WORKERS' COMPENSATION TRENDS


Five Strategies to Strengthen Your Workers’ Comp Program


By Lisa Bracero, Bender Insurance Solutions W


hat if a major expense dropped by almost 50%? On November 13, 2019,


Insurance Commissioner Ricardo Lara signed a 9% workers’ compensation rate cut effective January 1, 2020. Tis dropped the overall rates by 47% from 2015 to 2020. Several factors have driven the rate


decreases. Among these are favorable legislation, especially SB 863 (the Baker reforms), which passed in 2012, and SB 1160, which passed in 2016; drug formulary changes; and increased automation and safety that have resulted in declining claim frequency. Tese changes have made a


favorable impact to your workers’ compensation costs. However, the changes vary by class, insurance companies set their own rates, and your company’s experience is a key factor. Also, since the construction boom has resulted in higher payrolls and increased labor costs, reductions in your rates may not have immediately grabbed your attention as you reviewed your income statements. What does the future hold for


California workers’ compensation rates? As an insurance company president recently shared with me, “it’s a matter of math.” Premiums have declined because of lower claim frequency and severity. Eventually, they’ll reach an equilibrium point. Ten, we expect to see rates rise again in response to challenges in the system. As construction leaders, you know


first-hand how the industry requires a broad range of skills ranging from physical strength and dexterity to continuous environmental awareness and strong communication. With construction job hazards,


workers’ compensation coverage is still expensive, and safety is a significant


www.AGC-CA.org


focus for employers. Following are five strategies to


improve your risk management, manage your Experience Modification report, and lower your long-term workers’ compensation costs:


1. Build your safety culture Te importance of safety must be


understood and embraced at every level within the organization, from the CEO to the most recently hired employee. Your hiring process should support


your safety culture. Te adage “an ounce of prevention is worth a pound of cure” not only applies to onboarding and training, but also at the beginning of the recruitment and screening process. Another consideration is your safety


committee. While your safety leader may run this, participation from senior leadership emphasizes its importance,


To be effective in identifying issues and improving future results, any safety incentives should be aligned with lead indicators that point towards safety rather than lagging indicators that point to an outcome – such as zero claims – which may be the result of luck or may discourage reporting of actual incidents.


and representation from employees facilitates better insight and buy-in.


2. Focus on lead indicators To be effective in identifying issues


and improving future results, any safety incentives should be aligned with lead indicators that point towards safety rather than lagging indicators that point to an outcome – such as zero claims - which may be the result of luck or may discourage reporting of actual incidents. Examples of lead indicators


include all employees wearing proper Personal Protective Equipment (PPE), completing safety training, identi- fying issues and taking proper actions, maintaining equipment and vehicles, analyzing near-misses for cause and correction, etc.


3. Develop your return to work program


Did you know that the average


indemnity claim in California results in a loss over $68,000? If you can condense the indemnity period, you can create savings for your bottom line. Tere are three primary goals for an


effective return to work program:  Support rehabilitation.


Continued on page 14 Associated General Contractors of California 13


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