Why is Workers’ Compensation so Important?

Your business relies on employees to provide products and services to your clients. Without a strong and committed employee base, your business would not survive. It is a fact that employees are injured while performing on-the-job duties. Without workers’ compensation, insurance employers could not afford to pay medical bills and time-loss claims of injured workers.

The State of California has its own rules regarding workers’ compensation. This makes it important to understand how to manage your businesses workers’ compensation risks. As a result, California ranks highest of all states in workers’ compensation costs. According to the workers’ compensation rating bureau, California spends $3.48 for every $100 of payroll. 

There were over 470,000 reported injuries in the State of California in 2016. The top industries reporting claims were healthcare, social services, retail, hospitality, manufacturing, and transportation.

More Bad News

According to the Workers’ Compensation Insurance Rating Bureau of California (WCIRB), the average worker’s claims lasts longer than any other state in the nation. The report stated that over 60 percent of claimants are paid thirty-three percent longer than in other states. In California, it takes eleven years to settle most indemnity claims, as compared to about five years in Florida.

Common Types of California Workers’ Compensation Claims

Sixty percent of workplace injuries are back related. In California, over 370 workers lost their lives in 2016, which is down slightly from 2015, but still one of the highest in the country. Thirty-eight percent of the deaths involved transportation accidents.

Here are the tops causes of loss categories:

• Slip and fall
• Hit by object
• Accident
• Lifting

Proven Ways to Manage Your Business’s Workers’ Compensation Risks

Many proven best practices if implemented will help you in managing your workers’ compensation risk.  A little work up front will help reduce workplace accidents and injuries.

• Develop a set of safety rules and enforce them.
• Complete random drug testing as the law allows.
• Make sure all employees have proper safety equipment.
• Institute a safety committee and allow employees to manage the process.
• Investigate each accident and report findings to the safety committee and management.
• Develop progressive discipline for those who violate safety rules.
• Work with OSHA to make sure your business maintains complete compliance.
• Ask your broker to provide assistance.
• Look to your workers’ compensation insurer for resources.
• Encourage the review and reporting on unsafe practices.
• Provide annual training to all employees.
• Ask your insurer for regular claim review meetings to discuss open claims.
• Institute an award program for an accident-free month or for new safety ideas.
• Create a new employee orientation program where all safety procedures are outlined.

Workers’ Compensation insurance plays a vital role in helping businesses manage their employee and safety risks. Your agent should be able to provide you with a number of market options and help you manage your overall risk.

Top Workers’ Compensation Insurers in California

1. State Compensation Insurance Fund
2. Zurich Insurance Group
3. Travelers Group
4. Hartford Fire and Casualty Group
5. Berkshire Hathaway Group

Workers’ compensation offers two benefits. First, workers’ compensation provides an avenue for injured workers to obtain medical treatment when they experience an on-the-job injury. It also provides a system to pay the injured workers while they are in recovery. Second, workers’ compensation usually protects the employer from litigation from injured workers. Workers’ compensation is no-fault insurance, so there is no need to determine liability only that the injury occurred on the job.

Under California law, there is a detailed schedule of benefits injured workers expect if they are injured while on the job. In addition, injured workers can receive treatment and rehabilitation for their injuries to help them return to pre-injury condition. In some cases, the injured worker can receive a settlement if there is determined to be a partial or permanent disability.

There are different kinds of workers’ compensation programs you may wish to consider. Depending on your size, risk appetite, and industry, you can have your agent design a plan that is tailored to meet your individual needs.

Straight Workers’ Compensation – This is the most common type of program. Under this plan, you select an insurer based on their rates and discounts provided.

Deductible or Self-Insurance Options – This is like regular workers’ compensation but you are allowed to self-fund certain portions of your workers’ compensation coverage. There is much more financial review under these options.

Association Plans – Many associations offer workers’ compensation programs that are driven by above average loss ratios or safety programs. These association plans provide additional resources like safety training and even claims management.

Captive Programs – Captives are designed for large employers and allow the businesses to self-fund their workers’ compensation exposure through the forming of an insurance company.

Sources for the article included:

Business Insurance Magazine

The California Department of Industrial Relations

Bureau of Labor

Martindle- Nolo Research