State Premium Ranking – Thanks to Mike Manley for pointing us to the 2004 Oregon Workers’ Compensation Premium Rate Ranking Summary, which offers a comparison of premium by state. Mike is the Research Coordinator at the Information Management Division of Oregon’s Department of Consumer and Business Services. He also points us to some other workers comp studies that look very valuable – thanks, Mike.
Safe patient handling – Ann Hudson, RN, BSN commented on our recent post about Washington passes “Safe Patient Handling” legislation, noting that: “Substantial savings could be realized by insurance carriers and employers, and the nurse shortage could be eased, if workers’ comp carriers assisted employers to retain back-injured nurses in other non-lifting nursing positions.”
Her comment led us to the Working Injured Nurses Group or WING USA, a site that provides information, advice, and support to injured nurses. Anne is a founder of this group as well as co-author of Back Injury Among Healthcare Workers: Causes, Solutions, and Impacts. She has been active in championing the cause of back-injured nurses – both in terms of prevention and also in advocating for reemployment of injured nurses in positions that don’t require lifting.
We appreciate informed comments from our readers. If you have resources, information, or just opinions, we encourage you to jump in!
Posts Tagged ‘benchmark’
Readers reply: Premium comparison and safe patient handling
Friday, April 21st, 2006Compare your workers compensation losses with others in your industry
Wednesday, March 3rd, 2004Marsh offers an interactive tool to let you compare your workers comp losses with others in your industry. It entails entering a few bits of information, and it then generates bar charts that depict industry numbers and your variance from the norm. Of course, it’s a rough benchmark, but it still offers an industry-specific yardstick, and most of us are eager to see how we measure up to our peers. The site has other interactive tools too – test your liability limits, or benchmark your Directors & Officers liability.
The site also has a library of articles on various business insurance issues, including one entitled Controlling Workers’ Compensation Costs. Here is an excerpt:
“The average cost of a claim involving an employee who lost time from work was $30,000 in 2002, according to data gathered by Marsh. In the aggregate, these costs have a big impact on an employer’s bottom-line. A business with $100,000 in workers’ compensation losses and a one-percent margin (such as in retail) needs to generate $10 million in sales to pay its workers’ compensation claims.”
Obviously, we think the best way to forestall these punishing costs would be to prevent claims from occurring in the first place; Marsh suggest that employers view workers comp initiatives in terms of pre-loss and post-loss initiatives. They offer their views on an effective claims management component:
“To address post-loss issues, employers may need to sharpen their focus on the injury and claims management processes. This could involve establishing consistent policies for reporting claims and procedures for dealing with workplace injuries and providing medical referrals. A key element in any employer’s post-loss activities involves implementing a return-to-work policy that gives employees an opportunity to begin working on a modified schedule as soon as they are physically able. Transitional or temporary work programs offer significant benefits to the employee and potential cost savings for the organization.”
At Lynch Ryan, we are ardent believers in the need to measure and benchmark losses against the industry and also against a company’s own performance over time, so we are happy to see this handy tool from the folks at Marsh. If you haven’t visited the Marsh site lately, you might find some valuable risk management or HR resources.
Measuring Success 2
Tuesday, January 6th, 2004As I’ve said previously, a company that wants to have low workers’ compensation costs has to have effective ways to measure the performance of its safety and injury management efforts. In December, I wrote about the Cost of Losses per Full Time Equivalent Employees (FTE). Today, it’s time to talk about the Severity Rate.
In nearly all cases, time away from work drives the cost of losses more than any other determinant. This is why modified duty plays such a vital role in controlling costs. Therefore, the severity rate, which measures lost time, becomes the single best non-economic indicator of the overall effectiveness of a company’s workers’ compensation program. So, what is it, and how do we calculate it?
The severity rate is the number of days away from work due to workplace injury or illness per 100 full time employees (FTEs) per year. It sounds daunting, but the Department of Labor has made it easy to get and use this data.
For more than thirty years the Occupational Safety and Health Administration (OSHA) has required most companies to maintain what is called the “OSHA Log.” On this report, every workplace injury and illness is recorded along with the resulting time away from full duty, as well as time spent on restricted duty.
Every year, each company required to keep the OSHA Log sends a copy of it to the DOL, which includes it within a national database maintained by its Bureau of Labor Statistics. The BLS collates data from each Standard Industrial Classification (SIC Code) and publishes an annual national average rate of time away from work, or “severity rate,” for each SIC Code.
To calculate your severity rate, divide the total number of days lost due to occupational injury or illness by the total number of hours worked by all employees. Following this, compare your severity rate with the average for your SIC, published annually by the BLS. Remember, the average for your SIC is nothing more than the middle of the bell curve; it is neither good nor bad. You should set for your company a goal of maintaining a severity rate that is 50% less than your industry’s average.
Measuring success
Thursday, December 4th, 2003I’ve always thought that a company that is serious about controlling workers’ compensation costs and losses must be serious about measuring its performance, or else how will success be known?
The problem with traditional measurement protocols is that they take years to develop in order that conclusions can be drawn with any level of actuarial certainty. The four-year development of experience modification is the standard measure. Loss data for a given year does not enter the mod calculation until eighteen months following the close of the policy year, and the modification, itself, reflects three years experience. This fails to give management a timely opportunity to reverse unfavorable trends. If you are an employer, you need something better and quicker.
There are more user-friendly methods that employers can use to keep abreast of the status of their programs at any given time. We recommend tracking the data continuously and posting results monthly.
Over the next five weeks, I’ll post some of the methods we’ve found to be most effective at Lynch Ryan. If you’re an employer, perhaps you’ll find them useful as you search for ways to track the performance of your own injury management program. Feel free to post any comments – we’d like to hear what you think.
This first posting in the series will focus on Cost of Losses per Full Time Equivalent Employees (FTE).
The single best economic indicator of the effectiveness of a workers’ compensation cost control program is Cost of Losses per FTE. It provides an economically sound snapshot of program success at any given time. Oftentimes, employers have little control over whether workers’ compensation statutory premium rates rise or fall. Yet, individual employers can control whether their own losses rise or fall. Tracking the cost of losses per FTE is the best way to measure the status of the overall cost control effort.
To determine the cost of losses per FTE, first factor out the variability of part-time and overtime work by dividing the total number of hours worked by all employees in a one year period by 2080 (a 40-hour workweek times 52 weeks) to arrive at the number of full time equivalent employees. Then, divide the total cost of losses during the same one year period by the total FTE count.
Regardless of industry or geographical location, your annual Cost of Losses Per FTE should not exceed $100.
You can track the Cost of Losses Per FTE on a quarterly or monthly basis by substituting 520 or 173 for 2,080, respectively.
Compute your safety incidence rate
Monday, September 29th, 2003Do you know your company’s incidence rate? It can be a useful for tracking your own level of workplace injuries and illness over time, or it can serve as a benchmark for comparing divisions within your company, or with other companies in your industry. The Bureau of Labor Statistics (BLS) has detailed instructions on how to compute your incidence rate.
