Total Cost of Risk from a Construction Workers’ Compensation Lens

It seems that just about everyone in the insurance industry has big thoughts about positively impacting the total cost of risk (TCOR) for their clients. And for good reason. If there are ways to help clients reduce the erosion of their profit margins, who wouldn’t want to share that information? It begs the question, why are few agents doing something about it?

Total Cost of Risk Defined

First, let’s set the base for what the total cost of risk is within the insurance world. TCOR is the total cost within an organization to manage risk beyond simply the cost of claims. The Construction Practice at PMC, a division of One80 Intermediaries, looks at these costs through the lens of Workers’ Compensation and includes:

  • Insurance Costs for example: premiums, claims expenses, allocated costs that are outside of the policy limits, per-claim deductibles, managed care fees, etc.
  • Self-funded Losses
  • Vendor Service Fees companies will have external folks do work for them that can be included as part of their overall TCOR. Examples include procuring personal protective equipment, installing safety devices, providing safety consulting services such as monitoring for airborne contaminants and WC consulting on loss trends, training materials for safety events, telematics devices, and others.
  • Indirect Costs such as loss of production, reputation, and market share.

Ways to Drive Down the Total Cost of Risk

A commitment to developing a safe work environment includes eliminating/engineering out exposures and deploying work safety protocols. Supported by ongoing employee training and development, these are among the best courses of action a company can take to improve its total cost of risk.

One consideration that is sometimes missed involves engaging the front-line employees. They understand the work better than anyone and tend to provide the most effective insight on ways their work could be made more efficient, less stressful, and more productive. It costs nothing while fostering an environment where people are part of the solution. Identifying a critical path that drives results, with an unrelenting and prolonged commitment to it is the key to controlling TCOR over time.

Risk Specialists Help Lower Total Cost of Risk

To improve loss outcomes and provide a strategic asset to clients, insurance carriers, brokerages, and agencies have invested in risk control specialists and program leaders. These professionals work each day managing risk and thinking about the root causes and solutions that encompass purpose, process, and people. Companies can access these specialists to understand the right risk problems to solve, the reasons why those problems/exposures exist, and a “target state” to achieve better outcomes over time.

When deployed and sustained, these efforts result in better loss outcomes with less erosion of profit margin, increased employee engagement, and an overall environment people wish to be a part of.

For more information about the total cost of risk or ways, insurance agents can help construction clients lower their Workers’ Compensation total cost of risk, contact Jamie Merendino at 781-825-8307 or

PMC Insurance Group is a division of One80 Intermediaries that offers market-leading access to all major insurance markets in the US, UK, and Canada, as well as exclusive programs and in-house binding authority for property & casualty, financial lines, personal lines, life insurance, medical stop loss risks, travel/accident and health, affinity business and warranty coverage.

One80 serves commercial companies, non-profits, public entities, associations, unions, and private individual risks; and has offices in 55 locations throughout the US and Canada.

By Jamie Merendino

James "Jamie" Merendino is the Construction Program Leader at PMC Insurance Group with 35 years of P&C insurance experience. He has held leadership roles in risk control consulting and commercial sales and was previously the VP and GM of Liberty Mutual Risk Control. Jamie focuses on integrating risk management principles into Workers' Compensation to impact total cost of risk. He has a Bachelor's in Organizational Psychology and an M.S. in Safety Management.