Magazine article Journal of Property Management

Workers Compensation Cost Reduction

Magazine article Journal of Property Management

Workers Compensation Cost Reduction

Article excerpt

For many property managers, workers compensation seems to be escalating both in terms of the number of accidents which occur as well as the dollars associated with the cost of injured workers. Many states have increased their benefit levels to injured workers. Because of this, many insurance companies have had to increase their rates, further driving up the cost.

Property managers, however, can aggressively take on the mission of reducing workers compensation costs. The focus needs to be in two distinct areas. The first area stresses the prevention of injuries, and the second is, the active management of an injured worker.


The old adage that preventing injuries will ultimately reduce your costs is still true. Stressing safe working habits and loss prevention must continue. At each property, it is critical that a manager become personally involved in loss-prevention activities and stress the importance that safety plays at their property.

A formal safety policy should be developed and signed by that property manager and subsequently posted for all to see. Meetings with employees on a periodic basis should stress safety and loss prevention. Newsletters and Payroll stuffers should also be utilized to spread management's view.

Individual managers should receive formal training on loss-prevention issues. This instruction should include how to teach employees safe working habits and procedures to follow in the event of a claim. Each property under management needs to implement training in accident prevention.

Each property should have a safety committee. The committee should have high visibility and be supported by management. At facilities where loss is high, more frequent meetings should be required.

The use of outside firms can often bring new vitality to a safety committee. An invitation to your company's insurance carrier can provide valuable supplemental information.

Lifting programs should be done at least semi-annually due to the general high frequency of back claims and their associated high cost. Back injuries account for 80 percent of workers compensation costs, annually costing employers $93 billion in lost work days, $5 billion in medical expenses, and $12 billion in legal and insurance expenses.

Performance evaluations. Individual safety goals and objectives should be established for each property manager. These goals and objectives should have financial amounts associated with them for inclusion in performance reviews. If individual managers and supervisors see that their compensation contains an element of safety, prevention of injuries will become important.

Further ideas along these lines include development of a cost allocation formula if a property is on a loss-sensitive program or other risk-financing program that rewards good experience.

* Safety-incentive awards. Individual property managers can utilize safety award programs in an effort to motivate employees to work more safely. Awards can be cash and/or gifts, which not only provide an incentive, but also build morale through the utilization of a team concept for one department competing against another or a preset goal.

There are various contests that can be conducted, most based upon the theme of achieving a certain number of days without an accident. Programs should be run for a limited period to keep the objective reasonable. Higher valued incentive awards can be offered at facilities where losses have historically been higher than normal.

* Review loss runs. Each property should receive, on a monthly basis, an up-to-date loss run on all claims that have been reported for the most recent Period and the associated dollar value. These reports should be used to track the origin of claims and an effort should be made to understand the costs of these claims so that energies can be focused on preventing their recurrence. …

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