By Virginia Reames
The Policy Center
Jackson, MS

Once we had a favorite insurance customer. Yes, his premiums were pretty high, but the man’s company never ever had a claim. He even had a .80 Experience Mod on his Workers Comp. That means he had a 20% discount off the going rates because he was claim free for several years. Our guy even had daily safety meetings. Not long, but every day. He said he learned that from his friends out on oil rigs.

The man decided to retire, and he turned the management of the business over to a relative, one who had actually worked with the crew. The new manager understood the business, and, as a relative, had a stake in the business staying successful. Furthermore, he had plenty of good ideas about how to best use the 40 hours per week he had allotted to him.

The operation stayed pretty busy because, truthfully, this wasn’t the sort of business that had a lot of competition but had a lot of possibilities. The new manager expanded and hired a few more folks to meet this demand.

And he stopped the safety meetings because, well, his guys were scattered all over and didn’t have time to run into the office for an hour or so just to go over the same old stuff they had all heard time and time again.

What happened next? It started with an occasional small workers comp claim, then there was an occasional fender-bender auto claim. The workers were sure glad, they said, that the new guy was in charge, because he understood that sometimes these things happened. A crew member definitely did not want to have to explain to the old guy how he backed into that other truck! No, sir.

There were two small shop fires. Neither did much damage, but they filed the claims anyway. And it sure was a shame about that new guy’s back injury—dang!

Bottom line, they not only lost their 20% discount, but wound up with a 10% increase—an EMod of 1.1—within 3 years. That’s a total 30% hit on their workers comp rates alone. Plus, the property carrier raised their deductible to $5000, and they got their auto coverage dropped. The worst thing that can happen is to have your insurance cancelled or non-renewed. Nobody wants you when this happens.

Am I making my point here? Obviously, the old guy with his attitude and his daily safety meetings did something right. And obviously, “understanding that these things happen” wasn’t the best business approach after all.

The two management approaches speak for themselves – one got the job done, and the other failed. Miserably.

Somehow, those things did not happen when the old guy was running the show. They sure didn’t want to have to explain how they damaged the truck – somehow, they managed not to tear up that truck. They also, somehow, didn’t get hurt or file workers comp claims.

They managed to get the work done even though they had to attend those safety meetings. Daily safety meetings. A trick the old guy learned from his friends on the oil rigs. For years that business didn’t have any losses and their insurance rates went down.

When the new guy took over and decided that the safety meetings were not worth the time – his losses began, then he hired new people. What kind of training did he give those guys? Did they ever attend a safety meeting? Then, oh wow, one of them hurt his back.

The workers take their cues from the management—where leadership must begin. In the insurance industry and especially in all the trades, lack of leadership will cost you money—a lot of money! If no one is watching the details—and watching closely, something is going to go wrong. Anything can and of course, it will.

Most insurance companies that cover the trades have risk control departments that send out risk control guys to observe how you do what you do and suggest how to do it safer. You can request risk control come to your operation—it’s cost free and part of your insurance protection.

If you don’t have time for that—most companies maintain a video library with accompanying brochure-type handouts you can request and start your own safety meetings.

If you have had some claims and your rates have gone up, the company wants to know that you are trying to improve. Requesting safety videos and brochures is a step in the right direction.

Your company and the insurance company are a partnership where each benefits from the other. Maintaining a good partnership does two things for you—it saves you money (even if that only means you do NOT get an increase) and it builds a loyalty so, if you have a serious loss, the company pays it without raising your rates or non-renewing you the next renewal.

Those men work for you—leadership is what lets them know what you expect and how you expect it done. Let them know that safety is your biggest concern. You want them and the equipment in one piece at the end of the day.

It’s just good business!