For most construction businesses, workers’ compensation insurance is a significant expense. Here are five tips for reducing or at least better controlling these costs:
1. Make sure employees are classified properly.
Workers’ compensation insurers assign risk classification codes to employees based on their duties, responsibilities, and level of exposure to the risk of injury or illness. Higher risk means higher premiums, so be sure that employees are classified properly. If an employee who now works in the office (or from home) is still classified as an on-site laborer, your premiums may be needlessly inflated.
2. Double-check your experience modification rate.
Used to calculate workers’ compensation insurance premiums, this rate — also known as the experience modifier — represents your company’s loss history relative to industry average.
If you have an average loss history, your experience modifier will be 1.0. A higher-than-average loss history will raise your modifier above 1.0, increasing your premium; a lower-than-average loss history will have the opposite effect. Find out how your insurer determines its modifier and verify that the calculations are accurate.
3. Develop a robust safety program.
The most effective way to reduce workers’ compensation costs is to avoid accidents and injuries. That’s why it’s critical to develop a solid safety program that follows the Occupational Safety and Health Administration’s construction industry standards.
Train new hires thoroughly on safety protocols and procedures, as well as on the proper use of any construction equipment they’ll be using. From there, provide ongoing training and education as much as possible. Once your program is up and running, review and evaluate your safety performance regularly and update the program as necessary.
4. Promote a culture of safety.
Even the strongest safety standards are effective only if they’re followed and enforced, so it’s essential to make safety a part of company culture. This means setting the tone at the top and communicating to employees the importance of not only following safety guidelines, but also reporting accidents or injuries promptly. If employees are hesitant to report injuries, or feel pressure to “work through the pain,” your workers’ compensation claims will likely balloon both in number and magnitude eventually.
Building a safety culture involves sound hiring and training processes, too. By discussing your company’s expectations regarding safety during interviews, you can get a feel for an applicant’s proclivity for risky behavior. Training should emphasize safety practices and, as mentioned, underscore the importance of prompt reporting of accidents and injuries.
5. Establish a return-to-work program.
As the amount of time injured workers are off the job increases, their claims for lost wages will also go up while the likelihood of their return diminishes. A formal return-to-work program can help you retain employees and control workers’ compensation claims.
These programs help reintegrate injured workers into the workforce as soon as possible, typically in less physically demanding roles and often on a part-time basis. If an employee earns less than his or her preinjury wages during this period, the workers’ compensation insurer may make up the difference. The result: Injured workers return to their regular duties more quickly, reducing the costs of claims and minimizing the impact on your premiums.
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