Take The Lead

On Loss Control

• Zach Pucillo, CSP,

CHMM

• March 5, 2015

Moderator

Rebecca Ward

Marketing Writer

(303) 219-7802

rward@kpaonline.com

Presenter

Zach PucilloRisk Management Consultant

(317) 201-2335

zpucillo@kpaonline.com

Questions?

If you have questions during the presentation, please submit them using the “Questions” feature

Questions will be answered at the end of the webinar

Agenda

What is Loss Control

The Bottom Line (How do losses affect it)

Risk Management

Accident Investigation

Prevention Techniques

What is Loss Control

Loss control is defined as those measures

designed to eliminate and/ or reduce loss of

human, financial, or physical resources both

to the state and general public.

What is Loss Control

Loss control techniques or measure will include

some or all of the following:

• Risk management

• Accident Investigation

• Hazard Control

• Employee education

WHY SHOULD I BE CONCERNED

ABOUT LOSS CONTROL?

The Bottom Line

How do losses effect the bottom line

• Direct vs Indirect Costs

• Margins

• Insurance

The Bottom Line

Direct Costs

Medical Expenses

Workers Compensation Paid

__________________________________

Indirect Costs

Lost Productivity

Losses Due to Productivity Morale

Time Spent Due to Attention of Emergency

Damage to Tools, Equipment, Property

Losses Due to Return to Work

Lost Time on Idle Machines

Customer Losses Due to Time

Loss Time Spent Investigating the Cause

The Bottom Line*

U.S. Employers spend approximately $100

Billion per year for worker’s compensation

½ - Compensation Payment

¼ - Medical Care

¼ - Admin and for Safety, Legal, Health

Services provided by Insurers

The Bottom Line

Accident

Cost

Dealership Profit Margin

1% 2% 3% 4% 5%

$1,000 $100,000 $50,000 $33,333 $25,000 $20,000

$5,000 $500,000 $250,000 $166,667 $125,000 $100,000

$10,000 $1,000,000 $500,000 $333,333 $250,000 $200,000

$25,000 $2,500,000 $1,250,000 $833,333 $625,000 $500,000

$100,000 $10,000,000 $5,000,000 $3,333,333 $2,500,000 $2,000,000

Sales required to Pay for an Accident…

Accident

Cost

Dealership Profit Margin

1% 2% 3% 4% 5%

$1,000 2,857 1,429 952 714 571

$5,000 14,286 7,143 4,762 3,571 2,857

$10,000 28,571 14,286 9,524 7,143 5,714

$25,000 71,429 35,714 23,810 17,857 14,286

$100,000 285,714 142,857 95,238 71,429 57,143

# of $35 oil changes Required to Pay for an Accident…

Accidents In The Dealership

The Bottom Line

…Wait I Have Insurance!

The Bottom Line

Types of Insurance

• State Operated – We all pay in

• Ohio BWC

• Premium

• Private Policies

• Relies on insurance company

• Premium

• Self Insured – We pay for it

• Self Reserve

The Bottom Line

Premiums

• Calculation: Set Unit Dollars per $100 of

payroll

• NCCI - National Council on Compensation

Insurance

• Sets the unit price for most states

• Unit price is determined by NAICS

The Bottom Line

Manual Rate

• Dealership Technician Manual Rate $2.90

per $100 of payroll

• Your payroll for the year is $4,400,000

• Your Premium for the year =

$4,400,000 x $2.90/$100 = $127,600

The Bottom Line

Experience Modification Ratings

• Will allow insurance company to increase or

decrease premiums based on historical

performance

• Based on last 3 years

• The average dealership

has a rate of 1

The Bottom Line

• Experience Modifier Rates of 1.32, 1.04,

0.88

• Next Years Premiums $127,600 x 1.32 =

$168,432

• Premiums in 3 years $127,600 x 0.88 =

$112,288

Experience Modifier Credible Actual Primary Loss + Credible Actual Excess Loss

Expected Loss

The Bottom Line

Okay, I Am Ready To Explore Loss Control So I

Can Save Some Money…. Now What?

Risk Management

Risk Management*

Risk is the product of frequency and severity of

potential losses

Loss Frequency x Loss Severity = Risk

Risk Management

• Loss control would be

• Risk management gives us guidance so we

do not go overboard

Risk Management*

• Risk Identification

• Risk Analysis

• Reducing or Eliminating Risk

• Financing Risk

• Administering the Risk Management Process

Risk Management*

Risk Identification

• What are we risking?

• Employee injuries

• Employee health

• The possibility of citations

• Financial losses

• Reputation losses

Risk Management*

Risk Identification – Employee Injuries

• Past loss claims

• Assessments• Shop Equipment

• Processes

• Tire Rotations

• Chemical Inventory

• Age of workforce

• Our Techs Perform Multiple Tire Rotations Each Day….

Risk Management*

Risk Analysis – Quantitative

• 6 Tire rotation back injury related claims in one year

• Dealership performed 1,500 tire rotations in one year

• Average tech performs 100 tire rotations in one year

Probability = (6 x 100)/1500= 0.4

The employee has a 40% chance of receiving a back injury during a tire rotation each year

Risk Management*

Risk Analysis – Qualitative

Risk Management*

Reducing or Eliminating the Risk

• Prioritize the risk

• Refer to the Risk Matrix

• Refer to the Hazard Control Hierarchy

• Hazard Elimination

• Substitution

• Engineering Controls

• Administrative Controls

• PPE

Risk Management*

Financing Risk

• Some Risks will require money invested

to eliminate the risk

• Ex: Aluminum Work in Body Shops

• Aluminum repair means you accept risk

• Risk cannot be eliminated so it must be

reduced

Risk Management*

Administering the Process

• What will be our acceptable level of risk?

• 40% Probability is too high for back injuries

• 0% probability is unrealistic so our acceptable

level will be 5%

• Now we can install our controls with acceptable

levels of risk

Risk Management*

Risk Analysis – William Fine Method

Risk = Consequence x Exposure(frequency) x

Probability

Risk Management*

Risk Management*

Air Hoses on the Floor

• Consequence = 15

• Exposure = 10

• Probability = 3

• C x E x P = R = 450

Accident Investigation*

• Accidents vs Incidents

• Accidents – An unexpected, unforeseen, or

unintended single or multiple event sequence that

is caused by unsafe acts, unsafe conditions, or

both and may result in immediate or delayed

undesirable effects.

• Incidents – any unplanned event or event

sequence, whether it results in loss, injury, illness,

disease, death, or none of these.

• We don’t like surprises of any kind

Accident Investigation

What causes the “human loss”……

• Accidents

• Human error

• Unawareness

• No common sense

• Stupidity

Accident Investigation

Two fundamental types of accident causes:

• Unsafe Acts

• Unsafe Conditions

Accident Investigation*

H W Henrich

• Assistant Superintendent of the Engineering

and Inspection Division of Travelers

Insurance Company

• Industrial Accident Prevention, A Scientific

Approach -1931

• Behavior-based safety

Accident Investigation*

Henrich 88:10:2

• Analyzed 75,000 accidents

• 88% - Unsafe Acts

• 10% - Unsafe Conditions

• 2% - Unpreventable Causes

Yeah, but we don’t know these unsafe acts

were happening….

Accident Investigation*

Henrich - 300:29:1 Ratio

Analyzed 330 accidents of the same type

300 – Resulted in report but no injury

29 – Resulted in minor injuries

1 – Resulted in major lost time injury

There are many opportunities to implement a control before minor or serious injuries occur

Accident Investigation

Recognizing that accidents are CAUSED and

not just chance will allow you the pursuit of

accident prevention

•First Aid vs. 911

•Eliminate dangerous conditions

•Initial Paperwork

•Document ASAP

•Managers should understand consequences of not reporting

•Delayed notification increases suspicion

•Work with Insurance Company

Initial Notification

•Use proper accident investigation form

•Determine witnesses

•Write down theiraccount

•Take pictures

•Take note of equipment, PPE, floor condition…

•Document only facts

•Determine sequence of events

Investigate the Scene •Complete in SCM

•Employees from all levels

•Eliminate bias

•Corrective action

•Establish accountability

•Root cause

•Fishbone Diagram

Accident Analysis

•Analyze the Risk

•Eliminate the hazard

•Reduce the hazard level

•Provide safety devices

•Provide warnings

•Provide safety procedures & PPE

Prioritize Risk

•Incentive Programs?

•Signage

•Safety Committee involvement

•Invest money in facility

•Inspections

•PPE

Prevention

Accident Investigation

Accident Investigation

Use the 5 Why’s? to determine the Root Cause

• Joe slipped and fell at a service entrance

• Why? –Because the floor was wet

• Why? –Because people have tracked in snow

from the lot

• Why?-Because there is no place for them to wipe

their feet

• We need a slip resistant mat at the doorway

Prevention

• In house inspections

• Collect a group

• Come up with a check list

• Set a time and date

Prevention

Safety Committees

• Top level of management

• Members from every department

• Produce incentives for participating

Prevention

Employee Education

• Formal Training

• Shop Talks

Prevention

Programs

• Establish the written rules

• Top level commitment

• Lead point persons

• Sustain, Sustain, Sustain

KPA study

• ROI of Safety

• Sampled Mod Rates in FL and CA

• After 3 years of KPA service Ex Mod dropped

from 1.01 to .90

http://www.kpaonline.com/solutions/safety/safet

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References

*Brauer, Roger L. Safety and Health for

Engineers. Hoboken, NJ: John Wiley, 2006.

Print

Questions?Zach Pucillo

Risk Management Consultant

(317) 201-2335

zpucillo@kpaonline.com