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How to use Workers’ Comp to improve the bottom line

Tough times and leaner budgets mean employers are under constant pressure to improve their bottom line. Many employers view Workers’ Comp as a necessary and uncontrollable expense; yet, it is a controllable aspect of business that, if managed properly, will have a measurable and positive ROI that improves the bottom line.

In this issue’s case study, a general contractor saved over $245,000 in four years and now has a low Experienced Modification Factor (MOD) and excellent safety record after implementing a comprehensive injury management program. For years employees experienced one or two falls a year, resulting in an escalating MOD. The contractor viewed this as an inevitable cost of doing business. After all, construction workers are particularly at risk for serious falls. The radical reduction in the number and size of claims clearly demonstrates the fallacy of this reasoning.

The resulting low MOD not only lowers his costs, but it enables the contractor to bid on more jobs and be more competitive. Within the company, Workers’ Compensation is no longer an isolated expense, but a core business practice. Injury management is an integral part of the contractor’s culture and works to improve the overall business.

As CertifiedWorkComp Advisors (CWCA), we recognize that insurance companies do not pay for employee injuries, they merely finance them. You, the employer, pay the cost and often this is two or three times the cost of the claim. Our mission is to help you to manage and control your injury costs, so that your Workers’ Compensation costs are always under control.

It’s important to understand that this is not a “quick fix” – it’s a continuous process that requires rigorous, consistent implementation. There is no magic bullet – safety comes from the top down and bottom up – it must permeate every level of the organization through employee involvement, accountability and management commitment.

Managed properly it will produce results. The average client in one group of CWCAs that works with almost 200 businesses sees a 78% reduction in accident frequency in two years and almost a 50% reduction in their first year of the program.

The following chart shows the key processes that have been proven to drive down your costs by identifying and managing risks: