Six steps to controlling your insurance costs

Workers’ compensation costs may be an unavoidable cost of doing business, but it’s a cost that’s more controllable than you might think. 

A healthy portion of your insurance costs rely on your experience modification factor, or MOD factor. That factor formulates how likely it is that there will be injury claims and assesses premium accordingly – the higher the risk, the higher your MOD factor and the higher your insurance costs are likely to be.

Here are six things you can do to make your MOD factor (and your insurance costs) as low as possible: 

  1. Fine-tune your hiring practices: If your hiring practices don’t already include an effective selection process, including a pre-employment drug screening and a post-offer employment physical, consider adding one. Not only will the practices help you ensure that you’re hiring the best talent for the job, but that your policies are supporting a safe work environment for everyone. For more information on the legal practices surrounding screening, check out our recent article on creating a drug-free workplace.
  2. Use early return to work programs: Offering light-duty and early return opportunities to employees recovering from injuries will reduce claim costs by reducing payments. Training employees in a new job or skill may eliminate payments altogether. Another benefit? Encouraging an employee to come back to work and providing new skills through training improves overall morale.
  3. Spot and correct risky practices: Periodic safety inspections can help you identify and correct conditions before they lead to injury. Not only do regular inspections help you keep a safe workplace, but they also demonstrate your commitment to safety programs, something that will help boost employee buy-in as well.
  4. Don’t skimp on safety training: All employees should be properly trained in how to use safety equipment and procedures, as well as personal protective gear, MSDS forms and how to handle hazardous waste. Consistent visual, written and verbal reminders about safety policy and procedures also may help make safety a habit instead of an occasional obligation.
  5. Report and Investigate Claims Early: Claims should be reported immediately. This will allow the claims administration to properly investigate the claim and to manage the medical treatment costs effectively.
  6. Explore alternative risk pools: Group self-insured funds like MADSIF return all premiums not used for claims or administrative expenses to its members. Traditional insurance companies keep these excess premiums as profit.

Finally, all of these suggestions can only be more successful with clear and consistent communication from management about its commitment to safety and excellence in the workplace. 

It’s this commitment that will translate into lower costs and more profits for your dealership.