Be Safe Today – Save Money Tomorrow
Don’t think having a safe work environment in your business gives you a competitive advantage? Think again… A comprehensive and effective safety program for your workers is instrumental in controlling both the frequency and severity of workplace accidents. Both frequency and severity of workers’ compensation claims drive the costs of your workers’ compensation insurance program. When a once-healthy claims history goes south, the costs can be MUCH MORE than just increases in work comp insurance premiums. A bad work comp claims history quickly turns into a giant snowball of expenses.
Employers Resource is here to save you time and money by stopping the claims snowball before it starts rolling downhill. Whether your business is currently in work comp claim chaos or you’ve never had a workplace accident, there is one important thing to consider – focusing on workplace safety today can help you stay in business tomorrow.
Think about it – EVERY business must deal with workers’ compensation. Workers’ compensation insurance and the costs associated with workplace injury incidents is a major annual expenditure for most businesses. No doubt, your business’ work comp program is a major financial consideration in your annual operating budget. A major disruption in your plan due to workplace injuries that are out of control can have a catastrophic effect on your bottom line. As the frequency and severity of workplace injuries go up so do your premiums and out-of-pocket costs associated with injury incidents. Your opportunities to garner more business can suffer greatly. Prevent this from happening by being proactive in your risk management and employee safety programs today.
Look at the big picture. What do increases in frequency and severity of workplace injury incidents really cost you? Business owners often realize too late that a poor claim history can greatly affect several aspects of doing business. When the damage is done, the only way out takes a lot of time – often YEARS – to correct. Sure, more accidents means work comp premiums will go up, but that’s only the beginning.
The Real Costs of a Bad Claims History
Increases in work comp premiums are just the tip of the iceberg. The real costs of a poor or non-existent safety program go far beyond premiums alone:
- A poor claims history can cause your business to lose opportunities for jobs because your Experience Rate Modifier (premium divided by claims costs) exceeds the maximum allowed by vendor standards. Most major companies hiring contractors to do work require that the Experience Rate Modifier (EMR) be 1.0 or less. If your business pays $30,000 in annual work comp premium but you have two accidents that result in $40,000 in claims cost, your EMR puts you out of contention for any work from major companies.
- Higher premium and claim costs have to be absorbed somewhere in your company financial plan. Often claim costs result in less budget money for salary increases, new equipment, expansion or manufacturing costs. This can result in a MAJOR advantage for your competitors who have better claims history. More profit to your competitors allows them to do the things that can take YEARS for your business to match.
- Poor claims history that results from a poor safety program can cause your business to have fewer options in the work comp marketplace. If your EMR gets high enough, the availability to choose a carrier with competitive rates diminishes. In the worst case, your only option may be the extremely expensive State Assigned Risk Pool. You could pay more than 100% of the cost of insurance by being placed in the pool which puts your business at a competitive disadvantage.
Your business may quickly find that no potential customers want to have their brand associated with your next major work comp claim. In the service industry particularly high EMR and injury incident rates are a BIG DEAL.
The Story of ABC Construction Company
Zach is the owner of the fictitious ABC Construction Company which specializes in commercial and residential remodeling. Since its beginning in 2005, Zach enjoyed great growth and success in his chosen market. In 2007, ABC experienced a couple of costly work comp claims followed by three more in 2008. At the end of the 2008 policy period, ABC’s comp carrier advised them that the premium at renewal would be increased 50% because of the number of claims the small remodeler experienced and the costs associated with those claims.
Zach was discouraged by the news. He quickly discovered that he was being cut out of contention for lucrative commercial and governmental jobs because ABC’s Experience Rate Modifier exceeded the allowable maximum of 1.0.
Being unable to bid jobs because of a poor claims history caused ABC’s work volume to take a major dive. Premium costs were eating away at the bottom line. ABC continued to lose business opportunity – and began losing valued employees because of the lack of work. Zach had to spend less on marketing, pay his employees less salary and hold off on purchasing of much needed equipment just to stay afloat.
At the end of 2010, Zach found ABC to be in a major rut that was caused by just two years of poor claims history – which could be attributed directly to the lack of an effective workplace safety program. Zach realized he needed a change – quickly.
Zach met with an Employers Resource Business Development Specialist who showed him the immediate benefits of partnering ABC with Employers Resource. Employers Resource on-the-ground Safety Team assessed the hazards associated with ABC’s line of work and developed a comprehensive Employee Safety Program designed to control both the frequency and severity of workplace injury incidents.
The new relationship with Employers Resource affected a serious change in the way ABC conducted its business. The safety program equipped ABC employees with the knowledge needed to perform their work in a safe manner. 2011 was a banner year for ABC with lower claim costs and no major workplace injuries. At renewal in 2013, ABC’s Experience Modifier was adjusted downward and premium was reduced accordingly.
ABC could once again bid projects with major commercial and governmental concerns. It took almost six years, but ABC was once again on the path to growth and success. Zach had learned an important lesson – workplace safety and good risk management were important!
Make Safety A Priority for Your Business Today!
Don’t let a poor safety effort affect your bottom line! Making safety a priority today is one of the best ways to ensure business success tomorrow. Contact Employers Resource today to learn how our proven, effective safety program can help make your business more profitable.