ALTHOUGH WE are in a low workers’ compensation rate environment, eventually the market will turn and rateswill start to rise.
While you may not feel much urgency now if you have a few claims, once rates turn, those claims could become more magnified and start affecting your premium. But while rates are low, you can take steps to cushion against future rate increases.
Just be sure to avoid making these four common mistakes:
1. Thinking low published rates equal low premiums
Don’t make the assumption that your cost will go down just because rates for your particular industry have dropped.
Workers’ compensation insurers examine your claims history, including frequency and cost of claims to establish the price of your policy. The actual losses are compared with other companies in similar industries.
If your past losses are below your industry average, then the insurer gives you a credit that may result in your premium being less than the average.
However, if your claims history is above average, expect the insurer to tack on additional premium to your policy.
2. Believing you have little control over pricing
Cost reduction starts at the hiring process. Initiate effective interview techniques and background checks to help ensure the right people are hired for the right jobs.
You’ll want to ferret out serial workers’ compensation claims filers as they can drive up your rates quickly. Call former employers and get the scoop.
3. Neglecting risk and claims management
Safety should be an unyielding focus at all times. This will not only help your company reduce the risk of workplace injuries, but also keep your rates low over the long term.
Employers need to keep an eye on the issues that frequently impact the costs of claims, such as medical care costs and lost wages.
Also, remember the longer a claim stays open, the more expensive it gets, which again will affect what you pay for coverage in the future. Therefore, it’s equally important to have an effective returnto-work program in place to assist injured workers in getting back to work as soon as possible and reduce the cost of their claims.
4. Forgetting about the injured employee
Studies have shown that fewer accidents occur among experienced and skilled personnel.
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.
A return-to-work program should include maintaining constant contact with all 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.