INSURANCE: Now is the Time to Control Workers' Comp

The mere mention of workers' compensation insurance, or "workers' comp," can inspire fear in many business owners. Employee injuries can be costly, as can the insurance to cover it.

Because of today's "soft" insurance market, many businesses have enjoyed low workers' comp premiums. But these rates are expected to rise as insurers seek to improve their profitability. Taking time now to identify the areas that can cost a business an arm and a leg, and develop a plan to address each area, is one way for waste companies to effectively contain costs.

After all, keeping a tight reign on these costs can affect a business' profit margin drastically, as well as employee productivity, morale and service to customers.

Workers' comp costs are divided into two categories: medical and indemnity. Approximately 45 cents of every workers' comp dollar goes toward providing medical care to injured workers. The larger share, 55 cents, however, goes to indemnity costs, which pays employees for lost wages. To put that in perspective, employees who miss work because of injuries or illnesses are out an average of 17.1 weeks, according to a recent Gallup Poll. The good news is that lost-time workers' compensation claims dropped by 7 percent per worker in both 1995 and 1996, the last year the data was calculated.

While there may be many reasons for this decrease, the main one is the insurance industry's cost-containment efforts, including steps to limit fraud as well as legislative changes that tightened the definition of a compensable claim. Additionally, businesses have encouraged safer workplaces by implementing effective safety programs.

Workers' compensation insurance underwriters often are conservative in accepting and pricing risks resulting from inadequate control of workplace hazards.

The most common workers' comp exposures for waste businesses are related to cuts from sorting trash, slips and falls at the facility, and lifting injuries. Their most severe of workers' comp claims, however, usually involve vehicle accidents while hauling garbage. Frequency of injury incidents, as opposed to the severity of accidents at waste facilities, is the issue of most concern and should be a businesses' main target.

Before issuing a workers' comp policy, insurers first will make sure that a waste facility exercises "good housekeeping." For example:

* Is the area equipped with ladders so employees don't reach for items unsafely?

* Do stairways have railings?

* Are workers making good use of safety protection equipment such as gloves and respirators?

Areas that leave companies vulnerable to insurance claims and, in turn, financial losses, often are related to poor or absent training. Employee training is vital to ensuring that a potential exposure doesn't cause an injury.

For instance, back injuries always are a hot workers' comp topic. Fortunately, they also are preventable. Many back injuries result from lack of education about lifting. Consequently, if lifting is a regular part of an employee's job, training on proper lifting techniques would be a necessary cost containment technique.

Accident prevention also is essential in keeping workers' comp claims to a minimum. Because auto accidents are the most severe workers' comp claims suffered by many companies, driver training programs are an important investment in controlling workers' comp costs. Landfills are not the safest place to drive, so management needs to teach employees proper driving techniques for the road, and for a facility's tricky terrain. Likewise, screening potential new drivers, if performed effectively, can lead to lower insurance premiums.

Companies also should turn to experts. Industrial hygienists, for instance, play a crucial role in minimizing workplace hazards. Outside consultants can prove to be a valuable resource in identifying site problem areas, monitoring progress and improvements, and assisting a company with long-term cost control.

Workers' comp is an integrated risk management issue. Paying close attention to all the aspects of the job that can influence workers' compensation is key to making sure all costs stay manageable, a company stays profitable and a workplace is safe.