Workers’ compensation is one of the few business expenses that is a fixed variable. In other words, what you pay doesn’t change the coverage you receive. For most every other business expense, the amount you spend directly correlates to what you get. Spend more money on paper? You get more paper. Double your payroll? You will likely have more employees. But workers’ compensation doesn’t work that way. So, can companies control their workers’ compensation costs? The short answer is “yes."

Bagel shop owner baking bagelsConsider Jane’s Bakery and Joe’s Bagels, for example. Jane spends $7,000 a year on her workers’ comp coverage for her 10 employees. Joe spends $10,000 for his 10. That’s $3,000 extra that Joe spends for the same coverage. At a 10% profit margin, Joe needs to sell $30,000 worth of bagels to recoup the difference. That’s a lot of bagels.


So how can your company control workers’ comp costs?

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  1. Safety first. Companies that instill a safety-first culture have fewer accidents and fewer claims.
  2. Experience modification factor. An experience modification factor, or experience rating (EMR), is a key incentive for loss prevention. If your company experiences more loss than a comparable company in its industry, it earns a surcharge. Conversely, if it has less loss, it earns a credit. Companies should monitor their EMR. Errors in payroll amounts, inaccurate job classifications, improper claim reserves and open claims that should be closed all contribute to over-inflated EMR calculations. You can obtain your experience rating from your agent or the rating bureau.
  3. Get HR on board. It’s an established fact that the majority of injuries occur with inexperienced workers. HR can help by recruiting candidates with the right experience and physical abilities. Companies that do this may reduce their EMR and OSHA frequency and severity rating.
  4. Have a WC coordinator. Having a leadership team member whose responsibility it is to enforce your workers’ compensation policies will ensure that your policies are complied with effectively.
  5. Claims analysis. Once you analyze where claims are happening, you can implement a risk control protocol to prevent future exposures.
  6. Employee education is key. How much an injury costs the company, its causes and its impact, will affect how employees see safety. Once they see the connection, your loss control improves.
  7. Claims management. Establish a claims management system to ensure proper compliance reporting. Frequency and severity both impact claim costs, so work with your claims adjuster and risk advisor to ensure proper claim reporting.
  8. Close claims quickly. Some claims stay open for years for no reason other than sloppy management. More open claims mean higher premiums. Getting claims closed in a timely manner means you will pay the appropriate premium, not an inflated one.
  9. Tell your story. Make sure your agent is able to tell the story of how your company is different. How have you invested in safety at your business? What separates Jane’s Bakery from Joe’s Bagels? Make sure that story gets told as it makes a difference in how carriers price your quote.

Reinvest the savings to grow your business

These tips can help you build a workers’ comp program to save thousands – money you can reinvest to take your business to the next level. AmTrust would love to work with you and watch the story unfold.


Reiner Insurance is dedicated to working with you to pinpoint the right coverage for your specific needs. As a New Jersey insurance brokerage, we have the flexibility to shop a diverse array that fits both your specific needs as well as your wallet. At Reiner Insurance, we pair you with an all-inclusive New Jersey insurance package that caters to your lifestyle and business goals. We provide you with premium, tailored solutions for both New Jersey business insurance and personal insurance.

About the author: Matt Zender is vice president, workers’ compensation product manager for AmTrust North America, a multi-national property and casualty insurer specializing in coverage for small businesses. Reiner Insurance is an agent for AmTrust North America. 

When you find a trusted agent – like those at Reiner Insurance – you can save time and money by opening all of your insurance policies under one roof. Call Nancy Reiner today at 908-872-8432 or email