By Ken Cooper, Director of Risk Strategy, Western Growers Insurance Services
In late July, the California Commissioner of Insurance once again approved a decrease in the workers’ compensation pure premium advisory rates, which are used by insurance carriers to set their rates for coverage. As a result, policyholders are likely to see a decrease in their workers’ compensation premium rates for the seventh year in a row. In fact, the approved rate reduction effective September 1, 2021, is the eleventh overall rate reduction since January 2015.
With costs for workers’ compensation insurance decreasing, focus on safety might easily be overlooked in favor of business areas where costs are increasing. Production demands also might be a source of distraction from workplace safety. In addition, the perpetual focus on compliance-based safety, especially those related to COVID-19 since early 2020, might be a distracting factor for some organizations that are dealing with compliance fatigue.
The recent focus of many employers has been placed on complying with new practices related to the prevention of the spread of COVID-19. According to the Workers’ Compensation Insurance Rating Bureau of California’s 2021 “State of the System” report, only 6 percent of agriculture workers’ compensation indemnity claims were attributed to COVID-19 (compared to 60 percent in healthcare or 20 percent overall). The low incidence rate among agriculture employees, who largely remained actively working in their normal essential capacity while many other businesses could shift to remote work, speaks volumes to the effectiveness of safety measures taken by ag businesses to protect their employees.
As we look to press forward in times like these, it is especially important to increase and maintain focus on safety rather than giving in to the plethora of distractions. Occupational Health and Safety Administration fines continue to increase annually, and the insurance market is always subject to hardening and softening. Additionally, declining workers’ compensation rates can affect experience modifications. Lower payroll levels and lower expected loss rates mean that claims have greater impact on experience modification changes.
There are also the intangible costs associated with a lapse of safety focus—a compounded labor shortage, loss of productivity, decreased morale, increased employee turnover, economic loss to the families of injured employees. Simply put, protecting employees properly is crucial to the economy, our communities, fellow workers and families. Implementation of and focus on effective safety and health programs allow your employees to prosper and your business to thrive.
Safety is a critical factor that a business retains control of, regardless of regulatory or market conditions. Your employees are an investment, and as with any investment, it is in your best interest to protect them. Focusing on safety and health will benefit your business in the short term as well as help you avoid possible losses in the future. Therefore, do something about safety; invest in safety equipment, technology and programs now while workers’ compensation insurance rates are reduced so your business is prepared to be a best-in-class performer.