Risk Management Report 2014

Presented below is Clackamas County Risk Management's Annual Report. It contains graphs and statistics spanning the five-year period of July 1, 2009 through June 30, 2014.

The purpose of this report is to provide information, both programmatic and statistical, to help us understand and incorporate risk management measures into the everyday tasks we perform. Some general and unique challenges that have faced Clackamas County will be addressed as well. Knowing there is no crystal ball for forecasting the future needs of the County, we must rely on the experiences and statistics of previous years to project potential areas of future need.

General Overview

Clackamas County has 386,080 residents living within an area of 1,879 square miles. The county is primarily rural but does include 17 cities and local governments. Clackamas County employs approximately 2,314 full-time, part-time, seasonal and temporary employees, along with many volunteers. County government consists of departments organized to provide the following services: transportation and development, sewer, public safety/law enforcement, tourism, public and governmental affairs, libraries, community health and social services, taxation and assessment, as well as internal administrative services.

It is the intention of Clackamas County to preserve and protect the assets of the County from accidental loss at the most economical cost. Also, just as importantly, the County's goal is to provide a safe, secure and healthy working environment for its employees. The County has elected to retain exposure to loss primarily through self-insurance and transfer exposure through purchased insurance only when the premium cost has been determined to be cost-efficient compared to the exposure.

The management and control of the County's risk management program is a function of the Risk and Benefits Division, within the Department of Employee Services. A Risk Management Committee provides oversight of this function with the day to day management provided by the Risk Manager. Our philosophy is that risk management must be so much a part of County culture that it becomes a value rather than merely a priority that shifts as other priorities change. The primary areas managed through this program are: liability, workers' compensation, vehicles and unemployment claims administration, loss control services, insurance, and contracts.

Services to the Organization

Risk Management staff provides the following services to the organization:

  • Internal consulting services for departmental staff on preventing and controlling risks, including risk assessments;
  • Workers' compensation, liability, vehicle, property and unemployment claims administration;
  • Marketing, purchasing, and administration of property, excess liability and workers' compensation, and other miscellaneous insurance policies and bonds;
  • Review of County contracts for insurance requirements and indemnification language;
  • Employee and supervisory training on risk-related topics, including tort liability, workers' compensation, loss control and employee safety;
  • Coordination of modified duty assignments and physical rehabilitation programs for injured workers;
  • Loss control consultative services for employee safety and environmental issues;
  • Ergonomic consultations.

Executive Summary

We continue to focus on creating a loss-free environment, both within and without the workplace. However, since incidents and claims do occur, this report discusses what has occurred and what can be learned from it.

Our Cost of Risk had a slight uptick during FY13/14, due to an increase in each of the major expenditure areas (liability claims costs, insurance premiums, and personal services). The composite amount is the second highest amount during the last five years.

You will notice that the number of claims decreased in both Liability and Workers' Compensation, yet the Cost of Risk increased. The reason for this is that the cost of older claims continues to increase. Most of the increase is in the liability area.

Vehicle costs for all vehicle claims have continued on a steady incline since FY09/10. The paid cost of "at-fault" vehicle accidents decreased in FY13/14 to $1,853 per 100,000 miles driven as compared to $2,275 in FY12/13. We will discuss the area of the vehicle cost increase in more detail later in this report.

Unemployment costs increased 11% from FY12/13.

Daily attention to risk identification, prevention and mitigation is very important to the financial stability of ongoing stresses on County resources. Risks arise from decisions and practices throughout the entire organization, not just those departments with the most likelihood of sustaining loss. Identifying risk and preventing and managing it wherever it is found will contribute to a sound and productive service-oriented organization and move the County's strategic plan forward.

Statistical Summary

2014 Risk Management graph 2014 Risk Management graph

Claims data reflects that from FY12/13 to FY13/14 number and costs changed by the following:

  • Liability down 21% and up 114% respectively.
  • Workers' Compensation down 2% and down 42% respectively.
  • Vehicle claims up 11% and down 14% respectively.

2014 Risk Management graph

The OSHA Incidence Rate graph shows how we are doing in preventing injuries. This relates to the number of injuries per 100 full-time workers. The current OSHA review period decreased 14% to 4.37. This is the lowest OSHA rate in the past 4 years. There is a direct correlation between decreases in the OSHA rate and workers' compensation expenditures that will be explained in the WC section.

2014 Risk Management graph

To compare our program with like entities, we calculate the cost of risk as a percentage of budget and payroll. Costs include: actual claims expenditures (liability, workers' compensation, and vehicle), insurance premiums, staff salaries and benefits, materials and supplies, consultants and contractors.

From the graph you will see that our cost of risk increased substantially from FY12/13. The budget percentage increased by 29.68% and payroll by 29.25%. As noted in the Executive Summary, the increase is primarily the result of a large increase in liability claims expenditures that will be explained in more detail in the Liability Claims section.

Liability Claims

Claims brought against the County comprise a significant portion of the annual expenditures from the self insurance fund. We contract with a third-party administrator to effectively manage general liability, employment and vehicle claims. County Counsel contributes early on in any claims that may involve litigation.

The following graphs show the pertinent data related to these exposures.

2014 Risk Management graph

The overall number of liability claims decreased by 21%, due primarily to a decrease in the Auto and False Arrest categories. The number of general liability claims remained constant at 47. However, general liability claim costs increased from $345,000 to $1,449,000. Note: this is money paid during FY13/14 for all claims, regardless of the year in which they occurred. Three claims accounted for 77% of the expenditure.

2014 Risk Management graph 2014 Risk Management graph

Please note that in the Departmental graphs the data is based on the department's relativity to other departments based on payroll (per $100,000).

The graphs speak for themselves. However, one observation we would make is that while the Department of Transportation and Development had the highest number of claims per employee, the Sheriff's Office and Business and Community Services departments had higher costs per employee. This occurred in large part due to the fact that the high payouts in the Sheriff's Office were related to older claims. The take-away is that claims can have long tails with large expenditures occurring well after the claim is filed.

2014 Risk Management graph 2014 Risk Management graph

Worker's Compensation Claims

As mentioned earlier, the OSHA rate decreased in FY13/14. This correlates with a decrease in the number of workers' compensation claims by just over 2%. Costs decreased by 42% from FY12/13 to FY13/14. This continues a four-year downward trend. As has been expressed in prior reports, the best way to reduce costs over time is to reduce the number of accidents that occur. This is proving out.

2014 Risk Management graph

Strains and sprains continue to be the highest cause of claims in both number and cost. There were 14% more strain/sprain claims as compared to the prior year. This often has an effect on the costs increasing in the future because these kinds of claims generate the most medical treatment and disability.

However, due to a gradual decrease in these types of injuries over the past four years (even though there was a slight increase between FY12/13 and FY13/14), the cost of strain/sprain claims decreased from FY12/13 to FY13/14 by 60%. Soft tissue injuries can require extended treatment and recuperation and often last many months. This cost can build over a one or two-year period. Because the number of claims has decreased, the impact is less cost.

One additional impact on lower costs is from strong claims management. The County's integrated disability management function greatly impacts the ultimate expenditure on workers' compensation claims. The claims adjustors are technically proficient while bringing compassion and caring management to the processing of claims.

2014 Risk Management graph 2014 Risk Management graph

The Department graphs compare the relativity between departments based on $100,000 of payroll. This method gives us a better idea of how departments compare based on their size. There is still a risk factor to consider and the relativity does not take this into account. However, the comparisons reveal where some additional analysis of injures is warranted. Additional detail is available upon request.

2014 Risk Management graph 2014 Risk Management graph

Vehicle Claims

County personnel drove in excess of 7.6 million miles during FY13/14. The total number of vehicle accidents (both fault and no-fault) increased from 95 to 107 (up 11%). From an analysis of the data the largest change occurred in the "hitting fixed object" category (causes like misjudging distances and distractions) which increased 450%. However, because this increase in accidents did not involve accidents where serious damage or injury occurred, the amount of cost actually reduced by 24%.

2014 Risk Management graph 2014 Risk Management graph

We feel it is important to distinguish between "no-fault" and "fault" accidents. This will help us focus on those accidents that result from error on the part of a County driver and look for loss prevention methods to address it.

2014 Risk Management graph 2014 Risk Management graph

The preceding graphs capture the areas where our loss control efforts need to be focused. These are all causes that resulted from driver errors. From an analysis of the data, driver distractions and poor judgment were the primary causes.

2014 Risk Management graph 2014 Risk Management graph

Data reflects each department's relativity to other departments based on payroll. The two departments that drive the most (CCSO and DTD) incurred the most vehicle incidents. Proper follow-up training after a preventable accident and regular refresher training are important for all departments.

The number of claims per miles driven is the best way to compare Clackamas County with other jurisdictions. For example, Clackamas County's FY13/14 rate was 1.41. Multnomah County's FY13/14 rate of 2.76 (number of incidents per 100,000 miles driven) reflects how our two jurisdictions compare.
2014 Risk Management graph 2014 Risk Management graph 2014 Risk Management graph 2014 Risk Management graph

Unemployment Claims

Unemployment costs increased 11% from FY12/13. The increase is partially due to an increase in the use of seasonal workers. We have also seen more benefits being paid to part-time workers due to claims being filed when the number of hours fall below full-time.

2014 Risk Management graph

We continue to emphasize the need for appropriate documentation about employment actions and involving the Department of Employee Services early when employment questions and decisions arise.

Insurance Premiums

Premiums increased overall by 12.6%. Despite good negotiating by the County's insurance broker and developing strong relationships with insurers there has been a steady increase in premium cost since FY10/11. The most recent increase is the result of increases in property insurance, excess liability and excess workers' compensation premiums. While rates are remaining fairly stable, the County's exposure base is increasing. In the property area we are adding and increasing property values. In the excess insurance markets our recent large claims payouts are increasing those coverages.

Clackamas County purchases insurance in the following areas: property, bridges, boiler and machinery, excess liability, excess workers' compensation, volunteer and van liability, and marine and aviation liability.

2014 Risk Management graph

Conclusion

Achieving our mission - The goal of any risk management effort should be to help the organization achieve its mission. One important way of doing this is to increase resources. Managing risk can help accomplish this.

In terms of workers' compensation, employees who are at work because they have not been injured on the job avoids the need to back-fill, avoids overtime, promotes higher quality work because the person whose job it is, is doing the work, promotes positive morale and eliminates claim costs.

In terms of liability, attention to how an action may bring liability upon the County improves County-citizen relations by avoiding contentious claims. This attention often improves the efficiency of the service as well since time is not spent investigating and managing the result of a bad decision.

During FY13/14 the costs as a percentage of both payroll and budget increased. An observation mentioned earlier is that claims, both liability and workers' compensation, can have long run-outs, so the greatest impact on reducing costs is to prevent loss, not just mitigate it once it occurs. Some examples of loss prevention measures are: ergonomic assessments and stretching to reduce the impact of strains; thorough review of incidents to determine ways to prevent recurrence (e.g. CCSO Accident Review Board); a pothole hotline; regular training on high risk practices such as the Sheriff Office's pursuit policy; and proper use of personal protective equipment.

Efforts are ongoing to improve the consistency of our driver training. Since much of the loss in the vehicle area is due to distracted driving and poor judgment while driving, efforts will be increased to communicate safe driving recommendations to County drivers. One example of this is following distance. Opportunities like the Wellness Fair will be used to promote these recommendations.

Coney!To further promote and encourage safety the Safety Team uses "Coney", an icon meant to easily direct people to safety-related messages and resources.

Our goal remains to assist County departments in working to preserve and protect the assets of Clackamas County and its citizens.

Dwayne Kroening, CRM
Risk Manager
(503) 655-8576

Janis Oyama
Human Resources Assistant
(503) 742-5476

Shari Riedman
Integrated Disability Analyst
(503) 655-8577

Teresa Pouppirt
Integrated Disability Analyst
(503) 742-5477

Christie Long
Human Resources Assistant
(503) 742-5469

Trisha Bafus
Risk & Loss Control Analyst
(503) 742-5482

Jeremy Tovey
Risk & Loss Control Analyst
(503) 742-5475

Larry Lancaster
Risk & Loss Control Analyst
(503) 742-4618

Jason Morrill
Human Resources Specialist
(503) 655-8354

Juliann Getchell
Employee Services Deputy Director
(503) 655-8292