Although my firm does not implement worker’s comp policies, I am often asked about ways to reduce premiums. I should note, more claims = higher future premiums. Reducing real claims may just come down to work-site safety and employee morale. This is something to bring a worker’s comp expert or work-site safety expert in on. I work closely with many worker’s comp professionals that actually have proven records for reducing real claims.
Real claims will happen from time to time and hopefully not at the fault of a dangerous work environment, but due to a pure accident.
Then you have the other side of the claims world, the fraudulent side. Often it is cheaper for the insurance carrier to settle a claim that may look fraudulent in the eyes of the employer then to fight it, especially in my State of California. This really pisses employers off for two huge reasons. One, the claim will significantly affect their future insurance premiums and two, the employee got paid for lying (supposedly.)
In my opinion, humans tend to be good and want to do the right thing. With that being said, when an employee is living paycheck to paycheck and needs to provide for their family they will do anything they can to keep dinner on the table. You may have heard a version of this example before: Your employee in this scenario is at an annual family reunion. Every year the family is divided into two softball teams. Your employee is looking to make up for last year’s loss and smacks a ground ball to left field, sliding into second base. Where he fractures, cracks, & tears parts of his body he never knew existed. He manages to suck up the pain until Monday morning where he marches into work without any sign of distress. While at the office, whom ever used the water-cooler before this employee managed to drip a bit of water on the laminate flooring which is now more like an ice-skating rink (plaintiff attorney’s words.) Boom, crash, bang and here comes your worker’s comp claim.
This employee’s only option for keeping his income was to make sure his accident occurred while on-duty.
Like I said before, humans tend to be good and want to do the right thing. If your employee had another option to replace their income without having to create a worker’s comp claim which could be risky and may take several months to see any money, wouldn’t they use that option. As an employer, wouldn’t you want your employee to use the alternative option if their accident occurred outside of work?
Easy fix in 3, 2, 1…
Probably the second lowest cost insurance policy behind group life is group disability insurance. Group disability insurance will replace a good portion of your employee’s income if they become sick or disabled and are not able to work. In fact, they could start receiving income in as little as 7 calendar days and be paid out up to normal retirement age. And again yes, these plans are very inexpensive.
Your broker should be bringing this insurance product up to you. If they haven’t then ask them about it the next time you meet with them. If they have and you have not opted in then maybe the product has not been explained to you in this way. One fraudulent worker’s comp claim will cost you significantly more than a simple group disability insurance policy. Plus, you will look like a hero to your employees for offering such a plan, especially if it is ever needed.
Written by: Bijan Noori is the Principal of Baypoint Insurance Services based in Long Beach, CA. Bijan provides insurance benefit plans for groups ranging from 2 to 500 employees.