The Impact of Occupational Safety on Workers’ Compensation Insurance

Hazard exposures and the health and safety environment of workers in the construction industry are constantly changing. According to statistics from the National Safety Council, construction industry workers have the highest number of accidents and illnesses. Furthermore, according to the US Bureau of Labor Statistics, the Hispanic community has seen an increase of over 26% in workplace injuries since 2016—an increase that has had a direct impact on employee productivity, business results, and costs associated with Workers’ Compensation insurance.

In the state of Georgia, Workers’ Compensation insurance is required for all employers with more than 3 employees; this coverage provides benefits to employees who suffer work-related injuries, accidents, or illnesses. Because the work performed in the construction industry is one of the most dangerous, it is essential for businesses to protect their employees, understand what factors are taken into consideration when calculating the cost of Workers’ Compensation, and fight against rising trends in loss costs.  

The more workers suffer injuries, accidents, or illnesses, the more expensive Workers’ Compensation insurance will be. Workers’ Compensation insurance rates are promulgated and regulated by the National Council of Compensation Insurance (NCCI). The NCCI compares the experience of loss of an employer against that of the industry in which that employer operates and based on this they apply a discount or penalty. 

According to OSHA, it has been proven that employers who implement health and safety programs can save money on Workers’ Compensation and can reduce on-the-job injuries and illnesses by 20%-40%—said employers can also reduce the costs associated with these injuries and illnesses, including workers’ compensation payments, medical expenses, and lost productivity. In addition, employers often find that processes and other changes made to improve workplace safety and health can lead to significant improvements in their organization’s productivity and profitability.

Businesses that fail to implement health and safety programs suffer serious consequences, even more so if the business is small or medium, as it does not necessarily have the same resources as a large company. Therefore, it is important to update health and safety programs, to ensure that employees understand them and that they practice what they have learned. Your insurance company will ask for evidence in order to confirm insurability.

 If your company does not already have a health and safety program, start by validating that you are complying with occupational safety laws. Conduct a job security analysis and let subject matter experts provide recommendations. Also, formalize your recruitment and training process and provide ongoing support. 

Remember that an organization with an efficient health and safety program can decrease employee turnover, improve productivity and morale, reduce on-the-job injuries, and reduce Workers’ Compensation insurance costs.

To learn more about construction risks and if your company and employees are properly covered in your current insurance program and workers’ comp policy, contact our insurance specialists.

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*This blog post was written by Janyra Pérez Blanco, CPCU, CISR, and Director of Operations at Fulcro Insurance. It was originally printed in Spanish in the April/June 2022 edition of the Georgia Hispanic Construction Association’s Brick by Brick online magazine on page 6.