Don’t sacrifice the quality of workers compensation coverage for a small discount on price.
Owners of businesses large and small understand that controlling expenses is an important part of their success and insurance premiums are part of that equation. Since workers compensation is a must-have for most employers—meaning it's required by law in most states—what steps can be taken to control these insurance costs?
What Not to Do
Do not sacrifice quality coverage for a small discount on price; this move could end up costing more over the long run. Although most workers comp policies are similar in nature, the related services provided by all insurance companies are not.
What You Can Do
Employers should be sure to select a financially stable insurer that has a proven track record of helping to prevent occupational injuries and illnesses. The insurer should also be managing the claims that do occur in a cost-effective way. Otherwise, medical and indemnity expenses may contribute to a deteriorating loss history for the business and end up increasing the price paid for workers comp insurance.
Services available before, during, and after a claim are extremely important to control these costs. Here are five to consider:
1) Establish a workplace safety committee. The simplest way to reduce expenses incurred from workers comp claims is to prevent accidents from happening in the first place! Of course, all injuries and illnesses cannot be eliminated, but taking steps to create a safe working environment will go a long way to reduce the frequency and, often, severity of workplace mishaps.
Setting up a workplace safety committee that can implement loss control activities is the first step and an experienced insurer can help with this. In many states, a premium credit can be applied for establishing certain safety measures at the worksite.
2) Report claims promptly. When an injury or illness does occur, the faster the claim is reported, the quicker managing effective outcomes can begin—only the administration of emergency care should come first.
Employers should be sure to select an insurer that offers 24/7 claims reporting. Why? Because prompt claims reporting helps employees obtain fast, quality treatment and can hopefully avoid unnecessary lost time from the job. Companies that also handle the paperwork and supply their policyholders with a list of qualified medical providers are even better choices.
3) Implement a return-to-work program. When a limitation makes an employee's ability to perform original duties impossible, minimizing time away from the job is vital to containing costs. Programs offered by insurers can help employers establish opportunities for their injured or ill staff to engage in modified-duty tasks and alternative work assignments that, in turn, minimize disruptions to a business's operations.
4) Choose pay-as-you-go billing. More and more insurance companies are offering pay-as-you-go billing plans for workers comp coverage. This convenient payment model can provide a significant cashflow advantage because workers comp premium is paid in smaller increments on the same schedule that payroll is generated. Since the premium for pay-as-you-go workers comp insurance is based in part upon a business's payroll, what could be easier?
Typically, there is no down payment and no installment fees. Also, the likelihood of paying an extra premium at audit time is reduced because each bill is based on actual, not estimated, payroll.
5) Bundle insurance policies. We bundle our internet, telephone and television services to achieve better pricing. Why not bundle insurance coverages, too? When you find an insurer that you can trust to protect your employees, it just makes sense to have those same people handle your property and liability insurance needs, coverage for commercial vehicles and small fleets, and even homeowners insurance.