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SIS News is published quarterly by Self-Insurance Specialists, Inc., 6909 South Holly Circle, Suite 204, Englewood, CO 80112, (303) 741-5683. Fax (303) 741-5639. E-mail: arnolds@self-insurance.com. Website: www.self-insurance.com. Editor: Sally A. Arnold, CPCU, ARM, ARe. We provide this newsletter as a service to clients and friends. We make every attempt to report accurate, reliable information, but assume no liability from reliance on any statement contained here.

VOLUME IX ISSUE II WINTER 2000

Articles this issue:

COLORADO PRIMA BENCHMARKS FOR QUALITY

MILLENNIUM BUG–PREPARED OR HOODWINKED?

RISK MANAGEMENT TIP

 

COLORADO PRIMA BENCHMARKS FOR QUALITY

The Colorado Chapter of Public Risk and Insurance Management Association (PRIMA) is benchmarking for quality. During 1999 Self-Insurance Specialists and Colorado PRIMA began a research project: Benchmarking, Best Practices, and Performance Measurements in Public Entity Risk Management, funded by the Public Entity Risk Institute (PERI).

Self-Insurance Specialists researched benchmarking in public entity risk management extensively, then worked with the PRIMA Board and benchmarking committee to identify basic risk management functions, best practices, and performance measures. We’ve published Guidelines on Benchmarking, Best Practices, and Performance Measures in Public Entity Risk Management to help with these important issues. The Guidelines also will be on the PERI website (

Results of our initial research led to a pilot group of public entities implementing the benchmarking process in risk management programs throughout the state. About a dozen cities, counties, and school districts are reaching toward excellence by identifying best practices in other public entity risk management programs and emulating their benchmark partners’ best practices.

Public entities are benchmarking a variety of best practices including:

Workers’ compensation cost containment

Safety incentive awards

Claim reporting

Ergonomics

Cost of risk

Training tracking/effectiveness

Workers’ compensation injury surveys

Workers’ compensation injured worker contacts and follow-up

Accident investigation

Driver qualifications

Annual report

Claim review

Loss analysis

Property valuations/updates.

Benefits of implementing best practices in these areas include:

Reduced claim costs

Lower administrative costs

Fewer claims

Enhanced public image

Better communications

Healthier, happier employees

Less supervisory time reporting and investigating losses

Higher productivity

Proper insurance coverages

Increased visibility

Improved loss control focus.

Implementing these best practices is a great way to welcome the millennium! Details of progress will follow in future newsletters.

Self-Insurance Specialists and the Colorado PRIMA chapter have conducted 2 training sessions on the Guidelines. Many Colorado risk managers have offered to partner with the pilot group of public entity risk managers to help them in the benchmarking process. The outcomes are sure to improve both results and risk management visibility.

Guidelines

The Guidelines provide direction on benchmarking a public entity risk management program. For years, public entity risk managers have exchanged ideas; benchmarking is a more formal approach to what’s been done all along: sharing and adopting best practices. The Guidelines contain sections on benchmarking, best practices, performance measurements, and a chart of examples.

Benchmarking

For our purpose, we defined benchmarking as identifying, learning, adapting, and measuring outstanding practices and processes from any organization to improve performance.

This definition supports a commitment to quality.

The project goes beyond the traditional benchmarking of simply comparing numbers. It identifies best practices and standards to use as goals for improvement; it seeks qualitative measures in addition to quantitative ones. Benchmarking that focuses on measurable results usually concentrates on loss costs, rather than determining the cause of good results. Financial measurements are important; however, they fail to look at best practices of other organizations that, when adopted, will improve the entity’s future results. By assessing costs as well as what drives those costs and how to reduce them–then adopting practices to close the performance gap–both the pilot group and benchmarking partners expect to improve performance.

The Guidelines include a 7-step model for benchmarking from Richard Y. Chang and P. Keith Kelly’s Improving Through Benchmarking: a Practical Guide to Achieving Peak Process Performance:

Using this 7-step process, each public entity can benchmark its risk management practices. (See the Examples on page___ for risk management functions, practices, and performance measurements.)

 

 

Step 1: Choose an area that needs improvement to benchmark. For example, perhaps you could do a better job managing risks assumed under contracts.

Step 2: Decide on a measurement–such as the number of liability claims/full-time equivalent employee. If the performance measurement includes loss data or other cost of risk factors, whether you and your benchmark partner self-insure or purchase first-dollar insurance has a dramatic effect on results.

Step 3: Select a benchmark partner. One of the most effective ways to implement change is to learn from the successful experience of others. To simplify the process, you want a partner similar in size and exposures. For example, if you’re comparing a county’s workers’ compensation program, consider if the county is urban or rural, mountains or plains. Does it provide search and rescue, fire protection, law enforcement? These will affect workers’ compensation losses and therefore your comparisons.

Step 4: Collect the data. After selecting your partner, you’ll need to know their best practice. This probably will involve several phone calls, visits, e-mails, and mailing documents. Remember, what works in one place may not work in another–become familiar with the entity to see how to adapt their best practice to fit your organization. And be sure to document your data source–each comparison should use the same data source for simplicity and consistency.