Be safer, pay less insurance Featured

7:00pm EDT February 28, 2007

As the cost of insurance continues to rise, there is one sure way to keep this cost down: reduce the frequency of insurance claims by creating a culture that encourages employees to work safely 100 percent of the time.

“When implemented correctly, a good safety program helps companies increase the amount of control they have over potential loss-producing exposures,” says Mark Troxell, director of safety services at The Graham Company in Philadelphia. “If managers focus on the right things and can get their employees to buy into the necessary safety initiatives to prevent losses, then they are definitely going to see improvement in the form of reduced frequency of insurance claims and ultimately reduce their insurance costs.”

Smart Business talked to Troxell about how companies can improve their safety record and reduce insurance costs.

How does safety affect insurance costs?

A large percentage of the cost of insurance is based on a company’s loss experience. If a company has a high frequency of claims, it will eventually have a high dollar claim. By designing and implementing an effective safety program, we can prevent the accidents that create insurance claims, which will reduce the overall long-term cost of insurance for the company.

Aren’t most insurance claims the result of preventable accidents?

Almost all accidents are preventable. When you think about all the different kinds of insurance claims you could have, an employee could get injured on the job (workers’ compensation claim); one of your employees or a product you manufacture could injure another person (general liability claim); you could have an automobile accident (automobile claim); you could have a fire in your building (property claim); or you could make an error or omission in providing some type of professional service (professional liability claim).

With the exception of very few automobile accidents, almost every other type of claim can be prevented or at least minimized with proper planning and by creating the right work environment. Almost every job can be made safer or at least more comfortable for a company’s workers. Products can be designed to reduce the risk of causing injury to their users. Most automobile accidents can be prevented by hiring qualified drivers, driving defensively, keeping a safe following distance, properly maintaining your vehicles and only operating them when drivers are properly rested.

How do you start the process of creating a safety program?

We start by learning about our client’s business. Every company operates a little bit differently; it’s our job to learn about the culture of the company and what managers expect from their employees. We then assist our clients to identify, manage and control the risks present in their daily operations. This approach includes educational training, exposure identification, and assistance with program development, implementation and monitoring.

What are some of the keys to successfully designing and implementing an effective safety program?

The biggest factor that will determine the success of a safety program is management’s commitment to safety, which includes actively seeking input from workers. If a company’s leaders don’t believe in the program, then their employees won’t either. Companies that commit themselves to safety from the top down, allocate adequate resources (including people) to accomplish the job, and spend enough time planning their work and educating their employees about their operations tend to have the best results over time.

Creating a ‘safety culture’ that encourages employees to work safely and deliver safe products and services is directly related to reducing insurance costs in the long run.

What are some of the new trends in safety?

Behavior-based safety has become more of a focus over the past few years. One of things we like about this philosophy is that it shifts the focus of safety programs away from physical conditions that may potentially cause loss and more toward employee behavior, which causes the large majority of losses.

In other words, we like the idea of focusing on building safe work habits (something positive) within a company and having the employees actively participate in the observation process. For any given job, we list the potential hazards and define the behaviors that will allow an employee to complete a process safely every time. When done correctly, it becomes a fun and self-sustaining way to get results.

MARK TROXELL is director of safety services at The Graham Company. Reach him at or (215) 701-5340.