Insurance Companies Seek More Business in Marcellus Shale -
Pittsburgh Business Times
28 January 2011
As oil and gas companies rush to train and hire new workers for growing
operations in the region’s Marcellus Shale, there is a cautionary
statistic that insurance companies hope will inspire new business:
Companies that hire new workers have more workers’ compensation claims,
especially if they are drilling for fossil fuels.
“Workers with less than one year of experience represent 50 percent of
lost time claims and 53 percent of lost time claim costs,” said Pat
Clarke, a risk engineering manager for Zurich Insurance, citing
Zurich’s analysis of its oil and gas clients.
By comparison, new workers across all industries make up 40 percent of
claims and 34 percent of costs, he said.
In Pennsylvania, occupations that fall under the category of natural
resources and mining had the highest injury rates in the state in 2008
and 2009, the most recent years for which data is available from the
state Department of Labor & Industry.
While both state and nationwide workers’ comp claims decreased during
the recession, “as the economy improves, more Americans back on the job
could potentially lead to easily preventable work-related injuries and
illnesses,” said David Michaels, U.S. assistant secretary of Labor for
occupational safety and health.
Given the six-digit employment projections cited by the Marcellus Shale
industry, managing workers’ compensation will be a growing concern.
Zurich now seeks to help clients marry their safety division with their
human resource function and begin injury prevention before a candidate
is hired for the job. That means oil and gas operators think of job
descriptions and interviews as steps in their safety assurance process,
not just their hiring protocol, because inappropriately placed
candidates or those who take a job not certain of its requirements
result in higher injury rates, Clarke said.
Marsh, an insurance brokerage, has been selling workers’ comp coverage
to Marcellus Shale clients for several years, said Henry Scully, a
senior vice president with the company’s Pittsburgh office. Many of
those clients are energy firms that had existing policies through Marsh
when they decided to pursue shale development.
“This is really basic. People are always worried about staff leaving”
as a result of injuries sustained on the job, he said. The injuries are
similar for Marcellus workers as for other outside, manual labor jobs,
and an average claim costs the company between $5,000 and $25,000.
“You run into that whether it’s Marcellus Shale or not, but the
Marcellus just highlights all that because there’s the rush to get
workers trained because there’s not enough people to do (the work),”
Scully said.
Claysville-based RJR Safety Inc. has shifted almost all of its safety
training services from manufacturing to Marcellus Shale clients in the
past few years.
President Wayne Vanderhoof said most of the injuries come after the
drilling rig leaves the site and field workers move debris and connect
pipes by hand. That’s labor most frequently performed by new hires, who
are more prone to unsafe behavior, he said.
“Part of it is that new employees don’t ask for help because they want
to prove they can do it,” Vanderhoof said. “Part of it is that the
crews are short-manned.”
Green Hard Hats
Safety programs are changing in the Marcellus Shale. Bigger
companies, such as the national exploration and production firms
working in the region, have more standardized and effective safety
programs for new hires than smaller, regional firms, said Doug Mehan,
director of health and safety education with Bradford-based driller
Dallas-Morris. And much of that procedure is trickling down to their
subcontractors.
Many firms have a short service employee program that involves
assigning mentors to watch over new workers and giving newbies green
hard hats so others know they are inexperienced.
The next push in injury management should be better supervisor
training, Vanderhoof said.
“Because you’re hiring so many people and trying to get crews
established, the guy who’s been there six months gets promoted to
supervisor because he’s the most senior there. Now he’s got to get the
job done but there’s no real (supervisor) training,” he said.
Anya Litvak covers energy, transportation, utilities, gaming and
accounting for the Pittsburgh Business Times.
Contact her at alitvak@bizjournals.com or (412) 208-3824.