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JURY AWARDS AND HEALTH CARE COSTS DOMINATE CONCERNS OF MANUFACTURERS

    JURY AWARDS AND HEALTH CARE COSTS DOMINATE CONCERNS OF MANUFACTURERS
    NEW YORK, May 22 /PRNewswire/ -- Excessive punitive damage awards and spiraling corporate medical expenses are among the most pressing business concerns for U.S. manufacturers, according to a national survey conducted by Alexander & Alexander Services Inc. (A&A) (NYSE: AAL).
    Manufacturing executives also voiced apprehension over workers compensation issues.  The need to implement corporate policies to prevent job-related accidents and injuries was cited as a top priority by 86 percent of respondents.
    "Our findings document a two-pronged attack on manufacturers," reports Robert H. Moore, A&A senior vice president.  "Corporate capacity to pay for soaring medical expenditures is being further undermined by an ailing workers comp system."
    As these costs continue to escalate, manufacturers are increasingly focused on workplace safety, Moore says.
    Dr. Jeff Harris, director of research and development for the Alexander Consulting Group's Health Strategies Group, notes, "We have found that workplace safety and proactive injury management programs operate best when they are broad-gauged, functionally integrated and actively encouraged by top management."
    To curb companies' workers comp costs and related health care expenditures, A&A has created a strategic workers comp consulting group from a cross-section of its broking, consulting and risk management services.  Its job is to develop solutions to the complex challenges posed by these interrelated issues.
    In responding to A&A's findings, Paul Maddock, General Motors' director of risk management, notes, "Obviously, the big three are not the only companies adversely impacted by soaring medical and workers compensation costs.  It is becoming increasingly evident that if these expenditures are not restrained, it will be more difficult for U.S. businesses to be competitive in global markets."
    The manufacturing industry also continues to worry about unpredictable legal costs.  Capping non-economic and/or punitive damages was the leading issue in this year's survey with an 87 percent rating. Other top civil justice reform topics include the need to modify the joint and several liability doctrine and implement federal product liability reform.
    Recessionary pressures are also evident as 77 percent of manufacturers expressed concern over an increase in health care and workers comp claims as a result of downsizing.
    "The economic downturn gripping the U.S. has hit manufacturers hard. With the passing of the Cold War era and intensifying global economic competition, manufacturers have been restructuring their operations," comments Ed Freedman, managing director of the National Health and Welfare Practice of The Alexander Consulting Group.  "One worrying result has been an increase in health care costs to support long-term disability and workers comp claims as companies downsize."
    Additionally, this year's findings reflected interest in insurance market conditions.  Eighty-one percent of manufacturers noted the importance of using alternative risk financing mechanisms while 78 percent were anxious about the continuation of the soft property/casualty market.
    A&A's fifth annual survey focused on 98 legislative and regulatory issues.  Typical respondents were executives in companies with sales of $250 million or more, with half generating sales of at least $1 billion.
    The research was undertaken by A&A Government & Industry Affairs Inc., in Washington, D.C., and Radford Associates, part of the Alexander & Alexander Consulting Group Inc., a human resource management consulting company.
    A&A is a global insurance brokerage, risk management and human resource management consulting company serving clients from offices in more than 80 countries.
    NOTE:  A chart of leading public policy concerns for U.S. manufacturing companies follows.  Copies of the report are available from A&A Services Inc., Corporate Communications, 1211 Avenue of the Americas, New York, N.Y. 10036.
                 Alexander & Alexander 1992 Survey
                     Manufacturing Executives
                 10 Leading Public Policy Concerns
                                                            As a percent
    Caps on punitive damages awards                               87
    Workplace safety                                              86
    Spiraling health care costs                                   84
    Modification of joint and several liability doctrine          82
    Use of alternative risk financing mechanisms                  81
    Workers comp:  Increasing residual market costs               80
    Soft property/casualty insurance market                       78
    Increase in health care and workers
         comp claims as a result of downsizing                    77
    Use of workers comp system in lieu of health care program     76
    Product liability reform to
         establish uniform federal standards                      76
    -0-                       5/22/92
    /CONTACT:  Cathy Aiello of Alexander & Alexander, 212-840-8500/
    (AAL) CO:  Alexander & Alexander Services Inc. ST:  New York IN:  INS SU: TS -- NY018 -- 3270 05/22/92 11:34 EDT
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Publication:PR Newswire
Date:May 22, 1992
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