High-risk industries like construction and manufacturing are facing increased strain on their workers’ compensation programs due to rising medical costs and claims severity. Blake Nilsson, client advisor at The Buckner Company, believes that the solution lies not in alternative insurance structures, but in changing company culture.
“If an employer is paying significantly more for insurance than their peers in their industry, it can really move the needle and affect their ability to compete and win business,” Nilsson said. He emphasizes that companies must understand what’s driving their losses before exploring options like captives or large deductible plans.
The Importance of Culture
Nilsson believes that real change begins internally, with leadership accountability, clear safety expectations, and consistent follow-through. “We try to help people create that culture, implement these programs and be consistent with them over a period of time,” he said. A well-run return-to-work program is crucial, requiring buy-in from ownership and upper management.
Proactive Planning
Proactive planning is essential, including having modified duty roles in place, maintaining relationships with medical clinics, and keeping injured employees engaged during their recovery. “It’s the best thing for their mental health and it’s the best thing for the employer,” Nilsson said.
Hiring and Onboarding Practices
Nilsson stresses that not everyone is suited for labor-intensive roles. He advocates for clear communication about company expectations from day one. Dedicated roles like safety directors can make or break a program, as they drive the safety culture and work with injured employees.
The current labor shortage has led companies to accelerate hiring and shortcut onboarding, resulting in more issues with claims. “Any time a company is trying to drive growth over organizational best practices, we’re going to run into more issues with claims,” Nilsson warned.
The Soft Market Reality
While workers’ compensation rates have improved recently, Nilsson cautions that this won’t last. Insurance carriers will become more selective, looking for best practices in organizations. Employers with poor safety records will face higher premiums and fewer carrier options.
“When employers have had some bad experience, the knee-jerk reaction is to seek out other types of insurance programs… and it’s just not always in their best interest,” Nilsson said. Without addressing loss drivers, switching to a captive or retro plan can backfire.
Conclusion
Culture remains the key factor in Nilsson’s success stories. Companies that prioritize safety, treat injured workers with care, and plan for risk are not only controlling costs but also attracting talent. “Good employees want to work for good organizations,” Nilsson said, emphasizing that this is more than a slogan – it’s a strategy.
