Risk Control Newsletter – September 2021

In This Issue

• Donning Your “Risk Manager Hat”
• Employment Practices: Stay off the Retaliation Bus
• Preventing Sewer Back-Up Claims in 2021
• Rising Cost of Construction Materials Impact Insurance Property Values
• Did you Know?

Donning Your “Risk Manager Hat”

Many municipalities do not have the benefit of a full-time Risk Manager. These responsibilities are typically assigned to a Finance Director, Purchasing Agent, Human Resources Manager, or quite simply they are shared by all department heads. The problem with this approach is that to be truly effective at-risk management it is difficult to just put on your Risk Manager hat when you have other full-time responsibilities as it is a full-time job, but with budget limitations, this is quite often the case. However, a team approach to risk management can be quite effective when it comes to evaluating a potential project or program ahead of time. Below are 5 simple steps to consider when you put on your Risk Manager hat.

1. Identify the Risk: Assemble a committee of people who can offer input, perspective, and expertise to help you consider all viewpoints and opinions. Define the scope of the project or program, expected timelines, and discuss the reasons why it is being proposed. Determine who will be supporting the project and who will manage it moving forward.
2. Analyze the Risk: Ask the team to try to evaluate all the possible risks, benefits, and consequences if the project were to move forward.
3. Prioritize the Risk: As a team, rank the risks based on the likelihood of it happening and how it could impact the project.
4. Examine Solutions: Discuss how your municipality would manage those risks. Is it a risk you are willing to accept or one you want to avoid? Or is it one where you could transfer the risk to a vendor or third party? Do you have the staffing and budget to support this project down the road? How would the project be implemented? Be realistic about your limitations but mindful of the reasons behind the project. This is where you determine if you will move forward with the project. Consider a vote if needed.
5. Monitor the results: Do your best to monitor the outcomes of the project and if any new or unforeseen risks have developed. Determine if any modifications to your risk management approach need to be considered. Communicate your concerns with your team and all stakeholders.

This process is effective because it allows all potential stakeholders to communicate their concerns and it helps to avoid unintentional consequences of implementing a project or program without their input.

It can also allow for the project or program to be more effective since you will hopefully have made your decision based on risk and will have managed those risks ahead of time. Additionally, if your team determines that a project or program should not move forward, it can be easier to understand as it was well thought out and based on your ability to manage all the potential risks and outcomes.

Employment Practices: Stay off the Retaliation Bus

Employment retaliation occurs when an employer takes adverse action against an employee for engaging in legally protected activity; exercising their rights that are protected under the law. Retaliation can be tangible or be perceived. Examples include demotion, discipline, termination, salary reduction, job reassignment, or other changes that can be perceived as punishment.

Retaliation continues to be the #1 EEOC claim. In 2020, there were 67,448 retaliation charges with $333 million paid to complainants in monetary benefits, not including litigation awards and defense costs. The average legal cost is $250,000 with an average of 318 days to settle. Retaliation is usually paired with another charge such as harassment, discrimination, or wrongful termination, for example. Retaliation claims have nearly doubled from 2000 to 2020.

It is important to note that last year, 64% of retaliation claims were based on non-tangible information, employee perception, whereas 18% were based upon something tangible such as termination or harsh performance appraisals. It should be noted that this is only 82% of the claims that were filed.

To prevent and mitigate these claims, employers should focus on doing the right things: establish good written policies and procedures, review them annually with documentation of the review/revision dates, provide documented training to management and staff, immediately begin addressing any complaints, treat the complainant with respect and care, treat all complainants equally, do everything that can reasonably be done to accommodate employee’s needs, consult your labor attorney to ensure that proper protocol is followed, and have good communication. Check on the complainant and any individuals involved in the investigation. Answer any questions they may have, reassuring them that the situation is being taken seriously. Even if you have no new information, it is ok to convey that message along with wanting the employee to know that you care.

Ensure that your entity’s anti-harassment, anti-discrimination, and progressive disciplinary action policies contain a clause discussing the employer’s position on retaliation. Developing and implementing a standalone policy on retaliation and detailing the employer’s position and protocol for handling the issue is also strongly recommended. This is a progressive step that an entity can make, which is also a good measure to implement in case of the need for legal defense. If your entity has a standalone policy on retaliation, then ensure that your anti-harassment, anti-discrimination, and progressive disciplinary action policies refer to it in the employee handbook.

Maintain awareness for any gossip that may occur regarding an active retaliation claim, taking measures to stop such behaviors by counseling the employees. Document your efforts and anything that occurs in the workplace regarding a claim. Be consistent in your treatment of everyone involved. Be careful about job transfers or anything that affects the jobs of complainants and those involved in investigations. Any job change or alteration may be perceived as punitive to the complainant, but if it is necessary, then an approach may be to explain the situation to the employee and give them a choice on how they would prefer to handle it, letting them be part of the decision and process.

Treating employees, and especially complainants or individuals involved in an investigation, with respect, care, and compassion can make all the difference. It can be a very frightening position for someone to have to make a claim. It can be hard for people to blow the whistle or provide information if they are afraid of job loss and their well-being. They may not be able to express themselves or describe the situation well at first, due to being frightened or anxious. You may have to check in with them in a day or two and work with them to ensure that you have a good understanding of the situation and/or to confirm what you have been told. They may even say or do things that are out of character because of their feelings or emotional status. It is good to keep this in perspective as you are working with the person.

Workplace culture is particularly important in terms of morale, reducing claims, and increasing productivity. Empower your management and supervisors to be role models in the workplace, which helps build a successful work culture.

Training can be obtained from several sources, including Trident University’s web-based training program, which is offered at no cost to Trident’s policyholders. Contact us at asktheriskmanager@tridentpublicrisk.com to get your entity registered today!  

Preventing Sewer Back-Up Claims in 2021

Public Works and Water/Wastewater Utilities have been hit hard by COVID-19. Many of them already shared in their challenges from operating with skeleton crews to working with aging infrastructure and with limited preventative maintenance funds, but these ongoing issues have been amplified by COVID-19 due to unpaid bills and closed businesses. Utilities rely on their users to pay their bills on time for day-to-day operational costs and most put a moratorium on service shutoffs. This lack of revenue further limits their ability to make repairs and perform much-needed preventative maintenance. Additionally, as many states prepare to re-open to full capacity these challenges may come to light.

Regarding sewer backups, from a risk management and loss prevention perspective, preventative maintenance is essential and if documented properly can often be the determining factor in a claim. A claims adjuster will look at the service history of the area of loss to determine if the municipality was aware of a pre-existing problem such as collapsed lines or tree root problems, they’ll ask how often and when the area was last inspected via camera. When was the last time the lines were flushed or treated for tree roots? Is there a history of fat, oils, and grease build-up? Was there any work being performed in the area that could have contributed to the backup? If preventative maintenance was lacking during COVID-19, some areas that were prone to backups may be at even higher risk, especially with businesses reopening soon. Documentation of all preventative maintenance, as well as calls for service, is necessary. A work order tracking software can be an effective means to track preventative maintenance and customer service call responses. When backups occur, investigate the cause and what was done to repair or clear the blockage. Include the names of all employees who responded. Take pictures of the area of the backup and any visible damage. Most importantly, do not discuss who is at fault for the backup. If there are any questions by the affected homeowner or business owner, then politely refer them to your claims adjuster.

Another potential challenge for Public Works and Utilities departments is the turnover in business owners and homeowners. Many businesses and restaurants have permanently closed, and new ones are moving in, potentially at a ratio not yet seen in some communities. These new customers may not be from your community and in fact, could be moving from other states. It is important to establish relationships with these customers to educate them on what concerns or issues you may have had in the past. For example, if a particular area were prone to backups due to fat, oils, and grease, this may be information the business owner was not aware of and would want to take extra precaution with moving forward to ensure their grease traps are properly maintained so their business is not interrupted. If a business or homeowner has relocated from another state, it may be a good opportunity to let them know that you are available to answer questions they may have. You might also consider improving your social media presence to help get this message out. Use social media to your advantage as a free resource. You might be surprised how much social media can help with public education on issues like this.

As Public Works and Utility departments always do, they press on and do the best they can do with the resources they have. For more information on preventing sewer backups, click here.  

Rising Cost of Construction Materials Impact Insurance Property Values

The year 2020 will forever be etched in our memory. Who of us could forget a global pandemic that transformed how we live, work, and socialize? Or the drop-in mortgage rates that led to a rush in home-building. Nor could we forget the numerous natural disasters in the U.S resulting in billions in property loss. Well into 2021, we still feel the ripple effect of 2020 on our global economy, particularly, how it affects insurance premiums.

After an intense year of catastrophic weather events, it is common to see heightened demand and a slight price change for construction materials. Typically, these prices grow a small percentage each year to keep up with inflationary costs, and the price fluctuations vary regionally. However, the difference in price from last year to today has increased significantly. To illustrate, CoreLogic reported that as of March 2021, lumber costs in the United States “have increased by 42% year over year.” In some individual states, the increase is as high as 82%.

Several factors led to the surge in materials costs. First, there was a decreased material production due to COVID-19 preventive measures. Then, in addition to the catastrophic events, an increase in labor costs and newly imposed tariffs created the perfect “economic” storm for the price of construction supplies in today’s marketplace.

Regarding current building costs, insurance carriers and policyholders should be mindful of the downstream implications on costs when insuring to value (ITV). ITV is the amount it would take to rebuild a structure and has a resultant effect on your insurance premium. As your insurance provider, we keep current with the change in construction materials and all associated costs and adjust ITV as needed.

While we cannot control the global economy, policyholders can mitigate potential losses and prevent premiums from rising significantly. One way is to inspect and maintain a building’s roof. Performing frequent roof inspections and making repairs can decrease potential loss from snow, ice, hail, and other damaging elements. In addition, a roof inspection should include clearing the roofline from branches and trees. Finally, to prevent further damage, routinely clean out rain gutters to prevent water back up and roof deterioration.

Water damage also poses a considerable risk to the property. Therefore, it is best to replace parts in the plumbing system that show signs of wear and tear to prevent water damage. It is also essential to have a professional inspect the fire sprinkler system regularly. For more recommendations on preventing costly property damage, contact Trident’s Risk Control team at asktheriskmanager@tridentpublicrisk.com.

Did you Know?

In the United States, more than 427,000 school buses are transporting more than 26 million students each day. Each school bus eliminates about 36 cars from the road, Estimations from the American School Bus Council have found that if every student rode the school bus the fuel savings would be over 2 billion gallons annually.