The cost of workers’ compensation insurance has been increasing year after year, making it one of the most expensive lines of insurance for businesses. To maintain profitability in today’s competitive marketplace, controlling these costs is essential. Many factors contribute to the cost of workers’ comp premiums, but some businesses may be surprised at how much they can save by implementing certain measures.
By following these six tips, businesses can keep their workers’ compensation expenses under control and improve their bottom line.
Review Coverages
Make sure you have the right amount of coverage for your risks. Don’t over-insure or purchase unnecessary coverage, but make sure you have enough protection in case an employee is injured on the job. For instance, if your business is low-risk, you may not need as much coverage as a company that operates in a more dangerous industry. On the other hand, if you have a lot of employees, you may need more coverage than a business with only a handful of workers.
You can also save money by having a higher deductible. This means you will have to pay more out of pocket if an employee is injured, but it will lower your premiums.
Professional Employer Organization (PEO)
One way to reduce workers’ compensation costs is to contract with a PEO. A PEO provides comprehensive HR services, including workers’ compensation insurance, to its clients. By consolidating all of your HR needs under one roof, you can save both time and money. In addition, PEOs have the buying power to negotiate lower rates on behalf of their clients. This means you can get the coverage you need at a price you can afford.
On the other hand, PEOs are not for everyone. You will have to give up some control over your HR functions, and there may be a learning curve as you adapt to working with a PEO. Before signing on with a PEO, make sure it is the right fit for your business.
Implement Safety Measures
One of the best ways to control workers’ compensation costs is to prevent accidents and injuries from happening in the first place. There are many things you can do to make your workplace safer, such as providing employee training, implementing safety protocols, and conducting regular safety audits. By taking these measures, you can lower the chances of an accident occurring, which will save you money in the long run.
Additionally, if an employee is injured, a well-run safety program can help ensure that the injury is properly documented and reported. This will help to prevent fraudulent claims and ensure that you only pay for legitimate injuries.
Work with a Third-Party Administrator (TPA)
If you self-insure your workers’ compensation coverage, you may want to work with a TPA. A TPA can help you manage your claims and keep costs down. TPAs have extensive experience handling workers’ compensation claims, so they know how to get the best possible outcome for your business.
They can also help you navigate the often-complex world of workers’ compensation laws and regulations. It’s important to have a partner you can trust when it comes to managing your workers’ compensation claims.
Return-to-Work Program
A return-to-work program can help get employees back on the job quickly after an injury. The sooner an employee returns to work, the less money you will have to pay in benefits. In addition, a return-to-work program can help reduce the chances of an employee developing a long-term disability.
There are many different ways to design a return-to-work program, so it’s important to find one that fits your company’s needs. You may want to consider having different programs for different types of injuries, or you may want to create a customized program for each employee.
Data-Driven Approach
Finally, it’s important to take a data-driven approach to control workers’ compensation costs. By analyzing your claims data, you can identify problem areas and make changes to your safety program accordingly. For instance, if you notice that a particular type of injury is occurring more frequently, you can take steps to address the issue.
In addition, data-driven decision-making can help you choose the right mix of workers’ compensation insurance and self-insurance. By analyzing your claims history, you can determine how much coverage you need and how much you can afford to self-insure. You can also use data to negotiate better rates with your insurance carrier.
Controlling workers’ compensation costs is essential to the success of any business. Businesses can take several steps to reduce these costs, such as contracting with a PEO, implementing safety measures, and working with a TPA.
Depending on your business’s needs, you may want to consider these six strategies for controlling workers’ compensation costs or the mix of them.