Loss prevention is important for businesses in a tough economy to reduce costs from workplace injuries. Staffing companies should increase safety efforts now to prevent injuries that could increase workers' compensation costs. Insurance companies are also tightening guidelines and may raise premiums for companies with losses. Implementing effective safety measures and having management commitment to safety can help control risks and expenses. Wellness programs focused on weight loss can also help reduce healthcare costs by targeting obesity, a major cost driver. Smoking cessation programs are inexpensive and produce short and long-term benefits by saving on average $210 per employee who quits smoking.
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. 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 staffing@assuranceagency.com
Assurance Agency, Ltd. • One Century Centre • 1750 East Golf Road • Schaumburg, Illinois 60173
phone 847.797.5700 • fax 847.440.9130 • www.assuranceagency.com