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Keeping a Rein on Workers' Comp Premiums

Sep 24, 2015

Over the last decade, workers' compensation premiums have more than doubled. Many factors are responsible for this increase, including rising medical costs, an aging workforce, and injuries - including those newly recognized, such as carpal tunnel syndrome and other repetitive motion disorders. Unfortunately, these are outside influences over which you have very little control.

However, this does not mean that you are powerless to reduce your workers' compensation costs. You can effectively mitigate any damages incurred by an injury with a proper loss control program. Taking proactive measures, such as improving work conditions, will help keep the number of claims you file to a minimum.

Ten basic steps to loss control:

1. Screen your job applicants
A total loss control program begins with pre-employment screening. This process can show you whether or not the applicant may be predisposed to certain job-related injuries.

2. Workplace safety pays
Identify unsafe actions in your workplace and encourage employees to report any risky behavior to supervisors. You should also educate your employees on the proper ways to lift and carry heavy objects, since back injuries account for 25% of workers' compensation claims nationwide.

3. Open the lines of communication
In addition to thoroughly explaining workers' compensation benefits and procedures, you should also tell your workers' on a regular basis that they are valuable. Studies have shown that the way employees feel about their jobs may be the greatest factor in accident prevention. A rewarding work environment, low levels of job stress, and two-way communication between workers' and management are instrumental in lowering workers' compensation claims.

4. Show concern for injured workers'
Stay in daily contact with your injured employees. Visit. Let them know you hope for a full recovery. Genuine concern encourages employees to return to work more quickly. This reduces medical costs and improves a worker's productivity. Happier employees also are less likely to seek expensive, time-consuming claim settlements.

5. Control your payroll
Your payroll size affects your premium. Discuss these ideas with your agent and insurer auditor:
• Report only the statutory maximum pay that state law requires for senior executive. Usually executives make more than the reporting cap for determining premiums.
• If you plan to reduce staff or payroll, notify auditor of dates and size of reductions.

6. Get in the right rate class
Accuracy pays. Insurance companies place businesses and employees into classes based on their likelihood to produce workers' comp claims. Riskier rate classes mean higher premiums. So work with your agent and insurer to make sure your business and workers' are properly classified, and not placed into a more expensive rate class.

7. Root out fraud early
Most states give employers a limited time (usually 2-3 weeks) to challenge fraudulent workers' comp claims. Know your state's laws. Notify your agent immediately if you suspect a claim is phony. A good claim record can keep your premiums down.

3. Shop for the best value
Insurance companies often vary in their service. Work with your agent to shop from several insurers. Seek the best overall value. You need an insurance company that pays valid claims promptly and fully, stands by your side during tough times, and helps you maintain a safe workplace.

9. Join a safety group
Small employers in individual industries often work with insurance companies to pool premiums for paying claims. Groups with good safety records can receive premium discounts.

10. Lobby for a better system
Use your influence to help reform workers' comp laws and regulations. Work with other companies and insurance agents to control medical costs, reduce frivolous lawsuits, improve claim handling and discourage fraud. Seek a positive campaign that focuses on fair solutions. For many employers, join reform is the only hope for long-term relief from rising premiums.

Even the best loss control program may not prevent all accidents. If a work-place injury does occur, act quickly. Getting prompt medical attention and an immediate loss report can greatly reduce total claim costs. It is also important to maintain contact with any injured employees. By expressing your concern and encouraging them to return to work as soon as possible, you can improve employee relations, which will further help to avoid lawsuits and fraudulent claims.

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