Contributing Leavitt Group Author: Pat Hagge
There are several factors that impact workers compensation premiums. It is a good idea to review these items with your insurance agent to ensure you have the right amount of coverage and to keep your premiums at an affordable level. The following is a summary of some of the factors that affect your premium and what you can do to control your workers compensation costs.
Employers are assigned classification codes based on their industry, and different codes are assigned to employees based on the type of labor in which they engage. These class codes are set by the National Council on Compensation Insurance (NCCI), and they are state specific.
To ensure you have the right coverage for your employees, conduct an audit of your employee classification codes on an annual basis. This can be done by reviewing current employee classification codes and identifying any employees who are classified incorrectly. For example, if you have an employee who has moved from a job on the factory floor to the office, this employee may be assigned a less costly classification code to reflect the change in their work responsibilities.
The premium you pay for workers compensation insurance is generally based on the size of your payroll. If you have recently decreased the size of your payroll, these changes need to be communicated to your insurance agent. Making this simple update to your workers compensation records may have a significant effect on the amount of premium you pay going forward.
The best way to keep costs down is to not incur claims. The severity, type, and frequency of workers compensation claims you incur has a significant effect on your workers compensation premium. The more severe the claim and the more claims you incur, the higher your premium will be.
You can make a substantial impact on your workers compensation premium over time by developing and maintaining a safety culture geared towards preventing accidents and injuries. Here are a few key things you can do to improve your safety culture:
- Make safety a top priority. Engage employees directly in the effort. Solicit ideas from employees on how to create a safer workplace.
- Establish a written safety program. Your safety program should include training on preventing workplace accidents and injuries, as well as incentives for maintaining an accident-free environment. Getting commitment from management and employees is key.
- Be selective in your hiring process. Choose new hires who share the same safety culture values. Provide accurate job descriptions to job applicants, obtain previous work references, and conduct criminal background checks. Also, conduct a pre-start post-offer drug test and obtain a motor vehicle report (MVR) for new hires.
- Thoroughly train employees. Nearly one-third of workers compensation claims result from accidents with new employees. Evaluate your orientation program for ways to improve new employee training. Ensure employees know the correct methods and procedures to accomplish their assigned tasks. Require employees to demonstrate skill proficiency before performing a particular task.
- Prevent accident recurrences. Investigate and document every injury and near-miss. Identify why and how the accident occurred and make proper corrections to help prevent future incidents.
With effective claims management, you will see a faster recovery time for injured workers, reduced operational downtime, reduced claims costs, and less negative impact on your workers compensation premium. Here are a few suggestions for managing claims when they occur:
- Early Reporting. Reporting claims within 24 hours results in claims that, on average, cost 28 percent less than reporting an injury after seven days. Make sure employees know how to report an injury, and emphasize that injuries must be reported immediately, no matter how minor they may seem.
- Communication. In order to minimize the impact of a workers compensation claim on an organization, it is important to encourage and practice effective communication. It is essential to stay in contact with the injured worker, the claims adjustor, and the treating physician throughout the life of the claim. This is especially important if the injured worker’s ability to return to work is delayed due to his/her injuries.
- Modified Duty. Modified duty offered in accordance with physician-determined work restrictions will typically result in a more engaged worker, a shorter claim duration, and lower claim costs. Determining modified duty tasks should be done before an injury occurs so you are ready to bring an injured worker back as soon as possible. Consider a variety of job tasks when determining modified duties – office work does not have to be the only solution.
- Respect. Treating injured workers with dignity and respect is not only the right thing to do, but it will also help the claim process move smoothly. While you may be unhappy about the events leading to a worker’s injury, showing outright anger and/or vindictiveness towards injured workers will only complicate the claims-handling process and increase the potential for higher costs. Instead, engage injured workers in the accident investigation process and look for solutions that will keep similar incidents from occurring again.
Maintaining an affordable workers compensation premium takes ongoing effort and commitment from the entire organization. But these efforts, when effectively implemented, can pay off significantly with increased cost savings, improved safety culture, and better employee morale.