Workers’ compensation claims can be
a pain for both employers and
employees. Employers lose out on manpower while facing a potential financial
barrier. Employees suffer from a daunting ailment that sidelines them for short or long
periods of time. The issue can easily be time
consuming and confusing for both parties.
Steve Jacobson, a commercial insurance
broker for Westland Insurance Brokers, says
one way for employers and employees to
find common ground on the issue is through
constant training and educational programs.
It’s also important for companies to implement a formal safety program in an effort to
prevent accidents before they happen.
Smart Business spoke to Jacobson for a
more detailed look at how companies should
approach workers’ compensation insurance.
How can companies reduce workers’ compensation premiums?
The most important way is to work with a
broker and insurance company who knows
and understands how your business works.
Regular claims reviews should be performed to make sure claims are being
adjusted in the most timely and cost effective manner possible. The sooner a company can get a claim closed, the less it will
affect future costs. By preventing or reducing the exposures that cause injuries, a company can assure reduced premiums in the
future. Get management and employees
involved. Prevention and education are key
factors in future insurance costs.
What factors should companies consider
when selecting an insurance carrier?
With the recent reform, many new insurance companies have recently begun writing workers’ compensation coverage in
California.
When choosing a carrier, a company needs
to select one that is financially sound and has
an ‘A’ rating from the AM Best Co. Choose a
carrier that has its own claims personnel,
preferably located where the business is
located. By doing so, you will get claims
adjusters who know who the good doctors
are and who the bad ones are, which will
help in reducing fraudulent claims and
increased costs on legitimate claims.
The better quality insurance companies will
also have loss-control personnel, who will
assist you for free with reducing exposure to
losses and with employee safety programs.
They also have employees dedicated to
detecting and fighting fraudulent claims.
Can an employee incentive program be beneficial?
Employee incentive programs can be
extremely beneficial in reducing the frequency and severity of a company’s claims. When
employees feel that they have something to
gain, they will work hard toward the reward.
By making employees understand they are a
part of the team, they will take ownership in
the program. A company’s losses today affect
its premiums for the next few years. The
small costs of today’s incentive programs will
save a lot more for years to come.
How can employers help employees understand the impact of workers’ compensation
on a business ?
Employers need to educate employees on
the effect the company’s losses have on
their employer’s premiums. Employees
need to understand that today’s losses affect
a business’s premiums for the next three to
four years. When you educate the employees and explain that if the employer has to
pay higher premiums due to WC losses and
that there might not be enough money for
raises or bonuses, it gives the employees an
incentive to avoid a claim or to get back to
work as soon as possible after a claim.
A successful workers’ compensation program really has four partners that need to
successfully work together: the employer,
the employees, the insurance broker and
the insurance carrier.
Has the cost for workers’ compensation premiums changed for California employers in
recent years?
Starting in 2000, the California workers’
compensation industry began to see significant rate increases. Since the new reform
has gone into effect, our policyholders have
seen decreases on average from 65 percent
to 75 percent over the past two years from a
number of high-quality, ‘A’-rated insurance
companies. Rates are continuing to come
down, but keep in mind that the cheapest
rate is often not the best rate.
How can employers reduce their exposure to
loss?
Regular safety and employee training
meetings should take place with topics that
are specific to your industry. Claims can
often be avoided with proper training before
an accident. Employers should also have
the broker’s or insurance company’s loss
control representatives perform a walk-through a couple of times a year to survey
the business in order to point out any exposures to losses that could be eliminated
before they cause a loss. Material handling
procedures and machine usage should also
be evaluated frequently. Additionally, by
providing safety equipment to employees
such as back-braces, goggles, etc., some
claims can be virtually eliminated.
STEVE JACOBSON is a commerical insurance broker with Westland Insurance Brokers. Reach him at [email protected] or
(619) 641-3260.
