Workers’ compensation costs are on the rise. According to the 2014 Liberty Mutual Workplace Safety Index, the most disabling workplace injuries and illnesses in 2012 cost U.S. employers nearly $60 billion in workers’ compensation (WC) costs.
Additionally, the cost breakdown of WC has changed. The indemnity costs - compensation for damages or loss - traditionally were nearly 60 percent of total costs, while only 40 percent went to medical expenses. By contrast, today’s WC costs are 40 percent or less for indemnity and 60 percent or more for medical.
It is more critical than ever for employers to create a healthy and safe work environment in order to minimize the frequency and rising medical costs of their WC claims.
Impacting WC claims in a real way
There are a number of both general and industry-specific steps companies can take to impact their WC claims in both severity and frequency.
In construction, for example, where employers typically see a spike in WC claims close to project closeout or at the end of the season, strategies include engaging in a different seasonal business, like snow plowing, holding a portion of workers’ summer paychecks for winter payout, early communication of project close-out with employees and, for larger contractors, transferring employees to projects in a warmer state.
Regardless of the industry, though, any employer can leverage the following best practices to create a safe environment that promotes accountability among employees and employers alike.
Institute pre-hire screenings
A healthy and fit employee is less likely to get injured on the job and will recover faster should they sustain an injury. Have a third party perform physicals and functional capacity evaluations to assess prospective employee’s ability to meet the physical requirements of each job. Make sure only qualified employees are hired for the demands of their job.
Maintain the physical workplace
Make sure work sites are well maintained and regularly evaluated for hazards, including performing preventive maintenance where applicable.
Promote the physical and emotional health of employees
Without the right balance of physical and emotional health, stress and anxiety can surface and the frequency and severity of workplace injury and illness will increase. Do this by ensuring that supervisors aren’t over-incentivizing production while ignoring safety. When possible, use performance management strategies that engage workers in shared decision-making. Consider a corporate wellness program that incentivizes healthy living and rewards healthy lifestyle choices.
Assess work and provide the necessary tools
Sometimes it’s the nature of the work itself that poses the greatest risk. Assess the required work, establish on-the-job rules accordingly, train employees to do their jobs safely and provide the necessary tools and protective equipment they need.
Introduce a daily check-in
For blue collar jobs, like construction, that are especially injury prone, establish a meeting at the beginning as well as the end of the day that requires everyone to pass in front of the foreman’s eyes. The a.m. meeting might include five minutes of stretching or warm-ups, while the evening meeting could require everyone to sign something that says “I left the job healthy today,” to prevent an injured claim tomorrow.
Establish a return-to-work program
Known to curb long-term WC costs by bringing employees back to the office/project more quickly, return-to-work programs can include part-time, telecommuting and modified work duties and schedules. Such programs can improve productivity and morale across an organization, saving time and money, while protecting companies from loss of talent.
There’s no question that healthy employees are more productive, happier and generally have lower levels of stress and anxiety. Cultivating the optimal work environment that champions safety, physical and emotional health can lead to lower turnover, absenteeism and ultimately produce fewer WC claims.
Philip Casto, AVP, and Tom Heebner, SVP, Risk Consultants at HUB International, serve as resources for insurance brokerage operations, providing risk control and developing strategies to lower WC costs through aggressive safety management.