Workers Compensation Insurance: Are You Paying Too Much?

Workers compensation costs are rising. According to a recent report by the Workers Compensation Research Institute (WCRI), indemnity costs per claim (the loss of earning capacity, payments for lost wages, or permanent impairment or liability) increased faster from 2007 to 2009 than in prior years. The recession has had a significant impact on indemnity costs, and the study showed rapid growth in medical-related costs per claim due to many factors such as increases in doctor's office visits.

The gist of this report is that the cost of your workers comp insurance is almost certainly going to grow according to the type and amount of claims you file due to workplace injuries. Although it appears costs are rising, you can actually reduce expenses for workers compensation coverage by establishing and enforcing a culture of safety. Taking a proactive approach to safety won't only decrease workplace injuries which results in lower insurance premiums; having healthy employees means higher productivity and performance so you can watch profits increase rather than insurance costs for workers compensation.

A consistent workplace safety record shows insurance companies that your business is a good risk. And although determining coverage can be a complex task--best left to a trusted workers compensation insurance specialist--as a business owner it's really a simple equation: fewer claims result in lower premiums.

Let's take a closer look at some of the steps you can take to create a culture of safety that will ultimately reduce workplace injuries and, in so doing, significantly decrease the high costs associated with claims for workers comp insurance:

--If you haven't done so already, sit down with your management team and develop a safety policy and safety manual. Revisit and update your policies regularly and frequently communicate these policies to your employees.

--Review your past and current claims history to recognize trends, potential hazards, and high-risk areas of your business that may result in workers compensation insurance claims.

--Appoint a dependable employee as your company's safety supervisor whose job duties involve monitoring these hazards and risks, including walking areas that may be prone to slips and trips, and places where heavy items may fall or cause injury if moved or lifted.

--Post signs in break rooms and other high visibility areas that highlight hazards, advise ways to avoid them, and instruct what to do in case of injury.

--Emphasize employee awareness of the importance of workplace safety by holding regular meetings, and consider implementing an incentive program that rewards employees for maintaining a spotless safety record.

Review your workers comp insurance program at least annually at the same time you update your safety policies and procedures. Meet with your insurance company to discuss how changes in your workplace may impact your workers compensation insurance coverage. If you make safety job number one you may be surprised by how much a reduction in claims has on insurance expenses.