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Page 22 — COLORADO REAL ESTATE JOURNAL — March 4-March 17, 2015
Construction, Design & Engineering
W orkers’ compen-
sation typically is
one of the biggest
line items for businesses (and
that’s especially true for the
construction industry). It can
be a challenging area in which
to manage costs because it
requires a change in behaviors
as well as an understanding
of policy, compliance and risk
management strategy. Those
factors, coupled with premium
increases, can make it daunting
to develop a solid strategy for
managing costs. That doesn’t
mean there aren’t steps you
can take right now to start your
business on the right track for
2015.
You may have heard that this
year, for the first time in several
years, the Colorado Division
of Insurance says the typical
Colorado employer will see no
increase in premium costs for
the “loss costs” portion of their
workers’ compensation insur-
ance premiums. Loss costs
refer to the average cost of lost
wages and medical payments
for workers who are injured
during the course of their
employment. These costs can
be affected by several factors,
including the number of claims
and the severity of the injury.
As one of the more risk-prone
industries, however, construc-
tion businesses likely still will
see an increase in their premi-
ums in this area.
So what can a business in
the construction industry do
to manage
its workers’
c omp e n s a -
tion costs?
The answer
has a lot to
do with put-
ting together
a smart strat-
egy before a
claim is ever
filed. As one
of the state’s
largest writ-
ers of work-
ers’ com-
pensation insurance, Moody
Insurance regularly counsels
clients on developing risk man-
agement strategies that lower
workers’ compensation costs,
reduce losses, and protect the
employees and assets of a busi-
ness. Here are our top three
recommendations for manage-
ment looking to mitigate its
workers’ compensation costs.
n Re-engage your safety
program. During the recession,
many businesses had to make
tough cuts that unfortunately
often included safety managers
and safety management pro-
grams. I cannot stress enough
the importance of having a
robust safety program and a
knowledgeable safety man-
ager to spearhead the effort.
Preventing accidents before
they happen is the best way to
reduce your injury costs.
One of the best first steps
to creating an effective safety
program is forming a safety
committee of individuals from
throughout your organiza-
tion. Part of this committee’s
job should include visiting job
sites, identifying potential haz-
ards and then developing an
associated safety checklist for
everyone who will be on site.
Should an accident or near-
miss take place, this commit-
tee’s job is to investigate and
make recommendations for
ensuring the event doesn’t
happen in the future. Part of
reinforcing a culture of safety
is making it part of your pro-
cess on the job site. Consider
implementing a monthly “tool-
box talk” where safety leaders
on your job sites go through
potential hazards and safety
tasks with your on-site crew.
Finally, to ensure that all
new employees understand
the importance of adhering to
safety policies and procedures,
your safety committee also
should provide a list of the
company’s safety rules for new
employees to sign at new hire
orientation.
n Implement an aggres-
sive return-to-work program.
When an injury does happen,
the most effective way to miti-
gate losses (both for you and
for your employee) is to get
that person back to work. He
might not be ready to return to
full duties, but there should be
an efficient system in place to
ease back into work even in a
limited capacity.
One of the biggest features
of an effective return-to-work
program is good communi-
cation. Too many companies
allow communication to lapse,
which means people are out
of work longer, which costs
everyone involved. The easi-
est way to get started is by
defining specific modified
duty tasks for someone return-
ing to work and then outlining
those tasks in your policy at the
start of employment to ensure
everyone is clear on the path
back to work.
As an added bonus, with
the implementation of a safety
committee and a return-to-
work program, you are half-
way toward qualifying for
Colorado’s Cost Containment
Certification, which gives you
a discount on your workers’
compensation insurance.
n Elect for higher-deduct-
ible plans where possible.
Just like with a personal
health insurance plan, choos-
ing a workers’ compensation
policy with a higher deduct-
ible can reduce your premi-
um costs, but require you to
assume a greater risk when
and if your employees need to
use the insurance. If you have
a robust safety program and
an aggressive return-to-work
program, a higher-deductible
plan is a good option for reduc-
ing your costs while ensuring
your employees remain fully
insured.
Beyond the up-front pre-
mium savings, there are other
long-term benefits to a high-
deductible plan. Colorado is a
net reporting state for calcula-
tion of the workers’ compensa-
tion experience modification.
That means that any losses
under the deductible are not
reported to the National Coun-
cil on Compensation Insur-
ance, the entity responsible for
calculating experience modifi-
cations in Colorado. NCCI will
therefore calculate the expe-
rience modification without
these losses, which could help
lower the modification and in
turn lower your premium cost.
Ultimately, the goal of work-
ers’ compensation insurance is
to protect you, your business
and your employees. These
three steps will take you a long
way toward achieving that
goal.s
Brad Moody
President, Moody
Insurance Agency,
Denver
I cannot stress enough
the importance of
having a robust
safety program and a
knowledgeable safety
manager to spearhead
the effort. Preventing
accidents before they
happen is the best
way to reduce your
injury costs.
DENVER + COLORADO SPRINGS
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