Workers’ compensation insurance prevention

One could debate whether existing compensation laws achieve their goals. For example, some thought that employers would become more interested in safety by becoming responsible for indemnification of injured workers. However, the competition among insurance companies for employers business may have done as much to increase employer interest in safety. Many insurance companies selling workers compensation insurance provide loss control services to employers. Preventing work-related accidents helps employers reduce claims and lower insurance premiums. 

Workers compensation insurance is not in its simplest form a preventive measure it is merely a way of distributing the costs of injury across all employers. It can be made to serve a preventive function if the insurance premiums paid by employers are stmctured to reflect the accident experience of the particular employer. If companies with high accident rates have to pay correspondingly high premiums this should, in theory, give employers a vested interest in the health and safety of their workers, assuming a carefully designed scheme. 

Workplace incidents cause an enormous amount of physical, financial and emotional hardship for individual workers and their families. Combined with insufficient workers compensation benefits and inadequate medical insurance, woikplace injuries and illnesses can not only cause physical pain and suffering but also loss of employment and wages, burdensome debt, inability to maintain a previous standard of living, loss of home ownership and even bankruptcy. When implemented effectively, injury and illness prevention programs can help workers and their families avoid these disruptive and sometimes calanutous impacts on their lives. 

OSHA uses injury and illness rates to assess effectiveness of occupational safety and health efforts. Insurance companies use an experience model to determine good and poor risks for underwriting workers compensation coverage. Accident and injury experience does provide a good indicator about the effectiveness of hazard control initiatives. However, accident frequency and severity rates alone do not always accurately evaluate effectiveness of an accident prevention function. For example, an organization may experience an underreporting of occupational disease cases and hazardous materials exposures (Table 1.21). 

The prevention of occupational injuries and illnesses will definitely reduce the cost of workers compensation premiums. It does not matter whether the company pays into the state workers compensation system or is self-insured. What motivates most employers to reduce workplace injuries and illnesses is usually dollars. Some studies show that other benefits result from a decrease in the number of injuries and illnesses. For example, employers can expect to increase attendance, morale, and productivity. These are just a few of the side effects of reduced workers compensation costs. 

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