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What’s the Big Deal about Safety? Part 2: The Financial Reasons

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In the daily grind, business owners and management sometimes overlook the reasons why safety matters. Beyond complying with OSHA regulations, there are several reasons why safety makes sense for a business. Last week we looked at the ethical reasons. This week we’ll look at the financial reasons.

Insurance Companies Reward Safety

Your workers’ compensation premiums are based on a set of parameters specific to your safety program. In North and South Carolina, insurers can give up to 25% in credit on WC coverage. Here’s what insurance companies are looking for:

  • accident investigation procedures
  • drug free workplace
  • early return to work program
  • employee hiring process
  • ongoing employee training
  • ownership and management commitment to safety
  • personal protective equipment
  • property condition
  • safety responsibilities spelled out out for each level within the organization
  • self-inspection procedures
  • written safety manual that addresses job-specific hazards and hazard mitigation
  • written safety mission statement

A comprehensive safety program will address each of these concerns. Insurance companies also use the National Council on Compensation Insurance Experience Modification Rating to track how companies are doing with safety. If companies are experiencing losses (injuries and fatalities), then they pay higher premiums. If they’re below average on losses, they save on their premiums.

Project Owners, Construction Management Companies, and General Contractors Reward Safety

If you’re a subcontractor, chances are you’ll be bidding on projects with the same criteria as insurance companies. Project owners, management companies, and general contractors often require that their subcontractors have comprehensive safety programs in place.

Accidents Cost Money

The cost of running a safety program is minimal compared to the cost of accidents. Insurance only covers about 10% of the cost of an accident, so the rest is left to the business. Construction down time, management and administrative time, new hire training, damaged property not covered by insurance, rental equipment, liquidation damages, and negative publicity all combine to create headaches and high cost.

Accidents happen. But statistically, if you implement a safety program and cultivate a culture of safety, your accident rate will be significantly less, saving you many times over the cost and time of committing to safety.

photo credit: 401(K) 2013 via photopin cc

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