MOST BUSINESSES ARE REQUIRED BY THEIR STATE TO CARRY WORKERS’ COMPENSATION INSURANCE. THE COST OF THIS INSURANCE CONSUMES A VERY LARGE PART OF AN EMPLOYER’S PAYROLL. THE COST IS BASED ON MANY FACTORS SUCH AS THE NUMBER OF PERSONS DOING HIGH-RISK JOBS WITHIN A COMPANY, AND BY THE TYPE OF INDUSTRY IN WHICH THAT COMPANY COMPETES.
There is a rate used by the insurance industry to determine what it charges companies for workers’ comp insurance. That rate is made up of two major components: the manual rate and the experience modification rate.
The Manual Rate
All employers that have workers’ compensation must classify their workers according to the type of work they perform
There are more than 450 work classifications. Each classification of workers has a yearly dollar rate established for that classification. The rate is based on medical costs and benefits paid out for that particular classification of work that year.
The manual rate is expressed in $100.00 of payroll. The manual rates are calculated by rating bureaus each year and vary depending on the comparative accident cost associated with that particular type of work classification and an average cost is assigned. An example of this is an iron / steel erector classification expressed in $100.00 of payroll would be considerably higher than a clerical worker. These manual rates are designed to reflect the differences in the potential for occupational injuries and illnesses so that employers aren’t paying large amounts for workers who are in relatively low risk work.
Experience Modification Rate The second component is the experience modification rate (EMR). This is used to produce what is called the “mod rate.” A company’s EMR adjusts the industry-wide manual rate by that company’s unique safety experience. The impact of this experience- adjusted rate, or mod rate, can require a company with a poor safety experience to pay more for workers’ compensation insurance than other companies in the same industry, or it can offer the opportunity for a company with a good safety experience to pay less.
Back Injuries According to the Occupational Safety and Health Administration (OSHA ), back injuries in the workplace continue to be one of the major causes of time loss injuries in the workplace.
Hundreds of companies are closing yearly due to the increase of back injuries alone, causing the companies to be unable to pay for their increased premiums.
Improvement in workers with back pain when they wore the LifeBack Support
What’s The Solution? The simple answer is to reduce losses (injuries), which will lower your experience modification rate (EMR) and, ultimately, reduce your workers’ compensation cost. How do you do that? Reduce injuries with a pro-active, ongoing safety program that addresses your company’s individual problem.
For example, although back injuries are one of the leading causes in increased premiums, most companies are not doing much, if anything, to prevent this problem. They might have a stretching program, or might use supports that been proven to be ineffective by the Journal of American Medicine, or even worse, nothing at all.
Any employer who is not active in preventing workplace injuries may ultimately suffer not only a higher cost of workers’ compensation, but may not be able to find an insurance company willing to take a chance on their business.
You might not be able to prevent all back injuries, but at least with a program such as the Life Back Work Solution Program you might be able to cut down on the severity of those injuries which will result in getting your employees back to work sooner.
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