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Taking a Step Back to Find the Right Path Toward a Culture of Safety, Building a Valuable Loss Analysis Tool with Microsoft Excel

- September 22, 2015 by John Virsack, ARM (View all posts by John)

Edward Deming once said “Decisions made in fact tend to be better decisions.” Understanding the facts surrounding your workers’ compensation losses can help you make better risk improvement decisions for your organization.

A comprehensive analysis of past workers’ compensation losses can provide you with a realistic overview of your organization’s recurring claim problems and trends. These trends can act as a lens to help you predict and reduce future injury claims.

A loss analysis is one of the tools used in the process for managing a company’s risk. The basic risk management process is:

  • Identify and assess risk
  • Analyze and quantify risk
  • Develop solutions to reduce the organization’s risk factors
  • Implement and evaluate the effectiveness of the solutions—to insure that risk reduction is taking place

In order to reliably predict future loss incidents, conclusive workers’ compensation loss analysis should include several years of data. While there are a variety of software programs available for sale, you can create a simple and effective loss analysis tool using Microsoft Excel. At ICW Group, we create custom loss analyses for our clients to enrich their risk improvement decisions.

Building Your Spreadsheet

Before setting up your spreadsheet, think about what types of reports you may want to reference during your loss analysis, and then create the appropriate fields or columns in your spreadsheet. Each field or column will be a searchable name, so use separate fields for the data you will need to analyze.

Your insurance company’s first report of injury or the OSHA 300 & 301 forms are a good starting point to help you decide what data forms to track. For instance, analyzing the cause of an injury is usually more helpful that an analysis of the type of injury. A type of injury (strain or sprain) could occur from a variety of different injury causes—such as a slip, trip or fall, overexertion, material handling or a repetitive task.

Two essential measurement criteria are frequency (how many times a particular cause of injury occurred) and severity (how disabling was each of the injuries that occurred).  Severity can be measured in the total incurred cost of the reported claim, as indicated on an insurance company’s loss run, or in an injured worker’s total days lost or restricted from work, as indicated on an OSHA log.

The loss run reports provided by most insurance companies provide this claims data for a specific policy year.  Many of these are available in an Excel spreadsheet format as well as a PDF report format—your insurance broker should be able to help with this inquiry.

Over time, your spreadsheet will paint a clear picture of where your workplace safety issues lie, and guide you as you develop targeted solutions to prevent/reduce future injury claims—think of it as a compass as you build or rebuild your culture of safety.

How do you measure and analyze your loss data? Write us back and let us know some of your tips for better loss analysis.

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