Why are insurance premiums on the rise?
It’s no secret that workers’ compensation premiums are skyrocketing to their highest they’ve ever been, however injury rates are at their lowest ever. How does that even make sense? Rate increases are mainly due to the rising costs in healthcare, and also reflect in insurance companies reporting record profits. How does a company contain these premium hikes to reasonable levels? The best way to combat premium rises is to prevent costly injuries. Sprain and strain injuries encompass around 40 percent of lost workday injuries and direct medical costs.
A company’s Experience Modification Rating (EMR) has a strong, direct impact upon a business’ insurance premiums. This factor is utilized by insurance companies to gauge both past cost of injuries and future chances of risk. Many owners also require companies to possess an EMR below the national average of one in order to submit bids, so not only can a company’s insurance rates rise as a result of injuries, they may lose clients and business as well. Many states offer insurance premium discounts for various programs instituted, such as drug free workplace programs, fall protection programs, and establishing certified safety committees. According to OSHA’s Business Case for Safety and Health, employers that invest in workplace safety and health can expect to reduce fatalities, injuries, and illnesses.
Key Traits of an Effective Safety Committee:
What makes an effective safety committee?
“Safety committees need a specific purpose,” said Curtis Chambers, CSP, owner of OSHA Training Services, a provider of OSHA compliance training. They are comprised of a mixture of employees and management, and promote group discussion for incidents, near-misses, corrective action recommendations, and prevention of recurrence. The goal of the committee is to create opportunities for overall improvement. OSHA does not require all employers to have a safety committee, however it is highly encouraged. Employees have a right to a safe and healthy workplace, and safety committees provide them with an opportunity to share the responsibility in maintaining a safe and healthy work environment. Not only do illnesses and injuries cost employers a great deal of money in insurance premiums and claims, they may also lose money due to lost productivity and time away from work. The bottom line is, a company can greatly benefit from an effective safety committee.
- Adequate training and education is essential. Members of the committee should be sufficiently trained in OSHA regulations and injury prevention so they can effectively identify and correct issues.
- Regular communication between the committee and management is important to ensure the issues presented in the meetings are corrected timely and effectively. A safety committee should essentially function as a communication link between employees, the safety department, and management.
- Meetings should be held regularly to assure better employee attendance, participation, and preparation for discussion. Meeting minutes should be recorded, and an agenda should also be prepared so employees know what is expected of them. Setting goals and objectives is also encouraged.
- Reasonable timeframes should be allotted to complete goals and tasks set at committee meetings.
- Issues not relevant to safety and health should not be discussed at committee meetings. They detract from correcting safety and health issues.
- Management needs to provide their support and commitment to the committee. They should also provide direction, coaching, and training as the committee proceeds in its efforts. Employees should be confident that management is dedicated and passionate about the safety committee’s mission.
- “The safety committee must be valued by the highest levels of management. This means that top-level management fully supports the time spent by members of the committee on safety-committee activities and that the safety committee has an adequate budget.” – Robyn Morrison, executive director of WorkSafeMT, a nonprofit safety-advocacy organization based in Helena, Montana.
- Progress of the committee should be monitored and measured, as well as accomplishments recognized. Regular checks should be made to ensure goals are being attained. It’s encouraged to publicize the committee’s accomplishments for all employees to see.
What does all of this mean for my company?
You’re probably asking by now, what does this mean for my company’s insurance premiums? Workers’ compensation premium savings vary by state and insurance provider. Below, OSHA has outlined the examples of the discounts some states provide for various reasons, such as establishing certified safety committees, implementing various programs, having a superior safety record and/or drug free workplace, etc. It is worth asking your insurance company or state workers’ compensation bureau what types of discounts are available in your state to confirm eligibility.
All in all, it’s a safe bet to conclude that establishing an effective safety committee and investing in safety and health as a whole will result in cost savings in a variety of areas. Lowering workers’ compensation costs and medical expenses, avoiding OSHA penalties, and reducing costs to train replacement employees and conduct accident investigations go hand in hand with safety and health investment. In addition, employers often find that changes made to improve workplace safety and health can result in significant improvements to their organization’s productivity and financial performance.
| State | Safety Committee (Mandatory) | WC Premium Reduction
(% Discount) |
State Plan State? |
| Alabama | If requested by employee(s) | – | No |
| Alaska | – | – | Yes |
| Arizona | – | – | Yes |
| Arkansas | – | – | No |
| California | Not required –
However, employers having a safety committee are considered to be in compliance with the communication requirement of the California IIPP rule. |
– | Yes |
| Colorado | – | Plan and committee (10%) | No |
| Connecticut | Self-insured;
> 25 employees or high incident rate |
– | State Plan only covers Public employees |
| Delaware | – | Plan (19%) | No |
| District of Columbia | – | – | No |
| Florida | – | Plan (2%) | No |
| Georgia | – | – | No |
| Hawaii | The safety plans required for workplaces with ≥ 25 employees must include a safety committee or
“a person designated and trained by the employer for the facility’s safety and health program.” |
Plan (≥ 5%) | Yes |
| Idaho | – | – | No |
| Illinois | – | – | State Plan only covers Public employees |
| Indiana | – | – | Yes |
| Iowa | – | – | Yes |
| Kansas | – | – | No |
| Kentucky | – | – | Yes |
| Louisiana | Safety plan includes requirements for “designation of employees responsible for safety” and for regular safety meetings. | EMR > 1.5 and plan
(≤ 7%) |
No |
| Maine | – | – | No |
| Maryland | – | – | Yes |
| Massachusetts | – | Plan and assigned risk insured (% varies) | No |
| Michigan | – | – | Yes |
| State | Safety Committee (Mandatory) | WC Premium Reduction
(% Discount) |
State Plan State? |
| Minnesota | > 25 employees or high incident rate | – | Yes |
| Mississippi | – | – | No |
| Missouri | – | – | No |
| Montana | > 5 employees | – | No |
| Nebraska | All | – | No |
| Nevada | > 25 employees | – | Yes |
| New Hampshire | > 15 employees | Plan (≤ 10%) | No |
| New Jersey | – | – | State Plan only covers Public Employees |
| New Mexico | – | – | Yes |
| New York | Group dividend plans | EMR < 1.30 and WC
premium > $5,000 (10% over 3 years) |
State Plan only covers Public Employees |
| North Carolina | High incident rate;
> 10 employees |
– | Yes |
| North Dakota | – | Plan, etc. (≤ 25%)
Companies participating in retrospective rating, deductible, Risk Management Program Plus, or Safety Outreach Program(s) are not eligible for the Safety Management Plan (10% premium reduction). |
No |
| Ohio | – | Plan, etc. (≤ 7%) | No |
| Oklahoma | – | Plan, EMR ≥ 1.0 (15%) | No |
| Oregon | >10: committees;
≤10: meetings |
– | Yes |
| Pennsylvania | – | Committee (5%) | No |
| Puerto Rico | – | – | No |
| Rhode Island | – | – | No |
| South Carolina | – | – | Yes |
| South Dakota | – | – | No |
| Tennessee | High incident rate | – | Yes |
| Texas | – | – | No |
| Utah | – | – | Yes |
| Vermont | High incident rate | – | Yes |
| Virginia | – | – | Yes |
| Washington | > 10 employees | All (% varies) | Yes |
| West Virginia | High incident rate | Plan (% varies) | No |
| Wisconsin | – | – | No |
| Wyoming | – | Plan (10%) | Yes |
*Information directly from: OSHA’s Safety & Health Programs in the States.