Are Work Comp Costs Really a Big Deal?

The system that was designed to provide medical care and wage replacement for workers who suffer work-related injuries or illness is straining to sustain itself. Rising claim costs and non-regulated reinsurance are contributing factors to the rising costs of work comp.

Today, workers’ comp accounts for one of the fastest growing labor costs. Premiums for workers’ comp have risen 50% nationwide in the last three years – the fastest pace in a decade according to the New York City-based Insurance Information Institute. It really is simple math when every year costs double due to too many claims lasting longer than expected. Some businesses are finding themselves being hit with back-to-back increases of 25% and 40%, even if these businesses are favorable in workplace accident rates. As a business, there is no way to budget for a 20% increase that turns out to be twice that number.

Workers’ Compensation costs have had an enormous impact on several businesses’ bottom line. Accidents simply cost money – not only through direct costs, such as medical and compensation expenses, but in employee morale and client respect as well. Indirect costs are hard to calculate, but if lost, these items can cost your business several times more than direct expenses.

One factor that seems to be adding fuel to the fire is the length of time an injured worker stays off the job. Continuing wages that must be paid while they are on leave and the cost of replacement labor can be significant. Malingering claims are hitting businesses hard. Not taking an aggressive position on work comp and keeping a close watch on the entire process will cost businesses significantly.

The least expensive claim is the one that never happens! Reducing the number of accidents in your workplace will directly affect your costs for replacement labor while also reducing your chances of higher insurance rates. Having a solid safety program in your IIPP (Injury and Illness Prevention Program) that keeps you involved in the process can help reduce malingering claims.

Don’t allow your business to lose control of the claim, be proactive. Getting the injured worker to a modified duty assignment that accommodates their work restrictions, before the three day period ends that they have to start a claim, can save on your indemnity costs. Health and Wellness Rooms do just that by providing a modified duty room that can educate and help move the injured worker back to work faster than lying on the couch collecting work comp.

Insurance providers look at your track record and want to see what you’re doing to control your costs. Are you getting the injured worker the care that they need? Are you getting them back to work as quickly as possible? What are you doing to prevent future accidents and what programs do you have for safety training? Can you provide modified duty to your injured employee? All these questions, if evaluated in depth, can help move your business towards lower mod ratings and savings that will help your bottom line.

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