Workers’ Compensation Insurance is probably one of largest expenses besides your actual employee payroll. Since workers’ compensation insurance is required by law, you need to learn on ways how to reduce your workers’ compensation premium. Below are a few ways, you can lower your workers’ insurance premium.
Review Your Classification Codes
Make sure you have appropriate classification codes for caregivers, clerical employees, and outside sales employees. In addition, exclude those individuals who are owners of the facility if workers’ compensation insurance is not needed. By having the correct classification codes and excluding owners you may lower your workers’ compensation premium.
Being Claims Free
Another way to reduce workers’ compensation premium is simply being claims free or file no workers’ compensation claim. If your facility is claims free for at least 3 years, you will probably get the lowest rate on workers’ compensation premium from any carrier and may be eligible for experience modification from the WCIRB in California.
Loss Control Programs and Risk Management Training
Workers’ Compensation insurance carrier normally offer Loss Control programs and Risk Management training webinars to educate both the employer and employees on how to prevent injury in the first place. Training and loss control programs should be done routinely or at least periodically to assure all employees are aware on what to do to prevent common injuries. If your employees do not have an injury, then no claim will be filed. If there is no claim over a period of time, your workers’ compensation rate will be lower; thus lower your premium.
Lower Down Employee Payroll
Workers’ compensation insurance is based on employee gross payroll, any adjustments up or down would affect the workers’ compensation overall premium. When you run your business more effectively, you can operate with few employees. Few employers translate lower payroll assuming the same salary, thus lower your workers’ compensation premium.
Compare Insurance Rates
Insurance carriers change their workers’ compensation rates for each class code yearly. In some years, certain carriers will perform better than others. It is important that you compare your workers’ compensation rates or work with an insurance broker that can provide this service for you. Competition among insurance carriers will help lower your workers’ compensation insurance premium.
Communicate and Close a Claim
If you happen to file a workers’ compensation claim, you can still achieve low workers’ compensation premium by closing the claim early. When a workers’ compensation claim is filed, there a few moving parts. One of the most important steps always has discussion with an injured employee on how the injured employee is doing. By understanding the needs of the employee, you can assist the employee to return back to work in a timely manner. Many times, claims drag longer than expected because of lack of communication between employer, injured employee, claim adjuster, doctors, and claim administrator. When the communication is clearly on point to assist the injured employee, claims will be closed faster; thus reducing excessive fees or charges. Lower claim amounts convert to lower premium.
Insurance Carrier Discounts
Insurance carriers tend to offer their own premium loyalty and claims free discounts when you stay with the same insurance carrier over several years. Insurance carriers do not want to lose good insureds premium that has performed well over the years. It is usually to your advantage to negotiate with your current insurance carrier when compared to other carriers.
Since workers’ compensation insurance rates and premium are calculated on an individual basis, it is important you are aware your situation and policy calculation. If you have done most of the above recommendations, your rates and premium should be as low as possible. However, there will be situations when bad employees file multiple fraudulent claims or an unexpected chain of events happen that you cannot control. In these situations, your workers’ compensations premium will skyrocket and you have little choice on the change of premium. When you are in this situation, you will need to consult a good insurance broker on strategies to help you lower your workers’ compensation insurance in the future.
Related Workers’ Compensation Articles:
- What is workers’ compensation insurance? (Part 1 of 3)
- How is my workers’ compensation premium calculated (Part 2 of 3)
Other Insurance Articles:
- An introduction to commercial general liability insurance (Part 1 of 3)
- Commercial Liability Insurance: Coverage, Definition, Forms (Part 2 of 3)
- Which commercial liability insurance carrier or policy is good for my facility (Part 3 of 3)