Workers' compensation insurance companies have been at the vanguard of workplace safety initiatives maintaining laboratories, training facilities, intern programs, and hierarchical structures. Up until the late 1980's, risk control services were provided to clients as a customer service, with the costs hidden in the premiums. Many companies estimated 4-5 percent of the premium amount was devoted to risk control departments. The late 1980s brought about a change that some attribute to a misapplication of Deming's Total Quality Management (TQM) philosophy. Insurance companies tried to make the move to accountability, thinking that it would drive customer service to a "Deming" level and would create even higher profits. To accomplish this, companies made every department, including customer service functions such as risk control, profit centers. Risk control services that were previously funded through hidden costs were now sold at a rate of $130 - $200 per hour. Within companies, departments that traditionally had worked together began to avoid each other because of internal cost factors. Taken to the extreme, the result was that companies began "to feed on themselves." Moral decisions were replaced by a cost benefit analysis: profit became the primary focus. Large deductible policies produced the second major change that impacted the role of risk control. Finding persons willing to go "on the record" regarding the impact is difficult, but the results are easily deduced. When there is a large deductible, the insurance company's assets are not in danger until losses approach the deductible amount. Large deductibles mitigate the insurance companies losses, but the health and safety of client employees are often minimized and even ignored. Because so little is written on this subject, primary research consisting of interviews was conducted and opinions were compiled. Most respondents concurred that the profit center fixation had adverse impacts on employee health and safety.
Library of Congress Subject Headings
Workers' compensation--United States--History; Industrial safety--United States--History; Cost centers (Accounting)
Environmental, Health and Safety Management (MS)
Department, Program, or Center
Civil Engineering Technology Environmental Management and Safety (CAST)
Eure, Gary, "An Historical Retrospective on the Origin of and Changes to the Worker's Compensation Insurance Industry" (2005). Thesis. Rochester Institute of Technology. Accessed from
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