One of the biggest expenses affecting small businesses is workers’ compensation insurance, which covers expenses associated with injuries to employees while on the job.
While claim activity is usually out of your control – accidents happen – there are some things you can do to help show your carrier you deserve a lower rate on your Workers’ Comp premiums. Here are a few ways you can decrease your workers compensation insurance premiums:
1. Ensure Accurate Job Classifications
Did you know inaccurate job classifications can cause your workers compensation insurance premiums to increase? Inaccurate job classifications make you to overpay on your workers compensation insurance premiums. Proper job classification enables insurance company to estimate losses or expenses related to the risk they are providing insurance for.
Companies are assigned business type classification codes in various industries except staffing services, agriculture, and construction. The job classification system is a complex one, meaning you need to bring on board an expert well versed about the system so you do not have to worry about overpaying on your workers compensation insurance premiums.
2. Join a Professional Employer Organization
A professional employer organization (PEO) can help employers manage their workers compensation insurance premium costs and claims. It can help them navigate the safety challenges they encounter in their business. If you want to foster a culture of health and safety at your business, you can join a PEO. A PEO can assist you with the following things:
- Choose workers compensation plan coverage and cut premiums by negotiating competitive programs with insurance companies
- Assess the safety of your working environment and develop a safety program that can minimize the risk of injuries
- Resolve workers compensation insurance claims efficiently when they happen
- Manage relationships with employees who received an injury at work
- Incorporate a return to work program that increases the morality of workers and decreases the length and cost of workers compensation insurance claims
3. Establish a Safety Program
You can establish a safety program to prevent injuries before they can happen. The purpose of a safety program is to determine and eliminate hazards at work that may lead to accidents. To help you set up a safety program, here is what you need to do:
- Hire a third-party consultant
- Independent workplace safety consultants will charge you around $100 per hour
- Use an industry specific template
- You can download safety program templates from online companies designed for different industries and they would cost you around $100 to $150
- Check with Your Insurance Company
- Some insurance companies offer companies a fee-inclusive safety consultant to help them ensure safety at work
- Seek Information at Occupational Safety and Health Administration (OSHA)
- OSHA has a free on-site consultation program, which offers advice and information to small and medium sized businesses.
A key point to remember is that a safety program is more than just a document. You also need to provide on the job training to your employees with regular inspections to ensure they are following all safety protocols.
4. Implement a Return to Work Program
In addition to implementing a safety program, you need to implement a return to work program. A return to work program directs cost benefits to the workers compensation insurance claim. If the workers compensation insurance claim stays unresolved for a long time, the claim will become that more costly to settle for employers. When an injured worker returns to work, you need to help the worker readjust by modifying their duties and responsibilities.
This allows workers to work part time or a few hours according to the suggestion of their medical provider. An active return to work program offers indirect cost benefits as well. An active return to work program maintains a connection to an injured worker and prevents alienation that can happen on both sides when the worker is out for a long time. If they worker returns to work early, it decreases the chance of that workers never returning to work.
5. Decrease Your Modifier
Businesses can decrease their modifier to lower their workers compensation insurance premiums. You need to take the following steps to reduce your modifier:
- Make maintaining safety at the workplace your first priority and if you can, you should allocate the budget to get someone to come from the outside to inspect your work environment and implement the changes.
- Create a return to work program, as mentioned earlier.
- Enroll in a state-sponsored program such as a drug-free workplace program and any other programs you see fit.
- Join a group for group rating where some states provide large discounts to groups they recognize. You can qualify for it by maintaining an above average safety history. However, up and coming businesses will not qualify and that is why, they need to create a safety program so they can become part of group rating to get the discounts.
If you own a business where your employees are at risk of receiving an injury, you should obtain workers compensation insurance and then implement these strategies to decrease your premiums. If you have workers compensation insurance and a good safety program, you will increase employee retention rate as well. It will also help you maintain a good reputation among employees, both present and future.
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