LP Profit Loss Prevention Federated Insurance

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                     Profit & Loss Prevention
         Profit, in the broadest sense, is sales minus costs. Typically, loss prevention is seen as a
         cost to the business, but if it is done effectively and efficiently any loss prevention
         efforts will add to your bottom line.

         It costs money to implement something new: to            work conscientiously. These all add up to
         purchase additional equipment, to properly               increased profits by avoiding losses and
         train employees or change a process, etc.                increasing productivity.
         History tells us the savings from increased          •   Provide opportunities to identify hazards
         productivity, better morale, and fewer losses far        through regular inspections, quality control
         outweigh the costs. Studies have shown that for          programs and procedures to handle
         every dollar of loss prevention spent, the               deficiencies, which can then avoid and/or
         business receives three dollars in return.               reduce losses, and maximize profits.
                                                              •   Provide opportunities to learn from near
         Focusing particularly on losses, there can be            misses, accidents without losses, and
         two types of costs associated with a loss; insured       accidents involving losses to improve or
         and uninsured. Uninsured costs would include             create new loss prevention programs.
         any costs not covered by insurance. These            •   Provide emergency procedures –
         could include deductibles, loss of use of                employees that are properly trained on
         equipment, vehicles, temporary locations, hiring         emergency response are prepared to act
         and training replacement employees, loss of              quickly and correctly during an emergency
         customer goodwill, negative impact to business           and their quick response could avoid or
         reputation, owner and /or manager’s time,                mitigate any losses, again increasing profits.
         possible increased insurance premiums, etc.          •   Provide compliance to all safety legislation
         Statistics show that uninsured costs are typically       ensuring that your Worker’s Compensation
         one to three times the costs paid by insurance.          dues are minimized, thereby avoiding any
                                                                  penalties or punitive damages for
         Uninsured losses can have a significant impact           accidents.
         on your bottom line. For example, if you have a
         $5000 uninsured loss and your business has a         When all levels of the company are involved in
         10% profit margin you would have to increase         the creation, maintenance and enforcement of
         gross sales by $50,000 to recoup that loss.          a loss prevention program, success will surely
                                                              follow and profits for the business will be
         Every functional operation of a business should      maximized.
         be making a contribution toward profit. Loss
         prevention is no exception.

         The Benefits of effective loss prevention
         • Provide guidance to employees –
            employees who are properly aware of all
            hazards and are properly trained on how to
            deal with them tend to be more efficient
            workers. They respond quickly to potential
            hazards to avoid losses and perform their
    LP-41 Ed. 5-07
       Partners In Prevention                               Federated Insurance provides this Loss Prevention
       At Federated Insurance, we believe Loss              Bulletin as a service to our policyholders and their
       Prevention is a critical component of your Risk      business advisors. The information provided is
                                                            intended to be general in nature, and may not apply
       Management Program. Your Risk Services
                                                            in your province. The advice of independent legal or
       Coordinator and our Loss Prevention Team are
                                                            other business advisors should be obtained in
       available to assist you in reviewing your specific   developing forms and procedures for your business.
       business needs and providing                         The recommendations in this bulletin are designed to
       recommendations for loss prevention programs         reduce the risk of loss, but should not be construed as
       that will benefit you. Working together to           eliminating any risk or loss.
       reduce your loss exposures, ultimately impacts
       your bottom line!

       For more information, contact your Risk Services
       Coordinator, our Loss Prevention Department at
       1-800-665-1934, or visit our website at


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