Workers’ Compensation: Keeping Costs Under Control

Workers’ Compensation: Keeping Costs Under Control

If your business is not properly prepared, workers’ compensation issues can be both confusing and costly. However, through management controls and active involvement, your organization can effectively reduce the costs related to workers’ comp. claims. There are three main areas that are the keys to managing workers’ comp. issues: Workplace safety, mitigating losses, and managing your mod.

Creating a Safety-Focused Culture in your Organization

Cultures in business is driven by shared beliefs, practices, and attitudes that exist at an establishment. An establishments’ culture is the atmosphere created by those beliefs, attitudes, etc., which shape our behavior.

In a strong safety-focused culture, everyone feels responsible for safety and is accountable for it daily; employees identify unsafe conditions and behaviors, and take action to correct them (even if it involves correcting a supervisor or manager regarding a safety violation). In a strong safety culture communication is open and redirection towards proper safety standards when needed is well received by all levels of employees.

Establishing a safety-focused culture in your organization may not keep the workplace completely free of injuries, but reducing the frequency of injuries will reduce workers’ comp. claims and associated costs. The Occupational Safety & Health Organization (OSHA) cites that developing strong safety cultures have the single greatest impact on incident reduction of any process.

A safety culture in theory is a great idea, but how do you make it happen?

Here are a few tips to get you started on the path to a safety-focused culture:

  • Get Management Buy in: Policies come from the top and if managers don’t walk the walk, policies will fall by the wayside.
  • Conduct Self Audits: To know where you’re starting from, conduct assessments of the current safety measures that are in place
  • Develop a Safety Management Program: Safety management programs are comprehensive safety guides that are specific to your organization. OSHA offers free resources to help get your Safety Program started.
  • Get Employees Involved: In order to get buy in from employees, involve them in the safety program development process. Employees are more likely to support a program that they helped to create.
  • Assess and Adjust: A Safety Program will continually grow throughout the life of your organization. In order to be truly effective, a safety program must constantly be evaluated and updated so it evolves with your business.

As your safety program grows and becomes part of your culture, you may also begin to show recognition and offer rewards for safety benchmarks and achievements in order to continue to keep employees engaged.

Mitigate Losses

Even with all the right safety programs in place, accidents may still happen. When a workplace incident occurs, how you respond can greatly influence the outcome of the workers’ comp. claim. Prompt claim reporting is essential to keeping costs down. It is also important to have a designated injury management coordinator, someone who can supervise open claims and work with both employees and medical personnel to facilitate the timely recovery and keep the process moving towards resolution.

Manage Your Mod

Insurers use what is known as an experience modification factor (MOD), to calculate the premiums you pay for workers’ compensation coverage. By managing your risks and promoting safety and thereby reducing claims, it is possible to decrease your Work Comp insurance premium rates by lowering your MOD.

In fact, the members of our Workers’ Compensation Captive Insurance Program  have an average MOD of .88 as of this writing.  With a captive – that savings goes right back into the pockets of the members.  That’s the ultimate Cost Containment Program in our eyes!

In the end, controlling Work Comp costs is multi-faceted:  Keeping employees healthy thereby reducing the chance of injury, prompt claims reporting and management, and managing your MOD.

Last but not least for some well-run companies, joining a Captive Program is the ultimate cash savings option.  Interested in learning more?  Give us a call.

Dave Sinclair, CEO The WorkPlace Solution


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About the author

David Sinclair is the CEO of The WorkPlace Solutions and Sinclair Risk & Financial Management.

Are you ready to turn one of your biggest business expenses into a profit center?

The goal of The WorkPlace Solution is to provide our exclusive group of members a solid program to reduce claims and turn what once was a large draw on their P&L statement into a profit center.

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