Can You Control Your Insurance Cost?

In 1752, Benjamin Franklin founded the Philadelphia Contributorship for the Insurance of Houses from Loss by Fire, which is still America’s oldest, continuously operating insurance company. Massachusetts enacted the first state law requiring insurance companies to maintain adequate reserves in 1837. Insurance has been an important aspect of American life personally and in business for quite some time; Such an important role that imagining our society without it may seem impossible. Why? Because it serves a purpose.

Insurance provides protection for when disaster strikes. Another way of putting it-Insurance is a means to defend against unforeseen financial losses and contingencies. Often, it can be a challenge for insureds to reconcile the cost versus the benefits of insurance. Which can leave purchasers wondering… How much control, if any, do they have in their insurance cost? For some, the answer is more than they know. Let’s look at the impact of the experience modifier, commonly called your EMOD score.

It is important for business owners to know what the experience modifier is and how it works for, or against them. The Experience Modification Rating is assigned to companies by the National Council on Compensation Insurance (NCCI). Your EMOD is affected by claims that you, the insured, file. For instance, if your company is experiencing workplace injuries, then you can expect for your EMOD to increase. This ultimately results in your company paying more for insurance than another company in the same industry as you who is not having workplace injuries.

Here is how it works. An employer/company with average claim history will have an EMOD of 1.00. Businesses with better or worse claims will see their EMOD decrease or increase respectively. For example, John owns an electrical contracting company. At renewal for his workers’ compensation policy, the NCCI reviews his three-year loss history and determines his company is performing 20% better than the average electrical company. As a result, John’s EMOD is set at .80. If his loss history is 20% worse, the EMOD would increase to 1.20. Let’s say John’s workers’ compensation policy carries a $10,000 manual premium, John’s cost would be $8000 with a .80 EMOD ($10,000 x .80.) If John’s EMOD is 1.20, the premium increases to $12,000 ($10,000 x 1.20.) This is often referred to as receiving a credit or a debit.

This is just one example of how you, the insured, has some control over the cost of your insurance program. It is also worth noting, from a revenue generating standpoint, that bids can be won or lost based on a business’s EMOD score. This is because you are being compared to similar businesses that perform the same services. Business owners should consider how having a good risk strategy can not only save them money in terms of insurance costs but also contribute to generating revenue through greater business opportunities.

I help business owners utilize risk management strategies that can eliminate unnecessary claims and make them more marketable in their industry. This is something that every employer/business owner should be invested in for many reasons which include: worker protection, visibility in the market, business growth and profitability.

Risk, Readiness, and Repercussions

The New York Times reporter, Michael Barbaro, interviewed Judson Jones on “The Daily” regarding #hurricane threats, and their occurrences in the future. Judson highlighted how Tropical Storm Otis became one of the fastest strengthening #storms ever experienced, increasing to over a 100mph within 24 hours. An excerpt from the NYT podcast stated, “Hurricane Otis exemplified a phenomenon that #meteorologist fear will become more and more common: a severe hurricane that arrives with little warning or time to prepare.”

Storms of this type will certainly impact #riskmanagement processes regarding preparedness, response, and recovery. It goes without saying that these #incidents may negatively influence #insurance rates as well. The #commercial property marketplace, already under strain, has seen its fair share of increase in #premiums due to changing #climate and #naturaldisasters. Some industry observers have noted, many properties that should have flood coverage do not. According to the Insurance Information Institute, the U.S. is experiencing its costliest year ever in 2023 for severe convective storms, with insured losses from these events exceeding $50 billion dollars year to date.

*Hear more about Hurricane Otis here. https://lnkd.in/gfakWHNb

*Statistic from III by Michael Barry, New York Press Office.

#tropicalstormotis #hurricaneotis #hurricaneclaims #riskmanagement #insurance #insuranceclaims #storm #hurricane #news #newstoday #linkedinnews

Rising Gun Risk Incidents at Restaurants

In recent times, the issue of guns in restaurants has gained attention, sparking debates about safety and the potential risks associated with such incidents. Bradyunited.org cited that 117,345 people are shot every year. For restaurant owners and managers, understanding and addressing these concerns is crucial to maintaining a secure and welcoming environment for customers. This blog aims to shed light on some of the risks involved and encourage organizations to establish practical, risk-based solutions aimed at ensuring the safety of customers, employees, and the restaurant's brand.

The most immediate concern is the safety of employees and patrons. The presence of guns can elevate tensions and create an atmosphere of uneasiness, potentially leading to accidents or intentional harm. Restaurant staff may feel uncomfortable or unsafe when customers and/or staff possess firearms. This can impact morale, job satisfaction, and overall staff performance. As it relates to patrons, the mere sight of a firearm can escalate minor disputes into more serious confrontations. Customers may respond or react differently in the presence of guns, leading to altercations that pose a risk for all in the vicinity.

Businesses should clearly communicate the restaurant's stance on firearms through posted signs and inclusion in the establishment's policies. Make it known whether carrying weapons is allowed. Conduct regular training sessions for staff to educate them on the policies and provide guidance on how to handle situations involving firearms. Remember however, that it is best to identify situations that may escalate and diffuse them immediately. Businesses can also establish a positive relationship with local law enforcement to ensure a quick response in case of emergencies. In some cases, it can be beneficial to work with law enforcement who can show support by proactive presence at the establishment. Other measures that can be adopted include increasing security with visible cameras as a deterrent, creating areas where guns are not allowed, and use of metal detectors.

In regions where carrying guns in public spaces is allowed, restaurants could face legal complexities in managing such situations. Misunderstandings or accidents may result in legal consequences for the establishment. I recommend that readers of this blog visit the Negligent Security Attorney website to see examples of how this is impacting the restaurant sector. They shared some interesting information related to verdict settlements. Most notable was that restaurants pay an average of $600,000 in jury verdict awards and settled on average for $2.8 million for negligent security lawsuits. It’s also important that businesses are familiar with state and federal laws that apply to this situation. The Bureau of Alcohol Tobacco and Firearms webpage can aid owners with up-to-date information. Keep in mind also that incidents involving firearms can quickly go viral on social media, causing irreparable damage to the restaurant's reputation. Negative publicity may drive away customers and impact long-term success.

To address these challenges companies should regularly assess, and update security measures and policies based on evolving local regulations and feedback from customers and staff. They can also reach out to other companies, industry professionals, and utilize other resources, such as Restaurant Business, for ideas and best practices on prevention and mitigation. Continuous improvement demonstrates a commitment to safety and helps in maintaining a positive business reputation. Businesses should also develop a crisis management and communication plan to address potential incidents involving firearms. This plan should include steps for addressing the media, customer concerns, and legal matters promptly and transparently. Timely and effective communication can mitigate reputational damage. Remember, it is crucial that businesses demonstrate a commitment to learning from incidents and implementing measures that prioritize the safety and satisfaction of patrons.

Addressing the risks associated with guns in restaurants requires a multi-faceted approach that prioritizes the safety and well-being of both customers and staff. By implementing clear policies, providing adequate training, and enhancing security measures, restaurant owners can create an environment that minimizes the potential dangers while maintaining a positive brand image. Proactive engagement with the community and local authorities further reinforces the commitment to a safe and enjoyable dining experience for all. Talk to a risk professional today to review your program.

Psychological Safety and Conflict Resolution

As we approach the Occupational Safety and Health Administration "Safe and Sound" Campaign week it’s vital to address a critical aspect of workplace safety that often goes unnoticed: the relationship between psychological safety and conflict resolution. A safe workplace isn’t just about physical safety—it's about creating an environment where employees feel secure enough to voice concerns, engage in healthy conflict, and collaborate effectively. But how can promoting psychological safety and resolving conflicts constructively enhance workplace safety.

What is Psychological Safety?

Psychological safety is defined as a work environment where employees feel free to take risks, make mistakes, and express their thoughts and concerns without fear of negative consequences. I’d like to highlight the latter part of the definition. That is, fostering an environment where employees can express their thoughts and concerns, without fear. I think it goes without saying that this is extremely critical for organizations.  Also, according to the American Psychological Association, fostering psychological safety leads to higher levels of engagement, creativity, and overall job satisfaction (APA).

In a psychologically safe workplace, employees are more likely to report safety hazards, propose innovative solutions, and collaborate openly. This transparency is crucial for identifying and addressing potential risks before they escalate into serious issues.

The Link Between Psychological Safety and Workplace Safety

When employees are comfortable speaking up about safety concerns, the organization can proactively address hazards and improve safety protocols. A culture of psychological safety also encourages team members to share best practices and learn from mistakes, thereby enhancing overall safety standards.

Conversely, a lack of psychological safety can lead to underreporting of hazards and non-compliance with safety procedures. Employees who fear repercussions might hesitate to bring up unsafe conditions or suggest improvements, which can compromise the effectiveness of safety programs.

How Conflict Resolution Plays a Role

Conflicts are a natural part of any workplace, but how they are managed can make a significant difference. According to MindTools, effective conflict resolution is essential for maintaining a harmonious and productive work environment (MindTools). During my time as a safety professional I have seen many cases where employees have made unsafe choices in an attempt to avoid conflict.

Key Conflict Sources Related to Safety:

• Differing Opinions on Safety Measures: Disagreements about the best practices for maintaining safety can lead to friction between team members.

• Resistance to Change: Employees might resist new safety procedures if they feel these changes are imposed without their input or if they fear they’ll be negatively affected.

• Apprehension with Supervisors or Senior Employees: Employees may be reluctant to address concerns with supervisors or staff with seniority due to fear.

The Impact of Conflict on Safety:

Unresolved conflicts can undermine safety initiatives, resulting in a toxic work environment where safety concerns are not addressed effectively or ignored altogether. This can lead to higher accident rates, increased insurance premiums, increased turnover, and a general decline in workplace morale.

Effective Strategies for Conflict Resolution

To foster a safe and supportive workplace, it’s essential to implement strategies for effective conflict resolution:

1. Promote Open Communication: Encourage employees to express their concerns and ideas freely. Create channels for transparent dialogue where everyone’s voice can be heard.

2. Provide Training: Equip your team with conflict resolution skills through training programs. This helps individuals manage disagreements constructively and develop collaborative solutions.

3. Implement Mediation Processes: In cases of ongoing conflict, use mediators or structured mediation processes to resolve issues impartially and fairly.

4. Encourage Feedback: Regularly seek feedback from employees about safety practices and conflict resolution processes. Use this feedback to make continuous improvements.

Building a Culture of Safety and Psychological Safety

Leadership plays a crucial role in fostering a culture that values both psychological safety and effective conflict resolution. In risk management we refer to this as Tone At the Top. Leaders should model behaviors that promote openness, respect, and collaboration. By addressing conflicts promptly and constructively, and by supporting employees in expressing their concerns, leaders can help create a safer, more resilient workplace.

Real-World Benefits

Organizations that prioritize psychological safety and conflict resolution often see significant benefits in terms of workplace safety and overall performance. For instance, companies that implement regular safety feedback loops and promote open communication tend to have lower incident rates and higher employee satisfaction.

Commit To Improvement

Creating a safe and sound workplace requires more than just implementing physical safety measures. It involves cultivating an environment where psychological safety is prioritized, and conflicts are resolved effectively. We do well to remember that as the workplace evolves, so should our methods for addressing workplace hazards. By doing so, organizations can enhance their safety protocols, boost employee morale, and create a more productive and harmonious work environment.

As we support the OSHA Safe and Sound Campaign, August 12th - 18th, let’s commit to fostering psychological safety and addressing conflicts constructively. Together, we can build workplaces that are not only safe but also supportive and resilient.

risk management matters, are we managing properly

According to an ALS article, the Wall Street Journal reported a poll identified through executives that fewer than 20 percent of companies properly manage risk (ALS Group, 2014). This can be due to an array of reasons. Such as, company leadership may not be disciplined in risk management and its importance. Organizations may not have good communication of risk among departments. Moreover, companies may fail to identify potential risks all together. Poor or nonexistent risk management can have disastrous effects on companies. This process should be more nuanced than simply purchasing an insurance policy. Although insurance procurement can be an element of risk management (risk transfer), it should not be the main component of your program. Risk management is a strategic approach that your risk consultant should be advising you through. Let’s see how we can look at risk management through a strategic lens.

What is risk? A commonly accepted definition is the possibility of gain or loss. When we think about risk in business, risk can exist any and everywhere within an organization. If a company stores information, there is risk associated with that. When a business hires employees, develops new processes, acquires another company, manufactures products, all these functions and many more involve risks. According to Larry Linne, CEO of the InCite Performance Group, risk can be organized in three different ways: business, strategic, and hazard (Linne, 2022). Let’s look a little closer. Business risk is what is referred to as operational or procedural within the company; How the business is run (Linne, 2022). The strategic risk refers to what impacts the company’s value, and hazard refers to anything physical that can be lost, such as employee injury or asset damages (Linne, 2022). Your risk consultant should be aware of the benefits of organizing your risks into these types of categories. This will enable your trusted advisor to better provide the right solutions for your organization. Once the risks are organized, now they can be managed with company goals in mind. Here are some questions for companies to consider: What risks will be assumed? What risks will be financed? How will the organization mitigate risks if an incident occurs? What can be done to prevent risks? What risks will be transferred? The goal here is not to start with the insurance, but rather, identify the risks and manage them appropriately. This is how a company can holistically effect the cost of risk.

Neglecting to manage your risk properly can have negative effects on your business and in some cases catastrophic consequences. In contrast, companies have reaped great benefits from managing their risk strategically with the right team. These benefits include forecasting probable issues, maintaining a competitive foothold, achieving better budgeting, accomplishing stable growth, and developing better business processes just to name a few. To achieve this, companies are becoming increasingly selective of the teams that they work with. Advisors should be able to provide solid contributions that yield results. Also, they should be adept to cutting edge solutions if issues arise. In today’s market, risk management cannot be taken lightly. Ensure your company is doing its due diligence in identifying and properly managing risk. Take full advantage of professionals that are interested in risk management and not insurance placement. Communicate internally and reach out to trusted advisors for the right solutions. A wise proverb once stated that “there is wisdom in council”. With some strategic effort, your company can be in that top 20 percent of organizations who manage their risk the right way.

REFERENCES

The ALS Group. (2014). 80 Percent of Companies are not Effectively Managing Risk. Is Yours One of Them? https://info.thealsgroup.com/blog/effectively-managing-risk#:~:text=The%20Wall%20Street%20Journal%20recently%20reported%20that%20fewer,risks%20as%20part%20of%20the%20overall%20strategic%20plan.

L, Linne. (2022). The risk focused solution, a different approach to risk. The Risk Opportunity. https://vimeo.com/incitepg/review/696218992/302c362150