Topic Thread

cost of labor as a part of the burden rate

  • 1.  cost of labor as a part of the burden rate

    Posted 7 days ago
    ​If the cost of labor includes direct and indirect costs, and insurance is one of the indirect costs, the organization should consider the total cost of risk as a part of the indirect costs. The total cost of risk would include insurance premiums, retained losses (active and passive), risk management department costs, outside service fees, and indirect costs of loss (time spent investigating claims, downtime, loss productivity, damage to reputation, training new employees, management time, etc.). Fred Manuele, author of "On the Practice of Safety", says that an organization can use a ratio of 1:1 to calculate indirect costs of loss. In other words, for one dollar paid in claims there is another dollar of hidden costs paid by the organization. Would anyone share whether they include these costs or perhaps why you would not consider total cost of risk as a part of your cost of labor? Any thoughts are appreciated.

    Thank you!

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    Jon Erickson CRM, CIC, CWCA, MLIS, CIRS
    Producer
    Insure Forward
    Fargo ND
    (701) 893-2750
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