Workers' Compensation insurance: 10 ways you can reduce costs now

Workers’ Compensation coverage protects your business and employees from financial loss in the event an employee is hurt on the job and helps pay for medical care, wages from lost work time, and more due to work-related injuries or illnesses. Workers’ Compensation for DSPs is a large part of the total cost of risk.

Each incident your DSP business experiences, affects the experience modifier which affects future premiums. There are also hidden costs involved with every incident. According to OSHA, employers pay almost $1 billion per week for Workers' Compensation costs alone, including direct (Workers' Compensation payments, medical expenses, and costs for legal services) and indirect or “hidden” costs (training replacement employees, accident investigation and implementation of corrective measures, lost productivity, repairs of damaged equipment and property, and costs associated with lower employee morale and absenteeism).

Here are 10 ways you can reduce costs:

1. Report injuries immediately. Injuries tend to get worse, not better, over time without treatment. You need your TPA to begin managing the claim as soon as possible. A study by The Hartford showed claim costs increased by 18 percent after a one week delay in reporting and jumped dramatically to 45 percent increase when reported after 30 days.
2. Keep Informed about the status of open claims. Meet with your carrier/TPA to develop strategies that drive claims to the earliest possible resolution.
3. Create a safety-first culture for your DSP business. Start to incorporate different safety trainings, even a daily huddle, to continue to reinforce safety best practices for you and your employees to consider before, during and after delivering packages.
4. Develop a strong Return-to-Work program. This can reduce direct and indirect costs, speed healing, reduce litigation risk, and improve employee morale and engagement. Remember, 80 percent of employees off more than six weeks will need assistance returning to the workforce. Also, medical-only claims are reduced by 70 percent in the experience modifier calculation.
5. Separate overtime pay from regular pay. Workers’ Compensation rates are based on percentage of pay, so keeping accurate payment records is essential to making sure you pay only what is appropriate.
6. Understand any limitations on Executive Officer’s payroll. Payroll limitations typically apply only to sole proprietors, executive officers, partners, and certain noted classifications. In general liability, payroll limitations generally apply to executive officers, sole proprietors, and partners. The limitation varies by state.
7. Make hiring and onboard training a priority. Providing proper safety training when an employee starts a new job or new job tasks helps prevent injuries in the first place. Conducting pre-employment physicals ensures the employee is physically able to perform the job tasks. 
8. Make sure someone is responsible for the Workers' Compensation process. Assign leadership that focuses on the impact of Workers' Compensation costs and continually educates employees on the process to help them feel comfortable reporting claims.
9. Reduce attorney Involvement. Lawyers typically receive 15-25 percent of any settlement amount. So, communicate often with affected employees. Make sure they know they’re not simply a number, and offer them transitional duty work whenever possible. Care and concern for your employees is the key here. If they think you don’t care employees are more likely to hire an attorney.
10. Take advantage of risk management services provided by your carrier, broker and TPA.

Looking for more information on the DSP Insurance program? Connect with our regional account team today!

Author: Cassandy Rudy, Senior Claims Consultant, Workers' Compensation, MMA

Sources: 
OSHA
NCCI
Safety and Health Magazine