Safety, OSHA and Your Workers Compensation Policy

What’s the number one thing an employer can do to control workers compensation costs? Provide a safe work environment! Who oversees an employers work environment? OSHA! What’s all this have to do with your workers comp policy? Read on…

Insurance companies, who provide workers compensation, have a vested interest insuring employers who provide a safe work place. That’s because a safe work place equates to lower claims and more profits for the insurance company. Let’s look at things from the insurance company point of view. When an insurance company looks at a new risk that’s been submitted for coverage one of their top concerns is the employers claim history. They will review an employers loss history and EMR or experience modification rate worksheet. These are two tools an underwriter uses to assist them in determining an account’s acceptability for coverage with their company. An employer’s safe work place is important to an insurance company. You’ll typically find that employers with good claim history will receive better pricing from an insurance company while those with poor history may find it difficult to find coverage at all!

Employers have a vested interest in a safe work place because they don’t want to see one of their employees injured and claims equate to higher workers compensation premiums. So, an employers good claim history, as documented by loss runs and experience modification worksheets, plays an important part in securing coverage at competitive prices. Remember, an employer with good claim experience is an employer who’s business is sought after in the workers compensation market place!  

OSHA, the Occupational Safety and Health Administration, has an interest in work environments because of a mandate from the Federal Government to protect employees from workplace related injuries. It’s a job they should and do take seriously! Workplace safety rules developed by OSHA are thought, by many employers, to be onerous or heavy handed. Many employers take the stand that when OSHA comes to your work site it can only mean trouble! Sure, like many other government agencies, they come loaded with tons of red tape and difficult to understand rules written in what seems to some strange language that’s at best hard to figure out or understand. But the fact of the matter is that they come armed with an unparraleled statistical data base of work place injury information gathered since their inception. Information that when voluntarily implemented is translated into a much safer work environment. It’s their job after all to reduce work place injuries! An employer interested in reducing injuries can access OSHA rules and regulations through their website. (Be sure to check out their Construction Fall Prevention Program. Did you know that falls are the leading cause of death in the construction industry?)

No doubt about it, safety in the work place is the first place an employer should start when looking to control workers comp costs. Claims drive the typical workers compensation policy through experience rating and the application of the experience modification rate or EMR. So if an employer can reduce or eliminate employee injuries they will, over time, see an improvement in the EMR and a resulting reduction in premium. Or at least that’s how it’s suposed to work! Of course there are other factors that contribute to increased cost but by far claim dollars paid and reserved have the greatest impact.

An employer has many resources available to assist with creating and maintaining a safe work environment for their employees. Here’s a few:

  • The Insurance Company;  Most workers compensation insurance carriers have in house safety departments that will assist employers with establishing safety programs, providing safety materials and making recommendations that an employer may follow.
  • OSHA; The safety police! No other single organization has the mandate or statistical data to back up their rules and regulations for a safe work place. They know what causes work place accidents and what should be done to avoid employee injuries. Use them!
  • Independent Consultants; Workers compensation safety consultants can be a valuable source of information for an employer. Providing claim and loss review, establishing workable safety programs and guiding an employer to improved claim history are just a few areas in which a work comp consultant can help.

Hope you find this information helpful!

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