AGC Retro Committee members Len Zarelli Merit Company; Stephen Seger Foushée & Associates; Philo Hall Lease Crutcher Lewis; Van Hardy GLY Construction (retired). Other members of AGC Retro Committee are Gary Bennett Ferguson Construction; Jay Meyers Garco Construction; Nancy Mahoney Dew Drops Sprinklers; and Valerie Whitman Max J. Kuney Co.
Van Hardy didn’t think it was a good idea…at first.
Twenty-two years ago when the then-CFO and Vice President for GLY Construction was asked by AGC of Washington to look into what would ultimately become AGC’s best-value Group Retro program he was skeptical. After all in the 1980s AGC worked with the Department of Labor and Industries to create a retro program through which employers pay workers’ compensation premiums and retrospectively may receive refunds on those premiums depending on the group’s safety performance.
AGC abandoned that early version of a Retro program because of missteps on the part of AGC and the state. According to Hardy among the problems were AGC’s too-lenient underwriting criteria and the state’s unpredictability in managing claims.
“When it played out there was large degree of dissatisfaction among the AGC membership” recalled Hardy. “If you added it all up for the years the net was that we were ahead by a fairly significant amount but it was a scary ride. I was just an observer at the time but I knew enough to know that everyone who was paying attention had a sour face about Retro. “
That’s why a few years later Hardy was surprised to receive a call from then-AGC Executive Director Dick Bristow who said that individual companies were having good results with retro and maybe the time was right for the association to get back into it. Bristow asked Hardy to figure out what circumstances may have changed and what AGC could do to avoid the previous mistakes and ultimately to recommend whether or not AGC should create a new Group Retro program.
With his misgivings and a determination to keep an open mind Hardy spent a year analyzing the situation and he found that the landscape had in fact changed. One of the big differences he noted was that the state had addressed some of its problems with inconsistency. “You can have an honest disagreement with L&I’s priorities and methodologies but they had become more predictable with regard to how they approach a claim and that was important because you have to know how the insurer will operate” he said.
Hardy also confirmed the advantages of group participation over individual plans. “There was an advantage because of the way the state underwrote the program” he said. “The larger premium base the bigger the discount applied to the developed costs of claims. Basically there’s a big discount for larger premium base.”
With this and other important pieces of information Hardy suggested that AGC move forward and AGC created its Group Retro Committee to implement Hardy’s recommendation. The Committee included top financial experts such as Philo Hall CFO with Lease Crutcher Lewis Gary Bennett VP of Finance for Ferguson Construction and Hardy. All three are still on the committee today.
“I got a call from Van and then the more I looked into it the more it made sense” recalled Hall. “One of the things that struck me was that as an individual firm in a Retro plan alone a penalty could be crippling but inside of a group a firm could have a bad year and just not earn a refund.”
In 1991 the Retro Committee began its work. “The committee established that you need to have a certain premium size participating firms have to have safe operations you need a third party underwriter and you need a fair refund distribution formula that rewards performance” said Hall. “The structures that were put in place then have stood the test of time.”
Perhaps the committee’s most important decision was that only contractors committed to safety would be allowed to participate. Thus one of the main criteria for participation in AGC Group Retro is membership in AGC’s Safety Team® program. AGC would help members improve their safety programs but Retro would be open only to those who annually qualify for the Safety Team. “Safety Team is clearly a key element of the program because from an underwriting perspective you only want people with safe operations in Group Retro” said Hall.
The AGC Retro committee established other unique elements of the program.
“One of the groundbreaking things we have that nobody else does is our modified light duty resource centers operated by Safety Educators Inc.” said Hardy. “Early on we devised this idea of providing a positive place for injured workers who are not able to return to jobs a light duty work opportunity so people didn’t get on timeloss and isolated from the workplace. We knew it had to be low impact physically but high impact in terms of content and we came up with the classroom setting to allow people to improve their skills while waiting to go back to work.”
AGC Group Retro and Safety Educators in partnership with L&I also has an innovative retraining program for those who can’t go back to their construction jobs. Through it an injured worker can learn to become for example a building inspector.
Hardy and Hall both cite the hiring of AGC Group Retro Director Lauren Gubbe and her staff as a major milestone in the program’s growth and improvement. “When Lauren was hired 15 years ago she took AGC Retro to the next level” said Hall. “The AGC Retro staff includes certified worker’s comp claims consultants who know the RCW’s WAC’s case law and L&I policies inside and out.”
Twenty years ago AGC Group Retro started with 33 members. It now boasts a membership of 294 firms with a premium base of nearly $40 million. As its 99 percent member retention rate suggests AGC Group Retro is a very good idea indeed!