After several years of falling workers’ compensation rates, California employers are bracing for double-digit rate increases in 2010. Increased claims, rising medical costs and lower collected premiums as a result of higher unemployment leave insurance companies with no choice but to increase their rates. Regardless of workers’ compensation reform, the WCIRB has also reported that the average cost of serious claims has risen 47 percent since 2005. Unfortunately for most businesses, such rate increases could not come at a more economically challenging time.
“Most companies seeking to control their workers’ compensation claims and premiums have utilized traditional tools such as employee safety training, safety incentive programs and annual employee evaluations,” says Griff Griffith, CPA, CIC, a principal with GMGS Insurance Services. “Some measurable success has also been achieved with claim reviews when coordinated by experienced workers’ compensation claims specialists. Nevertheless, the greatest success can be achieved when a tool like GMGS’s Workers’ Compensation School is utilized to transform the culture of a company by making the employees the focus of such training.”
Smart Business spoke with Griffith about this unique risk management innovation that can help businesses mitigate the rising cost of workers’ compensation insurance.
How is a program like Workers’ Compensation School unique?
It is an employee training program taught by risk management professionals with proven results, including:
? Drastically reduced workers’ compensation premiums
? Superior employee safety performance
? Reduced frequency and severity of claims
? Special rate discounts offered by insurance carriers
? Improved employee morale and productivity
In Workers’ Compensation School, employees are taught the truth about workers’ compensation insurance and learn that they are more than just employees; they are key players in the success or failure of their workers’ compensation program. By inspiring employees to take ownership of their safety program, Workers’ Compensation School has proven to be a catalyst in reducing participant’s annual workers’ compensation premiums by thousands of dollars and, in several cases, more than $1 million dollars.
What results are achieved through Workers’ Compensation School?
Businesses control one key factor in the calculation of their workers’ compensation premiums: their Experience Modification Rate (EMR). This multiplier is an experience rating that companies earn based on the past three years of losses. This EMR can double or triple a company’s annual premiums due to an adverse loss history; alternatively, it can cut the annual premiums to less than half the average premium to reward a clean safety record.
Workers’ Compensation School participants regularly achieve EMR reductions of 50 to 75 percent, and even more impressive is the fact that their reduced EMRs are maintained indefinitely. In addition to EMR reductions, many insurance companies are also taking notice of these results and offering special premium discounts of 5 to 10 percent for companies participating in the school.
In addition to employee advocacy, Workers’ Compensation School educates management and employees about the realities of workers’ compensation fraud. Few, if any employees actually understand that workers’ compensation fraud is a felony and punishable by up to five years in prison.
Who benefits from this program?
As your company’s EMR and premiums drop amidst rising workers’ compensation rates, your company becomes more competitive than the competition. Companies are able to secure more work, which boosts revenues and preserves the jobs of their employees. Most business owners are also willing to share some of the premium savings with their employees, which helps to financially incentivize employees to take ownership of their workers’ compensation and safety programs.
What makes Workers’ Compensation School credible for the employees?
One of the keys to Workers’ Compensation School is that it is taught in English and Spanish by an outside third party, not an employee of the company or an employee of the insurance carrier. Bonding with the teacher is critical to the success of the program. In fact, students are taught that, as targeted results are met, their insurance carrier and broker actually make less money. This adds distinctive credibility to the training.
What are the most popular issues addressed?
There are 15 key topics addressed in Workers’ Compensation School, but probably the most popular is ‘How much do workers’ compensation claims really cost your company?’ Management and employees all want to know what a claim actually costs them in the long term. It is a penetrating lesson for employees to learn that their ultimate cost of a claim is 25 to 100 percent more than the actual medical costs paid by the insurance carrier.
The greatest myth dispelled by Workers’ Compensation School is the truth behind workers’ compensation lawyers. It is revealed to employees that workers’ compensation attorneys collect as much as $200 million a year in California, while claiming to be ‘Robin Hood.’ The students quickly realize that such attorneys are more focused on ‘robbing the ’hood’ than serving the needs of injured employees. Ultimately, Workers’ Compensation School ensures that employee safety is not a waste of time and that working safely benefits all employees personally and financially.
Griff Griffith, CPA, CIC, is a principal with Garrett/Mosier/Griffith/Sistrunk Insurance Services. Reach him at (949) 559-3370 or GriffG@garrett-mosier.com.