Every day, we get more evidence that 2011 is the worst disaster year the world on record.
Turkey is still digging out from a tragic earthquake that has reportedly killed more than 420 people.
Thailand is awash with floodwaters that have reportedly killed more than 350.
And now Ireland’s capital city has suffered a flash flood that reportedly killed two and stranded many Dubliners.
Today at 10:20 a.m. Pacific time, many Californians participated in the Great California ShakeOut, a state-wide drill that helps people and organizations be better prepared for major earthquakes. Wherever they were at that moment this morning, those who participated practiced the drop, cover and hold on technique as if there were a major earthquake occurring at that moment.
In an article I penned in the October issue of Risk Management, I summed up the history of this gargantuan drill.
Started in 2008, the Great California ShakeOut began as the Great Southern California ShakeOut — an effort by scientists and emergency managers to inform the public about earthquake preparedness. The drill was based on the ShakeOut Scenario, a comprehensive description of the destruction a magnitude 7.8 earthquake on the San Andreas fault would cause in Southern California, which was organized by the United States Geological Survey’s Multi-Hazards Demonstration Project. In 2008, the ShakeOut became the largest earthquake drill in U.S. history with 5.4 million participants spanning eight counties in Southern California. This year, more than eight million are expected to participate in California alone with Nevada, Oregon, Idaho and British Columbia practicing the “drop, cover and hold on” technique as well.
The drill has since spread to Japan, Puerto Rico, Hawaii, Alaska, Turkey and Chile. Below is a video produced by the Great California ShakeOut team showing the exact drill millions followed this morning.
It looks like businesses in the United States and the United Kingdom have seen slightly less litigation in 2011 compared to 2010. However, regulatory actions and internal investigations are climbing — this according to the latest Fulbright & Jaworski Litigation Trends Survey.
But corporate counsel doesn’t expect the trend in decreased litigation to continue. Many respondents expect the year ahead will bring more litigation (and even more regulation) as companies attempt to grow in an economy that remains volatile.
The vast majority of corporate counsel polled in the U.S. and the U.K. predict litigation will either rise or remain the same in the next 12 months: 92% of U.S. companies and 85% of U.K. companies. Of those, one-third of U.S. respondents predict an increase while 20% of U.K. respondents expect a rise in legal disputes in the coming 12 months. That compares with 31% and 16%, respectively, last year.
Why? And what sectors?
According to the report, stricter regulation and company growth topped the reasons cited for the anticipated increase in litigation. The industries bracing the most for an increase in litigation are technology, engineering, health care and insurance.
“Our survey respondents have a front-row seat to the increased scrutiny brought on by stricter regulatory enforcement,” said Stephen C. Dillard, the head of Fulbright’s global disputes practice. “This year, our survey confirmed a heightened level of governmental investigations focused on the energy and insurance industries, with the health care, manufacturing and engineering sectors not far behind.”
The report reveals that whistleblowers remain a concern in the coming year. More specifically, one-quarter of respondents anticipate an increase in the number of claims or lawsuits brought by whistleblowers next year. This year, 22% of respondents said their organizations were subjected to whistleblower allegations. Due to the Dodd-Frank whistleblower provisions, we can definitely expect more in litigation within this category for 2012. Companies, and more importantly, risk managers, should prepare themselves.
Healthier employees lead to lower premiums. If companies can help their workers improve their health without cutting benefits or shifting more premium costs to employees, where is the downside? After all, Fortune 1,000 companies have been using wellness programs for years to combat the rising costs of healthcare.
So the question is, why aren’t smaller companies using this proven method to lower their health care costs?
Randy Boss, a risk architect for Ottawa Kent Insurance in Jenison, MI, helps companies implement successful wellness programs. And he says he can understand how employers feel. “They’re frustrated because most likely they have tried things that didn’t work,” says Boss. “There seems to be a wellness vendor on every street corner these days and many use ROIs from Fortune 1,000 wellness programs as their own, yet they had nothing to do with that program.”
All wellness programs are not equal. “This is a very important problem and something companies need to understand when selecting the appropriate wellness program for their company,” said Boss.
Yet, the benefits of having healthy workers transcend reduced health care costs, including workers compensation and lower absenteeism. Healthy workers are less prone to injury and when injured, they recover quicker than less healthy workers. Conversely, out-of-shape workers are at a higher risk for injury and healing is often delayed and complicated by other health factors. If workers change and modify their lifestyle and reduce their health risks, medical costs decline.
While this may seem intuitive, the connection between wellness and workers compensation has been slow to take root. The reasons appear to be separate risk management departments overseeing workers comp and group health, concerns about expanding the employers’ liability for work-related injuries, a focus on workplace safety rather than workers’ health, and a number of small companies with high workers comp costs that do not offer health insurance have all been contributing factors. Still, one of the major areas of concern for employers is an out-of-shape employee.
According to a Duke University study, the cost of obesity among full-time employees is estimated to be $73.1 billion a year. This is the first study to quantify the total value of lost job productivity as a result of health problems, which is more costly than medical expenditures.
The report recommends that employers promote healthy foods in the workplace, encourage a culture of wellness from the CEO on down, and provide economic and other incentives to employees who show signs of improvement. And there is evidence that this plan can work for employers.
A University of Michigan study of a Midwest utility company’s workplace wellness program found that over nine years, the utility company spent $7.3 million for the program and reaped $12.1 million in savings. Medical and pharmacy costs, time off and workers compensation factored into the savings. The study, which took into account a number of costs, including indirect costs of implementing wellness programs, such as recruitment and the cost of changing menus, showed that wellness programs work long-term even though employees aged during the course of the study.
Overall, the program cost the employer $100 per employee. The cost of lost work time, workers compensation, and pharmacy and medical expenses among employees who participated each year increased by $96, compared with a $355 increase among employees who did not participate.
This is good news for employers. Amid heightened cost pressures and leaner staffs brought about by the prolonged economic downturn, employers need to reduce all types of absences to help maintain productivity. While employers tend to focus their energies on controlling the highly visible health care costs, which are more easily shifted, there are significant opportunities to control other costs with wellness programs.
On average, employers can see a 30% reduction in Workers’ Compensation and disability claim costs, according to a review of 42 published studies involving the economic returns of wellness programs. Moreover, wellness programs will reduce the costs of absences that, according to the 2010 Kronos/Mercer Survey on the Total Financial Impact of Employee Absences, add up to 8.7% of payroll costs, more than half the cost of health care.
It stands to reason that healthier employees will use less sick time. But ultimately, companies need to make a commitment to helping their employees stay in better shape. “Employers should focus on health and wellness at work,” says Randy Boss. “Businesses should allocate 2%-3% of their budget to an effective program that includes at least 90% participation by employees and a wellness coach on site to effect behavior change.”
Although budget and company size will dictate the type of program a company can undertake, there are five steps that companies should take before launching a wellness program:
When it comes to implementing a wellness plan at your place of business, it’s really all about risk versus reward. And the rewards can be huge, but only if the plan is properly implemented and the management team is committed to its success.