INSURANCE: Control Insurance Costs By Controlling Risks

Joseph Catanese

Like the proverbial apple a day that keeps the doctor away, attention to your insurance coverages and premiums is an important strategy in managing your company's liability and keeping your employees and facilities healthier and safer.

It may be reassuring to know that an insurance policy waits in the wings to pay expenses when an incident or employee injury occurs. However, an insurance claim can influence future insurance expenses. Controlling insurance costs runs parallel with controlling the risks that are being covered within a policy.

Consequently, implementing risk management procedures at a solid waste facility provides evidence that a facility takes its exposures seriously and is making every effort to prevent potential insurance claims. This often is rewarded with more affordable insurance premiums.

Implementing Risk Controls. To implement appropriate risk controls, facilities first need to identify their environmental exposures, no matter how small. This helps to determine the appropriate direction to take in controlling liabilities. A risk assessment also is a vital part of the insurance underwriting process. It is the primary tool an insurance carrier uses to determine how much risk it is assuming when issuing an insurance policy.

The amount of risk an insurer takes is determined by:

* The facility type and operations performed.

* How materials are handled.

* The risks associated with the location and operation of the facility. For example, is the facility near wetlands, water resources or a school?

* Whether engineering/environmental consultants are needed. If they are needed, how does the facility manage the consultants with whom they work?

* Whether employees are capable of handling an incident.

Many risk control tactics are inexpensive. Risk control often requires only a procedural change or increased attention on a specific operation, such as:

Employee Training. Because every employee's action can become an environmental liability, providing the proper equipment and training, and communicating environmental protection responsibilities to each employee is fundamental in managing environmental risks. If a landfill's staff is unsure of what steps to take to contain an emergency, it may not be contained. Addressing the situation later may be more costly.

Employee training should be considered an investment aimed at minimizing potential business disruption, costly environmental impairment remediation costs and workers' compensation claims. In addition to adhering to Occupational Safety and Health Administration (OSHA), Washington, D.C., requirements, training documentation will let others know that the facility is serious about being safe and well-managed.

Record Keeping. Maintaining a good record keeping system can make regulatory inspections easier; alert managers to certain milestones, including permit renewal and monthly inspections; provide important information to consultants; and allow landfill managers to view successful risk control methods that arose from past audits/inspections.

Diligent record keeping also pays off, allowing easy access to accurate information, which can assist in regulatory inspections as well as day-to-day operations. A sure way for a facility to receive a violation notice or an OSHA site audit is to have its records in disarray.

Consultant Controls. While consultants are important partners in designing, operating, monitoring and closing solid waste facilities, working with them has risks. For example, consultants typically interact freely with the federal, state or local regulatory bodies to ensure they progress on the tasks assigned by the facility's manager.

If a consultant negotiates a settlement with the regulatory agency on permit parameters or engineering design modifications without landfill management present, the facility still is responsible. Management needs firm control of its consultants' activities.

Facility management should define a consultant's role carefully and monitor it to keep track of regulatory agency contacts and to ensure that they stay on task and within their budgets. A business contract should define the scope of the consultants' work, identify milestones and outline a facility's expectations. It's best to implement this risk control before hiring a consultant.

Emergency Planning. Despite the best precautions, accidents happen. Therefore, implementing a master contingency plan including spill prevention, control and countermeasure (SPCC) plans, stormwater pollution prevention (SPP) plans and other emergency response programs plays an integral role in effectively managing risk.

An emergency response plan reassures an insurance company that cleanup will be quick. A coordinated response inevitably controls the time and expense needed to address the incident.

Screening Procedures. Waste types such as explosive, hazardous or toxic materials occasionally pass undetected at a facility until they show up in the surface water, groundwater or, in the case of explosives or chemicals, explode in a compactor.

Train employees to recognize waste types, Department of Transportation (DOT) placards and certain waste containers to stop accidental acceptance of unauthorized wastes. Likewise, operators should be trained in hazardous waste identification and waste segregation techniques to minimize the effects on employees, refuse drivers and the environment before state or local help can arrive.

Personnel need to know how to recognize unacceptable loads, and equipment operators should document a load inspection at least once a week or according to state solid waste regulations. A screening and load inspection program also will warn illegal dumpers that a landfill is actively looking for unauthorized wastes.

Actively controlling risks makes a facility a better candidate for the insurer. When seeking additional insurance coverages or competitive premiums, time committed to integrating effective risk control tactics into a facility's daily operations will be time well spent.