Ten Steps You Can Take To Lower Workers Compensation Costs

Hurt On the Job

Workers’ Compensation insurance can get costly and is a big pain in the butt for some businesses. In fact, the costs to carry coverage can even threaten the existence of some small businesses, especially in states such as California. The good news is that the insurance market is currently “soft”, meaning lower rates than we have seen in the past five plus years. However, it’s pretty much a guarantee the pendulum is just beginning to turn and we’re going to see work comp rates creeping upwards again as healthcare costs have skyrocketed, among other things.

Workers Compensation premiums are based in part on some things which you have little or no control, such as the type of industry your business is in, or the region or state you’re located. But rates are also based on things you do have some control over, such as your claim history and payments.

Here are 10 steps you can take to help lower your Workers’ Compensation costs:

  1. Match the applicant carefully to the job: Base the match on the applicant’s skills and abilities. Your careful hiring practices can go a long way toward reducing your costs. The Department of Fair Employment and Housing offers brochures to help guide you in conducting job interviews. Note: Discrimination because of a handicap is unlawful.
  2. Make safety a priority on the job every day: A safe workplace can lower your claims costs. It is far less expensive to prevent an accident than to pay for one.
  3. Fix dangerous conditions: When you become aware of a hazard on the job site, take appropriate corrective measures. Your failure to do so could result in a “Serious and Willful Misconduct” suit against you. This suit carries severe penalties that you would pay, not your insurance carrier.
  4. Train Supervisors: Workers’ compensation law includes supervisors in the definition of “employer.” When a supervisor fails to follow the law, it counts against you. Make sure your supervisors know all that is required of employers.
  5. Report employee injuries: As soon as you are aware of an injury, notify your insurance carrier by completing and sending the Employer’s Report of Occupational Injury or Illness form. The report requires you to provide information that includes the nature of your business, the type of employee injury or illness, and how it occurred. Your complete statements in each of these sections are necessary for determining the appropriate benefits. For example, information about your employee’s work hours and salary is necessary for computing benefit payments.
  6. Provide the employee claim form: You must provide the employee with a Workers’ Compensation Claim Form within one working day of learning of an injury. The employee should return the completed form to you. When you receive the employee’s claim form, make sure you sign and date it. You must then immediately forward the original to your carrier. The first indemnity payment is due within 14 days of your knowledge of a disabling injury. Failure to provide timely benefits may result in a penalty. The penalty may cost you, the employer, if findings indicate that you did not file the claim form with your carrier on time.
  7. Exercise medical control: Be sure to refer all of your injured workers to your carrier’s Medical Provider Network (MPN) physician. If you do not know of a physician or medical facility, contact your agent or carrier. Be sure to post notices with the name, address, and phone number of your medical provider so your employees know where to go in case of an injury. If the employee has previously notified you in writing of his or her personal physician, the employee has the right to be seen by that physician.
  8. Communicate with your employees: Show them you care about their well-being. If an employee sustains an injury, stay in touch throughout the recuperation period.
  9. Consider a Return To Work program: A Return To Work (RTW) program can help bring your injured employee safely back to work as early as possible. You adjust the transitional job to accommodate the employee’s improving condition until he or she can return to his or her usual duties. You reduce your costs; your employee can return to a self-supporting status; everybody benefits.
  10. Maintain records: Your personnel files can be of great assistance to your carrier in dealing with some cases. Information about an employee’s job description, wages, previous work history, recreational activities, any current work problems, and previous injuries is essential when fighting disputed claims.

As with any type of insurance, contact your insurance agent or carrier if you have questions on your workers’ compensation coverage, or if you need help controlling your costs. Insurance carriers have just as much incentive as you to prevent and/or mitigate loss, so there are risk control options to help.

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About Jimmy Kinmartin - Business Insurance & Risk Management

Jimmy is a California licensed Property & Casualty AND Accident & Health insurance agent working at the Olson Duncan Insurance brokerage based in Torrance and Irvine, CA. He grew up in Fullerton, CA and graduated from Servite High School in Anaheim and Loyola Marymount University in Los Angeles and currently lives in Tustin, CA. Have questions? Just ask! Or, follow Jim on Twitter at @JimKinmartin

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