Be Smart About Safety

Case study

Background

The University’s complexity produces a wide range of liability –
workers’ compensation, general liability, property, auto, etc. –
that costs millions every year. The funding required to cover
these liabilities is referred to as the “Cost of Risk”. Every dollar
we spend on the Cost of Risk is a dollar taken away from our
primary mission. Studies have shown that when dealing with
these liabilities, the saying “an ounce of prevention is worth a
pound of cure” has never been truer.

Goal

The goal is to make environments safer for faculty, staff,
students, guests, and patients. This could be accomplished
through a systemwide program that allows campuses and
medical centers to proactively invest in loss‐prevention and
loss‐mitigation programs specific to their unique needs. Such a
program should allow the Office of the President (UCOP) to
track results and share them with actuaries and insurance
underwriters, thereby reducing Cost of Risk through decreased
insurance premiums and claim payments.

Successes

The systemwide Be Smart About Safety (BSAS) program was
developed to address this goal. Through BSAS, UCOP budgets a
small amount of its total budget allocation to fund proactive
loss‐prevention and loss‐control projects at campuses and
medical centers. This funding is intended for projects specific
to the purpose of reducing the frequency and/or severity of
potential loss in the areas of workers’ compensation,
automobile liability and physical damage, employment
practices liability, general liability, and property. BSAS funds
cannot be used for expenses such as general operating
supplies, personal protective and safety equipment required
by law or regulation, or travel expenses.10 BSAS funds may
potentially be used for deferred maintenance corrections and
capital improvement projects if the predominant purpose of
the correction or improvement is to address an issue of life
safety and loss prevention and/or loss mitigation.

Challenges

During times of tight budget constraints and limited resources,
it is difficult to find the funding to produce new lossprevention
and loss‐mitigation programs.

Initial investment

The BSAS inaugural year was limited to a workers’
compensation program. The initial investment consisted of a
systemwide 10% workers’ compensation accrual surcharge
which equated to $0.12 per $100 payroll, or $11.2 million.

Fiscal results, current and anticipated

The University’s actuaries have determined that the return on
investment for approved programs ranges from 10% to 200%.
In the workers’ compensation program, systemwide annual
new losses have decreased from 7,097 in Fiscal Year 2005‐2006
to 5,057 in Fiscal Year 2009‐2010. Furthermore, the
systemwide accrual rate decreased from $1.51 per $100
payroll in Fiscal Year 2005‐2006 to $1.07 per $100 payroll for
Fiscal Year 2009‐2010. This amounts to an annual reduction in
funding for liability coverage of over $22 million.

Current action and next steps

UCOP continues to promote increased BSAS participation
across the UC system. Hence, the steps to apply for BSAS
funding are easy:

  1. Complete the University of California Be Smart About
    Safety Funding Application
    . Depending on the area of risk the proposal addresses, the
    application must be reviewed and approved by
    Environment, Health & Safety, workers’ compensation
    manager and/or risk management at your location. You
    must also obtain approval of the head of your
    administration and finance department, and also comply
    with any local‐specific requirements that may be in place.

  2. Submit your locally approved application to the Office of
    the President:

    UCOP Risk Services
    Attn: Kevin Confetti
    1111 Franklin Street, 10th Floor
    Oakland, CA 94607

  3. UCOP Risk Services reviews the application for
    appropriateness. Risk Services will send written approval
    or denial of the application and transfer any
    corresponding funding.

Proposals that are solidly based on statistical loss history or a
defensible risk assessment (including mitigation of risks, an
analysis of claims, or a hazard vulnerability study) receive
priority when being considered for funding.

Concluding statement

BSAS is proof that investments in loss prevention and loss
mitigation can yield very favorable returns when dealing with
the University’s unique liabilities. It has not only decreased
Cost of Risk, allowing us to direct more funds to our core
mission; it also makes campus and medical center
environments safer for all.