The Seven Workers Compensation Secrets That Can Cost Your Business Serious Money

Instead, the insurance company simply fronts the money for an employee’s injuries and then charges that money back to you in premiums at a rate of $2-$3 for every $1 the insurer pays on claims. You therefore pay for employee injuries, not the insurer. You also pay the price in other ways besides employee injuries.

  1. Your Experience Modification factor increases substantially
  2. Lost productivity
  3. Decreased morale for existing employees who are forced to cover for an injured worker
  4. Increased management stress

Active claims management on your part and a defined process for workplace injuries can save your business significant amounts in worker’s compensation costs, both in premiums and a predictable and low Experience Modification factor. Develop a specific, detailed process for reporting and responding to employee injuries and ensure strict compliance with that process

  1. Immediate reporting when an employee suffers an injury in the workplace including immediate reporting of the injury to your workers’ compensation carrier the day the injury occurs
  2. Information regarding which medical providers to visit after an injury
  3. What steps for the injured worker to take after a visit to a medical provider
  4. Developing a plan for any injured employee to transition back to work safely as soon as possible after the injury
  5. Developing (and sticking to!) a detailed process saves your business money by reducing injuries, keeping your Experience Modification factor from increasing and protecting against increases in workers’ compensation premiums.

The costs of insurance are determined after the policy has already expired. The dirty secret of workers compensation audits is that the insurance company’s auditor knows the rules, but you as the business owner do not. The auditor often will manipulate the audit in ways that are not apparent to you.

  1. The auditor is not required to explain the rules to you, particularly if doing so would result in a decreased premium.
  2. The auditor will put all of your employees into the highest (and most expensive) classification. For example, an office worker may be placed in the same classification as a construction worker.

A business’ Experience Modification factor can either be completely wrong or improperly calculated. An insurer, rather than a business owner, benefits from an erroneous or mismanaged Experience Modification factor. Even if the factor is correct, it may be mismanaged, leading you to be overcharged. An experienced insurance agent can assist in correcting any error and ensuring that your Experience Modification factor is correct to lower your workers’ compensation insurance premiums.

Some employees are simply more likely to make more claims than others. Exaggerated claims can simply be the result of hiring the wrong person rather than due to an unsafe workplace. Certain questions are prohibited by state or federal law from being asked during interviews, leading employers to be too cautious in assessing the risks of claims a particular job applicant may present during the hiring process.

JDA Insurance Group has developed several forms to assist clients to assess whether a prospective hire could be a serial workers’ compensation claim filer or screen for the potential of an employee being a risk for multiple claims down the road.

A business’ workers compensation insurance is often the only type of insurance over which the business may have any control, so it is imperative that every business pay close attention to its workers compensation coverage to ensure the cost is as low as possible.

Your insurance agent must take certain steps to ensure that your workers compensation premiums are as low as they can be:

  1. Establishing a comprehensive process for when injuries do occur
  2. Building an internal claims management process
  3. Confirming each of your business’s employees is classified properly
  4. Ensuring your Experience Modification factor has been calculated correctly and working to keep it as low as possible
  5. Controlling and managing the insurance coverage of any subcontractor(s) you may have

John Duran of JDA Insurance Group has the experience and the expertise, honed by rigorous training from the leading national workers’ compensation industry association for insurance professionals to help you keep the costs of your workers’ compensation as low as possible by doing, among other things, the following for its clients:

  1. Finding and fixing any mistakes in your company’s workers’ compensation system
  2. Creating processes to control employee costs
  3. Creating a plan to keep your Experience Modification Factor as low as possible
  4. Routinely verifying your company’s workers’ compensation program is error free