Often times, as business owners, you may feel you have little to no control over your workers’ compensation cost. This is not the case. BBSI is here to help. Republic Capital has some great advice on how to keep your claims costs down. We’ve added a couple of points of our own and would love to help you make them happen. Implementing these strategies will help you control your workers’ compensation costs and run a more profitable business.
Bottom line: you need to be as diligent as ever about controlling your workers compensation costs, already among the highest in the nation. One way to do that is through targeted risk control. Here are six crucial areas you should be focusing on:
- Thoroughly screen new hires. Preventing injuries and workers’ comp claims begins with your hiring practices. When checking out job candidates, be on the lookout for red flags such as a history of complaints, poor performance, or retaliatory measures. Conduct comprehensive background checks, and consider using tools such as drug screening, post-hire questionnaires, and pre-employment medical exams. A proactive pre-employment screening strategy can help you avoid candidates that are more likely to be injured on the job.
- Know your claims history. You can’t effectively manage future claims without understanding what’s happened in the past. Take time to analyze claim trends for anything that negatively affects your loss experience and total cost of risk. Then develop a risk control plan based on your analysis, clearly spelling out the financial improvements you expect to achieve by implementing your plan. This process of improving safety in targeted areas can help reduce your workers’ compensation premiums.
- Watch your ex-mod. Understanding your experience modification ratings (EMR) can go a long way in keeping your workers’ comp premiums down. Routinely evaluate your experience modification rating to ensure its accuracy and to help predict its future financial impact on your premiums. Inaccurate EMR calculations are usually the result of errors in payroll amounts, inaccurate job classifications, improper claim reserves, and open claims that should be closed.
- Be proactive about closing claims. The best way to keep your claims costs down is to close claims quickly. After all, severity – the length of time an injured worker is off work – is the number one driver of claim costs. So you need to do everything you can to move claims along toward resolution. Also, sit down with your insurance carrier every quarter and conduct a claim review to determine whether claim reserves are too high and need to be adjusted downward, and whether any open claims should be closed based on the claim’s circumstances. These quarterly claim reviews can be an effective strategy for reducing outstanding open claim amounts – and that means better premium pricing.
BBSI would like to add:
- Terminate Individuals with compassion – When you are exiting someone from your business, even if it is for cause, try and be as compassionate as you can. Remember this person is losing their income and is now entirely uncertain about their future. Fearful people are often the ones who file post-termination claims. You can always contact your Human Resources Consultant for advice on these situations.
- Be prepared with an exit strategy – What would you do if you lost a contract and had to lay off 5, 10, or 20 people? What if 5 of them filed post-termination claims? What would that do to your Workers’ Compensation cost the following year? Could your business survive the double impact of a loss of a huge contract AND an increase in your workers compensation cost? These are things that your Human Resources Consultant and Business Partner can help you with. Create an exit plan and be prepared.