How to Manage Your Workers’ Comp Cost Drivers
Do you think your Workers’ Comp rates keep increasing every
year? You are correct – The National Council on Compensation Insurance
announced that workers’ comp premiums grew faster than analyst projections in both
2012 and 2013. The premium increase is the result of changes in experience
modifers – the adjustment of annual workers’ comp premium based on previous
loss experience – in most states. The overall result of premium increaseses is
the industry is expected to be profitable for the first time since 2006.
It is easy to understand the costs associated with industry
segments such as construction – As
reported by the Bureau of Labor in 2013, 3.8% of workers were injured and 20%
of workplace fatalities occurred in construction making it the most dangerous
segment of the economy. Less obvious is the effect of workplace bullying which
accounted for 5.5% of sickness absenteeism and an increase of 42% in the number
of missed workdays and resulting workers’ comp claims (National Institute of
Occupational Safety and Health). The most invisible of all is cost shifting
from group health to workers’ comp to obtain higher rates of payout by
attending physicians who determine whether or not a condition is work-related
(Workers Compensation Research Institute). The average cost of employee injury
rose from $3,000 in 1991 to $9,000 in 2011.
While there is little you can do about the overall,
national cost drivers, there is much you can do on a company basis to manage
your own cost drivers that affect your experience mod because your premium is
custom made for your company based on the information you provide to your
insurer and your claims history as shown by loss run reports.
7 ways to manage your experience mod:
Make sure employees are classified accurately. A
substantial part of the experience mod calculation is based on the nearly 700
employee classifications used by NCCI.
Hire employees who are fit to do the job they
are being hired to do. An employer may use a
conditional offer of employment form which states the employer is
offering the job contingent upon receiving a medical opinion that the applicant
is mentally and physically able to perform all the duties the position
Provide proper and thorough training to include
ergonomic considerations for all equipment used on the job.
Create and maintain a culture of workplace
safety where employees know they must adhere to strict safety protocols.
Ensure all injuries are reported and treated
Create and implement a clearly defined,
written return to work program.
Know about the facilities that treat injured
employees and promote appropriate physical therapy to help employees recuperate
and return to work faster.
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