The average cost of a typical work-related accident is $44,179, though on the high end, vehicle accidents at work result in an average of $90,914 in expenses. If the work injury involves an amputation, average costs hit $120,077.
While your workers' comp insurance covers the expense of medical bills and lost wages, the insurer ultimately passes on these added costs. If you have a higher rate of accidents, it can significantly impact your workers' compensation premiums each month. Fortunately, through better accident prevention, you can save on your monthly premiums and ensure a higher level of safety at your company.
How Workers' Compensation Premiums Are Calculated
Workers' compensation rates are calculated using a fairly straightforward formula: Class Code Rate x (Payroll / $100) x Experience Modification Rate (aka EMR or mod) = Premium
To calculate your workers' compensation rate, the insurer first needs to determine your class code rate and your EMR. Then, your payroll amount is multiplied by these rates. Here’s a breakdown:
- Class Codes: The codes from the National Council on Compensation Insurance correspond to the assessed risk of a particular industry or job. If your employees work with hazardous waste, they will have a higher class code than those who spend their time managing office paperwork. You can't simply reclassify a high-risk class code as a low-risk one. This can result in retroactive premium payments and the cancellation of your workers' compensation insurance.
- Mod: The mod is the primary component of the workers' compensation premium formula that can be impacted through accident prevention. It is adjusted based on your risk profile. A mod of 1.0 is considered average. If you have few accidents, the mod can be below 1.0. If this rate exceeds 1.0, it means your company has a higher risk level than average.
How Accident Prevention Can Reduce Your Workers' Comp Premiums
While you can't change your classification code, you can impact your mod. By reducing the number of accidents at your company, you can lower the overall number of claims. This directly affects your mod and lowers the premiums that you have to pay.
Certain workers' comp insurers offer additional incentives to encourage companies to reduce their accident rates. Here are a few common examples:
- Dividend Payments: Your workers' comp insurer may provide dividend payments at the end of the year if you have fewer claims. These can be based on your individual performance or the performance of everyone in your industry.
- Premium Credits: Alternatively, there are insurers that offer premium credits and discounts in exchange for implementing safety policies and participating in accident prevention programs.
- Mod Improvements: Even if your insurer doesn't offer dividends or other payments, you can still reduce your premium costs by improving your mod. Lowering your company's accident rate reduces this multiplier and decreases the total amount that you have to pay in premiums.
Ways to Prevent Accidents at Your Company
By adopting accident prevention measures at your company, you can reduce your mod and save money on your workers' comp premiums. To get started, follow these steps.
Create a Written Policy
Each year, you should evaluate your existing safety policies. If you don't currently have any, now is a good time to create them. Whenever you make changes, send out a company-wide email to notify employees. You should also incorporate safety updates into your onboarding and training programs so your employees are adequately trained on all relevant matters.
Carry Out Hazard Identification and Proactive Risk Management
To identify hazards in your workplace, start by reviewing past injuries. Look for commonalities, such as dim lighting, poor signage, or skipped safety precautions.
Afterward, you need to proactively manage these risks. For example, you likely can't get rid of a loading bay at a factory because it needs to be used all the time. But to reduce the risk of falls, you can install a gate in front of it. Also, yellow paint or bright signage can help truck drivers back up the correct distance without hitting the wall. By being proactive and making a few key changes, you can prevent many common incidents.
Provide Safety Training to Workers
One of the most important things that you can do to prevent accidents in your workplace is to train your employees on safety practices. The Occupational Safety and Health Administration (OSHA) has established minimum safety training standards that all companies must meet, so start by reviewing the requirements specific to your industry and workplace.
That said, complying with OSHA regulations might not be enough. Many companies fulfill their legal obligation without making a truly effective safety program. To reduce accidents, you’ll need to go beyond checking off a box and actually create safety training that workers understand, remember, and use in their daily activities.
Train Specific Employees on First Aid
If an accident does happen, immediate medical care can affect the severity of the injury. In certain cases, it may even save the injured worker's life. For example, the Heimlich maneuver is taught in first aid classes, and administration from a peer can save an employee's life if they start to choke. By training multiple employees in first aid, you can lower eventual claim costs and protect everyone.
Ensure a Clean, Well-lit Workplace
To keep your workers safe, you need a clean and well-lit workspace. Proper lighting prevents people from slipping or running into things while they are working. At night, parking lot lighting deters theft and violent attacks. Similarly, maintaining a clean and uncluttered workspace helps prevent accidents.
Learn More About How Compensation Solutions, Inc. Can Help Your Company
Compensation Solutions, Inc. (CSI) can help lower your workers' compensation premiums. From return-to-work programs to rebate programs for accident prevention, it provides a range of methods that can help you save money on your monthly premiums. The CSI team has spent more than twenty years helping Ohio companies manage their premiums. From personalized services to claims management, they do everything possible to make your workers' comp experience simple and straightforward.
Workplace safety and workers’ compensation are closely linked. Ohio manufacturing businesses can reduce workers’ compensation claims and premium costs by prioritizing proactive EHS strategies and injury prevention. It’s time to bridge the gap between safety and savings. Protect your workforce and reduce your costs. Discover how CSI can help you lower your workers’ compensation expenses.
