How creating a safety culture can lower your Workers’ Compensation insurance costs
Running a small business can be exciting and rewarding. It can also be risky. Consequently, every small business should have insurance from a trusted provider to protect itself financially from the risks it faces. But, of course, you don’t want to pay more than necessary for that protection. One great way to manage costs is to create a strong safety culture at your company.
What does safety have to do with insurance premiums? We answer that important question below and provide some tactics for operating with fewer incidents and insurance claims. Read on to learn more about how to develop a safety culture and potentially lower your insurance costs!
How insurance costs are impacted by a positive safety culture
One of the key factors insurance companies use in determining costs is a customer’s claims history. Insurers also look at what’s called a company’s experience mod—a numerical representation of the organization’s past workers’ comp claims compared to the expected claims history of similar-sized companies in the same industry.
Ultimately, businesses that report more claims typically have higher costs. Another way to look at it is that companies that put time, effort, and focus into avoiding incidents are rewarded with lower premiums. That’s on top of the many other benefits of operating safely.
For example, companies that minimize employee injuries don’t have to deal with hiring replacement workers or modifying worker assignments to cover for that person. In addition, they don’t risk reduced productivity, missed deadlines, poor service, or other issues that can irritate customers and tarnish the company’s reputation.
A safe work environment also gives employees an increased sense of security, enhancing their well-being and improving morale. That can make it easier to retain current employees and recruit new ones.
Safe companies also aren’t adversely affected by compliance issues, including potential penalties and fines for unsafe working conditions issued by the Occupational Safety and Health Administration (OSHA) and other entities.
Who is involved in creating a safety culture?
A culture of safety is more than just a set of rules and regulations. It’s a commitment that has to be embraced at all levels of an organization. Safety must be ingrained in daily operations, wherever they occur—in the office, on the road in a company vehicle, at a client worksite, or anywhere.
Building a safety culture requires focused employee effort and ongoing initiatives. Business owners and decision-makers have to demonstrate a commitment to safety, leading by example and allocating company resources to support safety programs.
Employees tend to be on the frontlines, where accidents are most likely to happen. Consequently, their buy-in and participation in safety initiatives are essential. Their contributions—like identifying, reporting, and recommending solutions for risks they encounter on the job—are crucial for developing and maintaining a vibrant safety culture.
What is the process for developing a positive safety culture?
Safety programs are most effective when they address the issues from multiple perspectives. For example, ongoing risk assessment is critical. The problems your business faced yesterday might not be the same ones it confronts today. Staying on top of risks means conducting regular workplace inspections, performing thorough incident investigations, and even analyzing circumstances where incidents were narrowly avoided.
Based on these findings, companies have to train and educate their employees. Topics should include standard safety procedures and proper use of safety equipment, emergency response actions, and how to communicate hazards, among others.
In training and outside of it, clear communication is essential. Transparency about incidents and dangerous conditions makes it easier to address them. Employees should feel comfortable reporting issues without fearing negative repercussions.
Implementing performance measurement practices is another essential element of building a safety culture. Developing safety goals, tracking metrics, and holding everybody accountable for meeting the objectives helps reinforce just how important safety is.
Finally, it’s crucial to recognize that safety is an ongoing process. Regularly reviewing and updating safety programs based on feedback, incident data, and industry best practices ensures continuous improvement.
How to lower insurance premiums: practical steps
Understanding the high-level requirements above for creating a safety culture sets the stage for taking concrete steps that reduce your risk, decrease the number of claims you report, and potentially lower your insurance premiums. Here are some actions every company should take:
- Conduct a safety audit. Assess your current safety practices, identify gaps, and develop a plan for improvement.
- Establish a safety committee. Involve workers from all levels of the organization in safety planning and implementation. If you only have a few employees, your safety committee might include all of them!
- Develop a written safety program. Document your safety policies, procedures, and training programs.
- Implement a near-miss reporting system. It’s crucial to identify recurring issues that nearly result in accidents so you can address them before they cause one. Encourage employees to report near-misses.
- Invest in safety technology. This might be proximity sensors on equipment, so-called “smart PPE”—personal protective equipment that captures information on worker safety—or video surveillance systems that monitor potential hazards.
- Recognize and reward safe behaviors. The most effective safety programs identify and correct unsafe behaviors and reward safe ones.
- Regularly review and update your safety program. A safety program that gets launched with lots of enthusiasm but then gradually gets pushed to the back burner steadily loses its ability to protect workers. Take steps to keep people engaged, including staying informed about industry best practices and adapting your program accordingly.
Protect your business and your profits by prioritizing safety.
It’s been humorously said that “Safety doesn’t happen by accident.” Talk with any owners whose businesses have low accident rates, and you’ll find that’s true. They invest time and effort in creating a safety culture that protects their people and, by extension, their company profits.
Of course, investing in a culture of safety isn’t just about lowering insurance premiums; it's about creating a sustainable and responsible business. A workplace where safety is prioritized fosters a sense of trust, respect, and well-being, leading to a more engaged and productive workforce.
Developing a positive safety culture requires commitment, collaboration, and continuous improvement. But the rewards are significant, including lower costs, reduced risks, and a stronger, more resilient business.