When your workers’ compensation insurance carrier is calculating your premiums, one of the biggest factors they look at is your experience modification rating. That’s the rating the National Council on Compensation Insurance (NCCI) calculates by comparing your claims history to other companies in your industry, and by comparing your actual losses with expected losses.
And when it comes to the criteria for those ratings, new rating strategies by NCCI and some state insurance rating bureaus are putting greater emphasis on claims frequency when evaluating a company’s ability to control and mitigate risks. So while you’re sweating over how to prevent the severe, costly claims, make sure you’re not overlooking your smaller, less serious but more frequent claims, which have a bigger impact on your experience modification factor – and in turn, your premiums.
So how can you reduce your claim frequency? Here are three key strategies.
- Embed safety into your company culture. Foster a culture of safety in your organization and embed it into everything you do. You can’t simply put up a safety poster, implement a few initiatives or make a few procedural changes. You need everyone in your company onboard and being proactive about safety every day. Instead of making safety about compliance, make it about mutual concern and respect for everyone’s health and welfare, and a sense of collective ownership in the business. Make all new hires aware from day one that you view safety as an obligation.
- Make employee training pertinent to the specific job. In addition to overall safety training, make sure each employee gets training in the safety hazards associated with their specific position and duties, whether it’s proper lifting techniques, safe operation of machinery, or the position-specific safety attire they need to wear at all times. Clearly document the specific responsibilities and techniques required for each position. Don’t let little violations slide, and fix all problems completely and correctly the first time.
- Increase employee engagement. Get your employees involved in your safety culture. Start every meeting with a safety review to foster a “safety first” mindset. Create a collaborative team atmosphere by including employees from every department in your safety committee. Remember, front line employees are your best bet for coming up with proactive solutions to prevent future losses. Your key employees should be trained to diagnose potential future exposures. Aggressively seek out hazards and eliminate them. Consider offering incentives for achieving specific safety goals. Get your employees to own the safety process.
If you’re serious about lowering your workers’ compensation insurance costs, you have to be serious about reducing claim frequency. Don’t get so caught up in preventing the big, costly, catastrophic claims that you overlook the small claims that are happening more frequently, bumping up your experience modification rating, and chipping away at your bottom line.
For more ways to keep your workers’ compensation claims and costs under control, talk to the business insurance experts at Higginbotham.