Employers seem to always focus on premium they pay for a workers compensation policy. It’s a natural thing! But in many ways premium is the result of cost containment, not the beginning. Let’s talk about workers compensation cost containment and it’s effect on premium.
Many individual rating factors go into development of premium for a workers compensation policy. Most rating factors are outside the control an employer may have. Uncontrollable factors may include individual classification code rates; minimum rating payroll for sole proprietors, LLC members, corporate officers and partners; 2nd injury fund; terrorism; minimum policy premium; and other state mandated charges or surcharges just to name a few.
But the employer does have influence over a few key rating elements. They are:
- Proper classification of business operations
- Verification of accurate rating elements
These key areas are where an employer should focus efforts to gain control over their workers compensation costs and ultimately the premium they pay for a policy.
Proper classification of business operations is a must. Business operations dictate the correct classification codes for an employers workers compensation policy. Rates per code make a great impact on the premium an employer pays. A word of caution, classification codes are complicated and an area of constant misinterpretation. It happens every day that a code is incorrectly used, many times resulting in a higher premium, and that’s usually when our firm gets involved in sorting things out! If you have a code problem, you don’t have to go it alone, give us a call.
Claims, believe it or not, are manageable! Sure claims happen, but doing everything possible to eliminate all workers compensation claims should be the employers first concern. Actively controlling claims that happen should be the employers second concern. I cannot emphasize enough the importance for an employer of any size to have a workable workers compensation claims management procedure developed for their business. A procedure that’s easy to follow and that’s used for every workers comp claim that occurs. Claims, in some fashion or other, affect all workers compensation policies. Claims can be controlled!
I mentioned a little earlier that many parts of the policy rating process are out of the hands of an employer. However, while an employer may not have direct control of most individual rating elements, it does not mean that costly errors and mistakes do not happen. A final and important part of any employers workers comp cost containment plan should be the verification of rating elements used on their policy. While the employer may not be able to do this themselves, there are a few of us out here who can. So make sure, as a part of any workers compensation cost containment effort, you contact an independent workers compensation consultant for assistance!
Hope this helps you out! Thanks for visiting.