side
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um HR tremendous amount of HR resources so uh where I where I use it most heavily is is HR and safety right so um helping helping a client understand what's an OSHA 300 log what what is a lot of people don't even know about it they're not they're not aware that maybe I've heard the term but I'm not really sure what it is and and how to keep it okay well let me walk you through exactly what you need to record where you keep it um we actually have a software tool embedded in in Source where that OSHA
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300 can be kept where the data on an annual basis when you have to post your 300-day summary annually from February through April um you can print those directly from our portal onto and it prints on the on the OSHA forms that you that you then post so that's an example but um safety programs formal safety programs some of the best as a safety professional in my background um I vetted a lot of different programs out there and this probably has the best content from a OSHA compliance safety program along with training certifications
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videos it's it's all it's all there and it's high high quality so I really lead with that to understand like okay let's understand what our needs are whether it's on the OSHA compliance safety in general HR [Music] maybe even employee benefits because that that kind of goes into that realm as well in terms of what you're offering your employees um and and start building an action plan over the course of a year so that's that's the way I'll I kind of go about it um is building out kind of an action
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plan with deliverables on a monthly basis right so this month we're going to tackle Safety Committee training with the Safety Committee oh you don't have a Safety Committee okay here's what we're going to do to get that going yeah so obviously pretend or more businesses with 10 or more employees it's required by law if you haven't been inspected by O'Shea you will at some point and the very first thing they're going to ask for are the Safety Committee minutes so that's um that's an important thing to
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build out the infrastructure for you know the safety culture of the business and you got to start with the Safety Committee yeah so things like that where we're you know again this is going to come out during A needs assessment analysis of figuring out where they're at what they need um and and having the tools to kind of backfill with it so yeah and that's stuff that we do in-house we'll train the safety committees you know we'll train the Safety Committee on here are the basics here's a binder with
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everything you need to do as a Safety Committee from a vision statement to a planning session for the coming year who should be on it why should they be on it um topics of conversation agendas um action plans for the Safety Committee so yeah really that's you know that's a big piece this templates for these things out there but they're going to be cookie cutter a lot of the time like this is a really customized to the business you know you've sat down and said hey Mr Concrete contractor you've
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had all these injuries but you have two or three that keep happening over and over again are the same type of Incident That's triggering the injury yeah and so here's our you know our learning management system which is the portal where all the trainings and toolbox talks are built right into the portal um you are we're going to go in there and assign those over the next three months specific those trainings are going to be specifically based on oh you have a lot of ladder injuries so you need a ladder safety training and not
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only is it getting done actually training the employees and hopefully changing the safety culture but it's automatically documenting it for them yeah no that's um that's exactly right so it's again doing that that needs assessment understanding where they're at what they need um so on the safety side there's a lot there uh HR side equally is is powerful because really what we're trying to do is provide resources to our Paul to our business owners that are making their life easier right so you don't need to go out and
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search for um tools and resources that you need to then vet and you don't know what you're getting right the content that we're providing is vetted by uh professionals safety professionals attorneys we give an HR hotline to our customers right uh no no cost it's a phenomenal resource where they've got Unlimited phone calls emails um you know when you've got a situation arising not sure how to deal with it you know this could be a problem you call the hotline and they're going to give you state Regional
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jurisdictional um specific guidance that is really phenomenal yeah well in you and I have probably we've both run into this a lot where HR specifically is an example where it's like the owner caps a GM or someone that's in the Opera on the operations team or even just a supervisor Rule and they're like hey you're you're HR now too and and um and it's just uh it's really hard to navigate that we have no you don't know what you don't know and so um yeah that's huge having both the
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hotline engine all the tools that we have from helping with total compensation calculators and all that so job descriptions yeah yeah or even review interview script interview yeah exactly yeah yeah now it's there's a lot there that is uh extremely valuable that um you know you don't necessarily think of when you think insurance but this is a resource that we've invested in as an agency that uh that is extremely valuable to our customers yeah yeah definitely yeah it's we're making them better for working with us I
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mean that's our ultimate goal right yeah um so yeah that's I mean that's a big part of why I'm at Laporte is um I've always in in my insurance role always said hey I want to be a partner to your business um but the reason I came over here is I was I was really going to be able to follow through on that a lot more with with tools like in source and just having access to Dan and other other people that uh have kind of give us all the peek behind the curtain and really help us with these things so
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um yeah we're pitching here but but we'll move on so um so yeah uh thanks for sharing all of that so let's talk a little bit about [Music] um just uh and it doesn't have to just be work comp like what are some of the trends you're seeing for the insurance industry or just local business um that are worth sharing or um top of mind for you couple things um in general in the insurance Marketplace across the country we're pretty insulated in the Northwest um we're insulated on on a couple
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different levels I talked about the rate structures for work comp in Oregon that were pretty insulated um with with really low rate structures um property and liability were also pretty insulated as well um and again comparatively with you know I work with some of our key insurance carriers and and other groups of agency owners that I understand a little bit of what's Happening across the country from both the property side of it right there's massive catastrophic claims uh that have been happening I'll
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give you an example in the year 21 there were 25 billion dollar plus events um natural catastrophic events that happened across the country billion dollar plus 25 of them um that has a huge impact on property right so it's going to be everything from the the snow the ice the Hurricanes um tornadoes wind and hail um wildfires you know that's that's the one thing I I would say that we have experienced uh more and we're going to continue you know when when you start talking about trend of what's happening
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in the industry uh Wildfire exposure that's just going to get worse you know uh and it is getting worse um so we've got insurance carriers on the property side um in the Northwest that are that are backing off their willingness and ability to write businesses that have any potential Wildfire exposure so that that's one piece um the biggest catastrophic risks that we we face in the Northwest is earthquake right so that's that's the one that everyone is kind of hedging against um that is becoming a harder Market it's
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it's difficult more difficult to access uh adequate limits um and the prices as is going up right and that is directly related to two things one is the other um catastrophic um claims and incidents that have happened across the country and that has impacted the reinsurance market directly right so every insurance carrier uh will cover a claim up to a certain point they've got you know an attachment point where reinsurance where they buy reinsurance on their insurance right and the reinsurance market is very very
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challenged right now because of all the catastrophic claims and events um so that's that's kind of driving particularly on the property side um and we're feeling it here we don't feel it as much as other areas but we feel it here for sure um in property rates in general the other element obviously inflation uh has had a huge impact on our uh on our property rating structures you look at the replacement costs now for buildings structures that has uh just because of overall inflation supply chain issues
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um it's it's going extremely extremely high when a lot of people were already underinsured on their properties to begin with in the last couple years yeah that's exactly right yeah so that's that's kind of a trend that that we're seeing more and more um and then on the on the liability side um this is for us the biggest impact is having on on Commercial Auto uh and that really has to do with uh there's a term that's being used called social inflation right and social inflation are
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are some of the elements that uh Drive increased claim costs so big one in in Social inflation it's probably a misnomer the term social inflation it would be more I would say um uh courtroom um abuse is what it is right and Pirates right sorry so there's there's a 17 billion dollar industry uh that exists right now and has existed for the last 10 to 20 years but it's grown significantly um and it is uh what's called litigation funding right and so you've got third-party groups with with money
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looking to invest and they're gambling on individual cases uh in the courtroom typically against companies right so you have an anti-business sentiment you've got outside money that is now influencing um courtroom verdicts and the ability to or the plaintiff's willingness to take something to trial and uh you know get a massive massive number in terms of um in a word it's it's really kind of crazy what's happening that's indicative of what's actually happening with the verdicts because these companies are
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they're private Equity companies don't just they don't just gamble it's a little bit of a gamble but they invest in things that they think are gonna give them a return and so they've looked at what's happened with verdicts over the last few years and say oh there's a good enough chance that they're going to rule in favor of the individual and not the company right and um there's going to be a payout and so and they win typically 90 of the time buy their buy their account yeah right
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that's that's from from these from these companies that are investing and so the dynamic that has is um twofold one it's increasing the number of cases going to trial because typically you know an insurance carrier is going they're going to want to settle a case right if if they're legitimately they're they're insured is is at all they're liable um they're not going to generally speak they're not going to want to take it to trial they're going to want to because of the cost to defend and you know
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completely uh I mean there's it just doesn't make good sense uh but now with these companies are investing in trial they know they can get more from a jury and so they're pushing hard to go to trial and um it's it's having a massive impact on it's trickle-down it's impacting everyone down to the to the end consumer um so where do we see that we see that on uh primarily on on auto Commercial Auto that's where a lot of these verdicts are happening from a race structure um that's where you know we call them
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nuclear verdicts anything over a 10 10 million dollar verdict in the courtroom uh that's happening with more and more frequency I'll give you a statistic because it's it's mind-blowing in 2008 the average claim Insurance claim that exceeded uh a million dollars so that's you know you're going to exhaust your primary limits generally speaking the average claim above a million dollars was I believe it was 2.
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3 million dollars that was the average 2018 so 10 years the average claim liability claim over a million dollars was 22.3 million dollars yeah I saw that article the other day it's pretty pretty unimaginable that it's unimaginable yeah so you know I I was just giving a training yesterday to an association around um things that you can do to to Really prevent being in that place where an award wasn't that I mean well you're even in the courtroom and it had to do with large having a large Fleet and that exposure and commercial drivers and and
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everything from technology to cameras um and what you're doing with that right because oftentimes these are um you know you're being the jury's fine finding the business negligent for whatever it is negligent hiring negligent retention negligent fill in the blank so how do you hedge against that and a lot of it has to do with how you're managing your drivers you know and it's a massive risk for businesses um oftentimes for our customers their biggest risk physical risk risk for something bad to take the company
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down is going to be on around their Auto exposure yeah and so that's where you know when you when you ask what do you do outside of the work comp side of it I spent a lot of time on auto and Fleet Safety um because it's it's a it's a big risk to companies yeah well and it's we we spoke touched on briefly how hard hiring and retention is right now and so um you know with our clients trades people they're always they need their new hires to be able to drive and um they're getting a little bit more and
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more willing to hire people they might not have hired before and so that can really impact things um so you kind of already touched on it with the Fleet Safety side but maybe just in general I'm you know back to the concrete contractor I've gotten I've listened to this podcast and heard what's going to happen say I just renewed three or four months ago and it wasn't that bad it was all right but now I'm hearing this I'm getting a little nervous both in terms of controlling my claims
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but also just what to do in terms of the market and dealing with my agent do you have any tips absolutely I I think having a qualified agent do a full analysis of um not just your program your insurance program because that's that's one element um about looking at you know the risk across the company in general because there's a lot there there's a lot of unseen um unplanned for risk that exists you know one of the things that um in terms of Trends and and what we're doing how how are we staying ahead of
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what's Happening um is looking at executive or owner liability right so looking at what happens when I want to retire what's my succession plan what happens if you know my partner of 30 years dies tomorrow right do I have a mechanism a mechanism in place Visa via a buy sell contract or agreement that that provides um not just direction and you know uh of what happens but a funding mechanism you know to to make your partner's wife hole right and for you to be able to buy them out that sort of thing I mean there's a lot of risk
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from that standpoint when because a lot of businesses and and I'm sure you've seen this they kind of grow to the point of um without a lot of planning right and you get to a point where now you've got an owner that's you know middle age maybe they've got a kid in the business maybe they've got an Heir Apparent that's you know a key employee um but they haven't really done any formal planning around how to transition the business so oftentimes this is our our our clients largest asset is the
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business that they've built from scratch so there's a lot to protect right we should be having when we are having that conversation um consistently around risk management because now that's not necessarily about insurance it could be but really it's about what's your largest risk and how do you how do you plan well you talked about you know event like your your partner dies or something like that happens um but there's also even the just the threat of your business being built around a few key people who
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are being head hunted um exactly and one or two of them go somewhere else and they bring employees with them they bring all of the relationships with your vendors with them whatever it might be in the entire business operation is in their head yeah and and so yeah how do you keep them financially motivated to stay while um building a plan to transfer that knowledge to whoever is going to be the torch is going to be passed to so right exactly yeah yeah well that I honestly those conversations I think are for me personally they're they're the
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funnest and most interesting conversations and they seem to be you know um obviously what we do matters a lot like it's really important that I have the right auto insurance the right GL Pol all that stuff needs to be done right um but when it comes to a business owner's day-to-day these are the things that are going to keep them up at night um in terms of you know just having a viable business so yep awesome well um do you have any final thoughts or key insights you want to share before we sign off here
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you know the only thing I'll say um that I I think would be worth reiterating we started the conversation talking heavily about workers comp um and you know it's um it's the most controllable line of insurance so the call to action if I had one was to get your agents to do a full analysis of for you on your Mod on your claims to really understand where's the money where's the money leaking off your balance sheet because it's happening whether you realize it or not yeah and so how best
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to control that you know um so definitely that's what I'd leave with awesome well that's great and uh well I will uh look forward to getting this posted I know it's going to bring a lot of value to our audience and thanks again for being here Dan and shared a ton of awesome information valuable information and so um as the podcast moves along and more topics come up I'm sure we'll talk again but uh for now have a great rest of your day and thanks for being here thanks for having me I appreciate it
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