James Jorgensen
Principal & Executive Vice President, Business Insurance
Business risk often hides in plain sight among unaddressed maintenance, inconsistent training and outdated equipment, or for a company that doesn’t have safety or loss control as part of their corporate culture. These seemingly minor issues can accumulate over time, fueling claims, operational disruptions and have the potential to significantly increase your insurance costs.
Workplace incidents carry a significant financial burden across all industries and business sizes. As companies grow, proactive loss control is essential to managing Total Cost of Risk (TCOR). Scalable, prevention-focused strategies protect employees and help businesses stay resilient and, in the end, will help stabilize their insurance costs in terms of claims and premiums.
Understanding where risks begin is the first step to managing them – starting with how seemingly minor, overlooked issues can trigger exposure to significant financial consequences.
From Small Hazards to Big Costs: Understanding the Ripple Effect
Risk doesn’t always knock on the front door. More often, it creeps in through the gaps – a missed maintenance check, a worn-out machine or a skipped safety walkthrough. When small hazards go unchecked, the consequences are often devastating: serious injuries, fatalities, legal exposure and long-term operational setbacks.
Recent data underscores the critical need for proactive safety measures. The AFL-CIO's 2024 report found that employers reported nearly 3.5 million work-related injuries and illnesses in 2022. The National Safety Council found workplace injuries cost U.S. businesses a total of $167 billion, encompassing:
- $50.7 billion in wage and productivity losses
- $37.6 billion in medical expenses
- $54.4 billion in administrative expenses
What’s more, in 2023, private workers’ compensation carriers reported $43 billion in net written premiums, which was a 1.1% increase over the previous year.
Proactive safety measures are essential components of a comprehensive strategy to manage TCOR. Companies that address potential hazards before they escalate can safeguard their workforce, ensure compliance and maintain financial stability in an increasingly challenging market.
Investing in Prevention: Key Strategies for Loss Control
Effective prevention is about aligning safety efforts with real-world risks. That means focusing not only on hazard identifications but also on the systems, training and cultural investments that keep teams safe over the long term.
At its core, effective loss control means putting systems in place that help you get ahead of risk and not just react to it. Consider the following tactics:
- Preventative Equipment Maintenance: Scheduled maintenance reduces the likelihood of unexpected breakdowns and improves workplace safety, especially in equipment-heavy industries. Programs tailored to specific machinery or processes can significantly reduce downtime and the potential for injury.
- Strategic Use of Targeted Coverages: Insurance coverage should be built around actual risk – not assumptions. For companies with transportation operations, managing risk effectively means going beyond basic coverage. That could include aligning Auto Liability coverage with advanced fleet safety solutions like telematics, driver scorecards and ongoing coaching programs. These measures reduce accident frequency, improve loss history and often lead to better underwriting outcomes.
- Routine Safety Audits: Safety audits are a chance to spot inefficiencies, reinforce best practices and uncover hidden risks. Pairing audits with post-incident reviews also helps prevent future losses, identifying root causes and reinforcing accountability.
- Employee Training: Well-designed training programs empower employees to take ownership of their environment. Strong communication reinforces those lessons across departments, shifts and leadership levels.
Loss control engineers can also help tailor risk management strategies to specific industries and support documentation efforts that insurers and regulators increasingly demand. They bring a fresh perspective and actionable data to safety planning.
Beyond Prevention: How Safety Powers Long-Term Success
Companies that invest in and prioritize loss control strengthen their position across the board, often experiencing benefits such as:
- Lower total insurance premiums through better loss history
- Fewer claims and legal disputes that eat into time and resources
- Higher employee morale and retention
- Greater trust from colleagues, clients, regulators, insurers and partners
Similar to looking at self-insured programs, loss sensitive options, alternative risk transfer and captive strategies, loss control is a cornerstone of a mature approach to TCOR. Embedding safety into day-to-day workflows allows companies to increase their operational capacity, earn more favorable insurance terms and build a more stable foundation for long-term success.
Marsh McLennan Agency offers a comprehensive range of business insurance, employee health and benefits, retirement and private client insurance solutions tailored to both businesses and individuals.
Connect with a Marsh McLennan Agency representative to explore how we can help your business.
