You have a clear idea what your Experience Modification Rate is (or should be) and know all too well that the lower your “e-mod,” the better. But do you know what your company’s “incidence rate” is and how it can quickly hurt your bottom line?
In the simplest terms, OSHA uses incidence rates to compare your company’s safety record against others in your industry.
These rates allow you to make an apples-to-apples comparison and can help determine problem areas as well as progress in preventing work-related injuries and illnesses.
As you might have already guessed, incidence rates also allow insurance companies to determine your workers’ compensation premiums, because a high incidence rate typically suggests a poor safety management record and, not incidentally, can hurt your chances of landing business.
You don’t need too much math to calculate your company’s incidence rate.
Start by multiplying the number of “recordable” claims by 200,000, and then dividing that number by the number of employee-hours worked in a year.
A recordable claim is one that requires more medical attention than first aid. For example, recordable injuries are those which result in loss of consciousness, limit the type of work or motion the worker can perform post-injury, or that force you to move an employee to other types of work.
Assume you had two recordable claims in a given year, and the total number of hours worked from all employees was 50,000. That would give you an incidence rate of 8.0 (2 X 200,000/50,000 = 8.0)
Again, a lower incidence rate is what you want, because otherwise your rates will go up, even if rates on average have trended down, as they have over the past few years.
So, what can, or should you do to help keep your incidence rate in check? Here are two quick ways to address the problem:
First, start by making sure you don’t over-report injuries.
In some cases, companies will include incidents on their OSHA logs that really don’t need to be there. Remember that first aid delivered at a clinic does not meet the threshold as a “recordable” claim.
Secondly, try your best to compute the rates monthly. If your rate starts climbing, you can respond more quickly to what’s happening and put into effect additional safety training as needed.
According to the American Society of Safety Professionals, every $1 a company spends on safety means a saving of at least $2.
Your employees’ welfare is, of course, plenty of reason to make sure your safety program measures up. But ROI on workplace safety can be compelling, too.
Morgan P. Mahoney is an Insurance Advisor at CCIG. Reach him at 720-330-7926 or MorganM@thinkccig.com.
CCIG is a Denver-area insurance brokerage with the full-service capabilities of a national brokerage. We do more than make sure you have the right policy. We help you manage your long-term cost of risk with our risk and claims management expertise and a commitment to service excellence.