Why WC Rates Are Like the Obesity Epidemic
What is the absolute most frequent question I am asked by business owners and HR people? “Why is my workers’ compensation(WC) cost so high?” It’s a question that both angers and confounds people – it’s right up there with “What’s the meaning of life?” or “Why is the sky blue?” What I have to say about the subject may be disheartening to some, or maybe not; I suppose it depends on how willing you are to stop applying the band-aid and change the big picture. It was always frustrating to me, to be asked this question, because I could never give a direct answer that would provide that instant gratification that I knew people wanted. The truth is that lowering your WC cost is more about the day-to-day than anything else. I wanted to come up with a way to explain this and then it hit me – the cost of WC is much like, no – exactly like the obesity epidemic we face as a nation. Let me show you.
As a huge health and fitness nut I work hard every day to stay in shape and eat well. For me, health and well being is about what you do every day not some quick fix diet plan that promises 10 lbs of weight loss in ONLY 10 DAYS!!! Even if that were possible it’s not sustainable, and that’s what we are after, both in health, and in our WC premiums – sustainable low rates. Recently, I attended a lecture on health at the Cheshire medical Center and learned that roughly 88% of every dollar we spend on our health goes to actual medical care! That means that instead of spending money on gym memberships and health foods, we spend it on quick fix care that helps to ease the discomfort caused by our poor health. While I was unable to find a study to show the percentage of every insurance dollar that went to WC, if you are a business owner, I’m sure you’ll agree that it has to be around that, if not higher. Based on this assertion I have good news and bad news – bad news first…
You aren’t going to lower your WC cost today (note; due to the complicated nature of the calculations involved in determining your WC rate occasionally a good insurance advisor may be able to find errors that will lead to a better result, but this is like winning the lottery so don’t bet on it being the case). As with the obesity epidemic, we didn’t put all that weight on in one day – so don’t expect it to come off that easy, either. We have to look back to find out how you got to where you are today; did you have a big claim? Lots of little claims? Have you had someone review your NCCI worksheet and claim history to find any discrepancies? A good insurance advisor should be like a good doctor; we should review your history and show you where you are headed if you don’t make a change.
Here’s the good news; it is fixable. You can get to your lowest possible premium with some patience and planning. My husband is a Safety Professional and his biggest gripe is that companies are often too reactionary. A few good and proactive procedures can set you on a path to never having the claim in the first place. Just like obesity and poor health – if you had the carrot instead of the cookie you may not be in the position you are in now. Many companies are beginning to see the light and are putting safety programs into place but just having the program isn’t going to do the trick. I can say I’m on a diet, but drinking diet soda instead of regular soda isn’t going to make me thin. Employers need to change the way they think about safety to see a real difference. What do I mean by this? Here is an example I think illustrates exactly my point:
Stretch It Out – a manufacturing company developed a mandatory stretching policy led by managers and tracked the outcomes via their OSHA 300 logs over the course of a few years. The program was simple and required all production employees to participate in a pre-shift stretching session. The results showed a 67% reduction in lost work days and 50% reduction in soft tissue injuries. Not only that, but the employees were asked to participate in a survey about the stretching program and how they felt about it. Participation was 100% and overall feedback indicated that the employees thought the stretching program was not only beneficial but necessary. This is just one example of many out there, but it shows how once you identify the root cause of your injuries, fixing them can be so simplistic. I want to be clear that I’m not knocking standard safety programs, in fact I help develop them for our clients, but you don’t need to stop there. Supplement your policies with some out-of-the-box thinking; wellness programs, smoking cessation programs, company-wide stretching and ergonomics techniques - the possibilities are endless.
Once you identify the real cause of your workplace injuries and issues, fixing them can be surprisingly easy, the results will be lower WC cost and greater employee satisfaction. Will those results happen over night? No, they will not, but they will happen and they will be sustainable and real.
For assistance in setting up a program to help control your WC costs, reach out to me today via phone at 1-415-359-3052 or email me at bkingsbury@clark-mortenson.com. I’d love to help you manage your WC rates.
