"Missing Link" to Reducing Work Comp Rates in Montana

There is a direct correlation between safety and lower workers' compensation costs. However, many Montana businesses have yet to learn about that. That's why Fred Miller, a former insurance agent who now works for the Montana Dept. of Labor & Industry, calls it the "Missing Link" in this series about the need to improve safety in Montana workplaces. The phone call was unexpected and disturbing.

"Fred, don't bother calling me anymore. I'm quitting business and shutting the doors."

John (named changed to protect privacy) had run a family-owned drilling company for decades in a small Montana town. He was a roughneck, a hard working man who braved raw elements on a daily basis to earn a living among Montana's harsh climates. But workers' comp was one obstacle he could no longer endure.

"John, what's going on? What are you going to do?" As his workers' comp agent, I knew he was too young to retire, and I worried about his crew being able to find employment. The jobs he provided were some of the best-paying ones around. John said he was tired of paying Montana's high workers' comp rates. By moving to Wyoming, he said he could save $200,000 per year doing the same work with the same equipment.

Unfortunately, John was an "old school" operator and he never grasped the importance of implementing a safety culture among his workers. I had tried to get him see the benefits of a safer workplace, but his attitude was that accidents "just happen" and his workers wouldn't be able to change their ways.

For John, safety was a missing link between him and lower workers' comp premiums. Unfortunately, the same story can be repeated many times throughout our state.

John was one example of a Montana business that did not get serious about safety. On the other hand, some people get it.

A few years later my loss prevention consultant and I took another local business owner to lunch with some rather difficult news. His policy was going to be non-renewed unless he made the decision to take safety seriously and implement a safety culture in his workplace.

Ryan's response (name changed to protect identity) was immediate and confident. "Thank you for bringing this to my attention," he said as we finished lunch. "I know what needs to be done and I'll make sure it gets done." Sure enough, he followed through on our loss prevention recommendations. And just as sure, the frequency and severity of his claims started a gradual decline as a safety culture was instilled in his workplace. Three years later his work comp insurance declined about $50,000 per year and his workers were not being injured nearly as much while at work. It was a win-win scenario.

One of the goals at the MT Safety & Health Bureau is that we take the framework of basic risk management principles and teach them to all Montana businesses, large and small, to help reduce our high rate of workplace injuries, illnesses and accidents.

In turn, we will then see a reduction in workers' comp rates. That's because there is a direct correlation between the direct cost of accidents and workers' comp premium. And workplace injuries will decrease as more people throughout Montana adopt a strong safety culture in their workplace. This Missing Link series of 10 articles will bring you risk management principles, show how worker's comp premium is calculated, and how you can see work comp costs decrease as you implement a safety culture in your workplace.

(Fred Miller of the MT DLI Safety & Health Bureau http://erd.dli.mt.gov/safety-and-health-bureau.html is sharing a series of short stories about why safety is important to preventing workers from getting injured or killed at work. This is the first of the series. He can be reached at 406-781-4499, or e-mail fmiller@mt.gov)

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The Missing Link to Reducing Work Comp Rates in Montana - you can schedule free workshops http://www.matr.net/article-51595.html

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