When addressing workers' compensation costs, every company looks to reduce both their claims and their premiums. According to the National Council on Compensation Insurance (NCCI), the average direct cost of one lost-time claim is $29,500.1 Workers' compensation insurance premium can be one of the top five overheads for a company, depending on their experience, nature of business and what states they operate in. Yet it seems that many companies are hard-pressed to reduce their loss ratios and improve their overall workers' compensation expenses.
The reason could be simple; risk management efforts may be focusing on the wrong specifics. Ironically, the same three areas that hold the most exposure, and require the most attention - safety, claims management and job satisfaction - are the very areas where risk management strategies are falling short, creating a triad of elements that work against success. This Bermuda triangle of issues can sink even the most valiant efforts of your risk management team.
The Triple Threats/Opportunities
Fortunately, there are solutions within reach. By redirecting attention in each of these areas, companies can improve their workers' compensation portfolio and get a handle on out-of-control costs.
1. The Safety Plan
A safety plan is more than making sure your company meets safety compliance measures. Compliance is the minimum any company should do to ensure the safety of their employees. For a safety plan to be truly effective, there need to be solid best practices in place. Best practices should be built on the knowledge of what areas of risk are driving claims, and which efforts are working or falling short.
A solid safety plan also needs to be part of the corporate culture from the top down. Intentions aren’t good enough — a successful safety program permeates throughout the organization. That requires accountability, but that responsible employee also needs authority to effectively manage the plan. What is your company’s corporate safety culture?
How that plan is communicated is equally critical. How are employees and supervisors incentivized to report safety issues, and how often are safety protocols communicated or enforced? With consistent oversight, including all-level messaging and feedback, safety performance improves.
2. The Claims Management System
One of the biggest mistakes companies make is treating claims management as a clerical function. Claims management is strategic, yet often it is not treated as such.
Effective claims management requires the whole claim process to be managed, not just the filing. How carefully are accidents being investigated? How deliberately are they reported and written? How are they processed? Who is communicating with whom during the claim lifecycle? Is the claim process plagued by delays? Do important details fail between the cracks? Is critical timing missed as windows of opportunities pass? Are you fully communicating with your carrier's claim manager to ensure the process is going as well as it can be? Do you have a good strategic relationship with this person?
Every single aspect of a claim can be costly — or can be where your company reduces costs. A more responsive and agile claims management process saves claim dollars. Is your system centralized? Is the direct supervisor of the claimant involved in the communications? Clear and frequent communication with the injured worker helps to maintain a reasonable treatment plan and return to work on time.
3. Overall Job Satisfaction
One of the strongest predictors of whether or not a claim will be filed (and if it is filed, how severe it will be) is directly related to the job satisfaction of the employees. This is influenced by the company culture. It is defined as the quality of the relationship between the worker and their direct supervisor. When things are going well at work, employees are more motivated to return after an illness or injury.
Secondarily, job satisfaction is informed by how well the organization is perceived by the employees. If your favorite employee and least favorite employee have identical accidents, the employee who has fewer stressors at work, and looks forward to returning, is more likely to return sooner. That employee is also less likely to file a claim in the first place.
The goal for employers should be to ensure all employees and supervisors have respectful working relationships. If not, find out why. Then address the problem in a deeply meaningful way in order resolve the situation. Having friends at work is a great motivator, and can help improve a worker’s productivity, as well.
The Triangle, Aligned
Improving your workers’ compensation losses requires attention to the existing areas and topics your team is already accustomed managing and reviewing. However, by shifting focus from superficial causes of accidents to the root causes and how well each of those three areas are being monitored and managed, a real impact can be made.
The whole organization should be focused on the three elements of workers’ compensation loss control. Through accountability, effective management and better relationships within the company culture, better worker’ comp results are within reach.