Restaurants have significant expenses when it comes to workers compensation insurance. It is a necessary evil to protect you, your employees and the business. However, it doesn’t come cheap. If you ‘re looking for ways to lower your workers comp costs, you need to check out insurance dividends and rebate programs for your restaurant.
Dividend Plans and Rebates
Workers comp insurance dividend plans enable businesses to share in the profits of its insurance carrier when the business is able to limit workers comp claims. Basically when loss ratios fall under the policy’s threshold for the period, the insurance carrier provides a dividend to the business after a policy audit is completed.
There are several options once you find a carrier that provides a plan with the payout structure you desire. This may be a flat percentage, a sliding scale/variable or a combination plan. The net net is that dividend plans and rebates incentivize small businesses like your restaurant to implement safety protocols that reduce the probability of workers comp claims. And while receiving those dividends are not guaranteed, it provides a great reason to create a better safety program for your organization.
Qualifying for a Dividend Plan
Your state legislature and department of insurance ultimately control how your state’s dividend plans work. Employers typically must meet several requirements to qualify to buy a policy. Standard eligibility requirements include staying below a maximum loss ratio, remaining in force for the whole year, paying the premium on time and ensuring your earned premium meets the policy’s minimum.
The Risk of Dividend Plans
The reason dividend payouts are not guaranteed is they depend on profits. There are numerous reasons beyond your control that may limit or withhold payouts such as investment losses for the carrier or a major increase in claims. In addition, most payouts are approved by the insurance carrier’s board of directors, which may not authorize dividend payout for a variety of reasons.
Additional Ways to Lower Your Costs
Additionally, there are several internal processes that you can develop to lower your workers comp insurance costs.
Drug Free Workplace
Did you know businesses that implement drug free workplace programs report a 40 percent decrease in workers comp costs vs businesses without that program? It’s true. And that saves you big time. On average, more than 50 percent of workers comp claims stem from drug or alcohol abuse, so it makes a whole lot of sense for you to get serious about implementing a policy for your restaurant.
That’s because workers’ compensation costs are directly associated with insurance premiums. When workers comp claims rise, so do your health care insurance premiums. Businesses typically see a connection between their drug free policies, employee productivity and reduced workers comp costs so make it a priority for your bottom line.
Developing a good safety program is a great way to positively impact your workers compensation costs as well. For example, you may want to create an injury triage. You can use a telehealth model to differentiate between cases where medical care is necessary vs those in which home care is utilized. This way, minor injuries like cuts, bruises or mild sprains can avoid becoming official claims. The benefit to you? They don’t count toward incurred losses.
Similarly you can implement an out of service (OOS) policy for your OOS equipment. Ensure you repair or replace any broken or malfunctioning equipment right away. One idea for this is to put an OOS card in every paycheck to encourage employees to notify management. There should also be strict consequences for anyone using defective equipment up to and including termination.
A strong internal training program is another key to successfully managing your claims costs. Check out our article about developing one here.
Good Loss Runs
A loss run report reviews your business’s past claims history, including details for every incident. These include the type of claim filed, settlement costs, and frequency of filing claims. Your restaurant will benefit from a good report meaning you have experienced zero losses for a solid, lengthy time frame. Fewer losses usually mean you receive improved premiums.
By researching how you can qualify for dividend payouts for your business, creating comprehensive safety policies with your management team and working with your carrier on internal audits when they do happen, you may be able to benefit from insurance dividend and rebate programs for your restaurant. Here at DSR Financial, we deal with these issues all the time and we can help you claim the best dividends and rebates. Contact us for a free analysis and start saving today!