Originally published in Birmingham Business Journal Oct. 30, 2020. 

Author: Allen Baker, Sr. Vice President of Property & Casualty

Companies are experiencing increasing (or “hardening”) rates on their property and casualty insurance programs — an average 19% globally across all lines of coverage. Despite the overall hardening insurance market, one line of insurance is actually not increasing in price: workers’ compensation (work comp).

Businesses looking for operational savings should be closely managing work comp programs as employees return to work in a COVID-19 environment.


Here are some considerations your business should weigh:


Work Comp: soft today, hard tomorrow

While work comp is holding stable today, it probably will not stay that way for much longer. The good news is that work comp is the most controllable area of your insurance program. It commonly serves as an indicator of the overall health of your risk management program. By proactively managing work comp, you can impact other liability lines such as automobile, general liability, even directors & officers liability and employment practices liability – the same coverages that are already hard and quickly getting more costly.



Know thy “mod” and manage it

“Mod” is insurance lingo for “Experience Modifier” – part of the safety score or formula comparing your company’s losses to those of your peers. Mod is one of the major factors used in determining how much you will pay for your overall work comp premium. The more injuries, the higher your mod and the more you’ll pay. Companies with strong safety procedures and cultures, along with a strong post-injury system to get employees back to work and/or to maximum medical improvement, tend to have lower mods and better rates. 


Alabama is a “fund” state

When pricing your work comp, take advantage of traditional carriers, but don’t forget the Alabama state funds. These funds are member supported and act like group captive insurance. Regulated by the Department of Labor, they can offer competitive rates while providing hands-on service around loss control, medical and drug provider networks and legal guidance. Even if your company is headquartered out of state but has a presence in Alabama, your business could be eligible to participate. 


Pre- and post-claim technologies: better for employees and businesses

Thirty to 50% of employees report work-related injuries as sprains or strains. Measuring the legitimacy of these soft-tissue injuries has historically been a challenge, but new wearable technology is changing that. Companies implementing soft-tissue management programs are saving up to 25% in work comp costs during the first year alone, a trend that is driving more and more companies to partner with clinic and tech providers who can run diagnostic tests on range of motion, pinch strength, or grip strength, for instance, to assess injury. 


It’s ironic that today’s softest line of property and casualty coverage is also the most manageable for delivering savings that impact your entire insurance program. Give your work comp program a second look – it could be well worth it. And if you need assistance, contact our risk management team.