Everest National Loss Control

Loss Control Risk Improvement Service Procedures

The following are procedures for handling loss control risk improvement service for Everest National Insurance Company (Everest National), Everest Reinsurance Company (Everest Re), Everest Security Insurance Company (Everest Security) and Everest Indemnity Insurance Company (Everest Indemnity), collectively herein referred to as Everest.

A. Benefits of Risk Improvement Service: 1. Risk improvement service is consultative, scheduled visits to policyholders, to achieve reductions in loss activity or improvements in policyholder loss prevention efforts. Through the successful delivery of risk improvement service the policyholder will be more resistive to loss. The goal of risk improvement service is to achieve the following results:

 Reduction or elimination of claims by attacking their loss sources  Elimination of potential loss sources  Improvement of policyholder loss prevention efforts

2. Through the achievement of these results, risk improvement service will contribute to bottom line profitability of Everest and support the retention of desired policyholders.

B. Risk Improvement Service Criteria: Risk Improvement service must target improvements for inforce coverages. Risk Improvement service is available to all policyholders meeting the following criteria:

1. Have a combined written premiums of at least $150,000 regardless of the type of coverage (except when LC Utilization Criteria or Everest Loss Control Program / Account Service Instructions specifies a different service threshold) and provided when:

a) Adverse loss activity or loss trends indicate claim prevention or mitigation problems, uncontrolled exposures, safety program deficiencies, or hazards exist that require assistance and service to correct (e.g. implementation of a lock-out / tag-out program); or

b) Requested by the policyholder, Everest or the program administrator’s underwriting unit; or

c) Any policyholder, regardless of size, when such policyholder will substantially benefit from risk improvement service to improve conditions identified in paragraph B, 1, a.

d) Any policyholder rated as “Below Average” during the initial or subsequent Loss Control surveys and the underwriter plans to continue coverage or renew the account. Risk improvement service will be provided to these accounts until the rating improves to average or acceptable or the account has not cooperated with the risk improvement efforts.

Everest Risk Improvement Service Procedure 6-4-10 Page 1 of 12 C. Initiating Risk Improvement Service: 1. Risk improvement service is initiated upon approval of individual risk improvement service objectives by the Everest Loss Control manager or the Program Administrator’s loss control manager.

D. Preparing Risk Improvement Service Objectives: 1. Risk Improvement Service Objectives should be developed whenever opportunities for risk improvement service are recognized for written business. A service objective consists of a loss trend review, a goal to be attained, and the action steps necessary to meet these objectives. The most preferred time to develop objectives would be following the completion of an underwriting survey. This survey requires an evaluation of the account’s losses, exposures, controls and management practices. Initial service opportunities can be most easily recognized at this time. It is understood that additional visits may be required for evaluation purposes before measurable risk improvement objectives are determined. When these additional visits are required, the consultant may ask for them as needed to develop appropriate service objectives. The service objectives should be completed on the appropriate form provided by Everest or entered in LossWare under the Service Objectives tab. Each individual objective, the action steps and the need for that objective must be entered in LossWare. Everest has included a number of standard service objectives in LossWare that will be helpful to consultants in creating appropriate objectives for service accounts. These may be modified as needed based on the individual circumstances of the account.

2. Risk improvement service objectives must contain the following elements:

a. Loss Trend Analysis – A review of the account’s loss history to identify the most frequent and severe claims or trends. Everest’s policy is to achieve measurable risk improvement through the delivery of loss focused service to our policyholders. This analysis should be completed as part of the initial Loss Control review of the account and should identify at least two loss trends for both frequency and severity. If no existing trends are apparent, the Loss Control Service Provider should focus on potential loss trends that would be expected based on the nature of the operations and exposures. The service objective must briefly identify the loss trend and include some information on the percentage of losses accounted for by the trend.

b. Service Objectives – Service Objectives are measurable results that the policyholder and the loss control service provider delivering risk improvement service to the policyholder (the service provider) expect to achieve. They are the end results, the desirable conditions or situations to be achieved following completion of the service plan. Service objectives must be specific, measurable, achievable, and estimate a time of completion to achieve risk improvement.

For new policyholders receiving risk improvement services, it is understood that initial service efforts may need to focus on additional account evaluations in an effort

Everest Risk Improvement Service Procedure 6-4-10 Page 2 of 12 to identify and understand risk improvement opportunities. These additional evaluations must target areas described in paragraph B (1) (a) above.

c. Action Steps – The action steps outline the activities and tasks that are to be completed by the service provider to achieve the service objectives. This is a step-by- step process that upon completion will result in the achievement of the service objective. Each step should relate to the service objective; specify the task or activity to be accomplished; and the estimated completion date of each step. Included with the action steps should be a periodic measure of the progress toward the service objective. This periodic measure will allow the service provider to adjust the service plan to assure the service objectives are achieved. The service objective should be updated each time a service activity is completed.

d. Specialty services – Specialty Services are loss control services that must be delivered by specially trained and experienced loss control providers. Examples of specialty services include:

 Industrial hygiene surveys  Ergonomic Task Analysis services  Highly Protected Risk (HPR) assessments

The need for these services can be determined from many areas including:

 Loss control recommendations  A request from the policyholder, producer, program administrator or Everest  Results of an underwriting survey  Loss activity or analysis

When the need for these specialty services exists they should be identified in the service objective and the purpose explained.

e. Support materials – Support materials consist of a wide variety of items that can be used to complement the delivery of the action steps. Examples of support materials include:

 Audio-visuals such as safety & health videos and training programs  Pamphlets or brochures to enhance supervisory training activities  Model programs, best practice safety and health publications such as Loss Control Alerts  Regulatory standards such as OSHA, DOT, EPA, CPSC  Trade association guidelines such as ASHREA, or standards / recommended practices produced by recognized safety & health organizations such as NFPA, ANSI, ASME, NIOSH, or ACGIH

The service provider should identify the support materials, source of these materials, and their approximate costs in the service planning process if they are needed.

Everest Risk Improvement Service Procedure 6-4-10 Page 3 of 12 f. Anticipated cost to deliver the services - The service provider should summarize the expected cost or hours to complete the service objective.

E. Updating a Service Objective: E.1. The service objectives must be updated noting the date and the services delivered following the delivery of each service activity.

F. Revising A Service Objective: 1. A discussion of the anticipated service objectives for the next policy year should be included in the Renewal Report which is expected at least 60 days prior to renewal for all accounts receiving risk improvement service.

2. It is the responsibility of the Everest LC Manager or Program Administrator’s Loss Control Manager to provide the service provider with current policy number(s) and effective dates for renewed accounts. Risk Improvement service is not to be provided to any account with an expired policy number.

3. It is also expected that service objectives will be revised as service is delivered. There are many reasons to revise a service objective. These include:  Completion of service objectives or action steps  A need to revise or add service objectives or action steps  Changes in account organizational structure such as a change in account contacts, locations or divisions that impact the service plan  Insights gained from additional evaluations of account’s loss producing operations or exposures  Emerging issues such as changes in processes, operations, materials, or workforce  Emerging regulations, government actions or other external factors influencing the policyholder  Requests from the policyholder to deviate from the service plan

G. Service Reports: The following reports are required when providing risk improvement service: Note, most internal Everest and PA distribution is handled via LossWare.

Type of Report When Distribution Service Letter Every visit upon Original: implementation of  Primary Policyholder contact service. Copies:  Other policyholder contacts, producer,  Program Administrator’s Underwriting unit.  Everest LC or Program Administrator LC (see paragraph C)

Everest Risk Improvement Service Procedure 6-4-10 Page 4 of 12 Memo or electronic Policyholder is not Original: mail responsive to service  Program Administrator’s efforts or a need exists Underwriting unit. to communicate Copy: sensitive account  Everest LC or Program information Administrator LC (see paragraph C) Renewal Report When directed by the Original: Everest Loss Control  Program Administrator’s Manager or PA Loss Underwriting unit. Control Manager, 60 Copy: days prior to renewal.  Everest LC or Program Refer to service Administrator LC (see paragraph diagram, pg 13. C) Renewal Summary Included in the last See Service letter distribution above. service letter summarizing the delivery of the last scheduled activity for the current policy year and service plan for the coming policy year. Updated Service Following the Original: Objectives delivery of each  Program Administrator’s scheduled service Underwriting unit activity or visit Copy: outlined on the Action  Everest LC or Program Steps Administrator LC (see paragraph C) *Underwriting Every 3rd renewed Original: survey policy year, within 60  Program Administrator’s days before renewal. Underwriting unit This will replace the Copy: renewal report.  Everest LC or Program Administrator LC (see paragraph C)

H. Service Documents: 1. Service Letters: Service letter must be delivered within 10 days following the date of policyholder visit. The purpose of the letter is to summarize the results of the visit; communicate activities completed / accomplishments achieved, conclusions reached, new recommendations and status of previously submitted recommendations. Service letters must be on the letterhead of the vendor, program administrator or Everest, depending on the affiliation of the service provider delivering the service. In no case shall Everest

Everest Risk Improvement Service Procedure 6-4-10 Page 5 of 12 letterhead be used by anyone that is not an Everest employee unless approved by the VP of Policyholder Services. Service letter must be structured as follows:

a. Heading:  Addressed to primary contact  Include a Reference line (RE:) listing the policy number and effective date

b. 1st or opening paragraph:  The purpose of the visit (per the Service Objective)  Contact(s) or key individuals present met (anyone other than to whom the letter is being addressed)  Date of the visit if not included in a reference section at the beginning of the letter

c. Subsequent paragraphs: This part of the service letter is to be extremely flexible in content and reflect activities and accomplishment during the visit. The following is an outline of this part of a service letter:

Loss Review – loss reviews are expected when the planned/completed service activity includes a need to:  Identify loss reduction objectives  Identify loss trends, causal factors  Monitor progress toward loss reduction objectives  Prioritize service activities such as completing job hazard analyses on several loss producing operations to identify key targets.

Activities and Conclusions – this would include activities / accomplishments completed during the visit and any conclusions developed (e.g. if visit was to evaluate the effectiveness of lock-out / tag- out procedures, describe what the evaluation of the program included and finding / conclusions).

Progress on the service plan/ changes made/changes needed – this would include a brief summary of progress achieved to date and likelihood of achieving the service objectives. If a need to change the service plan exists, the reasons for the change and a summary of the revised plan should be stated.

Recommendations - If 3 or more recommendations, show as an attachment to the service letter. List new recommendation(s) developed as a result of the visit, if none so state. Summarize completed recommendation(s) and include a brief statement as to action taken to complete the recommendation(s). List outstanding recommendations. Restate the original recommendation and include a comment on the status (expected completion date, etc.).

d. Closing paragraph - The month of the next scheduled service visit and planned accomplishments. If the letter contains recommendations include the following phrase, “Everest anticipates your compliance with these recommendations and needs

Everest Risk Improvement Service Procedure 6-4-10 Page 6 of 12 to know your plans for completing them. Please respond in writing to the above address, within 30 days, regarding the status of these recommendations.”

2. Memo or Electronic Mail: This is a free-form communication intended to accompany a service letter when a need exists to report substantial account changes or sensitive information about an account to Everest or its program administrator’s underwriting unit. This communication is also to be used to communicate an account that:  It unresponsive to efforts in setting up a scheduled service visit following 3 attempts  It unresponsive toward risk improvement efforts  Requests a change in risk improvement service such as an increase or decrease in service activities or a discontinuance of risk improvement service

3. Renewal Report: The renewal report is for the program administrator’s underwriting unit. The purpose of this report is to support account renewal efforts by communicating current account status and recent changes to the policyholder’s operations, process, safety program, losses, recommendations, progress on service plan and opinion of risk to the program administrator’s underwriting unit. This report is required when directed by the Everest or PA LC manager. The Renewal Report is due 60 days prior to policy expiration. A revised service plan is required with all renewal reports for account’s to be provided risk improvement service.

4. Renewal Summary: The last service letter to be delivered to the policyholder during the current policy year should include a summary of the services delivered during the entire policy year and a proposed service plan to be implemented upon renewal. The purpose of this summary is to communicate the loss control activities provided and results achieved during the current policy year and support retention of good accounts through a proposed a service plan for the upcoming policy year.

Renewal summary should be identified in the service letter as a separate heading: “Summary of Loss Control Services”. The summary must be structured as follows:

a) 1st or opening paragraph: Describe the status of the service plan, significant accomplishments and results achieved. Document all service activity and summarize number of recommendations submitted, completed and outstanding/open during the current policy year.

Next, the letter should summarize the claims activity including comments on significant trends and account action taken or needed to address these trends.

b) Final paragraph: The final paragraph should identify service goals for the coming policy year and propose a service plan to achieve these goals.

c) Recommendations:

Everest Risk Improvement Service Procedure 6-4-10 Page 7 of 12 On a separate page, list new recommendation(s) developed as a result of the visit and any outstanding recommendations.

I. Service Documentation / Files: 1. Loss control service documentation is required for all policyholders receiving risk improvement services. This is typically accomplished through the LossWare system. If a service provider or Program Administrator is utilizing LossWare, all documentation related to the servicing of the account will be maintained in LossWare. If a service provider or Program Administrator is not using LossWare then they must maintain these files separately. If file folders are selected, the service files may be best maintained either in electronic format or in six section folders.

2. If electronic files are to be maintained, an electronic folder for each policyholder should exist. Sub-folders should be created within each folder labeled as:  Service Objectives – Current and past objectives  Correspondence – Correspondence sent to the policyholder such as service letters.  Loss Information – For storage of electronic loss information if available  Reports – Reports and memos to Program Administrator’s Underwriting Unit such as underwriting survey reports and renewal reports.  Quality Control - QC file reviews and directions to service provider  Miscellaneous - Miscellaneous items such as materials sent to policyholder, policyholder brochures, etc.

3. If hard copy paper service files are to be maintained instead of electronic files, the service files must be labeled with the policyholder’s name and location. The service files should be organized as follows:  Inside front cover - Service objectives, Current on top, all previous underneath.  Opposite front cover – Correspondence sent to the policyholder such as service letters. Letters stored chronologically from the most current on top.  Center section left – Current Loss information  Center section right – Reports to Program Administrator’s Underwriting Unit such as underwriting survey reports and renewal reports.  Opposite back cover – QC file reviews and directions to service provider  Opposite inside cover – Miscellaneous items such as materials sent to policyholder, policyholder brochures, etc.

J. Coordination of Services Involving Multiple Service Providers 1. Policyholders may have unique needs or an organizational structure requiring risk improvement service by multiple service providers. Examples of these needs include:  Policyholders with multiple locations requiring more than one service provider to deliver risk improvement services cost effectively  Policyholders having a diverse organizational structure such as multiple divisions or companies requiring multiple service providers to deliver unique service plans

2. Account coordination service should be provided when these unique conditions exist. Account coordination involves planning, organizing, evaluating, and managing loss

Everest Risk Improvement Service Procedure 6-4-10 Page 8 of 12 control services provided by multiple service providers for a policyholder. The account coordinator or controlling consultant directs all loss control services to multi- location/multi service provider accounts to achieve the account’s service plan. It is the responsibility of the Everest LC manager or Program Administrator’s loss control manager to identify unique policyholder conditions that will benefit from account coordination service.

3. Account coordination service requires the assignment of a controlling consultant. The controlling consultant develops the overall service plan for the account and initiates the service plan, via a completed Everest Coordinated Service Scheduler form, to achieve the stated objectives. The controlling consultant monitors the services delivered by the service providers and reports the findings and results to the overall or corporate level policyholder contact, producer, Everest or program administrator’s underwriting unit and applicable Everest or Program Administrator LC manager.

4. The service providers deliver the services, according to the service objectives outlined on the completed Everest Coordinated Service Scheduler form provided by the controlling consultant. This plan may contain corporate level service objectives applicable to all policyholder operations and location level objectives, applicable to specific locations. It is the service provider’s responsibility to develop and provide service objectives specific to the location(s) serviced by this individual to the controlling consultant. It is the controlling consultant’s responsibility to incorporate these service objectives into an overall account service plan on a completed Everest Coordinated Service Planner.

5. Assignment of Controlling Consultants and Service Providers

a) The applicable Everest or Program Administrator Loss Control manager will assign the controlling consultant to coordinate loss control services. For policyholders with locations that need to be serviced by multiple contract service provider companies due to geographic or skill requirements, the applicable Everest or Program Administrator’s Loss Control manager will assign account coordination responsibilities internally.

b) Controlling Consultant Responsibilities

 Within 30 days of receiving an account coordination assignment develop and submit a completed Coordinated Service Scheduler to the applicable Everest or program administrator’s Loss Control manager for approval. This form summarizes policyholder, producer and Everest contact information as well as location service objectives.  Submit Everest / PA LC Mgr approved Coordinated Service Scheduler or outline this plan in a letter to corporate policyholder contact for approval.  Upon approval of the Coordinated Service Scheduler through the approved controlling consultant’s company of Everest Loss Control (when acting as the controlling consultant) assign service providers to implement service plans at the policyholder locations contained within the service instructions.

Everest Risk Improvement Service Procedure 6-4-10 Page 9 of 12  Be responsible for overall service quality, service activity, and results of service. Within these responsibilities, the controlling consultant must review and approve location service plans, & service activities.  Submit changes to service plans that will result in additional service costs to the applicable Everest or program administrator loss control manager for approval.  Prepare a renewal report and renewal summary letter for the overall policyholder, 60 days prior to renewal. The renewal report should incorporate location service results.  Maintain the Coordinated Service Scheduler.

c) Service provider responsibilities

 Follow the Coordinated Service Scheduler  Implement the service objectives and initiate timely service according to an approved service plan.  Follow all Everest Loss Control procedures when delivering risk improvement service

Everest Risk Improvement Service Procedure 6-4-10 Page 10 of 12 Prepare renewal report and renewal summary letter for each assigned service location to be copied to the account coordinator, ENIC Loss Control, and to the Program or Everest Underwriter.Risk Improvement Service Flow Chart

Everest Risk Improvement Service Procedure 6-4-10 Page 11 of 12 Account Coordination Process

Everest Risk Improvement Service Procedure 6-4-10 Page 12 of 12