Depending on the business you are in, workers compensation MAY be a significant cost to your business. In order to maximize profitability, a business can follow a few easy steps to control the cost of workers compensation insurance.
1: Check your experience modification.
If your business meets minimum premium qualifications, then it automatically qualifies for experience rating. Experience rating compares the losses of YOUR business with similar business to determine if your claims are better or worse than expected and then modifies your premium, accordingly. For example, a business with a .75 experience modification factor will save 25% on workers compensation. A business with a 1.25 experience modification factor will pay 25% more than the standard premium. NCCI is the organization that calculates experience modification factors. Sometimes there are errors which can be corrected within a prescribed timeframe of a policy renewal so it is vital that you verify your experience modification factor at renewal with your agent.
2: Check your loss cost multiplier.
Every insurance company files a loss cost multiplier with the state for their filed rate. The insurance companies’ loss cost multiplier is essentially their markup over the standard established rate for each type of job. If the standard rate is $.90 per $100 and an insurance company’s loss cost multiplier is 1.1 then their standard rate for the job class is $.99. You may check your loss cost multiplier against other companies to see how competitive your rate is. Keep in mind that not all insurance companies accept all types of job classes. Just because your company has a 1.23 and you see a company on the list with a 1.05 does not necessarily mean that you can lower your rate by 18%.
3: Check your job classifications and payroll.
Businesses typically have employees spanning several different job categories. Each employee will be classified in the highest rated category for the type of work they do. However, it’s important to review the job classification for each individual to ensure that each employee is classified properly and you are not paying for a higher job class. While an audit may correct any discrepancies after the fact, a comprehensive review of job classifications and payrolls when you start or renew a policy can keep your cost down throughout the year.
4: Maintain certificates of insurance for ALL contracted work.
Businesses are responsible for and are charged for workers compensation on all contracted labor unless the business has a current certificate of insurance on file for the contracted company. It is prudent to retain this certificate on file for each vendor you utilize and to obtain the certificate before you pay the vendor’s invoice. Filing the certificates in a single place will streamline your worker’s compensation audit and ensure that you do not miss any vendors and inadvertently get charged for their work.
5: Maintain a culture of safety.
Naturally, the best way to keep your workers compensation costs down is to do everything you can to prevent injuries on the job. Maintaining a culture of safety includes reviewing and updating your safety manual, performing safety training at company meetings or before work shifts, performing routine safety inspections, communicating safety messages regularly, and posting safety reminders around the workplace. The best place to start is by reviewing and updating your safety manual and having each employee read and initial EACH page.
6: Provide a panel of physicians for injured employees.
Interestingly enough, this step is required by law, yet it is rarely performed. The state law requires that each employer provide injured employees with a panel of three physicians for an employee to choose from to consult regarding their injuries. This is beneficial to employees because they know how their injury is being handled. It’s also good for employers and insurance companies by preventing an unscrupulous employee from “shopping” multiple physicians until the employee obtains a diagnosis that they favor. Providing a panel of physicians ensures that the employee is properly taken care of and can assist in minimizing “extended” work outages.
7: Focus on returning your employees to work.
Extended out-of-work time for employees can have a significant impact on your workers compensation experience modification. In addition, your employees may lose morale and motivation the longer they are away from the workplace. Employers who focus on returning their employees to work enjoy happier, more productive employees and lower workers compensation premiums. Getting injured employees back to work often requires modifying job descriptions, tasks, schedules and work environment. Making these modifications is not always easy but will help keep your team productive and your insurance costs down.
If you are not already doing all of these seven things, The Choice Insurance Agency can assist you and your business to minimize injuries, reduce missed work as a result of injuries, and ultimately lower your workers compensation insurance costs. Call us for a complimentary review and risk management proposal.
The Choice Insurance Agency’s mission is to help you get from where you are to where you want to be financially by planning, achieving your plan and protecting your plan from unexpected events. In the process, our goal is to deliver insurance services in a manner that exceeds your expectations. See what The Choice Insurance Agency can do for you today. Give us a call at 757-416-5100 to speak with one of the licensed, professional members of our team or request a contact here. The Choice Insurance Agency. We’re on YOUR side. 757-416-5100 .