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3 Ways Your Clients Can Reduce Their Workers’ Compensation Rates

3 Ways Your Clients Can Reduce Their Workers’ Compensation RatesFor an employer, workers’ compensation insurance is a necessary cost of doing business. Most business owners want to pay as little as possible, but they don’t understand how the workers’ compensation system works. By helping business owners understand the basic New Jersey workers’ compensation rates as well as the markups that can affect their premiums and how to manage and plan for unforeseen events, agents can help employers control their premiums and even reduce them. Below are a few ways that insurance agents can help their clients reduce their workers’ compensation rates.

1. Review Job Code Classifications

Business and job code misclassifications can cause workers’ comp premiums to skyrocket, so it’s important for employers to ensure to be sure that they are using the correct codes for their employees. According to analysts at the Institute of WorkComp Professionals, as many as 70 percent of companies overpay for their workers’ comp insurance premiums, most commonly due to job code misclassifications. There are hundreds of classification codes, making it incredibly easy – and common – for employers to accidentally misclassify employees, which in turn can result in costly over-insuring.

Proper job code classification helps insurers estimate the expenses related to the risk they are insuring. For example, code 5040 (Iron or Steel Workers) employees will have more expensive workers’ comp insurance rate than a code 8803 (Auditing or accounting) employee, because less dangerous work is being performed by the latter.

Additionally, in industries that predominantly utilize business-type codes, there are exemptions for certain individual job types, such as clerical or outside sales, for example. Because of the complexities of this classification system, business owners can benefit from having their workers’ comp insurance agent review their codes with them before their next year’s policy goes into effect.

2. Review Prior Employee Injuries

Sometimes a disconnect in communication can result in discrepancies between what has been paid out for employee injuries versus what has been reported to the rating bureaus. This type of error can result in incorrect reserves which in turn can cause the experience modification factor to be calculated incorrectly, ultimately increasing workers’ comp costs. Simply communicating regularly with the client and ensuring that both the employer and the insurance agent both have matching information on all active workers comp claims can help mitigate potential errors, identify open cases that can be closed and reduce costs.

3. Implement a Strong Return-to-Work Program

Employers that implement strong return-to-work programs that allow injured employees to re-enter the workplace as quickly as possible are able to minimize the cost of workers’ comp claims. This type of program allows the employer to place the injured worker in a position with duties that they have the capacity to perform while they are still healing, often beginning with light desk work or part time hours. A good return-to-work program also helps injured employees feel more engaged with the company, increasing retention and productivity. Research has even shown that injured workers, especially ones with soft-tissue injuries, recover faster and more successfully when they return to work as soon as safely possible.

About ASIA Workers’ Compensation

Associated Specialty Insurance Agency, Inc. has been “The Workers’ Compensation Specialist for Brokers and Agents” for the past two decades and is committed to providing brokers and insurance agents across the East Coast with expertise and services to develop a Workers’ Compensation policy. For more information about how we can assist you with claims management, anti-fraud measures, and more call (610) 543-5510 to speak with one of our professionals.

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