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 Pucillo
Risk 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

Sales required to Pay for an Accident…

Dealership Profit Margin

Accident
Cost 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
 Accidents In The Dealership

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

Dealership Profit Margin

Accident
Cost 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
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
 Accident Investigation

•First Aid vs. 911

•Eliminate dangerous
conditions
•Initial Paperwork
•Document ASAP
•Managers should
Investigate the
understand Scene •Complete in SCM
consequences of •Employees from all •Incentive Programs?
not reporting levels •Signage
•Delayed •Use proper accident
notification investigation form
•Eliminate bias Prioritize Risk •Safety Committee
•Corrective action involvement
increases suspicion •Determine witnesses
•Establish •Analyze the Risk •Invest money in
•Work with •Write down their accountability facility
Insurance Company account •Eliminate the hazard
•Root cause •Inspections
•Take pictures •Reduce the hazard
Initial •Fishbone Diagram level •PPE
•Take note of
Notification equipment, PPE, •Provide safety
floor condition… devices Prevention
•Document only facts Accident •Provide warnings
•Determine sequence Analysis •Provide safety
of events procedures & PPE
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
yroi
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