Gulfshore Insurance > Gulfshore Blog > Commercial Risk Management > 6 Keys to Controlling Workers’ Compensation Costs

Workers’ Compensation has fast become a leading cost factor in business insurance programs. Premiums are at an all-time high within many business classes and the indirect costs associated with employee injuries are often two to three times the premium. Many businesses are left feeling helpless in controlling these costs and do not realize the level of control they can have. Below, we offer six key strategies to help effectively control your workers’ compensation costs. …

  1. Use a Formal Safety Program – In addition to qualifying for a 2% break on workers comp premium, a formal safety program will help create a safety culture within your organization. A positive safety culture increases awareness of hazards; promotes teamwork; and rewards results. A common safety program element is the Drug Free Workplace program, providing for an additional 5% premium credit.
  2. Use a Formal Return-to-Work Program – When an employee misses work due to a work related injury, the employer is hit with both direct and indirect costs. Direct costs are associated with medical and indemnity benefits, increases in premium, and overtime or wages for replacement workers. Indirect costs are associated with decreased production, time spent on claims management, retraining replacements, and low morale. A Return-to-Work program allows the employer to reduce WC benefits and get production from injured employees even when they have medical restrictions.The Experience Mod provides an additional 70% credit on the value of the claim for employers that use a Return-to-Work program.
  3. Use In-Network Medical Providers – Medical providers within an insurance carrier’s network can provide as much as 40-60% savings on the cost of medical treatment over out-of-network providers. Keep a directory of all WC medical providers by specialty so treatment can be directed to the providers that help control the cost.
  4. Complete an Annual WC Experience Mod Audit – As much as 75% of WC Experience Mod Rates (EMR) contain errors. The EMR has a direct impact on your WC premium, so ensuring its accuracy is critical. Common errors consist of inaccuracies in payroll, class codes, claim status, claim codes, and claim values.
  5. Choose the Rating Plan That Makes Sense – There are numerous WC plans such as Guaranteed Cost, Dividend, Retrospective, and Deductible. Many of these plans reward employers for maintaining a safety culture and minimizing claims. Participating in risk sharing plans such as Retrospective and Deductible can provide the largest tangible payoff for good performance. These risk sharing plans often include cash flow incentives in the payment of premium and claims.
  6. Get Value for the Premium Commission – Commissions on WC policies can range from 5% to 15% of the premium. In addition to placing the policy, an insurance agent should provide Safety and Loss Control Services, Claims Reviews, Experience Mod Audits, Statistical Analysis of Claims, and Online Service Portals all commensurate with the amount of commission they receive. Don’t pay for a third party to provide what is embedded in premium commission.

John Keller, CRM ARM CIC AAI is the Director of Risk Management and Claims at Gulfshore Insurance. John works with a wide range of business clients to deliver strategic risk analysis and guidance. Comments and questions are welcome at

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