If you are a long-time Approach client or a frequent reader of Ask Approach, you’ve probably heard us compare workers’ comp to car insurance. They have some important things in common:
- They’re both types of insurance
- They’re both required by law
- The best way to save money on either one is not to have a claim
With car insurance, you can usually get a safe driver discount if you don’t have any accidents or tickets. With workers’ comp in Washington state, L&I will give your company a Claim Free Discount if your company goes three years without any claims or at least without any indemnity claims (don’t worry, we’ll explain).
The Claim Free Discount from L&I can lower your company’s workers’ comp rates by 10 to 40 percent when compared to an “average” company in your industry. Meanwhile, a competitor who has experienced claims in the past three years may see their rates rise above average, increasing the advantage of the discount for your company.
The best way to avoid claims is to ensure that your company has safe working policies and practices in place, which are followed consistently by employees at all levels of the organization. Approach can help with this through our annual Safety Visit program and with site inspections and hazard recognition. We can also provide ergonomic assessments to reduce the risk of strains and injuries from repetitive tasks.
Most importantly, don’t give up just because a claim has been filed. If the injury is relatively minor and the worker returns quickly to their regular job or a light-duty position, the claim may be considered medical-only. If the costs are low enough, medical-only claims also don’t count against your experience modification rate (EMR).
The important thing is to begin managing the claim right away, starting with a call to Approach. That’s because even minor injuries can become problematic as soon as even a dollar of Time-Loss (or Loss of Earning Power and/or Permanent Partial Disability) payments are made by L&I. These payments are the indemnity costs that we mentioned above, which will cause your company to lose eligibility for the Claim Free Discount for at least three years.
If the doctor does not release your employee to any work immediately after the injury, we may advise you to pay Kept On Salary payments (KOS) instead of allowing time loss from L&I. This means your company continues to pay the employee his or her usual wages even though they are off work. The unplanned expense of KOS can save your company thousands when compared to the loss of a Claim Free Discount, which will impact the rates you pay for every hour worked by every employee.
To find out if your company has the Claim Free Discount — or to see how much progress you’ve made towards earning it in future years — contact your Approach retro coordinator. We can also help you review your proposed 2019 workers’ comp rates and show you how claims costs affect the calculation.
Bonus question – What about companies that save more than 40 percent with the Claim Free Discount?
It’s true, some companies get 50, 70, even 80 percent off of the rates paid by average companies for workers’ comp coverage. In fact, Approach Group Lead Chris Ristine says, “One of the most common questions I receive from companies who have the Claim Free Discount—especially from those who are medium or medium-large in size, and so have a 40% discount versus the average —is how can they get their discount above 40 percent, like the leaders in their industry.”
“Unfortunately,” says Chris, “the answer is usually that they can’t, unless they grow.” That’s because the largest companies usually don’t have a Claim Free Discount — with so many employees, they are bound to have several indemnity claims each year. But, these companies are large enough that their rates work out to be extremely low compared to smaller employers around the state, even without the discount. They simply have more buying power.