Turn Manufacturing Labor Risk into Resiliency and Growth

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Logos: Constitution State Services, Travelers. Text: Turning Risk into Resiliency and Growth. Next slide. Under the text, Turning Risk into Resiliency and Growth, two screens appear side by side. On the left are three men in video chat boxes. On the right is the opening slide with the text, Turning Risk into Resiliency and Growth, Presented by Constitution State Services and Travelers, December 2024. Three photos are to the right of the text: a woman and man in hard hats look at a tablet the woman holds, a woman in a warehouse looks down at a table, and a gavel rests on a round piece of wood.

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BRIAN GERRITSEN: On behalf of Travelers Insurance, thank you for joining us today for our webinar, Turning Risk into Resiliency and Growth. I'd like to extend a special welcome to Travelers agency and broker partners and our customers who are attending today.

Please take a few moments to review this important note.

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Text: Important Note: The information provided in this presentation is intended as informational and is not intended as, nor does it constitute, legal or professional advice or an endorsement or testimonial by Travelers for a particular product, service or company. Travelers does not warrant that adherence to, or compliance with, any recommendations, testimonials, best practices or guidelines will result in a particular outcome. In no event will Travelers, or any of its subsidiaries or affiliates, be liable in tort or in contract to anyone who has access to or uses this information for any purpose. This material does not amend, or otherwise affect, the provision or coverages of any insurance policy or bond issued by Travelers. It is not a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. Availability of coverage referenced in this document can depend on underwriting qualifications and state regulations. Copyright 2024 The Travelers Indemnity Company. Travelers and the Travelers umbrella are registered trademarks of the Travelers Indemnity Company in the U.S. and other countries. All rights reserved. Footer: Turning Risk into Resiliency and Growth: Travelers and Constitution State Services.

Next slide. Text: Moderator. Brian Gerritsen, C.P.C.U., A.R.M., Assistant Vice President and Manufacturing Segment Leader. Headshot of Brian Gerritsen.

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I'm Brian Gerritsen, assistant vice president and manufacturing segment leader at Travelers. And I'll be your host and moderator today. I encourage you to connect with me on LinkedIn, where I regularly post about Travelers’ perspective on what is happening in the manufacturing industry.

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C.E. Credit Information. Text is read.

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Here is important information regarding the CE credit offering today. Your full attendance is required. Attendees must stay for the entire duration of the webinar. And attendees must answer all polling questions that will be posed during the presentation. For states not requiring an affidavit, no additional steps on your part are needed.

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You can contact the institutes at the address shown here if there's any questions.

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Questions to: info@ c e u dot com.

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States requiring an affidavit (Florida, Kentucky, Michigan, South Carolina, Wisconsin).

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Please complete the affidavit found in the related content widget on your screen. And email that completed affidavit to [email protected] within one to two business days after the webinar.

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However, technical and CE-related questions can be directed to our support team via the chat function. And finally, a recording of today's webinar will be available and will be sent to the attendees. Let's get started.

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Panelists. Headshots: Dr. Vincent Catteruccia, PhD, LNMT, I.S.C.R.S., F.A.A.P.M., N.A.S.M.-P.E.S., Musculoskeletal & Human Performance Expert, Recognized Author, Damned by the Diagnosis. Keith Andersen, Vice President, General Liability, Travelers.

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I'd first like to welcome and introduce our two guests for the webinar. Dr. Vincent Catteruccia, Ph.D., is a workforce health services and risk consultant and has worked with some of the most complex manufacturing businesses in the country. He's also the author of the book Damned by the Diagnosis. Dr. Vince will share some of the ways he addresses lost time and claim costs while positively impacting behaviors from his frontline managers.

Keith Anderson leads Travelers’ General Liability Claim division, where he is responsible for the group's operational and resolution excellence, innovation initiatives and advancing severity and litigation strategies. Today, Keith will give us a rare view from the courtroom and highlight the financial impact of litigation on companies.

He'll also share his thoughts on the rise of nuclear verdicts and the importance of humanizing companies to mitigate their legal risks.

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Text: Constitution State Services and Travelers are trusted partners to manufacturers. 2 things we know: The business of manufacturing and the people who do it. 25K+ Current manufacturing customers (1). 1925 = First factory risk control visit. Footnote 1: BBU Actuarial Dashboard, December 2023. Photo: A man in a hard hat and safety glasses and vest smiles and looks down.

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For those of you who don't know, U.S. manufacturing is our largest industry segment at Travelers. We walked our first factory floor over 100 years ago. And over the years, we've built our portfolio to include over 25,000 manufacturers across the country from small to large.

For larger buyers utilizing or considering third-party administration, Constitution State Services provide specialized claim management services for workers compensation, general liability and auto liability delivered by our highly skilled professionals. For those of you in the audience who trust in Travelers or Constitution State Services for your insurance needs, we really appreciate and thank you for your business.

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Text: 87% of Manufacturing CFOs are optimistic. Top 3 reasons they feel confident? 1. 42% financial strength. 2. 27% technology efficiencies. 3. 24% customer retention.

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At Travelers, we believe that better data means better decisions. And most recently, we were especially interested in how the c-suite is evolving in mid- to large-sized businesses. So we completed a national CFO study. Here's what we learned specifically from manufacturing CFOs.

Well, just like all businesses, they are concerned about their competition, inflation and their talent. 87% of manufacturing CFOs shared that they are highly confident that their company has taken strategic actions to ensure its future success.

And they shared that this confidence stems from their optimism from three particular areas. One is their company's financial strength. Secondly, the efficiencies gained from adopting advanced manufacturing technologies like robotics AI-connected devices. And thirdly, the depth and loyalty of their customer base.

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44% of manufacturing CFOs say being a strategic advisor to the CEO is their primary responsibility. Top risk mitigation focus is cyber (65%) compared to employee training (33%). (Quote) "What's changed over the last 20 years is the role of CFO to be more of a business partner, helping the board and the CEO manage the business." (Unquote). CFO, PRIVATE MANUFACTURING, 1,000+ EMPLOYEES. Photo: The woman in the warehouse from earlier.

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Now, historically, the CFO role was focused on financial reporting. However, their roles are becoming much more expansive. 44% of manufacturing CFOs shared that being a strategic advisor to the CEO is now a primary responsibility driven in large part by the demands of merger and acquisition activity.

Over the next five to 10 years, they shared that this trend will continue as they have multiple levels stakeholder partnerships throughout their organizations that involve influencing the c-suite, as well as managing business risks.

And talent continues to be a main concern, with worker availability, turnover and cost topping the list. As labor market continues to tighten and unemployment remains low, manufacturers are under additional pressure to protect these key workers.

Yet what's interesting, of the companies we spoke with, only 33% are focused on employee training as a main concern to mitigate risk compared to their top focus, which was cyber risk. Very interesting. Let's launch our first polling question. Which of the following strategic actions do you believe is most critical for ensuring the future success of mid- to large-sized businesses in the manufacturing sector?

You see five options here and we'll take about 30 seconds to complete the poll.

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Text: A: 1. Increasing investments in digital capabilities and emerging technology. 2. Addressing competition and market positioning. 3. Managing inflation and economic pressures. 4. Enhancing talent acquisition and retention strategies. 5. Expanding and deepening the customer base. Poll items listed as A through E. (partially visible). A Submit button is in the lower right corner.

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I'll give it about another five seconds or so. And let's go ahead and close the poll and let's show the results, please.

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"Increasing investments in digital capabilities and emerging technology" is at 45%. "Enhancing talent acquisition and retention strategies" is at 24%.

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It appears that increasing investments and digital capabilities in emerging technology leads the pack in terms of the responses, and that's interesting. And we know that manufacturers are certainly investing in these technologies. Let's continue our story.

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62% of risk management activities are proactive. Icons: A right arrow goes from a lightbulb to a gear. Text: 38% of risk management is reactive, meaning a new process isn't implemented until after an incident. Icons: Chasing arrows go from the lightbulb to the gear and back to the lightbulb.

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Our CFO study research also revealed something very interesting. Almost 40% of companies wait until there's an incident to manage risks. However, what we know at Travelers is that a proactive rather than a reactive approach to risk management can create new avenues for optimizing operations, recruiting, protecting and retaining employees, and fortifying their business against potential disruptions.

Examples of this proactive risk management approach in manufacturing might be creative return to work programs for injured employees or designing products to withstand the rigor of stricter regulations outside of the U.S. The ultimate goal of all this is to improve resiliency while positively impacting growth and over time reducing the total cost of risk to the organization.

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Text: How injuries impact manufacturing employers. 35% of injuries from 1st year employees. 67: Average days away from work. Photo: A man in safety glasses and a vest with his hand on his hard hat.

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As one of the largest providers of workers compensation insurance in the country, we see this trend of proactiveness both a concern and an opportunity. According to our data, 35% of injuries in our manufacturing portfolio occur with first-year employees. This is impactful when you consider particularly the volume of new employee hiring that is happening within manufacturing.

And it also highlights an opportunity to reevaluate the effectiveness of training and onboarding plans not to mention checking in regularly with new employees and empowering shift managers with ownership of their safety results. We're going to ask Dr. Vincent in just a moment on his perspective on some of these important things.

Also particularly powerful statistics from our report is the average number of days a manufacturing employee misses work due to workplace injury. Consider the number: 67 days. That's over two months of lost productivity and indirect impact to other workers in the factory, not to mention ramp-up time and potential job modifications once the employee is ready to come back to work.

Each day away from the plant floor is lost revenue for the business, and manufacturing executives should and are taking notice. Let's launch our second poll question. What do you believe is the most critical action for reducing the high rate of injuries among first-year employees in the manufacturing sector? You see five options here and we'll keep the poll open for about 30 seconds.

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Text: A: 1. Re-evaluating the effectiveness of training and onboarding plans. 2. Emphasizing regular check-ins with new employees. 3. Empowering shift managers with ownership of their safety results. 4. Implementing more rigorous safety protocols and procedures. 5. Increasing investment in safety technology and equipment. Poll items listed as A through E. (partially visible). A Submit button is in the lower right corner.

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Again, about another five seconds. And if we can close the poll, please.

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"Re-evaluating the effectiveness of training and onboarding plans" is at 34%. "Implementing more rigorous safety protocols and procedures" is at 23%.

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Looks like reevaluating the effectiveness of training and onboarding plans rises to your level of insight here. Very interesting. Now, ultimately, the goal of all these efforts, like I said, is to improve resiliency while positively impacting growth and reducing that all-important total cost of risk over time.

Dr. Vince will share his thoughts and experiences about this in just a moment. But first, let's learn more about what's happening in the legal system and courtrooms with Keith Andersen. Keith, I'll hand it over to you.

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Keith Andersen's headshot and title reappear.

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KEITH ANDERSEN: Thank you, Brian.

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Text: Navigating Risks.

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Hello, everyone. I'm Keith Andersen, and I would also like to thank you for participating in this webinar. Our team has seen the financial impact on verdicts on the finances, brand and reputations of companies. And so today, we would like to talk through that and help better educate you on the risks.

Our team regularly talks to former jurors, ex-claimants, behavioralists. And it's through these conversations and other research plus years of experience of doing this work that we've come to understand the strategy of humanizing your company long before you ever needed is a competitive advantage.

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Understanding the Risks.

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In this time of increased verdicts, we are all, including me, as working for a corporation need to be aware of the risks and more vigilant in preventing accidents. The costs of risk are just too high to be passive. Disengaged employees can lead to some exposures that aren't readily apparent and have consequences further down the road.

When you think of liability exposures, it can really realistically take up to four years before you know that there was an issue. An employer who makes employee engagement a priority can see the results in quality control, productivity and in safety.

We have seen a trend during this time of less experienced employees in the workplace, creating more risks for a company, risk to their employees and risk to the third parties. Be aware, it is an-- be aware whether it's an unfortunate accident or a product malfunctioning, most exposures are the result of an employee action or lack of action.

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Less qualified workers and the rise in nuclear verdicts. Down arrows to: 583k Manufacturing job openings in 2024 (1). Footnote 1: National Association of Manufacturers. Photos: A worker wraps another worker's arm. A person with a crutch shakes someone's hand.

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We're in an interesting time. A great need for workers in the manufacturing space, but there are less qualified workers and then also the rise of nuclear verdicts. It's an interesting combination that's taking place. And what we are seeing, as Brian mentioned, first-year injury stats at 35% are significant.

There's less certainty about employees’ qualifications. And employers need to validate qualifications, have a vigorous onboarding and training plan, and can't assume that somebody is plug and play. Companies need to check and confirm.

And for example, if you are hiring somebody to drive a forklift in a warehouse, it's not good enough to just make sure or to take their word for it that they know how to drive a forklift, but you need to confirm and validate that they have that ability and they're giving all the safety precautions.

We are also seeing emerging risks with temporary employee agencies. We are seeing the risk shift from the employment agencies to the companies that are hiring them. And this creates additional exposure in addition to workers compensation for liability claims.

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Text: Financial toll of legal system abuse. Corporate nuclear verdicts nearly quadrupled from $4.9 billion in 2020 to over $18.3 billion in 2022. Loss of 4.24 million jobs. $429.35 B in output and more than $110 B in government revenues annually. Average 'tort tax' of $4,207 per American household per year. Photo: A hand writes next to the gavel.

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Now, the term social inflation-- we have used for some time-- is generally being replaced with a term called legal system abuse. And combining what's happening socially plus what's happening in the courtroom, corporate nuclear verdicts have nearly quadrupled from $4.9 billion in 2020 to 18.3 billion in 2022.

The median nuclear verdict rose 95% from $21.5 million in 2020 to over $41 million in 2022, according to the Chamber of Commerce Institute for Legal Reform. Also, the U.S. Chamber has reported in their last report, last month, November 24, the average tort tax increased to $4,207 per American household per year versus $3,600 that was reported in 2022. What we are seeing in the courtroom takes its toll on individual households.

And according to the Perryman Group survey, the total legal system abuse on the U.S. economy is staggering, resulting in a loss of 4.24 million jobs, close to $430 billion in output and more than $110 billion in government revenues annually.

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Litigation Funding. Four vertical bars with up arrows in each and the text, from left to right, $11.3B in 2020, $12.4B in2021, $13.5B in 2022, and $15.2B in 2023.

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On top of that, there is also an emerging industry. And we saw this industry several years ago, but it's becoming bigger. And that's litigation funding.

And in essence, litigation funding are third parties investing in litigation or in cases to drive a high rate of return on those cases to make money for them. We've seen the growth in the industry beginning in 2020, $11.3 billion. And now in 2023 it's $15.2 billion.

These investors are advertising 30% rate of return. We are fortunate that the government has taken notice of this funding because there have been some institutions and governments outside the U.S. that have taken note of the potential returns and have invested in U.S. litigation funding. We are actively working to have transparency in this issue and control what we are seeing in the courtroom.

But to give you one example of one piece of litigation funding reported by the Burford Capital, and they're one of the largest litigation funders: In one case alone, they had a 37,000% rate of return that netted out $6.2 billion to them. Fortunately, it wasn't in the U.S., but it was in Argentina. But when we start seeing returns like that, we see more and more people enter this area.

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Text: Can your business afford a nuclear verdict? Let's take a closer look at the root causes in two real manufacturing cases: Leasing Labor, Ignoring Procedures. Photo: A man touches his hard hat as he looks at a clipboard.

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Now, I'd like to just give a couple of examples of where we're seeing these nuclear verdicts. One of these was backed by litigation funding, but we're seeing these nuclear verdicts in the liability space that generally we didn't see because they were historically workers compensation claims.

The first is a clothing manufacturer. This clothing manufacturer, because they had seasonal shortage or they needed seasonal temporary employees, they used an employee leasing firm and they brought employees into their factory. For unknown reasons, one of these employees wandered away from her assigned area and found herself in an area where there was operating machinery.

Somehow she got caught in that machinery and she was pulled into it and the rollers-- was pulled into it by the rollers. And it was very unfortunate that it resulted in amputation to her hands.

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Text: Clothing Manufacturer. A clothing manufacturer contracted with a labor leasing company for seasonal, temporary employees. For unknown reasons, one of the leased employees was working in a restricted area where there were no safety devices to stop the machine in the event something got caught in the rollers. The leased employee’s hands got caught in the rollers, resulting in the amputation of both hands. The clothing manufacturer opted out of workers compensation, subjecting them to a direct lawsuit by the leased employee. The leased employee alleged the clothing manufacturer failed to have the appropriate safety devices and to provide sufficient training on the safe and proper use and maintenance of the equipment. Photo: Hands use a machine.

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Historically, we would have said this is a workers compensation exposure, but the manufacturing company in this instance chose to opt out of workers compensation, exposing them to third-party liability.

In addition, they had signed a contract with the leasing company that they would protect the leasing company. This went to a jury. The jury agreed with the plaintiff and their approach that you put somebody brand-new to the floor in an area without training, without proper instructions on what to do, and also did not safeguard the machinery, resulting in a nuclear verdict.

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Text: Food Manufacturer. An employee of the food company and a co-worker were emptying a drum full of trash into an industrial trash compactor when the drum fell into the compactor. One of the employees jumped into the compactor to retrieve the drum, while at the same time, the waste management company was collecting the trash. The waste management company moved the compactor, crushing the employee. The estate sued the food company for gross negligence. The food company had no policies or procedures in place regarding the compactor. There was no way to know if there was a truck outside. Under the theory of gross negligence, the employee has no comparative fault. Photo: A woman wearing an apron and mask prepares food.

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The next example is a food manufacturer. Again, a sad case, but in this situation an employee was taking the waste from the food production line and putting it into the dumpster. As he was putting it into the dumpster, he lost control of the garbage can and it fell into the dumpster. And this particular dumpster, half of it was internal, half of it was external.

He jumped into the dumpster in order to retrieve the trash can. And coincidentally, at the same time, the waste company was picking up the trash. And unfortunately, this man was crushed.

Based on the laws in this state, the plaintiff was able to bring a direct action, claiming gross negligence against the food manufacturer. They claim they had no policy or procedures on how to dispose of the trash about getting into the trash dumpster and had no warning signs.

Historically, we would have thought this makes perfect-- and they did have some documentation, but not enough to overcome our ability to have the case disposed of through motion practice. They were successful in getting to the jury that the defendant in this case was responsible, resulting in a significant verdict.

Again, another case where we typically think it was workers compensation, but where nobody's immune from that tort liability, especially when they're alleging gross negligence. In this case, although the jury found comparative fault on the part of the plaintiff, because it was a gross negligence, the manufacturer had to pay the entire verdict.

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Social Factors Driving Up Verdicts. Deflated Perceptions on Value of Money, Rising Medical Costs and Medical Build-up, Skepticism and uncertainty of Future, Polarization & Civil Unrest, Lack of Personal Connection, Anti-Corporate Bias, Access to Information, Declining Optimism and Control, 3rd Party Litigation Funding, Demographics / More Millennials on Juries, Increasing Litigiousness, COVID-19.

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In 2019, Travelers, we did our own research, and we conducted a survey with 500 potential jurors, asking them several questions about their attitudes towards litigation and businesses as a whole. And what we learned and what we suspected going into it, people are more likely to sue today than they were back in 2011.

Nearly 30% of the respondents said they were more likely sued today versus then. Interestingly, the age group from 18 to 34 was much more likely to sue and they were 60% above the average.

And when we think about that going forward and that age group, do they keep the same attitudes and behaviors going forward or as they age and gain a little more wisdom? Do they have the same perspective? These are things that we need to continue to watch and make sure we understand.

But considering the social factors out there and the plaintiff's bar really being aggressive and investing in cases, we have a perfect storm of what's happening right now. And it goes back all the way to the financial crisis of 2008.

We see an increased attention on healthcare and rising medical costs, an overreaching, anti-corporate corporate sentiment that has been growing in pockets of our society. And then the online world that we live in and people literally living their lives online.

During this evolution, the plaintiffs' bar has adjusted and they are treating litigation as a business. It is no longer making somebody whole, but it's maximizing returns. And the injured party or the defend-- or plaintiff in a case has become an investment mechanism, and they've built a business around it both from the way they advertise and take in claims and really identify where they're going to maximize their recovery.

But claimants’ behaviors and plaintiffs’ behaviors have also changed, a willingness to have multiple surgeries in order to drive up the economic damage. They are willing to engage in litigation funding by taking out loans to have surgeries and other medical treatment. And then when you think about the litigation funding as a whole, that generally was for class actions. We are now seeing it in discrete events with one plaintiff. So the environment is challenging right now.

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Public Sentiment. Optimism and the perception of control are declining... Placing a higher burden on companies, according to Travelers data. (1). Percent of jurors who strongly or somewhat believe companies: 89%, Should always have to do more than just meet government safety standards. 88%, Should take any and all precautions, no matter how impractical or costly to ensure the safety of their products. 67%, Knowingly cut corners when it comes to safety in order to make greater profits. 58%, Always have some responsibility for the injury, even if the customer is injured while misusing a product.

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And some other research we have done has shown that a do-more mentality inside in society, that companies should always do more than meet the government's standards and they should take any and all precautions no matter how impractical or costly to ensure the safety of their product.

Note that when safety standards are imposed and seat belts is a great example. Society tends to complain that their freedom is taken away from them, yet when it comes to determining liability on a safety standard, or following a government standard, or a higher standard, they have no issue in deciding liability and offering compensation.

It appears to hold companies to a higher standard and their financial payout versus direct costs to services and products. The appearance of a systematic failures is in protecting-- the public has become a large factor whether a jury finds liability and whether they award large amount of money.

Safety history and safety documentation becomes critical for a defendant or a business when they are defending themselves.

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What would you do? Quote: "Given the (highlighted) indisputable liability (unhighlighted) and outrageous conduct of your client and the devastating and catastrophic injuries suffered, any reasonable person must view your client as grossly underinsured and (highlighted) exposed to a verdict well in excess of its total $19,000,000 (unhighlighted) in insurance coverage. Only a full and unequivocal tender of the $19,000,000 policy limits will prevent the (highlighted) economic annihilation (unhighlighted) and (highlighted) extinction of your client (unhighlighted) which will inevitably result should this case go to trial. His manager will admit the work was dangerous and that this worker was in grave harm, but he did it anyway. His defense that management made him do it will enrage the jury and exponentially multiply the jury's gargantuan damages resulting in economically crippling punitive damages. The jury will hand down punitive damages that will (highlighted) condemn your client to economic extinction (unhighlighted). (Unquote)

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Now, moving forward just a little bit and as we see the plaintiff's bar's tactics change and as they try to maximize recoveries, they are taking what they have been able to do with nuclear settlements and convert those into our nuclear verdicts and convert those into nuclear settlements.

And what I've put in here is an example that you need to be aware of as a potential defendant. If you haven't been a defendant and haven't received one of these things, a letter like this, be prepared, at some point you will. So this letter came from a very prominent plaintiff firm that does very well. They also engage in litigation funding.

But this letter went out approximately a month after an accident, a significant injury. But liability hasn't been established. Nobody knows culpability, significant comparative negligence. It's early on in the claim where we need to understand things, and the plaintiff doesn't know everything.

But this is what they sent to the defendant's lawyer with the intent to get to the business, which it will. Your lawyer has a duty to give it to you. But here's what they said-- and this is just a portion of the letter, but this is them planting the seed with the defendant that this is a significant case even though it may not be. And I've highlighted some words.

Indisputable liability. Nobody knows that at this point. We're going to expose you to a verdict well in excess of your total insurance limits of $19 million. That right there is an attempt to get the defendant, the manufacturer, to contact me, the insurance carrier, and say, get me out of this case right now because I'm being told that I'm going to experience economic annihilation, extinction of my business, and that my business is going to be condemned to economic extinction.

This is a fear tactic, but it has been effective in some cases. But this is where you lean in and work with your insurance broker, with your insurance carrier. You are the experts at what you do, wherever you transfer your risks, are an expert at managing risk. And we should not be-- everything we should take some consideration to, but we should not be looking at this scare tactic to dictate our future.

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The Bullseye on the Corporate Defendants. Deep pocket defendants. Anti-corporate bias: Juror predispositions against corporations. Strong social beliefs that corporations care more about profits than people (individual safety). David v. Goliath: Rooting for "underdog." Distrust of Companies. Reptile Theory Mania -- Less about compensating plaintiff & more about punishing the corporate defendant.

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So many date the anti-corporate sentiment back to 2008 financial crisis. That may be the case, regardless of when this happened. And when this anti-corporate sentiment began, what it does tell us, though, there is more litigation, and it's likely to find yourself as a defendant in a case.

So another component of what we're seeing in the industry is the-- we call it the theater in the courtroom, which can be a significant driver. And we work with a company called Magna. And they did a polling on potential jurors to find out who was the least trusted in the courtroom. So we'd like to do a polling question here real quick and you can see the options of who is the least trusted in the courtroom.

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Poll Question 3: Changing Courtroom Dynamics - Who are jurors most likely to distrust in a courtroom setting? A: 1. A personal injury plaintiff. 2. An individual defendant. 3. Management level personnel of corporate defendants. 4. Corporate executive defendants. 5. Paid experts. 6. Attorneys. Poll items listed as A through F. (partially visible). A Submit button is in the lower right corner.

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BRIAN GERRITSEN: And we'll keep this poll open for about 30 seconds.

KEITH ANDERSEN: Thanks, Brian.

All right, are we good to close the poll?

BRIAN GERRITSEN: Yes, it's a long 30 seconds. About another five seconds for those interested in those CE credits. And we can close the poll now.

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"Corporate executive defendants" at 41%. "Attorneys" at 17%. "Management level personnel of corporate defendants" at 15%.

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KEITH ANDERSEN: OK, a smart group-- and this is an unfair answer because we don't believe this to be true-- but you are being portrayed as a villain, the corporate executives.

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Protect Your Business, Brand and Reputation. Properly train and hold people accountable. Promote a strong safety culture and enforce quality control standards. Go above and beyond applicable regulations and safety standards. Plan for the worst and treat each incident as if it could substantially threaten your business and its reputation. Proactive investigation and freeze the facts, you will need them. Establish a Catastrophe Response Plan. Corporate Awareness. Ensure leadership in key areas recognizes the shifting societal attitudes impacting the litigation environment. Potential juries remain predisposed to place broad responsibility on corporations. Be actively involved in your claims. Engage in regular communications with your insurer and broker to discuss your claims. Be present during trials and depositions to personalize your organization.

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So it's more important than ever to personalize your company and the corporate defendant things that need to be done in the courtroom, your goodwill, and talking about your goodwill and what you do for your employees, how you give back to the community.

You do not want to be a faceless entity. You want to put a face behind the corporation. And although the CEO and CFO are being villainized in this case, which we don't believe to be true, that is the tactic. And we recommend that you look at your frontline managers and middle managers to be the face of a corporation.

Juries identify with them. They identify with the working person that's on the floor, that's working with the employees. They need to be the face of the corporation versus just a name and a suit behind it.

So I'm going to just finish with my top 10 list or top eight list. And this comes from experience and what we have learned as an organization. So properly train and hold people accountable. That's the key. You have to have a strong safety culture. Go above and beyond applicable regulations and safety standards, plan for the worst, and treat every incident as it could substantially threaten your business and reputation. Take it seriously.

Now, this next one. If you hear nothing else from me today, hear this one. Proactive investigation and freeze the facts. When something happens, take it seriously. Gather all information. Preserve it, the facts, the photos, the video that may be there, the statements.

Employees come and go. Freeze all the facts. Gather all the information. You will need it at some point. And if you don't have it, somebody is going to create the facts or tell your story in the courtroom, which isn't going to be accurate. You need to have the truth and accuracy on your side.

Establish a catastrophic plan. Corporate awareness. This starts with top executives all the way through all employees. Now, be actively involved in your claims. Be engaged and communications with your insurer and broker. You are part of the defense team. You need to be actively engaged.

And finally, be present during trials, depositions, discovery. Plaintiff lawyers get concerned when they see you as a company taking a case seriously, knowing that a jury is going to look at you as the person and not as a faceless corporation. So with that, thank you for your time. And I will turn this back to Brian.

BRIAN GERRITSEN: Thanks, Keith.

(DESCRIPTION)
Text next to the headshot and title of Dr. Vincent Catteruccia: The importance of cultural transformation in safety, efficient injury management and effective leadership in manufacturing.

(SPEECH)
I love this top eight because Dr. Vince is an exemplar of this, of these top eight, these behaviors that he's instilled in his organizations. And we'll learn a little bit more about that. And always insightful to hear from you, Keith, around what's going on in the courtrooms.

Many of the attendees today are agents and brokers, partners of ours. You have a role in this with your clients leaning on your insurance carriers to support your manufacturing customers as well. So thank you for those efforts. Dr. Vince, welcome to the discussion finally after 30 minutes. Appreciate you.

You've consulted with numerous manufacturing companies over the years, some of them very complex like your current one helping them reduce claim injuries, claim dollars, improving that reporting time, that reporting lag, which is always so important. We'd really love to learn from you today, especially around these top eight.

And we have some questions for you because you're in the trenches every day, you're on the front line with your workers, and we're going to focus on some of that. So first question for you. As you come into a new organization, what's the hardest cultural transformation around safety that you typically see and that you have to navigate? And maybe two, if there is a merger or acquisition happening or on the radar.

(DESCRIPTION)
Cultural Transformation in Manufacturing Safety. Culture is Hard to Change: People are accustomed to doing things a certain way because it's how it's always been done. Assess the culture. Train employees. Promote a strong safety culture. Enforce the standards. Establish goals and celebrate achievement.

(SPEECH)
VINCENT CATTERUCCIA: Well, hello. Thank you. I'm Dr. Vince. Thank you, Keith. Yes, I'm right in the trenches. And in fact, to this point, the company that I'm consulting with right now just came out of that exact state of merger and acquisition. So when you enter a company like that, typically it's been very much face-forward production, revenue generation.

There's a lot missed in the humanizing portion of any of the companies that I've met in merger or acquisition status. So it's an interesting separate type of company in terms of what needs to happen for them. And really, it's simple. They need to face forward behavior and culture and leadership. That needs to be revitalized in that type of company.

Generally speaking, in a company what I find traditionally, there is a very reactive methodology when it comes to risk management or safety. There really needs to be a paradigm shift where the new normal would be thinking about early intervention, proactive programming. You need to get ahead of the issues.

I have a little saying that when I first meet a company, safety tends to be a broom sitting in the corner waiting for the mess to hit the floor. I would rather it be, how about the mess never hits the floor. We don't need the broom. Let's make sure we're doing everything we need to do on a mindful level to keep track of our employees, understand where they're at and meet them there and fill the gaps as they are seen.

BRIAN GERRITSEN: Yeah, it's interesting, Vince, that you mentioned that this reactive approach to risk management. And indeed our CFO study, including manufacturing CFOs, revealed that most companies, 38% had a-- only 38% had a proactive approach, leaving nearly 60% of those companies in a reactive manner.

So what you've seen in your own journey is playing out in the data that we're seeing as well. And there's a real opportunity, especially as we think about what's happening in the courtroom around making sure that the mess doesn't hit the ground to begin with even though that broom is in the corner.

VINCENT CATTERUCCIA: Yeah, and at the end of the day, if it does come to the point where there is a trial, you're in a better position if you're close to your employee. If that relationship that you've had over time is good, you're going to be less prone to have a messy case because the employee is going to be more prone to work with you.

You've established a familial type of bond with your staff. Most people aren't litigious from birth. They become that over time in having poor experiences with employers. So that's the cultural shift that we need to make.

BRIAN GERRITSEN: Right. We've always talked about safety culture being important. But I think in light of all the external factors and the pressure and the rising cost of risk-- the total cost of risk, whether that's the safety programs themselves or the cost of insurance or deductibles, those sorts of things-- it's real for a business leader or a manufacturing leader to recognize and address.

I'd like to tie back a little bit because you mentioned the M&A activity and there's so much of that going on within manufacturing and some other industry sectors globally. There almost appears to be this time of uncertainty for employees on the front, who are on the plant floor, managers that are supervising them and leading them.

And then others within the organization. Your thoughts on the short-term versus long-term view and in a time of uncertainty for most employees in these situations?

VINCENT CATTERUCCIA: Yeah, that's an interesting scenario. All the decisions are typically being made from the executive leadership tier behind closed doors. So even your managers, supervisors, superintendents are standing outside of that door wondering, what's next? The level of uncertainty, it breeds unrest. It also sets you up for risk because people that aren't secure, people that feel insecure, are going to be a little bit more scatterbrained.

They're going to be a little bit less attentive to what they should be paying attention to, more worried about looking over their shoulder about what's coming. And communication is a word that really, really stands out when it comes to the mergers and acquisition type of companies.

It's almost as if someone takes the spigot and shuts it off so that decisions can be made higher and then the employee management staff is guessing at what's happening. It's a very uncertain environment to be in.

BRIAN GERRITSEN: And not understanding necessarily where they fit within the future of the company.

VINCENT CATTERUCCIA: Exactly, if there is one. If there is a future.

BRIAN GERRITSEN: Right, yeah.

(DESCRIPTION)
Tracking Performance Over Time. Establish Initial Data for Evaluation. Make Observations. Track Outcomes. Produce reports.

(SPEECH)
So maybe lots of theoretical maybe discussion in that last question. I'd love to bring it down to that day-to-day. And I know you're a big data guy and you're always tracking the impact of change in behaviors and processes.

This takes some effort, especially if you're coming in new to an organization. What type of data can you share with us? What type of data and approaches that you use to initially assess a safety program and how do you track the performance over time?

VINCENT CATTERUCCIA: Yeah, so data is interesting. I use it to get a pulse on the company when we first start and we want to understand where the culture really is and why risk is happening. But then we take it into a very finite way of understanding the data and maybe the metrics that are actually accrued.

So rather than looking at just the TRIR or the incidence rate of a company, which is a number-- companies love to just hug and envelop and use to manage their operation. But there are other metrics that lead up to that. And I would like to just quickly regress, there's a rule of 10.

So for every 10 near misses, you have one first aid. For every 10 first aids, you have one recordable. So at the end of the day, shouldn't we start to track and understand, really dive into the near miss if we want to get ahead of risk?

So rather than just use incidence rate, or mod rate, or EMR, or things like this, I would tend to have a company really pay attention to the little things that end up becoming the big thing. So for instance, in this company we have a health services department.

I pay attention to when a person comes in for Advil. I want to know if they have stress-related neck tension. So I have these nurses logging every interaction so that we can really understand what the complexion of our plant floor is so you can get ahead of it early. So we'll do lunch and learns. We'll do different types of organizational tracks to get ahead of the big risk.

BRIAN GERRITSEN: There's really these early indicators of incidents that ultimately can impact the total cost of risk like we've been talking about, but also sidelined the business, especially if it's a key employee that's injured on the line. So any advice for a company that maybe doesn't have the benefit of nurses on staff or a full health and safety department? Can they track similar to what you do in your large organization today?

KEITH ANDERSEN: Yeah, so I believe that no matter what size the company, you're always going to have a champion, one or two people that have a genuine interest in making things better. So for instance, I bridge a gap between health services and safety. And I'm an ambassador that walks the floor four hours a day just touching the lives, hearing the stories, asking how people are doing.

It doesn't have to be big and it doesn't have to be expensive. You just need to have that champion in your company that faces the employee and then sits with the executive leadership team to say, hey, this is what's going on the floor because your executive leadership team might not get out there. They may not have the time or opportunity.

So within the confines of whatever size company you have, you do have the ability to take advantage of someone on your staff and elevate them, make them a champion. It's a great way to keep a pulse on how your company is doing.

BRIAN GERRITSEN: You make them a champion of those early indicators, right?

VINCENT CATTERUCCIA: Absolutely.

BRIAN GERRITSEN: I love it. So as we think about manufacturing businesses who are looking to refine or improve their safety programs, their return to work programs, just ramp things up, especially in light of verdicts that are not work comp anymore, that they're GL, like Keith had talked about general liability, how do you lean on your insurance carriers to support the efforts that you're trying to do?

(DESCRIPTION)
Collaborating with your insurance carrier's safety team. Incident Reporting Program. Modification of Duty. Supervisor Involvement. Elimination of Lost Time. Photos: Two women stand and look at papers. A person holds a smartphone and looks at their smartwatch.

(SPEECH)
VINCENT CATTERUCCIA: Yeah, this is a beautiful conversation. I can tell you that when I first started with this corporation, I had no clue the breadth and depth of ability Travelers offered to the company. So Travelers Group, for instance, brought in their transitional duty program and I was just about to create that from scratch.

And this is an awareness that I learned, unfortunately, at the ripe old age of 52. I learned it late and now is a great time to share it with people and say, look, make sure you understand what the offering is. The insurance company isn't just sitting there for the rainy day. They're there to help you through every day.

And you have-- Travelers especially has an amazing cohort of experts that can be drawn from to help the company that you're working for through any programmatic issue you might have or desire to create program. So definitely is something to research and understand, whatever carrier you may be working with.

Travelers, in this case, is very capable, very capable corporation within insurance. In that world, it's a very capable company to help you in any of the risk management or safety programming. You have it all already. Why redesign the wheel?

BRIAN GERRITSEN: Yeah, well, I appreciate the plug for Travelers. And we're in good company with a lot of carriers out there that provide good services and for the agents and brokers who are attending today. You have a place in this conversation as well bridging those services for your client on behalf of your client with your carrier as well. Vince, can you share any movement in terms of return to work utilizing Travelers’ corridor of care program?

VINCENT CATTERUCCIA: Yeah, so we worked very closely with Travelers in their corridor of care early on in 2023. We came into that year with a TRIR of almost 9. And we implemented a transitional duty program, a return-to-work program, modification of duty program all under-- with the help of Travelers.

And we are sitting right now at 2.6 in terms of a TRIR. And what it really did was it created a pathway corridor between our supervisors, managers and employees where if somebody got hurt, we all of a sudden realized that we're all responsible for the outcome of that injury.

And we made them a part of the resolution of the injury, keeping the employee on the floor within their department. So we worked with every department to come up with five optional jobs that a person could do if they did get hurt. Doesn't matter what their restriction is. We can still serve them inside their department and we have zero loss days. We just don't have it anymore because we have options for all of our employees.

And that took the collaboration of Travelers in the corridor of care, our supervisors, managers and our executive leadership team. They all needed to say, yeah, go run with it. Do whatever you need to do. Let's make this happen. And throughout the course of 2023, it completely reversed our TRIR. And we're actually headed towards a sub 1 for 2025.

BRIAN GERRITSEN: Just a quick--

VINCENT CATTERUCCIA: Yeah, go ahead. I'm sorry.

BRIAN GERRITSEN: Well, and that's the impact of a proactive risk management program, right, versus having the broom on the sideline waiting to sweep up.

VINCENT CATTERUCCIA: Exactly.

BRIAN GERRITSEN: And it requires effort. It requires sometimes capital investment. But it requires commitment, right, from the c-suite, which you are influencing as well. Part of this proactive too-- so we've talked about the internal focus on the plant floor and behaviors, those sorts of things.

But part of your work too is influencing and working with the external environment, particularly your medical providers. We'd love to hear, how did you change the impact that those providers are making with you? What were your best practices?

(DESCRIPTION)
Changing your approach when working with medical providers. Establish a Modified Duty Program. Work Closely with Medical Providers. Regular Meetings. Immediate Communication. Avoid Redundancy. Critical Evaluation of Provider Network. Preference for in-House Solutions versus Outside Contractors for Injury Management.

(SPEECH)
VINCENT CATTERUCCIA: Well, so that's a very, very key element in the success of a very good risk prevention program. You have to get outside of your company and you have to meet with third-party providers. You have to sit with the providers and let them know what your program entails. And that, look, we are a customer of that third-party provider.

They need to do it the way we want it done. It can't be willy-nilly. It can't be. Oh, lick your chops. I have a work comp case. I'm going to do all these tests. No, we go in and we meet with the orthopedics, we meet with the chiropractors, we meet with the physical therapists, and we say, look, here's what our expectations are. Are you in alignment with those expectations? If so, we can have a beautiful relationship.

But realize you're not going to do anything with my employee until I have a say in it. So that has a little bit of a dual prong effect. Some employees think that we're trying to control their destiny.

We had to really get ahead of that thought process and let them know, no, we're just spending a lot of time researching and developing relationships so that when you do have to go to the doctor you know you're getting the best care.

It's no different than a chef picking out your steak. You want to make sure the chef is-- you're using his expertise to pick up the perfect steak. That's what we're doing for our employees. We're making sure that the care that they get is top-notch. And we let the employees know that we're doing that. And we also let the providers know that we're going to be watching every step that they make.

BRIAN GERRITSEN: Yeah, and I like this concept of I'm your customer, you as the manufacturing leader. I'm your customer to this medical provider versus just a user of their services. And how does that impact that relationship and their commitment to you?

And I would say we've talked about this, that this behavior is scalable to regardless of if you are a Fortune 1000 company or you're just a sole proprietor with small staff, you can have his influence as well.

VINCENT CATTERUCCIA: Well, and I think that even-- it may be said by a small company, we're too small, they're not going to care. But that's not true. As a small company, you actually have more agility. You have the ability to meet with those providers more frequently, potentially, and establish that relationship and that line of communication.

Yeah, it does take-- it takes me a week out of every year to go to the meetings, to make sure that I'm having the confidential conversations with the providers. And it's just making sure that you're cultivating that line of communication and keeping it alive. That's a really important piece.

BRIAN GERRITSEN: One thing I want to be sure we have some time to touch on is this concept of industrial athletes. And we've heard you talk about your frontline on the floor employees as industrial athletes. Can you explain why you refer to your staff that way?

(DESCRIPTION)
The Concept of Industrial Athletes. Fatigue Management. Importance of Recovery. Balancing Production and Well-being. Rotating Positions. Better Outcomes. Photo: The man touching his hard hat as he looks at the clipboard.

(SPEECH)
VINCENT CATTERUCCIA: Well, at any given time, especially in the company I'm in right now, my athletes, my employees can put on 14 miles a day. They might lift 10 to 15,000 pounds a day. They have to twist and rotate thousands of times a day. Where in there, isn't that an athlete?

I can tell you that most of my professional athletes don't do the work that the athletes in the finishing room do here. So if we look at our employee as an industrial athlete, then we can actually start to realize the sweet spot in performance.

We have to really pay attention to recovery and we have to pay attention to job sharing or rotating positions so that we're not burning that athlete out. In football, you have a defensive team and you have an offensive team. They have time off the field so that they're the best they can be on the field.

We pay attention to that. It's very important. And if you're really, truly trying to get ahead of risk and reduce your safety numbers, then I would say that you have to look at your employee as an athlete and use the metrics. The mindset is that your manager, your supervisor, is the coach.

And any high-performing team, the coach knows every athlete. They know all their idiosyncrasies. They can see them from across the room and know that they're not feeling good. So you have to have a natural conversation. Where are you today? How are you today? It's that mindset that will change the whole idea and complexion of risk for a company.

BRIAN GERRITSEN: It's really a different way of looking at it. And I think you're writing about this concept in your new book as well. And so we look forward to learning more once that's published. That's a spoiler. Sorry, doc.

[LAUGHTER]

VINCENT CATTERUCCIA: I have to get it done.

BRIAN GERRITSEN: Yeah, we have-- well, the pressure's on now. We have one final poll question for the audience. So now we're looking at leadership behavior or lack thereof when it comes to employee safety.

Poll question for the group: Which detrimental leadership behavior do you believe has the most negative impact on employee morale and productivity ultimately related to safety? We'll keep the poll open for 30 seconds.

(DESCRIPTION)
Text: A: 1. Inconsistency in messaging (sending mixed signals to employees). 2. Lack of connection (failure to know employees beyond their work roles). 3. Inability to adapt (struggles to interact effectively with various personalities). 4. Micromanaging (over-controlling employees instead of fostering self-management). Poll items listed as A through D. (partially visible). A Submit button is in the lower right corner.

(SPEECH)
About another 10 seconds for those final votes. And let's go ahead and close the poll and show the results.

(DESCRIPTION)
"Inconsistency in messaging (sending mixed signals to employees)" at 39%. "Micromanaging (over-controlling employees instead of fostering self-management)" at 34%.

(SPEECH)
Looks like it's about a tie, inconsistency in messaging and micromanaging. Yeah, let's move on to the next slide. Very interesting. Oops, sorry. So final question for you, Vince, in maybe one or two minutes, which is never enough time.

VINCENT CATTERUCCIA: Never.

BRIAN GERRITSEN: What do you see in your leaders that you wish they wouldn't do and that you're trying to influence in terms of best practices in the c-suite?

(DESCRIPTION)
Detrimental Leadership Behaviors. Inconsistency in Messaging: Sends mixed signals to employees. Lack of Connection: Failure to know employees beyond their work roles. Inability to Adapt: Struggles to interact effectively with various personalities. Poor Follow-Through: Not completing tasks or commitments. Indecisiveness: Failure to make clear and direct decisions. Micromanaging: Over-controlling employees instead of fostering self-management. Accentuating Negative Behaviors: Focusing on and amplifying negative actions. Photo: The person’s hands on the machine.

(SPEECH)
VINCENT CATTERUCCIA: Well, I think all four of these questions are actually very pertinent in this whole dysfunctional leadership question. When it comes down to it, I think that it's lack of connection, lack of communication that's really, really detrimental to the leader.

Again, like I say to my employees, I have a skill set. You have a skill set. We are not better than each other in any way. We're going to help each other get through the day. You need to talk to me. I need to talk to you. And we're going to assemble the perfect year if we stay in concert with each other.

So at the end of the day, effective communication, being consistent, all of these things are super, super important. We all have been under a micromanager at some point in our life. Whether it was mom and dad or a boss at work, it's not a great environment to be in.

And so when it comes down to it, this whole idea of industrial athlete and becoming a coach changes this whole complexion of dysfunctional leadership because you're not going to get very far as a coach if you can't communicate and if you're not paying attention to your people.

BRIAN GERRITSEN: And that would go for the c-suite as well. I recall you and I discussing just how impactful it is to get one of those individuals out of their corner office to walk the floor as well, visibility.

VINCENT CATTERUCCIA: Absolutely. Yeah, it's the executive leadership tier. It's almost like Florida. It's where people go to die in a sense that I see a lot of laziness happen because they're no longer being forced to interact on a daily basis with all of the employees.

So it's really easy to get complacent and start looking at metrics and numbers as the way to steer your company. But it's really the opposite. You steer your company from the ground floor up, not from the top floor down.

BRIAN GERRITSEN: And the results follow, right?

VINCENT CATTERUCCIA: Absolutely.

BRIAN GERRITSEN: Yeah, I know, I know it's not as simplistic as that and we appreciate your insights as we wrap up the hour.

(DESCRIPTION)
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