Insurance for Water Works Employees Good Business
Compensation Insurance Advantages for Water Department Workers Are Many—How Plan Has Worked Out in Connecticut Under Law
THAT the plan of insuring water works employees against accident and sickness has advantages both for the employer and the worker is shown by Mr. Saville in the article which followes. The plan has passed the experimental stage and Mr. Saville shows the practical workings of the system.
With the coming of the Workingmen’s Compensation Laws and the Pension acts, followed by Compensation and Group Insurance, a great change has taken place in the relations between employee and employer.
Of these two events, the first is to safeguard the employee and the other, not only provides a method of safeguarding, the employer, but also helps the employee and relieves worthy men of any stigma of being the recipients of charity, More and more municipal departmental work is being run closer to business lines, and it is becoming to be realized that what is good in private affairs may be employed with profit in those in which the public is the stockholder.
As water works departments have grown it is found to be impossible for the management to keep in as close personal touch with all employees as was formally the case, and thus, because of the unconscious carelessness of men accustomed to their work, employees consequently are not so well guarded as formerly and there is an increase of accidents. Many municipal departments are now carrying compensation insurance, and it appears to be only a matter of time when this policy will be extended to cover practically the whole field, so that all may be treated alike in case of accident. For the premium paid all employees may be insured in accord with the compensation laws, and the department or the city be relieved not only of the financial responsibility, but also of the care and work necessary in connection with losses from accident. Those arguments are often ill-advised which affirm interest in old employees and a desire to do something more for them in case of accident than ordinary. With compensation insurance there is no bar to generous action, and in the long run fairer treatment will be meted out to all employees of municipal departments, through compensation insurance than by personal attention too often tinged with political policy.
The Compensation Act of Connecticut became effective in 1914 and with its various amplifications, since, it is now held to cover all injuries which may arise out of and in the course of employment, as well as occupational diseases. As to the working of Compensation Insurance, when an employee is injured all the insured has to do is to get in immediate communication with the insurer. The latter sends the doctor, and usually the injured man’s own physician can be had if desired, has the patient observed, from time to time, provides everything essential for his care, assumes all medical, surgical and hospital expenses and in addition pays the injured employee onehalf of his average wage during disability, as well as specific payments under the Compensation Act, for loss or partial loss of a member, the weekly pay under the law does not exceed a maximum of $18 per week in any case.
Purpose of Group Disability Insurance
Analogous with Compensation Insurance is the matter of the so-called Group Insurance, and the basic principle of both is unity of interest of both employer and employee. The purpose of Group Disability Insurance is to improve to the greatest possible degree the mental and physical condition of the employee. The theory of this is that inasmuch as the employee has only the energy of his body and mind to sell the value of his effort naturally depends in great part upon his physical condition and his attitude toward his work.
Any agency that, on the one hand will make an employee better able to produce a dollar’s worth of work for a dollar’s worth of wages is of money value to an employer, and on the other hand, if it will give to the employee a greater peace of mind and security, as to the welfare of himself and his dependents in case of serious disability and absence from work, this agency likewise, is of great value to the employee. The all-important function of Group Insurance is to remove worry from the mind of the employee. Worry is always present when a man is absent from his work on account of disability and is not paid and this insecurity of income causes discontent and even antagonism toward employers. The guarantee of a substitute for wages lost on account of illness is a long step toward bringing employer and employee into more cordial relations.
Education in Health and Hygiene
The second function of Group Insurance is to reduce so far as possible the number of cases of preveritable disability through education in the fundamentals of health and hygiene. A third function is to shorten the time of disability. This result is brought about by requiring medical attention in every case of disability with proper treatment based on careful diagnosis. The rate for this service by the insurance company, guaranteeing usually 26 weeks’ pay in case of illness is $1.12 per $100 payroll, the maximum amount of weekly indemnity being $40 covering sickness of every kind and all accidents that happen outside of employment.
“The experience of the writer leads him to feel that there is a great difference in the amount of risk of serious accident with municipal forces and those operating under ordinary conditions, and that the former is very much the less.”
“As water works departments have grown it is found to be impossible for the management to keep in as close personal touch with all employees as was formally the case, and thus, because of the unconscious carelessness of men accustomed to their work, employees consequently are not so well guarded as formerly and there is an increase of accidents.
If both Compensation and Group Insurance are carried the employee is certain of an income from one or the other of these sources during disability. So much for the theory and the actual benefits to the employer and employer from these two very valuable means of insurance. Each case however is a law unto itself and a question of individual judgment as to the net return to the industry or utility.
System’s Worth to Water Works
As to the worth to water department functioning of either or both of these propositions, the writer is somewhat in doubt, not at all as to the value of the application in the abstract, but as a matter of cost with present rates as balanced against the risk.
The basis of rates for new construction work for water works is $1.85 per $100 of payroll; the detailed rate offered for the Hartford Water Department after much discussion was:
Assuming a total annual payroll of $300,000, of which approximately 80 per cent, was labor to which the highest rate applied, the annual premium is about $3,500.
For the past six years (1917-22, incl.) the payments on account of accidents alleged to have occurred in connection with the work have been as follows:
This table is both instructive and misleading. A psychologist might infer from the gradual increase in accident cases since 1917, that the working of the compensation laws had an unconscious effect, many very minor accidents were more seriously considered than formerly, and that more time was taken in recovery when paid for than when time absent for any cause meant full deduction in pay. Where and how to draw the line between necessary time off and that due even unconsciously to malingering is a difficult problem in human characteristics.
Advantage in Character of Water Works Forces
This a phase that best can be handled by a just and impartial agency. It is a matter that must be considered, however, in a different light than formerly when a municipal force was almost entirely made up of old employees that were extremely loyal to the service, having grown up in it; whereas now it is difficult to hold the younger and reliable men, and a large part of the labor gang is composed of transients whose main interest centers in the pay envelope. The averages given above do not correctly represent working conditions at the present time, as is evidenced by the increased number of cases in the last three years, due perhaps to the reasons suggested above. Except for unusual major injuries, that are very infrequent on work bandied as is usually the case on city construction, where there are experienced foremen and a large number of employees trained, not only in the particular kind of work, but also in the peculiar conditions of the locality, the bulk of the accidents are of minor account. For example during 1922, the following were the most important cases of disability:
24 days—Back sprained
33 days—Eye injured by flying chip
77—Fell on ice, badly shaken, elderly man
17—Eye injured by flying chip
14 days—Bruised by falling tree
30 days—Cut with axe
13 days—Leg bruised by pipe
45 days—Broken rib, thrown from wagon, elderly man
34 days—Burned by hot lead
34 days—Fractured rib, from falling pipe
12 days—Face cut by falling pipe
80 days-—Broken collar bone, caving earth
15 days—Thrown from wagon
18 days—Wrist sprained
446 days—14 employees.
Always Chance of Serious Accident
In spite of this record, however, it must be remembered that there is a constant chance of a serious accident, which for a death would cost about $5,400, and one permanent disability about $9,700, besides the cost of medical treatment, which may run into several thousands of dollars. These of course are risks that must be paid for.
“Any agency that, on the one hand will make an employee better able to produce a dollar’s worth of work for a dollar’s worth of wages is of money value to an employer, and on the other hand, if it will give to the employee a greater peace of mind and security, as to the welfare of himself and his dependents in case of serious disability and absence from work, this agency likewise, is of great value to the employee.”
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In Hartford’s Water Department experience of a score of years, the most serious accident resulted in the loss of an eye to an old employee. The cost of this accident, which was caused by the blowing out of a lead joint, was about $2,544, including half pay during absence, and medical and surgical attention. At the time both eyes were involved, but by skillful care, the sight of one only was lost. Had both eyes been lost the legal compensation would have been about $7,280. In older lines of insurance an experience tabulation has been accumulated from which it is possible to predicate with some degree of reasonableness what the average relativity of risk may be. Compensation insurance is a comparatively new field and a reliable experience factor for use under widely varying conditions of work has not as yet become available.
Less Risk in Municipal Forces
The experience of the writer leads him to feel that there is a great difference in the amount of risk of serious accident with municipal forces and those operating under ordinary contract conditions, and that the former is very much the less. Referring to the table given above it appears that a yearly accident loss of $2,000 would be ample for ordinary conditions, and this is about the average of the last three years. To this might be added say 25 per cent, for a major accident that might occur once in 10 years, although even this has not been the experience of the Hartford Water Department. Times and conditions have considerably changed within the past ten years, and it would not be too safe to rely upon experience gained in times gone by.
In Favor of Compensation Insurance
To the $2,500 actual risk computed above must be added something for the time and work of the insuring organization. If 40 per cent, is allowed for this which is not an unreasonable figure, there results the $3,500 required by the insurance company for underwriting this risk. I believe, however, that with an insurance company covering this factor of the work that the cost of accident payment would be considerably reduced, which added to the less risk to municipal employees should result in a lesser rate than proposed for the bulk of the employees as given above. In view of the facts that have come under his observation, the writer is in favor, as a general proposition, of applying compensation insurance to municipally operated works, and especially those having to deal with many laborers, working in congested city streets.
Some excellent arguments are advanced for self insurance by municipalities, but the basic principles in favor of compensation being underwritten by an agency specializing in this branch of insurance, seem to apply equally well to works operated either by municipality or by private interests. That basis of rates which uses the amount of the payroll, instead of the number of men covered, seems illogical. Under the law, bodily injury to a low paid man is just as important as to one of higher salary, while the money risk may be not nearly as great in the case of the latter as with several of the former.
Early Accident Records Unreliable
Early accident records, while of value as a guide and for comparison with similar results elsewhere, can not be relied upon absolutely as a basis for formulating rate schedules. Some of the reasons for this are: The apparently growing tendency to magnify minor injuries, the unconscious effect of seeing another getting disability payment, the difference in the type of employees in different localities and the changes that are so rapidly taking place in labor personnel.
All of these matters have a strong bearing on the best way to handle occupational disability, and on account of the laws it must be considered a factor as applicable to municipalities as to private industry. Compensation Insurance administered by a competent agency seems to afford the best means for protecting both the employer and the employee.