"As a change of pace, this article is something we don’t highlight enough, a case where the claims people offered their congratulations after reviewing a claim report. So, here’s a chance to learn from a case where things were done right!"

By R. Bruce Wright, CPCU

Most of the articles you find in RE-marks either offer direct suggestions on steps that program participants can improve, or recount stories of the problems faced by other utilities in the program, as a way to offer lessons from the errors of others. As a change of pace, this article is something we don’t highlight enough, a case where the claims people offered their congratulations after reviewing a claim report. So, here’s a chance to learn from a case where things were done right!

Since the case is recent and the statute of limitations has a long way to go, the cooperative involved in this event cannot be identified. Even so, the basic facts are instructive and demonstrate how doing things right the first time, every time, can pay dividends.

The situation is one most utilities can relate to. This company suffered a severe storm with damage to their distribution system. The emergency response work was handled and power restored, but a lot of work remained to be done. The amount of work required was too much for the regular employee group to handle in a timely fashion, so a subcontractor was engaged to assist in the work. A contract was executed, and work began. During the course of the work, an unfortunate event involving two of the contractor’s workers and one of their vehicles resulted in the death of one of the contractor’s workers. The utility that hired the contractor conducted an immediate investigation, gathered the facts, and sent the results to the insurance company's claims department at once, along with copies of the contract and the contractor’s Certificate of Insurance, as well as a clipping from the local paper reporting the event.

Our program’s top Claims Manager told us how pleased he was with what he saw. “What impressed me about this insured,” he said, “was very timely reporting, executing a two page, well-written contract between (name of insured & name of contractor) for what appears to be a very short time frame (with) all the signatures and some very good indemnity and hold harmless language in favor of the insured, and (the) insured had in their file a certificate of liability insurance from the subcontractor.” The Claims Manager went on to say, “I was impressed by how organized this insured was,” and added that if everyone in the program would do as good a job with risk management techniques “we would see some very positive results.”

Wow, what a compliment to this utility! So, how did they do it? Do they have a genius at work? I guess probably not. Remember, at Synebar we think good results require careful planning, while bad things happen all by themselves. Careful planning and process design are key to making things happen right. Everything that impressed the claims manager in this case can be duplicated at any company with careful attention from management. Let’s look briefly at each element.

1- Timely reporting. This company sent a written notice to the insurance company the very next day after the event. Everyone should have a policy and a process in place to immediately review and report all potential claims, even those that are minor, or that (like this one) involve only a contractor’s employees and none of the utility's own workers. Conducting the initial incident review immediately provides the best opportunity to discover the facts while they are fresh in participants’ minds. Get the facts documented promptly. The longer you wait, the fuzzier the recollections will become. Then, as soon as you have the basic facts, send in the claim report at once. If additional information comes along later, you can send it in then. Waiting to submit the report hardly ever helps the case.

2- Written contract. The company had a written contract covering the work the subcontractor was to perform. Everyone should have a policy and process to ensure that all contractors execute a written contract before starting work. This need not be a “last minute” job, worked up on-the-spot. After all, using contractors is a predicable event, so why not have a sample contract prepared ahead of time with just a few blanks to fill in to meet the specific situational needs? You can easily fill in the date, the name of the company to be hired, and a brief description of the work to be performed. The template contract can have all the important clauses, including the insurance requirements and the hold harmless agreement, already written in ahead of time. Your attorney is well suited to help you prepare this type of template contract. Just ask!

3- Certificate of Insurance. The company had a current copy of the contractor’s COI in file. Everyone should have a policy and process in place to ensure that a copy of the COI is provided before any work begins. If you have contractors that you know you will be calling on in the event of a need, why not keep their COI on file at all times, and update it each year at expiration? That way, when you need it, you’ll have it ahead of time, instead of scrambling around at the last minute.

To quote the Claims Manager one more time, here’s a final thought from him. He said, “In most claims, we wished the insured would do certain things that would eliminate or reduce exposure. (Here) the insured did everything right and has placed us in a very positive position.”

Here’s another quote you may recognize. “Go thou and do likewise.”