Strategies to Reduce Your

Worker's Compensation Premium

The good news is that, if you are an Indiana employer, your worker's compensation premiums are among the lowest in the nation. The bad news is that those premiums still come right out of your bottom line. Therefore, anything that an employer can do to reduce that premium will increase profitability. Here are some ideas that you may want to consider.

Get out of the pool!

The assigned risk pool is a benefit for employers who are not able to get insurance in the competitive market. However, it is an expensive option. You will pay at least 25% more for your insurance if you are in the pool than if you have private insurance. Work with your broker and your worker's compensation attorney to figure out why you are in the pool and how to get out. The main reason will probably be your losses, and so you will need to work on your safety program. It may take a year or two to work your way out of the pool, but it will be worth it.

Should you be self-insured?

If you are a large employer, with a workforce of over 500 employees, and have good control of your losses, you may want to seek self-insurance. Another option is to buy insurance with a high retainage. These programs are not for everyone, but if you think this might be a way for you to cut your premiums, you should definitely talk with your broker and your worker's compensation attorney.

Know your adjuster.

Work with your broker to get your insurance carrier to assign one or two adjusters to your account. This will pay dividends in terms of communicating about your claims, and will be particularly helpful if you have any questionable claim. The adjuster will get to know your work environment, your processes and your workforce. If you have a return to work program, that adjuster will be aware of it and make sure that employees are not kept off work unnecessarily. That adjuster will know the occupational clinic and specialty physicians you prefer to use. Your claims will be managed more effectively and this will save you money in the long run.

Have an effective return to work program.

Most employers know that they will reduce their premium by having a return to work program. The premium is based on your experience rating, and the experience rating is a formula which combines the number of work injuries and the cost of those injuries. A return to work program addresses the latter element by reducing the cost of each injury. Even if you have a return to work program, you may be able to fine tune it by better communications with your adjuster and your occupational doctor, and by working closely with your line supervision to identify return to work opportunities.

Reduce the number of injuries.

Your safety program is your first line of defense against work injuries. Reducing the number of injuries addresses the first element in the experience rating formula. The cheapest worker's compensation injury is the one that never happens. Therefore, working relentlessly with your safety personnel and your line supervision to reduce the number of injuries is critical. Remember that, with our aging workforce, overuse injuries (such as back strains, shoulder strains, and so on) are on the increase – so your safety program needs to address these as well as acute injuries.

If you have questions about these recommendations or any aspect of your worker's compensation program, please Kathleen Shortridge or Ann Stewart.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.