Save on Workers’ Compensation Costs by Keeping Losses Low
In 2008, U.S. employers reported 3.7 million nonfatal occupational injuries and illnesses, according to the U.S. Bureau of Labor Statistics. While this number was down from the prior year, it still shows that workplace safety must be a priority for employers. When workers get hurt or sick on the job, productivity suffers, the employer becomes less attractive to the other employees, and managers’ attention shifts away from growing the business. Preventable accidents also hurt the bottom line in another way — they eventually raise workers’ compensation costs by increasing the employer’s experience modification factor.
The experience mod is a number calculated by the workers’ compensation rating bureau in the employer’s state. It’s a reflection of how the employer’s loss history for the prior three years (not including the current year) compares to that of an average employer in the same industry. It takes into account the size of the employer’s payroll for those years, and the number and severity of its losses. The formula penalizes an employer more so for frequent losses than for expensive ones. For example, an employer with 10 losses of $3,000 each will have a higher experience mod than will a similar employer with one loss of $30,000. The insurance company must, by law, multiply the employer’s workers’ compensation insurance premium by the experience mod factor; a factor of less than 1.0 reduces the premium, while a factor greater than 1.0 increases it. Therefore, it makes financial sense for employers to take steps to prevent frequent on-the-job accidents.
There are several things employers can do to improve their accident records and save on their workers’ compensation premiums.
* Management should make workplace safety a top priority. The things that are important to managers become important to workers. Provide continuing training to workers on job site safety and enforce safety requirements.
* Obtain and review publications about the industry from the U.S. Occupational Safety and Health Administration. These publications provide practical recommendations for preventing injuries. For example, the “Construction – Hand and Power Tools” category has a document titled, Safeguarding Equipment and Protecting Employees from Amputations.
* Keep the work environment clean. This reduces the risk of employees contracting airborne illnesses; eliminating clutter makes trip-and-fall accidents less likely.
* Maintain machinery and equipment in good working order. Check it regularly for safe operation.
* Institute programs to keep the workplace drug and alcohol free. Within legal parameters, test employees for drug and alcohol use.
* Review loss information from insurance companies. Look for trends in the types of losses that occur. They could indicate dangerous work procedures, incentives that cause employees to rush, defective tools, or another factor in need of correction.
* Take advantage of the expertise in the insurance company’s loss control department, particularly if the company specializes in insuring businesses in that particular industry. They can recommend measures that have proven to work for similar businesses.
* Monitor employee morale. Unhappy workers can become careless or slipshod in their work. Take steps to improve morale and to deal with employees who may be causing problems.
* Review the experience mod worksheet with the firm’s insurance agent. Ensure that the insurance companies have accurately reported all losses to the rating bureau. Ask to have errors corrected, and follow up with the agent until it happens.
* Require employees to report all injuries, no matter how minor they appear. Make sure that injured employees receive prompt medical attention.
No one benefits when employees get hurt on the job. With focus and effort, employers can make workplace injuries less frequent and less severe. That will make their businesses better places to work and add hard-earned dollars to the bottom line.
BGES Group’s office, located in Larchmont, NY is a full service insurance agency offering, Property, Liability, Umbrella Liability, Business Auto, Bid & Performance Bonds, Inland Marine, Worker’s Compensation, Worker’s Compensation Premium Recovery, New York State Disability, Group Health, Life insurance, Personal lines and Identity Theft.
Special Contractor Insurance Programs (NY, NJ, CT) – We we have 60+ insurance companies to market your general liability, umbrella liability, business auto, workers compensation, bid & performance bonds and group health coverages. We help contractors set up proper risk transfer. If you’re a contractor we offer extensive information about insurance markets, coverages, risk transfer, subcontractor screening, ways to lower your insurance costs.
BGES Group are Worker’s Compensation Specialists for the States of New York, New Jersey and Connecticut – Issues we address: 1) Lowering pricing – we have specialty programs that can save you up to 40%; 2) Finding a new company; 3) Replacing policies that are being cancelled or non renewed; 4) Audit disputes; 5) Company creating fictitious payroll at audit time; 6) Lowering high experience modifications factors; 7) Misclassification of payrolls; 8) Lowering or eliminating renewal deposits; 9) Getting coverage when you’ve been without for a few months; 10) Covering multiple states under one policy; 11) Eliminating 10% service or policy fees; 12) Timely issuance of certificates; 13) Always being able to get someone on the phone or by email when you need to.
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Company: BGES Group, 216A Larchmont Acres West, Larchmont, NY 10538
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