Controlling the Cost of Workers’ Compensation Insurance
Most businesses with employees are generally required to buy workers’ compensation insurance. Workers’ compensation insurance is intended to protect your construction company from worker lawsuits that result in employee injury from accidents on the job and to provide medical treatment and compensation for lost income to your injured employees.
The cost of paying workers’ compensation premiums is a significant one for most contractors. Premiums have moved upward over the years due to a rise in state-approved rates, increasing medical costs, mandated coverage for more types of ailments, and a jump in the number of fraudulent claims. As the owner of a construction firm, you can implement a variety of cost-reducing strategies to help control your expenses. Here are some ideas you may be able to use.
Review Your Carrier’s Premium Calculations
When it’s computing the premiums for your company, your workers’ compensation insurance carrier examines several variables, including the size of your payroll, job classification codes, and your history of claims/accident history. Each job classification, generally, is assigned a separate rate. Therefore, your premiums could rise because of an error in classifying your job categories. You should always carefully review your workers’ compensation insurance billing statement and policy declarations for accuracy.
Introduce On-the-Job Safety Incentives
The higher the number of on-the-job injuries, the higher your premiums. A well-designed, rigorously implemented employee safety incentive program can reduce injury rates and help control the cost of premiums. Consider creating a safety committee that has the time and the authority to carry out a thorough overview of your operations to identify those practices and operations that have the potential to cause worker injuries. It’s also important to get the support and cooperation of every employee in this undertaking. You could consider offering prizes and bonuses to employees for suggestions for better workplace safety.
Look into Using a Single Carrier for Medical and Workers’ Compensation Insurance
Buying your medical and workers’ compensation insurance policies from a single carrier may deliver potential cost saving benefits. The carrier may offer a discount and will often apply the same type of cost control methods to workers’ compensation costs that it uses to control medical plan claims. This rigorous oversight may result in lower overall costs for your company.
Consider Any Multistate Issues
If your business has construction activities in more than one state, you should know that workers’ compensation laws vary from state to state — for instance, when it comes to the amount and the duration of lost income benefits. In addition, cost-control strategies that may be allowed in one state may not be allowed in another.
Warning Signs of Possible Workers’ Comp Fraud
- A late claim report without a reasonable explanation
- An accident without any witnesses and the injured employee’s explanation does not logically support the cause of injury
- An accident with a witness who appears unusually eager to describe what occurred
- A claimant who has a history of numerous suspicious, litigated claims
- A claimant who is difficult to contact at home when they are allegedly disabled
- A claimant with financial problems
- A claimant who files a claim after being told that he or she will be laid off or just before a job is completed
- A relatively minor accident resulting in major medical costs and an injury that lasts for several weeks or months
- Injuries that tend to be subjective, such as muscle spasms, strains, headaches, and nausea