One last word about workers' compensation costs
 Dec. 18, 2013

As we close the book in 2013 there's not a great deal of good news about workers' compensation for California employers. Rates continue to rise and the elements that drive the cost of workers' compensation continue to soar as well. The expectation for the coming year is that the cost of a workers' compensation claim will not likely come down. While claims management is important the key to controlling costs depends largely on what you do before a claim occurs. That is why manufacturers must have an effective risk control program.

Risk control is broken into two areas, loss prevention and loss reduction. Loss reduction practices are for the most part applied after an accident occurs. They are designed to reduce the severity of the claim's cost. But, perhaps even more important is the application of loss prevention practices, because an accident that never occurs has no cost. It sounds obvious but it is the foundation of every successful loss prevention program.

Most loss reduction practices fall under the heading of "claim management" and are applied by the organization managing your claims. Generally this is the insurance company and by virtue of your insurance contract, they are required to provide workers' compensation benefits consistent with the requirements of California Labor Code and at the same time protect the interests of the policyholder as it relates to their workers’ compensation liability.

Loss prevention, on the other hand, is a hands-on practice for employers. Your Injury and Illness Prevention Program (IIPP) requires that you structure a formalized program covering eight elements designed to help reduce the frequency and severity of work-related injuries. Controlling the severity of a loss is difficult, the difference between a $5000 claim $500,000 can be a matter of inches. That is why reducing the frequency of accidents is so important.There is a chain of events for losses. An event or act produces and accident which produces and injury that results in a claim that results in a loss. The key is to avoid that claim before the accident occurs in the first place. This requires a minimum of five practices to be in place:

  • An inspection program to identify your organization's exposure loss
  • An understanding of the causes of loss for accidents that do occur
  • A practice of correcting hazards
  • An effective and well documented program to ensure employees are properly trained and understand how to use personal protective equipment (PPE)
  • An on going work readiness program to ensure workers are able to safely complete their job tasks

Once a claim does occur, you can still play a critical role in reducing the cost. By offering transitional work you can reduce the disability period associated with a work related injury. Studies have shown that this goes a long way to reducing the overall cost of workers' compensation claims. To ensure you have an effective transitional work program you need to work closely with your insurance carrier. The problem is most insurance carriers merely accept premium from the policyholder and just pays claims. But, if you're participating in the CMTA Group Workers' Compensation Program with CompWest Insurance Company, you can take advantage of their cost cutting Keep-At-Work program. The Keep-At-Work program is the industry's most innovative and successful transitional work program and is available only through CompWest. While most insurance companies no longer provide loss control services, CompWest and CMTA offer a full complement of loss control services that help you both prevent work-related injuries and reduce their potential cost.

As an employer you are responsible for maintaining a safe workplace. The resources to help accomplish this can be difficult to find. That's why CMTA partnered with CompWest. They provide members with a full-service group workers' compensation program. Why is this important? Because in California, your workers' compensation premiums are based largely on the insurance company's filed rates which are modified upward or downward twice, based on your historic loss experience. The first modification is by the insurance company's rating plan and the second by your experience modification. If you have unfavorable loss experience you are in essence penalized twice.

CMTA and CompWest are here to help you develop and implement a successful risk control program so that your cost of workers' compensation is the lowest possible. For more information on risk control and our workers' compensation partner CompWest, contact CMTA at (916) 498-3340 or the wcgroup@cmta.net.

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