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As higher workers’ comp rates loom, employers can soften blow

HISTORY OF INJURIES, POSITIVE ENVIRONMENT, RETURN TO WORK ARE KEY

By now many of you are aware that the Workers’ Compensation Insurance Rating Bureau is recommending a 16 percent increase in “pure premium” rates to Insurance Commissioner Steve Poizner.

This increase would affect new and renewing policies as of Jan. 1, 2009. Hardly the type of New Year’s gift hoped for by California employers already facing an extremely challenging economic climate.

It might seem as though our collective fates rest in the hands of insurance company CEOs and their view of the California workers’ compensation marketplace. To some degree this is true. How these executives view the market will to a large degree determine the rates filed by their companies.

Still, it would be a mistake to throw up your hands in disgust or feel completely helpless as rates fluctuate up and down. As an employer you retain a significant measure of cost control through your company’s culture and the ability to reduce the frequency and severity of claims suffered by your employees.

The number and seriousness of work-related injuries sustained by your employees is a critical factor in determining how much you will pay for workers’ compensation insurance. This is true for employers large enough to qualify for an Experience Modification rating (which is a benchmark used to compare your company with other companies in California performing similar operations as your own) and for smaller employers for whom carrier underwriters can apply pricing debits or credits based on your loss history.

Furthermore, a positive corporate culture increases worker productivity and boosts company revenues. Employees who enjoy where they work and feel appreciated by their company are likely to outperform their disgruntled peers.

It also stands to reason that a worker who enjoys his/her job is far more likely to return to work quickly following an injury than an employee who dreads the thought of coming back to work.

Every day an injured worker remains out due to injury increases the cost of his or her claim. Since claim costs are passed back to employers in future workers’ compensation premiums, it’s vital to keep these costs to a minimum. Also consider what the lost productivity costs could be for your company if an important employee were to remain out on disability leave for an extra two months.

There is no shortage of recent examples showing us that financial markets, including insurance, tend to go up and down. A quick look at my currently free-falling 401K savings stands in painful testament to this fact.

As employers we need to understand that it is in our best interests to optimize the controllable factors that increase our revenues and reduce our costs of insurance in all markets.

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David Weinstein, CWCA, is executive director of CompZone, a wholly owned division of Vantreo Insurance, www.vantreo.com, 707-546-2300.