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I don’t think ‘contractor risk profile’ is a term you will find in wikipedia or the dictionary, but it’s a concept that can have a large effect on an Insurance Company Underwriter when he or she takes a look at your account and starts to determine your pricing.  A glaring example of a bad risk profile is this headline:  COMPANY IN BRIDGE COLLAPSE PREVIOUSLY CITED BY OSHA

Earlier today, a Connecticut contractor was doing demolition work on a bridge, when it partially collapsed.  There was only one serious injury, but the repercussions will be grave. Obviously, at this point it is too early to point fingers at who is responsible for the collapse(unknown who the contractor was who built the bridge in 1949, and who did a major renovation on it in the 1980′s).  It could be the contractor who was working on it today, or a 25 year old completed ops claim.  However, since the bridge hadn’t collapsed prior to the recent demolition, it was be surmised that Brunalli will be found responsible for this.  Frankly, I wouldn’t want to google my company’s name and have the first page filled with my history of OSHA fines and collapses that severely injured my employees.  The contractor on this job doesn’t have a website, so they have no online presence or information in which they can offset their shaky track record on safety.  Unfortunately for them, when an insurance underwriter is doing their initial research on your account, the internet and your website are some of their first stops.  Do what you can to be known and respected as a safe construction company.  And not just paying lip service to it, but actually having the safety record and low experience MOD to prove it.

It is too early to say that this disaster today could have been prevented, but given what happened last time OSHA visited one of their job sites, it can be said that this company is not known for safety.

List of OSHA fines from 2009:

The U.S. Occupational Safety and Health Administration cited Brunalli for safety issues involving the rebuilding of a bridge over the Housatonic River in Falls Village. OSHA said the company failed to protect workers against falls, drowning and other hazards at the Route 7 job site.

The December 2008 OSHA inspection –which led to the fine — found employees exposed to falls of up to 43 feet while working without fall protection on unprotected or inadequately guarded sections of the bridge and using an access ladder of inadequate height.

Workers also were exposed to drowning hazards due to the lack of life jackets, ring buoys and a lifesaving skiff which are required to be used and readily available on site when employees work over water.

In the Falls Village project, OSHA issued Brunalli Construction three willful citations, with $147,000 in proposed fines, for the fall, drowning and ladder hazards and 10 serious citations, with $33,950 in proposed fines, for additional fall-related hazards, puncture and laceration hazards from a damaged cable guardrail system, no hard hats for employees exposed to overhead hazards, amputation and laceration hazards from unguarded grinders, and no trained emergency responders on site.

OSHA defines a willful violation as one committed with plain indifference to or intentional disregard for employee safety and health. OSHA issues serious citations when death or serious physical harm is likely to result from hazards about which the employer knew or should have known.

Does your construction company need a risk profile improvement?  Contact the crew at Construction Risk Advisors for the type of risk management advice that the safest contractors in Connecticut have been using for years.

I’ve been trying to keep up with the oil spill in the gulf, and finally saw a picture of the containment unit that BP is devising to drop onto the ruptured line.

It makes sense that because the oil is lighter than the water pressure at that depth, that the oil will be able to be drawn out through the container successfully, but my concern lies in whether they can manage to get that thing to seat correctly using submarines.  I suppose they have the technology to get structures that large down there, but with all the oil in the water as well as a strong ocean current…

I hope they got the math right, and can make it happen.  The last thing Louisiana needs is another huge natural disaster that ruins its wildlife, fishing industry, as well as the income it receives from tourism that stems from fishing and beaches.

Link to article on CNN.com

As we’ve alluded to a few times here at FYR, our day job is helping contractors with risk management and insurance consulting among myriad other services aimed at protecting their company and reducing their Total Cost of Risk(everything that goes into risk management, not just the premiums and deductibles on the policies).  Anyways, our business model is different than your average insurance broker.  We don’t engage in pricing battles with other agents.  We walk away from prospects that don’t want to understand our business model.  We do a lot more than just insurance, but our fees are the same as you’re paying your agent right now.  Recently, I’ve noticed some strange irony between our business and the contracting business.

So, when we are meeting with a new prospect for the first time, we will spend the first part of the meeting discussing their business.  Lately, more and more of these meetings turn into complaining sessions about how there are too many people on bid lists, under-qualified contractors bidding work they don’t know how to do, people bidding ridiculously low numbers and on and on……

In the same breath that they berate their own industry, they turn around and buy their insurance based on all the things they hate about the bidding process.  Low price wins regardless of the expertise or capabilities of the agent.

Things not taken into consideration:

1.  Whether or not the agent or broker has any experience dealing with the nuances of contracting (unqualified contractors bidding on projects that they don’t really know how to complete)

2.  Whether the low priced coverage is comprehensive enough to protect every facet of your business (if the price is too low to cover materials/labor and any sort of profit, something is fishy)]

3.  Allowing every agent that calls you saying they can get you the lowest price to quote your insurance policies (long bid lists filled with unqualified contractors)

Shifting your mindset into a new way of doing things isn’t easy.  But neither is closing the doors to your business because your cheap insurance didn’t protect your company correctly.

Over the weekend, I was catching up on some reading of a few ski magazines that have been collecting dust on my coffee table.  In this month’s issue of Powder, one of their contributing author’s wrote a piece on how to build a rescue sled, if you or one of your backcountry partners is injured in a way that leaves them unable to move on their own.  Not planning on going into detail about how to do this, but the author, Mike Hattrup added an interesting point about why he teaches things like this, and why he brings safety equipment with him into the backcountry everytime.

I’ve never needed to build a rescue sled.  But I’ve never needed my avalanche tranceiver, either, nor have I needed airbags in my car.  The ability to build a rescue sled our of your skis is similar-it’s insurance.  Like all insurance, you hope you never have to use it.  But if you need it and don’t have it, you’re in a world of hurt. -Mike Hattrup

Take this philosophy to heart next time your insurance agent or broker suggests raising your General Liability Aggregate or increasing your umbrella. We all hope that we are never in a situation that requires a 5 or 10 million dollar umbrella to max out, but imagine what life would look like for you and your construction firm if you had to write that size of a check out of pocket.  Would your doors open again?

NEW YORK CONSTRUCTION DEATHS TUMBLE IN 2009

It has come to my attention that there is a company out there that is piggy packing on well-known thermometer technology to prevent injuries related to lack of knowledge of slippery surfaces and the consequences there in of walking on them.  The company is called IceAlert, and they have developed a pedestrian warning system that helps alert your customers to the potential for ice on your walkways and parking lots.  It’s such a simple solution to an all too common general liability claim that occurs anywhere there is foot traffic and the potential for the temperature to dip below freezing, that I can’t believe no one had thought of it prior to now!  The beauty of Icealert’s system lies in its simplicity.  All you as a business or property owner, have to do is install about 10 of their signs/alert systems, and you are essentially warning your customers and employees that dangerous and slippery conditions exist, and that they need to slow down and walk more carefully.  Then if they slip and fall because of their own clumsiness or lack of attention to the conditions around them, they have no one to blame but themselves for not heeding the warnings that you as the business owner have provided for them.  Another upside to this system, is that any members of your staff doing salting or de-icing know when the temperature has slipped into the danger zone, and can appropriately react and prevent ice buildup on road and walkways on your property.  Since no one has invented a cure for lack of common sense when ice exists, check out Icealert to winterize your cold weather risk management program.

By now you probably know a handful or more people who have been afflicted with H1N1/swine flu.  Vaccinations have been in short supply nationwide, and healthy men who are physically active (construction workers) are not anywhere near the top of the list.  So then what happens when a big portion of your laborers gets sick?  You are spending all your time bidding work, just so you can get your laborers out in the field, doing what they do best.  And now that you have bid the job, you have no one to complete it, because all of your “guys” are out with a contagious illness.

Sure, you could go to the union halls, but you’re a non-union contractor. Or you could drive by Home Depot in the morning, and see if anyone there understands how to safely perform a job in your trade.  There are also plenty of out of work contractors on Craigslist who are looking for any kind of day labor they can get.  So you’re thinking to yourself, “we’re gonna be ok, we have the manpower to do the job”.  Then people start getting hurt, people who were being paid under the table so you could get the job done in the time that your bond stated you would.  And now these workers, who supposedly were trained in your trade, are making errors and delaying the project more so than if your regular workforce was performing the job after it being on hold for a few days while everyone fought the cold.  These workers are getting injured, and are not on your payroll, so the whole worker’s comp thing gets very complicated and can jack up your insurance costs over the next 3 years.  We all know how important it is to keep those experience mods under 1 right now, so you can keep your ability to bid any job that you have the ability to effectively complete, and preventable accidents are not going to keep you, or get you back “into the black”  So if you run into an issue where a lot of your key folks are getting sick, give them a few days to get better because the whole project will end up in better shape because of it.  If you or your employees have any further questions on symptoms and treatments, send them to http://www.flu.gov/know.html.  And construction company owners, if you need any help with this type of risk management or any other construction specific inquiries, head on over to www.constructionriskadvisors.com

Here’s a top 10 list of the things you need to do to insure that their visit has the least impact on your bottom line as possible…

Ten Commandments for Managing an OSHA visit

1. I need to know my legal rights and be ready.

2. I’ll appoint and train one person or a team to handle government investigations.

3. Before I permit access, I’ll check inspector’s credentials.

4. Before inspection begins, I’ll be clear why the inspector is visiting. If not clear, I’ll dig deeper until I’m satisfied why the inspector is visiting.

5. I’ll be totally professional, no hostile behavior.

6. I’ll never, ever permit an inspector to go through my facility unaccompanied. I’ll have at least two company employees to accompany the inspector, one to take notes and the other to listen.

7. I’ll video the inspection. If I can’t video, I’ll audiotape and take the same measurements and photographs inspector takes. I’ll keep thorough and complete notes.

8. Like an IRS audit, I’ll not volunteer anything. I’ll only answer what is asked and give only requested documents.

9. I won’t give inspector documents the law says I don’t have to unless I’m convinced the reasons are valid.

10. At the closing conference, I’ll obtain information, but offer no additional information.

For more information, head on over to www.OSHA.gov

What kind does your company have?

Is it formalized with buy-in from the owner all the way down to the newest employee?  Or is it in place because it is the only way you can bid all the jobs you want,  and OSHA says you have to?  Most contractors fall in the middle.  Safety is important, but not to the point where we let it delay a project from being completed on time.  Or, we pay a lot of attention to safety immediately following an accident, then we slowly get lazy about it until someone gets hurt again…

Listen folks, the insurance market has been soft(less expensive and more readily available) for contractors for the last few years.  According to industry experts, the next hard market is right around the corner and having an effective safety program, is a good way to show insurance underwriters that you care about limiting the amount of claims they have to pay and care more about whether all your employees get home every night instead of getting the job done as fast as you can.  Having a safety handbook is helpful, having safety meetings is helpful, wearing hardhats and other PPE is helpful.  Putting them all together is VERY helpful and believe it or not, will have a bearing on your insurance pricing.

Is this what your safety program looks like? If so, now is the time to get it a real helmet.

Working safe or working fast?  For one Connecticut contractor, the answer turned out to be an expensive one. Last week, OSHA issued a proposed fine of 180K for several willful safety violations to a CT contractor who had severe inadequacies in securing their job site.  A job site that was 43 feet above a river!  Several of the safety measures that were missing include: hard hats, life jackets, a rescue boat, guards on machinery, ladders of insufficient height, and an unsatisfactory fall protection system in place.  Luckily, nothing went wrong, and OSHA was on the scene before anything did.  But what the contractor was cited most for was working without fall protection over a work site with severe potential for a drowning.  Again, nothing went wrong, and luckily no one was hurt, but in the insurance game, prevention is key, and this company did very little to prevent their employees from being severely injured in myriad ways.  Aside from the steep OSHA penalties, this company will have a heck of a time when their insurance comes up for renewal.  And I doubt, the CT Department of Transportation will consider them for any more state funded bridge work since this incident didn’t make them look very good either.

So, how would an OSHA fine accept someones insurance?  The final decision will come from which ever insurance company’s underwriter is tasked with the assignment, but their decision will be biased by:

• Lack of a safety culture.  Even though nothing happened this time, the outcome is grave if a laborer falls 4 stories into a river, in the month of March.  That won’t be a “band aid and back to work”.  That will be a “call the next of kin”.
• Disregard for the safety of their employees.  If on one job site, on one day, OSHA found this many willful violations, it would be hard to convince an underwriter that this was a freak occurrence.

• Lack of personal protective equipment.  Just the fact that no one even had hard hats on makes one think that the corporate structure of this contractor has no regard for safety or OSHA regulations, and maybe this is why they were able to bid this job for the price they did.

The one part for me that is a little hazy still, is how this company was able to bid on the work in the first place.  Many states require contractors who want to bid jobs for them to have an experience MOD factor lower than 1.00.  It would surprise me to find out what this contractor’s MOD is, because with this many willful violations at one time, it would be pure luck for them to have a good safety record.  The lack of machine guards alone should account for at least a few workers with 9 fingers.  The company that committed the offenses hasn’t issued any public statements yet, and it is not my place to be pointing fingers at what they could/should have done to prevent the fines that OSHA is imposing, but for any contractors who think they can cut corners with safety and federal OSHA requirements to bid jobs at lower prices, this should be your wake up call.