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How Can I Lower the Cost of My Worker’s Compensation Insurance?

By April 14, 2022Business Insurance

Many companies we speak with that operate in the Lake Ozark region say that workers’ compensation insurance is one of their highest expenses, which begs the question — is there a way to lower the cost of workers’ compensation insurance?

In short, yes. However, taking proactive steps to decrease how much you spend is a gradual move and could take years rather than months to achieve. Leveraging the proven strategies, I will outline in this article can help improve morale among your team, minimize on-the-job injuries, and reduce your need to file claims. Ultimately, it’s those claims filed that will directly impact how much you’re required to pay regularly for your workers’ compensation insurance. Fewer claims will mean a lower premium.

The Truth About Lowering Your Workers’ Compensation Insurance

So often, professionals reach out to us in hopes that we can offer a quick fix. Unfortunately, there’s not a switch we can flip overnight to lower your premium.

Workers’ compensation insurance is calculated based on risk. One of the biggest risks factors includes how likely you are to file a claim. Insurance companies look at past claim history as an indicator of what to expect going forward. Therefore, in order to lower the number of claims filed, you must take proactive steps to protect your employees. Here are some of the steps we recommend to our clients to help them lower their workers’ compensation insurance costs by reducing claims.

1. Hire Smarter

The people you hire have a direct impact on risk levels. Responsible employees will not be as likely to be involved in an accident and, therefore, won’t need to file a workers’ compensation claim as often, if ever.

When hiring new employees, consider adding the following procedures to your hiring strategy:

  • Physical exams
  • Drug testing
  • Reference checks

The first two procedures — physical exams and drug testing — can help expose any pre-existing conditions or current behaviors that could impact the employee’s ability to perform well and responsibly in the role they’re applying to fill.

Reference checks also add a layer of protection for you when it comes to on-the-job injuries. The answers from references will often shine a light on whether the person can safely and responsibly carry out the duties of their job.

2. Regular Review of Open Claims

Often, business owners take a “set it and forget it” type approach to workers’ compensation claims. They don’t regularly revisit open claims, which can prove problematic and costly.

In addition, having open claims means your employees are still receiving care. If you’re not reviewing these claims and helping your employees return to work as quickly as possible, you also cost your business productivity. The sooner you can get employees safely back to work, the better.

3. Get Your Employees Back to Work

It’s costly to have your employees out of the office and off the job. To help reduce the time they spend away from work due to a workers’ compensation claim, and reduce the costs associated with these claims, it’s a good idea to have a strategy to get them back to work quickly.

One way you can do this is by streamlining the process of understanding your employee’s capabilities. By talking to the employee’s doctors and having an open line of communication with the health care providers, you can assess when they need to remain on light duty and when they can return to work.

Get creative with how you allow them to return to work. For example, you can:

  • Modify their hours to ease back into the flow
  • Modify their job duties to contribute without requiring physical labor

For example, giving injured employees a short-term project to work on could help keep them engaged and active until they’re able to return to the work in their job description. Or, you could put them in a leadership role and have them train new team members on their old job.

4. Choose Doctors Wisely

Did you know that you, as the employer, have the right to choose which doctors your employees see? In Missouri, the employer (or the insurer, on behalf of the employer) has the right to choose the healthcare provider or treating physician. However, the employee has the right to select a treating physician at the employee’s own expense.

This strategy might seem a little unusual when it comes to lowering insurance costs, however, it can be hugely beneficial over the long run.

By preapproving physicians for your employees, or allowing your unsurer to do so, you know the outcome will be the best for both you the employer and your employees. It needs to be a win win situation for both parties. Getting that employee back to work should be the goal if at all possible.

5. Add a Safety Committee

Done well, a safety committee can improve the overall safety of your employees. Having the right strategy and job description is key here. A quality safety committee will:

  • Regularly review the workplace environment for any safety risks
  • Conduct safety reviews of job sites
  • Discuss and review accidents, incidents, and near misses
  • Determine ways to reduce risks moving forward
  • Schedule job safety training for employees
  • Recommend policies to leadership

6. Regularly Test and Interview Your Team

Testing during the hiring process alone isn’t sufficient. If you want to continuously maintain a high record of safety on the job, you must regularly drug test and interview your team.

Drug testing is a crucial part of maintaining on-the-job safety. Drug and alcohol use is attributed to:

  • Abusers increase their risk of an on-the-job accident by 3.6 times.
  • Drug and alcohol users are 5 times as likely to file a workers’ compensation claim.
  • Nearly 50% of all workers’ compensation claims are attributable to drugs in the workplace.

By deploying random drug testing and post-accident drug testing, you can incentivize your team to stay sober and keep everyone safer.

In addition, holding regular interviews with your employees can also help you get feedback about risky situations that you might not be seeing. Hiring a third party to conduct these interviews is beneficial. That third party can ask questions, such as:

  • Is there a component of your job that could and should be done more safely?
  • Is there any area of your work that you feel could be more effective or efficient?
  • Have you ever witnessed people cutting corners when it comes to safety and quality?
  • Is there any equipment that you wish you had more training to use?

The goal is to help create a work atmosphere that’s safe and supportive of your employee’s needs, therefore reducing the risk of an accident or incident.

Ready to Lower Your Workers’ Compensation Costs?

There are six solid options available to you here. If you’re feeling overwhelmed, choose just one or two to start with. Even taking just a couple of new proactive steps will help lower your workers’ compensation costs over the long run.

We’re here to help! Contact us to request a proposal and determine if there is an opportunity to lower your workers’ compensation insurance today. We’ll be happy to shine a light on how your insurance premiums are calculated and review your current claims and practices to help you find the best option for your organization’s needs.