Employers beware — insurance premiums are set to go through the roof with rates increasing anywhere from 10 per cent up to 500 per cent for some companies. The Insurance Brokers Association Ontario says attention to HR issues, such as hiring and health and safety, can help reduce these rising costs.
Some businesses are experiencing drastic rate increases and much of this depends on the workplace environment, said Robert Carter, association CEO. It’s time for companies to do some risk management to curb these costs.
Employers must be more vigilant when hiring and training new staff; ensuring they are following the necessary guidelines put in place to eliminate accidents, Carter said.
“Let’s say you’re running a trucking fleet. Two or three years ago your main objective was to keep drivers running the fleet. Today, you have to want good drivers, give them road tests, check their references and have penalties for drivers who don’t follow the rules.”
Companies must make sure they have clear-cut safety standards and procedures in place so if something does happen, they won’t be liable, Carter said.
For example, there have been a lot of fires occurring on building projects lately, contractors have to make sure their procedures are safe to prove a fire wasn’t primarily their fault, he said.
“It’s time for employers to work with their insurers and the Workplace Safety and Insurance Board (or workers’ compensation boards outside Ontario) to reduce the chance of loss. It’s time for solid risk management processes,” Carter said.
But even the most successful HR initiatives won’t stop high insurance rates in some sectors. Take for example asbestos manufacturing where insurance premiums were not that high a few years ago.
“Then they discovered the health hazards and if you’re an asbestos manufacturer today, you couldn’t afford the insurance because the long-term health-care risks are coming out of the woodwork.”
While there is a perception Sept. 11 is spurring rising insurance costs, Carter said insurance companies were planning rate increases long before the tragic event, although those increases were to be staggered over a number of years. Sept. 11 did impact the industry so much that these rates went up at a much faster pace, Carter said.
“In the late ’90s and into the new millennium, returns on investment have declined dramatically as evidenced by reduction in interest rates and the stock market,” the Ontario Insurance Brokers Association noted in its latest report. “As a result, insurance companies no longer have investment income to offset losses.”
Natural disasters have also affected premiums. Hurricanes, ice storms and tornadoes have forced insurers to pay higher insurance to protect themselves against these major disasters.
“The result is increased losses, reduced investment income and higher insurance premiums for insurance companies. These costs are now being passed on to you (the employer),” the association’s report stated.
And, selling products in the United States has always had a high premium rate attached to it, but with recent events, there is a different outlook, Carter said. There is greater opportunity for large losses and it wasn’t looked at too closely before, now it’s being scrutinized.
“High losses, low investment return and high insurance costs, we never had all three of these things at the same time before,” he said.
The brokers’ association offers a few tips to control insurance costs:
•ensure employees are aware of the safety and hiring practices as well as your company’s harassment policies;
•consult with an insurance provider before expanding into different geographical areas, costs may vary dramatically; and
•examine deductibles for all lines. Balance the ability to assume smaller losses against the need for insurance coverage for more costly incidents. Significant credits may be available for higher deductibles.
Some businesses are experiencing drastic rate increases and much of this depends on the workplace environment, said Robert Carter, association CEO. It’s time for companies to do some risk management to curb these costs.
Employers must be more vigilant when hiring and training new staff; ensuring they are following the necessary guidelines put in place to eliminate accidents, Carter said.
“Let’s say you’re running a trucking fleet. Two or three years ago your main objective was to keep drivers running the fleet. Today, you have to want good drivers, give them road tests, check their references and have penalties for drivers who don’t follow the rules.”
Companies must make sure they have clear-cut safety standards and procedures in place so if something does happen, they won’t be liable, Carter said.
For example, there have been a lot of fires occurring on building projects lately, contractors have to make sure their procedures are safe to prove a fire wasn’t primarily their fault, he said.
“It’s time for employers to work with their insurers and the Workplace Safety and Insurance Board (or workers’ compensation boards outside Ontario) to reduce the chance of loss. It’s time for solid risk management processes,” Carter said.
But even the most successful HR initiatives won’t stop high insurance rates in some sectors. Take for example asbestos manufacturing where insurance premiums were not that high a few years ago.
“Then they discovered the health hazards and if you’re an asbestos manufacturer today, you couldn’t afford the insurance because the long-term health-care risks are coming out of the woodwork.”
While there is a perception Sept. 11 is spurring rising insurance costs, Carter said insurance companies were planning rate increases long before the tragic event, although those increases were to be staggered over a number of years. Sept. 11 did impact the industry so much that these rates went up at a much faster pace, Carter said.
“In the late ’90s and into the new millennium, returns on investment have declined dramatically as evidenced by reduction in interest rates and the stock market,” the Ontario Insurance Brokers Association noted in its latest report. “As a result, insurance companies no longer have investment income to offset losses.”
Natural disasters have also affected premiums. Hurricanes, ice storms and tornadoes have forced insurers to pay higher insurance to protect themselves against these major disasters.
“The result is increased losses, reduced investment income and higher insurance premiums for insurance companies. These costs are now being passed on to you (the employer),” the association’s report stated.
And, selling products in the United States has always had a high premium rate attached to it, but with recent events, there is a different outlook, Carter said. There is greater opportunity for large losses and it wasn’t looked at too closely before, now it’s being scrutinized.
“High losses, low investment return and high insurance costs, we never had all three of these things at the same time before,” he said.
The brokers’ association offers a few tips to control insurance costs:
•ensure employees are aware of the safety and hiring practices as well as your company’s harassment policies;
•consult with an insurance provider before expanding into different geographical areas, costs may vary dramatically; and
•examine deductibles for all lines. Balance the ability to assume smaller losses against the need for insurance coverage for more costly incidents. Significant credits may be available for higher deductibles.
