Insurance Issues
Taking a Proactive Approach to Mitigate Expenses
There is no “Silver Bullet” a company can use to drop all of their insurance costs in one fell swoop, but by implementing some of these suggestions you can at least start down the path.
Nathan Brainard
There are a number of ways to impact your cost of insurance that have nothing to do with shopping your policy every year at renewal. Difficult times call for creative solutions and a proactive approach in order to mitigate your expenses. The intent of this article is to shed a light on some ideas you may not have considered.
Tires
When a consumer goes to purchase a vehicle there are many aspects to focus on such as lighting packages, tarp systems, fuel consumption etc. Rarely do consumers ask about the tires. They come with the vehicle so they must be adequate right? In a recent conversation with the Risk Manager of a waste hauler in Miami, FL, I learned this was not the case. This gentleman had a background in the tire industry as a Risk Manager, so he is acutely aware of various specifications of different models.
When he took the position at the waste company he did a total survey of their loss history and began implementing systems to improve all aspects of the company’s operations. When he got to the fleet, he noticed almost all of the units were equipped with “stock” 11/22 R tires. He decided to conduct an experiment, so he equipped several of their units with 315/80/22s. His results were staggering. He found the trucks he equipped with the 315/80/22s had a reduction in down time, lower fuel costs, more stability in the unit and the tires had a longer life expectancy. He also noted there was a reduction in mechanical failure.
In this industry, roughly 90 percent of a company’s liability revolves around their vehicles. They are big, bulky and on the road for large portions of the day. By making this change, the company not only improved the reliability of their fleet, but also made the fleet safer which in theory will reduce potential claims related to their auto policy from “self inflicted” incidents. Obviously, the tires are only one aspect of the vehicle, but worth investigating for your company. Proper tires with a quality driver/operator are your best bet.
GPS
Many insurance carriers are offering discounted premiums for companies with a proven safety record. This is unlikely a news flash, however, did you know these same carriers are now beginning to offer premium discounts to companies with GPS units installed in their fleet?
There are a number of third-party companies offering GPS installation and monitoring and some are now beginning to lease the equipment instead of just selling it. Insurance carriers love to see GPS. GPS shows you are concerned with your fleet and employees. If a truck is stolen that has GPS, the odds of them tracking it down and recovering the unit are greatly improved as opposed to writing it off as a total loss. You can also prove or disprove where your trucks were at a specific time in the event of a dispute with a potential claimant.
There are a plethora of options to choose from when selecting a GPS system. Some offer the ability to create “Geo Fencing” allowing the company’s Risk Manager to monitor routes, speed, etc. while others offer cameras to play back 20+ seconds prior to an accident. These companies tend to advertise in trade publications, on the Internet and at industry shows such as Waste Expo and other conferences. Some insurance companies even have their own system which they can provide at discounted rates.
Not only are you able to track your vehicles, you are also able to track the productivity of a driver. Are they where they are supposed to be, or have they taken the company vehicle to an area outside of their assigned grid? Are they speeding through school zones or other speed restricted areas?
There is an upfront cost of installing a GPS system, but over the long run you will make back the investment ten fold. Another logical concern many employers face with the installation of a system like this is how the employees will react. Installation of GPS, especially those with cameras can make the employees feel like the company is watching them at all times. The approach with the best results seems to be explaining how this impacts the company and its costs. Some employers even go so far as to offer bonuses for driver safety, fuel conservation, etc., all of which can be tracked on these systems if you purchase the necessary package. This turns a potential negative into an incentive opportunity for the employees.
Return To Work Programs
Unfortunately, every city has their fair share of ambulance chasing attorneys stating they may be able to collect additional money for an injured employee if they contact them. While you are not going to be able to control the action of every employee, you can certainly improve their perception of how the company will respond if they are injured. The longer the employee is injured and not back to work in some capacity, the more exposed they are to television and radio commercials from these lawyers. In addition to feelings of isolation, they begin to wonder if their job will still be there when they are healthy enough to return.
Return to Work or Light Duty offers an employee the opportunity to get back to work in a different capacity until they are fully healed and given the thumbs up from the doctor to engage in their normal duties. Companies can have the injured employee do things ranging from riding along with route supervisors to answering phones or filing paper work. It really doesn’t matter what the task is as long as they are back at work and feel they are contributing. This also gives the employee the ability to experience a different side of the company.
For those employees who are severely injured it is a good idea to have someone in a recognizable position such as Human Resource or Senior Management call the injured employee on a weekly basis to see how they are doing and let them know they are being missed at work. This is a simple task that takes five minutes, but could save the company tens of thousands of dollars. This approach of touching base with them to get an update on their health status and offering a light duty option makes the injured employee feel appreciated. They tend to feel the company has gone the extra mile for them and because of this want to reciprocate the gesture.
It is also a good idea to have the doctor you send your injured workers to come and visit your yard. This way they can see first hand what is required from each position in your company and a proper diagnosis of Light Duty can be assigned. If this is not done, they are relying on an employee’s account of the position and duties and might get a perspective that is inaccurate.
As a side note, you do not want to give the injured employee a menial task like counting paper clips over and over or being a washroom attendant. This is more likely to hurt you in the long run. I have seen both of these done in the past, and both times the employee contacted a lawyer. The work made them feel unappreciated and humiliated, both are feelings you want to avoid.
Safety Meetings and Employee Handbooks
How often are you holding safety meetings? Many employers conduct some form of safety meetings, but they are sporadic. Safety meetings are an excellent way to get your employees together and address any items that have come up. It is very important to document the date, time and subject of the meeting, as well as having those in attendance sign off they were there. Whether the meetings are daily, weekly, monthly or quarterly, they are important. In addition to receiving discounts on your insurance premiums, you are essentially addressing items that could give way to a claim which will drive up the cost of your insurance.
One area of safety meetings that tends to be neglected in this industry is known as “Near Misses”. This is when an accident is narrowly avoided. In order for you to continue to educate and train your employees, the tracking of near misses is essential. It has been my experience employees are fearful to tell their supervisor or company owner about near misses as they feel it will be used against them during performance review or bonus time. They don’t want to say, “Bob, I was using the front loader filling a trailer and XYZ happened,” as they are afraid they will be reprimanded, or worse fired for what could have happened. Instead, they look over their shoulder, make sure no one saw the incident and pretend it never happened. In order for this tracking to take place, as well as using it as an example for others so they don’t make the same mistake, we recommend companies do not mention names or single people out, and the reporting of this type of situation be given amnesty from disciplinary action. This way, employees feel comfortable sharing and the entire team benefits from the information they share.
These items can also be used to update the company Safety Manual. Hopefully, you are updating your manuals as your company moves forward. Any program put in place at the beginning is most certain to grow outdated unless it is continually maintained. This can be as simple as photocopying a document, or adding a section from a seminar. Be sure to review the updates with your employees on an annual basis. This will reinforce the company’s commitment to safety.
Did you know by conducting regular safety meetings, documenting the topic and having the employees sign off they were in attendance, could save you up to 25 percent of the employers’ liability on a worker’s comp claim? There are additional requirements to make this happen, some of which are outlined below. It is recommended you speak with your agent about this to see if your state offers this type of protection to employers who are using safe practices and what the exact requirements are. This varies from state to state, and the company must follow the same set of standards for all employees. If your best driver makes a mistake and receives little or no punishment, and then another average driver does the same thing and is given a two-day suspension without pay it will be viewed as a non-unilateral system and could jeopardize any potential savings to the company in the event of a claim.
In addition to enforcing the safety rules you must also enforce the use of Personal Protective Equipment (PPE) and have documents with the employees signature showing they received the equipment and were properly trained in its use (should such training be required). The use of PPE is something that should definitely be included in your Employee Handbook. It is one of only a myriad of topics that should be addressed. Other topics should include, but not be limited to: Use of Company Vehicles, Use of Cell Phones, Safety Practices, Emergency Contact Names and Numbers, Company Policies and Guidelines, and similar topics. Each employee should again sign off that they received and reviewed the handbook as this will be taken into account should a claim arise.
If you do not have an Employee Handbook or Safety Program there are third party companies who can help you establish them. There are even companies out there who can come in and perform mock OSHA inspections. With the current Administration there are a massive amount of new OSHA inspectors being trained and deployed into the field. They are turning up in areas they may have never visited before and are looking for things the past Administration was more lenient with, such as combustible dust (a hot topic of the new Administration). As OSHA fines can be very hefty, investing in a service like this could save the company substantial fines. Some universities have Risk Management programs that offer this for free, and if they do come out and do a survey the company can be exempted from an actual OSHA inspection for a period of time to rectify any items identified as problem areas. Your agent should be able to tell you of any offerings like this in your area.
Starting Down the Right Path
There is no “Silver Bullet” a company can use to drop all of their insurance costs in one fell swoop, but by implementing some of the suggestions mentioned you can at least start down the path. Some of these items will require an up front cost, but their value can be realized over time. Admittedly, some will be recognized faster than others. Additionally, not all of the above items are applicable in every state so it is recommended you speak with your agent to determine if any discounts are available.
Nathan Brainard is Vice President, Environmental Division, at Insurance Office of America (IOA) (Longwood, FL). Nathan has been with IOA for six years and specializes in Environmental Insurance with an emphasis on insurance for the Waste, Recycling, Remediation and Demolition industries. He can be reached at (407) 998-5287 or via e-mail at [email protected].