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Six Steps to Drive Down Workers' Compensation Claims and Costs

Champion best practices such as pre-screening hires, providing the right work tools and checking in with employees.

As the frequency of workers’ compensation claims continues to escalate, so do its corresponding costs. In fact, the most disabling workplace injuries and illnesses cost U.S. employers nearly $60 billion in workers’ compensation (WC) costs[1]. The cost breakdown of WC has evolved as well. Traditionally, the indemnity costs - compensation for damages or loss - accounted for about 60% of total costs, while only 40% went to medical expenses. By contrast, in recent years this has evolved to a profile of WC costs today that are 40% or less for indemnity and 60% 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 worker’s comp claims,” said Tom Heebner, CSP, ARM, ABCP, CLS, senior vice president, Risk Services Division, HUB International. “Organizations that want to stay ahead of rising costs will take a good look at their existing workforce, policies and procedures and physical workspace when considering how they can improve worker’s comp numbers long term.”

Leveraging best practices to avoid workers’ compensation claims

There are six steps companies can take to reduce both the severity and frequency of workers’ compensation claims.

Regardless of the industry, any employer can leverage the following best practices to create a safe environment that promotes accountability among employees and employers alike.

Best Practices to Creating a Safe EnvironmentScreen employees before hire. Take extra steps to make sure only qualified employees are hired for the demands of their job. 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.

Maintain the physical workplace. Make sure worksites 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 with it comes an increase in injuries and illnesses. Make sure supervisors aren’t emphasizing production goals at the expense of safety. When possible, utilize performance management strategies that engage workers in shared decision-making. Consider a corporate health and performance program that promotes healthy living and rewards healthy lifestyle choices.

Provide the necessary tools for the job. 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.

Institute a twice-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 morning 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.

Creating a culture of health and safety

When companies apply both general best practices and those specific to their corporate culture and employee base, they will see real results.  

“There’s no question that healthy employees are more productive, happier and generally have lower levels of stress and anxiety,” said Philip Casto, CSP, CHST, CFPS, CHMM, CRIS, assistant vice president/senior risk consultant, HUB International. “The businesses that cultivate the optimal work environment and champion the physical and emotional health of their workforce can experience a real reduction in turnover rates and absenteeism. Ultimately, this will produce fewer workers’ comp claims.”

Pre-screening new hires, creating optimal conditions in the workplace and instituting post-injury support for employees can create a culture of health and safety that is felt across the entire organization. Contact HUB International's risk management team to find out how your business can drive its workers’ compensation claims and costs down by creating a healthier work environment.

[1] According to the 2014 Liberty Mutual Workplace Safety Index