Business costs are rising so identifying ways to improve profits is difficult. One of the top challenges is controlling workers' compensation costs. Safety is critical at Marlin Steel - going over 3,044+ days with only one lost time incident. Keeping insurance premiums low let you invest money in ways to grow the company. Here are five ways business owners can help control high workers' compensation premiums.
1. Implement "Best Practices" Hiring Strategies
Hiring the right employees has a direct correlation to workers' comp claims. Adhering to a consistent hiring process ensures you are hiring better-qualified employees, not your next workers' comp claim. For example, in my state, we have a website to see if your prospective employee has had prior WC claims: http://www.wcc.state.md.us/WFMS/public_inquiry.html - check your state's website to see if your prospective applicant has an unsavory pattern.
Another critical technique to hire well is to confirm your job applicant is sober by drug screening every applicant. Sober employees get into fewer accidents. Check out if your state allows this strategy. In addition, completing a background check and calling references ensures your candidate is a good fit for the culture you are trying to build.
2. Work the Mod
Workers' Compensation Experience Mods are one of the primary factors dictating your WC premium. Make sure your agent is staying on top of your mod. Examples include finding errors in mod data, advising what claims to submit vs. what should be paid out of pocket, and promptly reporting claims. Timely reporting is crucial. First, in some states, this starts the statute of limitations on the claim (3 years), and the sooner you open the claim, the sooner the potential to have it closed. Open claims= higher mod. A one week delay in reporting leads to a 10% increase in a claims cost. A one month delay or more can lead to as much as a 48% increase!
3. Control what you can Control - Workers Return Swiftly to Light Duty
Minor medical expencopiedses add up (ex: physical therapy). Make sure you stay active in your involvement with employees involved in workers' comp claims. Things such as unnecessary tests, opioid abuse and prolonged physical therapy all add up. Moreover, implement a "return to work program" and measure the results. It is important to get injured employees back to work as quickly as possible, even if only in modified roles. Have your employee do light duty or office work and encourage their feedback. Supporting your injured employee gives them the confidence to want to return to full duty faster.
4. Prevent Leakage - Insurance Company Oversights Fixed
Don't pay more than you have to. Be aware of what is being paid out through your insurance. Paying a claim that never should have been paid and paying out more benefits than required are two all too common instances that affect workers' comp premiums. Make sure you explore all options, including the possibility to subrogate (your carrier pays first, and then gets reimbursed by an at fault party).
5. Create a Safe Culture - Your employees will be more dedicated
Foster a safe environment and stress at every company meeting and inflection point the importance of your company's safety program. Putting the proper protocols in place allows you to save more money over time. Lead by example. Safety starts at the top. Do not delegate safety - the companies with the best records have an owner on their safety team. Have the team monthly and focus on near misses. A near miss today will be the most likely issue of tomorrow. Your employees will be safer by vigilantly identifying the root causes of near misses and improving the process so they safety challenge evaporates in the future. Leadership showing safety leads to employees showing safety!
Special Thanks to Sarah Kyle a Commercial Risk Advisor at Diversified Insurance Industries, Inc. for the inspiration and crafting of this column.