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| Workers' Compensation Risk Control |
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Workers' compensation insurance is one of the earliest forms of no-fault insurance. Employees who suffer work-related injuries and illnesses are compensated regardless of who is at fault, whether it is the employee, the employer or a third party. Workers' compensation insurance is mandatory for most businesses by statutory requirement. It is also one of the largest overhead costs for most businesses.
For many employers, their loss experience, defined by the frequency and severity of employee injuries and illnesses, has a direct and very dramatic impact on their ability to control workers' compensation premium. Basically, the fewer work injuries/illnesses experienced by an employer, the lower their premium will be. This provides a great incentive for them to reduce accidents by protecting business, property, and people with a safety and health program.
Although not experience rated, smaller-sized businesses can also benefit from reduced accidents by implementing a safety program. Indirect costs from accidents can be avoided such as decreased production, training others to perform an injured worker's job or hiring a replacement, possible damaged equipment or material, downtime of others on the day of the accident, OSHA citation, etc. The key to controlling workers' compensation costs, as with all other operating expenses, is top management leadership and support.
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Management Leadership and Support 
Success in any endeavor rarely just happens by chance. This is as true for safety as it is for anything else. If you don't integrate safety into everyday business activity (i.e. plan for it and make it an integral part of what you do and how you do it) sooner or later accidents will happen.
Few business owners, CEOs, or department managers would ever consider "winging it" when it comes to product quality or customer satisfaction. Neither would those who are truly committed to worker safety. They recognize that an employee injury is as symptomatic of management error or failure as is a product defect or customer service failure. They also know that typically the underlying or root causes of all such errors are similar. Usually there is a breakdown in hiring and screening, inadequate training and orientation, or poor supervision or communication, etc.
Everyone in your organization must be convinced of management's commitment to safety. It's no coincidence that the most successful companies in any industry also have the best safety records. These companies have long recognized that money spent on maintaining a safe workplace invariably produces an excellent return on investment with many additional side benefits, including:
• Reduced accidents and insurance costs
• Increased productivity and efficiency
• Fewer employee injuries
• Reduced downtime
• Improved quality
• Better employee morale
• Enhanced community image
• Better labor-management relationships
The key to achieving these results begins and ends with management leadership and support, as demonstrated by:
• Establishing and effectively communicating a clear and consistent safety policy
• Establishing specific, measurable, achievable, relevant and trackable (SMART) accident
prevention goals
• Assigning a safety coordinator or manager, accountable to top management and
responsible for achieving goals
• Holding middle management and supervisors accountable for results in their respective
divisions, departments and units via performance appraisals and meaningful impact on
their total compensation
• Establishing a specific budget for safety and health programs
• Developing and fostering a safety culture where every suggestion is considered worthy of
consideration
• Monitoring results throughout the year and taking action as needed.
The bottom line is that top management is ultimately responsible for everything that does or does not happen regarding safety. This starts with having a policy, plan, and procedures in place to ensure that you attract and screen applicants and hire those people who will help your business succeed. The next section will provide information to help you with attracting and retaining quality staff.
Hiring and Screening
Effective management of the hiring and screening process requires knowledge of employment laws, civil rights laws, benefit and pay structures, employee motivation, and employment documentation to name a few areas. When labor markets tighten, it is often tempting to just hire a warm body so someone is paying some attention to the work pile that is building. Some who have given in to this temptation have hired "problems" who have haunted them.
When hiring employees, always strive for the perfect match. Be sure that the employee meets all, or at least most, of your needs and that your company can meet their reasonable needs and expectations as well. Both conditions are necessary. The right employee for you is one who performs the job in a way that meets or exceeds your expectations. Based on education, experience, references, performance on tests, and "the right chemistry" you are certain that they can and will get the job done for you.
However, it's just as important to know what the employee's expectations are. Will they be happy working for you? Will they feel they are compensated properly, will they have opportunities for advancement, will they enjoy their work and will they get along with their coworkers? If you don't measure up, odds are they will not be around long. If they don't leave, for whatever reason, their performance will likely suffer over time. The odds of their producing shoddy work and the odds of them having accidents will increase substantially.
Human Resource processes that directly affect job performance and workers' compensation insurance costs include:
• Recruiting
• Interviewing
• Screening and testing
• Selection
• Orientation and training
• Recognition and incentives
Refer to the sample Application for Employment (Appendix D1) to help you with your hiring and screening of applicants. After you have hired the right person, you will want to give them every opportunity to succeed by getting them started the right way. To help you determine what you should review with them during this critical, early stage of employment, refer to the Employee Orientation form (Appendix D2). We recommend that this document, or a customized version of it, be made part of your personnel file. This form was developed to summarize key areas that are important for new employees to understand. It's the beginning of a training process that lets employees know exactly what you expect of them. It helps demonstrate that you intend to follow through on what you told them during the hiring and screening process.
Training
Most would agree that a well-trained work force performs better and is more likely to be productive than one that has received insufficient training. The need for training exists for all levels of management, not just the "worker bees." This is as true for safety training as it is for anything else. The CEO or owner who drives a company car might benefit from defensive driver training. The first-line supervisor probably needs to have intimate knowledge of the safety training his or her staff receives. No one is exempt. Worker injuries resulting from inadequate training should never happen.
The best way to know that your employees have been properly trained is to have your company train them. Second best is to question them about how they will perform a job, zeroing in on their knowledge of the hazards involved, and observe them performing their job to be sure that their actions agree with their words.
Situations in which training is essential to minimize the potential for unsafe work practices include:
• A new employee who lacks knowledge and/or skills
• An inexperienced employee who is assigned to a new job
• A new process, machine, or piece of equipment is introduced into the workplace
A common element in each of these areas is a lack of information. The goal of training is to close the information gap and insure that actual job performance will equal the expected level of performance. Performance expectations must include injury-free performance not just turning out a quality product. This means giving employees the information, knowledge, skills, and abilities required to safely perform the job.
To achieve this, training programs should be designed to meet specific goals or instructional needs such as:
• Developing knowledge, skills, or abilities needed because of new processes, materials,
or equipment
• Improving competency in operation of machinery and equipment
• Providing OSHA required training
• Providing hazardous substances training
• Implementing a respiratory protection program
• Implementing a hearing conservation program
• Assuring effective supervision
Since training requires a lot of preparation and can be very costly, avoid the tendency to automatically assume that training is "the answer" when performance does not meet expectations. For example, training programs are likely to fail if they are offered as temporary solutions to safety and health problems that could be solved with engineering or administrative controls. Also, poor performance or attitudes and/or a lack of motivation usually cannot be changed with training. Refer to Training Guidelines (Appendix D3) for other tools and techniques for holding training sessions.
Always follow-up to be sure that training has achieved the desired results. Finally, always document your training efforts and be certain that whatever you teach does not contradict safety policies or safety rules.
Safety Rules
While well-written and clearly communicated safety policies are essential, there are always some critical behaviors that require rules because nothing can be left to chance. Safety rules should be developed for each department, jobsite and/or workplace. The department supervisor working with the safety director or safety advisor should draft the list of safety rules. These rules should cover specific hazardous operations, machinery, equipment, and chemicals to which employees are exposed. Identify unsafe work practices. Ask workers how the job could be done in a safer manner. Also review past accidents to help produce safety rules.
Once you have compiled a list of potential safety rules, the next step is to categorize them. The fewer rules the better. Keep those critical to the job(s) posted. The remaining rules and other general company safety rules are still important, but you should incorporate them into new employee orientation and training procedures. Refer to the previous sub-sections entitled Hiring and Screening and Training for details.
The final list of safety rules should be printed in English, Spanish, and any other languages as needed. They should be easy to read and printed on large posters or signboards. The rules should be posted in two or three visible places within each department, jobsite, and/or workplace depending upon the physical size of the department.
The safety rules should be reviewed with each employee at the employee orientation and at departmental safety meetings. A printed copy of the safety rules should be given to all employees and they should be required to read and sign the rules annually indicating their compliance. A duplicate copy of the signed safety rules should be kept in each employee's personnel file.
Hazard Control
Most studies suggest that eighty-five (85%) percent of accidents result from unsafe acts or behaviors. Less than five (5%) percent are considered "acts of God" (i.e. something not readily subject to control); the remaining result from unsafe physical conditions. Unsafe acts and unsafe physical conditions are known as uncontrolled hazards.
Although, on average, the unsafe physical conditions account for not more than fifteen (15%) percent of accidents, management tends to focus their safety efforts in this area. There are many good reasons for this, though when viewed in terms of cost-effective investments, there appears to be something wrong with this picture.
The bottom line is that safety works from the top down. From the CEO or owner to the first line supervisor, management must always be as concerned about controlling unsafe behaviors as they are about controlling unsafe conditions. When employees fail to use personal protective equipment, when they operate machinery with guards removed, when they take short cuts that increase their exposure to injury, they must be corrected on the spot. Formal self-inspection programs should include provisions for observation of unsafe behaviors. Incentive programs that measure and reward good loss results should also include provisions that encourage safe behavior. Better to "nip unsafe behavior in the bud" and prevent a loss from ever happening than to address it after the fact when the damage has already been done.
Your FCCI Loss Control representative can help you develop a checklist and identify uncontrolled physical hazards or conditions that may be losses waiting to happen. The sample Workers' Compensation Self Inspection Checklist (Appendix D7) can be used as a guide for you to develop a check list specific to your company's hazards and facilities. After you have performed at least a couple of the inspections yourself, you should train your supervisors on how to conduct the inspections and then assign them the task. The results of the inspections need to be reviewed and a priority established for the repairs/corrections. A comprehensive and effective hazard control program shows your employees that you are serious about maintaining a safe operation and that you expect and require their participation.
By following the basic risk control practices described so far, more than fifty (50) percent of our workers' compensation insureds have no losses. If you can't prevent every loss, then the next best thing is to minimize their impact on your business when you do have a loss. There are highly-effective, time-tested techniques that will help you accomplish this. We cover those in the next section called "Managing Losses."
Managing Losses
There are several important tasks that need to be taken to effectively manage a loss:
1. Select a Clinic - as allowed by state law, begin today by selecting a clinic, doctor and/or
hospital that injured employees will be sent to, review that information with all new or
transferred employees, and post it in a conspicuous location for them to read. Florida
policyholders may use the Medical Provider Plan (MAP) Medical Provider Directory.
2. Attend to the employee's injuries.
3. Determine if medical attention is required.
• Paramedics and/or ambulance needed
• Take to an authorized hospital Emergency Room
• Take to a local clinic or doctor's office
4. Contact the hospital, clinic, or doctor's office to tell them of the impending arrival of your
injured employee. Some states have adopted laws pertaining to a
Drug Free Workplace Program (for the Florida employer); you'll need to tell the doctor if
they should collect a sample. All samples are sent to a DFWP certified laboratory. Refer
to the Workers' Compensation Additional Resource List (Appendix D8) for information on
how you can order a copy of applicable labs.
5. Contact FCCI Insurance Group's Claims Division at (800) 226-3224 and select Option 1 to
report the claim IMMEDIATELY.
6. Conduct the accident investigation. The investigation should be conducted by the
supervisor (initially you may need to assist your supervisor to show him/her how it is to be
done). See Workers' Compensation Accident/Incident Investigation Report (Appendix D4)
for more details and the form you can use.
7. Offer early return to work (RTW) to injured workers. One of the best ways to minimize the
impact of a claim on your workers' compensation premium is by getting the injured worker
back to work as soon as possible. Refer to Job Description form (Appendix D5) for more
details about early return to work. It will help the doctor decide about the suitability of
modified-duty work assignments.
8. Communicating and showing concern for an injured employee is extremely important at
the time of the injury, during initial treatment, and throughout the entire recovery period.
Studies have indicated that nearly one of every four employees who loses work when
injured on the job seeks the advice of an attorney. The employee is usually concerned
about his medical condition and how the injury may affect his future livelihood. Also, the
employee becomes concerned about whether his/her job will be waiting for him/her when
able to return to work. Because of this, it is essential that all employees understand what
their workers' compensation benefits are well before they are injured.
After you have gathered the necessary information via your Workers' Compensation Accident Investigation Report (Appendix D4), you should determine the proximate/root cause of the accident. Your analysis of the proximate/root cause(s) should reveal to you some commonality and trends among the accidents. Begin by addressing the most frequent and the most severe causes of injury, such as those that:
1. Cause the greatest human suffering
2. Cause the greatest dollar loss due to severity or frequency
3. Can be easily and quickly controlled
4. Occur over and over (frequency)
For your added convenience, you can access and print the OSHA 300A Log. This log is a required federal document to record your work-related injuries and illnesses.
Despite all the positive and proactive steps you take, occasionally you may have to deal with a suspected fraudulent claim. Falsifying a workers' compensation claim is insurance fraud. This type of crime is growing with an annual cost of more than $30 billion. It is often considered a high reward, low risk practice.
FCCI Insurance Group has a Special Investigation Unit staffed by private investigators and field claim adjusters who fight fraud on a daily basis on behalf of policyholders. To get more information on how to handle suspicious claims, refer to Fighting Fraud (Appendix D6).
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