Georgia’s goal is to become the best managed state in the country. To accomplish this we are changing the way we do business. One step towards achieving “best managed” status is to build a risk management culture. The Department of Administrative Services and its Risk Management Services Division are poised to help state entities achieve these changes through the implementation of comprehensive loss control programs. In a recent DOAS survey, only 14 agencies indicated they had any kind of loss control program in place.
Historically, DOAS has been charged with the administration of the state’s trust funds for Georgia’s self-insurance programs. Risk Management Services annually processes over 10,000 claims for injured state workers, damaged vehicles and property, and claims from individuals and groups seeking monetary damages from the state and its agencies. State funds in excess of $100 million dollars a year are paid for these claims. Indirect costs including lost workplace productivity and additional administrative time in dealing with these events costs millions more. Although trends show a decrease in the number and severity of claims, deeper change is needed to remove the root causes of these events from our systems – the policies, procedures and practices that govern our operations.
Incentives and deterrents are needed to ensure that these changes take effect in entities covered by state insurance programs. Recently, the Commission for a New Georgia’s Risk Management Task Force recommended that an equitable system be implemented so that entities bear the burden for the claims they experience, with each claim causing a financial impact on the agency. Building on these recommendations, Senate Bill 425 passed in 2008 gave DOAS the authority to implement these changes.
The vehicle to drive these changes is loss control. Its aim is to recognize, evaluate, control and anticipate risks and hazards that lead to losses. Developing a risk management culture will allow operational changes that eliminate hazards or minimize their impact. If we can stop an incident before it happens, the only cost is the time we spent in preventing it. If we anticipate and prepare for losses, we can mitigate the severity of those losses, as well as demonstrate our due diligence in dealing with hazards. Loss control will change our workplaces and build a risk management culture.
The benefits of change are sometimes not completely obvious. When a worker is injured on the job, the primary financial impact includes the medical expenses to treat the injury and the wages paid to the worker while off the job. Other costs that can be avoided when a loss is prevented include:
Senate Bill 425 authorizes DOAS to establish incentive programs that include setting insurance coverage premium rates and adjusting claim deductibles based upon participation in loss control programs. DOAS will work with entities covered by the various state insurance programs to define what loss control programs are necessary for their identified operational risks.
The implementation of this program will take place in three phases beginning in October 2008. Page two summarizes the implementation plan. Goals for the final phase of the program are provided on page three. The eight components of the Comprehensive Loss Control Program are summarized on Page four. Covered entities will be provided detailed information on implementing this program.