Four Workers’ Comp Mistakes Employers Typically Make
July 11, 2017
WORKERS’ COMP is always a significant outlay for any organization and you may be wondering what you can do to reduce your costs.
Some companies may take drastic measures to reduce their rates, but in the process they make mistakes that end up costing them more in the long run. Below are four common mistakes that you should avoid in your rush to cut your workers’ comp costs:
Assuming lower rates mean lower premium
The Department of Insurance every year (or this year twice) sets average benchmark rates for all industries in California. But just because the benchmark falls, does not automatically mean that you’ll pay less premium.
Workers’ comp insurers use three years of claims history for your organization to establish the price of your policy. The actual losses are compared with other companies in your industry.
If your past losses are below average, then the insurer gives your a credit that lowers the premium, but an added surcharge is applied to the premium if your losses are above average.
Thinking you have no control over claims costs
Cost reduction starts at the hiring process. Use effective interview techniques and background checks to help ensure the right people are hired for the right jobs.
Focus on safety in all of your operations and have a return-to-work program to assist injured workers in getting back to work.
Letting cost containment efforts lapse
Safety should be top of mind at all times. This will not only help your company reduce its claim numbers, but also keep its rates low over the long term.
Employers need to keep an eye on the issues that frequently affect the costs of claims, such as medical care costs and lost wages.
Also, remember that open claims continue accruing expenses and affect your X-Mod negatively.
Not linking cost containment and retention
Studies have shown that fewer accidents occur among skilled workforces, but even skilled workers can have an accident.
A large part of whether or not an injured skilled employee returns to work is based on how their employer responds to them during and after recovery.
You can do this with an effective return-to-work program that maintains constant contact with injured workers and their health care providers to monitor how they’re recovering and when and how they can get back to work as soon as possible.
Studies have found that employees who are kept in the loop with a return-to-work program and periodic phone calls about what workplace changes are occurring in their absence, are more likely to return.
Conversely, employees that feel forgotten, undervalued and disconnected aren’t very likely to return quickly, if at all.