Risk Reduction Realities: Loss Prevention for Restaurants with Alliant’s Tim Leech

In this episode, Kaya Stanley interviews Tim Leech, Director of Risk Consulting at Alliant Insurance Services. Tim shares insights from his 34 years of experience in the insurance industry, focusing on loss-sensitive programs and effective risk management strategies. 

Learn about reducing the cost of risk, engaging management in safety programs, and the latest industry trends. 

Whether you are a restaurant operator, broker, or industry expert, this episode offers practical advice to improve your risk prevention efforts.

00:00 Introduction to the Self-Insurance Podcast

00:21 Meet Tim Leech, Director of Risk Consulting

01:50 Understanding Loss Sensitive Programs

02:20 Reducing the Cost of Risk

06:05 Characteristics of a Successful Program

07:14 Engaging Management in Safety Programs

11:48 Measuring Success in Risk Prevention

17:51 Current Trends in Risk Management

19:26 Conclusion and Final Thoughts

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Transcript

Risk Reduction Realities: Loss Prevention for Restaurants with Alliant’s Tim Leech

Kaya Stanley: [00:00:00] Welcome to the self-insurance podcast brought to you by CRMBC. Every week we're interviewing industry experts, restaurant operators, and brokers to talk about the world of workers' comp self-insurance in California.

I'm so excited to welcome Tim Leech today. Tim is the director of risk consulting at Alliant Insurance Services. Tim, thank you so much for joining us. 

Tim Leech: Oh, you're welcome. Thank you for inviting me. 

Kaya Stanley: And we are excited not only to have you on the podcast, but we're going to be working with you at CRMBC on risk services and loss prevention.

So before we start, will you tell us a little bit about your background, both in, in this field and just how you came to get into this field? 

Tim Leech: Sure. Yeah. Well, I I graduated Oklahoma State, you know, way back in the dinosaur era. And you know, I, I went into the insurance industry. So I've got about 34 years of experience.

I started in insurance, worked there for a little bit, a little bit, didn't [00:01:00] really care for it too much, did some time in in aerospace and then came back into insurance but where I really found my niche was when I went into the brokerage side of the business and the reason being is because I was really more focused on the client's needs and helping them be successful as opposed to the underwriters.

So so I've been doing it for quite a while enjoy it and manage a team here at Alliant and you know, we're just moving forward. Yeah. 

Kaya Stanley: And specifically, how did you get into the risk side of things? 

Tim Leech: The risk side of things? Well I think just from going from step to step between different organizations, finding out what I really didn't like, what I really felt was going to be meaningful.

And so, I want to talk a little bit about you know, loss sensitive programs today. And that's where I really found my niche, particularly as it relates to workers' compensation. I do have experience across the board, property caddy and worker comp, fleet, and [00:02:00] the, kind of the whole, the whole risk spectrum.

But that's where I really found that I really enjoyed working and felt like I could really make a difference with my clients and help them be successful in reducing their cost of risk. 

Kaya Stanley: And let's talk about that, reducing the cost of risk, what so we're, so our audience are members, are potential members, so restaurant owners or really anyone that has a workers' comp program, but also brokers.

So some of them, some of these words, you know, they might have some mean understanding of what that meaning is, but can you talk more specifically what you mean when you say that? 

Tim Leech: Sure. So if you look at it as a pie. You think of a pie, right? You're going to have a number of different elements that, that kind of contribute to your total cost of risk.

You might have an internal person, an administrator or something internal that you're paying a salary for. You're going to, if it's a loss sensitive program with a deductible or an insurance [00:03:00] or a self-insurance retention, You might have collateral that you have to, you know, pay or put up and pay for.

You're going to have claims costs that you're going to have to pay for. But the biggest aspect of your total cost of risk on a loss sensitive program, again, the ones that would be a deductible or self-insured retention, are going to be your loss retentions. And those loss retentions usually can make up somewhere in the neighborhood with work comp, somewhere in the neighborhood of 70 percent to 90 percent of your total costs. Often times what clients get focused on is they get, they get focused on fees. So, for example, what's our, what are we going to have to pay our broker? And what are we, what's our insurance going to cost? And they, they kind of miss the, you know, forest through the trees, as they say.

So yeah, so what I like to do is focus on that, that loss retention. The loss retention is because by doing that, it kind of shrinks the whole pie, if you will. 

Kaya Stanley: And what do you define loss retention for the [00:04:00] audience? 

Tim Leech: Okay, so loss retentions are going to be those, those losses that the, the, the organization that in this case, a restaurant, if they have a loss sensitive program, that's going to be what they're basically paying out of pocket for, for example, or they're having to put up you know, collateral for it, or, or the money's in escrow or what have, but, but essentially it's dollars that are coming out of their pocket, they're not insured.

Okay. Okay, so if a client had let's say I work with clients sometimes they'll have as much as a million dollars per loss and when you have a lot of work comp claims that could be a, you know, it might have a cap on it, an aggregate but they're responsible for that first million dollars. So you know, you may have several million dollars in losses that you're responsible for that are, again, are not transferred to the insurance company.

Okay. 

Kaya Stanley: And what, how can a, you know, in this case, a restaurant owner, because we, we, we do do, we do do loss prevention as a whole group. But let's look at [00:05:00] individual restaurant owners. What can, how, how can one restaurant owner have an impact on this in their operation? 

Tim Leech: Yeah. Well, so the retentions are going to be made up of you know, the claims costs, obviously, but the number one thing you can do to reduce.

The last one is the loss retention is to reduce claims. You know, the best claim that you can ever have is the one that never occurs, right? So, focusing on those loss frequencies with insurance, excuse me, with restaurants, obviously you're always going to be looking at slips, trips, falls, strains, and sprains, things like that.

So having a target approach that will reduce those types of claims will have an impact on your loss retention because there's Over time, if you reduce the frequency, which we can control, It will, the severity will come down and that's happened every time I've ever done this for the most part. Yeah.

Kaya Stanley: Well, let's get more in the weeds. What, what are three to [00:06:00] five characteristics of a, of a very successful program? 

Tim Leech: Okay. Well, I will tell you that I've done a lot of large risk management assessments and for large organizations, and it's, it's consistent throughout. It doesn't matter what industry or what we're talking about.

I just recently did one with assessing an aviation program. They have the same issues there. in the program as that I see in normal organizations. But essentially, it's just like any other management system. If, if the, the leaders in the organization want to get it done and they want to focus on something, it happens.

Where I see the most gaps are, it's going to be lack of management support. And that might be because of just maybe not understanding, right? Understanding how to, I don't know why that with safety management or managing a safety program, It's not looked at just like any other business process, but that's what I do I look at it [00:07:00] as a business process and it integrated into the organization.

So having management support Let's 

Kaya Stanley: pause on that one. What I guess I'm seeing this and some of our yeah members the Both in terms of not just safety, but how to get the managers on board What have you done that worked? to get managers on board. 

Tim Leech: I'm not one that believes that throwing money like incentive programs and things like that, but if, if you have a, let's say you have a multi a restaurant change, you know, whoever the, the manager of, of each of those organizations is going to have what they're going to have responsibility for showing profitability sales.

Maybe employee retention and different things, right? So you just build a safety, you build a safety program in the same way you manage the rest of the organization. Not something that's on the shelf, but something that's managed in the exact same way. So if they're, if they're incentivized [00:08:00] on maybe a bonus or something, so portion of that bonus should be based on, on how they perform safety wise.

Now, if you do that without having right systems in place, It's not going to be effective, right? You can't not have tools and have the right systems in place. Or at least some kind of education or understanding at the management level. So that's a way. Another way that they do it is allocating.

Allocating your cost if you're not doing it already. But again you know, actually implementing something and a focus is really where it's going to come down to. It's focusing on those areas that need to be. addressed. And quite honestly, it's very rarely, Oh, we're not doing training. We're not doing inspections.

We're not doing all the stuff you think safety people do. It's usually, you know, it's usually either lack of managing it, poorly managing it, or just, you know, just saying, well, hey, that's just part of our risk. It's [00:09:00] going to happen. 

Kaya Stanley: In your experience, do you feel like most of the members that you that you go and talk to get it?

Like at the ownership level, they understand that this is important, or do you get pushed back thinking, Oh, that's not a big deal? 

Tim Leech: Yeah, it's difficult at times to, to get it across. You know, I forget what the adage or the cliche is about, you know, people have to feel the pain before they want to do something about it.

And so if they're feeling pain a lot of times, it's not really even related to safety. It might be, again, going back to Let me step back a little bit. The process to reducing losses, whether you have a you know, a self-insured retention, a deductible, or your every dollar, you know, first dollar insurance program, the process is the same.

It's just measuring and what you measure and things might be different from a financial standpoint. So if you go back to how you get their attention, if they're not feeling the pain, you maybe have to show them that, [00:10:00] hey, this is something that we can control. So if I'm able to work with a restaurant I haven't looked recently what a restaurant, what their margin generally is, you know, what's, do you, do you know what a general margin is for a restaurant?

Kaya Stanley: It's different for, you know, fast food, fine dining, fast casualty. It's all across the board. 

Tim Leech: But if I'm able to, let's say that I could have an impact on that margin of maybe even one percent. That's pretty, pretty telling, right? So in order to do that, you have to do some financial analysis as far as how we're going to reduce the losses, making sure that, hey, you know, not to Not that we don't want safe organizations, but we also want to have a return on whatever we're investing into that organization, right?

And if that means improving safety, and reducing accidents and we can increase our margins, be more competitive because now maybe we don't, we're not as impacted by things like inflation and things like that and having [00:11:00] to increase our prices more to keep up because of losses then those kinds of things are really what, in my mind, are more telling than, than going out there and saying, oh, well, OSHA says, yeah.

You know, or, or, you know, things of that nature. So it's really getting it into a business process and having a business understanding of, of implementing the right procedures and so on and so forth. 

Kaya Stanley: And that really speaks to our, a lot of our members, cause in fast food, as you know, the, you know, 10 cents on a price of a taco can completely change, you know, your bottom line.

So, so when we're looking at ways that we can reduce. It's cost and exposure. It does, it does make a huge difference, which leads me to the next question, which is how do you measure success in a risk prevention program? 

Tim Leech: Yeah well, just like any other organization or any other business processes, number one, I want, I have to do an assessment, [00:12:00] right?

That might be on losses and, and you know, I'm looking at losses, I'm looking at how it's operated you know, talking to stakeholders and things like that. So I can come up with some measurable objectives, right? I'm sure everybody that's listening to this probably has heard of SMART goals. You know, goals that are set are specific, measurable, achievable, reasonable, and timely.

And so, I work with the organization to find out what their goals and objectives are, and, and how do I align the risk management or risks and safety process with those goals now, and if, if if reducing incidents and accidents. Are part of that, then that's what we'll measure, but we want to have we want to measure them.

We want to implement the process and then we, we monitor and make sure that we're, it's a, it's a continuous improvement process, right? Then we monitor it to make sure that we're achieving what we set out to. And if we're not, we go back [00:13:00] to the drawing board and say, Hey. Let's let's, let's take a look at this and what do we need to, what do we need to change?

But measuring that success, so, so that's how I measure it. Is through that process and, and through objective goals and objectives. 

Kaya Stanley: So let's, let's get even more in the weeds. How do you specifically reduce losses in a company? 

Tim Leech: Again, that process that I talked about very rarely did it, like I mentioned before, very rarely is it not is it not a management issue.

I read a book by Patrick Lencioni. I forgot the name of it. He wrote the one that a lot of people might that I would recommend that a lot of people might've heard of is the five let's see the five dysfunctions of a team. 

Kaya Stanley: Oh, yeah. 

Tim Leech: Yeah. And he wrote another book in the very. first line, it's the only thing I remember from the book.

The very first line basically, obviously ad libbing was, is that most things can be controlled through improving management systems, which, which don't cost the organization any [00:14:00] money. Right? Right. And, and so generally, I'm looking at management processes and things of that nature. Things like accountability.

No one's not, no one's held accountable. And, and just basic things, you know, for management to occur, you have to have responsibility, authority, and accountability. So understanding those things and then applying safety you know, how I bring safety into it. A lot of times, I'm not even bringing anything safety.

I'm not doing inspections. I'm not doing training. I'm, I might be saying, okay you're, you, no one's responsible for these things. We need to change that. 

Kaya Stanley: Yeah. 

Tim Leech: And making sure that they do have solid objectives and goals that they're working towards. So You know, it's, it's not a cookie cutter approach.

If, if you're having a, if you're an organization that's having problems with slip strips and falls or strains and sprains or struck by, those are going to be the three main claims in a, in a restaurant. And someone says, oh, we can [00:15:00] give you some training on that. Well, I'm not saying that you don't need to train people, but training in and of itself is not, is not good enough.

Kaya Stanley: Along that same lines that you were just talking about, one of my frustrations with some of some loss prevention that we've used over the years was there was, it was almost as if they were acting in a silo where they were going out and doing loss prevention services. There was no communication between claims and underwriting and loss prevention.

So as the CEO, and as a member owned, you know, nonprofit, we want to make sure that every dollar that we're spending is has makes a difference. So we, what we were finding was we would hire a loss prevention company and they would spend most of their time making sure that there were eye wash stations when we don't have any claims on eye injuries, which regulatory, we know that those things need to happen, but that's where all their time was spent on regulatory things as opposed [00:16:00] to, Hey, we just saw an uptick in this type of claim or this particular member, Hey, These locations that are managed by this manager are having issues.

So, we have a strong emphasis on integrating our data between all of those different providers so that when we're doing loss prevention, we're actually focusing on where the costs actually are. What do you guys do in that regard? 

Tim Leech: That's exactly what we do. You know, we, pretty much everything starts with a loss analysis.

And so analyzing losses over, let's say even five years is almost too long because there's so many changes in operations. We had a COVID, things of that nature. But understanding where their losses are coming from. How do they compare to others out there? You know, we can do that as well. But that's exactly what I would do is I bring you know, processes, procedures in that, that are going to affect [00:17:00] those losses that are driving their, their loss ratios up, you know, which makes the insurance company happy, happy when that, you know, when it's.

When it's that, they do that. And, and so that's what we do. We start with a loss analysis, but you have to understand the operations of the organization. What you're explaining to me is pretty much it's almost like the discipline is guilty of that very thing of what you're saying. You know, we have references to that, but it's just an inspection.

It's all compliance driven. You can be 100 percent compliance and still have all kinds of losses. I can work with someone, work with a loss prevention program and get them to reduce losses and the byproduct of that is being compliant. 

Kaya Stanley: Right, right. What do you, what do you see as current trends? Is there anything current happening either with, you know, things going on within the state of California or going on within restaurants that you think is impacting our, our [00:18:00] membership or is going to impact them in the next couple of years?

Tim Leech: I, what I will say is that, you know, California just passed their workplace violence. Are you familiar with that? The SB 553. So, you know, that's something that's driving a lot of activity out there. Personally, I don't think that it's going to do anything to reduce workplace violence. But, but security and workplace violence are two of the things that we're seeing out there.

When I say workplace violence, you know, whether it be That's we've seen it on TV. It's in restaurants as well as other retail outlets. I'm sure you've had conversations about cyber security and point of sale. systems. I'm not, I'm not that's not an area of skill set. That's not a skill set of mine, but I do know that that's, that's another trend that's occurring.

But it's it's almost a technology oriented things that, that are really driving things and concern. It's also the things that are, are difficult to ensure against, right. And [00:19:00] prevent against the other one, I would say is obviously the wildfire issues and some of the natural the Nat Cat, if you will, the natural cat catastrophe type things that are going on that, you know, climate changes that have occurred that are driving losses up, driving insurance costs up, even your homeowner's insurance I'm sure has gone up as a result of that.

Kaya Stanley: Well Tim, I can't thank you enough for coming on here and giving us your insight and I'm really excited to be working with you guys on CRMBC and just any, any parting words for our members? 

Tim Leech: No, I just say if, if you ever need anything, even if you just want to ask a question or you need some information I'll make my, I'll make it available to everybody and they can just give me a call.

We're happy to help even if, if it's just again, maybe they need some advice or you need a template of a program or, or whatever it is they need from a risk and safety. I'm happy to be there to help them out. 

Kaya Stanley: Thanks so much, Tim. Have a wonderful day and we'll see you soon. 

 Thank you for joining us [00:20:00] for the self-insurance podcast brought to you by CRMBC.

If there's a topic you'd like to learn more about, or if you have any questions, just email us at info at CRMBC. com. Remember to subscribe, like comment and share, and join us again next week for more tips on self-insurance.