How to Save Money on Workers' Compensation Insurance

Topics: Workers' Compensation

Summary: Businesses with safe workplaces could see an experience modifier that is better than average and pay less for their workers' comp premiums – while also protecting their employees. Companies wondering how to save money on workers' compensation costs can follow the reduction strategies in this article.

How to Save Money on Workers' Compensation Insurance

How to Lower Costs on Workers' Compensation Insurance with Workplace Safety Programs

The Occupational Safety and Health Administration (OSHA) found that "workplace injuries and illnesses have a major impact on an employer's bottom line. It's estimated that employers pay almost $1 billion per week for direct workers' compensation costs alone." While the good news is that there has been a reduction in the number of workplace accidents overall, the bad news is the cost of workers' compensation claims remains high.

Companies create workplace safety programs as a way to invest in their employee's safety while at the same time improving well-being and productivity. Devoting resources to these safety programs helps reduce losses from preventable accidents, so they are seen as an investment for the health of the company.

Workplace Safety and Workers’ Compensation Rates

Workers' compensation insurance protects a business and its employees should an injury on the job occur. These benefits can address medical care and related medical costs, retraining, lost wages until the employee can return to work or compensation for permanent disability.

The frequency and severity of workplace injuries are strongly correlated to a small business's workers' compensation insurance costs. Insurance Business shared that the relationship goes further, adding the "severity of workers' compensation claims that an organization experiences, their premiums and their commitment to safety is a very direct one."

How Much Does Workers’ Compensation Cost?

The average cost of workers' compensation coverage depends on various factors, including the number of employees, the specific occupation and the rate classification of the business. Plus, occupations with higher risk will be more expensive to insure than occupations with minimal risk. However, having a policy in place can save businesses significant money in the long run, making it easier to manage profits and losses by reducing out-of-pocket financial liability in the event of an employee injury.

The experience modifier connects the association between loss history and workers' comp premiums in the insurance industry. Businesses with safe workplaces could see an experience modifier that is better than average and pay less for their workers' comp premiums.

How AmTrust Financial Will Help Save You Money

Consulting with AmTrust can help small businesses remediate their excessive workers' compensation costs by providing guidance on a variety of cost-saving measures:
  • Create a workplace safety program: Implement a written safety program with the full support of management and top leaders down to the employees.
  • Train your workforce: Explain the workplace safety program clearly to employees and involve them in the training, implementation and day-to-day workplace safety processes. Hold everyone in the workplace accountable for his or her actions.
  • Start a return-to-work program: Return-to-work programs are an efficient way for employers, employees, healthcare providers and claim administrators to manage the workplace injury rehabilitation process and help employees return to the job as quickly and safely as possible.
  • Hire for safety and test for drugs: Effective hiring procedures impact a company in multiple ways, from morale and productivity to reducing workers' compensation claims. AmTrust knows that safety training is key to a proactive approach to minimalizing injuries, incidents and controlling costs.
  • Assess workplace hazards: Create a process to identify potential risks in your office, shop or work site. Have your insurer, local chapter of the National Safety Council, OSHA, etc., visit your location to point out the hazards. Employees should also be encouraged to recognize and report any dangers or near-miss accidents.
  • Build accountability: Every employee should be held accountable for following their companies workplace safety procedures.
  • Develop injury response protocol: Having an employee injury response procedure in place will help ensure the injured worker gets prompt care and assist in making the worker's compensation claim process go smoothly.
  • Near-Instant Injury Reporting: When a workplace injury occurs, there are procedures that must be followed by both the employer and the injured employee to be compliant with workers' compensation laws. All injuries, from minor to major, should be reported within 24 hours of the incident.
  • Post-injury investigations: Every workplace incident needs to be investigated, no matter the size or injury type. The examinations will give insights into which safety processes are not working or need to be updated to prevent future accidents.
  • Evaluate claim history for patterns: Employers can watch for certain warning signs that indicate common types of workers' compensation fraud. One warning sign that impacts workers' comp cost is finding a pattern of injuries with the employer or using certain counsel and/or medical providers.
  • Health insurance, healthcare incentives and worker well-being programs: Employers see a connection between happy, healthier employees and an increase in retention, productivity and a reduction in health care costs. Industry experts say wellness programs can and do, reduce workers' compensation claims. Healthier employees injured on the job can also recover faster, resulting in fewer days off work.
  • Classify employees correctly: Understanding the difference between a company employee and an independent contractor is important for an organization's tax and benefits purposes.
  • Work with the right medical provider: AmTrust has a network of medical providers across the U.S. and California. One aspect of our claims management medical care is AmCares®, an opt-in program with a 24/7 nurse line available to injured employees where nurses use nationally recognized triage guidelines to identify the appropriate level of care for an injured employee.
  • Regular workers' compensation auditing: To ensure that Workers' Compensation premiums are accurate and classifications remain appropriate, all policies are subject to an audit to determine the actual premium. The premium audit takes estimated payroll and converts the policy premiums, so they are based on actual payroll. Workers' Compensation law requires audits, and the obligation is noted in every policy AmTrust writes.
  • Set a standard for handling claims: AmTrust prides itself on handling claims with speed and efficiency. Our experienced staff understands that a timely claims conclusion is vital for all parties involved.

AmTrust’s Risk Management Solutions

AmTrust knows that safety training is key to a proactive approach to minimalizing injuries, incidents and controlling overall costs. Our Loss Control Department can help insureds by providing the most effective safety resources and commercial property safeguards to ensure their ongoing success.

Download a free copy of our ROI of Safety white paper to find out more information about controlling the cost of workers' compensation claims by implementing a dedicated workplace safety program.

This material is for informational purposes only and is not legal or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.

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