1. Loss Prevention as a Cost Control Exercise

2. Speakers: Bill Hettrick President/CEO, Hettrick, Cyr & Associates Jeff Barker Director of Insurance, JELD-WEN, Inc Moderator: Peter Willitts President, Liberty Mutual Management

3. Perspectives Given Today Bill Safety & Risk Control Service Provider Perspective Construction & General Industry USA Companies Approximately 50,000 Employees Proven Programs across Multiple Captives and Self Insured Jeff Risk manager Single manufacturing perspective 24 countries 22,000 employees Grown primarily through acquisition

4. Hiring Practices Post Injury Management Claims Management Internal Safety Circles & Committees Employee Training Employee Maintenance Program Audits & Inspections Worker Observations & Counseling Performance & Measurement Written Safety Programs Supervisor Training & Accountability Fleet Safety/Auto General Liability Property Legal Loss Control Through Effective Best Practices Best Practices Focus on:  Programs  Policies  Workplace

5. Focuses on key elements of a true safety culture Member/Company Developed & Approved Captive members are Audited Internally/Externally to Best Practices Non-compliance is tracked, trended, and reported to Captive members/management Loss Control Best Practices

6. Benchmarking – Management by Measurement Employee Maintenance Legal Hiring Practices Claims & Success Alerts as an Accident Prevention Tool Employee Weekly Safety Huddles (Tool Box or Lunch Box) Peer to Peer - Safety & Risk Managers Semi-Annual Workshops – Sharing of Resources & Ideas Captive Appreciation & Recognition of Employee Safety – C.A.R.E.S. Proven & Effective Best Practice Examples

7. Measures results of captive and individual members, departments, and/or facilities against tangible goals & industry averages Develops accountability by member, department and facility Benchmarks calculated by payroll or hours worked. Examples include: –Loss Rate per $100 of Payroll (WC, GL) –Incurred Cost per FTE (WC,GL) –Non $0 Claims Frequency per $1,000,000 in payroll (WC, GL) –Days Away from Work Rate per 200,000 hours worked –Lost Time Frequency Case Rate per $1,000,000 payroll –Non-$0 Auto Frequency per 10 Insured Vehicles –Auto Liability Loss Rate per Insured Vehicle –OSHA Recordable Incidents per 100 FTE’s (200,000 Hours) –Individual Tracking of Member Loss Pics with Development –Lag Time Reporting Management by Measurement - Benchmarking

8. Tracking Captive Members or Facilities Against Captive Goals Note: Information contained in this chart is for example purposes only and does not reflect actual company data

9. Establishing Timely Reporting as a Best Practice Note: Percentages do not represent actual practices, this is for example only information

10. Benchmarking Transparency Non $0 Claim Frequency per 200,000 Hours Worked

11. The Importance of Employee Maintenance The first of the Baby Boomers reached age 63 in 2009. As baby boomers approach retirement, they will comprise a greater percentage of the workforce. Will present a greater challenge to manage workplace safety, mitigate risk, and prevent injuries. Employee Maintenance programs must be part of the forward thinking to maintain standards of fitness for duty A pproximately 1.4 million claims are filed annually in the USA as a result of sprains, strains, and overexertion, accounting for a direct cost of over 25 Billion dollars

12.  1st Quarter (0 -20)  Resilient (Mostly Bumps & Bruises)  2nd Quarter (21 – 39)  Soft Tissue Injuries  Half Time (40 – 41)  Injured Reserve  3rd Quarter (42 – 60)  Lost Time Injuries  4th Quarter (61 – 80)  Season-ending Injury  Overtime (81 – 85)  Debilitating Injury  Double Overtime (85+)  Injury – Game Over! Evolution of an Injury

13. “ Human ” Maintenance  Mechanical Machine  Human Machine –Most difficult to properly diagnose –Most expensive machine to fix –Toughest machine to get back on the road –Maintain Equipment –Maintain Grounds –Maintain Building –Maintain Vehicles –Preventative Maintenance Employee Maintenance

14. Welcome to Stretch Coach Train The Trainer!!! “WE ARE ALL ATHLETES IN LIFE”

15. Prepares the Body For Physical Work Increases Flexibility Enhances Body Mechanics Creates Body Awareness Reduces Risk of Soft Tissue Injury Physically & Mentally Prepares Employees for their Workday Starts Work on a Positive Note Reduces Stress & Tension Increases Alertness Pre-Shift Stretching Design Improvements in Health, Morale, & Productivity result over time

16. A national trucking company implemented the Pre-Shift Stretch Program in 2007, and saw a 62% injury reduction within the first year. (This company utilizes a blending of the Pre-shift Stretch and a part-time onsite Human Maintenance System certified athletic trainer through OAI. National Trucking Company – 4,000+ Drivers

17. “ The results of implementing the Occupational Athletics Program have exceeded our expectations. Mark Everest does a great job sending a motivational message to our employees to change their lifestyle behaviors. We have seen a decrease in our workman’s compensation claim costs of 77% through the involvement of our employees in the Pre-Shift Stretch Program. Additionally, the continual maintenance of the program has created a culture of wellness. We had 6% of our employees quit smoking and 16% went on the weight loss programs. Results of the Health Risk Assessment, year after year, show that their total lifestyle scores improved significantly. Our employees are happier and healthier. This has been a great return on investment.” ~ Penny Pilafas, V.P. Human Resources ~ Testimonials

18. One of OAI’s largest single clients, this Midwest Utility company implemented the Pre-Shift Stretch in 2005 and because they had such significant results (a 50% reduction in soft tissue injuries), they added several full-time HMS certified athletic trainers onsite at various locations. Their current savings has been in the millions of dollars. Midwest USA Utility Company – 8,500 Employees

19. Legal Best Practice as a Loss Control Begins with identification of claims and exposures, looking for claim patterns, just as we do in safety, where do risks come from? Main Focus on CGL & Property, but also Auto and WC Review of Contractual Obligations by members/companies: Real Estate, Purchase Orders, Employment/HR, General Services, Products, Sub-contractors Examine indemnification language and check to be sure that indemnification liability is limited to the extent the loss is due to member's negligence Certificates of Insurance Requirements Statutes of Limitations by member location Identify Strategy Development of Best Practices, putting captive in “less legally vulnerable” position

20. Purpose of claims’ alert program is to;  Inform & educate captive members of potentially large claims that have occurred at other facilities.  Provide a detailed sequence of events, root cause analysis, and preventative measures to help everyone educate employees and prevent a reoccurrence.  Can be utilized as a tool box, lunch box, safety huddle, or shift talk where applicable. Criteria for a claim to become a “Claim Alert” in a Construction Captive (example):  All falls over 6’ in height  Any water infiltration incident  General liability claim over 25K  Preventable auto accident claim  Property damage in excess of 25K  Any claim that provides a value to the members at large Claims’ Alerts to Prevent Incidents & Accidents?

21. A five (5) minute Safety Huddle is an informal safety discussion presented to employees as refresher training within their departments. Safety Huddles are run by Department Managers, Supervisors, Safety Committee Members, or Field/Shop Personnel. Talks focus on a specific workplace hazard, department incident, OSHA topic, or any relevant safety matter. A 5 minute talk every week provides over four hours of refresher training a year. Five Minute Safety Huddles Benefits:  100% Comprehension – All adults have a 5 minute attention span.  Positive communication between management & labor.  Keeps safety as a priority as a constant refresher 24/7.

22. Safety & Risk Management Peer to Peer Meetings –Primary goal is to establish an internal network of safety professionals and risk managers who share common workplace perils within the captive. –Peer to Peer extended to Store Managers, Operations Directors, Department Managers, Superintendents, HR Directors, Safety Committee Chairs, etc. –Meetings are held 1-2 days. –Outside speakers selected based on topics and specific training requirements of meeting. –Conducted Regionally or Nationally a minimum of twice per year. Information Sharing & Development

23. Project C.A.R.E.S – Captive Appreciation and Recognition of Employee Safety Objective: Giving recognition to those who put forth added effort in the workplace everyday to ensure not only their own safety, but that of the entire department or crew. These employees go above and beyond to ensure the workplace is as safe as possible, and truly make safety a number one priority. The efforts these employees put forth on a daily basis, improves safety for all and deserves recognition. Frequency: Monthly Criteria: Each captive member submits an employee’s name based upon criteria developed by Captive Loss Control Committee. Recipients of the CARES Award are eligible on a frequency of once per policy year. Award: Those selected receive recognition in the monthly captive newsletter which is discussed and displayed in all location. In addition, a gift certificate for $50.00 to a local restaurant and a polo shirt displaying the captive name, with the slogan “C.A.R.E.S”. Project C.A.R.E.S.

24. Captive Members Loss Control Provider Claims Managers Actuarial/ Investment Bankers Insurance Brokers Captive Managers Insurance Carrier COORDINATION OF SERVICES

25. Some captive members (size dependent) making more in captive distributions than operational profits (2009) Loss ratios reduced by 57% Claims’ frequency decreased by 38% Have First VT Captive to receive a return in Year Two 92% of members and companies performing better than their individual loss pics Supervisor/Foremen testimonials within captive – most powerful, “Charlie the Superintendent”. Proven Results: All HC & A Captives & Self Insured Programs

26. Best Practices Dedicated Loss Control Managers Hiring Practices Risk Management Manual Contracts and Certificates of Insurance Silo Breakdown –EPAQ (Environmental Project Assessment Questionnaire) –Engineering Involvement –Product Development –Quality & Production Incident Investigation JWReportIt Benchmarking – “Driving Competition”

27. Dedicated Loss Control Group Six dedicated individuals Life Safety (W/C) primary focus followed by property, motor vehicle and general liability Administrative conduit for facility challenges Train the Trainer techniques and topics Semi – Annual site visits to each location –Audit reports – solution oriented –Relationship with facility management –General Manager accountability sheet

28. General Manager Accountability Sheet “Non-Negotiables” of Risk Management supported by Executive Management Safety Programs & Annual Training (P&G 301, RMM) YesNo 1. Management conducts and documents monthly employee safety training concerning all the applicable topics listed in the RMM tab 5 in order to meet the annual training requirements. (Note: Your Field Service Manager will help you determine the applicability of specific safety programs to your facility and operations.) (301-A, 2 & RMM tab5) 2. All required safety training is documented in ClaimDesk Training Tracking. 3. The facility incorporates safety topics into the daily or weekly production/quality meetings. (Best Management Practices) 4. The Lockout/Tagout Program is fully implemented. (RMM tab 11) 5. The Personal Protective Equipment (PPE) Program is fully implemented. (RMM tab 12) 6. The Hazard Communication Program is fully implemented (MSDS). (RMM tab15) 7. There is an Emergency Preparedness plan in place that adequately addresses all foreseeable scenarios that could affect the facility. (RMM tab18) 8. The JELD-WEN Ergonomics Program is fully implemented. (JELD-WEN Ergonomics Program)

29. Hiring Practices 2004 Safety Initiative –WCIR of 16.0 (1,979 claims) –Open Claim Volume of 735 –Accrual of $18.5M –Analysis of dollar impact led to identification of two lead offenders: 1)Employees in their first six months of hire 2)Repeaters Result was emphasis on pre-employment, training, & re-emphasis on substance abuse testing

30. Hiring Practices, cont. Insight Integrity Test – weed out potential problem employees before they begin employment –Workers Compensation Fraud –Work Place Violence –Substance Abuse –Theft –Dependability

31. Hiring Practices, cont. “Is your current use of illegal drugs or alcohol affecting your job performance?” A. No, I do not report to work with illegal drugs or alcohol in my system. B. No, because I perform well even with illegal drugs in my system. C. A little, but my performance is acceptable. D. I have been told that my job performance is not very good when I have reported to work with drugs or alcohol in my system.

32. Hiring Practices, cont. From 2004 to 2010 over 48,000 tests conducted W/C Fraud, Theft, and Substance Abuse three leading categories

33. Hiring Practices, cont. Basic Skills

34. Hiring Practices, cont. Over 19,000 test administered since 2005 19% did not meet the minimum of 70% correct

35. Hiring Practices, cont. Overall Results of Safety Initiative –WCIR of 4.1(338 claims) –Number of open claims 290 –Accrual of $8M Translates into a $45M savings

36. Risk Management Manual Online resource for all facilities in one location Programs address a variety of risks from workers compensation, motor vehicle, property and general liability Gives JELD-WEN standard unless regulatory requirements are higher Examples of programs: –Hot Work –Sprinkler Maintenance and Testing requirement –Contractor Safety –Ergonomics Risk Management Manual Program Example

37. Contracts & Certificates of Insurance Five person contract review committee –Legal (contract attorney) –Operational Vice President –Treasury/Accounting –Tax –Risk Philosophy shift toward solidifying every relationship with a contact Specific insurance requirements and limits for suppliers/contractors Track suppliers/contractors for compliance

38. Silo Breakdown Connecting and sharing information between business units, divisions, facilities, and departments Engineering Involvement –Review plans for plants and equipment prior to being built –On the same team for process improvements EPAQ (Environmental Project Assessment Questionnaire) –Filled out prior to any project or process changes occur –Risk Management automatically sent a copy

39. Silo Breakdown, cont. Transportation –Driver tracking, classification & approval –Point system for violations –Number of vehicles provided electronically Product Development & Production

40. Incident Investigation Each near-miss, incident or claim is investigated regardless of line of coverage Identify whether it was an unsafe act or unsafe condition Identify root cause and preventive actions to be implemented Reviewed by safety committee and general manager or divisional vice president Aids in claim management

41. JWReportIt Internal claims and risk management system Over 600 users from safety coordinators, risk management staff, general managers, and divisional vice presidents Five primary functions –Claim entering and management –Facility Audit –Training and Tracking –Document Management –Deductible and Monthly Billing

42. Benchmarking WCIR –Monthly reports sent to all General Managers, Divisional Vice Presidents, & Executive Management –Universal definition of what is included in the calculation Global Audit –Compliance with top 14 Risk Programs

43. Challenges for Implementation Cost vs. Benefit Corporate “Sheriff” Mentality Work Place Culture Silo “Kingdom” Effect Top Down Support U.S. vs. International