Working as a landscaper or nursery employee is physically demanding, requiring your employees to move heavy materials and tools. Injury or hospitalization is a real risk, making Workers’ Compensation an essential insurance policy. Workers’ compensation helps your business and employees by covering expenses arising from these incidents, such as medical bills, lost wages and ongoing care costs.
Some market developments and trends could raise the price of this essential coverage. Read on to learn what’s affecting your coverage and ways you can reduce the likelihood of workers’ compensation claims.
Experience Modification Rate Changes
Millions of Americans use their credit score to track how they interact with debt. The experience modification rate (EMR) works similarly for businesses, measuring a company’s work-related accidents and reflecting claim history via pricing. If your business is below the average of comparable companies, meaning you filed fewer claims, you can get a credit on your workers’ comp. You’ll likely have to pay more for the same coverage if your business has an above-average claims history.
The EMR is determined using a formula set by the National Council on Compensation Insurance (NCCI) or another state-specific rating bureau. The NCCI oversees the system in 36 states and altered its experience modification factor formula for 2024. While the overall formula did not change, there were adjustments in how certain parts of the formula were derived to account for cost variations among states.
Always take the time to review regulatory changes that could impact your insurance rates. Michigan has a separate state entity charged with rating — the Compensation Advisory Organization of Michigan (CAOM). Staying on top of any changes they make to their formula is essential to ensure you’re not taken by surprise. At the same time, promoting a safe work environment can reduce your likelihood of workplace injuries and the chance that your claim history will negatively impact your workers’ comp rate.
Employee Mental Health
Do you ever feel burnt out, tired or depressed when working? You’re not alone. These feelings are common and can lead to a greater risk of workplace incidents and injuries, two things that lead to higher workers’ compensation claims.
Not only can mental health issues lead to inattention and oversights that can harm employee safety, but Michigan law provides workers’ compensation for stress and anxiety claims arising from employment, something that includes coverage for prescription medications, therapy and lost wages, according to legal firm Michigan Workers’ Comp Lawyers.
Incorporating mental health initiatives into your business can reduce the likelihood of mental health-related workers’ comp claims. For example, providing several mental health days and resources to reduce stress can help employees cope while enhancing their loyalty to your company.
Medical and Wage Inflation
Inflation is putting pressure on millions of average Americans, but small business owners also have unique sore spots regarding this ongoing trend. Medical and wage inflation are putting pressure on workers’ compensation claims, resulting in higher-than-normal costs.
Medical care costs have risen 119% since 2000, according to the Peterson-KFF Health System Tracker. This includes essentials such as the price of services provided, insurance, drugs and medical equipment. Meanwhile, many small business owners have been forced to offer higher wages amid minimum wage increases and labor shortages in order to find qualified candidates. This could also result in higher workers’ compensation rates, as payroll is often used to calculate premiums.
Manage the impact of medical and wage inflation on workers’ compensation claims by taking proactive steps to reduce the overall number of claims caused by workplace injuries. Consider promoting a safe working environment by hosting annual safety trainings, proactively addressing issues with faulty equipment before they become claims and helping your employees with their mental health concerns.
Artificial Intelligence (AI) Solutions
AI has much potential in the workplace, but did you know it can also help you manage and prevent occupational injuries and related claims? AI solutions can help limit claims by analyzing and determining the cause of common workplace incidents at your business and suggest ways to prevent these events in the future. For example, if your AI detects a particular piece of equipment is causing accidents, you can take steps to replace or repair it before someone gets seriously hurt.
Additionally, AI can assist after an injury. When a recovering employee returns to the jobsite, AI-enabled wearable fitness devices can help them monitor their progress and adjust their treatment accordingly, so they can recuperate safely.
The possibilities of AI are growing. These solutions can help your business control its workers’ compensation claims by identifying and preventing accidents before they occur, managing your business costs and more.
Workers’ compensation is a valuable safety net for employees and small business owners. By remaining aware of changes that could impact your rates — and tools that can help you mitigate these effects — you can help safeguard your employees and your business’s bottom line. Gallagher Affinity understands that navigating the insurance market is complex, especially as you juggle the needs of your business. Contact Ashley Thomas of Gallagher Affinity for a free risk analysis and coverage review to ensure your needs are met. Call her at 918.764.1619 or email her at ashley_thomas@ajg.com. You can also learn more about available coverage at gallagheraffinity.com/MNLA.
The information contained herein is offered as insurance Industry insight and provided as an overview of current market risks and available coverages and is intended for discussion purposes only. This publication is not intended to offer legal advice or client specific risk management advice. Any description of insurance coverages is not meant to interpret specific coverages that your company may already have in place or that may be generally available. General insurance descriptions contained herein do not include complete Insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. Actual insurance policies must always be consulted for full coverage details and analysis. Insurance brokerage and related services provided by Arthur J. Gallagher Risk Management Services, LLC (License Nos. 100292093 and/or 0D69293).
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