Would you believe there is a way for managers to proactively work with these expenses and perhaps even turn lower workers’ compensation costs to the company’s competitive advantage? It can and has been done. There are some key issues to consider when reducing comp costs.
- Don’t hire potential problems. A complete hiring process, including a credit report, motor vehicle operators record (if the employee will be operating company vehicles or their own on their employers behalf) and a criminal history record check will save you many headaches and, at a minimum, screen out repeat offenders and potential hires with questionable judgment.
- Take action. Actively monitor and review workers’ compensation claims with your agent and insurer regularly. Here the squeaky wheel gets the grease. You want your claim coming to the adjuster’s attention as frequently as possible. Some adjusters may have as many as 600 files they supervise. At a minimum, there should be an annual claim review conducted on every open claim. More frequent reviews are recommended if you have a larger number of claims.
- Make modifications. Explore opportunities to return employees to work as soon as possible, especially in a modified-duty position. Employers are entitled to offset wages earned at modified duty against the wage indemnity portion of a workers’ compensation claim. Every dollar diverted from the workers’ compensation claim is not subject to insurance program markup and will not impact your experience modification.
- Speak up. Ask your agent to make sure that your experience modification is accurate. The rating system was changed in 2004 and there can be errors resulting in higher premiums. In one case, and insurance company returned $16,000 in premiums just by correcting an experience modification.
- Trust, but verify. If your company is experiencing a number of workers’ compensation claims, make sure that employees are not abusing the system by extending disability or magnifying symptoms. Ask your claims adjuster if surveillance to verify the extent of disability may be required. Employers should also consider whether employees are making claims because of a negative work environment or other symptom of dysfunctional management-labor relationships.
Self-audit tools to evaluate workers’ compensation coverage
- Are your insurance companies rated at least A-Financial Size VII by A.M. Best? Financial staying power is important, as comp claims can go on for years.
- Have you collected and reviewed insurance certificates from vendors and subcontractors for compliance with Best’s rating, limits of liability and coverage, and to see if you have been named as additional insured? Did you know that in some cases your insurer can charge premiums for uninsured workers on your premises?
- Depending on the size of your business, it may be possible to save fixed premium dollars by investigating a deductible for workers’ compensation.
- Have you formed a safety committee for your company to seek employee input about safety issues and to determine if you can qualify for the safety committee discount?
- Has the actual cost of insurance and annual claims been reviewed with employees so that the connection between low claims experience, lower insurance premiums, company profitability and job security been explained?
- Have you posted a panel of physicians and other health-care providers as required by your state’s workers’ compensation act? If so, you maybe able to direct workers to those approved providers in the early and critical part of medical treatment for their injury.
Hopefully these suggestions and recommendations will help management discover methods to control and reduce workers’ compensation expenses.
Eric Ewing is CEO of Citizens Insurance Services. Reach him at (877) 467-7767 or email@example.com.