Reduce your Risk and your Workers’ Compensation Costs

To many employers, workers’ compensation insurance is just another unavoidable cost of doing business and an expense over which they have little control. However, controlling workers’ compensation costs are not as difficult as one might think.

Here are some common sense steps you can take to improve your accident record and control your workers’ compensation premiums:

Cost reduction begins with the hiring process. Good interview techniques and thorough background checks will help you identify potential problems.

  • Begin by reviewing the applicant’s resume. Pay careful attention to gaps in employment history. Ask the applicant to explain the reasons for these gaps. Probe for information about the applicant’s attendance record during previous jobs.
  • Conduct a complete background check after you have obtained written consent from the applicant.
  • If you decide to use any additional screening tools, be sure to establish reasonable criteria and apply uniformly for all applicants. Examples include:
    • Fitness-for-duty physical exam and medical history review
    • Skill and/or personality test to assess competency and work ethic. 

Make workplace safety a top priority. Train new employees to perform their job safely. Consider developing a written program that is presented to all new hires during their orientation.

Maintain safety awareness. You need to continually remind your employees to practice safety by posting reminders in common areas and holding meetings to discuss any issues affecting your staff.

Monitor employee morale and take steps to deal with employees who may be causing problems.

Reduce the risk of accident or illness by keeping the workplace clean. For example, you can reduce trip-and-fall accidents by eliminating clutter.

Institute programs to keep the workplace drug and alcohol free. Within legal parameters, test employees for drug and alcohol use.

Properly classify your employees. There are more than 600 job classification codes and each one is associated with the level of risk necessary to perform that job. Never use one code for all of your employees and always use the most recent edition of the classification code book for your state. If you don’t take the time to properly classify your employees, you may actually increase your workers’ compensation rates by assigning codes that have more risk than your employees face.

Require employees to report all injuries, no matter how minor they appear. Make sure that injured employees receive prompt medical attention. Studies of temporary total disability claims and permanent partial disability claims reveal that timely medical treatment reduces expenses.

Find an independent insurance broker who specializes in property and casualty insurance, particularly workers’ compensation. They will be able to recommend a program that not only meets state mandates, but also offers you the best value for your premium dollar. They may also be able to recommend insurers who specialize in your industry and offer programs that are designed specifically to reduce the risks associated with your type of business.

Discuss all aspects of your business thoroughly with your broker. The more honest you are, the more realistic your premium will be. If your payroll or business description changes mid-year, you can always adjust your workers’ compensation policy to reflect these changes.

But even with the best employees and safety programs, injuries can happen. Be sure that you have an effective return-to-work program and policy that monitors the injured employee’s recovery and helps them get back on the job as quickly as possible. Your insurer should provide a nurse case manager to monitor complex cases.

No one benefits when employees get hurt on the job. With focus and effort, you can make workplace injuries less frequent and less severe, thereby making your business a better place to work.

For more tips and information on how to manage your workers’ compensation costs, talk to a HUB Workers' Compensation Insurance Advisor.