OSHA and insurance: how workplace safety affects your premiums
As a business owner, you juggle a lot of responsibilities. From managing inventory and employees to keeping your customers happy, there's always something that needs your attention. But there's one area that deserves a top spot on your priority list: workplace safety.
A safe workplace is not just about following rules and regulations. It's also about creating a culture of company safety that protects your employees, your customers, and your bottom line. That includes having the right business insurance.
One of the most significant financial benefits of a strong safety record is its impact on your insurance premiums. In this article, we'll explore the connection between the Occupational Safety and Health Administration (OSHA), workplace safety, and your business insurance costs. We'll also provide some practical tips for creating a safer work environment.
Why is safety in the workplace important?
Before we dive into the insurance side of things, let's answer a crucial question: Why is safety in the workplace important in the first place? The most obvious reason is to prevent injuries and illnesses. Your employees are your most valuable asset, and you have a responsibility to provide them with a safe and healthy work environment.
But the benefits of a strong safety culture go far beyond that. A safe workplace can lead to:
The role of OSHA in workplace safety
OSHA is a federal agency that sets and enforces workplace safety and health standards. OSHA's mission is to ensure safe and healthful working conditions by setting and enforcing standards and by providing training, outreach, education, and assistance.
OSHA regulations cover a wide range of industries and workplace hazards. It's important to familiarize yourself with the standards that apply to your business and to ensure that you're in compliance, since OSHA performs inspections and can fine businesses for violations of its safety code. In addition, a business that has excessive OSHA violations can find it difficult to obtain workers’ compensation insurance.
How workplace safety affects insurance costs
Now, let's get to the heart of the matter: how workplace safety affects insurance costs. Insurance companies are concerned with risk assessment. The higher the risk of an accident or injury at your workplace, the higher your insurance premiums will be.
One of the key factors that insurance companies use to determine your premiums is your "loss experience," which is your company's history of accidents and claims. A company with a long history of claims will be seen as a higher risk and will pay more for insurance than a company with a clean record.
This is where your workplace safety programs come in. By implementing effective safety programs, you can reduce the number of accidents and injuries at your workplace, which will, in turn, improve your loss experience and lower your insurance premiums.
Here's how it works. First, you reduce the number of claims. The most direct way that workplace safety affects your insurance costs is by reducing the number of workplace accidents and subsequent insurance claims.
You also lower your experience modification (Ex-Mod). This is a number produced by workers’ comp regulators to compare a company’s workers' compensation claims history to other businesses in their industry. Regulators provide it to insurance companies, who are legally required to modify the premium for the company in question. An Ex-Mod of 1.0 is the industry average. A figure below 1.0 means your claims history is better than average, and you'll receive a discount on your premiums. An Ex-Mod above 1.0 means your claims history is worse than average, and you'll pay a surcharge. Ex-Mods only apply to companies above a certain size, so they may not affect your business.
In addition, when you have a strong safety record, insurance companies see you as a responsible and low-risk client. This can lead to better rates, more flexible payment options, and a better overall relationship with your insurer. Also, some general contractors and government entities review a company’s Ex-Mod to determine whether to do business with them.
So, does workplace safety reduce insurance premiums? The answer is yes, it does. By investing in business safety, you're not just protecting your employees; you're also making a smart financial decision that can save you money in the long run. Knowing how safety programs lower workers’ comp insurance costs encourages and empowers your business to take a proactive approach to risk management.
Business insurance and safety programs: building a culture of company safety
Creating a safe workplace is an ongoing process that requires commitment from everyone in your organization. Here are some steps you can take to build a culture of company safety:
Develop a written safety plan.
Your safety plan should outline your company's safety policies and procedures, as well as your expectations for employees.
Identify hazards regularly.
Frequently inspect your workplace for potential hazards and take steps to correct them.
Conduct regular safety training.
All employees should receive training on the specific hazards associated with their jobs, as well as on general safety topics like fire prevention and first aid.
Involve your employees.
Your employees are your eyes and ears in the work environment. Encourage them to report any safety concerns they have and to get involved in your safety committee.
Invest in safety equipment.
Provide your employees with the personal protective equipment (PPE) they need to perform their jobs safely.
Assess incidents.
Investigate all accidents and also near-misses to determine the root cause and to prevent similar incidents from happening in the future.
Lead by example.
As the business owner, it's up to you to set the tone for safety in your workplace. Always follow your own safety rules and make it clear that safety is a top priority for your company.
The bottom line on workplace safety and insurance premiums
When it comes to workplace safety and insurance premiums, the connection is clear. A safe workplace is a less risky workplace, and less risk means lower insurance premiums. By investing in workplace safety and creating a strong safety culture, you can protect your employees, reduce your insurance costs, and build a stronger, more resilient business.
At biBerk, we're committed to helping small businesses like yours succeed. We offer a range of insurance products, including workers' compensation, general liability, and business owners policies, to help you protect your business and your employees.
To learn more about our insurance offerings and how we can help you create a safer, more profitable business, visit us online.