For California employers, this summer brought at least some relief in workers’ compensation premiums following a proposal by the state Workers Compensation Insurance Rating Bureau (WCIRB). Beginning July 1, premium rates went down thanks to lower-than-expected medical costs and declining severity.
But despite this bit of good news, other trends may serve to keep your workers’ compensation costs up.
The State Average Weekly Wage (SAWW) rose almost 4 percent in the year ending March 31, 2016. That’s going to boost temporary total disability (TTD) and permanent total disability (PTD) rates for 2017 workers’ comp claims. Beginning in January 2017, other workers’ comp benefits will be increasing too, including TTD paid two years or more after an injury, PTD payments for injuries on or after January 1, 2003, and installment payments on death claims. On top of that, medical costs continue to rise.
Bottom line: you need to be as diligent as ever about controlling your workers compensation costs, already among the highest in the nation. One way to do that is through targeted risk control. Here are four crucial areas you should be focusing on:
- Thoroughly screen new hires. Preventing injuries and workers’ comp claims begins with your hiring practices. When checking out job candidates, be on the lookout for red flags such as a history of complaints, poor performance, or retaliatory measures. Conduct comprehensive background checks, and consider using tools such as drug screening, post-hire questionnaires, and pre-employment medical exams. A proactive pre-employment screening strategy can help you avoid candidates that are more likely to be injured on the job.
- Know your claims history. You can’t effectively manage future claims without understanding what’s happened in the past. Take time to analyze claim trends for anything that negatively affects your loss experience and total cost of risk. Then develop a risk control plan based on your analysis, clearly spelling out the financial improvements you expect to achieve by implementing your plan. This process of improving safety in targeted areas can help reduce your workers’ compensation premiums.
- Watch your MOD. Understanding your experience modification ratings (EMR) can go a long way in keeping your workers’ comp premiums down. Routinely evaluate your experience modification rating to ensure its accuracy and to help predict its future financial impact on your premiums. Inaccurate EMR calculations are usually the result of errors in payroll amounts, inaccurate job classifications, improper claim reserves, and open claims that should be closed.
- Be proactive about closing claims. The best way to keep your claims costs down is to close claims quickly. After all, severity – the length of time an injured worker is off work – is the number one driver of claim costs. So you need to do everything you can to move claims along toward resolution. Also, sit down with your insurance carrier every quarter and conduct a claim review to determine whether claim reserves are too high and need to be adjusted downward, and whether any open claims should be closed based on the claim’s circumstances. These quarterly claim reviews can be an effective strategy for reducing outstanding open claim amounts – and that means better premium pricing.
Employing smart, targeted risk management strategies can help you mitigate the financial effects of adverse loss trends, better manage claims, and keep costs down. Want more smart strategies for keeping your workers’ comp costs under control? Partner with the California workers’ compensation experts at Republic Capital. Contact us today or download our fee Cost Control white paper.