Your clients feel like they have little to no control over their workers’ comp premiums. For the most part, they’re right. The traditional insurance market punishes even the most well-run businesses with high costs, long tails, and no clear way out. They’re frustrated and they’re turning to you for answers. They don’t understand why their premiums are increasing when their claims are low.
Captive Coalition has worked with hundreds of independent agents who want to help their clients while further building their book of business. They want to look for tools outside of shopping for new carriers for a more affordable price. Agents like you want to guide clients with more strategic advice, especially when it comes to costs like workers’ comp.
This article will give you six specific ways to help your clients cut their workers’ comp costs, plus a bonus section explaining how the policy itself could be the real problem.
The first mistake most agents make is allowing underwriting decisions to be driven by incomplete or generic data. Workers’ comp premiums are heavily influenced by the experience mod, which is based on claims from the past three years. If that story isn’t told well (or not told at all), your client is the one who pays for it.
The underwriter needs to see how your client is managing risk. Are they investing in safety? Running drills? Are they tracking trends and implementing them in training? That needs to be part of the submission. No data = no leverage.
Your clients need to remember that it’s all about the people and ensure they don’t get hurt. Protecting their people also protects their profits. OSHA monitors workplace injury rates. Carriers monitor loss trends.
Guess what? Clients with reactive, outdated safety programs get hit twice. Once when an employee is hurt. Then, they’re hit again when the mod spikes.
Encourage your clients to look beyond the wall. When was the last time they updated their risk program after an incident? How often do they talk to employees about safety? Are they prepared if OSHA shows up?
Every dollar invested in a safety culture can help save more in future premiums.
If your client runs a labor-heavy business, hiring blind is expensive (to say the least). A proper job hazard analysis helps your client make sure new hires can safely handle the demands of the role. Without it, they’re inviting pre-existing injuries into their comp program.
This is all part of risk management. After all, it doesn’t make sense for someone with an untreated shoulder injury to perform a job with overhead labor. That’s a soft tissue claim waiting to happen and linger. They can drag for years and drive up the mod.
Have your clients be proactive by building a hazard profile and hiring accordingly.
If your client doesn’t have a written, enforced drug-free policy, they’re legally, financially, and operationally exposed. A forklift driver operating under the influence or a roofer falling off a roof while intoxicated can trigger a serious injury and a six-figure claim.
Including safety, this also matters for underwriting. Some carriers provide credits for formal drug-free programs. Others will flat-out reject submissions without them.
This is all about preventing chaos, protecting your team, and protecting your client’s bottom line.
This is often overlooked. The National Council and Compensation Insurance (NCCI) system uses business class codes to determine the rate per $100 of payroll. One wrong code and your client might be paying like a roofer when they’re really a maintenance crew.
This is common enough to where misclassifications happen all the time. Around 35 states follow this system. If the payroll data is off or the code doesn’t match the work, it inflates the premium fast.
Review the codes and fix what doesn’t belong. It’s one of the fastest and cleanest ways for your clients to cut unnecessary spending.
When an employee is hurt, the worst outcome isn’t always the medical cost. They’re also compensating for lost time. Indemnity claims (where workers are paid for being out) stack fast. But you can help clients create a structured return-to-work plan so they can reduce that exposure.
Even if the injured worker can’t do their original job, they may be able to contribute elsewhere. That means less downtime, faster recovery, and fewer lawsuits. Yes, employees not brought back quickly are much more likely to lawyer up.
The big takeaway is for your client to have a plan ready before they need it.
Your clients can check every box above, run the smoothest operation, and still be overpaying. That’s the thing: your clients might still be punished while having a good performance.
It might be good for you and your clients to look into captive insurers. Captive insurance allows your clients to own a piece of their risk and get rewarded when things go well, especially when they keep their claims low. For well-run businesses spending $250,000 or more on annual premiums (Workers’ Comp, General Liability, and Auto Liability), it’s a conversation worth having.
Don’t be afraid to learn more about captives. If your clients bring captives up to you first, you don’t want to avoid the conversation. Your clients will investigate captives.
Workers’ comp is a huge expense for your clients. And when your clients have issues with that cost, it’s your opportunity to prove to them your value. Have these conversations with them. Have these six strategies ready to help your clients. If you’re curious about options for your clients outside of the traditional market, take a look at captives to see how they can help you and your clients.
To learn more about captives, read our Captive Insurance 101 guide. It’s a great start to learning more about captive insurance.
Want to go a step further and learn even more about captives? Become a member of Captive Coalition for FREE to access additional tools, resources, webinars, and training. That way, you have alternatives for helping clients with their needs outside of the traditional market and further maintain your book of business.