Perspectives | LOSS CONTROL

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LOSS CONTROL

Douglas H. Hartman, ARM

June 2008 -- In addition to acquiring knowledge about insurance and claims, we think that executives responsible for risk management need to analyze and understand their exposures to financial loss and acquire knowledge on how to monitor risk avoidance and control programs. Additionally, while compliance with the letter of enviornmental, health, safety and other laws is mandatory, obedience does not guaranty freedom from risk. Nor, in our opinion, does conformance with best practices or an industry standard.

Cases in Point

  • In our experience, workers compensation accidents are rarely attributed to violations of OSHA rules and regulations. Yet retained claim costs, according to the 2006 RIMS Benchmark SurveyTM, accounted for 20% of the total cost of risk.
  • The March 16 crane collapse in Manhattan that killed six workers and an occupant of a nearby apartment building prompted the City of New York to tighten inspection and enforcement regulations. Nonetheless, on May 30th a second crane collapsed, killing two more workers.
  • Consider the thousands of farmers, small business owners and homeowners who decided not to buy flood insurance, because they were told their property was not within the 100-year or 500-year floodplain as defined by FEMA.

How do financial and human resources executives gain loss control knowledge?

The short answer is to seek the advice of a qualified risk control professional. To provide an idea of the elements of a system to evaluate loss control programs, see the opposite page. Also included is information how to find a consultant.

Elements of the International Safety Rating System

  1. Leadership and administration
  2. Management training
  3. Planned inspections
  4. Task analysis and procedures
  5. Accident/incident investigation
  6. Task observation
  7. Emergency preparedness
  8. Organizational rules
  9. Accident/incidence analysis
  10. Employee training
  11. Personal protective equipment
  12. Health control
  13. Program evaluation system
  14. Engineering conrols
  15. Group meetings
  16. General promotion
  17. Hiring and placement
  18. Purchasing conrols
  19. Off-the-job safety

This information is reprinted from copyrighted material given to me by Frank E. Bird, Jr., founder of the International Loss Control Institute. Mr. Bird passed away last year. He is credited with developing loss causation models which isolate the management lapses in control and causes of accidents.

To find a loss control consultant, The Business Insurance Market Sourcebook can be purchased for $50 by calling Crain Communications at (888) 446-1422. This directory separately lists safety and property loss control consultants. Included are the top insurance brokerage concerns, such as Aon and Marsh, as well as the top insurance companies, such as ACE, Liberty Mutual and PMA. Or, hit the "Contact Us" link below and we will try to help you.