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Taking the Lead on Loss Control
- 1. Take The Lead On Loss Control • Zach Pucillo, CSP, CHMM • March 5, 2015
- 2. Moderator Rebecca Ward Marketing Writer (303) 219-7802 rward@kpaonline.com
- 3. Presenter Zach Pucillo Risk Management Consultant (317) 201-2335 zpucillo@kpaonline.com
- 4. Questions? If you have questions during the presentation, please submit them using the “Questions” feature Questions will be answered at the end of the webinar
- 5. Agenda What is Loss Control The Bottom Line (How do losses affect it) Risk Management Accident Investigation Prevention Techniques
- 6. What is Loss Control Loss control is defined as those measures designed to eliminate and/ or reduce loss of human, financial, or physical resources both to the state and general public.
- 7. What is Loss Control Loss control techniques or measure will include some or all of the following: • Risk management • Accident Investigation • Hazard Control • Employee education
- 8. WHY SHOULD I BE CONCERNED ABOUT LOSS CONTROL?
- 9. The Bottom Line How do losses effect the bottom line • Direct vs Indirect Costs • Margins • Insurance
- 10. The Bottom Line Direct Costs Medical Expenses Workers Compensation Paid __________________________________ Indirect Costs Lost Productivity Losses Due to Productivity Morale Time Spent Due to Attention of Emergency Damage to Tools, Equipment, Property Losses Due to Return to Work Lost Time on Idle Machines Customer Losses Due to Time Loss Time Spent Investigating the Cause
- 11. The Bottom Line* U.S. Employers spend approximately $100 Billion per year for worker’s compensation ½ - Compensation Payment ¼ - Medical Care ¼ - Admin and for Safety, Legal, Health Services provided by Insurers
- 12. The Bottom Line Accident Cost Dealership Profit Margin 1% 2% 3% 4% 5% $1,000 $100,000 $50,000 $33,333 $25,000 $20,000 $5,000 $500,000 $250,000 $166,667 $125,000 $100,000 $10,000 $1,000,000 $500,000 $333,333 $250,000 $200,000 $25,000 $2,500,000 $1,250,000 $833,333 $625,000 $500,000 $100,000 $10,000,000 $5,000,000 $3,333,333 $2,500,000 $2,000,000 Sales required to Pay for an Accident…
- 13. Accident Cost Dealership Profit Margin 1% 2% 3% 4% 5% $1,000 2,857 1,429 952 714 571 $5,000 14,286 7,143 4,762 3,571 2,857 $10,000 28,571 14,286 9,524 7,143 5,714 $25,000 71,429 35,714 23,810 17,857 14,286 $100,000 285,714 142,857 95,238 71,429 57,143 # of $35 oil changes Required to Pay for an Accident… Accidents In The Dealership
- 14. The Bottom Line …Wait I Have Insurance!
- 15. The Bottom Line Types of Insurance • State Operated – We all pay in • Ohio BWC • Premium • Private Policies • Relies on insurance company • Premium • Self Insured – We pay for it • Self Reserve
- 16. The Bottom Line Premiums • Calculation: Set Unit Dollars per $100 of payroll • NCCI - National Council on Compensation Insurance • Sets the unit price for most states • Unit price is determined by NAICS
- 17. The Bottom Line Manual Rate • Dealership Technician Manual Rate $2.90 per $100 of payroll • Your payroll for the year is $4,400,000 • Your Premium for the year = $4,400,000 x $2.90/$100 = $127,600
- 18. The Bottom Line Experience Modification Ratings • Will allow insurance company to increase or decrease premiums based on historical performance • Based on last 3 years • The average dealership has a rate of 1
- 19. The Bottom Line • Experience Modifier Rates of 1.32, 1.04, 0.88 • Next Years Premiums $127,600 x 1.32 = $168,432 • Premiums in 3 years $127,600 x 0.88 = $112,288 Experience Modifier Credible Actual Primary Loss + Credible Actual Excess Loss Expected Loss
- 20. The Bottom Line Okay, I Am Ready To Explore Loss Control So I Can Save Some Money…. Now What?
- 21. Risk Management
- 22. Risk Management* Risk is the product of frequency and severity of potential losses Loss Frequency x Loss Severity = Risk
- 23. Risk Management • Loss control would be • Risk management gives us guidance so we do not go overboard
- 24. Risk Management* • Risk Identification • Risk Analysis • Reducing or Eliminating Risk • Financing Risk • Administering the Risk Management Process
- 25. Risk Management* Risk Identification • What are we risking? • Employee injuries • Employee health • The possibility of citations • Financial losses • Reputation losses
- 26. Risk Management* Risk Identification – Employee Injuries • Past loss claims • Assessments • Shop Equipment • Processes • Tire Rotations • Chemical Inventory • Age of workforce • Our Techs Perform Multiple Tire Rotations Each Day….
- 27. Risk Management* Risk Analysis – Quantitative • 6 Tire rotation back injury related claims in one year • Dealership performed 1,500 tire rotations in one year • Average tech performs 100 tire rotations in one year Probability = (6 x 100)/1500= 0.4 The employee has a 40% chance of receiving a back injury during a tire rotation each year
- 28. Risk Management* Risk Analysis – Qualitative
- 29. Risk Management* Reducing or Eliminating the Risk • Prioritize the risk • Refer to the Risk Matrix • Refer to the Hazard Control Hierarchy • Hazard Elimination • Substitution • Engineering Controls • Administrative Controls • PPE
- 30. Risk Management* Financing Risk • Some Risks will require money invested to eliminate the risk • Ex: Aluminum Work in Body Shops • Aluminum repair means you accept risk • Risk cannot be eliminated so it must be reduced
- 31. Risk Management* Administering the Process • What will be our acceptable level of risk? • 40% Probability is too high for back injuries • 0% probability is unrealistic so our acceptable level will be 5% • Now we can install our controls with acceptable levels of risk
- 32. Risk Management* Risk Analysis – William Fine Method Risk = Consequence x Exposure(frequency) x Probability
- 33. Risk Management*
- 34. Risk Management* Air Hoses on the Floor • Consequence = 15 • Exposure = 10 • Probability = 3 • C x E x P = R = 450
- 35. Accident Investigation* • Accidents vs Incidents • Accidents – An unexpected, unforeseen, or unintended single or multiple event sequence that is caused by unsafe acts, unsafe conditions, or both and may result in immediate or delayed undesirable effects. • Incidents – any unplanned event or event sequence, whether it results in loss, injury, illness, disease, death, or none of these. • We don’t like surprises of any kind
- 36. Accident Investigation What causes the “human loss”…… • Accidents • Human error • Unawareness • No common sense • Stupidity
- 37. Accident Investigation Two fundamental types of accident causes: • Unsafe Acts • Unsafe Conditions
- 38. Accident Investigation* H W Henrich • Assistant Superintendent of the Engineering and Inspection Division of Travelers Insurance Company • Industrial Accident Prevention, A Scientific Approach -1931 • Behavior-based safety
- 39. Accident Investigation* Henrich 88:10:2 • Analyzed 75,000 accidents • 88% - Unsafe Acts • 10% - Unsafe Conditions • 2% - Unpreventable Causes Yeah, but we don’t know these unsafe acts were happening….
- 40. Accident Investigation* Henrich - 300:29:1 Ratio Analyzed 330 accidents of the same type 300 – Resulted in report but no injury 29 – Resulted in minor injuries 1 – Resulted in major lost time injury There are many opportunities to implement a control before minor or serious injuries occur
- 41. Accident Investigation Recognizing that accidents are CAUSED and not just chance will allow you the pursuit of accident prevention
- 42. •First Aid vs. 911 •Eliminate dangerous conditions •Initial Paperwork •Document ASAP •Managers should understand consequences of not reporting •Delayed notification increases suspicion •Work with Insurance Company Initial Notification •Use proper accident investigation form •Determine witnesses •Write down their account •Take pictures •Take note of equipment, PPE, floor condition… •Document only facts •Determine sequence of events Investigate the Scene •Complete in SCM •Employees from all levels •Eliminate bias •Corrective action •Establish accountability •Root cause •Fishbone Diagram Accident Analysis •Analyze the Risk •Eliminate the hazard •Reduce the hazard level •Provide safety devices •Provide warnings •Provide safety procedures & PPE Prioritize Risk •Incentive Programs? •Signage •Safety Committee involvement •Invest money in facility •Inspections •PPE Prevention Accident Investigation
- 43. Accident Investigation Use the 5 Why’s? to determine the Root Cause • Joe slipped and fell at a service entrance • Why? –Because the floor was wet • Why? –Because people have tracked in snow from the lot • Why?-Because there is no place for them to wipe their feet • We need a slip resistant mat at the doorway
- 44. Prevention • In house inspections • Collect a group • Come up with a check list • Set a time and date
- 45. Prevention Safety Committees • Top level of management • Members from every department • Produce incentives for participating
- 46. Prevention Employee Education • Formal Training • Shop Talks
- 47. Prevention Programs • Establish the written rules • Top level commitment • Lead point persons • Sustain, Sustain, Sustain
- 48. KPA study • ROI of Safety • Sampled Mod Rates in FL and CA • After 3 years of KPA service Ex Mod dropped from 1.01 to .90 http://www.kpaonline.com/solutions/safety/safet yroi
- 49. References *Brauer, Roger L. Safety and Health for Engineers. Hoboken, NJ: John Wiley, 2006. Print
- 50. Questions? Zach Pucillo Risk Management Consultant (317) 201-2335 zpucillo@kpaonline.com