Super High-End Home Theaters
Fascinating Sci-Fi Home Theaters
Gorgeous Celebrity Home Theaters
Our favorite themed home theaters.
Print
Email
Comments (0)
Share
How to Reduce Workers’ Compensation Costs
Employ these ideas to reduce workers' compensation costs.
Employers have a love-hate relationship with workers' compensation insurance. While the program protects business owners from lawsuits for workplace injuries, the required premiums continue to threaten profits.
"The cost of workers' compensation is a huge concern for most employers," says Ed Priz, president of Advanced Insurance Management. "In some regards, it is more of a widespread problem than health insurance."
Unlike that optional medical benefit, workers' comp is mandated virtually everywhere, except for some states that exempt the smallest of employers.
The biggest problem with workers' compensation is, of course, the size of the premiums. "Outside of health insurance, workers' comp is the most expensive insurance policy the typical employer buys," says Scott Simmonds, author of a book on the topic.
It may also be the most problem-prone: "Everyone seems to have a horror story either on the premium side or the claims side."
Experts say the most effective way to shave costs is to spot errors in the way premiums are calculated. "The insurance industry makes a lot of mistakes in providing workers' comp insurance," says Priz, whose job it is to spot overcharges in his clients' paperwork. "I find that in one third to one half the time, the client has been overcharged somewhere along the way. That's a significant error percentage."
One of the costliest errors is misclassification of employees. In the workers' comp world, different classes of workers are assessed different premiums, which reflect injury risk. "There are more than 900 classifications for employees and rates are all over the place," Simmonds cautions.
While actual premiums vary widely by state, clerical people have less risk of injury and are thus rated relatively low.
Your workers' comp premiums are affected by a second factor: your claims history.
The insurance industry compares the number and severity of your workplace injuries with those of similar operations in your industry. The resulting ratio is your "experience modification" or "x-mod" for short.
The lower your x-mod, the lower your premiums. "Many business owners aim for an x-mod of 1.0, a figure which indicates your claims are no higher or lower than the average," says Simmonds.
How can you lower your x-mod? The first way is to tally up your own history of claims and compare the results with those on your official x-mod worksheet. That document outlines the losses you have had, specifies your total payroll and provides the calculations that result in your x-mod. It is prepared by an agency called the National Council on Compensation Insurance (NCCI), which then provides it to your insurance carrier, who in turn forwards copies to your agent and to you.
You can also reduce costs by instituting a safety program that brings down your accident rate.
"The cost of workers' compensation is a huge concern for most employers," says Ed Priz, president of Advanced Insurance Management. "In some regards, it is more of a widespread problem than health insurance."
Unlike that optional medical benefit, workers' comp is mandated virtually everywhere, except for some states that exempt the smallest of employers.
Errors in Calculating Premiums
The biggest problem with workers' compensation is, of course, the size of the premiums. "Outside of health insurance, workers' comp is the most expensive insurance policy the typical employer buys," says Scott Simmonds, author of a book on the topic.
It may also be the most problem-prone: "Everyone seems to have a horror story either on the premium side or the claims side."
Experts say the most effective way to shave costs is to spot errors in the way premiums are calculated. "The insurance industry makes a lot of mistakes in providing workers' comp insurance," says Priz, whose job it is to spot overcharges in his clients' paperwork. "I find that in one third to one half the time, the client has been overcharged somewhere along the way. That's a significant error percentage."
One of the costliest errors is misclassification of employees. In the workers' comp world, different classes of workers are assessed different premiums, which reflect injury risk. "There are more than 900 classifications for employees and rates are all over the place," Simmonds cautions.
While actual premiums vary widely by state, clerical people have less risk of injury and are thus rated relatively low.
Check Your Records
Your workers' comp premiums are affected by a second factor: your claims history.
The insurance industry compares the number and severity of your workplace injuries with those of similar operations in your industry. The resulting ratio is your "experience modification" or "x-mod" for short.
The lower your x-mod, the lower your premiums. "Many business owners aim for an x-mod of 1.0, a figure which indicates your claims are no higher or lower than the average," says Simmonds.
How can you lower your x-mod? The first way is to tally up your own history of claims and compare the results with those on your official x-mod worksheet. That document outlines the losses you have had, specifies your total payroll and provides the calculations that result in your x-mod. It is prepared by an agency called the National Council on Compensation Insurance (NCCI), which then provides it to your insurance carrier, who in turn forwards copies to your agent and to you.
You can also reduce costs by instituting a safety program that brings down your accident rate.
Post a comment