We’re going to branch off today and I’d like to introduce a new aspect of the blog. We’re going to post valuable pieces and excerpts of our actual products here on the blog. I will start with a chapter of our famous Safety Manual, which can be bought, and customized to meet the needs of your company. This chapter is titled : “A Simplified Guide to Workers Compensation”, and the section we are discussing today is about Loss Prevention and Loss Control- It applies to ANYONE with even ONE employee. There are laws on this topics which are required by federal law, so it should be relevant to everyone. If you have any comments on the topic, please feel free to sound off in the comments section below the article.

Workers Compensation Premium Cost Containment

Loss Prevention and Loss Control

The costs of occupational accidents in 1998 were $121 billion, which is equal to the total, combined profit of the 50 largest corporations in America. This does not include occupational illnesses (e.g., lung diseases, cancer, etc) which cost many times more! No business is immune from accidents and we all have to pay a portion of the bill. This year, you and each one of your employees will have to produce $960.00 worth of goods or services to off-set the cost of work related injuries.

Accidents are more expensive than many of us realize. Why? Some costs are obvious such as your Workers’ Compensation claims which cover medical costs and indemnity payments. These are the “Direct” costs. But what about the costs to train and compensate a replacement worker, repair damaged property, investigate the accident and implement corrective action?

Less apparent are the costs related to schedule delays, added administrative time, lower morale, and general lost time. These are the “Indirect” costs which are buried, but none the less affect your company’s profit margin. Can you afford to lose your best employee for even one day?

OSHA’s conservative approach of indirect costs estimates the ratio at 4.5 to 1.1 for each direct dollar spent. At any rate, you are spending more than you think, even for relatively small accidents.

Each day, 15 American workers are killed on the job and over 16,000 suffer disabling injuries. The average cost of a death on the job is $940,000 and for a disabling injury, $26,000. This excludes property damage. While you might be thinking, “that’s why I have insurance,” you should take a closer look at your indirect costs, insurance modifiers and premiums; particularly if your business has experienced several injuries (even minor ones) over the past few years.

Premium Cost Containment – Accidents happen, but who really pays?

The more losses that occur, the higher the premium will be, for the same amount of exposure, regardless of the insurance company you use. However, these are not the only costs which are incurred. As a business owner or manager it is important to recognize the many uninsured costs associated with each workers’ compensation claim. Take a minute to consider all of the costs related to workers’ compensation claims that
occurred at your business.

Additional time, paperwork, and phone calls with claim adjusters, medical providers, and injured workers.

• Lost production resulting from work stoppages while the injured worker is attended and other workers discuss the incident among themselves.
• Cost of hiring and training temporary labor or re-assigning and training other workers to handle the job of the injured employee until they return to full duty. Also the cost due to production losses and errors that occur during this transition period.
• Cost of replacing equipment and materials damaged during the accident.
• Loss of customers resulting from price increases due to higher, accident driven, operating costs, insurance premiums, or an inability to bid on jobs due to your accident rate.

These costs are real and are not paid by your worker’s compensation policy. If you total these uninsured costs, you will discover that they quickly exceed the cost paid by insurance. According to some studies, these uninsured costs often exceed the cost paid by insurance by a factor of 2 to 5 times the insured cost. Sound unbelievable? It is not – it is just plain business. When you consider these uninsured costs, and their impact on your profits, it makes sense to try to prevent accidents.

Here are some simple tips which you can implement to prevent accidents:

• Set the example – If you do not practice and enforce your own rules, nobody else will either.
• Assign accountability and responsibility for safety throughout your management and employee workforce.
• Analyze your operations to identify accident producing operations, tasks, jobs or hazards. Observe job activities and use past accidents to help identify problem areas.

• Implement changes to accident producing operations to prevent injuries. Consider permanent changes such as altering materials, processes, methods, or equipment to reduce the accident potential. If these permanent changes cannot be made consider the addition of equipment, tools, or safeguarding. Train and educate workers regarding the hazards of their jobs and steps they can take to prevent injuries. Provide personal protective equipment to address any residual hazards. Also consider sub-contracting your more hazardous jobs or tasks to others if it cannot be performed safely by your workforce.
• Regularly inspect your operations to identify unsafe work habits or hazardous conditions. Immediately correct all noted problems.
• Investigate all accidents to identify causes and take steps to prevent recurrence.

So what is the best way to reduce the risk and costs of accidents at your business?

Implement this “Safety and Health Program” at your company. It is estimated that for every dollar spent on safety, you may save four-six dollars in return by reducing injuries, illnesses, Workers’ Compensation costs, and employee turnover, while improving productivity and enhancing worker-management communication.

In the next article, we will discuss strategies on developing a strategy for cost containment. If you want to receive this automatically via e-mail, you can subscribe to our email list to receive future updates by clicking here. Here are five other reason to subscribe, also.