The credo “Safety Pays” is a little misleading. In truth, companies with better safety records are the ones that pay less for their workers compensation insurance—sometimes, significantly less. Just ask contractor Midwest Asphalt.
Based in Eden Prairie, Minnesota, Midwest Asphalt is a full service asphalt paving, grading, milling and reclaiming contractor serving municipal, commercial and residential customers in the Twin Cities. In an industry rife with potential hazards, Midwest Asphalt has reduced its insurance premiums by hundreds of thousands of dollars, thanks to the development of a proactive, well-managed safety program that engages every one of its 150 employees.
“Their loss ratio in 2014-2105 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.” A primary tool used by the insurance industry in calculating an insured’s risk, average loss ratios can range across the board. Loss ratios of 40% and higher are not uncommon.
Another metric of safety performance is the Experience Modification Rating (EMR),* an indicator of loss experience that determines workers compensation premiums. From an EMR of 1.33 in 2010, Midwest Asphalt’s EMR in 2015 lowered to .79—reflecting an annual premium reduction of 54% in just four years.
Achievement of these enviable safety numbers didn’t happen overnight, but in a steady progression resulting from focused and sustained, hands-on effort. Midwest Asphalt began ramping up its safety program about three years ago, working with COMPTROL to pursue new approaches to workers comp cost control.
“KA’s loss prevention specialist showed us the process over the course of over a year; then we took it on,” said Gregg Prest, company CFO. The company’s workers comp carrier, The Builders Group, also provided valuable technical expertise from its Loss Control representative, Adam Tripp.
The company identified its more safety-conscious and outspoken employees from each department to step up into safety leadership roles; and added a safety recognition program.
Results have been dramatic. In the first year, Midwest Asphalt’s EMR dropped from 1.55 to 1.01 in 2013, heading steadily downward to a 2015 EMR of .79. The company’s workers comp premiums in 2015 have dropped to less than half what they were paying in 2012; and are expected to lower even further. Midwest Asphalt’s projected EMR for 2016 is .66.
And, the company has cut its workers comp losses by a minimum of 50% each year for five straight years.
Employee engagement is the key to the program’s success. Midwest Asphalt Fleet and Safety Director Rob Magers oversees monthly meetings at which representatives from all its areas—construction, paving, materials, milling and trucking—each report on any safety-related equipment or personnel issues that need attention. It’s a paradigm shift from the old days, when “nobody wanted to talk about failure,” says Magers.
The safety culture is now embedded through all levels of the company, providing cohesive support for the pursuit 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 some behavior that needs correction, the major reason for injury prevention is the truly good employee buy-in we’ve established.”
When injuries do occur, the company does an excellent job in mitigating both employee and company exposure by systematically rehabilitating and welcoming employees back to work.
“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 has also raised its hiring standards, tapping into the expertise of KA Insurance’s HR services team on standby for support.
“They should be viewed as one of the safest contractors on any job site,” said Hislop.
*What’s in a Number?
The Experience Mod Rating (EMR) metric is calculated to determine adjustments in an employer’s workers compensation premium based on their loss experience over the preceeding three years. Based on 1.00 as average, EMR’s greater than 1 reflect higher-than-average losses; where EMR’s less than 1.00 reflect lower-than-average losses. Midwest Asphalt’s 2015 EMR of .79 means it pays 21% less for workers compensation insurance than an average competitor.