“What are these rates and where do they actually come from?” is a common question we hear when going through an initial workers’ compensation quote with a start-up business (to be honest, we hear this from established businesses too!). So we do our level best to fully explain the ins and outs of workers’ compensation up front, because let’s face it, your job is to be exceptional at YOUR business, not exceptional at knowing the insurance industry.
Subsequently, many business owners may not understand how these costs can be managed or perhaps even decreased to improve profitability. Here are some key steps you can take to exert a little more control over the outcome:
- It may be beating a dead horse, but safety is crucial. If you don’t have a safety plan or employee training manual, you need to make time to create one or both. There are a wealth of resources available to you to make this somewhat turnkey, with OSHA always being a good first stop.
- Have a return to work program. Obviously, nobody should be forced to come back prematurely, but if your business has a formal method for having injured workers get the treatment they need to get better, the sooner they can get back on the job… and that = a smaller work comp claim.
- On your payroll, check what class codes your employees are working under. If you have employees that do multiple jobs (we’re guessing you might!), ask your payroll provider if their system offers a feature called Labor Distribution. This allows the multi-tasking employee to have their hours at each specific job to be properly attributed. This is critical, because one of those roles may have a comp rate that is double or triple that of their other role. You may simply be overpaying premium based on this seemingly innocuous oversight.
- Ask for pricing help! If you have been around for a few years and have little or no losses on your workers’ compensation policy, ask your agent to see what he/she can do to get you a better deal. The ways in which this can be accomplished are many and somewhat complex—so I won’t delve into them here. But you cannot get what you do not ask for.
Most importantly, you need to remember that with workers’ compensation, a high tide does raise all ships (or in the case of workers’ comp rates, lowers them). Safer operators in your line of business means fewer work comp claims. Fewer claims in your industry means lower rates… for everyone.