Workers’ Comp Nightmare

One of the biggest shocks clients experience is when, after years with no injuries, a moderate accident occurs and a worker is injured. What often comes next is difficulties finding the insurer’s medical clinic, miscommunication between the worker and the insurer, delays, prolonged recovery, frustration, and high healthcare costs.

Workers’ Comp rates are calculated by comparing “expected” losses, which are surprisingly small in dollar amounts, with actual medical costs that will be incurred. That calculation creates a premium modification (“ex-mod”) that can be excessively high even when there’s a moderate loss.

The pain is shocking

  • The ex-mod causes your premiums to skyrocket two or three times the previous level, and they continue that way for three years.
  • OSHA often gets involved due to your “high hazard worksite” (just one non-catastrophic injury!) and mandates an “enforcement inspection.”
  • The distraction and costs of getting ready, updating safety policies, collecting training documentation and coordinating with employee files can be huge.
  • Fines and penalties – including worksite shut-downs – can be ruinous.
  • Many contractors with high ex-mods are prohibited from project worksites.
  • And then your worker can get fed up with all the delays and engage an attorney to start a lawsuit.

Lots of employers, rightly or wrongly, feel angry, bullied by an illogical system, and forced into expensive, superfluous, bureaucratic measures. Many do not prioritize – up front – the time, effort, and investment needed to support a successful safety program: effective policies, a collaborative culture, and regular conversations. After an accident it’s often too late.

Relieve the pain with some simple steps

  • Stay on top of all the different aspects of your safety program.
  • Invest in the right policies, tools, training, and outside resources.
  • Keep safety top of mind in all employee conversations – at the same time as discussing work timetables, project schedules and business productivity.
  • Make sure any injury is closely monitored –
    • Weekly contact with the worker by you or someone on your staff.
    • Monthly updates from the claim adjuster to your broker.
  • Push, push, push – with pleasant persistence – for action to resolve any delays or stumbling blocks.

Every safety professional I know and every study I’ve read say that it costs $6 to $10 to fix a safety problem that $1 would have prevented. Think about it: we all need to recognize that these are investments not expenses.


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  1. Charles T. Wilson June 10, 2015 at 2:46 pm - Reply

    My friend and colleague, Corri DiBagno emailed his feedback:
    Excellent RiskSmart Tip! Indeed, it has been my experience the most effective safety programs involve a total “buy in” from owners/senior mgt./ employees/ insurance carries-loss control and their agent/broker. Regular loss prevention meetings, updates on lost time accidents/status are critical in order to contain loss costs and experience mods.

    I recall an account we underwrote, a large printing operation for property & liability. The place was immaculate from an inspection point of view, the very best equipment, state of the art printing presses, etc. The owner loved his business….our loss control rep asked him what his most valuable asset was on one inspection…and to his surprise (thinking the reply would be”my employees”) … the owner said “my presses!!” Well, this comment rang true because, he could have cared less about his employees. There were many lost time accidents, no formal safety program, no monthly safety meetings etc. needless to say we declined on quoting/ writing the WC. Ultimately, turnover, poor morale, etc, led this guy to sell his business!

    Thanks, Corri, for your regular contribution of real-life stories.

  2. Tom Bone June 9, 2015 at 9:21 am - Reply

    Charles, you make some excellent points. But, it all starts by hiring the “right” person for the right job. Many times injuries occur, because employers hire someone who can not perform the tasks of the job. Employee turnover is costly, as well as, injuries. This topic should be further discussed so thanks for starting the conversation

    • Charles T. Wilson June 10, 2015 at 2:42 pm - Reply

      Yes, Tom, you are right on. The inter-connectedness of Workers Comp and Human Resources exposures cause many unexpected problems.

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