1997 RISK MANAGER OF THE YEAR: TAKING ON COMP SLASHED COSTS

Bringing workers compensation and safety under the risk management department's purview and paying closer attention to injury claims have cut FMR Corp.'s workers comp costs dramatically.

The savings have added up even as the company's employee population has soared.

"Today we spend just about exactly the same as when I first came for (workers comp) insurance protection, and claims have more than doubled" while severity has decreased, said Judy Lindenmayer, vp-Fidelity insurance and risk management for Boston-based FMR, better known as Fidelity Investments. "So I feel pretty good about that."

Moreover, Fidelity's risk management department has cut workers comp losses by more than $1 million during each of the past two years by establishing safety policies, helping injured workers get back on the job as soon as possible and fighting spurious claims, according to Ms. Lindenmayer and Don Hagerty, claims and loss control manager.

For all of 1996, Fidelity paid $239,000 in losses, according to Ms. Lindenmayer. Fidelity is subject to a $250,000 deductible per loss under its workers comp coverage.

All the while, Fidelity's employee population has been soaring. During the nine years that Ms. Lindenmayer has headed Fidelity's risk management department, Fidelity's employee population has more than quadrupled to 24,000 from 5,500.

Ms. Lindenmayer credits Mr. Hagerty for the low costs. "He's pretty tenacious," she said about the former maximum-security prison guard officer and Boston Marathon runner.

Ms. Lindenmayer sparked the improvement in costs shortly after she arrived at Fidelity. At that time, the employee benefit department handled workers comp.

"But, as the company began to grow, we were losing an opportunity to enhance our cash flow for lack of attention" to workers comp claims administration, Ms. Lindenmayer said.

She persuaded the benefit manager to allow her to take over responsibility for workers comp.

Safety was moved into risk management in 1994. Again, the move came at Ms. Lindenmayer's urging.

A year earlier, Mr. Hagerty had been named head of safety, which was under the company's security group. At that time, his supervisor called Ms. Lindenmayer, a member of the security group's contingency planning team, for tips to help Mr. Hagerty get better grounded in safety issues.

She suggested sending him to the Risk & Insurance Management Society Inc.'s annual conference two weeks later.

When management of the security group changed the next year, Ms. Lindenmayer successfully pitched to move safety into risk management.

"It's been a very good fit," she said. Risk management has the information and analytical skills to support the safety group, which is responsible for both property and employee protection, she explained.

Noting that "safety and claims go hand in hand," Ms. Lindenmayer said Mr. Hagerty devoured claims data from Fidelity's insurer to develop loss trends immediately after he moved into the risk management department.

After developing those trends, Mr. Hagerty began visiting problem sites and observed the behavior of workers.

That served two purposes.

"Observed behavior tends to change," Ms. Lindenmayer noted.

Perhaps more importantly, though, Mr. Hagerty's study helped him develop a safety policy that he has presented at various sites and codified in a book that has been forwarded to the presidents of all of the Fidelity Capital group of companies, which consists of more than 100 subsidiaries.

The book contains sections that are standard for every Fidelity company, such as how to file a claim.

But, portions of it are tailor-made for each company to guide it in reducing claims.

In addition, Mr. Hagerty and Peter B. Burd, a risk manager on Ms. Lindenmayer's staff who primarily is responsible for the Fidelity Capital companies, continue to visit all of the capital companies.

Mr. Hagerty also visits Fidelity's workers compensation insurance adjuster to investigate why some claims have been open an unusually long time. Many of the claims are closed by the time he arrives, Ms. Lindenmayer noted.

In addition, "someone from my department is at every hearing, at every trial on every claim in Boston," she said. A risk management representative is present at hearings out of state for larger claims as well.