Workers Compensation is one of the biggest challenges to running a successful business. The risks of injury in some jobs are staggering and fraud is a reality that must be mitigated.
With over 10 years experience in the staffing industry, Dave has seen nearly everything. The good news is this experience and knowledge is now available to you.
As the staffing business grew, so did the workers compensation challenges, Starting with a guaranteed cost program with no oversight, the cost was not guaranteed – experience mod factors after year 1 showed how costs can increase if claims are not managed.
The next step was to enter into a loss-sensitive program. Theoretically this would allow a lower cost by returning premiums if costs were below a certain threshold. However, claims management by the provider was not good. They were not incentivized to control claims. In fact, they received a percentage fee of all losses!
The next program – a captive. This gives the business the opportunity to control its own destiny. A percentage of payroll is paid as premium. The only other cost is the actual claims.. If you manage your claims well there can be huge savings over the other types of programs. The downside is the cash or letters of credit that are needed to be in a captive. If you can meet these requirements, you can save money if you are in high risk codes. Eventually we got to a better place and were able to reduce the overall costs of insurance.
The key to controlling workers compensation costs is to be an active participant in loss control and prevention. Applicant screening, safety programs, customer selection and claims management are some of the key areas where participation is required.
To learn more about this topic or other services, please contact us.