California business owners are saddled with the highest costs in the nation for workers' compensation insurance premiums. While new regulations and a recent landmark overhaul of the state-run program did produce the first double-digit percentage rate cuts since deregulation in 1995, employers remain hungry for solutions to effectively manage and control their costs.
According to California Insurance Commissioner Garamendi, “Workers' compensation rates are definitely on the down escalator, but the escalator needs to speed up.”
Knowing the risk factors that impact workers' compensation premiums is the first step in taking control. When evaluating a company's risk, underwriters review three basic areas:
Your class of business
This is a general description of the type of work you perform, and the different job classes for your employees. In other words, what exactly does your organization do and is the work inherently risky?
Your loss history
Underwriters of workers' compensation insurance assume that your past performance is the single most important indicator of how well you will do in the future. A clean loss history is certainly desirable. However, a seasoned underwriter will also want to know if there's a written plan of action if an injury should occur. And are there educational materials available to employees that outline your company's safety protocols. Also, is there an early-return-to-work program and is it used effectively.
The profit on your account
An underwriter's job is to make sure enough premium is collected to protect the insurance carrier. They want to know how profitable your business has been to the current workers' compensation insurance carrier.
By clearly understanding the risk factors that are important to an underwriter (a company's history of job-related injuries and the cost to the insurer), employers will become empowered to implement strategies that will reduce costs.
Hiring and training
Sound hiring practices include having a thorough written job application, a comprehensive face-to-face interview process, written job descriptions for all positions, checking for references, and post-offer physicals and drug testing. A sound hiring policy will help you hire reliable people with good work habits, and avoid hiring a workers' comp claim in the first place.
Develop an active training program that includes educating employees that having claims is costly. Also, consider training activities that include rotating schedules or rotating tasks. Having workers perform a variety of tasks reduces repetitive-stress injuries and keeps people sharp and interested.
California law requires that all employers establish, implement, and maintain a written safety program. Your injury and illness prevention program must describe the company's safety committees, workplace inspections, and employee training on work-related hazards.
This can actually be a very effective tool to control workers' compensation costs. Document employee training and workplace inspections. Then, build improved safety measures based on what you learned.
Have a plan of action should an accident occur, including a comprehensive and proven early return-to-work program.
When an accident occurs
Communication is the key to a successful outcome. Begin immediate communication with the injured worker. At the scene of the accident, ask what happened. It's important to learn why they got hurt in order to prevent it from happening again. Administer first aid when appropriate to help minimize the extent of the injury. Use Occupational Clinics where they specialize in the treatment of occupational accidents.
File the claim early, within 24 hours of the accident. Stay in close contact with the injured worker being empathetic to the injury. Track their medical visits and monitor their progress, and when the time is right, make an offer in writing to return them to work in a transitional capacity.
Early return-to-work pProgram
While the concept has been around for a long time, under the new workers' compensation reforms, employers are now being offered incentives to help injured employees return to work early through workplace modifications.
Employers can provide special adaptive equipment, offer flexible work hours, modify work stations, restructure job tasks, and even consider retraining. These accommodations will bring employees back to work sooner with the added benefit of building the stamina and ability they will need to perform their essential job functions.
Before employees return to work early, understand their medical limitations clearly and always have the employee's doctor approve the modified duty. Continually monitor the employee's progress to make sure everything is going as planned.
Bringing an employee back into the workplace early has proven very effective in building morale and minimizing other workers to consider filing a workers' compensation claim. Unfortunately, even good workers can succumb to the temptation of getting paid for not working.
A 15 percent reduction in the permanent disability payments is afforded for those employers who offer an early return-to-work program. However, a 15 percent increase in the permanent disability payments is applied for those employers who do not offer the program.
Develop a formal written plan for your early-to-work program and communicate the program to all of your employees and to the medical community. You will have greater success when you have their support.
Medical provider networks (MPN)
A significant and very positive change in last year's overhaul of worker's compensation was to put the decision in the employer's and/or insurance carrier's hands where employees would seek treatment for work-related injuries. Fees can now be controlled and courses of treatment managed for more cost effective outcomes.
In conjunction with this new selection process, because 75 percent of workers' compensation claims are for chiropractic treatment, limitations have been set on the number of visits allowed per the lifetime of a claim. The new limit for chiropractic visits is now 24.
When employers implement the programs outlined above, they will reduce the number of claims and the problems associated with claims. But the real key to success is in the communication.
Employees will have a vested interest in protecting claim dollars when they have an understanding of what you offer and how it impacts them personally.
Have a formal written plan for the company's hiring, training, safety, and early-return-to-work programs. Provide employees with a copy of each plan and have them sign an acknowledgement of receiving the plan.
Ongoing communications in the form of literature and meetings will reinforce the value of maintaining a safe working environment and reinforce the protocols to follow should an injury occur on the job. When employees realize that claims costs tie directly into what employers can pay for compensation, they buy-in to helping reduce those costs.
Allan Burns is vice president of United Agribusiness Insurance Services (a wholly owned subsidiary of United Agribusiness League). For more information about Workers' Compensation Programs, call 800-223-4590.