A phrase that’s recently turned into a sort of buzz in the world of workers compensation. This is one of those topics that if you ask different people to define it, you’ll get different answers. In this blog I’ll shed a little light on Workers Compensation Cost Containment and we’ll learn how a cost containment program may help an employer.
Workers Compensation Cost Containment typically refers to any sort of documented program developed and implemented to mitigate the costs associated with workers compensation insurance. These programs come in all shapes and forms. From the very simple to the very complicated. From very limited to a very broad focus. But I’d venture to say that the majority of cost containment programs that are in place are primarily focused on reducing workers compensation claim costs.
For the experience rated employer (that’s an employer who has qualified for an EMR or Experience Mod or XMOD) claims play a very important part in the premium they ultimately pay for their workers compensation coverage. So it’s a natural thing that control and reduction of claims will have a positive impact on premium.
But shouldn’t a Workers Compensation Cost Containment Program address more than the claim cost function? That’s what we believe!
Workers compensation premium development is complicated and involves a hodgepodge of various rating elements that come together in one place to produce the premium an employer pays for coverage. Classification code identification and application; proper application of rating payroll; application of contracting classification credits along with other premium credits; and experience rating modification calculations are just a few rating elements that, on their own, make a big impact on proper premium development. A comprehensive cost containment program will, in addition to claim cost control, address each of these items.
So a Workers Compensation Cost Containment should not be just about getting a handle on claim costs but should, in some manner, encompass all cost factors in development of an employers workers compensation premium.
We are currently developing a specific section on our website about Workers Compensation Cost Containment so be sure to check in on our progress every once in a while.
Hope this helps you out! Thanks for reading!
