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Liberty Mutual's Research Institute: Making money with pro-bono work

Last updated Dec. 20, 2006

Work at Liberty Mutual’s Research Institute for Safety (RIS) continues much as it has for the past half century.  Since its inception in 1954, the RIS, located in Hopkinton, Massachusetts, has been studying the causes of work injuries, workplace mishaps, job-related stress and overexertion—in short, anything that might precipitate an insurance claim.

The result of all the research, of course, is diverse discovery of the usual causes behind the problems.  In the end, Liberty Mutual hopes to avoid the majority of these problems entirely by exploring how they occur and discovering what causes them, which allows insurance companies to resolve the causes.  Such a resolution might include flattening a small office step to avoid trips and falls, or ergonomic training to reduce back pain for desk workers.

What the approach represents, essentially, is a philosophy of attacking a problem at its source, of treating the disease rather than the symptoms.  In the short run, it would be more efficient to simply deal with claims one at a time, reviewing and paying out cases one by one.  Liberty Mutual, however, is quite apparently willing to drain millions of dollars on research in the hope that client companies will take note of the data, make appropriate changes to avoid accidents, and decrease their own and Liberty Mutual’s expenses.

Much of the research at the RIS is focused on reducing workers’ compensation claims; thus, many projects deal with workplace hazards or job risks.  In 2005, for example, one project studied the causes of “slips, trips, and falls” in the office; the study revealed that 64% of falls occurred at a transitional area (whether dry to wet, one type of floor to another, or one level to another).  A second study showed that restaurant workers were most often injured in tasks involving carrying and handling, and that about 40% of these injuries were due to overexertion, and 20% due to same-level falls.

Of course the list is much too long to reproduce here; from the research projects under way at the Institute, 96 peer-reviewed scientific papers were published in reputable journals in the year 2005.  The annual budget at the RIS runs above $8 million—it is certainly a large-scale operation.

It is larger, for example, than the research labs of The Hartford and Travelers Insurance.  These two facilities are among a group of company-associated labs that work more directly with the insurer’s client base.  This participation includes work in the indoor air quality field, and offers fee-for-service arrangements to both individual and business clients (e.g. specific risk analysis, or evaluation of an air contaminant).

Liberty Mutual itself has an Industrial Hygiene Lab located at the same site as the RIS, which performs such work, but this entity is a separate entity from their research area.

Some labs also offer rentals of air filtration, purification, and analysis systems for businesses and individuals.  A few company-associated labs sell their work to other companies for their own use in client advising or premium adjustment.

The research labs of the RIS do not conduct business with other insurance companies.  Rather, the RIS publishes data publicly.  The results of experiments, if they are conclusive or useful, are submitted to scientific publications for public consumption.  The research is free to those who choose to use it, including competing insurance companies.

The reason that the RIS can give so much while seeming to ask so little is a triumph of capitalism—simple capitalism, too; the RIS needs no drastic steps such as raising premiums for client companies that fail to implement the RIS recommendations.  Companies simply make more money when their workers are not injured.  It is therefore usually in the best interests of the company to heed the recommendations of the RIS.  In turn, this benefits Liberty Mutual, who will not have to pay out for workers’ comp claims.

Liberty Mutual also gains in the public eye for spending so much on worker safety.  Because of helpful work that it does, the RIS seems the philanthrope of the industry, which can only help attract customers. However, both of these benefits are virtually impossible to quantify.  All we know is that Liberty Mutual, for monetary or other reasons, deems the value greater than the cost.

The cyclic system makes it financially possible for Liberty Mutual to spend vast amounts of time and money searching for a way to keep people safer.  It is truly a win-win situation.  More information is available at www.libertymutual.com/researchinstitute.


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