How Can You Control Your Workers' Compensation Costs?
Regardless of your company's industry, controlling the cost of your workers' compensation insurance premium can be critical to the financial position of your business. The following are a few practical tips to help manage your workers' comp insurance premium costs.
Make Safety a Priority
One of the best ways to control workers' comp costs is to prevent on-the-job injuries and resulting claims. Promoting safe work habits, ensuring a safe working environment for your employees, and implementing an effective, ongoing safety training program are key to preventing or minimizing employee injuries.
- When new employees are hired, it is important to properly train them to perform their jobs safely.
- Make your employees aware of your company's safety program.
- Heighten safety awareness by posting reminders, flyers, or posters in common, visible areas.
- Hold workshops, seminars, or in-services about safety-related issues affecting employees and any potential hazards specific to your operations.
- To reinforce your commitment to your safety program, provide incentives for employees or work teams who demonstrate outstanding safety records.
- Rewarding safe work practices also can improve employee morale. Rewards might include recognition on a prominently displayed plaque, gift certificates, time off, or bonus pay.
- If you do not have a safety program, an LWCC loss prevention consultant will provide a free evaluation of your workplace, make recommendations for worksite or policy improvements, and help you craft a program specific to your unique needs.
In Louisiana, workers' compensation is considered "no fault," meaning that if one of your employees is injured on the job, that injury is covered by your workers' compensation insurance, regardless of the cause of the accident. Avoiding accidents and potentially costly claims is critical. Any claims that incur medical expenses or require payment of indemnity benefits (monetary compensation for lost time) can affect your "e-mod" or experience modifier.
The e-mod is a factor calculated by NCCI (National Council on Compensation Insurance) that compares your accident history (loss experience) to the average loss experience of companies with the same type of risk in Louisiana. Claims losses may cause an e-mod debit (increase) to the amount of your policy?s premium. Therefore, continually promoting safety awareness and safe work habits to avoid costly claims can directly affect your bottom line.
Report Accidents Promptly
If an accident resulting in the injury of an employee does occur, you should file a report as soon as you become aware of the incident. Reports can be filed quickly online, by phone, or by fax. Many research studies show that the sooner an employee is treated for an injury, the less costly the injury is to treat. Early medical intervention and following the progress of an injured employee to facilitate return to work as soon and safely as possible can have significant financial benefits. Use a health-care provider participating in OMNET®, LWCC's statewide network of more than 2,000 occupational medicine experts. With OMNET, injured employees are guaranteed appointments with specialists within 72 hours. To locate an OMNET provider near your business, search our online directory at www.lwcc.com or contact one of LWCC?s client relations representatives at 800-85-OMNET to request the latest copy of the provider directory.
Classify Employees Properly
Another important factor in controlling workers' compensation costs is using the correct industry classification codes for your employee workforce when reporting payroll. Your annual payroll (in $100 units) is multiplied by a price, or "manual rate," for each class code to determine your annual premium contribution, plus other factors such as your e-mod. There are over 600 class codes that identify professions according to the type of work performed, and each varies in the level of potential risk of injury or illness. An error employers sometime make is classifying their entire staff under a single code. LWCC regularly audits its policyholders' payroll to verify that the class codes reported accurately match the type of work its employees perform to ensure that the proper amount of premium is calculated.
An example of an easily avoided classification error is assigning the code of "office clerk" to all administrative personnel. Not all administrative personnel perform the same type of job duties. A file clerk typically does not use a computer keyboard; however, a data entry clerk usually spends most of the time manually entering information using a computer keyboard and has a higher risk of acquiring carpal tunnel syndrome. It is important to use the most up-to-date Louisiana classification code manual to accurately classify your employees. If you have a question about the appropriate class code for a particular employee's role, contact your agent who works closely with an LWCC underwriter to manage your policy.
Controlling your workers' compensation insurance costs has benefits not only for your company but also for the business community at large. Because the cost of workers' comp is determined by a calculation of the collective performance of all policyholders, every individual contribution to the safety and well-being of the workforce ultimately benefits everyone.