Insureon Blog

Manage Your Workers’ Comp Exposure to Keep Costs Low

14. June 2013 16:27

The Huffington Post reported last week on a woman who was accused of Workers’ Compensation Insurance fraud when she appeared on The Price Is Right years after an initial Workers’ Compensation claim that stated she was unable to do the physical activity required for her post office job.

Apparently, the motion required to spin the wheel was one she said on her Workers’ Comp claim she was no longer able to do. When suspicious parties launched an investigation, it came to light that the woman had also been zip-lining and doing other activities that would have been impossible if she’d actually had the injuries she claimed to have.

The woman pleaded guilty to fraud and will be sentenced this fall. So what does this mean for her and her employer? Big losses: she’ll likely have to pay fines (she’s been collecting Workers’ Comp benefits since the injury occurred in 2004), and the USPS has been essentially funding her lifestyle through its Workers’ Comp premiums (which we all know it can’t afford to do).

Here’s how you can prevent Workers’ Comp fraud from wreaking financial havoc in your business.

5 Tips to Minimize Your Workers’ Compensation Insurance Costs

Workers’ Compensation Insurance works a lot like health insurance for small businesses: your premiums will depend in part on your employees. If someone files a claim that your insurance provider pays out on, your premiums could easily go up. To learn more about what affects your Workers' Comp costs, read our Workers' Comp Insurance Quote Analysis.

Here are some ways to keep your premiums afforable:

  1. Talk with your team about Workers’ Compensation. For small firms especially, paying more than you have to for Workers’ Comp coverage (or any type of insurance!) can amount to an unmanageable financial burden. Let your employees know that Workers’ Comp payments aren’t some kind of freebie they can get – people accustomed to working for large corporations may not realize how closely your business’s finances are tied to the Workers’ Comp benefits you offer. Of course, legitimate Workers’ Comp claims can and should be paid; spreading awareness about how this type of coverage works should help minimize the incidence of fraudulent claims.
  2. Handle Workers’ Comp claims the right way. Too many small-business owners think that Workers’ Compensation claims are a matter for their insurance company, not them. In reality, though, a claim can easily spiral out of control when handled improperly. If and when one of your team members is injured and submits a claim, take time to sit him or her down to talk about the issue: what happened, how they’re feeling, what kind of support they’re looking for. An employee who feels cared for, listened to, and supported is less likely to seek massive damages than one who feels like his or her needs have been ignored or belittled.
  3. Address problems when they’re small. If a member of your staff seems tired, stressed, or distracted, he or she could be more susceptible to injuries than someone who’s well rested and focused – and more likely to sue if such injuries occur. Encourage your employees to take a little time off to rest and rejuvenate so you don’t lose them to major injuries that build up over time (and end up with Workers’ Comp claims on your hands). (More on employee wellness programs.)
  4. Have a plan for dealing with injuries that occur around the office. If and when someone is hurt at work, take the incident seriously, even if your employee thinks or says they’re fine. Taking adequate steps to encourage healing and proper treatment right away minimizes the chances that a seemingly minor incident triggers bigger problems down the road. Plus, if an injury does lead to a Workers’ Compensation claim, your immediate response could affect whether you’re found liable in the event that your employee decides to sue.
  5. Treat claims with a healthy dose of skepticism. In small businesses, it’s usually harder to fake an injury to collect Workers’ Comp benefits – but it’s certainly not impossible. Because Workers’ Comp premiums come out of your company assets, it’s part of your job to make sure workplace injuries are just that (and not so-called “Monday morning injuries” that people experience over the weekend and “save up” to report at work so they can collect benefits).

Mutual Respect Helps Minimize Workers’ Compensation Incidents

Let’s get one thing straight: we’re not trying to imply that most workers will try to game the system and commit Workers’ Compensation fraud. In fact, the vast majority of people wouldn’t dream of such a thing. But as a small-business owner whose finances are directly tied to your Workers’ Comp costs, it’s a good idea to be aware that fraud exists in this field – and that minimizing the incidence of such fraud is well within your power.

Writtten by Brenna Lemieux – check her out at Google+ or Twitter.

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Risk Management | Small Business Risk Management | Workers' Compensation Insurance

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