Controlling Workers’ Comp Costs: Tips for Your Commercial Clients

September 3, 2019
Workers Comp Insurance

Business owners large and small understand that controlling expenses is an important part of their success, and insurance premiums are part of that equation. Since workers’ compensation is a “must-have” for most employers (meaning, it’s required by law), what steps can be taken to control these insurance costs?

First, What Not to Do!
Don’t let your clients sacrifice quality coverage for a small discount on price; this move could end up costing them more over the long run. Although most workers’ compensation policies are similar in nature, the level and type of services provided by all insurance companies is not.

Next, What You Can Do!
You should be sure that your clients (and their employees) are protected by a financially stable insurer that has a proven track record of helping to prevent occupational injuries/illnesses AND managing the claims that do occur in a cost-effective way. Otherwise, medical and indemnity expenses may contribute to a deteriorating loss history for an employer and end up increasing the price he/she pays for workers’ compensation insurance. You should also consider other “added-value” features offered by an insurer such as special programs, flexible billing plans, and self-service options.

For instance, you can encourage your clients to:

#1: Create a Safe Workplace
The simplest way to reduce expenses incurred from workers’ compensation claims is to prevent accidents from happening in the first place! Of course, you can’t eliminate all injuries/illnesses, but taking steps to create a safe working environment will go a long way to reduce the frequency and, often, severity of workplace mishaps. While larger businesses are accustomed to receiving a high degree of loss control support from their insurance company, it is harder to find an insurer committed to the same degree of attention for smaller operations. At Berkshire Hathaway GUARD Insurance Companies, we take pride in providing each of our policyholders, regardless of size, with an array of on-line and in-person resources designed and implemented by our expert loss control staff. TIP: In many states, a premium credit can be applied for establishing various safety measures at the work site.

#2: Report Claims Promptly
When an injury/illness does occur, the faster the claim is reported, the quicker managing effective outcomes can begin. (Only the administration of emergency care should come first.) Therefore, be sure your clients are working with an insurer that offers 24/7 claims reporting. Why? Because prompt claims reporting helps employees obtain fast, quality treatment and can hopefully avoid unnecessary lost time from the job. Companies that also handle the paperwork and supply their policyholders with a list of qualified medical providers (like at Berkshire Hathaway GUARD) are even better choices. TIP: In some states, a premium discount is available for participating in a managed medical care plan.

#3: Establish a Return-to-Work Program
When a limitation makes an employee’s ability to perform original duties impossible, minimizing time away from the job is vital to containing costs. Programs such as Berkshire Hathaway GUARD’s “Restoring Employees To Useful Roles and Normalcy” can help employers establish opportunities for their injured/ill staff to engage in modified-duty tasks and alternative work assignments that, in turn, minimize disruptions to a business’s operations. If your client’s insurance company isn’t talking about a return-to-work program, find one that will!

#4: Inquire About a Group Dividend Program
Group workers’ compensation insurance is a popular option for small- to mid-sized businesses. These groups “pool” the premium and loss experience of all members to determine dividend eligibility after the policy term. Most groups share similar characteristics, such as business type. For example, Berkshire Hathaway GUARD features group dividend programs for businesses in the (1) automotive, (2) restaurant, and (3) wholesale/retail food industries in most states.

#5: Choose “Pay-As-You-Go” Billing
More and more insurance companies are offering “pay-as-you-go” billing plans for workers’ compensation coverage. This convenient payment model can provide your client with a significant cash-flow advantage because workers’ compensation premium is paid in smaller increments on the same schedule that payroll is generated. Since the premium for this line is based upon a business’s payroll, what could be easier? Typically, there is no down payment and no installment fees. Also, the likelihood of paying an extra premium at audit time is reduced because each bill is based on actual, not estimated payroll. “Pay-as-you-go” billing is generally available in conjunction with participating payroll service companies with some insurers also featuring self-reporting options. Berkshire Hathaway GUARD offers both!

#6: Bundle Insurance Policies
We bundle our internet, telephone, and television services to achieve better pricing. Why not bundle insurance coverages, too? When you find a company that you can trust to protect your client’s employees, it just makes sense to have those same people handle your client’s property and liability insurance needs, coverage for commercial vehicles and small fleets, and even homeowners insurance. TIP: Many companies ―including Berkshire Hathaway GUARD― offer a wide variety of premium discounts when multiple policies are purchased.

#7: Take Advantage of Self-Service Options
Finally, in today’s digital world, on-line self-service options are an essential component to an insurer’s customer service approach. From making a payment to reviewing important policy information to checking on the status of a claim, internet portals just make insurance easier. Berkshire Hathaway GUARD’s Agency and Policyholder Service Centers are equipped with this functionality plus provide access to a wide range of free risk-management resources including a video library and safety materials in both English and Spanish.

This article originally appeared in Issue III, 2019 of Smart Choice Magazine.