As summer winds down, here is an encore of an essay regarding the importance of lagging indicators in successfully securing the proper insurance coverage.
By Mike Drew, The Reschini Group
Is the quarterback resourceful – or reckless?
Is the candidate truthful – or tactless?
Is the businessperson poised – or preening?
It all depends on the context.
The same can be said for the effect of safety-related lagging indicators, two in particular – Experience Modification Rate (EMR) and Total Recordable Incident Rate (TRIR) – that can have significant effects on insurance rates, and even on the ability of contractors to secure work, primarily in the oil and gas industry.
EMR helps to determine workers’ compensation premiums for businesses. A mathematical formula calculates an annual rate, and premiums can go up or down depending on the company’s claims experience. By learning how to monitor company processes, some additional control may be gained over those workers’ compensation expenses. TRIR is a measurement used by the federal Occupational Safety and Health Administration (OSHA) to record safety-related incidents across an organization.
While these measurements represent responsible accountability metrics, with safety remaining a top priority for companies and their employees, occasionally the impact on premiums can outpace the actual significance of safety-related events. A single incident in a TRIR calculation, for example, can knock a company out of the running for contract bid submittals for years.
Say an employee suffers a minor accident while on the job. After receiving prompt treatment at a hospital, he is medically cleared to return to work that same day and does so. But because this event technically qualifies as a recordable incident, his company experiences some very real and negative financial ramifications.
In other words, the episode gets taken out of context. The “punishment” can easily exceed the “crime.”
Yet here’s the hard truth of the matter. The rules are the rules. EMR and TRIR rates cannot be changed. Safety incidents can and should be explained within the proper context, so that future work engagements can still be sought without penalty and so that premiums can remain reasonable.
At The Reschini Group, our in-house safety consultants bring a fuller understanding and context to safety documentation. Our expertise in safety practices, covering both pre- and post-accident conditions, can explain and detail the proper context, so that a minor occurrence doesn’t need to turn into a major problem.
Contact us to learn more or discuss your situation.
Copyright 2016 The Reschini Group
The Reschini Group provides these updates for information only. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.