Risk Management

Safety affects insurance premiums

This column uses fictitious case histories to introduce important loss-control principles. The details for these case histories are not meant to represent any particular occurrence. Any similarities to living people or actual events are purely coincidental.

Rocket Roofing was a disaster waiting to happen. The company had 40 employees and a $10 million sales volume. Ron, Rocket Roofing's owner, took over the company from his father about five years ago. At about the same time, the company's loss ratio started to increase.

Ron did not encourage safety with his crews. Although he knew about Occupational Safety and Health Administration regulations, neither he nor his foremen made any effort to comply. Ron's lack of commitment to safety showed in many areas but most clearly was reflected in Rocket Roofing's claim experience in all lines of insurance. For example, during a three-year period, six employees suffered serious falls, including one that resulted in death.

In addition, two automobile liability claims resulted when employees driving company vehicles rear-ended a car and struck a pedestrian. During a routine insurance audit, Ed, a loss-control representative, found that Rocket Roofing does not order Motor Vehicle Reports (MVRs) on new hires or existing employees.