Overlooking oldest exposures equals problems for marketers

November 7, 2012 By    

If you look hard and often enough, you can see safety in numbers.

First, you have to pay attention. The whole world will pass you by if your head is buried in any particular part of your business, and yet 80 percent of your problems come from 20 percent of your exposures.

Pay attention to that 20 percent. While you must keep an eye on what you are doing right, I encourage you to focus on numbers that leave you exposed.

For 40 years now, I have sold invisible products. In many ways, insurance and safety share similar interests, traits and objective outcomes. If you have never had to collect on insurance, I am certain you feel the cost to transfer millions of dollars of risk is expensive.

However, if you have needed legal defense and liability limits after an accident and an allegation of wrongdoing, you probably were thankful that you had the numbers to pay for handling the problem.

Safety numbers impact companies large and small. Believe it or not, the 80/20 formula applies to large companies, as well. If you think large companies do not have accidents, claims, employee or customer problems that involve costly numbers, think again. Think of the difference between 20 percent of a small company and 20 percent of a large company. Twenty percent of 1 million customers would be 200,000 exposures.

One difference may be that large companies have more revenue and resources to pay for such exposures, but after reading a few recent financial statements of publicly held companies it would appear that they have problems, too.

The large question for companies large and small is: What are you doing about those 20 percent of exposures? Struggles with profitability will cause a reduction in money spent on safety. Sometimes this means less training, but in other cases it might mean not hiring enough employees to handle the 20 percent of your problems.

Years ago, I had a client that carried $30 million in liability coverage – a lot of insurance at the time. Then an accident happened in Georgia, where they allow punitive damages, and the initial lawsuit was for $1.6 billion. Talk about large numbers.

While it was ultimately settled for $13 million, this was a costly incident, caused by a weak-link employee who decided not to perform a leak check on an interruption of service. As safety leaders for that company, we had to ask ourselves: Who else out there is not adhering to company policy and industry code requirements?

In four years of traveling the country and talking about safety, we looked employees in the eyes. We found the percentage of employees who did not adhere to company policy was about 20 percent when we started, and it was down to about 2 percent when we finished. That company, in that time, did something about the 20 percent.

Gas system checks for the remaining 20 percent are advisable. I am willing to bet that most of the gas system checks performed by your company are on new installations or new customers. My experience working with propane marketers large and small is that many have had customers for 40 years and still have not performed a gas system check with a leak check.

With today’s industry technology, it has never been simpler to document system integrity, and yet we fail to address those exposures that need our attention the most.

After an accident, a plaintiff attorney will want to know why one of your oldest customers never received your safety attention. In the face of that question, what will you say? What will your employees say? What will your competitors say?

What will your insurance company say? The only remaining question is: What are you going to do about your problem?
Successful business owners put a pencil to the safety numbers and put their shoulders to the problem. Take a moment right now to pay attention to potential problems and make a plan to address that 20 percent today. LPG

Jay Johnston (www.thesafetyleader.com) is an independent insurance agent, business consultant, and safety leadership coach and keynote speaker. Jay designs and implements risk management programs for businesses that want to achieve profitable results. Jay can be reached at 952-935-5350 or via email at jay@thesafetyleader.com.

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