There are numerous ways to control the costs related to workers’ compensation. This article focuses on the actual premium paid instead of the other components associated with workers’ compensation costs such as labor used to investigate, report, and follow up on workers’ compensation claims, lost productivity directly related to an accident, temporary labor to replace an injured employee, and other administrative, claims and loss control related expenses.
The workers’ compensation premium alone can be a significant cost to any business but by taking the appropriate administrative steps you can ensure that you are not overpaying for your insurance. Trust me, your insurance company is not going to help you save money, and neither will your agent as he earns more commission when you pay more in premium. Below are 10 questions to ask when reviewing your workers’ compensation policy and risk management program:
- Did I reduce reported payroll to account for the extra compensation related to overtime pay?
- Did I cap or exclude executive payroll from the reported payroll?
- Are my employees properly classified and can some be classified at a much lower rated class code, such as clerical or sales?
- Does my policy have a credit applied which can reduce premium by 5% to 30% or more?
- Does my insurer have competitive rates filed with the State for the governing class codes of my business?
- Is my company experience modification factor correct and applied?
- Did I make sure that losses used to calculate the experience modification factor are correct and do not include excessive reserves?
- Am I properly reviewing and controlling my claims to ensure insurers are not paying excessive claims and passing those costs on to me?
- Is safety a priority at my company as frequency of claims drives premiums?
- Can I retain or transfer risk to lower my premiums and ultimately save money?
Risk Manager’s Takeaway:
Taking the time to answer some basic questions can help you focus your efforts to reduce risk and develop a sound risk management plan. This can save you substantial money over the long run. Call the experts at Star Risk Consultants and we will be happy to review your program with you to create a plan that will save you money.
