Security Watch: Finding Your Security Niche
Feb 1, 2005 12:00 PM, By Bret Bass
Creative integrators can increase their profits by exploring non-traditional video security applications.
Video surveillance products, in varying forms, have been a part of the security industry for decades. The concept arose during the early years of television in the 1930s and 1940s, and systems implementation began in the years after World War II. Progressive cities, predicting the significance the technological advances of the late 1950s would have, moved forward with their plans to implement the new systems. By 1961, London had already installed its first public surveillance system in a railway station.
Video surveillance helps keep businesses secure from everything from theft to fraudulent insurance claims.
Video products are more popular and accessible today than ever before. The emerging concept of total security — of protecting investments and people in addition to property — is creating demand for video surveillance products among innovative business owners. The use of video security reduces false liability claims and internal crime, ensures safe working conditions for employees and customers, and enables executives to have a “presence” at multiple and geographically diverse locations without ever leaving their computers.
The issues of crime reduction and loss prevention will always remain, and businesses have come to rely on video security to address these concerns. The industry figures confirm it: in 2002 alone, CCTV systems outsold fire systems to non-residential customers. Although the FBI estimates the annual monetary loss incurred from crime to be $4.7 billion, that figure pales in comparison to the amount of money business owners spend each year in workers' compensation fraud (a growing epidemic in this country), false liability claims, and lost productivity resulting from days away from work.
By exploring non-traditional security applications, such as employee and customer safety, creative integrators can penetrate new niche markets and realize greater profit potential. Because, according to the Bureau of Labor Statistics, salvage yard operators fall into the largest category of liability and injury claims, this article will focus on the non-traditional benefits of video security in the salvage industry.
SALVAGE YARD CONSIDERATIONS
Salvage yard operators are no strangers to injury and liability claims. Loose parts are scattered throughout the yards. In pick-your-part type lots, customers perform their own dismantling of vehicles and equipment. Large and potentially dangerous vehicle-crushing machinery may be present. Chemical storage issues exist — catalytic converters seem to pose one of the largest problems, according to Pick-N-Pull, a California-based auto dismantler. Recently in New Jersey, a woman died of asbestos exposure from a salvage yard, and the operator was found liable for not properly recognizing or disposing of the material. Salvage yards are obviously more hazardous than retail environments, and liability is a major concern. Because salvage yards fall into one of the highest divisions of workplace injury, a division comprising 44.5 percent of all non-fatal claims, compliance with OSHA standards is another serious issue facing salvage yard owners. Recently, OSHA increased its penalty fees for workplace safety violations. Violations now bring a civil penalty of up to $25,000, with an additional charge of $15,000 for every day a failure to abate a known violation continues.
The Workers' Compensation Insurance Rating Bureau reports that premiums have risen 56 percent since 1999, and the average claim is nearly $37,000. Salvage yard operators can expect 6.9 injury claims for every 100 employees this year. Last year alone, more than 4.7 million workplace injuries were reported. Employers lost more than 2.7 million production days due to injuries, sacrificed $220 million in lost productivity, and spent $1.7 billion in direct workers' compensation costs. An estimated 60,000 people die each year from job-related illnesses. The workplace cost of these tragic job-related injuries exceeds $127 billion a year, which is more than the combined profits of the 17 most profitable U.S. corporations. According to the National Insurance Crime Bureau (NICB), workers' compensation claimant fraud and medical fraud combine to contribute significantly to an annual estimated $30 billion insurance fraud problem.
And these figures do not take into account the monies lost in fraudulent claims brought against business owners from customers. All things considered, the $4.7 billion in theft and property loss seems slight in comparison to the amount of money lost in combating injuries to both workers and customers.
The Special Investigation Unit of ESIS, a reputable risk management services company, recently released a document detailing the top 10 strategies for fighting workers' compensation and false liability fraud. Ranked third on the list was the installation of video recording, transmission, and surveillance systems. The ACE INA Insurance Report (Philadelphia News Wire) recommends businesses install video equipment. According to the report, “A visual record can help support legitimate workers' compensation claims while weeding out bogus injuries. Additionally, the installation of cameras and video surveillance equipment has been proven to deter fraud and other crimes in the workplace across the board.”
THE BENEFITS OF VIDEO SURVEILLANCE
Clever integrators, specializing in video surveillance applications with remote management capabilities, easily increase their revenue potential when they think outside the security box. For instance, consider what you can offer a salvage yard operator:
- Access to sites locally or over the Internet with secure IDs and passwords for live viewing or retrieval of archives.
- The ability to remotely manage and monitor internal theft, asset tracking, employee attendance and productivity, and potential insurance premium and fraudulent liability claims. Recording and retrieving footage allows employers to defend themselves against these fraudulent claims.
- The ability to ensure that employees are working in accordance with operational safety guidelines, reducing the risks of liability while promoting a healthy work environment.
- DVRs with CD burners that allow archived data to be transferred to a CD-ROM for evidentiary purposes.
- Integration with alarm systems and automation software for use at remote monitoring facilities or control rooms.
Also, consider the benefits of either local or remote monitoring to salvage yard operators. Customers and employees in yards constantly face the dangers of cuts, trips, falls, or worse. Supervisors, managers, and security guards can only be in one place at a time. And they too are susceptible to injuries and risks. With video surveillance products and monitoring, these risks are reduced. These systems allow for pre-event detection (a child too close to the vehicle-crushing machine or an employee walking into an area saturated with motor oil), interaction, reporting, damage mitigation, and emergency assistance. Should a child wander off, for example, motion sensors on cameras in the area will trigger an alert to intervention and monitoring agents. Agents can instantly record, monitor, and respond to the incident. Using two-way audio systems, commonly installed in the units, agents can communicate over a speaker to alert the potential victim, or others in the area, of the imminent danger. This intervention can prevent or limit the damage. Should an injury occur, intervention personnel immediately summon assistance from local authorities. With remote video surveillance, the area is constantly observed.
Also consider the frequency of false claims. People report injuries that cannot be verified or disputed. These claims usually require business owners to expend exorbitant amounts of money on litigation, damages, medical costs, and increased insurance premiums. Having a constant watch on the facility, or at least the ability to record and then review the activity, gives business owners the evidence necessary to mount a solid defense.
The last consideration is, of course, price. Salvage yard operators are familiar with guard services. They are also familiar with high costs and limitations of guards. A typical guard contract can cost around $10,160 per month. An effective video system with a monthly monitoring contract typically costs the business owner between $230 and $1,100 per month, depending on the level of service. Integrators also have the option of selling the equipment outright or leasing it and amortizing the cost into the monthly fee. And always remember that with contract monitoring, the integrator receives recurring monthly revenue.
MAKING THE SALE
Show salvage yard operators how much money they could be losing each year with safety, injury, liability, and crime-related issues. Show them all the ways in which video surveillance can effectively and economically reduce these issues. Then show them the difference between $10,000 a month for questionable guard service and $1,100 a month for video, and the sale should be yours. With video installations, you boost profits and reach new customers by widening your offerings beyond the scope of standard security.
Bret Bassis a security industry consultant with more than 15 years experience in central station and video monitoring. He has consulted for large security firms, such as Tyco and Criticom. He is currently in charge of Interactive Video Monitoring for IASG/NACC.