Safety Efforts Pay Dividends

Generally speaking, a company that provides full onshore and offshore services to the oil industry wouldn’t be considered the best of risks for workers’ compensation insurance. But Gaviota Maintenance Services Inc. staged an intensive safety program for its 100 employees--and, owner Ed Lyon reports--cut its workers’ comp losses to the point where almost half the insurance premiums covering its work on offshore platforms were returned.

Only a small percentage of businesses take part in such programs, which are based on California’s rating plan for business insurance. The plan rewards firms that have low losses and punishes those that have high losses.

Gaviota used on-site classes and video lessons, among other methods, to instruct its workers on such subjects as drug abuse, toxic gas dangers and wearing safety equipment. Employees now take 14 safety courses as part of the program, Lyon said.

Besides reducing injuries and work-time losses, the program, set up through the Ventura County division of Frank B. Hall & Co., a nationwide commercial insurance brokerage, returned $172,000 of Gaviota’s $364,000 in premiums covering offshore work in the year ended Sept. 30. That’s a cost reduction of 47%.

Gaviota paid Fred Drennan, an industrial safety consultant based in Ojai, $30,000 to set up its training program.

With workers’ compensation costs mounting, especially in such dangerous fields as offshore oil, Ed Lyon said of the preventive approach, “It’s the only way to stay in business.”

Darwin Hall, sales manager of the Hall concern, said that as a rule a company should have at least 100 employees to make the retrospective rating approach worthwhile. “Even then, there’s an element of gambling in such a program. If you have high losses, you can end up paying more instead of less.”