The Impact of Workers’ Comp Mistakes on Premiums
Workers’ compensation insurance is a crucial part of any business—no matter the size. Workers’ comp not only helps protect your employees financially in the event of an accident or injury at work, but it can also protect your business.
Mistakes aren’t completely unheard of when it comes to workers’ comp claims, however, and these errors can have a huge impact on premiums. As a business owner or HR manager, ensuring you’re saving the most money possible while keeping your employees covered is imperative. Let’s take a look at some of the common workers’ comp mistakes, workplace safety, the Experience Modification Rate, and best practices for reducing premiums.
Common Payroll and Classification Errors
Managing payroll and workers’ compensation can be overwhelming, particularly when you already have a lot on your plate. Let’s dive into a few of the most common mistakes made when handling workers’ compensation claims.
1. Classifying Employees Incorrectly
Employee classification depends on what type of employee they are—whether that’s full-time, part-time, seasonal, or an independent contractor. These classifications typically determine what benefits a worker is eligible to receive. If an employee is classified incorrectly, it will mean backtracking to fix errors and can result in higher premiums going forward.
2. Not Filing the Claim Right Away
As an employer, it’s crucial to be proactive about filing workers’ comp claims. Filing a claim right away helps ensure the details of the incident are accurate, and it can also help prevent the situation from escalating further.
3. Failing to Properly Document the Incident
Providing a detailed account of the incident is imperative for keeping premiums at bay. For example, if you miss out on key pieces of information, it may result in an accident looking like the fault of the company when really it was negligence on the part of the injured worker.
Failure to Maintain a Safe Workplace and Its Consequences
One of the best ways to prevent an increase in workers’ compensation premiums is to maintain a safe workplace. No matter what industry you’re in, an unsafe work environment can lead to an increase in workers’ comp claims, ultimately resulting in higher premiums.
How Claims Management Affects Your Experience Modification Rate (EMR)
The Experience Modification Rate (EMR) is calculated based on your company’s claims history in comparison to others of a similar size in the industry. The National Council on Compensation Insurance calculates this rate by looking at the expected losses in your industry versus what your company’s losses actually were, as well as their frequency and severity. Proper claims management is necessary for improving your EMR.
Best Practices to Reduce Workers’ Comp Premiums
1. Create a Safe Work Environment
First and foremost, creating a safe work environment plays a massive role in reducing workers’ comp premiums. This applies not only to the safety of the workplace itself, but also to the way your employees interact at work. Be sure they know the importance of workplace safety, and set a strong example of what that looks like through your own actions.
2. Implement Safety Training Programs
Implementing safety training programs is a great way to keep your employees up to speed on current safety protocol. Offering refresher training regularly rather than waiting until an incident occurs is crucial for helping improve your EMR with reduced workers’ comp claims.
3. Report Injuries Right Away
Reporting an injury as soon as it occurs is crucial for timely claim management. The more prompt and streamlined your claims process is, the more likely you are to avoid further costs.
4. Remain Compliant With Laws
Workers’ compensation laws are constantly changing. It can be difficult to keep up with rules and regulations when it comes to insurance and the claims process. Falling out of compliance with these laws, however, can lead to penalties and fines for your organization.
5. Consider Working With a PEO
Professional employer organizations (PEOs) step in to handle the administrative tasks of your business, such as workers’ compensation and payroll. PEOs can implement safety training programs for your employees, manage all aspects of the workers’ compensation claim process, and ensure that your organization remains compliant with ever-changing rules and regulations.
Proactive Steps to Keep Costs Low
Managing workers’ comp claims effectively is essential for business owners and HR managers. A proactive approach helps reduce costs, minimize risks, and keep operations running smoothly. Partnering with a PEO gives you the expert support needed to streamline your workers’ comp process and stay focused on growing your business.
At OCMI Workers Comp, we specialize in simplifying workers’ compensation through tailored PEO solutions. Contact us today to gain control over your claims process and protect your bottom line.
