9 Ways To Reduce Insurance Costs

February 15, 2013 No Comments

 

 

Here are nine strategies for reducing your workers compensation insurance premiums.  Apply them at your company and see your insurance costs go down!  Some of these strategies are controversial, but in todays’ challenging business environment one needs to be creative and open to trying something new.

• Your insurance agents’ commission may be negotiable.  If you work with an independent agent, don’t be shy about asking what their commission is.    It can vary from 5 to 15 percent; with 12% being about the average.   One strategy to achieve a reduction might be to ask your agent if they’d reduce their commission if you received fewer services.  For example, if the agent normally provides claims and loss control advice to your company,  ask what the savings would be if you did not take those services in the upcoming year.
• Buy your workers compensation insurance from the very largest independent insurance agency in your area.   The larger the agency, the more clout they will have with the insurance companies that they represent.  For example, if you ever get into a disagreement with your insurance company on: workers compensation classification codes, claims reserves, loss control service, or payment schedules, an agency with $1,000,000 in business with your insurance carrier will have much more leverage to get the insurance company to give you what you want than an agency that does only $50,000 in business with your insurance carrier.
• Avoid lost time accidents at all costs.   Lost time claims have a greater impact on your experience modifier than do medical only claims.   Be fanatical about returning injured employees to light duty to avoid lost time.   Let the treating physicians know right away that you can accommodate any form of light duty (including sedentary work).   If the employee can’t drive a car because of the medications they are on, hire a taxi to take the injured employee to and from work.    Be creative in finding ways to avoid lost time.
• Don’t over-report claims.  Insurance companies sometimes encourage insureds to report all claims to them, even the really small ones that do not require a doctors attention (i.e. first aid cases).   They say, report these little claims  because if the injury gets worse and requires medical treatment they will already have it on record.  Don’t do it!  Never report any more claims to the insurance company than you are legally required to.   The number of claims you report will be taken into consideration when determining your insurance premium for the next year.
• Competition is a good thing – periodically shop your insurance.   Get insurance quotes from other agents and insurance companies.  If your current agent and insurer know that they’ve got competition, they will “sharpen their pencils” and give you their lowest pricing.
• Fight to get outstanding claim “reserves” reduced or eliminated.   Ask your agent when the reserves are put into your new experience modifier calculations.    Two months before that date ask for a new loss run.   Review every claims reserve on that loss run.   If your agent has a claims expert on staff, get them to help you with this “reserve analysis”.    Don’t be shy about asking the insurance company to justify a reserve if you believe it to be too high.   Argue and negotiate the reserve down to a more realistic figure.
• Roll out the “red carpet” when the insurance company sends a loss control representative to your facility.   These safety inspectors are the “eyes and ears” of the underwriters.  How they rate your account will have a bearing on the premium you pay!  When the insurance loss control person shows up:  
  • make the inspector feel welcome – treat them like your largest customer
  • clean up all areas
  • show them well documented safety policies & procedures
  • make sure all employees are wearing the required personal protective equipment
  • express appreciation for their recommendations
  • thank them for their help
  • promptly follow up on their suggestions
• Partially self-insure your claims.  Ask your agent if you are eligible for a “loss responsive” insurance plan (e.g. retrospective rating program,  deductibles, dividend, self insured retention).
• Get certificates of insurance from all of your contractors and from the temporary employment agency you use.  If you do not, you may be required to pay WC insurance on these people.
• Never terminate, fire, or lay-off an employee with an open workers compensation claim.  Wait for the claim to close and then do what you need to do.  I know of a number of cases where employees with open workers compensation claims were laid-off.  The ultimate value of these claims skyrocketed when the disabled employee was either unable to find work or was granted lavish education and retraining benefits at the company’s expense.

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