CompMonitor: An Experience Modification Reconciliation



Reduce the costs of your workers comp insurance

When a company has workers compensation claims, the indirect cost associated with each claim to the company is between 1.1 to 4.5 times the direct costs of the claim. To many organizations this is unacceptable, but they feel powerless to reduce their workers comp costs. Listed below are 6 things an employer can do to reduce their claim activity.
  1. Develop or refresh a safety program.
  2. Provide employee training.
  3. Identify employees having multiple workers comp claims.
  4. Institute a safety incentive program.
  5. Initiate a supervisor safety awareness program.
  6. Monitor the accuracy of your workers comp experience modifier.

Cut Your Workers Comp Costs

1. Develop or refresh a safety program.

Employers as well as the employees want to work in a safe environment but just do not know what it takes. One thing that is important is development and communication of a company safety program. Every company should have one in order to keep down their workers compensation costs. Frequently I am asked; where do I find the content for such a program? The answer is simple. The company's workers compensation insurance agent or the insurance carrier can provide you a manual that will come close to meeting your needs.

2. Provide employee training.

Many workers comp injuries come from employee's using machinery incorrectly. Either they do not know how to use the equipment or they try to take shortcuts. Regardless, it is the employer's responsibility to train each employee how to perform their job safely. This training should include what can happen if safeguards are not performed as outlined in the training and what the consequences are if the employee avoids using the safeguards. An example would be not using protective eye glasses when using a piece of equipment. The workers compensation carrier can assist and employer in identifying needed safeguards.

3. Identify employees having multiple workers comp claims.

Every organization should identify those employees that have multiple workers compensation claims. One reason is to prevent a more serious injury but the other reason is to prevent them from impacting the workers comp costs of the company. Your first step should be to identify the cause of the workers comp losses. If you take the position that every workers compensation claim can be avoided, then through your investigation you should be able to identify why they are happening. Once the cause is identified, you then must speak to the employee and have them modify the behavior causing the losses. You must communicate the consequences if the appropriate behavior needed to work safely is not followed.

4. Institute a safety incentive program.

An incentive program is a great way to keep your workers compensation insurance costs down since it creates safety awareness. The incentive does not have to cost the company a great deal. It could be a pizza party at lunch if the organization goes 120 days without a loss time claim. I have seen some organizations give a half day off if the company goal is met. The bottom line is the incentive program will keep people focused on safety.

5. Initiate a supervisor safety awareness program.

Supervisors need to be aware of keeping workers comp premiums and related costs in check. By supervisors being aware of safety and where safety problems can arise, they can be your front line eyes. If they understand safety is important to you, then they can head off workers comp accidents.

6. Monitor the accuracy of your workers compensation experience modifier.

I have found numerous workers comp experience modifiers to be inaccurate. There are simply too many places where information for the formula to derive your experience modifier can be posted inaccurately. Claims that are closed may not be reported as closed, data reported to NCCI may be inaccurate, and NCCI may input data they receive from the workers compensation insurance carrier inaccurately. Ask your workers compensation insurance agent if they have the ability to perform this task.

By following these 6 steps, a company can greatly impact workers compensation costs. Workers compensation premiums will be reduced because of good claims experience and employees will be available to do their job. Both your direct and indirect costs associated with workers compensation will shrink and improve your bottom line.

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