workplace injuries affect workers comp premiums, many employers are
tempted to avoid reporting accidents. That's bad. "Failing to report a
workplace injury is illegal in virtually every state," warns Ron
Peters, a partner in the San Jose office of Littler Mendelson, the
nation's largest labor and employment law firm representing management.
are two reasons for the illegality, says Peters. First, the states feel
that injured workers have a right to receive benefits at a level which
may be higher than what employers would provide without legislative
mandate. Second, the insurance industry needs to have a realistic way
of measuring risk for the purpose of setting adequate premiums.
is an exception, however: You need not report minor injuries that
require only first aid. "If you are in the habit of reporting
`first-aid only' injuries, then you may end up paying higher premiums
than necessary," says Peters. While such over reporting may seem
counterintuitive, the fact is that employers are often tempted to do so
out of fear that what appears to be a minor injury may turn into
something more serious. "Employers can get nervous because sometimes
it's not easy to identify a serious injury," he says.
Shop for a Deal
it comes to workers compensation insurance, shopping around can make a
huge difference in premiums. "One of my clients recently experienced a
30 percent drop in his workers comp premium, even though his payroll
had increased by eight percent," says Simmonds. "He had not been
shopping around for over six years and didn't realize that new
insurance carriers had entered his market offering lower rates.
Suddenly his current insurer, afraid of losing a good customer, lowered
his rates because of competition."
Your short list of candidates
can include carriers who have sold similar goods to others. "Talk with
friendly competitors," suggests Simmonds. "Find out who they are doing
Prudent shopping means comparing brokers as well
as carriers. "The broker you choose can make a big difference," says
Priz. "Some agents give the impression they can access the whole market
and get quotes from all kinds of insurance companies, but that may be
misleading. Often agents have contracts with only a handful of
companies and can really only market to those. As a result, you might
not get the best fit. So you need to talk with several different
insurance agents to make sure you are thoroughly covering the available
There's one last weapon in the cost-cutting arsenal:
insurance policies with high deductibles. Not all states allow such
policies, however. And even in states that do, not all insurance
carriers sell them. Again, shop around.
The cures for high
workers comp premiums vary by state. Be sure to check with your local
chamber of commerce, which may already be involved in a lobbying
program with your state legislature. If workers comp is a continuing
irritant, the prudent employer can keep a lid on premiums by taking
some rational steps.