Maintaining an affordable workers' compensation premium takes ongoing effort and commitment. Several factors affect workers' compensation premiums in an organization. Review these items with your insurance agent to ensure you have the right amount of affordable coverage. Learn about the key items that affect your premium and what you can do to control costs.
Classification Codes
Based on the industry, employers are assigned classification codes. Different codes are assigned to employees based on the type of labor in which they engage. These classification codes are set by the National Council on Compensation Insurance (NCCI) and are state-specific.
To ensure you have the right coverage for your employees, conduct an audit of your employee classification codes annually. This can be done by reviewing current employee classification codes and identifying any employees who are classified incorrectly. For example, if you have an employee who has moved from a job on the factory floor to the office, this employee may be assigned a less-costly classification code to reflect the change in work responsibilities.
Payroll
The premium you pay for workers' compensation insurance is generally based on the size of your payroll. If you have recently decreased the size of your payroll, these changes need to be communicated to your insurance agent. Making this simple update to your workers compensation records may have a significant effect on the premium you pay going forward.
Safety Culture
The best way to keep costs down is to not incur claims. The severity, type and frequency of claims has a significant effect on your workers' compensation premium.
Make a substantial impact on your workers' compensation premium over time by developing and maintaining a safety culture geared toward preventing accidents and injuries. Here are a few key practices that will improve your safety culture:
• Make safety a top priority. Engage employees directly in the effort. Solicit ideas from employees on how to create a safer workplace.
• Establish a written safety program. Your safety program should include training on preventing workplace accidents and injuries. Get commitment from management and employees with incentives for maintaining an accident-free environment.
• Be selective in your hiring process. Choose new hires who share the company’s safety culture values. Provide accurate job descriptions to applicants, obtain previous work references and conduct background checks. Also, conduct a pre-start, post-offer drug test and obtain a motor vehicle report for all new hires.
• Thoroughly train employees. Nearly one-third of workers compensation claims result from accidents with new employees. Evaluate your orientation program for ways to improve new employee training. Ensure employees know the correct methods and procedures to accomplish their assigned tasks. Require employees to demonstrate skill and proficiency before performing a particular task.
• Prevent accident recurrences. Investigate and document every injury and near-miss. Identify why and how the accident occurred and make proper corrections to prevent future incidents.
Claims Management
With effective claims management, you will see a faster recovery time for injured workers, reduced operational downtime, reduced claims costs and less impact on your workers' compensation premium. Here are a few suggestions for managing claims when they occur:
• Early reporting. By reporting claims within 24 hours, claims cost 28 percent less, on average, than reporting an injury after seven days. Make sure employees know how to report an injury, and emphasize that injuries must be reported immediately, no matter how minor.
• Communication. In order to minimize the impact of a workers' compensation claim on an organization, it is important to encourage and practice effective communication. Stay in contact with the injured worker, claims adjustor and the treating physician throughout the life of the claim. This is especially important if the injured worker’s ability to return to work is delayed due to his/her injuries.
• Modified duty. Modified duty offered in accordance with the physician-determined work restrictions will typically result in a more engaged worker, a shorter claim duration and lower claim costs. Determine modified duty tasks before an injury occurs so you are prepared to bring an injured worker back as soon as possible. When determining modified duties, consider a variety of job tasks — office work doesn’t have to be the only option.
• Respect. Treat injured workers with dignity and respect. Not only is it the right thing to do but it will also help smooth out the claim process. While you may be unhappy about the events leading to a worker’s injury, showing anger or vindictiveness toward injured workers will only complicate the claims-handling process and increase the potential for higher costs. Instead, engage injured workers in the accident investigation process and look for solutions that will keep similar incidents from occurring again.
Employers can control workers' compensation costs by assigning the correct classifications codes, reviewing payroll numbers, creating a culture of safety and managing claims thoroughly. When implemented effectively, these efforts can pay off significantly with increased cost savings, an improved safety culture and better employee morale.
This article furnished by the Leavitt Group.