Enhancing Profitability to Keep Your Competitive Edge

1. Enhancing Profitability to Keep Your Competitive Edge A brief insurance perspective

2. Introduction A benchmark study of companies provides conclusive evidence that process safety provides benefits essential to your business: • Two qualitative benefits. You can see them in the way the public, your shareholders, government bodies, and your customers relate to your company: • Corporate Responsibility • Image • Reputation • Brand • Business Flexibility • License to operate • Increased business options • Two quantitative benefits. These have measureable impact in terms of your bottom line and company performance: • Risk Reduction • Process safety prevents human injury • Process safety avoids significant losses and environmental damage • Sustained Value • Process safety helps boosts productivity • It helps produce high quality products, on time, and at lower cost • It contributes to shareholder value All four benefits combine to support the profitability, safety performance, quality, and environmental responsibility of your business

3. What does an $18/hour Employee Really Cost? Actual Labor Cost is $28.91/hr. = Wage Rate + Labor Burden (This calculation can help determine the use of overtime, productivity, hiring, compensation, etc.)

4. Labor Burden (Sample) • Labor Burden (Sample) Percentage Cost • Hourly Wage $18.00 • Payroll Taxes • FICA-Social Security 6.20% $1.12 • FICA-Medicare 1.45% $0.26 • Unemployment (Fed. & State) 3.85% $0.69 • Insurance • Work Comp (industry average) 20.0% $3.60 • General Liability (related to payroll) 4.75% $0.86 • Associated Benefits (Fringe) • Health Insurance 20.83% $3.75 • Training, Supplies, Paid Vacation, etc. 3.50% $0.63

5. Two Ways to Increase Your Profit Margin 1 2 Why not address one of your biggest contributors to employee cost! • By reviewing the previous example, you can see how much Workers’ Compensation contributes to your overall labor costs. • Workers’ Compensation pricing can fluctuate dramatically due to losses, business longevity, safety procedures, etc. Decrease Costs and/or Increase Selling Price

6. Our Success is Your Success We make the commitment to you use all of our resources and knowledge to ensure you are receiving the best options for your business needs: • Assistance with Safety Training • Access to Technical Expertise and Resources • Safety Loss Prevention Program • Workers’ Compensation Advocacy Program • Needs Assessment • Exposure Assessment and Analysis • Claims Management • Accountability Programs • Industrial Hygiene Services • Motor Vehicle Programs • Ergonomic Evaluations • General Liability • Commercial Auto • Surety Bonds • Umbrella • Life • Health • Environmental • Professional Liability • Crime • Builders’ Risk • Industry Surveys • Benchmarking Data We complement our coverage with specific Value Added Services that are designed to enhance your business and its Success.

7. Is All Business Good Business? Gross Profit % = Gross Profit/Selling Price x (100) Scenario: A company has a sales goal of $1,500,000/year, they determined overhead is $300,000/year. Question: What should their markup be to achieve a 7% net profit ($105,000)? Answer: 37% markup yields a 27% gross margin It depends on the goal of the company Proper markup (materials, subcontractors, employees)is essential to profitable bidding!

8. What You Don’t SeeWill Hurt You (Hidden Costs of Work Comp Claims) Direct vs Indirect Costs of a work-related injury An OSHA study claims that indirect costs for a claim can be 4.5 times the direct cost • Direct Costs (20%): • Medical • Insurance • Indirect Costs (80%): • Overtime • Retraining • Reports/Paperwork • Equipment Repair • Hiring • Reduced Productivity • Schedule Delays • Legal Fees • Overhead Costs • Time Lost • Claims Investigation • Lower Morale

9. Direct Cost of Accidents Accidents and Work-related Injuries… make you less profitable and less competitive

10. Workplace Danger Of these fatalities, 17.5% were contributed to the construction industry. And each accident/fatality can increase your costs for years! Not only is the construction/contractor industry highly competitive; it is also very dangerous. In 2011, workplace fatalities were at 4,114! All accidents (and especially these four) hurt employees and can really hurt your business. Making you less competitive! Making you less profitable! • The “Big4” • Falls • Electrocutions • Struck by Objects • Caught-in/Between

11. Markup vs Profit Margin Drawing on decades of construction industry experience, our professionals consider everything from your coverage needs and risk appetite to your financial scenario. We provide solutions that complement your business model and help you meet your business and financial goals. A 40% markup IS NOT a 40% gross profit margin By facilitating proactive communication between clients and underwriters, maintaining response times that exceed industry standards and designing program solutions to help you achieve your financial goals, Yavitz ensures that your risk management program moves in the same direction as your business.

12. Cut Costs Through Safety A strong safety program gives you the following benefits: • Improved Quality • Less Absenteeism • Healthier Workforce Overall(particularly through reduced injury and illness rates) • Workers Feel Good About Their Work • Reduced Workers’ Compensation Costs One of the best ways to cut costs is through basic safety measures. We can help you implement safety processes and lessen risk. ProductivityIncreases ProductionCostsSaved MaintenanceCostsSaved Source CCPS Workshop Make Safety a “Way of Life” 24/7!

13. Dynamics of Safety Culture Change

14. Concrete Concrete Industry Concrete is the building product of choice in construction, and proper application requires lots of planning and execution daily. The last thing concrete contractors need to worry about is how to manage their insurance risks. Yavitz is a single source for value-added risk management and insurance for concrete contractors. We provide both programs and coverage for a variety of concrete contractors including: pour-in-place concrete work, curb construction, concrete repair, sidewalk and driveway contractors, parking lot construction, and foundation and footing contractors.

15. Excavation Excavation Industry As an excavation contractor, you face significant liability risks each time you begin to move earth. Those can include risks associated with adequate soil compaction and meeting proper grades for water runoff, as well as first party property damage exposures to your heavy equipment. You also face risks associated with equipment operator error; hitting underground utilities that can cause widespread damage; and worker injury from strains, falls from equipment, or being caught in or under heavy materials and equipment. Consider Yavitz your one-stop shop for insurance. Coveragesinclude: • Commercial general liability • Contractors equipment • Contractors professional liability • Contractors pollution liability • Workers compensation • Crime • Other coverage

16. Electrical Electrical Industry Yavitz is dedicated to providing innovative, forward-thinking contractors insurance. Our seasoned staff compounded with, risk control consultants and claims professionals not only know construction, but are skilled in helping electrical contractors better manage their complex indemnity, additional insured, and contractual exposures.

17. Plumbing Plumbing Industry Yavitz understands that running a high-quality plumbing and mechanical contracting company in today's business environment is no easy task. Recognizing that each contractor's situation is unique, together with a thorough understanding of the risks and the range of issues plumbing and mechanical contractors face As with all Yavitz customers, you’ll receive dedicated, contractor-specific safety and risk control solutions, as well as a dedicated and knowledgeable claim service staff.

18. Utilities Utilities Industry Yavitz understands an underground utility contractor's business, from trenching and excavation, to determining soil stability and managing traffic control at work sites. Providing a valuable resource in helping underground utility contractors effectively manage their risks, Yavitz has a knowledgeable staff compounded with experienced risk control consultants with solid technical background in the field. Yavitz also provides underground utility contractor customers with a number of special coverages, including an electronic data liability endorsement, which protects contractors for damages related to loss of data arising out of hitting a utility line. Also available are railroad protective coverage, owners and contractors protective coverage, pollution liability coverage, and damage to property endorsement - limited coverage for certain underground property. Additionally, Yavitz offers coverage to contractors that work on pipelines, including natural gas and petroleum transmission lines.

19. Oil & Gas Oil & Gas Industry Running an oil and gas business is no simple task. Overseeing rig equipment and tools, conducting well evaluations, managing crews and complying with government regulations all require in-depth industry knowledge and a commitment to exceptional practices. So troubleshooting problems that could affect your operations should be much more of a concern to you than worrying about whether you’re protected when something goes wrong. That’s why Yavitz has the products and services tailored to meet the specialized needs of oil and gas customers. We work hard to serve the industry and continue to develop and enhance our existing oil and gas coverage offerings.

20. Highway/Road Highway/Road Industry Highway, street and road contractors know that there is a strong demand to improve the infrastructure across the country. To help manage the need for additional insurance coverage, Yavitz continually adapts programs to meet highway, street and road contractors' specific insurance and risk management requirements. The services the Yavitz program provide is total account solution for highway, street and road contractors. A collection of safety and risk management resources dedicated to help contractors meet today's risk management and safety challenges.

21. General Contractors General Contractors Industry Performing the general contracting on a construction project is a complex task. Course of construction, accidents, timelines, change orders and contract administration are all concerns. Yavitz specializes in fulfilling the insurance and risk management needs of general contractors. Insurance provided by Yavitz for general contractors is a dedicated team approach to meeting their multifaceted insurance needs. Account executives, risk control consultants and dedicated claim professionals work together to create an integrated insurance solution that includes: Tailored, industry-specific product: In addition to all the core lines of insurance, we offer construction-specific coverages, such as contractors professional liability, owners and contractors protective, and railroad protective, to name a few. Proactive services from specialists: From ongoing risk consulting to safety seminars for contractor personnel to claims management. Our focus is so laser-sharp, we even have claims specialists dedicated exclusively to GL construction claims, including construction defect. Contractual risk transfer proficiency: CRT is an essential component of all general contractor operations. Yavitz construction account executives are skilled and available to assist our clients in developing and maintaining their CRT process.

22. Landscape Landscape Industry Even as a professional at lawn care or landscaping, no matter how many years of experience you have under your belt, there are times when something goes wrong and those situations may never actually be your own fault or doing. These instances may not even be able to be foreseen or even prevented by yourself―sometimes accidents just happen. The right lawn care insurance coverage or landscaping insurance coverage will help to protect you and your business through these times and can even help to keep your lawn care or landscaping business afloat even in the most severe of cases.