Would you like to reduce just one expense by $100,000 in the next 12 months?  Here are the steps one of our clients, the owner of a 170 employee combined retail and wholesale operation, took to achieve exactly that savings in his workman’s comp premiums:

1) Multiple sign-off on claims. When he decided to get serious about insurance premium reduction, he moved claims out of his HR department to a double sign off procedure that included him. He personally reviewed each claim, giving him top of the mind awareness and the ability to train correctly. What he discovered was that many of the “so-called” claims were incidents that could easily be handled without workman’s comp processing.

2) Involve the underwriter. To prove that he was serious about safety, this owner invited his insurance underwriter (not the agent) to his business to tell him exactly what he should do to lower premiums. The underwriter found several problem areas that needed correction, and recommended a new safety manual. The owner took his recommendations seriously. After six months, he invited the same underwriter back so he could see for himself all problem areas were fixed, the new safety manual was complete, plus tell him about all the safety education that had taken place.

3) Outside safety engineer. To get help fixing the underwriter-identified problems, our client hired a safety-engineering firm at a cost of $10,000. He was assigned a safety engineer who reviewed all procedures, got the OSHA and other agency training up to date, conducted safety classes, and produced the new safety procedures manual. This engineer’s expertise was invaluable in speeding our marketer through a process that if done strictly internally, could have taken years!

4) Salary review. Since workman’s comp rates are calculated strictly on base salaries, the company reviewed all large salary workers and when appropriate, reduced salaries by implementing non-salary bonus performance plans. In addition, as all salaries were reviewed, each employee was checked for the correct job category. During this salary review process, it was discovered that overtime had inadvertently been included in previous salary reporting. Regulations review showed that only regular salary is reportable and correcting this reporting alone saved the company thousands.

5) Safety Director hired.  Once the engineering firm professional finished his work, it was clear that safety needed to be an ongoing task. A full time, professional safety director was hired, at just over $40,000 per year, to spearhead all the safety programs.

6) Bid Process. Once all the safety programs were in place, the company used an insurance broker who specializes in the petroleum industry (Andy Smith 713-940-6590) to get quotes. Interestingly enough, they ended up keeping the same carrier, but the successful bidder was an agency who produced lower prices for the same coverage! The net result was over $100,000 in annual premium reduction, but not without pain. Before the premiums went down, the company spent many hours, and at least $25,000, before they saw a dime in savings. Was it worth it? They say YES!

PetroAnswers Only Six Steps to an Extra $100,000 in Savings