So, your insurance agent calls up and asks if he can stop by to chat.  You say sure, always have coffee on, stop on by.  The agent stops in and after some chit chat says the work comp insurance company is notified him they have some concerns with the account.  You say, well, we’ve had some claims but they’re no biggies.  Then the insurance agent says, well, it may be a biggie.  Of course, you are surprised and inquire as to the nature of the problem.  The comp carrier has commented on: an increase in injuries on the job, that premiums are going to increase because of the increased losses and, the best part, (saved for last of course) is the mod rate is going up to 1.25 when pre-mod rate was .95.  This is where your agent tells you safety programs cost less than accidents.

Naturally, you have some questions. For instance, which of the comp claims is the carrier concerned with, how much will the work comp premium rise and what is a mod rate?

The agent explains all of the claims are a concern because the frequency of injury is increasing, the premium will increase approx. 18% (but the carrier is also making noise about dropping your account) and the mod rate is the cost of premium to attain coverage.

Safety programs cost less than accidents:

You ask your agent what you should do.  Well, first he has some questions, such as do you have anyone in charge of safety? Do you conduct any safety training? Do you audit field performance from a safety perspective?  No you say, it costs too much and I’m too small (50 employees).

Your agent points out several points for you to ponder. First, the increased premium will likely add approx. $25,000 to your insurance costs.  Second, an increasing number of businesses today require a certain mod rate and that a 1.25 mod rate will bar you from even bidding work with those potential clients.  Third, the costs you’ve paid in deductibles under the work comp plan is approximately $25,000.

Your agent, a smart guy, explains the cost of implementing a safety program, safety talks and some safety training, will by far be less than the planed increased in work comp costs (premium), the deductibles you’ve paid in the past year.  But he also points out the lost project time due to loss of personnel due to injury.  He further points out that an injury on the job tends to slow down the rest of the crew of the uninjured workers, and so how much does that cost he asks you?  You of course, after thinking about if for a few minutes, know what that cost is.

The cost of a safety program is common recognized to be much much less than the cost of losses.  Your agent explains that with a fixed safety compliance program you know your costs.  What you never know, is what the cost of an injury is until it occurs, and that cost you have no control over.

Moral of the story, safety programs cost so much less than accidents.

Safety on ladders and stairways.

What you don’t know can hurt you-Hazard Identification & LOTO