8 Keys to Lowering Workers’ Compensation Premiums

By | October 26, 2011

Written by:

Bob Hollingsworth of The Buckner Company


1. Know Your Experience Modification Factor.

The experience modification factor is one of the critical factors in determining the cost of your workers’ compensation premium.  Understanding how it works and how it is affected by your losses is vital.  There are some big changes coming in how the experience modification is calculated starting in 2012.  Check with your agent/broker regarding these changes.


2. The Safety Manager is Your New Best Friend. 

Great safety translates into fewer accidents.  Fewer accidents mean fewer workers’ compensation claims.  Ask the safety manager what can be done to eliminate the most common accidents and injuries in your industry.


3. Know Your Insurance Agent/Broker.

Your broker needs to be your best friend.  A mistake many employers make is thinking the broker’s main job is to keep you (the client) happy.  The broker should be a knowledgeable business person who works for you as an advisor on:

  • How best to submit claims.
  • How to cost effectively manage claims.
  • How to read & use the loss runs
  • How to affect change regarding your experience modification factor.
  • Be a proactive part of your workers’ compensation program.

Discuss with the broker what benefits are provided.  Hold the broker to this, and your job will get easier.  Expect more than simply an annual stewardship report. 


4. Know the Return-to-Work Program.

The better the company’s transitional duty program (also known as modified duty or light duty) the quicker and faster the workers’ compensation claims will come to an end. The company is going to be paying the cost of the indemnity benefits through higher workers’ compensation premiums. To reduce the cost of those benefits, return the employee to modified duty. While the injured employee may not be as productive as an uninjured employee, all the productivity of the injured employee on light duty is benefiting the company to some extent while reducing the cost of the claim.


5. Know Your Insurance Company.

What services do they offer as part of your program to help you lower your cost? Ask them to explain ALL of their services, not just those they pre-select. Your agent or broker should be very helpful here.  Are they a behemoth insurance company who writes workers’ compensation, or are they a smaller, regional, or local company that specializes in workers’ compensation?


6. Sometimes it is Time to Babysit.

Employees do get injured.  Employees need to know the company still cares about them even though they temporally are not working. This is the critical role of supervisors; they will affect when employees return to work.  The best procedure is to contact the injured employee after each medical appointment to learn about  any issues with their medical treatment, their return to work status and any concerns they have about their job or their workers’ compensation claim. By showing the injured employees that you, the employer, cares, it will have an overall effect of lowering cost of workers’ compensation.


7. Know the Adjuster.

The adjuster needs to be a best friend. Often adjusters are given too many claims to manage on a proactive basis.   The better the working relationship with the adjuster, the fewer snags encountered on workers’ compensation claims.  A competent adjuster who does the job well will make the WC manager’s job easier.



8. Learn How to Read Your Loss Runs. 

Loss runs can provide a massive amount of useful information on the nature and the extent of the injuries.  Learn about the types of injuries that occur most often and discuss with the Safety Manager what can be done to curb or even eliminate some claims. This is the place that shows you how much money is being spent on medical and indemnity benefits.  Ask your agent or broker about the most helpful stats they review on loss runs.


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