Rob Foote and Brian Pratt are roofing industry insurance advisors with Roofing Risk Advisors LLC, a division of Frank H. Furman Inc. They consult with 92 roofing professionals throughout the country and develop cost-effective insurance and risk management programs. At Best of Success, they demonstrated how managing risk has a direct impact on the roofing contractor’s bottom line in a session titled “Safety as a Profit Center.”
Foote and Pratt shared several proven strategies that contractors can utilize to manage costs associated with insurance, including workers’ compensation and automotive/fleet coverage. “A culture of safety will differentiate your company from your peers,” said Foote. “An effective risk management strategy will reduce insurance cost, which is the third largest expense for most roofing professionals.”
Foote encouraged roofing contractors to view their insurance program as a valuable profit driver and not a commodity. He recommended that contractors review roofing industry benchmarks and compare their company’s performance with that of their peers. He advised attendees to assess the factors that impact workers’ compensation costs, including the company’s experience modification rate. “Do you know your company’s minimum experience mod?” he asked. “Every point you can reduce your controllable mod translates into premium savings. Establish a goal relative to your experience modification and outperform your peers to create a competitive advantage in your market segment.”
Setting up a return to work program for injured employees will reduce insurance cost over time. Offering injured workers light duty keeps them engaged, lowers costs, and reduces the likelihood of a lawsuit, according to Foote.
Foote and Pratt urged contractors to measure the performance of crews and post the results. “Form a health and safety committee,” Foote advised. “We believe safety committees foster a culture of accountability and illustrate a top-down management philosophy.”
Pratt updated attendees on trends in automotive insurance and fleet management costs. He noted that inflation in auto premiums has been the result of “eggshell claims” — low impact collisions with little apparent damage — that are being settled for large sums of dollars due to a re-aggravation of a prior injury by the claimant. “We’re seeing low impact rear-end automobile claims that used to settle for 25-30K and now reaching 275-325K with higher frequency because of litigation and exploding settlement costs,” Pratt said.
Eliminating distracted driving should be a top priority, Pratt stated. “Distracted driving is the number one cause of accidents,” he said. “There are services out there that can help roofing contractors limit the use of phones in vehicles by employees.”
Both advisors urged attendees to consult with an experienced, construction-focused insurance professional to explore creative strategies to reduce insurance cost and enhance profitability. “Insurance is the number three expense item on your P&L,” Pratt concluded. “Committed roofing professionals can impact operating results by implementing disciplines that reduce insurance costs.”