Workers Comp: How To Reduce Your Premiums

We frequently hear the complaint that Workers Comp premiums are too high. The fact that it is legally necessary in all but one state leaves only one option: Find ways to reduce those premiums.

The first thing you want to do is to talk to your insurance professional to ensure that you are being billed appropriately.

You want to see to it that your employees are classified properly. The premiums vary, depending on their positions in your business. If they have been promoted or moved to other positions, you want to ensure that this information was received by the insurance company.

Rates are based partly on the amount of benefits paid, so the earlier an employee gets back to work, the lower the benefits paid. Work to get your injured employees back to work quickly. If you need to, you can set up a temporary job for them which is not physically taxing and allows the employee to come back to work on “light duty.”

Start a safety program which is created to keep your insured employees safe. Make sure that the offices are ergonomically correct. If they use industrial machines and equipment, make sure they wear safety glasses and helmets or whatever protective garb is recommended. Require employees who work in a warehouse or delivery truck to wear back braces and make sure they get training in correct lifting.

Whatever you do, you want to keep your carrier informed of safety changes and improvements made to the workplace.

Review your workers compensation annually when you review your other business insurance. Work with your licensed insurance professional and workers comp carrier to make sure your coverage, risk exposure, and premium is where they should be.

How Do I Lower My Workers Comp Premiums?

In the past few decades, workplace safety has become an issue, and one that all are aware of. As a result, overall workers compensation claims have gone down drastically in the past few decades.

That said, we must point out that there are some industries where they have gone down less than others

If you want to lower your workers compensation premiums, there are several paths you could go down.

First, initiate a risk management plan in your business. Start out using your insurance carrier’s risk management staff. They are the people who understand the industry from that side. Implementing safety procedures lower your risk factors for the carrier, and this step could save much money.

As you grow it is likely that you can delegate your own staff to take over the tasks involved with that risk management plan. You might even get to a point where you can hire someone specifically for that task.

Has your company had claims? If so, are those claims in a particular department? Find out why and address them as part of your risk management program. Then advise your carrier that you are working in that direction.

Find out how your payroll is reported. Is overtime factored into it? Are bonuses? This could be a driver of your premiums.

Additionally, you might look into starting a program to assist workers to get back into the workplace more quickly, which mitigates the losses your carrier is paying, and losses are what drive premiums.

Normally, a program where your workers can come back gradually and in a limited capacity which will increase step-by-step works best.

Check your job classification codes and insure that they are classified correctly. Sometimes the wrong classification can change your rates.

Keep your carrier informed of all changes and improvements made to the workplace.

Remember to review your workers compensation annually along with all of your other business insurance. Work closely with your licensed insurance professional and your carrier to make sure your risk exposure, coverage, and premium is where they need to be.

Reduced Workers Compensation Premium

How can I reduce my worker’s compensation premium?

Your individual business will have no real effect on the industry rating you are subject to within your state. It is possible however, to reduce your worker’s compensation premiums. Workplace safety has evolved and overall, worker’s compensation claims are on the decline. Still, certain businesses and trades will continue to tick up in terms of claims and costs associated with those claims.

As a business owner, you can begin the process of trying to lower your worker’s compensation premium. The starting point is developing a risk management program for your business. Starting out, utilize the risk management staff at your carrier, the company which issues your worker’s compensation insurance. As you grow, consider adding this task to an employee at your company. At some point, you may consider hiring a professional risk manager for your business.

Developing a risk management program means adding a safety program. Implementing a safety program and developing a procedure manual as part of the risk management process can help reduce premiums. Make sure your employees are classified correctly as part of your program. Grouping all employees under the business classification can greatly increase your premiums. Check with the state and your carrier to determine the appropriate classifications and how they need to be reported. Implement a back-to-work program for injured employees, even if you never have had an employee lose time. Be prepared and have a process in place. Insure your payroll reporting is accurate. Overtime and bonuses may not have to be factored into the reporting and push your premium up.

Review your worker’s compensation annually. Work with your licensed insurance professional to manage the costs of your worker’s compensation insurance. Ask if group participation and ratings are available to your business through associations or state programs. Document risk management programs and keep your agent and carrier updated. You can work to reduce your worker’s compensation costs, but it does take work.