The two questions people ask safety professionals and risk managers most frequently are:
- How can I reduce the amount of money I pay in insurance?
- Can you perform a mock OSHA inspection for us?
Everyone wants to reduce their premiums, so that’s no surprise. But why do they want a mock OSHA inspection? They ask this believing that if they can pass a mock inspection, it signals that they have a good safety program. Unfortunately, that just isn’t true.
OSHA has rules, not suggestions. Your company is supposed to pass inspection. After all, as safety and risk professionals, our mission is not to improve a safety program after an injury occurs, but rather to prevent our employees from being injured in the first place. We have workers’ compensation insurance so that if our program fails and someone becomes injured, we are able to take proper care of that worker.
So, compliance in and of itself is not necessarily going to make a workplace safer. While inspections and compliance audits are part of an effective safety program, a long-term, strategic approach provides the best results. Savvy loss control specialists understand that the goal is to create a strategic, proactive safety plan; not a reactive, tactical safety program.
Strategic Versus Tactical Loss Control
Whether you are a trained safety professional or someone who was “volunteered” to coordinate your company’s safety efforts, you need to provide safety goals and direction for your employees. The most effective way to do that is by following these steps:
- Risk identification
- Risk evaluation
- Risk quantification
- Evaluation and planning
Take time to review both the frequency and severity of your accident trends. Understand what is driving your losses. Then, to make the most positive impact, focus on mitigating high-frequency or high-severity loss drivers. In other words, take control over your safety program and direct your resources: don’t wait for an insurance carrier to do it for you.
Improving Your Risk Profile
The importance of ongoing planning cannot be overemphasized. Safety is not a one-time, set it and forget it type of program. That’s because your business, employees and risks change over time. You must continually evaluate your loss data and modify your strategy to stay focused on your loss drivers.
OSHA estimates that for every dollar that is invested in safety policies and planning, a corresponding maximum of six dollars is saved in accident costs. While that savings is impactful, an even greater benefit is derived by improving your safety culture and in the time savings realized by your safety and management teams.
When thinking about your risk management goals and developing your long-term risk management strategy, consider these questions:
- How risk adverse is your company today?
- Do you want your risk management program to progress and accept more risk as your losses improve by possibly reviewing a high-deductible plan or other options?
- As you plan and budget for safety, are you only planning for losses and premiums?
- Can you justify any services or programs by quantifying loss reductions?
- Can you show premium savings by selecting the appropriate insurance programs and demonstrating loss reductions?
- Can you demonstrate to the executive leadership team a cost savings, better insurance coverage, a safer work environment, less absenteeism and improved performance?
- Can you demonstrate how improved safety through strategic loss prevention planning can increase profitability?
In addition to strengthening your business, an effective loss control program could help you improve your position with insurance carriers and reduce your insurance premium expenses. Eliminating accidents will reduce your workers’ compensation medical costs, including your return-to-work program. Finally, not only will your employees be happier, but you also will reduce the impact of indirect losses (e.g., productivity, quality, workforce attrition) on the business.
For More Information
To learn more about the business value of safety and considerations for your loss control program, read our white paper, Safety and Loss Control: Strategies to Protect Employees and Profitability. Also, your Hylant risk management expert can assist you in reviewing your casualty risk profile and offer suggestions for improvement. If you are not yet a Hylant client but would like to speak with someone about your company’s casualty risks, contact us here.
The above information does not constitute advice. Always contact your insurance broker or trusted advisor for insurance-related questions.