Pub. 1 2020 Issue 2

20 Kentucky Trucker Kentucky Trucking Association expenses. If the company still cannot afford to pay for an injury, then it is likely that the money will have to come out of the owner’s pockets instead. It may take many years for the owner to be able to finish paying for these inevitable and unavoidable costs. The best way, however, is to develop a safety program that will prevent injuries from occurring in the first place. Preventing injuries is especially important because the data shows that companies with frequent injuries often have more severe injuries, too. How do you lower the cost of workers’ compensation insurance? The National Council on Compensation Insurance has 600 classifications. Insurance compa- nies come up with experience rates for each classifi- cation that are organized by state, and they base the experience rates on the last five years of experience. The premium a company pays has three parts: • The base rate. This rate is the insurance company rate based on the NCCI loss cost and the insur- ance carrier’s cost. • The manual rate. This rate is the business clas- sification multiplied by the number of people on the company payroll, which is then divided by $100. It pays to make sure your business is classified correctly. • The experience rate is the one that can be affected by a company safety program. To calculate it, you have to determine the company’s losses over three years, excluding the previous year. For example, the 2020 rate would be based on losses from 2016- 2018. Losses are compared to average injury risk within a company’s classification and the actual number of incidents. If a company reduces the number of incidents, then the experience rate goes down. Fewer injuries result in more profit because expenses (as affected by the experience rate) have gone down. The experience rate for a new company is always 1. After the first year, it can go up or down, but the goal is for it to go down. Suppose a company has an experi- ence rate of 0.85. The rate would modify the premium, so if the manual premium were $100,000, the modified rate would be $85,000. Now consider a company that is identical to the first company but has an experience rate of 1.15 because it hasn’t invested in safety within the company. Its manual premium would be $100,000, but when multiplied by 1.15, the modified rate would be $115,000. For any company, safety is a shared responsibility for the employer and also for the employee. Creat- ing a safety program, with clear goals for preventing accidents, is a way to help employees stay safe. A side benefit, of course, is that a good safety program will also make it clear to employees that they are valued. The side benefit for employers is that safety pro- grams are a smart business decision as well as being the ethical choice. You should also know that turnover goes down 48% for companies that implement an injury prevention program. Why? Workers are more relaxed when they are in a positive work environment, and they are also less likely to make mistakes. Not only do they make fewer mistakes, but those mistakes are also less costly. Employees are more productive and efficient; in fact, productivity can increase as much as 25%. Companies with safety programs have reported that for every dollar they’ve spent on the program, they’ve gotten a return of $3-$5. Your safety program should include the following: • An emergency response plan. • A plan for dealing with bloodborne pathogens such as hepatitis B, hepatitis C and HIV. • Safety training. • Safety training and safety equipment. • Training documentation. • Fall protection. • Trench safety. For more information to get you started on creating a safety program for your company, call our offices at the KTA. We have resources available to help you. continued from page 19