In this and upcoming posts we will take a look at eight required sections of the IIPP, along with suggestions that will help you get started in creating an effective safety program. Today, we will look at the first two elements to consider:

1. Management commitment/assignment of responsibilities

A demonstration of safety and health begins with top-level management.  Management’s commitment to safety will set the tone for the rest of the organization.  Appointing a safety captain to be in charge of the program is a great start to demonstrating company-wide commitment.  While the safety captain’s primary role is to ensure that safety work-habits are adopted throughout the organization, they may, also, lead a safety committee comprised of employees representing each department/area of the organization.  Members of the committee can assist the safety captain by executing the organization’s safety goals.

2. Safety Communication system

There are many creative ways that you can communicate the importance of safety to your staff.  They may include:  introducing  your safety program during new hire orientations, include examples of safe behaviors in a company newsletter/company-wide communication, post safety posters throughout your facility or communicate a safety tidbit on a regular basis at a start-up/staff meeting.  Remember, empowering your team to develop creative ideas on how to effectively communicate your safety program will go a long way in motivating them to stay committed.

In our next post, we’ll discuss enforcing employee compliance with the safety plan, how to assess hazards in the workplace, and conducting investigations.

Contributed by: Sara Richards, Senior Loss Control Manager, CPEhr

Most employers would rather spend the time talking to brokers, preparing application packets, and shopping insurance carriers in an effort to find the best deal, than invest one dime in safety.

We thought we should step back for a minute and consider how investing time into creating a safe work environment will have a much greater impact on your workers’ compensation rates than shopping carriers.

A Story of Two Warehouses

Let’s take an example of two warehouses, each with $2 million of payroll. One company – let’s call them Warehouse A – spends 3 months choosing a broker and submitting application packets to half-a-dozen insurance carriers. In the end, it receives bids from two carriers. One offers an average rate of 4.6% for a total annual premium of $92,000. The other offers an average rate of 5%, for a total premium of $100,000.

Not bad – an $8000 savings for a couple months of work. Figuring they were set with a great rate, they neglected their safety program, didn’t conduct regular meetings, and were careless around the warehouse. One by one, the injuries started. First a sprained back, then a slip, and eventually a forklift accident that left a worker paralyzed from the waist down. When it came time for renewal, their insurance rates shot up. Why? Because their Experience Modification jumped through the roof.

What is an Experience Modification? That’s another great question, and you should be sure to know the answer. Stay tuned and we’ll get to it on our next post…

Read the Press Release here.

Unfortunately, this is nothing new. California has faced a turbulent workers’ compensation market over the past decade, with insurance rates swinging wildly from huge increases in the late 1990′s, to plummeting rates in the mid-2000′s, to rising rates again as we approach 2010. Several large insurance companies have also shut their doors over that same time period, most notably Reliance Insurance Company and  Golden Eagle Insurance Company.

What can you do to protect your business?

You can’t control the workers’ compensation market, but you can control your own company. If you take safety seriously, adhere to the required OSHA guidelines, and diligently manage workers’ compensation claims, you will be in a strong position to negotiate good rates upon renewal. If you ever find yourself in the unfortunate position of shopping for a new carrier, a solid safety track record will make it easy to find a new insurance company willing to take your business.

In our next post, we’ll look at some concrete steps you can take to keep your workplace safe, and ultimately reduce your workers’ compensation costs.

Almost ever carrier in the state has also reported increases -

• Woodland Hills’ Zenith Insurance Co., one of the bigger players in the California comp niche, filed for a 4 percent July increase
• Two Berkshire Hathaway Inc. entities have filed for 10.3 percent increases
• Several Guard Insurance Group companies, meanwhile, filed for jumps in the 2.2 percent to 5 percent range.

So what can you do to avoid the inevitable? Here are 3 simple starters…

Be safe! Insurance companies will first view the loss history of an individual company before instituting rate increases. The Loss Ratio (the ratio of losses paid out versus premiums paid in) is the most important factor in determining rate increases. Even while published base rates state-wide may be increasing, a company with a low loss ratio can still experience a decrease.

Shop around. Certain insurance carriers have a preference for specific insurance risks. Some may prefer white collar business, while others may pursue riskier “blue collar” operations such as construction and transportation. As  your broker to submit your renewall to several carriers and compare costs.

Join a PEO (Professional Employer Organization). A PEO is a firm that specializes in managing all the responsibilities relating to employees.  A PEO legally hires a company’s current employees, thereby making the PEO the “employer of record” for taxation and insurance purposes. Because the PEO pools thousands of employees and hundreds of clients, they are able to negotiate significantly lower premiums than any small, individual business could on their own. It sounds complicated, but it’s really very simple – economies of scale.

Click here to find out more about Professional Employer Organizations and to explore the possibility of procuring lower workers’ compensation premiums for your business.