Like materials, your lease, and taxes, workers’ compensation insurance is a necessary and unavoidable operating cost for your business. That doesn’t mean it’s an altogether fixed cost.
To calculate what your organization pays, an insurer first calculates your manual premium, then multiplies that by your experience modifier. Thus, there are two general methods for lowering your workers’ comp costs: lower your manual premium, or lower your ex-mod.
From an operational perspective, lowering your manual premium is the much more difficult option of the two. Remember, your manual premium is determined by payroll, location, and the kinds of work your employees perform. In order to change this number, you would need to cut workers’ pay, relocate your company, or start another business entirely.
Your ex-mod, meanwhile, is a multiplier based on your organization’s environmental health and safety performance. It can have a positive or negative impact on your premium. If your organization has better EHS outcomes than your competitors, you get a discount on workers’ comp insurance. If you do worse than your competitors, you pay a higher rate.
In other words, lower your ex-mod and you’ll lower your premium.
Here are a few practical ways to do just that:
- Eliminate sources of past losses.
This one is pretty straightforward. Find and fix any known and potential hazards in your facilities, if you haven’t already.
- Ensure workforce compliance.
Know and follow all the rules your organization is accountable for—from Occupational Safety and Health Administration regulations to laws on the state and local levels. This includes emergency response planning, labeling of hazardous materials, equipment certification, evacuation mapping, and more.
- Optimize employee hiring, onboarding, education, and training.
Communicate the importance of safety every individual in your organization—before they even join your team. Conduct EHS training on day 1 and periodically thereafter. Make sure everyone is aware of, involved in, and has a voice in your organization’s EHS initiatives.
- Establish a return-to-work program.
Minimize the length and cost of workers’ comp claims—while improving employee retention and morale—by making it easy for injured employees to return to work as soon as they are medically cleared to do so. Learn more about the benefits of a return-to-work program.
- Set EHS goals and keep your team accountable for them.
Instead of merely reacting to accidents and resulting claims, get proactive in your commitment to workplace safety. Designate safety responsibilities to leaders within your organization; establish EHS targets, timelines, and strategies; and measure results against your objectives.
- Maintain complete and thorough records.
In EHS, documentation is everything. Capture information about every system, step, employee, incident, decision, and so on.
- Give your insurer what they want.
Simple actions can go a long way in improving your ongoing relationship with your insurance provider. File reports in a timely manner. Be kind, courteous, professional, and responsive in any and all communications. Insurers are more likely to give the benefit of the doubt to companies who demonstrate a commitment to safety.
- Conduct regular audits and loss control inspections.
Stay ahead of EHS risks and uncertainties. Don’t neglect to inspect and test your systems for potential hazards, gaps, and areas in need of updating.
Ultimately, we’re talking about creating a comprehensive EHS program and instilling a culture of safety throughout your organization. If that sounds like a lot of work, it’s because it is—if you’re doing everything manually. KPA’s platform makes it possible to implement an EHS program that harnesses technology, best practices, and the concerted efforts of your workforce to maintain a safe and productive workplace. With KPA, safety professionals are consolidating their giant lists of EHS program essentials through a platform that covers everything:
- Issue tracking
- Claims management
- Accident management
- Mock OSHA inspections
- SDS access
- Hazard communication
- Environmental reporting
- Online training
No other solution on the market offers the same capabilities in one system. And few solutions can compare in terms of results. The typical KPA client earns and maintains a workers’ comp rate 10 percentage points below average, saving tens of thousands of dollars along the way.
Ready to see how you can transform your workers’ comp costs, safety outcomes, and bottom line? Schedule a free evaluation with us.