Loss Control vs. Shopping Carriers: Which Saves You More Money?
Taking the time to understand the drivers behind your workers’ compensation costs and making a long-term commitment to a comprehensive loss control program designed to control those drivers is the best method for reducing your WC premium.
Shopping carriers may bring short-term premium reductions, but unless the true issues behind your workers comp costs are addressed those savings will be just that – short term.
The main driver of your workers comp premium is your loss control program. The success or failure of the program is reflected in the severity (dollar amount) and frequency (number) of your workers comp claims. The frequency and severity of your claims are input into a formula which determines your experience MOD factor. Like accidents and tickets serve as predictors of future losses for your auto insurance the MOD factor does the same for your WC costs. The more claims you have the higher your MOD factor becomes. Higher MOD factors increase your workers comp premium and lower MOD factors reduce your workers comp premium. Through the application of the MOD factor, in almost all cases, it is the employer who ultimately pays for their employee’s injuries, not the insurance company.
If you continue to incur losses it doesn’t matter how many different carriers you quote with your premium will eventually increase to pay back the insurance company for those claims.
To truly reduce costs employers must move beyond the bidding process and implement a loss control program designed to reduce hazardous conditions which will reduce claims which will reduce your MOD factor which ultimately will reduce your premium costs.
The MADSIF Experience
Along with MADSIF’s comprehensive loss control program, which is free to members, MADSIF offers a Premium Loss Control Safety Program (PLCS) at a cost of $550 per dealership visit. Both programs have been very successful but the success of the PLCS program shows dramatically what a comprehensive loss control program can do for your bottom line.
The Premium Loss Control Safety Program (PLCS) has significantly REDUCED insurance costs in Michigan dealerships. There are currently 73 dealerships on the program receiving on average of 2 extra visits per year. The High MOD dealers (>1.4) that joined the PLCS program have averaged a 25% reduction in their MOD factors within 3 years with a corresponding reduction in their premium. These safety training programs when instituted and monitored on a continuing basis have prevented accidents, lowered exposures to MIOSHA citations and fines, and ultimately minimized these dealers’ costs of both workers’ compensation and liability/property and casualty insurance. The program has also provided safe working environments for their employees which has increased their productivity and their bottom lines.
The program normally includes quarterly in-house safety consulting sessions although the number of visits can be customized to meet your dealership’s needs. The available services include but are not limited to:
- Follow-up review of the recommendations made in your annual MADSIF safety survey.
- Safety Audits targeted to monitor MIOSHA compliance.
- Testing for Carbon Monoxide levels, monoxivent systems and noise levels.
- Customization of the MADSIF Safety Manual to meet MIOSHA requirements. This would include a review of current safety policies and programs. The consultant would also review and customize your Emergency Preparedness Plan including preparing the required diagram.
- Review of all training programs and documents.
- Review of MIOSHA required training documentation.
- Safety training sessions for all employees. The consultant will perform training sessions for employees. The consultant will also assist management in the appointment of a Safety Coordinator who will oversee all required safety training programs. The Safety Coordinator will be taught the specific duties related to the training and also the issues related to MIOSHA compliance. The consultant will train the coordinator in the maintenance of required safety training records.
The PLCS program is tailored to the individual dealerships needs with the goal of improving employee safety and reducing your dealership’s long-term insurance costs. The cost of the program is $550.00 per visit.
Employers who shift their focus from “going out for bids” to those factors that actually reduce costs and increase profits can make a dramatic difference in reducing injuries, reducing the MOD factor and minimizing WC premiums.