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Return on Investment
What is the Return-On-Investment (Premium Savings) from Safety Pays? As mentioned at the beginning of this analysis, Safety Pays customers generally average at least a 50% reduction in
losses during just the first year of program use (see attached
customer references - more available on request.) As applied
to your company, let's consider the following hypothetical figures
so that you can see what your return on investment would be
using our program: Current Workers' Comp Premium: $100,000 Loss
Ratio: 50% (ratio of losses to premium paid) Experience Modification
1.00 (industry average).
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Since I don't have your actual figures, I've used very moderate projections
above. But if your claims exposure is high (ie. a higher loss ratio
and/or experience modification factor than I've used in this model),
then you are probably paying twice as much or more than these estimates.
Conservatively then, a 50% reduction in loss (due to the implementation
of Safety Pays) will cut the loss ratio (and accompanying loss dollars)
in half to 25% (or approximately $25,000).
Generally speaking, as translated to long-term premium savings, reducing
a company's loss ratio by $1 will in turn, translate to $3 in long-term
premium savings. So if we successfully cut your annual claims dollar
losses by $25,000, the net long-term savings to you is $75,000 in
reduced premium. That's a $75,000 return on an initial program investment.
So even if your total incentive costs are $5,000, you are still getting
the benefit of a 15 to 1 return on investment. But let's be even more
conservative. Instead of a 3 to 1 rate of savings (claims loss dollars
vs. long term premium savings), let's apply a rate of only 1 to 1.
Thus for $25,000 in reduced losses, your company sees premium dollars
reduced by $25,000. That's still a 500% return on your investment
(5 to 1 ROI)!
Utilizing the Safety Pays program and it's integrated system of employee
motivation, virtually any company can achieve at least a projected
50% drop in its workers' comp exposure for an initial cost which is
a mere fraction of the company's annual workers' compensation premium.
The results will provide not only a dramatic increase in employee
morale, productivity and management/ workforce communication, but
will impact the company's bottom line by tens of thousands of dollars
a year based on workers' comp premium reduction alone.
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