Beware: Only 35% Of The Cost Of Worker Injuries Are Insured. The Rest Directly Hits Your Bottom Line

Click here to read the full article.

Have you fallen into the trap of linking insurance premium with total workers compensation costs? I ask this because, while insurance premiums are certainly important, ultimately the cost of your workers compensation program are a function of total economic impact of your claims - not insurance premiums.

Industry statistics consistently indicate that only 25 – 40% of the total cost of workers compensation claims are transferable to your insurance carrier. The remaining cost still hits your bottom line - and hits it hard – but are completely uninsured. These "uninsured costs" are the result of the marginal inefficiencies to your manufacturing or service process as a result of a work-related injury.

The purpose of this article is to explain many of the components that make up these uninsured costs and identify proven strategies and other resources that you can use to minimize both the insured and uninsured cost of worker injuries.

The Components Of Total Worker Injury Costs
As shown below, the total cost of your worker injuries is actually the total of four (4) components. Three components are the direct result of premium payments to your insurance carrier. All three may be either correct or loaded with overcharges.

Your "Cost Of Risk Transfer" is the audited workers compensation premium.

Your worker injury claims are reported to the NCCI bureau who, in turn, calculates your workers compensation experience modification. This modification factor not only is used to calculate your current insurance policy. It is actually a three-year rolling calculation and, as a result, your company is actually paying back part of the claim cost over the next three years through this experience rating factor.

Believe it or not, 60% of all workers compensation polices, or their subsequent premium audits, have errors in them. This is due to a number of reasons, including:

• Incorrect payrolls,
  
• Incorrect classification codes;
  
• Incorrect claims reported to the NCCI to calculate your experience modification,
  
• Human error in reporting the data to the NCCI.

While estimates vary, these direct, or insured costs, typically account for approximately 30% of your total costs. They are significant, and every effort should be made to minimize this cost and eliminate all premium overcharges.

Click here to read the full article.

Source: CompEraser, Inc.