Issue link: https://read.dmtmag.com/i/175761
INSURANCE ISSUES Take Control of Risk Management to Take Control of Insurance Costs I f you were told that by doing one thing at your business you could keep your employees safer on the job and possibly even reduce insurance costs, would you be interested? Of course you would! What if you were told that one thing is risk management? This is where some business owners stop listening. Risk management just isn't a priority right now—not enough hours in the day to put a plan into action. Or, they may consider it restrictive and expensive and don't fully understand how it could help. If you're one who has put loss control on the back burner, perhaps these statistics will prompt you to reconsider its importance to your entire organization. • Every year, nearly four million people will suffer a workplace injury. Some may never fully recover.1 • On average, a single workers compensation claim will cost $36,200.2 Just one claim could increase your work comp premium by 5, 10, 20, or even 50 percent. Just one claim could have an effect on your work comp mod for years. Just one claim could impact your earnings due to hidden costs not paid by insurance. Just one claim. It's all about taking control You've heard it said that you have to spend money to make money. A similar case could be made for risk management: You have to invest money to save money. Without an effective risk management program, you could be setting up your business for a downfall from which it may not Garrett Pepper Account Executive, ARMS be able to recover. As one business owner put it, "I don't think there's an alternative to providing a safe workplace. I'm one lawsuit away from being out of business." Two out of three Your insurance rates are based on a three-part formula that multiplies base rates times experience times your schedule rating. Your experience rating is based on your claims history; and, basically, your schedule rating is based on how your business operates. In other words, you control two of the three factors used to determine your insurance rates. It doesn't take a special formula to illustrate the effect insurance claims have on premium. Typically, the more claims your business has, the higher premium you will pay. This is true for any type of claim, whether property or work comp. While this may be an overly simplified explanation of insurance "cause and effect," it paints a clear picture of the positive impact an effective risk management program can have on your company. Sometimes managing a company can feel pretty overwhelming—one task gets completed and two more get added. If risk management feels overwhelming, remember, Federated is here to help you. So, if you don't set aside time to evaluate your current risk management program, will you have time to handle the disruption caused by just one claim? 1 OSHA. 2 "Worker Injuries, Illnesses, and Fatalities." www.osha.gov/oshstats/commonstats.html. 2011-2012 National Safety Council. "Injury Facts®, 2012 Edition. Itasca, IL: Melissa Ruminski It's Our Business to Protect Yours® This publication is intended to provide general recommendations regarding risk prevention. It is not intended to include all steps or processes necessary to adequately protect you, your business, or your customers. You should always consult your personal attorney and insurance advisor for advice unique to you and your business. © 2008 Federated Mutual Insurance Company. All rights reserved. 28 OIL PROPHETS SUMMER 2013