How a safety management system can reduce costs to insurance companies

Across various industries, such as manufacturing, construction, and agriculture, risks are inherent. Workers must carefully evaluate the potential risks and rewards associated with their tasks, while employers must consider the need for insurance coverage.

Traditionally, insuring employees against injury and illness has been a necessary expense in operating a business. However, solely relying on insurance won’t serve the best interests of employers or workers. To effectively protect workers and control costs, the implementation of preventive measures and the promotion of safe behaviors are essential.

Implementing a well-designed safety program is the most effective approach to integrate these practices into the daily workflows of your workers. Here, we outline some key ways in which a robust safety management system can drive down costs for insurance providers and, ultimately, for you.

Good housekeeping

Maintaining a clean workplace is of the utmost importance for ensuring safety, which is why most safety programs incorporate housekeeping policies and procedures. By promptly clearing clutter, addressing spills, and appropriately disposing of hazardous waste, incident rates can be significantly reduced. It’s worth noting that insurance auditors will surely recognize and appreciate a well-maintained worksite.

Additionally, a robust safety program enables improved efficiency and reliability regarding lockout/tagout procedures, equipment maintenance, and the management of hazardous chemicals. Establishing clear and consistent procedures for monitoring these factors not only enhances your workers’ safety but also boosts your company’s insurability.

Consistent training

In the pursuit of safety, knowledge plays a crucial role, and regular safety training consistently leads to improved incident rates. This concept also holds true for task-specific procedural training, which aims to promote the safest and most efficient methods of carrying out hazardous tasks.

Nevertheless, for many companies, ensuring consistent training poses several logistical challenges. Determining which team members have completed all necessary training, deciding when policy changes necessitate new training, and identifying individuals who require retraining following recent incidents are just a few of the subjects that arise. However, incorporating a training management system into your safety program can provide the answers to these queries, enabling you to demonstrate to insurers that your workers are well informed and up to date .

Lower litigation costs

Ideally, a robust safety program combined with sufficient workers’ compensation coverage will help you prevent litigation whenever possible. Nevertheless, in the event that an incident does result in a legal dispute, having well-documented safety policies in place will support your argument that you took every necessary measure to ensure your workers’ safety. Furthermore, this documentation will aid in identifying any weaknesses in your preventive practices, allowing you to proactively address hazards before they lead to accidents.

Lower workers’ compensation costs

Workers’ compensation insurance is a significant expense for heavy industries like mining and construction and is often mandated by law. Many organizations opt for more coverage than necessary to mitigate legal risks and manage overall risk exposure. However, implementing a safety program can still help reduce costs. Premiums are typically influenced by payroll, company classification, and a claims experience modifier. While the first two factors may remain constant, the third can be lowered by minimizing the number and severity of incidents.

Improving employee health

Worker safety goes beyond identifying hazards and preventing accidents. A comprehensive safety program should also prioritize employees’ well-being, including their physical and mental health. While implementing wellness and mental health initiatives may involve initial costs, the long-term impact can result in cost savings and enhanced productivity. A satisfied and healthy workforce tends to exhibit higher morale and productivity, which may also lead to negotiations for lower health insurance premiums.

Enhanced productivity

High-risk industries like construction and agriculture often experience significant revenue fluctuations due to seasonal changes, unpredictable demand, and shifting political environments. Many factors affecting revenue may be beyond a company’s control. However, a safer workplace can contribute to improved cash flow and productivity. In cases when revenue protection insurance is necessary, demonstrating a consistent safety program can potentially lead to reduced premiums.

Reducing injury rates with an EHS management software

Insurance providers offer lower rates and favorable terms to companies that demonstrate a commitment to protecting their workers. Auditors also look for evidence of workers being empowered to prioritize their own safety through training, documentation, and transparent records. However, managing these variables can be challenging given Occupational Safety and Health Administration (OSHA) requirements and internal demands. Safety managers often find themselves with a handful of responsibilities. Don’t leave safety to chance. BLR offers the most comprehensive Environmental, Health, and Safety (EHS) management tools on the market that helps you move the needle in your organization and allows you to invest in what really matters: your people. Learn more by clicking here.