Each year, employers in the U.S. lose large amounts of money due to accidents in the workplace. This is especially true for those who operate in high-risk industries: sectors with the most vulnerabilities include construction, manufacturing, and health care. As a result, injuries can increase the price of workers’ compensation, which can cause businesses to spend parts of their precious budget on avoidable expenses.
This article will discuss how employers can safely keep employees on the job while reducing workers’ compensation costs.
Why workers’ compensation costs have risen
The nationwide workers’ compensation net written premiums increased by 11% in 2023, rising to about $47.5 billion. Workers’ compensation calculations depend on employee classifications and their assigned rates. Why do employers care? Well, each incident impacts future premiums, and companies with higher injury ratings generally pay more for workers’ compensation coverage. The more serious incidents that occur, the more likely it is that an organization will have to pay higher premiums for workers’ compensation.
This uptick in costs is due to several factors, one of which is rising wages. Because the general cost of living is higher, some jobs have raised employee salaries. While higher salaries are great for employees’ wallets, the issue is that these higher wages lead to higher indemnity costs for employers if a court warrants them.
Another reason costs have risen over the years is the changing workforce. Many older workers are pushing retirement back past the average retirement age. The average expected retirement age among non-retirees is now 66, up from 60 in 1995. While this helps employees fund their retirement more effectively, it can cause companies to raise premiums. This is because workers who are older than 55 account for a large part of workers’ compensation claims.
Additionally, medical inflation impacts the cost per claim, further driving up costs. The rising price of care for employees translates to more expensive workers’ compensation claims. When the workforce doesn’t receive sufficient medical attention, they’re more likely to get injured and need time off.
Ten strategies to mitigate the price of workers’ compensation
Mitigating the price of workers’ compensation helps businesses maintain financial stability. It also ensures the safety and well-being of employees. Here are a few strategies to achieve this:
1. Educate employees on the importance of workplace safety.
Companies can prioritize safety by ensuring their workforce knows how to best care for themselves and handle dangerous situations. Employers can invest in educational programs and regular safety training sessions for workers. This helps educate them about potential hazards, workplace violence, and safe work practices. Implementing employee safety measures can reduce medical costs in the long run. A safer work environment can lead to fewer accidents and lower workers’ compensation claims.
2. Choose quality medical care.
Employers can also reduce costs by providing an injured worker with the best medical attention as soon as possible. This lowers the risk of team members suffering long-term disability or negative effects. Companies can ensure they’re getting good value by reviewing their insurance coverage and working with their insurance provider to tailor coverage options.
3. Report incidents.
When injuries occur, employers should give all required documents to their insurance agent as soon as possible to process a claim. Prompt reporting and investigation can help further control claim costs.
4. Implement risk management.
Companies can lower workers’ compensation costs by implementing robust risk management practices to identify and reduce workplace hazards. Employers should conduct regular risk assessments and take proactive measures to lower their risk profile.
5. Provide safety and personal protective equipment.
While not every company that uses workers’ compensation is in an industry that requires safety equipment, those that are, like construction, manufacturing, and health care organizations, should provide their employees with personal protective equipment and ensure it is used properly.
6. Focus on workplace ergonomics.
Employers can assess and improve workplace ergonomics to reduce musculoskeletal injuries. This is especially helpful for employees who use equipment or sit in an office all day. Simple adjustments to workstations and tools can make a difference in accident prevention. Companies can provide ergonomic office equipment, such as:
- A chair
- A keypad
- A mouse
- A standing mat
7. Ensure legal compliance.
It’s an employer’s job to stay up to date with relevant laws governing workers’ compensation. Business leaders can avoid legal penalties by knowing what’s expected of their company. This also helps reduce the risk of pricey lawsuits that can escalate costs.
8. Foster a healthy workplace culture.
A workplace culture focused on safety and accountability can improve employee health and well-being. Employers should build a work environment where workers feel comfortable reporting hazards. Businesses should encourage open communication and collaboration to maintain this type of workplace. This boosts employee morale and lowers workplace violence and indirect costs.
9. Build a back-to-work program.
Creating a back-to-work program makes it easier to transition employees after a workplace injury. The program establishes steps for employees to follow once they’re able to start work again. Modified duty assignments and clear expectations can help reduce the duration of disability.
10. Consult with insurance specialists.
If employers want to reduce their workers’ compensation premiums, specialists can help. They understand occupational health and safety and can help business leaders build a strong plan. Specialists can also give insights and recommendations tailored to the organization’s industry.
This article was originally published by Marsh McLennan Agency on MarshMMA.com. Marsh McLennan Agency is a business insurance broker and risk management consultant. Its business insurance program is tailored to fit the
unique risks and exposures prevalent within this industry and is fully customizable.
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