Frequency vs. Severity of Insurance Claims

by | Jun 11, 2019 | Risk Management | 0 comments

Frequency Vs. Severity of Insurance Claims

“I have insurance, I’ll just file a claim.”

Have you heard yourself saying that before? I’m sure you have at least thought it in the past. Unfortunately, a common misconception people have about insurance is that small claims will not affect them since the insurance company is still taking in more money from the premiums that are paid than the amount they are paying out in claims.

In reality, when comparing two businesses against each other, one that has multiple small claims versus one that has had only one large claim, every insurance company will look more favorably upon the business with only one claim. Why is that?

When assessing the risk of a business, insurance companies look at three factors when it comes to their claims; the cause(s) of loss, the frequency of similar incidents and the severity of each. Claims are typically categorize them into these four classifications:

1. Low Frequency – Low Severity
2. High Frequency – Low Severity
3. High Frequency – High Severity
4. Low Frequency – High Severity

With these four classifications in mind, the business owner can decide how to best handle losses to be viewed as a better insurance risk to the insurance companies.

Obviously, we know, the more favorable you look to an insurance company, the lower the premiums you will pay. So the business owner has four different ways to respond. Pssst, this is called Risk Management.

1. Accept the risk and budget for the impact of it
2. Prevent the risk by using loss control or safety measures
3. Avoid the risk all together
4. Transfer the risk to someone else

As you have probably figured out, insurance is for risks that have Low Frequency – High Severity and the reason we need to transfer the financial burden to someone else is because the risks are not predictable.

They can be things like a tornado taking out your shop, or an employee that is struck by a tree while on the jobsite. These risks would lead to claims that could have a huge financial impact on your business and potentially even lead you to close up shop. Insurance companies are comfortable covering these risks due to the law of large numbers, an insurance term meaning that as they add more policyholders, the probability of each one having a severe claim goes down.

What worries the insurance companies the most, is when there are a high frequency of low severity claims. This is simply because the more small claims you have the likelihood of a large claim happening is much greater.

For example, if a tree service has a large number of small fender benders, it likely means safe driving practices aren’t in place, their vehicles are not well maintained or they are employing reckless drivers. Over time, it is inevitable that a larger auto claim will occur.

Consider workers’ comp as well. Does your business have more than a couple laceration claims in the last couple years? Often times we’ll see laceration claims close for around $3,000, but it doesn’t take much more for a small laceration to turn into a permanent partial disability claim where a great employee loses a finger or even hand. And if chainsaws are causing issues, might there be other body parts with some exposure as well?

Telling your team you’ve seen an uptick in claims and explaining the repercussions is a great place to start. Also consider areas like your on-boarding process, safety meetings, and post-accident discussions. Get creative with this as each company likely has different experiences but you should be able to narrow down your problem areas based on previous claims or close calls. Refer to a previous article that I wrote titled “How To Get The Most Out of Your Safety Committee”, as this could be a job for your safety committee to take a deeper look at.

Now you know that when insurance companies asks for loss runs and sees a high frequency of claims, they are not only assuming you will continue to have more claims, they are also assuming that you are likely to have a much larger claim in the near future.

Work with your insurance agent to review your claim history and see if you notice any trends. It helps to write out which type of risks you want to pay attention to with loss control and safety training, which risks you’ll cover by paying out of pocket, and which risks you want to transfer to insurance. Look at that, you just created a Risk Management Plan!

And as always, feel free to reach out to an ArboRisk team member if you have any questions on how to best minimize your exposures to loss and ultimately secure the most competitive insurance rates!

Written by: Malcolm Jeffris, CTSP

On Boarding New Employees

by | Jun 4, 2019 | Employee Management | 0 comments

On Boarding New Employees

The Society of Human Resource Management (SHRM) estimates that 33% of new hires begin looking for new positions within six months of hire! That is a huge percentage!

As you know, bringing on a new team member takes a considerable amount of time and energy. However, what often happens next is the effort that went into finding the right talent creates a temporary sense of relief, and the energy level of your management team drops. The on-boarding of the new employee is typically limited to filling out all the paperwork and sending the recruit out to fit into the work environment to learn the job and company culture. Magically they become a member of the team. You know they have the skills and experience to succeed so integration should just happen right? Not quite.

SHRM research also finds that it costs up to 9 months of an employee’s salary to find and replace an employee and that a proper on-boarding process lowers recruitment costs, increases employee retention rate by 50%, as well as increasing productivity by as much as 54%.

One of the main reasons employees leave is because they are not engaged with their new role and don’t feel like part of the team. Why? Because no one took the time to teach them the duties of the job, culture and ground rules.

Top performing tree care companies, the ones you’re competing with for talent, look at on-boarding as the process of integrating a new employee into the company culture, as well as getting a new hire the tools and information needed to become a productive member of the team. It starts during the interview process and continues, step by step, until the employee is actively engaged and productive. The development of a thorough and repeatable on-boarding experience is an investment every company should make.

How to Develop an On-boarding Process

To start, let’s not confuse on-boarding with orientation. Orientation is the start of the process and typically lasts a week or so. It consists of filling out all the paperwork, going over the employee handbook, work rules, job duties, introduction to other team members and other routine tasks. On-boarding is a comprehensive process involving management and other employees that can last up to 12 months.

Here’s some key questions for the company leadership to answer while developing an on-boarding process:

What impression do you want new hires to walk away with at the end of the first day?
What do new employees need to know about the culture and work environment?
What role will HR play in the process? What about direct managers? Co-workers?
What kind of goals do you want to set for new employees?
How will you gather feedback on the program and measure its success?
Once these questions have been answered, devise an action plan to help new employees quickly assimilate company policies and workflow, while getting fully acquainted with the organization’s culture. We know tree care is a high-risk occupation. It is vital the on-boarding process includes regular and consistent briefings on the risks and hazards associated with daily operations. This is typically where the injuries occur, clear communication is required to operate as a team on the job site, and we all know each crew has its own language and set of expectations.

Something often overlooked, is the impact of on-boarding on the existing team members. Psychologist, Bruce Tuckman first described a path that teams follow during on-boarding of a new employee. Understanding this impact will be beneficial when establishing your on-boarding process.

Forming – “Welcome to the team”. Initially this stage can be very positive, however, formal processes and frameworks have not yet been established and the ground rules are not known by all team members. The strengths and weakness of other all team members may also not be known yet.

Storming– At this stage the team members begin to understand their role and what is expected. When new members are added, new skills and expectations are added to the mix, which can be a source of frustration. In this stage, the team leader needs to be aware of the stress put on the team associated with the integration and training of the new employee, and the challenges it presents to keep the work completed on time.

Norming– If integration is successful, the team will begin to hit its stride by working productively as a team. Each member understands their strengths as well as the strengths of others.

Performing– The final stage of the on-boarding process is when the team is functioning at a high level. Adding and removing team members at this point will have minimal impact, as it will allow the team to communicate team expectations quickly and effectively to new members.

Creating a solid on-boarding process is as simple as knowing what questions to ask your leadership team and considering each of the four stages above.

If you struggle with finding and keeping great employees, contact an ArboRisk team member today! Our Thrive Risk Management Hiring & Recruiting Package and team of experts will help you one-on-one to create a hiring and recruiting plan that works for your organization.

Written by: Jim Skiera

5 Simple SEO Tips

by | May 28, 2019 | Marketing | 0 comments

5 Simple SEO Tips

“Do the best you can until you know better. Then, when you know better, do better.” – Maya Angelou SEO. Search Engine Optimization. If you’re anything like me, it makes you shudder just to see those words in print. But, because I realized I am immersed in the world of digital and traditional marketing, I knew I could not let that fear overtake me. Rather, I decided to tackle SEO day-by-day, to learn as much as I could to do my best for our clients. I started my journey by attending a seminar that revolved entirely around digital marketing strategy and maximizing your website to its best potential (Thanks, Top Floor Marketing!). The main takeaways from the class involved avoiding website and marketing disasters and best practices for SEO. But the one thing that really stuck out to me was how simple some of the steps were to update the SEO on your website. SEO does not have to be scary or difficult. I attribute learning about SEO to learning how to be a successful tree care service owner: in the beginning, it was scary because of the unknown, but once you learned more, those scary thoughts went away, and were replaced by confidence and knowledge that would help you make the correct decisions for your business. SEO is the same way! Below are a few simple tricks and tips to get started in updating your website’s SEO: Meta Data: SEO Meta Data is what appears on search engine results pages and includes the page title and the description text below the title:

You want to make sure your pages are clear and optimized, while not being too brief or too spammy. There are four categories of Meta Data, and how you adjust them can impact your SEO. Below, I use the example of “ArboRisk Insurance” and the page title of “Who we serve:”

Automated: ArboRisk | Who We Serve | Arborist
Somewhat vague, does not give a full picture of what you are about

Non-existent: Home – ArboRisk Insurance
Nothing available, does not provide any additional information about what the page pertains too

Optimized: ArboRisk Insurance | Protect Your Tree Service with ArboRisk | Tree Service Insurance
Clear, concise, and lets Google know exactly what the page is about without going overboard

Crawl Errors: 404 Page Not Found. Crawl errors occur when Googlebots try to access your website, but something prevents them from doing so. Crawl errors may be caused by faulty links, DNS failures, server connectivity, or issues with your robots.txt file. What does this mean? Check the links on your website regularly to ensure all are working. Contact your web master to help resolve any server issues or to fix broken links.

Indexing: In a nutshell, indexing lets you know if Google can find your webpages and shows you the URLs on your website that are getting the most visits. In other words, indexing is incredibly important because if your website is not in Google’s index, it will not show up when people search for a query. A simple way to check indexing for your website is to type Site:your website URL into Google. (Example – Site:arboriskinsurance.com) Be sure to use your EXACT website URL! If your site does not show up when indexing, and you are using your exact URL, it’s time to make some updates! Add a blog, update a few pages – the more copy you can change and edit, the more likely Google will be able to find your pages.

URL Structure: The best types of URL structures write for both users and search engines, use specific keywords and file path structure, and utilize hyphens over underscores. Don’t be generic, avoid keyword repetition aka spammy structure, minimize URL strings (URL’s that have too many numbers or incoherent letters), and make sure that the user can understand what your page is about by looking at the URL. An example of good URL structure is:

Traffic Analysis: Are you analyzing your website traffic on a regular basis? Do you know which website pages are getting the most hits? Analyzing your traffic is an essential way to maximize your SEO. Make sure you are looking at which pages get the most organic entrances (meaning people are finding them by simply searching in Google, rather than clicking on an Ad), organic bounce rate and time on site, and what organic traffic is branded (words that mention your brand name) vs. non-branded (words that do not reference your brand name).

SEO is always changing. It is always something that needs attention. But if you do your best to schedule in time each month to analyze and update your SEO, you will find your website will be more optimized and you will save yourself future headaches and frustrations down the road.

Written by: Katie Petersen

Principles of Estimating

by | May 21, 2019 | Business Strategy | 0 comments

Principles of Estimating

Have you ever heard the phrase…

“It’s not the job you lose that puts you out of business, it’s the job you won.”

I know you’re nodding your head in agreement. We all have taken on a job that we shouldn’t have and it cost our company dearly from a time, team morale, equipment or profit standpoint. Many times, all four of those items suffer and our company regresses.

The importance of proper job estimating in the tree care industry is undeniable. In order to become and remain successful, your company must be proficient at providing accurate estimates to win profitable jobs. When your team begins to feel confident with their estimating skills it is easier for them to walk away from a job that won’t meet your profitability numbers. I wrote an article on the power of saying no to certain jobs in November of 2018. You can read it here: The Power of Walking Away.

So what goes into job estimating? How can you get your sales team to produce profitable jobs for your company? Let’s begin by looking at the steps in the estimating process.

Steps to job estimating for the tree care industry:

Discussion with Property Owner – Obviously, everything begins with setting clear expectations with the property owner for the work that is desired. This also means specifically describing what will not be done during this job. When discussing what they want you to do, dig into the emotion of their request. Why are they asking to have those services performed? When done properly, the sales conversation changes and a relationship is born, one that usually produces additional work as well. Read one of my prior articles titled, The Most Important Question to Ask Customers for a simple way to help your sales team connect immediately with the customer.
Assign Number of Hours – Once you have a clear description of the work to be done, you can start to assign the number of work hours necessary for each task to complete the job. Make notes regarding, drive time, site/equipment set up, completing the work, and cleanup. By doing this you can show the property owner everything that goes into performing the job safely and efficiently without damaging anything. Be sure to also include notes on any special equipment necessary for the job.
Signing the Work Order – Once the property owner has chosen your company, get their signature on the work order approving the specific work to be done, the cost for each service (either in time or dollars) and the payment terms agreed upon. This agreement is vital to ensuring both parties know what to expect. As you know, many times the property owner wants to make slight changes or additions to the work once the crew is on-site, so having the initial cost and job specs outlined will help you accurately account for any additional work so you can appropriately bill for the addition.
Job Completion Analysis – Looking back at completed jobs can be difficult to do. Most companies feel they do not have the time to get each job done, much less enough time to analyze how each job went. However, if you do not take the time to look at how your jobs are performing, how do you know if your estimating practices are solid? To do this, simply have the crew foreman complete a post-job analysis that looks at each of the factors from #2 above to see how close the job estimation was to reality. These post-job forms should be brief, but must be completed at the jobsite before the crew drives away. Any jobs that have a large discrepancy on any of the factors need to be looked at further by the management team.
Lastly, if you are not using an integrated proposal building software like Arborgold, ServicePro or SingleOps, get one today. Being able to produce professional looking proposals in the field that automatically sync up with your customer database is invaluable for a tree service. While the software may come with a large price, ask any owner who has made the switch from paper proposals to one of these and you will quickly see the efficiencies that you gain make you much more profitable even with the additional software cost. The software will also help you analyze your estimating process, thereby allowing your team to continually better their proposals and win more profitable jobs.

Don’t let poor estimating practices put your business at risk for failure. Work only on jobs that will produce a positive outcome for your company and you will see your business reach its goals.

Written by: Eric Petersen

4 Tips to Create a Cohesive Brand

by | May 14, 2019 | Marketing | 0 comments

4 Tips to Create a Cohesive Brand

As a tree service owner, diving into the realm of branding can seem like a daunting task. For so many companies, it’s overwhelming or gets filed in the “I’ll do that later” folder. Your brand is your company’s entire image and the story that is being conveyed to customers and prospects, so it needs your attention.

Before a customer uses your services, they have interacted with your brand in some way. Whether they drove past a truck with your logo, walked their dog past a house with your sign in the yard, or saw your latest Instagram post, all of these seemingly small interactions are the building blocks of relationships with your audience and ultimately what defines your brand.

With a few tweaks and fine tuning, you can create a cohesive brand for your tree care company that attracts new customers.

Determine your brand identity: Your brand is so much more than your logo. It is the story your customers tell. The first place to start determining your brand identity is by defining your “why”. The “why” is so critical for many aspects of your business, but will essentially define your brand identity. We wrote an article recently all about this topic and can help you define your why: https://arboriskinsurance.com/2018/08/what-is-your-why/ Clearly outline your key services, the history of your company, your company’s values, and where you want to go in the future. Once it is determined, your brand identity will influence everything in your marketing plan from the words on your website to your social media posts.

Utilize a consistent color palette and fonts: Your logo is your company’s most identifiable aspect. Your brand colors should include those of your logo and complementing colors that align with the principles of design. From mailers to social media posts, utilize these colors in all artwork. Your fonts should remain consistent just as your colors. When choosing fonts, make sure they are easy to read and can be used for a variety of purposes. If you select a “fancy” font for headlines, make sure to pair it with another that is more ordinary. Here is a resource that helps pair complementary fonts: https://fontjoy.com

Create a professional website: Did you know it only takes 3 seconds for someone to make a decision whether to stay on your website or not? Your website is the first place prospective customers go to check out your business before they decide to use your services. With such a short time frame to make a great impression, having a professional website is a critical aspect of your business and your brand. If you are like most, website design isn’t included on your resume. Invest in a web designer and a professional photographer to create a site that helps your business stand out!

Use a recognizable voice: Whether you are doing all the writing yourself, or outsourced to another company, decide on a writing style that portrays the brand identity you have created. Start by choosing 3 words to define your brand’s personality and voice. From there, choose a style that appeals to your target audience and keep it consistent. Use the same tone and formality throughout your website pages, blog, direct mailers and social media posts.

With a clearly defined brand, you will attract the right kind of customers. Following the 4 tips outlined above you will begin to create a cohesive brand that will help your tree care company stand out from the crowd!

Do you need help with your company’s overall branding? ArboRisk’s exclusive Thrive program includes brand building initiative to help take tree services to new heights! Contact [email protected] today to learn more!

Written by: Amanda Eicher