Post-Pandemic Workers Comp Budgets – A Few Suggestions
In a Zoom meeting with a client, the CFO had thought about the best way to set their company’s workers comp budget. The CFO had set the budget for pre-pandemic numbers (2019) with an added percentage for increases in wages. The client was in a large-deductible program.
From that conversation, I decided to list a few suggestions on how to adjust your Workers Comp budgets. These suggestions are not state-specific. Some of the suggestions will also apply to self-insureds.
In 2009 – 2011, during the beginning of the financial crisis recovery, some of the same questions were popular.
Workers Comp Budgets – In A New Era
Employment and wage forecasts are now super-critical.
If your company grows/recovers quickly, then be prepared for a large workers comp bill at the end of the policy year. A balancing act may be necessary. Do not let your company experience a huge premium audit bill that is due soon without the funds available to at least enter into a payment agreement with the carrier.
Alternatives are always available.
Alternative programs such as PEOs, rent-a-captives, large-deductibles, self-insurance, and other viable options are out there if your company wishes to explore them. Hearing that an employer has found their “one” best option always makes me ask if they explored all the options.
Always keep searching even if you have recently renewed your workers comp policy or TPA agreement.
Safety Still Rules All Workers Comp Budgets
Two large companies that were very committed to safety each have Experience Mods of .85 or lower. Two major developments are caused by great safety programs when searching for a policy.
- .85 or lower means more carriers are interested in covering your company
- 15% discount built-in to your program.
Any insurance carrier, TPA, risk management, rating bureau, etc. personnel will always say that safety is key – because it is. Some insureds decided to roll back their safety budgets during and just after the pandemic. I am reviewing their claims loss runs online due to a spate of injuries.
Many of the injuries were caused by a worker’s unfamiliarity with the job function they are now performing or a new task assignment. The adage – 90% of accidents happen the first time you use something new looks very familiar when reviewing the accident reports in the claims loss run/reserving review.
Resources for Assistance in Reducing Your Workers Comp Budget
Many times I am asked about where the employer can receive help in reducing their budgets. I always list:
- Agents, Carriers, TPAs – many have resources such as Loss Prevention and other free services
- Industrial Commissions, State Departments of Labor, Ombudsman offices
- Associations that your company has joined – great for finding policy sources
- Rating Bureaus – Some have two-minute explanation videos or provide teleconferences at least monthly
- Call me 800-813-1386. I may not know the answer, but I can refer you to someone who can answer your questions.
Workers Comp budgets may not always be on the front burner until the premium audit bills arrive from the carrier or the TPA billing charges.