As NY workers comp rates continue to rise, employers must take steps to understand how insurers calculate premiums so that they can learn methods to keep their rates as low as possible.
Every year, workers compensation insurance policies renew, and prior to the new renewal year, insurance carriers issue rates for every industry classification. Insurance underwriters review overall loss ratios of industries as a whole, and they also take a look at individual loss ratio results by company as well.
The loss ratio is a calculation based on expenses paid for injuries against the premiums paid by the business for its coverage.
In order to employers to maintain a low loss ratio, they must adhere to one or both of the following methods:
1) Reduce the occurrence rates of on-the-job accidents and
2) Lessen the severity of workplace injuries when they do happen.
NY Workers Comp Rates Affected by Claim Occurrence Frequency
Occurrence rates, also known as frequency, refers to the number of worker injuries in a given period. In situations where a business has a high rate of injuries that are similar, usually the problem lies with the employer.
Business owners and managers can take steps to reduce their injury occurrence rates by creating awareness and improving safety training of employees.
When employee injuries happen often and yet are unrelated in how they occur, many times it is due to employee error, and in some instances, also to a lack of safety awareness. Again, employers can help to reduce further workplace injuries by creating an injury prevention plan and instituting a regular calendar of employee safety meetings to offer further training and discussion.
Severity of Employee Injuries
Severity, on the other hand, involves the extent to which workers are affected by their injuries. In other words, how severe the injuries are when they happen. Employers must ensure that employees receive treatment so they may get back to work as quickly as possible.
High loss ratios reflect on an employer’s loss history and affect the company experience modification. A high rate of workers comp claims, particularly more severe or expensive ones, will lead to a higher ex-mod rate that will also increase workers comp premiums over a minimum of 3 years.
Keeping claims low and regularly training employees on safety procedures and protocol will go a long way in helping to maintain lower NY workers comp rates and company ex-mod factors.