Building a Safety Culture at Midwest Asphalt Corporation

The phrase “safety pays” can be misleading. Companies with stronger safety records often pay less for workers compensation insurance, sometimes significantly less. Midwest Asphalt is one example.

Based in Eden Prairie, Minnesota, Midwest Asphalt is a full-service asphalt paving, grading, milling and reclaiming contractor serving municipal, commercial and residential customers throughout the Twin Cities. In an industry with substantial hazards, the company reduced insurance premiums by hundreds of thousands of dollars through a proactive safety program that engaged all 150 employees.

“Their loss ratio in 2014 and 2015 has been outstanding,” said Matt Hislop, producer with COMPTROL, a division of Kraus-Anderson Insurance. “The organization produced a loss ratio with its insurance carrier of just 3% over the past year.”

Loss ratio is one tool insurers use to assess an insured’s risk. Average loss ratios vary widely, but loss ratios of 40% or more are not uncommon.

Another key measure is the Experience Modification Rating, or EMR, an indicator of loss experience used to determine workers compensation premiums. Midwest Asphalt reduced its EMR from 1.33 in 2010 to 0.79 in 2015. The reduction reflected an annual premium decrease of 54% over four years.

How Did Midwest Asphalt Improve Its Safety Performance?

Midwest Asphalt’s results came through focused, sustained effort. The company began strengthening its safety program about three years earlier, working with COMPTROL to pursue new approaches to workers compensation cost control.

“KA’s loss prevention specialist showed us the process over the course of more than a year, then we took it on,” said Gregg Prest, company chief financial officer.

The company’s workers compensation carrier, The Builders Group, also provided technical support through its loss control representative, Adam Tripp.

Midwest Asphalt identified safety-conscious employees in each department and invited them to take on safety leadership roles. The company also introduced a safety-recognition program.

What Results Did the Safety Program Produce?

The results were significant:

• Midwest Asphalt’s EMR dropped from 1.55 to 1.01 in 2013, then continued to decline to 0.79 in 2015.
• Workers compensation premiums in 2015 fell to less than half of the company’s 2012 premiums.
• The projected 2016 EMR was 0.66.
• Workers compensation losses decreased by at least 50% each year for five consecutive years.

Why Does Employee Engagement Matter?

Employee participation is central to the program’s success.

Rob Magers, Midwest Asphalt fleet and safety director, oversees monthly meetings where representatives from construction, paving, materials, milling and trucking report equipment and personnel issues that need attention.

The approach represents a shift from a culture where, as Magers described it, “nobody wanted to talk about failure.”

Safety became part of operations at every level of the company, supporting the goal of zero injuries. “Everyone knows they’re the eyes and ears,” Magers said. “Whether it’s reporting on a broken spring on a truck gate or behavior that needs correction, the major reason for injury prevention is the truly good employee buy-in we’ve established.”

How Does Return-to-Work Support Safety and Cost Control?

When injuries occur, Midwest Asphalt focuses on rehabilitation and return-to-work support. The company systematically welcomes employees back to work, helping limit the impact on both employees and the business.

“They’ve done an exemplary job of welcoming employees back to work, far above the average contractor in its industry peer group over the last four years,” Hislop said.

The company also raised its hiring standards and used KA Insurance human resources services for added support.

“They should be viewed as one of the safest contractors on any jobsite,” Hislop said.

What Is an Experience Modification Rating?

The Experience Modification Rating, or EMR, adjusts an employer’s workers compensation premium based on loss experience during the preceding three years.

An EMR of 1.00 represents the industry average:

• An EMR above 1.00 indicates higher-than-average losses.
• An EMR below 1.00 indicates lower-than-average losses.

Midwest Asphalt’s 2015 EMR of 0.79 meant it paid 21% less for workers compensation insurance than an average competitor.

Learn more about workers compensation cost control, insurance risk management, construction safety leadership and ergonomic best practices.

For additional workers compensation and injury-prevention resources, visit the Occupational Safety and Health Administration.