Risk & Business Magazine General Insurance Services Magazine - Page 26

WORKERS COMPENSATION Save Money by Being Proactive in Managing Your Workers Compensation Costs T he cost of workers compensation insurance is likely to be one of your highest expenses for your business insurance. Yet, many business owners are often unaware they can take back some control and begin managing this cost. Let’s start with how your premiums are calculated. Premiums are calculated by how employees are classified, the size of the employer’s payroll, and the company’s claim experience: Premium = Classification Rate x Payroll (per $100) x Experience Modifier Your Experience Modifier factor, or MOD, is a numeric representation of your company’s claim experience. MODs are based on how your business compares to others in your industry with similarly classified employees. Keeping your score less than one is the key to managing your costs: • • • What produces your claim experience? Insurance companies will examine your loss run report, including the frequency and dollar amount of your claims. The longer a claim stays open, the more it will cost you. Now I know you are asking yourself: What can I do to help manage my costs? Be proactive. Implement safety improvements, eliminate work hazards, clarify work and safety expectations, and institute new policies for a safer work environment. The beauty in implementing these changes is not only will your company be better protected in the event of an accident but your employees are more likely to be satisfied and more productive. A win-win for everyone! Employers with fewer and less severe claims than average yield a MOD > 1. 26 Implement procedures for effective safety training of new hires, to reduce the risk of accidents, and ongoing training for everyone. Clear, detailed job descriptions go a long way towards reducing injuries and may shield you, the employer, from claims of negligence. So how can we help you? As your risk manager, our focus is to help manage your risk profile. • We help you understand and manage your company’s Experience Modifier factor. It is imperative you understand it and share it with your employees and leadership team. Everyone can take an active part in making a positive impact for safety. • We can also help by reviewing vendor contracts and certificates of insurance to ensure proper wording and sufficient risk protection. Services may include reviewing hiring practices, safety training protocols, Here are some tips on how to “be proactive” today: • An average MOD is set at 1. Employers with more claims than average yield a MOD > 1. lost time during a certain period of time. Awards and recognition make employees proud of their accomplishments and strengthen company culture. • Establish a culture of accountability from the top. Your behavior on the job must establish the type of behavior to lead to the highest standards of safety. It starts with you. Incentivize your employees for safe behaviors. Offer bonuses for no