Workers compensation insurance is a considerable expense for small business owners and premiums may be increasing even more, but there are a number of steps small business owners can take to mitigate costs.
Workers compensation insurance is a mandatory protection maintained and paid for by employers. Insurance benefits are paid to compensate employees hurt on the job. Given the mandatory nature of workers comp coverage and the potential expense involved, the cost of workers’ comp insurance can be a company’s second-largest operating expense after payroll. Recent changes to federal law as recommended by the National Council on Compensation Insurance and to Illinois law threaten to increase premiums even more.
Here are some tips small business owners can take to cut or slow the growth in workers comp premium costs:
— Safeguard employee hiring practices by doing a thorough, non-discriminatory review of applicants and their backgrounds. Probe applicants about lapses in their work histories and reasons for leaving former employers.
— Take safety seriously. Implement safety programs in such areas as materials handling and ergonomics.
— Encourage workers to take simple steps for their own safety, like stretching regularly. Lead by example, and hand out exercise cards office workers can keep at their desk.
— Estimate your payroll accurately. Since workers compensation premiums are based, in part, on payroll, you can avoid overpaying (which ties up money that might better be used to build your business) or underpaying (which could mean penalties) by estimating as accurately as possible.
— Walk the factory floor daily to make sure there are no obvious signs of any accidents waiting to happen. Make everyone accountable for safety and health in the workplace.
— Implement good accident reporting procedures and communicate them regularly.
— Take complaints about working conditions seriously, and do what you can to address them. Disgruntled employees are a major source of workers compensation fraud.
— Publish your workers compensation policies and educate your employees about the cost and impact of workers compensation insurance on the business. Employees need to understand that their employer, not the big insurance company, ultimately pays the costs of injuries.
Accidents will happen from time to time and this is inevitable, but by being proactive and keeping them to a bare minimum, it is going to cost you less in the long run.
Because workers compensation is so highly regulated, it is worth the time to shop for quotes from multiple insurers; longevity with a single carrier doesn’t provide any real benefit in terms of premium costs. Packaging workers compensation coverage with property/casualty coverage sometimes saves costs, sometimes not; it’s worth looking at it both ways.
The experts at Axcess Insurance Services Group can help on both counts: shopping around and advising on whether to package coverage. Contact them today.