As members of one of the most dangerous trades, steel erectors deal daily with the threat of injury and death. This has not gone unnoticed by insurance companies who have consistently charged higher premiums for erectors.

Unfortunately, it is getting worse. According to Bob Jones, account executive for Metal Pro, the insurance program of the Metal Buildings Institute (MBI), everyone can expect steady increases in rates. "It is a trickle-down effect. September 11 was the largest workers compensation loss by multiples and one of the largest potential liability claims in history. It is going to affect all of us, but especially the construction industry."

With rates that already lead the building industry, erectors are looking for proactive ways to deal with the rate hikes. One very feasible alternative to lowering insurance premiums is the development of a good safety program.

LPR Construction of Loveland, Colorado is one company that has made a difference in the lives of its employees and its insurance rates. LPR, which started in business in 1979, currently employs 175 field ironworkers and has as many as 20 projects going at any one time. Leading its safety program is Ed Valencia who was an ironworker before stepping into the role of safety director in 1991. "When I started in this position, LPR's EMR (Experience Modification Rate) was 1.81. That's 81 percent above the average (base rate). Our rates were sky high," he says. The EMR number is the key to lowering insurance rates and premiums.

"Our work has paid off. In 2001, our EMR rare was .57, a swing of 1.24. Today, at .62, we are well below the average (base rate)", Valencia continues. "Our premiums are considerably less. In fact, through our saving in premiums and claims we've been able to fund the entire safety program. Our department now includes a director, three training coordinators plus all the equipment and supplies for the safety and training programs. We basically pay for ourselves."

The lower EMR numbers pay off in other ways. In 1990, LPR was accumulating $1.4 million in claims per year. Today, it averages $25,000 in annual claims. That has had a major effect on LPR's ability to bid and win jobs. "We are able to bid jobs very competitively, whereas before we would often be taken out of the running due to our safety record and the cost of doing business that accompanied it," says Valencia.

"EMR rates, insurance premiums and claims are having a definite effect on the bidding process," agrees Jones of Metal Pro. "Safety and quality building practices have taken the forefront on all levels. We have collected information that shows that for every dollar an insurance company spends, the contractor spends three dollars in soft money. This includes lost time, hiring and firing. Competitively, that makes a huge difference."

Another strong asset of LPR is its exceptional relationship with OSHA. LPR President Rocky Turner has participated on the Steel Erection Negotiated Rule-Making Advisory Committee to Federal OSHA Management, and the company says it is currently one of the only steel erectors to have a VPP (Voluntary Protection Program) with OSHA for all Region 8 jobsites.

"As far as we know, we are the only steel erector in the country to have a VPP mobile demonstration worksite partnership with OSHA. In that process, OSHA audits all our programs and reporting procedures," Valencia explains. "OSHA checks that we are 25% below the national average through field audits and interviews with employees. Everything goes through Washington, D.C. It has really helped our program. Plus, they know we are serious and proactive when it comes to safety. They also suggest ideas for new programs or program improvements. It is a huge benefit for LPR."

The company has also been able to ride the insurance rate increases with relative ease. "We received notice that our rates were going to increase so we shopped around," says Valencia. "Due to our record, EMR and safety program, LPR is a very desirable customer for insurance companies. We have been able to find a new carrier who is willing to keep our rates the same."

Not everyone will be so lucky. Says Jones: "Underwriting standards will be rethought and severely tightened. Companies should be prepared to provide more information regarding financial statements and any incurred losses. In short, property and casualty premiums will be on the rise for several years. Firms without safety programs or ones that have incurred substantial losses will have a difficult time securing competitive premiums in the standard marketplace."

Developing a strong safety program and record takes time, but there are many resources available. Chris Long of MBI offers one option. "The Metal Buildings Institute has developed a loss-control manual. This guide will help erectors develop specific loss-control programs that will hopefully have a positive effect on their EMR and insurance rates. We also have the opportunity for erectors to be involved with Metal Pro, our association insurance program."

A copy of the manual and additional information on Metal Pro can be obtained simply by calling MBI at 800-866-6722.

By Heidi J. Ellsworth
MetalMag July/August 2002