What is workers’ compensation?
Workers’ compensation coverage pays benefits to workers injured on the job, including medical care, part of lost wages and permanent disability. It also provides death benefits to dependents of employees killed from a work-related accident.
It’s important to note that workers’ compensation systems are different in every state, as individual statutes and court decisions have shaped the way they handle claims, evaluate impairments, settle disputes, provide benefits and control costs.
In 2022, our Claim Advocacy and reserve verifications lowered claim reserves by over $4,000,000 resulting in over $2,200,000 in premium saved due to decreases in their experience modification factor.
History and importance of workers’ compensation
During the 19th century, the number of individuals joining the workforce grew exponentially. As a result, the number of workplace accidents grew as well. At that time, the only way that injured workers could obtain compensation for their injuries was to sue the employer. Many legislative proposals emerged early in the 20th century, focusing on compensating injured workers for their medical care and lost wages.
By 1949, all states had a system in place to provide compensation for injured employees. Under these systems, the employer was responsible for providing compensation for the cost of medical care and wages lost, and consequently, the employee gave up his or her right to sue the employer for injuries.
As part of the insurance package, the injured worker’s medical, rehabilitation and lost wages are paid for by the state or insurance carrier. If the injury leaves the employee disabled, the insurance carrier will pay the claim based on the extent of the injuries and based on its permanence. The disability will fall into one the following categories: temporary total, temporary partial, permanent partial or permanent total disability.
Workers’ compensation rates and programs are managed by private insurers, state funds or the National Council on Compensation Insurance (NCCI). If you would like more information about how your state handles these programs, contact us.
Employer work comp responsibilities
Employers are required to do the following to comply with workers’ compensation insurance laws:
- Provide coverage for their employees and are held liable for all injuries suffered by employees while they are on the job (with the exception of employers residing in the state of Texas)
- Pay premiums and provide the carrier with audit payroll numbers
- Provide a safe environment
- Notify the carrier as soon as possible after an injury
- Investigate injuries
How can you control workers’ compensation costs?
There are many ways for you to control workers’ compensation costs for your business. The most important is to convince your employees that maintaining a safe workplace is vital and will consequently reduce your insurance costs.
Implement a return-to-work policy in which employees work modified duty until they are fully healthy to do their jobs.
Understand the elements that contribute to your workers’ compensation costs. It is vital that you understand the impact that each brings to your overall pricing.
Orient and train your employees on safe practices necessary for their job functions and tasks.
Insist that employee claims are reported promptly, as statistics reveal that for every week that a claim goes unreported, the cost can increase as much as 50 percent.
Investigate the cause of injuries and illnesses. While one injury may be behind you, others will take its place unless you do something to reduce the chance of the incident occurring again.
Further managing your workers’ compensation costs
Your workers’ compensation insurance premium is based on a rating your company has, which is based on payroll, averages for your industry and claims experienced over a three-year period. Claims have a direct impact on this experience modification factor (mod), which can significantly drive up premiums. This means many times a company will pay for its own claims in increased premium costs. There are many things that companies can do to lower their workers’ compensation costs, such as the following:
- Inspecting your insurance policy to make sure that all job classifications and payrolls are correct.
- Making an investment in workplace safety to avoid accidents to improve claim histories and reduce overall costs. If you modify operating procedures even slightly, you can alleviate unnecessary exposure to injuries.
- Creating a modified duty program at your organization to help injured employees return to work sooner. Under these programs, employees are assigned duties that they can physically complete while they recover. The most successful return to work programs incorporate speedy, quality medical care and assistance to reduce emotional stress after an accident.
Certified WorkComp Advisors
We take workers’ comp seriously, knowing it’s the most controllable form of insurance you have. Our Certified WorkComp Advisors work with you to establish a process that reduces costs and improves productivity.
How can UNICO help control work comp costs?
Safety and Loss Control
Reduce the number and severity of workers’ compensation claims through safety programs in the workplace.
- Assistance and training in the development of a safety committee
- Creation and implementation of a new employee safety orientation program
- Employee flyers and presentations
- Safety meeting topics
- Written safety manuals and policies
- Establishment of an injury review process
- Claim review meetings and consulting
- Cost of claims analysis
- Shock loss mod letters
- Monitoring claims
- Claim reporting assistance
We help our clients understand their mod rating and provide them with ways to significantly save on their workers’ compensation premiums.
- Mod premium analysis
- Discover cost drivers
- Stay ahead of your losses
- Control your costs
Return to Work Programs
Get injured employees back on the job sooner with our resources for creating effective return to work programs:
- Identification of light duty jobs
- Development of an ADA-compliant written policy and job descriptions
Make sure everyone is on board with the loss control initiatives by using our supervisory training materials, which emphasize:
- The financial impact of employee injuries
- How to prevent worker injury
- The basics of cumulative trauma injuries
- How to improve ergonomics of workstations
Read more about UNICO and various potential insurance experiences through these Case Studies.