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Managing Risk, Controlling Costs

Whether it's preventing employee disabilities, reducing property losses or avoiding lawsuits, chances are your company could do a better job of managing risk.

Consider the costs of employee disability today. When an employee is out of work, even for a short time, replacements must be hired and trained, productivity may suffer and you may even lose potential business. The impact on your bottom line can be significant. The same holds true for property losses due to fire or theft, or to liability losses. In all cases, it is well worth the effort to look closely at some of the measures every employer can take to manage risk, reduce claims and control costs.

Avoidance. The first line of defense is to eliminate the risk. Your company may decide to avoid a loss exposure by stopping or discontinuing a specific activity or asset. For example, you may find a way to eliminate certain repetitive motions on the job, or to retire a sub-standard vehicle.

Loss Prevention. There are many techniques you might consider to reduce the frequency of claims. You could:

• Remove flammable materials from your buildings or ensure that they are stored properly;
• Eliminate open flames and other heat sources;
• Enforce "no smoking" rules on your premises or in your vehicles;
• Make sure your buildings are structurally sound and your surroundings well maintained;
• Implement a formal training program for your employees, including an ergonomics seminar;
• Secure motor vehicle reports on all employees who may drive company vehicles on a regular basis;
• Review contracts with vendors for liabilities that you may have unknowingly assumed.

Loss Reduction. These techniques are used to reduce the severity of claims:

• Install fire walls;
• Install a sprinkler system;
• Install an "automatic extinguishing system" over all commercial cooking surfaces;
• Install a "central station alarm" system.

Transfer of Risk. Purchasing insurance is one way to transfer your loss exposure to another party. For example, disability insurance not only protects your employees from income losses, but it also often includes disability management programs that can help you control costs within your organization.

Here are other ways to transfer your loss exposure:

• Be named as an "additional insured" on the General Liability policies of your tenants or any subcontractors that you may hire, which can absolve you of liability incurred as the result of their negligence.
• Include a "hold harmless" clause in your contracts stipulating that you will not be held liable for specified kinds of losses.

Retention. Finally, there are techniques you can employ when you believe it will be less costly to retain a specific loss exposure than to insure it:

• Purchase high deductibles;
• Reduce or eliminate non-essential coverages;
• Self-Insure (if legally qualified).

At Turner Barker Insurance, we work closely with our clients to identify potential risk management strategies and to help implement techniques that will benefit both employees and employers over the long term. The right insurance plan, coupled with techniques to reduce, eliminate or mitigate risk, will help you and your workers feel more secure.