How can I lower my work comp costs in Arizona?

Let's talk about some practical things we can do as employers to lower our work comp rates. First though, let's take a quick look at how work comp rates are doing overall in Arizona.

Workers compensation rates are holding their own in Arizona, and in some cases are actually going down. Some of that has to do with the economy in general, which is getting better slowly. In fact, in 2015, the overall rate filing was down 6%. (See slides 23 and 24 in this report.)

But there's another statistic in this NCCI State Advisory Forum; something we all need to pay attention to. While claim frequency may be down overall in the last few years, and injured employees are returning to work a little faster, there is still room for improvement in the overall medical costs area. We are much higher than our regional average.

So what does this mean to me as an employer in Arizona who is trying to lower his work comp rates? It means that we all need to work smarter at keeping our workers comp rates down. I'm an employer just like you (and a huge shout out to my excellent staff at Joe's Insurance).

Here are three things we employers all need to do:

1. Set up a safety program.

I know, you've heard this one before. But most small business owners I personally know in Chandler, Maricopa, Phoenix and all over Arizona, still don't have a written safety program in place. Or if they do, it hasn't been updated in years. Having an up-to-date written safety program is a start in focusing everyone in the company on safety. Even if you have just two or three people that is "everyone." Here's a good start; download this Small Business Handbook by OSHA. Workplace safety lowers claims. Lower claims means lower a lower MOD. A lower MOD means more money left in your business checking account for future growth.

2. Establish a "Return to Work" program.

This is a big one. The longer an employee is unable to return to his or her job, the more likely it is that they will remain out of the workplace for what seems like forever. And you will pay for that in higher work comp premiums.

Employees get discouraged when they feel there's no "path back." A discouraged employee is an employee who takes longer to recover. Work is medicine. You know that for yourself; if you have something to get up for in the morning, something positive, it gives you energy. It's the same for your employee. No one does well sitting on the bench.

There are many resources for setting up a Return To Work plan. You can start here, by looking at the U.S. Department of Labor Toolkit. You can also partner with your insurance company; most of them have programs that you can utilize. Farmers Insurance has an excellent one (shameless plug- I'm a Farmers Agent).

3. Review your job classifications & hours.

Studies have shown that there is an error rate as high as 35% when it comes to the classification of employees. That means that if you manage a restaurant, your bookkeeper may be costing you what your chef is costing you. The chef who plays with knives for a living. A bookkeeper is usually a classification 8810 (clerical- the lowest NCCI rate). The chef standing over a hot grill is a different NCCI code, and it's considerably more. When is the last time you sat down with your insurance agent and carefully reviewed the hours and classifications of every employee? If you are like most of us... it's been too long.

I can help. I specialize in small business insurance in Arizona. I've been recognized as one of the top Farmers Insurance agents in Arizona, and I can help you do what I do... save money on workers compensation rates. Give me a call at (480) 940-0909.

~Joe Baselice

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