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Safety performance is a no-limits poker game, stacking chips in the corner of those with the highest performance records, even eliminating those with poor performance from playing another hand (bidding work).

Just to stay in the game, every contractor needs to be highly motivated to implement an effective risk management program. Here are a few tips for winning at safety.

Identify the Risk

Every program is designed to control the frequency and severity of losses. Although risk management programs addressing general liability, property and equipment thefts are important for contractors, the most important area for contractors' risk management programs is employee safety.

For the majority of contractors, employee injures are the most frequent and most expensive losses. This leads to workers' compensation insurance premiums that far exceed the other lines of coverage. Workers' compensation insurance is directly affected by a contractor’s previous experience, as indicated in the experience modification rate (EMR). Every employee injury has an immediate financial implication, as a deductible must be paid out, but the farther reaching effect of injury is illustrated in the EMR for three future years.

Develop a Program to Minimize Frequency of Employee Injury

Contractors can’t competitively bid work without an effective risk management program. The program should include at least the following elements.

  • Support from upper management. Support must be visibly demonstrated and employees should be able to cite examples of how the company provides support.
  • Employee involvement. Employees need to be included in decisions that affect their daily operations.
  • Formal hazard identification processes at jobsites. Site employees call for safety routines that are understood to be more valuable than production schedules.
  • An accountability system for control of hazards:
    • performance goals must be established and tracked;
    • metrics must be developed and tracked down to the project and supervisor levels; and
    • an initial orientation and continuously evolving system must be developed for employee safety training/education.

Develop a program to manage employee injury costs

Even the best programs will inevitably have an employee experience an injury. Lack of an injury management system can undermine an otherwise proactive risk management program. A combination of techniques needs to be utilized to effectively control an EMR:

  • ensure a work hardening and return to work program is in place and is fully utilized;
  • attempt to eliminate indemnification through alternative job placements;
  • meet with carrier and broker claims representatives to review and update loss reserves (with the meeting scheduled on a recurring basis and held before EMRs are prepared);
  • get claims closed out and push carriers and brokers for expedited claim closures to reduce lingering claims from affecting future EMRs;
  • keep track of any subrogation recoveries and request changes when they are made;
  • focus the safety program on loss frequency, as it holds more value in the EMR calculation;
  • conduct EMR audits to ensure rate schedule, classifications and clerical errors are not in play; and
  • mandate employee wellness initiatives to encourage weight loss and smoking cessation.

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