For small businesses, managing operational costs is crucial to ensuring sustainability and profitability.
One major expense that impacts many small businesses is workers’ compensation premiums. Workers’ compensation insurance is required in New York State and most other states. It is essential for providing financial protection to employees in case of work-related injuries or illnesses, but it can also be a significant financial burden for employers.
However, there are several effective strategies that small businesses can adopt to reduce their workers’ comp premiums without compromising the safety and well-being of their workforce.
Here are seven valuable tips to help your small business reduce workers’ compensation costs.
1. Develop Safety Program and Training to Reduce Workers’ Comp Claims
Prevention can go a long way in keeping premiums as low as possible. A written and active safety training program is one of the best ways to reduce claims of work-related illnesses and injuries. Educating employees on how to recognize, avoid, and prevent unsafe conditions within the workplace helps to reduce injuries.
Create a safety committee comprising employees from various departments. This committee can work together to identify safety concerns, suggest improvements, and monitor the effectiveness of safety measures. Demonstrating a commitment to employee involvement in safety initiatives can lead to more favorable insurance rates.
2. Allocate Workers’ Compensation Insurance Costs
Allocation of insurance costs is a quick way to educate managers about the importance of controlling accidents. Under such a plan, insurance expenses become a direct part of the managers’ budget, providing motivation and incentive to train employees and prevent workers’ comp claims.
3. Establish a Return-to-Work Program
Developing a return-to-work program can also positively impact workers’ compensation premiums. When an employee sustains a minor injury, having a structured plan to help them return to work with modified tasks or reduced hours can prevent prolonged absences and costly claims. Insurance providers often reward businesses that actively support their employees’ recovery and reintegration into the workforce.
4. Investigate Workers’ Comp Accidents (Including “Near-Miss” Ones)
A thorough investigation into all accidents is critical. Talk to multiple witnesses to determine exactly what happened. By taking the time to inspect the accident area and keeping all your findings organized, you can make sure that the accident or injury won’t happen again. When a “near-miss” accident occurs, try to figure out what caused it so you can prevent it from happening in the future.
5. Implement Risk Management Strategies
Work closely with your insurance provider or a risk management consultant to identify potential risks specific to your industry. Taking proactive steps to address these risks can lower the chances of workplace accidents and injuries which in turn reduces your workers’ compensation claims. Insurance companies are more likely to offer discounted premiums to businesses that demonstrate effective risk management practices.
6. Keep Accurate Records of Workers’ Comp Claims
All businesses in New York are required to have an annual workers’ comp audit. If records contain inaccurate numbers, you could end up paying a higher premium than necessary. Also, keep Certificates of Insurance from any sub-contractors; if an audit shows you used a sub-contractor who didn’t have workers’ comp coverage, you may be charged for their workers’ comp exposure.
7. Consider a Pay-as-You Go Option for Workers’ Compensation Premiums
In recent years, many states, including New York, have introduced pay-as-you-go (PAYGO) workers’ compensation insurance options for businesses. PAYGO is an alternative premium payment method that offers greater flexibility and cash flow benefits for small businesses. Instead of paying a large lump sum premium at the beginning of the policy term, employers can make smaller, more frequent payments based on actual payroll data. This program is especially beneficial for small businesses whose payroll fluctuates throughout the year.
How GTM Insurance Can Help with Workers’ Comp
The GTM Insurance Agency offers workers’ compensation and New York disability insurance, with numerous benefits often not available with other brokers, including a Pay-As-You-Go (PAYGO) policy. Instead of premiums based on an estimate of projected annual payroll and subject to installment fees and large audit adjustments, PAYGO workers’ compensation lets businesses pay for coverage as their payroll is processed, eliminating large down payments, minimizing audit adjustments, and providing better control over cash flow. To learn more, call (518) 373-4111 or get a complimentary quote on workers’ compensation insurance.
