Top 5 Tricks to Get the Best Workers’ Compensation Program
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You don’t have to walk a tight rope, conduct a disappearing act or pull a rabbit out of a hat to control insurance costs. Instead, understand the factors that play a key role in the pricing and structure of your workers’ compensation (WC) program. Below are a few of the WC tricks that, if managed correctly, can lead to increased savings:
1. Understand the impact of your Experience Modifier.
Your Experience Mod compares your WC claims history with that of other employers in the same industry, and then uses the data to predict future losses. An Experience Mod of 1.0 is considered the industry average. A mod less than 1.0 is considered better than the industry average and will reduce your insurance premiums. A mod greater than 1.0 is considered worse and will add to your insurance costs.
Benchmarking your own experience against your peers will show areas for improvement within your own organization and can help determine if your loss prevention efforts are effective at controlling your WC costs.
2. Understand how insurance carriers view your claims history.
As part of the underwriting process, insurance carriers look to identify trends and patterns in your loss history, and more importantly, how likely those trends are to continue. If the majority of your claims are back strains and you have recently implemented a lift assist program with additional training in this area, don’t forget to share this information with your insurance broker. Additionally, if you have discontinued a certain operation that resulted in a large amount of prior losses, or you have hired a new manager with a strong background in claim management, use this information to your advantage.
Showing that you are proactively engaged in loss prevention and being able to tell a story around your claims past can have a significant impact on a carrier’s willingness to write an account, as well as the pricing structure – especially if you have adverse loss history.
3. Know the difference between Guaranteed Cost and Loss Sensitive programs.
Understand the differences between the various types of WC programs, and work with your insurance broker to help identify which programs are the best fit for your organization. This is especially important as the insurance market continues to harden. Loss Sensitive programs will vary by insurance carrier and size of your premium, but if your organization has a tolerance for risk and has effective loss prevention programs in place, you can significantly reduce WC costs by self-insuring more of your expected losses.
4. Follow the best practices for your industry.
Follow established protocols for hiring practices, employment/background checks, formal safety and return to work programs, accident reporting and investigation, etc. Incorporating these best practices will set you apart from competitors, as well as lead to reduced claim frequency and severity – which in turn leads to reduced insurance costs.
5. Incorporate an employee wellness program.
Physical factors and health conditions contribute significantly to work-related injuries. By maximizing the health of your employees, you can minimize risk, and therefore, reduce the frequency of claims. Healthy employees will also take less time to heal post-injury and return to work more quickly, lowering the severity of claims.
Wellness programs can positively impact your health insurance premiums while reducing employee stress and increasing employee job satisfaction and morale. This aids in employee recruitment and retention.
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