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Manufacturing Risk Management in a Global Economy: Quarter 3 Risk/Reward with Tom Precia

business-circuits-computer-1476321My guess is you’re reading this on a computer, tablet, or smartphone. Take a moment and give that device a good, close look.

Go ahead. I’ll wait.

Do you have any idea where that device, and all of its internal components, came from? Let’s say it’s an iPhone. There are components in there from at least a half dozen countries. There’s China, of course, where the iPhone is assembled, but inside are parts from Singapore, the Netherlands, South Korea and elsewhere.

 If one of those components failed and caused you harm, where would you turn?

You’d turn to Apple, of course. Because in our global economy, claims for product liability come to the manufacturer. The various makers of the pieces and parts might be scattered all over the world, which can make the original sources difficult to trace.

If your company is a manufacturer, it’s imperative to know where your parts, components, or ingredients come from, and how to hold their manufacturers accountable. Because whether you make engines, cell phones, or frozen TV dinners, once your product enters the stream of commerce, you could be liable for any injuries or property damage caused by defects in that product.

It would be wonderful if your supply chain extended no further than the city limits, but that’s not the world we live in. You probably use parts or ingredients from manufacturers all over the country, and likely all over the world. This can present a challenge, because when you are dealing with international businesses, you are dealing with different cultures and different worlds.

How can manufacturing companies take advantage of the global economy while carefully managing their risk? 

The best defense starts with a good contract. Review your indemnification agreements to make sure your suppliers are legally obligated to defend and indemnify you when their product leads to a loss. The contract should not only include defense and indemnity, but also language that also holds the supplier responsible for attorney fees, withdrawal and recall expenses, and other costs associated with the loss.

Once you have a strong contract in place, pursue equally strong insurance coverage from your suppliers. Make sure they provide you with a certificate of insurance outlining general liability and product recall coverage. Review that coverage to make sure the limits are adequate, the insuring company is sound, and perhaps most importantly, that the coverage applies in the parts of the world where your product will be sold and used.

Finally, know your suppliers. Make the extra effort to build a relationship with key personnel in the organizations with which you do business. If you need to present them with a claim, you will be more successful if you are on a first-name basis with the people who will need to respond.

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Establishing and maintaining your supply chain can be difficult enough. Ensuring your parts are appropriate, available, and priced right is an immense job. But if you don’t ask the right questions about liability and insurance coverage, even the best components at the best price can be a nightmare.

Our global economy has opened up tremendous opportunity for manufacturers to grow and diversify. At the same time, however, barriers like time zones, distance, language, and culture can translate to increased risk. By crafting a good contract, pursuing strong insurance coverage, and getting to know your suppliers, your business can expertly manage manufacturing risk while seizing every opportunity.

Quarter 2 Risk/Reward with Tom Precia: Preparing for Growth and Competition in Wisconsin

Ground was broken last month on Foxconn’s planned facility in Mount Pleasant, marking the official start of a project expected to have as much as a $7 billion economic impact on Wisconsin’s economy.

Foxconn has named 27 Wisconsin subcontractors to build the facility and is forecasted to purchase one third of its annual $4 billion in supplies from Wisconsin vendors. Those subcontractors and vendors will need their own subcontractors and vendors, and so forth. It’s an exciting yet challenging time to be in business in Wisconsin.

As the saying goes, “A rising tide raises all ships.” Steady economic growth means more opportunity to realize your goals and the vision you have for your company. Our professional team here at Integrated Risk Solutions is here to help your team turn those visions into a reality.

An immediate challenge will be competition for resources. Mostly, that means people.

Later this month, our benefits team is hosting a free seminar where you’ll have an opportunity to hear from top business development and talent acquisition experts on how to best position your business to thrive in Wisconsin’s burgeoning economy. Topics covered will include:

  • How Foxconn will impact the job market
  • Smart hiring practices
  • Strategies for retaining the best people in a hyper-competitive environment
  • Innovative benefit package options that help control cost

Innovation is the key to managing your cost of risk in transformational times like these.

So, in addition to the forward-thinking experts our benefits team has assembled, we have also partnered with leaders who are revolutionizing the way businesses pay to treat work injuries. You will begin to hear more about bundled surgical costs, pre-negotiated fees, and even early intervention options that can help you care for injured employees without triggering claims.

A fee schedule to control medical costs for work injuries remains something of a “Holy Grail” for Wisconsin, but it is a worthy goal, and Integrated Risk Solutions remains committed to it. Through our continued involvement in the Wisconsin Worker’s Compensation Advisory Council and your input through Wisconsin Employers for Equitable Worker’s Compensation, we hope to influence the State Legislature to approve positive change for Wisconsin business. As Wisconsin’s economy grows and changes, it’s imperative that lawmakers keep up.

On these and many other fronts, we are working to make sure you have all the right tools to thrive in these exciting, challenging times. Talk to your Account Executive about the opportunities you anticipate in the next few years, and we will make sure you have the right insurance and benefit solutions to make the most of them.

Quarter 1 Risk/Reward with Tom Precia: Our Work to Achieve Worker’s Compensation Reform in Wisconsin

State legislature handed Wisconsin employers a small victory by fixing a loophole that allowed injured workers to circumvent the exclusive remedy and sue employers.The State Legislature handed Wisconsin employers a small victory on worker’s compensation recently by fixing a loophole that allowed injured workers to circumvent the exclusive remedy and sue employers. While it’s not the medical cost reform employers have been pleading for, it’s an important change. I’m proud of the role Integrated Risk Solutions played in bringing it about.

More than five years ago, Integrated Risk Solutions recognized several worker’s compensation challenges facing employers in our state. Runaway medicals costs and steady increases in disability rates threatened to relegate Wisconsin to the back of the pack when competing for new and growing businesses.

Employers needed a coalition to rally support for fair progress on our Worker’s Compensation Act. Our Wisconsin Employers for Equitable Worker’s Compensation (WEEWC) group provided that outlet.

Working with our dozens of employer members, WEEWC identified key objectives for worker’s compensation legislation. Chief among these was a fee schedule to tackle the skyrocketing cost of treating work injuries.

The facts bear repeating:

According to the Worker’s Compensation Research Institute’s (WCRI) CompScope Benchmarks for Wisconsin 2016 study:

  • Wisconsin had the highest average per-claim medical payments from 2014-2015.
  • Prices for non-hospital services and hospital outpatient services were highest in Wisconsin, compared to 27 other states in the same study.
  • Wisconsin employers pay more than double the typical price for common services, like pain management injections, radiology services and even basic evaluation and management.
  • Prices for worker’s compensation medical treatment grew faster than any other study state from 2009-2014.

Every two years, the state of Oregon ranks all 50 states and the District of Columbia on the overall rate for worker’s compensation costs. In 2014 Wisconsin was 23rd, and in 2016 rose to the 12th most expensive state for worker’s compensation.

Employers recognized the need for a change.

But, WEEWC couldn’t go it alone. Through combined efforts and a common goal of improving Wisconsin’s work comp environment for employers, WEEWC has found a valued partner in Wisconsin Manufacturers and Commerce (WMC). The influential organization allowed WEEWC to connect with lawmakers at a higher level, and eventually take a seat on the Worker’s Compensation Advisory Council (WCAC).

As a member of the Wisconsin Worker’s Compensation Advisory Council, John Tindall, Integrated Risk Solutions Director of Client Claim Advocacy, helped negotiate the agreed bill that included a fee schedule. Tindall has rallied support for the bill, and along with Integrated Risk Solutions Executive Vice President Pete Aisbet, led a delegation of employers to testify in favor of the bill at a public hearing in February.

Lawmakers, possibly swayed by the deep-pocketed healthcare lobby, chose not to act on the agreed bill this year.

That’s disappointing, but we’re not giving up.

We know employers can successfully achieve positive changes in worker’s compensation. Just look at the exclusive remedy fix.

It all started when an alert defense attorney raised the alarm about a troubling Supreme Court case. Through Integrated Risk Solutions’ work on the Worker’s Compensation Advisory Council and WEEWC, we were among the first to recognize the perils and join the push for a fix.

The Supreme Court’s decision in The Estate of Carlos Rivera v. West Bend Mutual permitted the estate of a temporary worker killed on the job to sue the company that used the temporary service. The case pierced the exclusive remedy provision by exploiting statue language that states a temporary employee cannot sue the borrowing employer if the injured worker “makes a claim” for worker’s compensation benefits. Since the Rivera estate never “made a claim” for worker’s compensation benefits and proceeded directly to a civil suit, the Supreme Court permitted that suit to proceed.

Tindall, through his role on the Worker’s Compensation Advisory Council, helped draft a legislative fix to the flawed statute.

The current language – signed into law February 28 by Governor Scott Walker – simply replaces “makes a claim” with “has the right to make a claim.” That sounds easy, but it took dozens of people and multiple drafts to find the right language that contemplates possible loopholes and secures the exclusive remedy.

To achieve the same success on medical cost containment, we must grow our coalition and speak with an even louder, more persistent voice. We need you – Wisconsin employers – to join the cause.

In the coming months, you’ll see more information on WEEWC activities. These important events will help shape the agenda as the WCAC looks to begin another agreed bill cycle.

For more information, or to join WEEWC, contact John Tindall at jtindall@intrisksolutions.com.

With your help, I know we will achieve a brighter future for Wisconsin employers.