A necessary evil and a cost of doing business. If you're a business and have this view of workers' compensation, it's easy to understand why. Workers' compensation is often times one of a company's most costly expenses - even more so if you are a company with a high workplace exposure due to the nature of your business. For these companies employee injuries often occur more frequently and are more expensive.
Such was the case for a business that I’ve had the opportunity to meet with a handful of times over the past couple of months. This wasn’t a poorly run business – quite the opposite in fact. They were successful, had been in business a long time and actually had some good loss control policies in place. They required pre-employment physicals, pre-employment drug tests, provided all the right safety equipment and required new employees to read and sign a safety handbook.
And yet, they had a poor loss history and rather high experience mod of 1.20.
"We usually have about four to five minor claims every year, and then we typically have one big one every three years," the owner said to me, shrugging, as if to say, it is what it is and there’s nothing they can do about it.
There was a lot they could have been doing. Here are three of the essentials that they and all businesses should be doing.
1. Continually Educate Employees
Actively and consistently educating your employees can become the difference between a moderately safe business with a high experience mod and one with an established culture of safety and a low experience modification. Educate employees on what an experience modification is, the claims process, and regularly provide safety education. Consistently drilling a theme of safety into your employees' heads will help make safety a priority for them and in turn create an entire culture of safety.
2. Implement a Return to Work Program
The aforementioned business did not have a return to work program. Their reason: because of the nature of their work, their employees really couldn't return to work in a part time capacity. It was common practice for an injured employee to remain on workers compensation until they were fully capable of lifting at least roughly 60 pounds.
This was a huge contributor to their experience modification. Even if your return to work program means bringing the injured employee in part time to file paperwork, it is extremely important to have something in place. Loss time compensation accounts for 18% of claim costs. Having a return to work program reduces the cost of the claim, reduces litigation, encourages the injured employee to take their rehabilitation seriously, and ultimately helps keep your experience modification under 1.00.
3. Rely on Your Agent (Beyond the Quote Process)
Every business should count on their insurance agent to keep their workers compensation down – but it shouldn’t start and end with them getting the best possible quote for you. The quote should only be the beginning. From there, your insurance agent can play a pivotal role in establishing a culture of safety in your workplace. The desire and ability of your agent to do this effectively is what differentiates them from being merely broker and a legitimate asset to your business.
In 2013 a colleague and I had our first meeting with a business that is now a current customer. In many ways this business was similar to one previously mentioned above ... well run, successful, a lot of inherent workplace exposure and a high experience mod. They had a lot of good safety measures in place, but could be doing more - such as relying on their agent to provide safety education classes for employees. After earning their business, we began providing quarterly safety education classes for their employees. In the two years since their experience modification has dropped from 1.56 to 1.28. A drop like that has significant positive impact on a business' bottom line.
Of course, there are more measures a business can take in order to avoid claims, decrease their experience modification, and ultimately increase their profitability. The first step though is to not underestimate the massive impact you can have on your workers compensation costs no matter how high the inherent exposure of your business is. Just because you have a high workplace exposure does not mean you need have losses, it doesn’t mean you need to have a high experience modification, and it doesn’t mean your workers compensation needs to be a financial albatross.
Questions? Contact Ryan by email at rhanigan@congalins.com or call 630-737-9361.
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