Everybody knows that safety in the workplace should be the number one item on any risk managers mind, right? Well, if you didn’t know that, you should! Let’s talk a bit about how safety in your workplace makes a direct impact on the workers compensation premium you pay!
Experience rating is where your individual business workers comp claims are taken, compared to other businesses doing the same kind of work and plugged into a rating formula that spits out a rating factor that’s used to modify the premium you pay. Otherwise known as your EMR or Experience Modification Rate. This modifier can be identified as either a debit mod which will be expressed as a number over 1.0 such as 1.10 or 1.11 or be shown as a credit mod which will be expressed as a number below 1.0 such as a .90 or .98. This factor, once developed, will be applied to your individual workers comp premium.
So what’s safety got to do with it? A great deal.
The EMR is driven by several rating elements each of which will create it’s own unique problem if found to be applied in error. But by far the single most important element driving a EMR will be the employers individual loss history. In simple terms, claims will drive your EMR through the roof!
Safety is where it starts! A safe work environment, one where the elimination of claims is paramount and where employee buy in has been accomplished, will do a great deal to improve your EMR.
If you take a look into what makes some insurance carriers better at playing the workers compensation game than others you’ll almost always find that those carriers who place a great emphasis on insuring employers who can demonstrate top tier safety procedures are the ones who win the profitability game. As a matter of fact I recently read an article in Best’s Review that featured Maine Employers Mutual Insurance Company. The MEMIC CEO is quoted in the March 2016 article saying “Safety is our first and foremost point of attack. We won’t write an account without a thorough analysis from our safety consultants.” Just more proof of the importance the workers compensation insurance company community places on safety.
Don’t fool yourself into thinking that price is the only thing you should be focused on when it comes to your work comp program. That’s a losers attitude! In fact price, or the premium you pay, is actually a result of the safety procedures, claim control and your company attitude towards developing and maintaining a claim free work place.
Want to improve your chances at securing the lowest cost workers comp policy? It’s not that difficult and the formula for success is not a big secret. Simply work to improve your company’s losses. But that’s not all. You must work to improve your organizational skills in how claims are handled which should include developing proper claim reporting methods. Work to improve how your injured workers are treated and what you can do to get them back to work as soon as possible after an injury. Work to gain your employees buy in on how safety affects them on a daily basis.
Something I often hear from insurance carriers is that they want to insure “the best in class.” Those are the folks that get the lowest premium. Not employers who think claims “just happen.”
Cheaper premiums or lower premium costs come from you presenting to the insurance community a superior desirable risk. And that’s how creating and maintaining a safe workplace effects your workers compensation premium!
Hope this helps you out! And…thanks for reading!