Month: November 2015

Workers’ compensation premiums represent a major personnel expense for most organizations. Injuries that cause employees to miss work are especially costly, in terms of both lost wage compensation and lost productivity. Also, the longer a worker is disabled and unable to work, the more his future earning power decreases and the more likely it becomes that he will hire an attorney. For these reasons, it is advantageous to both employer and employee to get the injured worker back on the job as soon as possible. As a result, many employers have implemented return to work programs.

Under a return to work program, the injured employee performs a different job while receiving his prior level of pay. The new job should be matched to his current physical capability, reflecting his state of recovery from the injury.

To succeed, this requires a good working relationship between the employer and treating physician. The employer needs accurate information as to the tasks the worker can safely perform; otherwise, the result may be a second, more severe injury. If the worker’s physician will not cooperate or provide a realistic estimate, the employer or insurance company may have to require a physical examination by an independent physician.

A return to work program should be one piece of a comprehensive and coordinated loss management program. The elements of the program should include:

• Immediate reporting and investigation of accidents
• Arrangement of primary medical care
• Return to work program
• Regular communications with the injured worker

To assist in the arrangement of primary care, the employer should provide the treating physician with job descriptions that explain each job’s physical tasks in detail. Meetings with the physician to explain the nature of the employer’s operation will help match a job to the worker’s capabilities. Communications between the physician and the employer are vitally important. The employer may want to arrange for direct reports from the physician or regular reports delivered by the employee. The ideal situation is one where the employee can assume light duties without missing any time.

Barring that, limiting lost time to a week or two will still keep the claim’s cost down, resulting in premium savings for the employer. The experience modification formula, which adjusts the premium based on loss history, gives the most weight to losses of $5,000 or less.

Getting the injured worker back on the job quickly will help keep the loss well under that limit. Since losses remain in the calculation for three years, the effect of holding down claim costs is long lasting.

Of course, return to work programs have pros and cons. The pros include:

• Limiting or eliminating lost work time
• Keeping the worker involved in the work environment
• Eliminating the need to locate, hire and train a replacement
• Increasing the chances of success should the worker refuse the new duties and sue for lost wage benefits, since the employer can show that it made a reasonable job offer

Among the cons are:

• The employer will pay the employee’s full wage for reduced productivity
  An employee with a bad attitude about his alternative duties could lower morale among the other employees
• If the alternative arrangement does not work out, returning the employee to lost wage benefits will wipe out any cost savings
• While individual cases might not produce the desired results, employers should realize long-term savings by implementing return to work programs. Beyond the verifiable dollar savings, return to work programs can give the employer a more stable, happier workforce and a good reputation with potential employees.

Of events with negative financial and commercial impacts, natural disasters such as floods, hurricanes, tornadoes and earthquakes are at the top of the list. In 1907, a massive earthquake in San Francisco touched off a financial panic that nearly turned into a full-scale depression. Hurricane Katrina in 2005 cost an astounding $125 billion dollars in damages. The hurricane shut down nine oil refineries and another thirty oil drilling platforms.
Obviously, natural disasters can wreak havoc on all industries, not just oil and fishing. Small and large businesses are equally afraid of the effects a natural disaster will have upon their balance sheets. The inability to quickly recover from a disaster means certain death for the business. This is why having a disaster recovery plan is so important. The proper plan can help business owners get their operations back on track without permanent losses.
Needs Assessment

To formulate a disaster recovery plan, the business needs to first assess their needs. A qualified insurance agent can go over the books alongside the business owner and clearly state what requires coverage, such as loss of income, continuing operating expenses, or miscellaneous expenses after disaster strikes.
Document Organization

Organization is one of the most critical components to surviving a disaster intact. The right documents all gathered together and secured properly will save hundreds of hours later. Depending on the nature of the business and/or what industry it operates in, off-site backup of critical files may be called for.

Commonly, insurance companies will insure the basic constituents of a business, such as business income. Business interruption insurance will replace lost income as a result of the business being closed for whatever reason as the result of a disaster. This is why having documents organized properly is so important. The claims adjuster would need precise, detailed records of income and expenses in order to properly determine what the profits would have been had the business not closed due to disaster.

While it is next to impossible to determine what the document list should be for all businesses, here are some general documents to keep backups for:
insurance policy contracts
information on all of the bank accounts associated with the business

• leases
• income tax return forms for the last three years
• sales records
• inventory lists

It is also wise to make a list of all of the important people the business would have to contact in the event of disaster. This list includes bankers, landlords, accountants, creditors, employees, customers, etc.
Evacuation Plans

Preparing an evacuation plan will aid the business executives and employees by telling them exactly how to proceed during an emergency. When forming the evacuation plan, the business must make sure that all employees have designated assigned roles that they will follow; this will help organize their efforts and keep things under control.
When the Worst Happens

After a disaster occurs, it is important to carefully document the damage extensively. The business must inform their insurance company immediately that a disaster has occurred and that they have incurred damages and/or losses as a result. The business owners are responsible for the safety and well-being of all of their employees before, during and after the disaster. If the building where the business has been located has been damaged, get the building inspected.

The business owners must survey the damage carefully. Photograph and videotape all damaged areas everywhere, whether inside or outside the building. If necessary, they can make initial repairs to prevent even greater damage, such as boarding up windows and holes in the ceilings and walls. Once the adjuster and local authorities approve the claims application, than repair work can begin.