Workers’ compensation rates reflect a company’s experience, its commitment to safe practices and its determination to holding down costs. The formula for reducing workers’ compensation costs is simple: Injury Prevention + Loss Control + Lowest Cost Insurance Program = Lower Workers’ Compensation Costs. Those employers who have successfully cut their workers’ compensation costs report that the reality of cost reduction is very challenging and requires the attention and commitment of the highest levels of management. Employers with the “best” records (fewest workers’ compensation claims) had these common qualities:
- Placed great emphasis on safety and prevention practices;
- Were more inclined to have “open” managerial styles that encourage shared decision making; and
- Had consciously developed disability prevention and management strategies.
Employers are encouraged to look at their individual operations with a critical eye toward identifying ways to further reduce injuries and illness, thus improving working environments while cutting workers’ compensation claims cost. Companies that have successfully reduced workers’ compensation costs have offered the following cost-saving suggestions:
- Set safety goals.
- Create an employee incentive program.
- Improve accident reporting and investigating.
- Make review of injury reports part of the job of top managers (even the very top).
- Review injury reports promptly.
- Have front-line supervisors and employees design injury prevention programs.
- Establish training programs in safe lifting techniques, hand safety and hazard recognition.
- Purchase appropriate equipment along with making other ergonomic changes.
- Develop return-to-work programs in which injured employees are allowed to return gradually, from simulated work settings to meaningful transitional or part-time assignments to full-time duty.
- Write job descriptions that include “physical capability” requirements.
By making an effort to improve the safety of the workplace, companies can reduce their workers’ compensation insurance costs in two ways:
- They can reduce the dollar value of business losses by limiting the severity of accidents or by eliminating them altogether.
- They may make the business eligible for schedule rating credits, premium credits and other incentive programs offered by carriers.
Nearly all insurance companies provide safety inspection services and loss prevention/control programs to help clients keep costs under control. These are services that businesses should inquire about before choosing an insurance carrier.
information taken from MichiganAdvantage.org’s workers’ comp handbook.