Transcript No Slide Title

The Business of Safety
and Insurance
What Insurance
Companies Look to See
Mark Hansen, CSP, PE, CPE, CPEA
National Director
Risk Control
Oil & Gas
Lines of Business
• Automobile
• General Liability (Products / Completed Operations)
• Worker’s Compensation
• Property
• Environmental
• Umbrella
Measurements and Restrictions
Measurements
Regulatory Restrictions
• Frequency
• State Work Comp
Commission
• Severity
• Experience Modifier
Rate (EMR)
Loss History
• Loss Analysis
• Controls
• State Department of
Insurance
• Percent increase on
premium
Loss Leaders
• Auto
– Personal use of company vehicle, cell phone use
• General liability – completed operations
– Training, equipment maintenance, load-unload
• General liability – products
– QC program, product safety program, COIs
• Property
– Heat detectors, building separation, business
continuity, maintenance
Loss Leaders
• Environmental
– Aging, plug and abandon wells, flow lines, pipelines,
gathering systems
• Inland Marine
– Site security, kill switches, maintenance
• Contracts
– K4K, additional insured, POs, rental agreements,
AESC MSAs and IADC (daywork, footage and
turnkey) standard contractual agreements
Using Financial Principles
• Worker’s
Compensation
• Experience modifier
• Incident Rate/LWDI reduction or increase
• Insurance audits and reports
• Business
Costs
• Business interruption
• Loss product
• Loss of quality
• ROIs
Money begets money
Using Financial Principles
• Engineering Economy
– Present worth
– Future worth
– Depreciation
– Rate of return
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Replacement
Retirement
Break-even analysis
Cost-Benefit analysis
Direct Costs
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Medical
Indemnity
Case management
Rehabilitation
Attorney fees
Fraud investigation
Hidden costs can be far greater than direct
costs, and are not covered by workers’ comp
insurance.
Indirect (hidden)
costs are 4 to 20
times higher than
direct costs !!!
Indirect (Hidden) Costs
• Lost production of
victim and bystanders
• Damage to equipment
and downtime
• Time required to
investigate, document
and follow-up the
accident
• OSHA penalties and
fines
• Attorney’s fees and
defense costs
• Cost of temporary or
permanent
replacement of an
injured employee
• Future impact on
insurance costs
• Future impact on your
ability to successfully
bid for jobs
Cost?
• Loss of life, money, time, resources and
reputation
• Costs covered: medical, compensation
and physical damage to injured parties
and property
• Costs not covered: lost production,
customer confidence, OSHA fines, law
suits, loss of employee morale
Sales Required to Cover Losses
Yearly
Incident
Costs
1%
Profit Margin
2%
3%
4%
5%
$1,000
100,000
50,000
33,000
25,000
20,000
$5,000
500,000
250,000
167,000
125,000
100,000
$10,000
1,000,000
750,000
333,000
250,000
200,000
$25,000
2,500,000
500,000
833,000
625,000
500,000
$50,000
5,000,000
2,500,000
1,667,000 1,250,000 1,000,000
$100,000 10,000,000 5,000,000
3,333,000 2,500,000 2,000,000
$150,000 15,000,000 7,500,000
5,000,000 3,750,000 3,000,000
$200,000 20,000,000 10,000,000 6,666,000 5,000,000 4,000,000
What Can a Company Do?
• Focus on eliminating losses
• Manage the loss, get involved
• Implement a working safety process
• Be proactive by preplanning for safety
Low Accident Companies
• Strong training commitment
• Task specific training
• Augment training with preplanned jsas
and sops
• Daily toolbox, tailgate or pre-work
meetings
• Worker safety orientations
• Supervisor leadership
Conclusions
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We see a snapshot of operations
We assume you are showing us the best
We ask questions of those doing the work
We field-validate the programs
We are the eyes and ears of Underwriting
We build lasting relationships with the client
We teach our clients to fish
We give our clients access to huge database of
resources
• Managing your risks affects your profitability
Disclaimer
The purpose of this document and any activities leading to
its creation (“St. Paul Travelers Activities”) was to develop
current underwriting information and/or to assist you with
your legal responsibility to maintain safe premises,
practices, operations and equipment. St. Paul Travelers
Activities do not cover all possible hazardous conditions
or unsafe acts that may exist, are not legal advice, are not
for the benefit of any other party and do not amend, or
otherwise affect, the terms, conditions or coverages of any
insurance policy issued by St. Paul Travelers.
Implementation of any practices suggested by this
document is at your sole discretion. St. Paul Travelers
disclaims all warranties, express or implied, and assumes
no liability to any party for any damages arising out of or
in connection with St. Paul Travelers Activities.