Assurance Edge Quarter 4 2008


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Quarterly newsletter from Assurance for staffing industry professionals

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Assurance Edge Quarter 4 2008

  1. 1. STAFFING Q4 2008 AssuranceEdge Helping Today’s Professionals Stay On Top of the Insurance Marketplace Loss Prevention is Even More Important in a Tough Economy Businesses spend $170 billion a year on costs associated with occupational injuries and illnesses. This is money that comes straight out of company profits. With a slowing economy, businesses are looking for ways to trim expenses. For temporary staffing companies, occupational safety and loss control should not be an area to cut funding. In fact, when facing a slowing economy and reduced top-line revenue, the opposite is true. There are a number of reasons why staffing companies should look to increase efforts in the area of preventing workplace injuries when the economy slows down. It has been long established that effective safety and health management practices can reduce injury costs from 20%-40% annually, and these costs can become the difference between operating in the black vs. running in the red. Employee injuries and illnesses increase workers’ compensation costs, absenteeism and can cause incidents attributable to poor workmanship. More difficult to measure are decreases in morale and productivity. Beyond the simple well known facts, what are the other reasons for increasing investment and focus in health and safety initiatives right now? The unemployment rate continues to climb across all sectors of the U.S. economy. One of the key factors that increase an organization’s workers’ compensation expenses is the indemnity (lost time) incurred as a result of injuries. When the economy slows down, many companies are forced to reduce the number of shifts they operate, as well as reduce their labor force. If an employee is injured and is able to come back to light duty while recovering from the injury, but the employer is unable to accommodate the employee due to reduced demand for labor, the claim value will be significantly higher than what it could have been if light duty were available. The only way to prevent such a scenario is to prevent the injury from occurring. An additional reason to invest further in preventing losses is due to the fact that insurance carriers are beginning to tighten up their underwriting guidelines. Insurance carriers essentially make money in two ways, through the premiums they collect, and the investment returns they make from the premium dollars they hold. With a significant decline in investment returns, insurance carriers are forced to be more conservative when pricing risks. As we move into 2009, staffing companies who are proactively keeping their losses low will reap the rewards of lower insurance premiums. For those that are incurring losses, it is likely that they will see premium levels begin to increase incrementally as the insurance carrier community moves to a more conservative underwriting philosophy. In the end, the success or failure of an organization’s health and safety initiatives depend on two key factors. The first being commitment from the top of the organization. If upper management believes that investing in health and safety initiatives will deliver expense reductions, then embracing a culture of safety will successfully flow throughout the organization. Second, you can rest assured that you don’t have to walk alone in the process. Now more than ever, true Risk Management professionals can help you identify the vital few loss leaders and help you craft a strategy to successfully implement effective loss prevention measures. The new year will bring many challenges to an organization’s profitability. However, tools are available to help executives deal with the margin pressures created by a slumping economy. Gaining control of your risk management expenses is possible and generating a positive return on your investment is highly probable with the right Risk Management partner, and an organization wide commitment to the process.
  2. 2. Q4 2008 Get the Most “Bang for Your Buck” with a Wellness Program in the New Year Your bottom line may be going up in smoke Research has shown that successful wellness programs can help control health care costs for many Consider the following: businesses. But sometimes, implementing a wellness • Smokers have a significantly higher chance of having program seems like a difficult task that may cost more a stroke or coronary heart disease, which on average money than it’s worth to many employers. However, cost $65,000 in medical bills in the year of the event starting a wellness program is much easier than you and $30,000 for the following 2 years* may think. And not to mention the cost benefits are • Pneumonia costs $3.85 per member per month for well worth it. If you already have a wellness program smokers and 96 cents for non-smokers* or if you’re looking to start one in 2009, we’ve outlined • Low-birth weight babies are much more common two key places to focus on to get the most “bang for among women who smoke during pregnancy and cost your buck”. $18,000 - $58,000 (for birth and the following The high cost of obesity 6 months) while a normal-weight newborn costs $6,000 - $8,000 including prenatal care* Consider the following: • Obesity costs employers more than $12 billion each Have you considered covering smoking cessation year in increased healthcare utilization, reduced programs the way you would any other medical productivity, and higher absenteeism* procedure? As you can see from the • Obesity-related disabilities cost employers an average figures noted above, you can’t afford $8,720 for each claimant* not to. A comprehensive and effective • Among women, obesity is related to depression, smoking cessation program usually another major medical claim cost driver for costs less than 50 cents per member employers* per month, or less than $6 per • Annual healthcare costs are 11% higher among obese year per member. You vs. non-obese people* will save on average $210 annually on So how can you begin to reduce these costs through health care costs wellness programs in your workplace? Focus specifically for each smoker on programs aimed at helping people lose weight. Here who quits. Smoking are some ideas: cessation programs are inexpensive and • Start a walking challenge. Over the spring and produce both short- summer months, have employees pair up into groups 2009 and long-term benefits and start tracking their miles walked with pedometers for members, and an (you can purchase pedometers for $2 - $4 per immediate impact on employee). At the end of the challenge, the top three your bottom line. teams to walk the most miles win a prize. • Switch out your vending machine or break room * Source: snacks to healthier items. This option doesn’t cost Workforce Management anything, as you are already paying for these items. • Bring in Weight Watchers or Jenny Craig and offer to pay a portion of the sign-up fee. Your employees may even get a group discount! At Assurance, we have built our reputation on • Offer partial reimbursements on yearly memberships earning our client’s trust and confidence through at your local gym (we suggest $50 per employee). excellence in every interaction. Independent since our inception in 1961, Assurance is ranked by Each of these ideas are easy to implement and Business Insurance magazine among the top 75 though there is a cost to get some of them started, the insurance brokerages in the country. impact programs like these can have on your health care costs will be worth it in the long run. For further information, please contact your Assurance representative at 847.463.7877 or e-mail Assurance Agency, Ltd. • One Century Centre • 1750 East Golf Road • Schaumburg, Illinois 60173 phone 847.797.5700 • fax 847.440.9130 •