ron adams 2010 fowler seminar
TRANSCRIPT
Safety – The Hidden Return on
Investment
Presented by:Ron Adams
Director of Risk Management
Builders Mutual Insurance Company
Headquartered in Raleigh, NC Grew from North Carolina Home Builders Association In business since 1984—understands the unique coverage needs of the
building market Devoted exclusively to the construction industry For general contractors and trade contractors—both residential and
commercial Solid financial position consistently recognized by A. M. Best with ‘A’
(Excellent) rating Distributed a dividend to eligible WorkSafe policyholders 21 out of 25
years, totaling $45.9 million
Complete Lines of Coverage
Workers’ Compensation Commercial Package Policy Commercial General Liability Commercial Property Commercial Inland Marine Commercial Crime Commercial Auto Builders Risk Umbrella Liability
Costs - The Data
Unintentional injures were estimated at $701.9 billion for 2008
Wage & productivity losses were estimated at $145.1 billion
Administrative cost estimated at $22.3 billionEmployers’ uninsured costs estimated at $22.3 billion146 million workers were injured at a cost of $183 billion
Is Safety a Cost or Investment?
Investment in a well designed and implemented safety program can be recovered by the prevention of ONE accident
Conservative estimates indicate the indirect cost of an accident are 3 to 5 times the direct cost
Example:– $10,000 direct cost equals $30,000 to $50,000 in
indirect cost– If your profit margin averages 3%, it would take $1.6
million in completed business to cover the loss
Direct Costs
Increased cost of insurance / poor loss ratioDeductiblesIncrease in Experience Modification FactorDamage to property / equipment
Indirect Costs
InvestigationsLoss of productivity / moraleWorker replacement – cost of hiringDamage to work / equipment / other employeesDelays in scheduled workOSHA inspections / finesPR - Image
Causes of Loss
FallsStruck By / Caught BetweenMotor VehicleUnprotected OpeningsEquipment OperationsConstruction Defects
Construction Defects
The trial courts have recognized that construction defects are tangible and can typically be grouped into the following four major categories:– Design Deficiencies – Material Deficiencies – Construction Deficiencies– Subsurface / Geotechnical Problems
Construction Defects - continued
The courts have typically used these categories and associated standards to determine culpability for construction defect problems. The metric used to measure is whether the specific condition under review has violated any applicable building codes, is the direct result of construction means, methods, or practices that are below the standard of care in the building industry, resulted from a deviation from the Permitted/approved plans and specifications, or the specific condition is below the reasonable expectation of the home buyer/owner.
What To Do First
Contracts / Change Orders “Continuous” Inspection during construction processDocument inspection process – photos are betterDo not make structural changes to design/blueprints w/o
PE stamp Use only subs you know and trust – subcontractor
agreements / contracts Inspect, inspect, inspect!Don’t be the first to try a new material or method Look for manufacturer’s warranty
How to Address the Issue
Statue of reposeGive your homeowner a clear way to contact you in the
case of a problem Don’t provide your homeowner with a list of your subs to
contact in case of a problem – be the first point of contact
Respond promptly to a homeowner’s notification of a potential problem
View the problem as an opportunity
How to Address - continued
Good PR can come from a prompt response with appropriate corrective actions being taken
Utilize remediation specialists to inspect and report the cause
Speak with your attorney regarding placing a “right to cure” and arbitration clause in sales contract
If you do use arbitration language, be sure to speak with your attorney regarding having connecting language in your subcontractor contracts.
Safety Programs & Culture
Setting the right safety culture for your business– Defining & communicating the importance and
economic value of safety – more than a written safety policy
– Employee involvement / management commitment
– Shared responsibility for results– Defining & measuring results – “What Get’s
Measured, Get’s Done”
Safety Programs & Culture - continued
Develop & implement a written safety policy that best fits your organization – hold everyone accountable
Define those areas that are measurable and monitor on a regular basis
Communicate the results and develop corrective actions – praise positive improvements
Use the resources provided by your agent/broker, insurance carrier, industry experts
Involve all departments in the process
Conclusions
Develop the right safety culture for your business
Defining, measuring and communicating expectations and results
Use your insurance & safety professionalsRemember – “What Get’s Measured, Get’s Done”