Andy Hawkes, Insurance People – June 2011

Andy Hawkes believes the insurance profession should devote more of its risk management attention towards safety, rather than the traditional focus on survey and the compliance issues. What’s needed is ‘safety leadership’ – a workplace culture that spreads both thought and action on safety matters right through a business from top to bottom. In other words – let’s make safety ‘cool’

Let’s start with a couple of insurance market riddles and conundrums.

A) Which firm has the better safety record? The one where the CEO tells everyone they must behave in a certain way to comply with the firm’s legal obligations?

Or the one where the CEO’s concern is more directly targeted at the well-being of his staff?

B) Having accepted that behavioural change can work in a business, why does the insurance industry ignore the possibilities of similar behavioural change in safety? Is it because ‘indemnity’ is so often confused as being the same thing as ‘security’?

Let’s be honest and admit that the topic of safety leadership and culture is a fairly blank page within many firms. Sure, the law requires boxes to be ticked. And boxes are ticked. But what if there’s no box?

Example: A commercial traveller joining a new firm is given 20 minutes induction training on how to sit safely on his office chair. And then left completely to his own devices when tossed the keys to his £30,000 company car (in which he will be spending the majority of his work time, and many hours in excess of normal office hours!). Why does that happen? It happens if there’s no box to tick.

And why is there no box to tick? Because no one in the organisation has created a culture that makes safety ‘cool’.

Example: Workers in heavy industry in the 1920-30s were provided with goggles where appropriate, but the majority refused to wear them for social reasons. Witness today’s version of the same fetish on the building site. While some sites sport all kinds of head-to-toe safety wear and equipment – worn almost as fashion statements – other workers still spurn hard hats and knee protectors in favour of shorts and bottom cleavage display.

This latter workplace environment can only be changed for the better by an “empowerment leadership” style – in other words making safety ‘cool’ by bringing the workforce, voluntarily, into a culture where safety takes pride of place.

Where does insurance stand in all this?

The question has to be asked. Why doesn’t the insurance profession – broker and underwriter – spend more time focused on safety? After all, all businesses understand and embrace leadership as a business concept.

And many will talk about their own culture. Yet when it comes to risk management, the main focus is to survey and look at the compliance issues. I’m not saying that compliance should be ignored, but more time should be spent understanding the safety culture within a business, and the leadership on the subject from the CEO and board. Do, for instance, the CEO and management practise what they preach?

Our experience across small, medium and large clients supports the view that strong, positive leadership (as with every other business driver) will deliver better results when it comes to safety. If the board lives and breathes safety and drives safe behaviours, the result will be lower levels of accidents and injuries. Fact.

Safety involvement

In the US, they talk about “discretionary behaviour”. In the UK this might be referred to as “above the line” or “organisational citizenship behaviour”.

But whatever definition you prefer, it all boils down to creating a working environment where freedom of input on safety matters should encourage constant thought and action. Volunteering; non-mandatory safety training; incident discussions; exhibiting safe behaviours and practices in front of new starters; and sometimes deliberately blurring the edges between compliance and “discretionary behaviour” are all part of this.

When brokers or insurers can understand how a business encourages and embraces these behaviours there is a clear opportunity to differentiate a portfolio. Admittedly, some of our clients just employ us to protect them from prosecution, but increasingly the objective is a combination of “return on investment” and “saving lives”.

Compliance isn’t enough

Compliance isn’t enough. Research suggests that there’s a better correlation between workforce involvement in safety and incident rate and basic compliance and incident rate. If that sounds intuitively unlikely, consider this:-

Question: Would you prefer your ten-year-old to simply step into the road blindly at a pedestrian crossing because the green ‘walk’ sign has come on, or would you prefer them to cross 50 yards down the road but ‘dynamic risk-assessing’ properly as they go?

Regardless of blurred edges, I hope we’d all agree that the safety culture we are talking about is simply the basic behaviours we’d all like to see in our own and our clients’ workforce undertaking. But do insurers or brokers really understand this? My view is they don’t!

Many insurers and some of the larger brokers will invest in inspirational speakers, set up behavioural processes, or launch “hearts and minds” initiatives for their own businesses. But when it comes to safety rather than efficiency or key performance indicators, we somehow fail to see the connection.

If there is evidence that behavioural change can work in a business, why not in safety? And if we can change safety behaviour, why does the insurance industry not focus more attention on this issue?