Safe and Sound

Contractors with a sharp eye for their bottom line are smart to place a premium on safety. Insurance agents and brokers tend to know a construction business that avoids injuries is not only applying safe building techniques but also sound economics. Accidents are costly and the majority of them may be preventable. While contractors may have safety in mind, an insurance agent or broker can make sure site safety and its impact on profit margins is a top priority.

In addition to insight on the economic reasoning for taking safety measurements, insurance agents and brokers can connect customers with risk management resources that leading insurance carriers can provide.

The Business Case for Safety

In Oklahoma, a boom comes loose from a crane as workers are attempting to move it and an employee suffers massive head injuries. In Virginia, seven members of a crew are injured when a scaffolding collapses at a construction site. And in Florida, two are injured when a large sheet of metal they are moving through a site topples on top of them.

These and other similar incidents are rarely front-page news because construction accidents tend to happen frequently. In fact, the Bureau of Labor Statistics has indicated that construction has one of the highest rates of injuries and deaths among all industries. In 2007, accidents left 1,172 construction workers dead (a rate of 12.3 per 100,000 workers) and injured more than 380,000 others.

Beyond human pain and suffering, the direct cost of accidents is high. A November 2007 study in the journal Accident Analysis and Prevention found that the 2002 total cost for construction deaths and injuries in the United States was $11.5 billion.

Direct costs, however, are just the beginning. The Occupational Safety and Health Administration (OSHA) cites the following as some of the common identifiable indirect costs: 1) finding and training a replacement worker; 2) repairing damaged property; 3) investigating the accident; and 4) implementing corrective action. Schedule delays, added administrative time, lower morale, increased absenteeism and poor customer relations are additional indirect costs. OSHA estimates the indirect costs of an accident can range up to 20 times more than the direct costs.

The bottom line is that accidents can erase profit margins quickly. An insurance agent or broker’s construction customers need to understand it is smart business to avoid potentially costly accidents.

Connecting to Resources

In addition to government resources for creating adequate safety programs at construction sites, agents and brokers can help contractors tap into their insurance carrier’s expertise. Insurers are in a position to potentially know some best practices for avoiding accidents. Their risk control consultants can be used to assess a contractor’s practices and recommend improvements for the contractor to make. Insurance agents or brokers may be an especially useful resource for small construction firms without resources for a risk manager in connecting the firm with their carriers’ risk management expertise.

While different construction companies may face a variety of specific challenges, the goal should be to create a culture of safety that permeates everything managers, supervisors and employees do. Planning for hazards and preparing employees for dangerous situations is critical. There are four key components including, but not limited to:

Buy-in at the Top. When a company’s leadership team is consistent about its commitment to safety, workers know that the company is not just going through the motions of meeting OSHA requirements. Owners who talk about safety frequently, who celebrate safety successes and who insist on accountability set the pattern for everyone to follow. Creating safe worksites can become a priority when performance evaluations and financial incentives are driven by a focus on managers and supervisors following safety rules and raising awareness of safety expectations.

Effective Safety Planning and Training. New employees need organizational as well as site specific orientation training that brings them up to speed on how a contractor expects work to be done. Daily and weekly safety briefings should apprise the crews of what will be taking place at the site, who may be coming onsite if subcontractors are involved, what hazards can be expected, and finally what precautions and controls the employees are to use.

Employee Screening. All employees should be properly certified for jobs they are expected to perform, including specialized training for drivers, crane operators and other workers who perform dangerous jobs. Screening should take place prior to hiring an employee and continue throughout their employment by staying on top of deadlines for recertification.

Site Safety. Some construction businesses even create a safety director position to serve as the point person for OSHA compliance. That doesn’t mean, however, that job site safety is solely up to the safety director. Project managers, site foremen and supervisors all need to understand safe procedures and hold their workers accountable for safe practices.

Some construction companies may look at insurance as just one more cost of doing business. An insurance agent or broker can help these customers see insurers as an asset and valuable business partners.

One concrete contractor saw such a partnership pay off when an above-ground worker slipped and fell while removing concrete forms. Although OSHA requirements can be met without tie offs for some above-ground-level work, the contractor’s insurer had convinced the company to implement a 100 percent tie-off program. The worker, secured to a horizontal lifeline, survived the fall without injuries.

No employer wants to be responsible for deaths or injuries — and no business can afford the costs and delays that come with accidents. With help from agents and brokers, including the risk management knowledge offered by their insurers, construction companies can build a culture of safety that protects their employees and profits.