How to Reduce Skyrocketing Workers Comp Costs Even in Difficult Economic Times

Managing Workers’ Comp Costs Important, Especially Given Current Economy

While many companies continue to battle with added costs and continuing layoffs, the financial impact of ever-increasing workers’ compensation insurance costs often goes unrecognized.

For many companies, getting a handle on workers’ comp costs  is something that is absolutely possible, but it takes time and effort to do so.

Whether companies are major players in the business world or mid-level employers, their workers’ comp costs can be managed, with the average reduction being anywhere from 20 to 50 percent. The first step is the most difficult — to start with STEP ONE.

For those not comfortable in dealing with their workers’ comp costs, finding a qualified insurance broker or agent to explain the methodology of premiums and more is easier than you think. At the end of the day, all workers’ comp coverage will be decided by how much in losses the insurer believes your company will undertake. Start by selecting an insurance broker or agent that is familiar with the vagaries of YOUR industry. Some selection criteria are available.

For the majority of companies, workers’ comp ranks as the greatest percentage of their insurance dollar; often as high as 30%, according to the 2009 RIMS® Benchmark Survey. For Professional Employee Organizations (PEO), and trucking companies, workers’ comp cost is many times trailing only their payroll expense.

Employers, insurers and brokers that team together have major incentives to trim the cost of workers’ comp. Consider your insurance broker and insurance claims handler or third-party administrator your partner. Ask them to help you develop a cost reduction plan.

When starting such an initiative, the risk manager needs to obtain the support of senior management, employees and physicians to put in place a holistic program. The broker must obtain the numbers to substantiate development of cost containment initiatives. Start by using the Workers Comp Calculator www.ReduceYourWorkersComp.com/calculator.php to show senior management the real cost of workers’ compensation.

Editor’s Note: Look for how to implement a proven workers’ comp program in the next installment.

Author: Rebecca Shafer, J.D. consults for mid-market and national accounts focusing on project management, risk management assessments, data review, benchmarking, and development of Workers’ Compensation and Injury Management Programs. Projects focus on development of training and education programs, document design, evaluation and integration of insurance claims administration and TPA services. Contact at: RShaferB@ReduceYourWorkersComp.com

Visit Our Websites:
Reduce Your Workers Comp: www.ReduceYourWorkersComp.com/
Workers Comp Kit: www:workerscompkit.com/
WC Calculator: www.reduceyourworkerscomp.com/calculator.php

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workman’s comp issues.

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