There
is a huge misconception about workers compensation claims amongst
business owners. It is a commonly held myth that a workers compensation
policy is no more than a finance mechanism for payment of claims.
Because of this, many business owners feel they would benefit more from
not having a structured system of compensation claims in place.
The truth is it doesn’t work that way,
and workers compensation system involve several complex mechanisms that
can help avoid potential to harm any business in more than one way.
If a business is rated on the basis of
its experience, it is important to remember that every dollar paid on a
claim will have its effect on the cost of compensation insurance. Not
all employers or business owners possess the funds or expertise to do
what’s necessary when employees suffer from injuries. Such poor claims
management will only result in increased cost of Houston workers compensation insurance that an employer would have to pay.
If one wishes to understand the link
between insurance claims and increased cost of insurance, it is
necessary to understand the mechanism of experience modification factor.
What is an experience modification factor?
To put it in simple terms, an experience
modification factor is a system that compares a business’ experience of
handling workers compensation claims, which is comprised of claim
dollars and payroll, to those of other businesses. These businesses
would not be unrelated, randomly chosen ones but would be similar
businesses. Businesses with better claims have low factors of experience
modification and hence their sum total of workers compensation cost is
reduced. Conversely, those with poor claims experience and high factors
have an increases total workers compensation cost.
How to have a better claim experience and lower the factor as an employer?
- Reporting all claims to the insurance company on time is important
- Open claims should be paid extra attention.
- Closing the claims as quickly as possible is another important task.
- Working in close association with the insurance company adjuster to solve any issue could be of great help.
- An employer should do everything in his power to get the injured employee back in good shape and back to work.
Occurrence of workers compensation claim
is unavoidable. It is important that a system is in perfect shape to
assist the injured employer in terms of medical assistance,
rehabilitation etc. The best way to do this is by being involved in the
claims process and shouldering responsibilities.
For more details on workers compensation claims and insurance, call us at 800-362-2809.
