In Minor's League: Aug. 2000

Q: My insurance is getting out of hand. Can you give me some advice on reducing these costs?

A: I will address this question from two angles. One involves the management of your carrier or broker relationship. The other addresses the management of your people in regards to developing a safe workplace.

First, let’s talk about getting the best prices for insurance, regardless of your safety record. Most important is the obvious – make sure you are shopping prices from broker to broker, and make sure they get a number of quotes from the insurance carriers they represent. I do not subscribe to changing brokers each year, but shopping prices occasionally is important.

Do not assume that your regular broker can always get the best price for you. Some have more carriers at their disposal as well as more leverage with their carriers than others might have. Also, check to make sure that the broker gets a quote from a carrier who has knowledge of the industry and will understand your needs and risks. Personally, I only changed brokers once in 20 years, but it was a good change and I took advantage of the knowledge my new broker could offer.

Second, and probably most important, is to evaluate the reasons why your premiums are going up. Determine whether your increase is just industry price increases or whether your loss ratio is such that a carrier perceives you as high risk.

Your experience modifier is a good indicator of the latter. If your modifier is on the rise, the frequency and/or severity of your claims is probably too high to justify the risk of writing your business or getting competitive pricing. Should that be the case, your only option is to begin improving your safety record to ensure reduce claims in the future.

The financial benefits of reducing accidents can be significant, but how is this done? The most important aspect is the development of a written safety program.

Awareness in your company about the value of a safe workplace is key. You and your managers must be committed. If your people know you view safety as a priority they, too, will make it theirs.

Other ideas include:

• Develop a safety manual and require employees and hew hires to learn it. Considering giving tests on the information it covers.
• Investigate the accident histories of new employees through some of the services available.
• Do pre-employment drug testing, and consider random drug testing and post-accident drug testing. Make sure you have written policies and procedures that have been reviewed by a good labor attorney.
• Include training for the proper use of equipment, drivers training and the proper use of safety equipment. Weekly training meetings led by your foreman or a safety manager will keep the topic in front of your employees regularly.
• Post signs to motivate your staff about the importance of a safe workplace.

There are also many creative incentive programs being done around the country. Ask your peers what they are doing. I had a lot of luck paying a monthly bonus to our field staff for accident-free months. Our managers were also on annual incentive programs that were clearly affected if our insurance premiums were too high.

Last, there are some very good publications to help you create and manage an excellent safety program. The Associated Landscape Contractors of America, in conjunction with CNA Insurance, has created a management safety resource manual, a supervisor’s safety handbook, and various training videos to mention a few. Take advantage of these resources, and remember a little investment of time can reap huge savings.