Property & Casualty Insights
Renew Your Organization’s Commitment to Reducing Risk
JUNE 7, 2022
In 1996, the National Safety Council (NSC) in the U.S. established June as National Safety Month to increase awareness of the leading safety and health risks and decrease unintentional injuries and fatalities. Now that National Safety Month is here, it’s a great time to renew your organization’s commitment to risk reduction by addressing factors that contribute to your total cost of risk (TCOR).
Claims make up the largest portion of TCOR for most organizations. An organization with a negative claims trend will have a higher TCOR, not just from claims costs, but also from less favorable coverage and pricing, and from increased retained costs such as greater deductibles or uncovered loss. Proactive risk control focused on mitigating future losses can help reverse the trend, lowering TCOR and increasing safety, productivity and employee retention.
Understand What Drives Claims
While each organization has unique exposures, risk is also often driven by loss trends specific to the organization’s industry. To help businesses best address their risks, USI Insurance Services has developed an understanding of the industrywide trends impacting our clients, allowing our risk control teams to conduct a focused analysis and provide targeted solutions to mitigate and reduce top sources of claims costs. This often results in fewer claims, lower claims costs, and premium savings.
Workers’ Compensation
Workers’ compensation can be a significant driver of claims costs for many employers. The top four sources of claims cost employers $35.75 billion in 2020:1
1. Musculoskeletal (MSK) injuries from overexertion, stress or sprains — Top source of workers’ compensation claims costs overall
Cost: $13.3 billion in 2020
- Industry impact: No. 1 source of claims costs for manufacturing, healthcare and transportation; No. 3 source of claims costs for construction
- Sample USI solution: Loss trend analysis, job hazard analysis, targeted ergonomics programs, wearable technology, artificial intelligence (AI) integrated with imagery or cameras
- Financial impact: Average cost per claim — $37,000 plus $100,000 in indirect costs
To help mitigate these costly claims, NSC has released resources for National Safety Month focused on preventing MSK injuries.
2. Falls on the same level from slips or trips — Second highest source of claims costs overall
Cost: $10.58 billion in 2020
- Industry impact: No. 2 source of claims costs for manufacturing, healthcare and transportation
- Sample USI solution: Heat mapping, slip/skid meters, training, wearable technology and AI integrated with imagery or cameras, engineered walking/working surfaces and coatings
- Financial impact: Average cost per claim — $46,600
NSC has developed resources for National Safety Month focused on reducing slip, trip and fall injuries.
3. Falls from elevated surfaces to a lower level — Third highest source of claims costs overall
Cost: $6.26 billion in 2020
- Industry impact: Nonfatal injuries from falls to a lower level is the top source of claims costs for construction, costing the industry $3.65 billion in 2020
- Sample USI solution: Site risk assessment, job hazard analysis, employee training, engineered fall protection systems, wearable technology, AI integrated with imagery or cameras
- Financial impact: Average cost per claim — $46,600
4. Struck by falling or moving object/equipment, or struck on object/equipment
Cost: $5.61 billion in 2020
- Industry impact: More variable by industry — third highest source of claims costs for manufacturing, second highest source of claims costs for construction
- Sample USI solution: Loss analysis, site review, machine guarding, lockout/tag-out systems, vehicle backup safety systems, AI integrated with imagery or cameras, job safety analysis, review personal protective equipment
- Financial impact: Average cost per claim — $40,000, plus potential OSHA penalties and fines
Reducing and eliminating the frequency and severity of top cost drivers for workers’ compensation can lower premium or actual claims dollars up to 30%.
General Liability
For certain industries, general liability can be a top driver of claims costs:
Falls on the same level
- Source: Slip and trip hazards
- Cost: Real estate — $1.13 billion; healthcare — $3 billion
- Industry impact: No. 1 source of general liability claims costs for real estate and healthcare
- Sample USI solution: Heat maps, slip/skid meters, security cameras
- Financial impact: Average cost per claim — $46,500
Reducing and eliminating the frequency and severity of top cost drivers for general liability can lower premium or actual claims dollars up to 30%.
Auto Liability
Auto liability claims due to automobile accidents are a top driver of claims costs for the transportation industry.
- Industry impact: The top five crash types for transportation organizations account for 85% of incurred claim costs
- Sample USI solution: Fleet safety program, risk analysis, driver ratings, telematics, training
- Financial impact: Average cost per crash type — Rear-end crash $81,020; intersection crash $51,262; loss of control $39,365; lane change crash $38,444
Similar to workers’ compensation and general liability, reducing and eliminating the frequency and severity of top cost drivers for auto liability can lower premium or actual claims dollars up to 30%.
How USI Can Help
More costly, frequent and complex claims have directly impacted the insurance marketplace in terms of premium, coverage restrictions and higher deductibles, and increased underwriter attention to loss trends. While the marketplace is beginning to ease up, most lines of coverage will continue to favor businesses with lower loss trends and well-defined risk management programs in place.
Because of this, USI does more than simply place coverage for our clients. We integrate analytics, risk control and claims management to provide clients with targeted, measurable risk management that helps them mitigate claims and premium costs, and promotes continuous improvement.
- Our risk assessment process is infused with industry- and client-specific knowledge and data, allowing us to pinpoint a client’s unique sources of risk and cost drivers.
- We use our proprietary ClaimsLens tool to aggregate client loss data from multiple sources (i.e., their previous and current insurers) to identify adverse loss trends and cost drivers for the client, and develop a tailored risk control plan focused on reducing and eliminating those specific cost factors.
- We leverage our experience and the success of hundreds of thousands of commercial insurance clients to develop and recommend innovative, cutting-edge solutions designed to mitigate the top sources of loss per industry.
- Our cross-discipline approach integrates the expertise of our analytics, risk control, and claims teams to reduce our clients’ TCOR by as much as 30%.
Understanding the top cost drivers and sources of risk can help your organization implement effective solutions and reduce your TCOR. To learn more about USI’s approach to risk management, contact your USI representative or email pcinquiries@usi.com.
For more safety and risk control information and events, download the 2022 National Safety Observances Calendar.
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