Safety First! Employers Hit with Higher Workers’ Compensation Costs | DCR Workforce Blog

Safety First! Employers Hit with Higher Workers’ Compensation Costs

New York will see a 9.3% average hike in workers’ compensation loss costs, taking effect on October 1. Businesses in New York avowedly see this hike less as a burden and more as a necessity to keep the insurance market stable after the state hiked benefits in 2007. Now, workers’ compensation insurers add their own expense and profit factors to the approved loss costs to generate rates. The Business Council of New York State said the hike is a cost of doing business as it reflects the true cost of New York’s workers’ compensation system, while urging lawmakers to enact reforms to address the factors driving up costs.

The hike is necessitated by a continued rise in the cost of claims, as indemnity costs are rising at an annual rate of about 5.3%, and medical costs at about 5.1%; while claim frequency is mostly stable. The New York State workers’ compensation system is also deeply troubled by the expensive reforms of 2007 which more than doubled maximum benefits, indexing them to the state’s average weekly wage, increased medical costs, rapidly grew costs of scheduled loss of use awards and caused extensive litigation and excessive fees paid to claimant attorneys.

Nothing but serious reform could ensure lower comp costs in the future. Computations of the loss cost level indicated an increase of 9.6% across all classifications but the state proposed only a 9.3% increase by assuming no change in the loss cost provisions for terrorism, natural disasters and catastrophic industrial accidents. Last year the state approved an average 5.9% increase in loss costs.

  • New York has one of the highest costs in the nation for workers’ compensation, as it pays for lost wages and medical care when an employee is injured on the job.
  • The compensation system was unable to cope with the rising costs associated with workers’ injuries and insurance carriers were threatening to leave the state if they couldn’t raise prices to cover claims.
  • The increase reflects planned increases in the maximum weekly benefit. As per the pre-approved schedule passed by lawmakers in 2007, the maximum weekly benefit of $864 as of July 1, 2016, will rise to $886 on July 1, 2017, and $922 on July 1, 2018. These increases in the maximum weekly benefit account for about a 0.5% increase in total workers’ compensation claim costs, according to the industry.
  • Though most lifetime payouts for injuries were done away with in 2007, delayed resolution of cases caused injured workers to be paid for far longer than the 10-year maximum for most cases.
  • The maze-like system frustrated injured workers, whose claims went unresolved while they made multiple visits with lawyers and with competing doctors who represent claimants and payers.

The new rule makes even employers working hard to maintain good safety records to avoid claims face higher rates. Interestingly, Wisconsin has just approved a 3.19% reduction for worker’s compensation rates in the state, thanks to the commitment and investment of Wisconsin employers into the health and safety of their employees through effective risk management through collaborative efforts from workers and management.

Sure-fire ways to reduce worker compensation rates

Worker’s compensation insurance is basically aimed at ensuring injured workers get medical care and compensation for a portion of the income they lose while they’re unable to return to work. Everyone wants to lower costs, but how many recognize that the only assured method to reduce costs is working to eliminate workplace accidents and developing strategies designed to lower injury rates?

Here are some best practices that can achieve this, whatever may be the industry – such as retail, wholesale, restaurants, hotels, oil dealers, home health care, residential care facilities and other industries.

  • Set a goal of 100% safety and zero risk/injury at your workplace and make it a part of your DNA – and independent of cost-control initiatives.
  • Get everyone to commit to the program goals, from the top to the bottom. For every manager who saves money by not proving a worker with safety equipment, we have at least one worker who disregards safety instructions and refuses to don the safety gear provided!
  • Avoid safety violations through educating and motivating the workers to stay safe and inculcating a culture of safety into every worker.
  • Set a goal to bring down the costs incurred by the workers’ compensation costs by ensuring worker safety.

The results of implementing a “safety first” culture will not just affect the workers’ compensation program, but also your organizational productivity, overall worker safety and ultimately your businesses success.

What has your company done to promote a culture of safety, helping to eradicate work comp claims?

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.