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November 4, 2015

Techniques to Reduce Losses & Costs in Workers’ Comp

By Matt Bigham


Employers face a multitude of insurance challenges in today’s market.  The Affordable Care Act (ACA) has understandably garnered a majority of the insurance media coverage since it fundamentally changed how medical insurance is offered.  However, dramatic changes in the workers’ compensation market should pique the attention of employers as well.


Because the ACA has begun to shift some healthcare costs from health benefit providers to workers’ compensation policies.  Combined with increasing workers’ compensation costs, agriculture employers face increasing challenges to obtain options for coverage.

Agriculture is viewed as a high-risk industry in the workers’ compensation market.  Few carriers list the industry as an acceptable risk.  As a result, Western Growers Insurance Services (WGIS) recommends that every agriculture company implement various risk-reducing measures such as loss control, claims management and most importantly, staff education to enhance the company’s viability as an insured client and to make the industry as a whole a more viable option for insurers.

A key figure to be aware of is a company’s workers’ compensation loss ratio.  This is calculated by dividing total loss dollars by premium dollars.  A profitable threshold account for an insurance carrier is a 65 percent loss ratio.  Anything above that and a carrier might shy away from working hard to get your business with attractive rates.  A lower loss ratio is more appealing and motivates carriers to provide more competitive pricing for prospects.

Rita Carey, workers’ compensation claims analyst for WGIS, sampled 15 customers that have worked with WGIS for at least three years and have applied risk-reducing initiatives.  Rita found that claims management and staff education were critical in reducing the loss ratio for accounts.  Loss control, which focuses on preventing injuries in the work place, has an impact on reducing losses, but injuries occur even in the most attentive environments.  Rita found that if a company manages claims with the goal of simply getting them closed, it has significant effect on the experience modifier (ex-mod) and loss ratio.  Additional improvements were gained by educating supervisory staff about the ins-and-outs of the workers’ compensation system.  Combining loss control, claims management and staff training in a consolidated effort can have a significant impact on your loss ratio and ex-mod, which will ultimately reduce your workers’ compensation premium costs.

Focusing on these issues can reduce claims frequency, average annual incurred costs of claims, average cost per claim and the annual loss ratio.  The chart below illustrates these results.

Managing the factors that can drive up workers’ compensation costs is a smart way to reduce your premiums.  Let WGIS assist you in achieving those goals.


Rita Carey is the workers’ compensation claims analyst for Western Growers Insurance Services. Rita has an extensive background in workers’ compensation, risk management and human resources.  She was a workers’ compensation claims adjustor for several years for a large self-insured employer before acting as the risk manager and human resources director for a major industrial manufacturing entity.  Rita has many years of experience working on all sides of workers’ compensation issues both as an adjustor and an employer.  She has worked closely with many WG members on improving their workers’ compensation programs and results.  Rita can be contacted at [email protected] or at (949) 885-2286 for more information.






Before Training

After Training


Payroll dollars per
workers’ comp claim



Improved 41%

Average annual
total claim costs



Improved 47%

Average cost per claim



Improved 32%

Average annual loss ratio



Improved 55%