Doug Marcello
WHY IT MATTERS: Safety protects profits, not draining it as an expense burden many erroneously believe.
WHAT’S THE PROBLEM: Too many view safety as just an expense. A burden. A drain.
The folks in finance who live-and-die by the P & L statements, myopically see “safety” on the expense lines rather than what it is—an investment.
They look at money spent on safety as a hemorrhage of profits. The result—safety expenditures are internally challenged. They are shortsightedly cut to puff profits.
Like an owner-operator reducing maintenance during tough times. Short term return, but a long term loss.
The reality is that reducing expenditures for effective safety programs can actually cost more off the bottom line.
I had a client with a $1 million deductible. He would tell me that how his company did at year end depended on how I did in the courtroom.
WHAT IS THE REALITY: Safety saves. Lives. Injuries. And Money.
This is especially true in today’s world of trucking companies taking on risk to reduce the amount that their insurance will increase. It’s their deductible. Their “retention.”
The result is that companies pay for the first $X per accident up to the amount of their deductible. Where does that money come from? Off the bottom line.
Safety is an investment to prevent the incidents that drain revenue. Prevent the “death by a thousand cuts” of the “costs of defense payments” made even when there is no fault or no injuries.
That starts with safety. Investment in safety. Investment in technology. But also investment in a culture that puts safety above all else.
No compromise. Safety compromises cost.
SUPPORTED BY STUDY: ATRI issued its study on the issue, “The Rising Insurance Costs of the Trucking Industry.” A key takeaway from the study is that premium is no longer the sole determination of costs. It is just the start.
Instead, the key is “Total Costs of Risk”—premium plus deductible payments plus safety investment. And the result?
It found that, “Carriers that increased deductibles or [self-insured retention] levels as a strategy for lowering premiums successfully lowered our-of-pocket costs more often than other carriers,,,”
Eighty (80) percent of those that increased retention and deductibles decreased their MCMIS crash rates the following year. “This counter-intuitive finding appears to result from a heightened awareness of increased liability and exposure that leads to increased safety investment.” (Emphasis added)
And how did they do it? “As noted in the research, this likely requires a top-down emphasis on safety culture starting with the senior executives who authorize changes in coverage, deductibles and/or SIR levels.”
Further, ATRI recommends carrier evaluate all costs associated with risk, including coverage, deductibles and/or SIR levels, financial and litigation liability exposure, safety technology investments, driving hiring and training, and out-of-expenses.”
“Safety technology investments.” That’s the perspective.
SAFETY IS “ANTI-REPTILIAN”: Investment in safety is not just preventative. It is also a proactive defense against a Reptilian attack.
The Reptile Theory isn’t about the accident. Nuclear verdicts rarely, if ever, detonate because of the facts of the accident.
The Reptile lawyer preys upon “Systemic Failures”. Things you do on a ongoing basis that can be levered to inflame the jury and explode a verdict.
Your “safety investment” deprives them of the explosive source. The “systemic failure.”
Rather than reeling in the deposition to the Reptilian inquisition, you can respond, “I’m glad you asked that question. Let me tell you about safety program.”
BOTTOM LINE: Safety profits. Rather than a drain, safety keeps money on your bottom line. And the bottom line is, well, the bottom line.
