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The advantages of a strong safety program
I have been trying to convince one of my new customers about the importance of a strong safety program and aggressively managing his employee injury and property damage claims. He believed, as do others, that it is not worth spending the time to do this because these problems are all better handled by his insurance program. He feels the Insurance premium is always going to be a fixed cost to him regardless of how much he intervenes.
This may be a little short-sighted on this employer's part. In most cases, the real costs of a worker's compensation claim are far more than the medical, wage replacement and settlement expenses paid by the insurance company. According to Joseph L. Pilato, Account Executive with Maran Corporate Risk Associates, “the indirect costs associated with insurance claims … can add up to much more than the cost of the premiums.” Pilato suggests that the business should “Consider the costs associated with these by-products of accidents:”
According to Pilato, a partial list of those would include:
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Productivity costs due to time lost by injured workers;
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Cost of training new workers;
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Time and expense of recruiting replacement workers;
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Cost of management time to investigate accidents, correspond with insurer, etc.;
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Disruption to work activities of co-workers during accident investigation;
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Non-covered claims costs, such as deductibles, intentionally retained costs, or claim denials;
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In cases of bad publicity, the cost to your brand or reputation;
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Time and employee morale effects during OSHA investigation;
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Costs associated with the loss of use of company equipment or delivery vehicles;
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Loss of market while recovering from damage to a production, operations or retail facility;
Pilato also says: “As you can imagine, the above indirect consequences can be devastating to a business. That’s why it's a good idea to identify existing and potential claims hazards and seek assistance from your agent and insurance company to prevent or limit your insurance losses.”
If you need additional help or guidance, it would be good to seek the advice of a Claims or Risk Management consultant who can take the time to guide you in setting up a claims reduction and control program. These are also good discussion points to raise with your supervisors and line managers. Pursuing change here will no doubt resut in premium savings from an aggressive safety program combined with close in-house monitoring of all accidents and Work Comp Claims.