Loss Prevention: How to Avoid Costly Workers’ Compensation Claims

Every Massachusetts employer is required to provide Workers' Compensation insurance coverage for their employees. It is a mainstay of business and protects employees and employers alike. However, Workers’ Compensation claims can become costly if you don’t know what to look out for. If you understand how the system works, you can take advantage of simple ways to reduce Workers' Compensation costs.

Workers' Compensation coverage includes two types of protection: Workers' Compensation and Employer's Liability. Regardless of the industry you're in, the best way to control the cost of Workers' Compensation insurance premiums is to avoid injury claims. A safe environment, effective safety training, and ongoing programs to promote safe work habits are keys to preventing employee injury. As an employer, managing your Workers’ Compensation claims means preventing worksite injuries before they happen as well as getting injured employees back to work as soon as possible. Good loss prevention & control, claims management and effective return-to-work programs can cut costs dramatically.

One of the most costly aspects of Workers’ Compensation claims is the length of time they take to process. Claims can drag out and if not settled quickly, can turn into costly administrative nightmares. At Telamon, we have a process in place that keeps these costs in check. Our In-House Claims Management is a centralized claims processing center that ensures that all open claims are monitored, tracked and settled in a timely, efficient and consistent manner. With the help of monthly loss run reviews from the insurance companies, Telamon is able to address claims issues immediately, working closely with all parties to achieve a swift resolution.

The Commonwealth’s Department of Industrial Accidents has compiled an Employers Guide to the Massachusetts Workers’ Compensation System, containing all the information an employer in Massachusetts needs in order to comply with the insurance and reporting requirements of the Massachusetts Workers’ Compensation Act. The guide provides a number of suggestions for reducing your overall Workers’ Compensation insurance expenses, including:

* Establishing comprehensive safety and health education and training programs
* Establishing joint labor-management safety committees onsite
* Providing speedy and efficient medical attention to injured employees
* Completing and filing all relevant insurance forms on behalf of the injured employee
* Maintaining contact with the injured employee
* Providing job modifications to encourage employee’s return to work

To learn more about how to avoid costly Workers’ Compensation claims and to better understand the Workers’ Compensation coverage that is right for you, contact Elena Smalky at Telamon today.

Understanding the Experience Modification Rating

An effective way to reduce your Workers’ Compensation premiums is to lower your Experience Modification Rating (EMR). Also referred to as the Experience Modification Factor, Experience Modifier or just the Mod, the EMR is an adjustment made to an employer’s Workers' Compensation premium. Any company with an annual premium greater than $5,000 is subject to a premium modification rating. Because an employer’s loss history is often a predictor of future losses, insurance companies use EMR as a prime indicator of a company's commitment to safety and overall management competence.

Since EMR is calculated based on data reported by employers' past insurers, incorrect or incomplete data can cause incorrect EMR, therefore it is worthwhile to review these calculations for accuracy. At Telamon, we offer In-House Claims Management services which include the review of loss data and the monitoring of all data being reported to the Workers’ Compensation Rating Bureau.

EMR is calculated based on an employer’s prior 3 years' payroll and loss data (excluding the most current year), essentially comparing the loss data to average loss data for all other employers in that state who share the same classification codes. Normally, the average experience modification rate is 1.00. Therefore, an employer who is assigned an EMR of .85 would receive a 15% credit, while an EMR of 1.15 would result in a 15% surcharge.

All experience modifications and classification rulings for Massachusetts employers are issued by the Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIB), a private, non-profit association of insurers licensed by the Commonwealth. As a licensed rating organization, the Bureau collects policy, claims and financial data from all carriers licensed to sell Workers' Compensation insurance in Massachusetts.  The Massachusetts Workers’ Compensation and Employer’s Liability Insurance Manual provides an overview of classifications, rates and premium determination, and premium discounts.

To learn more about Workers’ Compensation insurance and effective ways to lower your EMR, contact Elena Smalky at Telamon today.

Meet Elena Smalky, Telamon’s Service Manager