Risk & Business Magazine Sterling Insurance Magazine Winter 2018 | Page 26

WORKPLACE SAFETY How Workplace Safety Could Affect Your Bottom Line E veryone wants a safe workplace. The issue isn’t whether people want it; it’s whether they are willing to do the things that need to be done to actually attain it. The companies that do so not only have a more attractive work environment for their employees, but they are often saving a substantial amount of money on their workers’ compensation premiums year over year because of it. The companies that do not? Well, their employees are getting injured more often, and they are sabotaging their own bottom line. Why? What is the difference, monetarily? The answer to that lies in the mod. Each state has its own workers’ compensation bureau which comes up with an experience mod based on company history. The underwriter at the insurance carrier will then decide how much “schedule credit” to apply to a policy based on loss ratio, experience mod, and a number of other factors. The mod itself is a lot like a driving record. It is a 3-year history that looks at payroll and the claims dollars that your insurance company has spent, including reserves. An average mod is 1.00, which basically means it is not modifying your premium at all. A 1.00 isn’t going to hurt your 26 company, but it isn’t doing you any favors either. How big of a difference could this make? Let’s imagine a company with a 1.62 mod. That means that they have a 62% surcharge on workers’ compensation. That could easily equate to tens (or hundreds) of thousands of dollars that they have to spend which is ultimately wasted. Spending the time to be proactive about safety would solve that issue for them. Here is another thing to note: a mod lower than 1.00 has the same effect on your premium. You can save money by lowering your premium simply by having a lower mod. How is that done? Be aggressive about safety. Stay proactive. Make it a priority and make sure everyone knows it is a priority. Personally, when I want to determine how well a company is doing in terms of safety, I look at the mod first. Then I look at what the owners are doing for safety. Finally, I start looking for things that showcase a safety culture, such as signs in the breakroom and the lunchroom. In my experience, high mod companies often have an “us vs. them” mentality. Management vs. employees. Management vs. regulators. I bet it isn’t surprising that the owners of these companies often don’t attend safety meetings. In low mod companies, I find a lot of team focus, safety culture, and the owners make their presence felt during safety programs. How is your safety program looking? Ready to make some changes and start lowering your premiums? I’m ready to help. Give me a call at (586) 843-2774 and we can get started. BY: CRAIG DEAN STERLING INSURANCE GROUP Craig Dean has handled commercial insurance programs for over 20 years. He has international clients in the manufacturing, distributing, property management, and technology sectors. Craig utilizes a process that improves his clients’ risk profiles, which ultimately is reflected in lower insurance costs. Reach him today: [email protected], or (586) 843-2774.