Save Money on Insurance Through these Safety Programs
To say insurance is not cheap would be an understatement. We live in a litigious society that requires you to ensure your company is protected no matter the cost. A good broker will help you find the best deal on insurance policies, but even then you could be eligible for further discounts. The problem is that many companies do not realize which programs are available to them. Sometimes discounts are available for things they are already doing with their health and safety programs.
Worker’s Compensation is a state-run program, so it is important that you research what is available where your company is based, but generally speaking, the following are the types of discounts you’re likely to find.
Comprehensive Safety Program
Nine states and the District of Columbia offer discounts just for having a comprehensive safety program. Note though, that this does not mean you can grab some cookie-cutter program from the internet, slap your company logo on it, and expect to get a check in the mail. Your program needs to be both comprehensive and effective. Remember, insurance companies, just like your company, are in business to make money. They are not in the habit of just giving away cash ; you are going to have to earn it.
“Comprehensive” means that it must cover all aspects of your business in which you are exposed to risk. If you are a chemical manufacturer that doesn’t have a hazard communication program in place, your program is not comprehensive. If you have maintenance workers that work on your HVAC systems on your roof, but have no fall protection policy in place, your program is not comprehensive. If you are an underground utility contractor without an excavation policy in place, your program is not comprehensive. You must address all exposures in your business. But, these examples are obvious. What other exposures might your insurance carrier be looking at?
Fleet is a good place to start. Maybe trucking isn’t your business, but your foremen drive company vehicles. Maybe your maintenance personnel operate company trucks to travel between campuses or facilities. Or, maybe transportation is a major part of your business. Whatever the situation, your insurance company is going to want to know what your fleet safety policies are. Are you bound by DOT programs? Do you have required rest periods? What is your company policy on cell phone usage and texting while driving? Do you enforce the usage of seat belts? It is not enough to simply state that you require your drivers to operate their vehicles safely. What do you require, how do you enforce it, and what do your accidents say about how effective your program is?
Return to work is another area an insurance company will be interested in. Are you bringing your injured employees back to work as soon as possible, or are you letting them linger at home collecting worker’s compensation? The longer an employee stays home, the less likely it becomes that the employee will ever return to work. Aside from that, the longer an employee stays home, the more money your insurance company is paying. Long, expensive worker’s compensation cases will affect your EMR (experience modification rating – more on this later) and cause your premiums to rise.
However, just like the health and safety program , the return to work program cannot be some generic plan that consists of dragging injured employees in to stare at the walls. Your program must be clearly defined. When will employees be allowed to return to work? What is their normal job function and what modified duty work will you have available? What is the maximum length of time somebody will be allowed to remain on modified duty? Who will monitor their progress and manage their case with the insurance company and medical providers? This should all be clearly spelled out in your program and there should be evidence to support that it is being done.
Drug and Alcohol Free Workplaces
Drug and Alcohol Programs can help you save money too. In fact, 19 states currently offer premium discounts for companies that have some form of Drug Free Workplace program in place. If you have one of these programs, how are you going about it? What type of testing is being done? What kind of education are you providing your personnel? Who is enforcing the program and how have they been educated to do so? All of this information will be reviewed to see if you actually have an implemented program, or just a book on a shelf.
Finally, some states offer discounts for having a Safety Committee. Pennsylvania, for example, has a program that allows you to save 5% every year on your worker’s compensation premiums by setting up a safety committee that meets their requirements. You will need to certify your committee, but once you do, you know exactly what you’ll be saving. Other states offer similar programs for safety committees, so again, it’s important that you check out your state.
Are Your Programs Effective?
While this gives a general idea of what an insurance company would be looking for in a “comprehensive” program, or what other discounts are available, let’s talk about what it means for that program to be “effective”. Simply put, the insurance company wants to see results. They are not going to give you a discount because you have a health and safety program if you’ve still got a high number of losses (or a high dollar amount). They will primarily look at two things to gauge your program’s effectiveness: your loss runs and your EMR.
Your loss runs will tell them how much they’ve spent on your injuries (both medical and indemnity) case by case. Here they will be able to look at what types of injuries you are having and what they are costing. They’ll be able to see what’s open, what’s closed, and how much money is on reserve for those that are still open. These are the carrier’s own figures.
Your EMR is a number developed by the state that is based on the severity and frequency of your losses. It is a modifier of your current premium (hence, Experience Modification Rate) based on the 3 most recent years of losses (excluding the most recent – so an EMR for policy year 2013-1014 would not include 2012-2013, but would include the 3 years prior to that). Basically, a 1.0 means you have an average loss history. Your rates will be your current premiums x 1.0 (in other words, they won’t change). If your safety program is effective and you are having few losses, your EMR may begin to dip below 1.0. When multiplied against your premiums, this will bring them down. On the contrary, if you have a poor program and are experiencing frequent and/or severe losses, your EMR will go up, essentially causing you to pay a penalty.
This is not a guessing game. The statistics are out there and the insurance companies will use them to ensure they do their due diligence. They may be offering discounts, but they are going to make sure you deserve those discounts.
In the end, while insurance premiums are expensive, there are often ways to help curb those costs. The majority of the time, the way to get those discounts is by doing things you are already supposed to be doing, or that are, at the very least, good practices. Look at it as an investment; a small amount of money spent developing and maintaining these programs now can save you a great deal of money in the future. Companies across the United States have already saved millions through these discount programs. You can too.