Insureon Blog

Privatized Workers’ Comp Yields 20% to 90% Savings

18. December 2012 13:37

workers compensation

The research firm New Street Group recently published a study showing that opting out of state-provided Workers' Compensation Insurance (and investing in privately provided insurance) can yield significant financial savings for business owners.

The study examines a Texas experiment that allowed employers to opt out of the state’s mandatory Workers’ Compensation system. Most of the employers who opted out chose to enroll in a private program rather than expose themselves to the tremendous risks associated with going without Workers' Comp Insurance.

Results from the study show that privately run Workers’ Compensation Insurance offers business owners…

In addition, privately managed Workers’ Compensation plans led to lower rates of opioid abuse among injured employees, which can translate to lower recovery and treatment costs over the long term.

Proactive Injury Prevention and Management = Lower Costs

Business owners who opted for private Workers' Compensation Insurance noted that their costs were at least 20 percent lower than under the state program, but as much as 90 percent lower. As an added benefit, these business owners were better able to tailor their workermans comp benefits to complement the benefits provided by their health insurance programs.

Analysts attribute these savings to the fact that private, self-directed insurance investment incentivized business owners to manage workplace safety and injury prevention proactively and in a manner that best suited their individual work environment. To learn more about what drives Workers' Comp costs, read our Workers' Comp Insurance Quote Analysis.

Nationwide Trends in Workers' Comp Privatization

New Street Group’s findings mark the latest in a trend toward privatization around the country. Earlier in 2012, Illinois considered legislation that would let it introduce a privatized option, and Maryland lawmakers voted in May 2012 to transfer the state’s Workers' Comp provider into a private, nonprofit corporation.

Interested in learning whether your business could save money on its Workers’ Compensation Insurance? Talk to one of our agents about whether the laws in your state allow you to purchase insurance privately.

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

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Insurance Research | Workers' Compensation Insurance

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