How much are you Paying For Your Insurance Companies Safety Services?

You are paying for the safety services provided by your insurance carrier.  The question becomes, how much am I paying and what am I supposed to get for my money?  You have every right to ask that these costs be quantified, for services to be clearly defined, and to decline services you do not wish to pay for.  

If you are a large contractor, you will typically be paying around $10,000 to $25,000 per year. This cost is buried within your insurance premium.  

Unfortunately, many companies perceive that their insurance company is providing "free" safety/loss control services, and therefore are not particularly upset when the promised services are not delivered.  Your carrier may even infer that these services are free.  They are not.  

If you were to spend $10-25 k outside of premium for professional safety services you would expect to have the services quantified and delivered as promised.  You would also expect to have an experienced, qualified consultant deliver those services.  

It is also within your rights to decline insurance safety services and receive a savings in premium to include the cost of the services plus premium tax.  The insurance carrier may negotiate the reduction in premium to include a small number of visits as "due diligence."  This means that the underwriters have a safety professional visit some projects to ensure they have not written a policy with undue risk.  

If you decline to pay for the insurance carriers services, they have a right to ensure that safety will be properly managed during the policy year.  You may decide to engage an outside safety consulting firm, or be able to demonstrate that you have a well staffed, highly qualified, internal safety department and that the carrier's services are not needed.  

Some insurance companies have highly reputable internal safety consultants and provide excellent service.  If you are engaging a carrier with this reputation, or if you have a long standing relationship with your carrier's safety representative for your account, you may wish to pay for additional services outside the premium.  This "unbundled" service will not be subject to premium taxes and can save you 5-15% in cost due to tax savings.  

Hourly costs for either insurance carrier/broker services or outside safety consultants will cost an average of $100 per hour.  At this rate, you should expect a highly qualified consultant.  If you are not familiar with the insurance safety representative assigned to your account, it is reasonable to request a bio/resume outlining their qualifications and experience.   

When you meet with your insurance carrier to discuss safety/loss control services, you should clearly define what the proposed services.  Too often, the only services provided are jobsite inspections.  Since you are already required under OSHA to conduct regular and frequent inspections, this is a safety function that should be performed internally. 

While it is helpful to have an occasional outside set of eyes doing inspections, you will get more return for your dollar by clearly defining services that you do not have the internal expertise for.  Some of these services may include; safety program development or OSHA training.  If your insurance carrier/broker cannot provide a qualified/authorized consultant to do OSHA training or program development, you may be better served by hiring an outside consultant.  

One issue that may contribute to a decline in insurance services is the current hard market.  As insurance carriers look for ways to save on expenses, one of the first departments to suffer is the safety/loss control group.  They are now asked to do more with less, and may not be able to deliver on promised services.  

So what should you do to ensure you are getting what you are paying for?  

As your policy year renewal approaches, determine what the carriers quoting on your account have to offer in services and in expertise.  Require your agent to breakout the cost of services excluding due diligence.  Insist on a written service agreement that clearly outlines what service you will receive.  Hold the carrier accountable for providing the promised services.   

If your carrier cannot or will not provide what you need, consider unbundling the cost of safety services and hire a reputable safety-consulting firm with the savings.  

Remember, YOUR INSURANCE COMPANY WORKS FOR YOU!  

Pamela Fisher, CSHM, CHST