The average workers compensation claim costs employers between $20,000 and $90,000 depending on the reason for the injury. Just one workers compensation claim can create an entire setback for a business in a matter of minutes. That’s why taking precautions to mitigate business risks is crucial for your organization.
But you don’t have to do it all on your own. Hiring a risk management company, or even a PEO, can benefit your organization to reduce risks in business.
Ready to learn how? Keep reading this guide about workers compensation and risk management!
What Is Workers Compensation?
Basically, workers compensation is a type of insurance that gives cash benefits or medical care for any worker who is injured on the job or becomes ill/injured because of the job.
As an employee, you do not have to pay for this insurance. Your employer will pay for this insurance.
Who Is At Fault?
If something is to happen in the workplace, no one party is going to be at fault under a Worker’s Compensation claim. This means that if you file a claim as an employee, you’re not going to receive less money or benefits due to carelessness. It is also not going to be increased because an employer may be at fault.
The claim will be looked at as is without fault taken into consideration.
When Will You Receive Compensation?
You will receive compensation through your workers compensation claim if the insurance carrier or even the employer agrees that the injury or illness is related to work.
However, if there is a dispute, you will not receive a cash settlement until after the law judge decides who is right in this case.
It is also important to keep in mind that even if the worker doesn’t receive benefits because it is deemed to not be work-related, the worker may be eligible for disability benefits.
It’s important to note, though, if this does happen, then these payments will be subtracted from future worker’s compensation award.
What Is Never Covered By Workers Compensation?
If you get ill or injured on the job, it is not always work related. For instance, worker’s compensation does not cover one-time illnesses such as the flu or headache/migraine.
Although depending on the industry, you may think this is because of work, these do not count. For instance, you could get the flu as a teacher because the students you teach have it. You will not be covered by workers comp under these circumstances.
You will also not get coverage for the following:
- Any incident that came about from an act of God
- Conditions that are preexisting before you were hired at a particular job
- If you contract an ordinary disease of life
What Risks Increase Workers Compensation Costs?
As an employer, it’s important to note what can increase the costs of workers compensation claims for you. Here are a few trends to keep in mind.
An Inexperienced Workforce
Because there is such a shortage of labor in a lot of different industries at the moment, there are a lot more worker’s compensation claims going around. This is because the workforce is more inexperienced and not trained properly. This can lead to more injuries and potential hazards on the job.
So what does that mean for you as an employer?
Although you may think that you were saving money by hiring an inexperienced worker, there is more of a likelihood that you will see an increase in file claims. This means that you are not actually saving any money and maybe losing some.
In fact, anytime that you hire someone for the job, they are three times more likely to get an injury than those who have been working at the job for a while. That means that the more and experience workers that you hire, the more you risk this.
Comorbidities can also increase your workers compensation costs.
So what does this mean exactly? A comorbidity is something that occurs when another condition causes it or makes it more likely. They are coexisting conditions.
For instance, if you are ill physically, a common comorbidity is depression. They go hand-in-hand.
Because of this, comorbidities are more likely to appear on a claim together which is going to drive up medical costs. Although you may not be able to do anything about this as a preventative measure, it is still helpful to keep in mind.
A workers compensation claim is just the beginning. Although the first factor and part of the claim are going to be the initial injury or illness itself, more things can come up after the fact.
For instance, the aftereffects of an injury can impact the claim as well.
Mental health is a huge part of that. Many injured workers will report feeling depressed after they get an injury on the job, usually within the month after the injury.
As an employer, it is your duty to address the mental health concerns that employees may be facing.
What Is the Role of Risk Management in Workers Compensation Claims?
Odds are, you are going to have workers compensation claims as long as you are an employer. Those aren’t going to go away. However, there are things that you can do to mitigate the risk as well as decrease workers compensation claims that you may receive.
Figure Out Your Leading Indicators
Leading indicators is a legal term used when looking and assessing risks within a company.
A few examples of leading indicators would be:
- The number of inspections at the workplace
- Percentage of corrective actions
- Ratio of safe to unsafe observations
These leading indicators can demonstrate how safe the workplace is. From there, you can also start making changes to make the workplace safer. The safer it is, the less likely you will receive workers compensation claims.
Now that it is 2023, technology is more important than ever. Using the right technology can make a huge difference in the safety of the workforce.
Some technological features can actually identify hazards and threats to safety before anything actually happens. Because of this, you will be able to solve the issue so that you don’t have to deal with the workers compensation claims that could come from those potential hazards had they not been identified.
What Are Risk Management Programs?
A risk management program is a program that can help companies and organizations put a risk management plan into action. This plan can include a lot of different things such as risks that are identified as potentially leading to workers compensation claims, how to deal with these risks, and more.
These programs are also able to continuously identify new potential risks that could occur because of ongoing or routine activities. For instance, if you acquire new machinery, this may be a new risk that needs to be identified. The program will help to adapt the risk management plan.
Overall, the risk management plan is meant to reduce the likelihood of injury to employees and customers, as well as reduce the financial impact of the business using the risk management program. Additionally, a risk management program is beneficial to safeguarding a business’ reputation.
How Risk Management Programs Can Help Your Organization
As an organization, you may be wondering how a risk management program can actually benefit you. Well, the risk management program is there to first help you identify potential risks. However, they will also help you put solutions into place to address these risks.
Typically, they will address the following:
A Focus on Training and Education
Since many workers compensation claims happen because of an experience workers, a risk management program is most likely going to create the solution of implementing more training and education in the workplace.
You will need to prioritize training sessions, safety meetings, and more workplace communication attention to the safety of everyone on the job. However, you are not only training new hires. You also need to educate any supervisors so that they know how to adequately train the new hires.
Although this is an upfront cost, training and education can significantly offset workers compensation claims and the costs associated with those.
Always Report Injuries
If a worker is injured on the job, you need to report these injuries promptly. You should file them as soon as managers become aware of the incident.
During a case, it is important that you have investigated the issue and are taking action to make sure that this doesn’t happen to anyone else as an employer. Additionally, you want to ensure that you reduce this risk so that you do not have multiple claims about the same issue. This can be extremely costly to you.
Other Benefits of Using a Risk Management Program to Assess Business Risks
In addition to learning more about how to create effective solutions, risk management programs provide other benefits as well.
For instance, they can reduce your business liability. By using a risk management program, your business is demonstrating that you put safety first. Shareholders in your company as well as any other investors will view this as an attractive business move. In reality, the better the business does, the better these shareholders and investors will do as well.
In addition to reducing business liability, it will also help you to build a better defense to class actions. This is because you can prove that you have not been negligent if you are assessing risks and using a program to help you do so.
If you as an employer, can point to using a risk management program to help mitigate risks, there is less of a likelihood that litigation can prove you negligent or even try to argue that in the first place.
Lastly, using a risk management program will help improve the safety of your workplace. Although the last thing you want is to have a workers compensation claim on your hands, you also do not want to have any workers, customers, or community members hurt or injured.
By using a program, you are doing everything you can to reduce this from happening. Although you can do your best to reduce the likelihood of a tragic event, it is better to have experts take a second look. They can see risks that may not be apparent to you, or that you do not have the expertise to see right away.
In reality, some things that are risky may not seem that way just from a quick glance. Letting experts decide what is and what isn’t can be beneficial!
Assessing Business Risks: How Workers Comp Programs Can Help
When it comes to your business, you want to make sure that you are doing everything in your power to keep workers, customers, and everyone in the community safe. While you do not want anyone hurt or injured on the job, you also do not want to deal with workers compensation claims because of unforeseen business risks.
This can hurt your reputation, cost you a lot of money, and even cost you employee turnover.
Luckily, there are steps that you can take to mitigate risk in the workplace.
One way to do this is to use a workers compensation risk management program. At National Workman’s Comp Programs, we are here to help you figure out your needs. From offering insurance options, workmans comp insurance, and connecting you with a PEO, we have it all.
You can get an instant quote here.