Reducing Worker's Compensation Costs
"Safety planning? I feel safe at work." Great, most people do. However,
Safety planning has far less to do with warm fuzzy feelings about being safe on
the job, than it does with more practical matters. For example, how much are you
paying for workers compensation insurance?
Yes, if you get a complaint OSHA may show up on your doorstep (unannounced of
course) and politely request to have a look around the place. Starting with the
simple stuff like whether or not you have the posters you’re supposed to have up
on the wall. OSHA also will want to review your written plans and procedures,
training records and illness and injury records; such as form 300.
Granted an OSHA inspector would typically fine you $200 - $1200 per violation
however, the real cost is in the premiums. Safety plans impress worker
compensation carriers to the point of offering deep reductions in premiums.
One company, an office business with about 200 employees was paying about
$138,000 in annual premiums to an insurance provider of last resort. Then the
insurance provider decided to pull out of California. By implementing an OSHA
compliant safety program the employer was able to locate a carrier who provided
the same coverage for $80,000 and held out promises for further reductions if
the injury rate reduced.
Today, controlling costs is more important than ever. Here in California
businesses are not just competing with one another in the traditional manner.
Businesses are competing with those who do not have overhead expenses such as
workers comp. Estimates vary however, with some 2 million undocumented workers,
many of who are working for cash at very low wages, business owners are not
competing on a level playing field.
As one plumber put it " there is no way I can compete with these people, I’m
paying almost $100,000 a year in workers compensation premiums. Undocumented
workers can undercut me by a wide margin."
If your rating is over 1.0 you are a greater risk than the average employer
(for worker comp injuries). If your rating is 1.5, you are likely paying 50%
more for insurance than your competition. (and 150% more than those who are
working under the table)
The best way to reduce insurance premiums is to comply with OSHA and
demonstrate this fact to your carrier.
Establish a formal safety program that has real teeth by assigning
responsibility to an actual person. Document procedures, evaluate hazards, train
employees, investigate injuries and illness, maintain on-going communications
and establish an accessible filing system. Then set up an appointment with your
worker compensation carrier representative. Most will be happy to come out to
your location and see first hand what you are doing. Then, let the negotiations
begin.
by Brian Scales
Copyright All Safety Products, Inc. 2003 Reprint Permission should be
directed to Brian Scales (E-mail:
brian@allsafetyproducts.biz)