For most businesses, carrying workers’ compensation insurance is not optional. If you don’t have this type of policy, you could face fines and other penalties. Unfortunately, buying workers comp insurance isn’t always cheap. If your worker’s comp coverage is breaking the bank, there are steps you can take to reduce the cost.
Why Do You Need Workers Compensation Insurance?
Workers’ compensation insurance is mandatory in most states. In the state of Wisconsin, nearly every employer is required to carry this type of coverage with very few exceptions. The purpose of this insurance is to pay for medical care, lost wages, and other expenses when an employee is injured at work. Workers’ comp insurance covers the smallest injuries, such as carpal tunnel syndrome. It will also cover severe injuries and even death.
How Much Does Workers’ Comp Insurance Cost?
Workers’ comp rates are based on a variety of characteristics. In general, the base rate will be determined by your company’s industry, as well as state and local laws. There isn’t much you can do to impact these factors, aside from making sure that your company has been classified correctly.
Another factor that affects your worker’s comp premiums is your claims history as an employer. To calculate your worker’s comp insurance premium, your claims history will also be referred to as your “Experience Modification Rate” or simply “Mod.” Your Mod is usually based on three full years of claims, ending one year before the date of your current policy’s expiration. If you have had many losses during this time, your Mod will be higher, which means that you will pay a higher premium for your worker’s comp insurance.
Lowering your Experience Modification Rate
One of the most effective ways to lower your worker’s comp premiums is to reduce your experience modification rate. To improve this parameter, focus more of your company’s energy on reducing the number of claims filed against you. Invest in more safety measures and encourage all employees to adhere to established safety protocols. If you are concerned that employees are unaware of your company’s protocols, consider safety training for both current employees and new hires. To encourage employees to participate and pay close attention, consider offering incentives.
Another way to reduce your Experience Modification Rate is to improve your claims management process. When you manage claims efficiently, payouts are often reduced, which in turn lowers your Mod. When a claim is filed, be sure to take action as quickly as possible to ensure that employees get the care that they need and are able to return to work in a timely manner. Oversee the claims process from start to finish to ensure that nothing is overlooked, and be sure that you remain in contact with injured employees until they are fully recovered.
Once you have reduced your Mod as much as possible, you can lower your premium even more by working with an independent insurance agent. An independent insurance agent can help you find ways to optimize safety in the workplace and reduce your rates. Contact Mayville Insurance today to learn more.