Why is my Workers’ Comp Insurance Premium Going Up?
Has your workers’ comp insurance premium increased on your last renewal? Will it increase again this year at renewal? Why does the premium seem to increase every year?
There are a couple of reasons. First, most insurance premiums increase year over year with a few exceptions. Another reason could be that your payroll increased as you added employees. While increasing headcount is a good thing, it automatically raises your payroll and payroll is the primary element that workers’ comp insurance premiums are based upon.
Other reasons that your workers comp premium increased, which are not good, are the company had an increase in the number of work-related injuries which translate into an increase in claims on the workers’ comp insurance the past year, or the company’s work-related injuries have increased over the last 3 years or so. The insurance carrier notices an increase in the number of claims against the insurance and is trying to reduce the losses to its profit. Another reason could be that an employee had a serious injury at work and has had surgery or is away from work for a long period of time or needs to have a significant amount of therapy. All of this causes the insurance company to have to maintain a significant amount of reserves, money held to pay for the future surgery, future medical treatment, future wages, etc.
So, what can a company do to stop the increase in workers’ comp insurance premiums? First, understand that workers’ comp insurance premiums, generally, will increase. The goal is to reduce the amount of increase to the minimum or the lowest possible increase for the company. To do this, the company needs to reduce the number of injury claims that it makes against the workers’ comp insurance. This means to reduce the number and seriousness of the injuries that workers experience at work. This is where a good safety program or safety management system comes into play. While it is not the intention of this article to go into details of a good safety program or safety management system, there are main elements to briefly describe.
First, the highest company Executive must wholly and visibly support the effort to reduce the number of injuries to the workers. This visible support from the Executive will translate into what the Managers and Supervisors impress upon their employees as important. The next step is to get the employees involved in the efforts to reduce the number of injuries as it benefits them as well as the company. Encourage employees to report hazards, incidents, injuries, make suggestions, and participate in the efforts to reduce injuries. Representatives from the company can conduct audits or inspections to identify hazards that can potentially injure a worker documenting the hazards and eliminating or controlling the hazards. Review past injury reports to determine what has caused workers to be injured in the past and then work to eliminate or control those causes also. Develop safety procedures to address the hazards that were identified though not able to be eliminated or controlled. Train the workers on the safety procedures and methods to eliminate or control hazards. The Managers and Supervisors then need to coach employees on the efforts listed previously to reduce the number of injuries in the workplace. This may include coaching, re-training, more coaching, and then in extreme cases progressive discipline may need to be used. The process to reduce injuries in the workplace is a long process that is never really completed once it is started. Ultimately, the process leads to a change in behaviors, attitudes, and the culture of the company, all in a good way.
Another way to reduce workers’ comp insurance premiums is to institute a light duty or return to work program for workers that experience a work-related injury. When a worker is working and being paid wages by the company, the workers’ compensation insurance company is not paying wages, only medical expenses so this reduces the insurance claim amount and decreases the costs to the insurance company. To develop a light duty program or return to work program, identify tasks and modify jobs temporarily so that workers that are injured at work can do the tasks while healing from the injury while complying with the restrictions placed on the injured worker by the health care provider. There are many studies that prove that the sooner workers return to work the quicker they will heal from the injury.
RJR Safety Inc. can assist in your efforts to reduce workplace injuries and reduce the number of claims against the workers’ comp insurance. Wayne Vanderhoof CSP can be contacted at firstname.lastname@example.org or (724) 809-4234.