Implementing Enterprise Risk Management: Case Studies and Best Practices

CHAPTER 11 Starting from Scratch The Evolution of ERM at the Workers' Compensation Fund

DAN M. HAIR

Senior Vice President, Chief Risk Officer, Workers Compensation Fund

Modern workers' compensation systems are children of the industrial revolution. The concept of a social insurance program protecting workers from job-related injuries and illnesses had its modern origins in the development of European factory, child labor, and mining regulations throughout the eighteenth and nineteenth centuries. In the United States there was a long gestation period leading to the adoption of similar schemes. In the nineteenth century accidents in the mining and railroad industries led to early regulatory structures in those areas. The Russell Sage Foundation's Pittsburgh Survey of 1907 along with the Triangle Shirtwaist Factory fire in 1911 were major factors in the adoption of the first state workmen's compensation laws from 1911 to 1915.

In 1917, the Utah legislature passed the Workers' Compensation Act, requiring all employers to obtain workers' compensation insurance coverage. The Workers Compensation Fund (WCF), then called the State Insurance Fund, was created to provide competitively priced insurance to Utah employers. In the same year, the legislature appropriated $40,000 from the state treasury for WCF to begin writing insurance. This loan was repaid by WCF in four years, and from that time forward WCF has operated financially independent of the state and has functioned largely as ...