Experience rating, safety performance measurement

The insurance loss experience for an organization is closely related to its safety performance. An understanding of how insurance premiums are calculated and the type of impact accidents can have upon premiums can provide the safety manager with an additional method for measuring safety performance. Along with measures of lost workdays and recordable accidents, insurance industry measures should also be part of the safety performance measurement and improvement process. Examples of quantifiable insurance markers that are indicative of safety performance are loss ratios, experience modification rates, and expense ratios. These insurance industry measures are yet another type of performance measure available to the safety professional. 

Experience rating is mandatory for all employers who buy workers compensation insurance from insurance companies. For those employers, experience rating is one of the historical performance measures that can be used, cautiously, as an indicator of the quality of safety in place. Self-insured companies would not have workers compensation experience modifications. 

The actuarial premises on which the workers compensation experience rating system was developed give credibility to OSHA incident recordable and lost workday case rates as measures, and predictors, of safety performance, with these qualifications The statistical base (the hours worked) on which the records are developed has to be large enough and low probability-severe outcome risks may not be encompassed within the experience base. 

Do the OSHA statistics—the recordable case rate and the lost workday case rate —for an exposure of 1,000,000 hours have a confidence level of, say, 68.27%, as measures of the quality of safety performance An entity of this size would more than likely purchase workers compensation insurance and have an experience modification as an additional measure. 

Any simple measurement of performance in terms of injury frequency rates or incident rates is not seen as a reliable guide to the safety performance of an undertaking. The report finds there is no clear relation between such measurements and the work conditions, the injury potential, or the severity of injuries that have occurred. A need exists for more accurate measurements so that a better assessment can be made of efforts to control foreseeable risks. It is suggested that more meaningful information would be obtained from systematic inspection and auditing of physical safe guards, systems of work, rules and procedures, and training methods, than on data about injury experience alone. (HSE, 1976)... 

Various forms of accident data are collected by organisations and a number of standards indices are used, e.g. rates of accident incidence, frequency, severity and duration. Accident data are based on information compiled from accident reports. As such, they are a reactive form of safety monitoring and should not, of course, be used as the sole means of measuring safety performance. However, they do indicate trends in accident experience and provide feedback which can be incorporated in future accident prevention strategies. The following rates are used ... 

Table 8.1 describes the steps of the methodology in more detail. The procedure starts with the Problem definition production rate, chemistry, product specifications, safety, health and environmental constraints, physical properties, available technologies. Then, a first evaluation of feasibility is performed by an equilibrium design. This is based on a thermodynamic analysis that includes simultaneous chemical and physical equilibrium (CPE). The investigation can be done directly by computer simulation, or in a more systematic way by building a residue curve map (RCM), as explained in the Appendix A. This step will identify additional thermodynamic experiments necessary to consolidate the design decisions, mainly phase-equilibrium measurements. Limitations set by chemical equilibrium or by thermodynamic boundaries should be analyzed here. 

Obviously, each containment is a particular case and the best way to establish a realistic yet conservative value of the leak rate for safety analyses would be to observe the behaviour of the containment with time and the amount of the leakages measured either in the as found conditions (that is before having performed maintenance to the sealing parts) and in the as left conditions (that is after maintenance). Unfortunately, however, at the time of the design and of the initial safety analyses this experience is not available and therefore reasonable preventive estimates have to be done, which should be confirmed during the operation. 

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