Safety Equates To Better Insurance Rates
The first meeting was with our workers' compensation insurance carrier. We received our renewal proposal for the next year.
Fortunately, for a change, our Experience Modification Ratio had gone down several percentage points, and, as a result, our total premium for workers' compensation insurance actually went down slightly for the year. This was an important thing for us because the last few years our premiums had risen significantly because of some bad experiences.
As a result of those experiences, three years ago we put in place a safety committee in our firm and really began making an effort to emphasize safety. Unfortunately, it has taken three years for the effects of the committee's work to help us. In Missouri, in computing your Experience Modification Ratio, any incidents stay on your record for three years.
The Safety Committee
A Health and Welfare Actuary's projections regarding health care costs over the next five years are that medical costs will continue to rise between 12 percent and 18 percent per year for the foreseeable future. Knowing that workers' compensation insurance rates are directly related to medical costs, it is apparent that it is more important than ever for us to emphasize safety in our companies.We have lowered our premiums by making a management decision to emphasize safety. The first step was putting a safety committee in place.
The committee consists of installers, shop personnel, service technicians, drivers, and our company safety manager - the only management person on the committee. We felt we didn't want to overload the committee with management people because that might stifle constructive input. The committee began by meeting every two months.
The committee's first suggestion was to set a goal for the number of days we could go with no lost-time accidents. If we met that goal, then everyone in the company would receive an award. We had to spread the word about the importance of achieving this goal.
Then one of the committee members, a volunteer fireman with medical and CPR training, conducted some "toolbox talks" with various groups of our employees. These talks lasted only about 30 minutes, early in the morning, and highlighted an area of importance for that group of employees.
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In our company's monthly news-letter, we have a section devoted specifically to safety. We include our status regarding our "no lost-time accidents" goal, as well as some tips regarding any area that may have caused us problems with accidents. We consulted our OSHA log to determine the specific incidents that had the most significant negative affect on us.
We also have a "safety representative" from our insurance carrier give a brief talk at our annual company meeting. This serves the dual purpose of showing the employees that safety is important to us, as well as letting our insurance company know we are emphasizing safety.
Through the insurance company's recommendation, we are now self-paying all claims $500 and below. We found that our Experience Modification Ratio was affected by the number of claims, as well as the size of the claims, and self-paying the small claims can help us significantly. We are considering recognizing workers with exemplary safety records, too.
It appears to us that the most important thing is that you and your company have to recognize the importance of safety for your company. Oftentimes, we find we are busy putting out the day-to-day fires and safety isn't always a top priority. But we have found if you want to find a good way to improve your bottom line, safety really does pay!
Guest columnist Butch Welsch operates Welsch Heating & Cooling in St. Louis. He can be reached by e-mail at Welsch1@primary.net.
Publication date: 04/25/2005