Workers’ compensation Featured

7:00pm EDT December 31, 2006

In the modern business landscape, workers’ compensation provides a safe workplace environment and financial compensation in the event of an employee injury. It also provides a system whereby employers can fulfill their obligation to provide employee protection while also allowing a way to budget costs associated with workers’ compensation injuries.

A number of risk services are geared toward businesses, but every company has its own individual needs when it comes to workers’ compensation. That’s where insurance agents play an important role.

“Agents or brokers can be your absolute best friends in this process because their end objective is to improve your risk profile,” says Mike Eckert, vice president of risk services for Kapnick Insurance Group.

Smart Business spoke with Eckert about the importance of obtaining unbiased information, the best practices that can be employed in controlling workers’ compensation claims and why a safe work environment starts at the top.

How can a CEO or business owner most effectively identify his company’s strengths and weaknesses in regard to employee safety?

The key is getting a formal safety program audit from an objective source. The caution is that there may be certain consultants or other businesses that may have a bias. For example, perhaps they want you to buy more of their services even though such offerings aren’t necessarily in your best interest. You want someone who can take a fresh and objective look at your program to assure that it is the appropriate one for your organization and who can provide information on high-level, structural changes that may be needed.

What types of risk service capabilities are available?

A number of risk services are available from many sources. For example, national organizations can provide OSHA compliance services; organizations can provide training services and training tools; national nonprofit associations and government organizations such as OSHA have resources available to individual companies.

Like so many other things in business, paring through options and finding what the best fit is for your company is always a challenge because you don’t want to spend money unnecessarily. If you don’t have someone internally to help you with these choices, then having an external trusted adviser can help you ‘triage’ resources and get the best ones to you. Ultimately, an insurance agency can help coordinate some of those services for its client groups.

Are alternative risk financing programs a viable tool for companies hoping to minimize the cost of workers’ compensation?

They can be, but it’s certainly not a one-size-fits-all. It depends on a number of things like the state laws where you operate, the type of business that you’re in, your loss history, the nature of the exposures that you might have, and your financial strengths and capabilities. For some companies, guaranteed-cost programs can be a great fit. For other companies, being in more traditional types of programs may be a better fit for them. Again, having quality, trusted advisers to steer you through that process as a business owner is critical. Because workers’ compensation is really a long-term financial obligation, not only will current business needs and strengths need evaluation, but they must also be projected into the future.

What best practices can a business use to help control workers’ compensation claims?

Pay attention to workers’ compensation matters and manage them like any other valued part of your business. Many company owners, officers and key managers are under the assumption that the insurance carrier will take care of all of their needs related to workers’ compensation. The reality is that the business owner needs to be savvy and have an understanding of fundamental loss-control principles. The level of knowledge necessary for key managers and executives doesn’t have to be terribly complex and time-consuming, but understanding fundamental principles is critically important.

How important is it for management to be fully committed to creating a safe work environment?

It’s absolutely essential. Ultimately, there is not an individual within any organization who manages safety at a higher level than their executive management team will allow. It takes a firm, visible commitment, active involvement and a desire to understand what the processes are.

Creating a safe work environment involves more than lip service. Anytime workplace safety is perceived as being less important than productivity or quality, it loses a lot of traction within an organization.

MIKE ECKERT is vice president of risk services for Kapnick Insurance Group. Reach him at (888) 263-4656 ext. 1160 or mike.eckert@kapnick.com. Kapnick Insurance Group will sponsor a safety seminar in Adrian, Mich., on January 23 and in Novi, Mich., on January 30. For more information visit www.kapnick.com.