An effective safety program gives your company a competitive advantage over one with careless operations. Safety awareness lowers your workers’ compensation rates through premium rebates and discounts, and better rates from less frequent and less severe claims.
“I can walk into a manufacturing plant and sense whether the company has a strong focus on their operations and safety. And, nine out of 10 times, I’m correct,” says Richard B. Hite, CEO of SeibertKeck Insurance Agency.
Smart Business spoke with Hite about how safety programs and a safety culture factor into decreasing your workers’ compensation premiums.
How can you use safety to take advantage of workers’ compensation rebates and discounts?
As one of four states that don’t allow employers to buy workers’ compensation from private carriers, Ohio and its Bureau of Workers' Compensation (BWC) have a number safety programs (www.OhioBWC.com/employer/programs/safety). The three fundamental ways to get credits to your basic rates, depending on whether you have a basic or advanced safety program, are the:
- Drug-free safety program, a premium discount of 4 to 7 percent for implementing a drug-free program that promotes occupational safety and addresses the use and misuse of alcohol and drugs in the workplace.
- Safety council rebate program, a 2 percent rebate for active participation in a safety council, as well as another 2 percent possible based on the frequency and severity of your workers’ compensation claims.
- Destination excellence program, up to 3 percent refunded based on industry-specific safety discounts.
Additionally, based on your company’s total losses and their severity, you get experience modification — a credit, or debit if you’ve had claims — to your base rates. The BWC also administers workplace wellness grants, which by establishing a more healthy and aware workforce can reduce the frequency and severity of claims in the future.
Your property and casualty commercial insurance carrier is another source for safety assistance to help reduce claims. The national carriers already provide out-of-state workers’ compensation, so they have programs and information that your company may be able to take advantage of as a client.
How can you ensure employees actually follow your safety practices?
Many business owners examine their prior premiums and rates to see the total savings from BWC credits, rebates and discounts, and then share half with employees as a safety bonus. Employees know if they stay safe the employer will, for example, hand out gift cards. Also, if a department has no workers’ compensation claims for a certain quarter, the boss could buy everyone pizza.
Another incentive is posting accomplishments — the sign that says ‘We’ve had X consecutive days of no workers’ compensation losses.’ You might not think it works, but employees don’t want to be the one person to mess up, so they are more aware and take extra time.
Your safety committee should be helping with education and awareness. First, you train the trainers at monthly meetings, such as bringing in a loss control engineer or practical exercises like the proper way to lift a 100-pound object. Then, the committee members go down to the specific departments, which already should have safety resources for individual jobs.
How else can you institute a safety culture?
The written safety plan needs to be reviewed by employees, so make employees sign a statement that they read it. Post safety rules in relevant places — the BWC can provide posters. When new employees go through safety training, make sure you’re refreshing the memory of existing employees. Keep your job analyses current and match the right employees to the right tasks. An improperly trained employee who’s lifting and bending all day is an accident waiting to happen.
It’s only after you establish a strong safety culture to keep frequency and severity of claims down that you can think about the next level where you can get in a group or a retrospective rating program to earn your own rates.
Richard B. Hite is the CEO of the SeibertKeck Insurance Agency. Reach him at (330) 865-6573 or firstname.lastname@example.org.
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Over the past few years, many employers in Ohio have been looking at the Group Retrospective Program implemented in 2009 by the Ohio Bureau of Workers’ Compensation (BWC) as another option to garner savings when it comes to their workers’ compensation premium. Enrollment numbers have doubled each year, especially with employers that are of medium size and debit-rated by the BWC.
“If you are an employer in Ohio who has some claims in your experience — as accidents will happen — but also has a solid safety program in place, Group Retrospective Rating may be an option. Organizations that do not qualify for a Group Rating program or are seeing little savings from this program should consider Group Retrospective Rating as an alternative,” says Heather Vogus, vice president at CompManagement, Inc.
Group Retrospective Rating enrollment for private employers ends April 30 for the 2013 policy year.
What is Group Retrospective Rating?
Group Retrospective Rating is a performance-based incentive program designed to recover a portion of premiums for employers that reduce injury rates and lower associated claims costs. It is similar in concept to Group Rating, as companies are grouped together to be rated as if the group was one big company. However, with this program, companies continue to pay their own individual premium but have the opportunity to receive retrospective premium adjustments, such as refunds or assessments, at the end of each of the three evaluation periods performed by the BWC.
How are groups evaluated by the BWC?
Three evaluations are performed by the BWC at 12, 24 and 36 months after the end of the policy year. At the end of each period, the BWC looks at the expected losses of the group and compares those to the actual losses to calculate the group’s Retrospective Premium. If the premium calculated is less than the group’s total Standard Premium, the participants receive a refund for that period. However, if the premium is greater, an assessment will be levied by the BWC, but each group limits the maximum assessment by selecting a premium cap that can be factored into your budget so that your organization is prepared. Before entering a program, be sure to have a feasibility study created to ensure this program fits the risk tolerance of your organization and has the ability to garner appropriate savings.
Why should my organization participate?
If your organization is committed to improving workplace safety and accident prevention, as well as taking action to reduce the frequency and severity of accidents involving your employees, this program has the ability to attain premium savings to boost your bottom line. The BWC has just released statistics showing that the 2009 private employer Group Retrospective Rating program has refunded a grand total of $12.4 million to date, for an average of $33,940 per employer.
How is the Group Retrospective savings projection calculated?
First, the overall group premium is calculated. As an example, suppose the Standard Premium for the group is $4 million and the Minimum Premium, assuming 25 percent, is $1 million. Add Developed Losses, which is incurred losses multiplied by the BWC developmental factor of $1.4 million, and that equals the Retrospective Premium — the minimum premium plus developed losses — to give you $2.4 million.
The Group Retrospective Refund, which is the Standard Premium minus Retrospective Premium, is $1.6 million, and the Estimated Refund Percentage is 40 percent.
Using the estimated refund percentage of 40 percent from the group example above, a mid-sized service company, assuming a payroll of $1 million, may expect:
• Individual Premiums of $62,500
• Group Retrospective Rating Premiums of $37,500
• Group Retrospective Rating Savings of $25,000.
Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with Group Retrospective Rating such as Destination Excellence Go Green and Safety Council (participation rebate).
Heather Vogus is vice president at CompManagement, Inc. Reach her at (800) 825-6755, ext. 65440 or email@example.com.
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More often than not, CEOs and business owners place workers’ compensation near the top of the list of cost drivers for their company.
Last year, the Ohio Bureau of Workers’ Compensation (BWC) looked to ease this burden with several initiatives designed to reduce red tape and a base-rate reduction that resulted in more than $86 million in premium savings for public and private employers. The agency also saved an additional $80 million by cutting its own biennial budget by 12 percent.
Now, BWC is focusing on making workplaces safer and improving return-to-work rates. The agency’s leaders
believe improvements in these areas will bring further reductions in workers’ compensation costs for Ohio employers.
“Over the past four years, the number of injured workers getting back to work after sustaining a workers’ compensation claim has fallen from 75 percent to below 69 percent here in Ohio,” explains BWC Administrator/CEO Steve Buehrer. “Additionally, we’ve seen medical and indemnity costs rising faster than the national average.”
Destination: Excellence takes on troubling trends
With these statistics and trends as a backdrop, BWC created Destination: Excellence – a package of new and existing BWC programs – that allows companies to design a risk-management plan that suits their business needs.
Destination: Excellence’s program options:
- Address safety and accident prevention through on-site consultation by BWC experts, industry-specific training, rebates for safety council participation and help with implementing a drug-free program;
- Provide assistance with developing transitional work and vocational rehab programs, including grants to help develop these types of programs;
- Help save companies money on premiums through adoption of best practices and meeting certain performance
requirements. Additional savings are also possible for effective policy maintenance, such as doing business online and keeping current on premiums.
“We designed Destination: Excellence to align with our top priority of preventing injuries and getting injured workers healthy and back to work sooner,” Jeremy Jackson, BWC’s chief of public policy & strategy, explains. “A quick return to work has the dual benefit of saving money but, more importantly, increasing the chances of a positive outcome for the injured worker.”
From helping to review and develop a transitional work program to on-site safety and health consultation, BWC has experienced staff members to assist employers with all of the elements of Destination: Excellence. There is no additional cost to employers for these services.
BWC offering financial assistance with workplace wellness
In addition to Destination: Excellence, BWC recently unveiled its Workplace Wellness Grant Program for Ohio employers that want to improve the health and wellness of their workers through wellness programs. Developing workplace wellness initiatives can help employers control the escalating costs of health care by proactively addressing risk factors.
BWC will provide a grant over four years to implement wellness programs addressing health risk factors, such as obesity and chronic disease. Health experts often point to obesity as a key contributor to conditions that include hypertension, diabetes, stroke, coronary heart disease and cancer. These conditions, in turn, can complicate workers’ compensation cases and returning injured workers back to work.
Visit ohiobwc.com/DestinationExcellence for more information about Destination: Excellence and the Workplace Wellness Grant Program.
BWC opens door to safety for Cincinnati manufacturer
Cincinnati-based Champion Door Manufacturing, which produces custom windows, doors and patio rooms, needed to develop better methods for finishing and packing products that could weigh as much as 600 pounds.
Mark Giordano, a BWC ergonomics consultant, visited with Champion’s management and staff to assess the company’s processes and to pinpoint particularly troublesome areas. Giordano and company officials decided work tables that could lift the mammoth doors and other products to an ergonomically correct height would greatly benefit workers.
With help from Giordano, Champion applied for 2-to-1 matching funds through BWC’s SafetyGRANT$ Program and received financial assistance to purchase five ergonomically correct work tables.
For more details about Champion’s partnership with BWC, visit the BWC Ohio channel on YouTube.