Business owners know that workers’ compensation insurance is a necessity.
Generally speaking, any business in Michigan with even one employee is required to have workers’ comp, which provides wage replacement and medical benefits if an employee is injured on the job.
But what some do not understand is: The simplest way to cut the cost of your workers’ compensation insurance is never to have to use it, or to at least use it as little as possible. In other words, prevention of claims is the key to low workers’ comp costs.
So how do you prevent workers’ comp claims? Here are eight effective ways:
1. Make sure your employees know their roles and stick to them
It may seem obvious or unrelated, but having complete and accurate job descriptions for each employee is key to preventing claims. Particularly since some of your people may be trained for riskier tasks and others may not be, it’s important that your employees are doing what they were hired and trained to do if you seek to keep workers’ comp costs down.
2. Job too dangerous? Outsource
It’s possible you may have certain jobs or projects that aren’t a good fit for any of your people, but still need to get done. Consider outsourcing things like these, as it allows you to transfer some of your workers’ comp risk to an outside contractor.
3. Train effectively – particularly when it comes to safety procedures
Once you’ve got the right people in the right spots, be sure they’re trained properly. An employee who is trained well is usually more efficient, accurate and safe. Your company training program should include a new hire orientation as well as regular supplemental sessions, both on job-specific topics, but also safety-related topics, emergency procedures, etc.
4. Form and support a safety committee
The key driver of any safety training you do should be your safety committee. This committee should be made up of key employees who can evaluate employee safety, develop changes, present new information and so on.
5. Be substance-free
Obviously, sober people make better employees. Research shows that employees under the influence of drugs or alcohol on the job site are responsible for twice as much workers’ comp claims cost. With this in mind, consider prevention and mitigation measures such as pre-employment drug tests and/or random employee drug testing, and make sure substance-related expectations and disciplinary actions are clear and communicated effectively.
6. Document everything in an updated employee handbook
How do you make sure expectations are clear and well communicated? Have a regularly updated and effective employee handbook. Your SBU risk advisor can offer ideas and solutions to assist you with your handbook.
7. If an incident occurs, have a plan for reporting and reacting
Unfortunately, no amount of prevention can guarantee you’ll never have a workers’ comp claim. When an incident does happen, it’s important that employees know how to report it, and it’s even more important that your business is intentional about making necessary changes after the incident to make reoccurrence less likely. SBU has a solution available that makes reporting and reacting to claims much easier.
8. Lean on your risk advisor
Your SBU risk advisor is an important piece of the puzzle when it comes to controlling costs. We’ll be able to provide detailed recommendations, and we review workers’ comp coverages annually to ensure protection, value and effectiveness. Through our advisors, SBU can work with your company to control workers’ compensation cost with a proactive approach.
Making the Complex Simple
Workers’ compensation insurance is a necessity. These eight pieces of risk advising are a great start when it comes to cutting the cost of that coverage as much as possible.