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Workers’ Compensation Insurance: Think People, Not Premiums


When it comes to workplace safety and risk management, today’s construction executives are up against some serious challenges. Despite representing one of the country’s smallest occupational groups, construction employers absorb the second highest rate of absences due to work-related injuries. 

Workers’ compensation costs for construction employees, per hour worked, are more than double the average cost for all other occupations. And construction workers receive more workers’ compensation benefits than workers in all industries nationwide, according to the Center for Construction Research and Training.

Finally, and most importantly, construction firms are seeing mounting effects on the individual workers behind these numbers. Workers’ compensation spending on opioid pain medication is five to 10 percent higher in the construction industry than it is in other industries, per insurance analysts. Rates of substance abuse continue to climb among construction workers—more markedly than almost any other industry category.

Taking a people-focused approach to workers’ compensation—one that aims to control liability costs while enlisting the help of employees and foremen—has maybe never been so important. The following guidelines can create a positive cycle of reduced insurance rates and fewer harmful incidents in an organization.


Compile loss data and accident investigation reporting from the past three years, and tally all the associated costs—both direct and indirect. A lot of companies fail to look beyond medical expenses and workers’ comp payments. In truth, the indirect costs (project downtime, worker replacement, higher insurance premiums, legal fees and damaged brand reputation) are often far more expensive.

In construction especially, employers are susceptible to unusually steep, indirect costs, according to the National Safety Council. “If the average back injury has a direct medical cost of $25,000, the real cost of that injury may be closer to $90,000, or the equivalent of a full-time employee’s salary and benefits,” explains a 2013 NSC guide. “In the construction industry, known for its higher risk, ratios of indirect to direct costs can vary from 4:1 to 17:1 depending on the type of incident.”

With hard numbers in hand, a company can begin to benchmark itself against others of similar size and set goals for improvement.


When taking stock of past incidents and “near-miss” events, conduct a complete audit of the company’s safety needs. Construction hazards may include workplace-based, activity-based and environmental hazards. All three categories deserve a place in policy making. For example, the majority of workers’ compensation claims involve chronic shoulder problems or lower-back pain. Building ergonomics policies into the safety plan could help reduce work-related musculoskeletal issues that result from excessive bending, kneeling or vibrating equipment.

If the company does not employ an in-house risk manager or certified safety auditor, the second step may be overwhelming. Luckily, for small businesses, OSHA offers a free, on-site consultation program to assist. An insurance agency that specializes in workers’ compensation insurance for construction companies will be invaluable; the right team will have the industry knowledge necessary to act as ongoing partners in the safety program. An experienced insurance agent can review and revise workers’ comp classifications to ensure the company is not overpaying and help prepare for annual audits.


OSHA offers downloadable tools and templates specific to the construction industry. There are customizable worksheets and training tools to fit construction businesses. Involve employees at all levels. Get their perspectives on workplace injuries, illnesses and general sense of well-being. It’s one thing to just follow industry statistics about opioid use or sedentary lifestyles; it’s even better to confer with team members who can improve safety buy-in and inform a more relevant, well-rounded safety program.


Review policies at regular intervals and during new-hire orientation—especially since newer employees are shown to experience higher rates of accidents and injuries. Remember: handbooks and checklists are useless if left to collect dust on a shelf. Beyond federal or state-required trainings, supervisors should find ways to reinforce the culture of safety in everyday operations. Offering safety incentives is one way to motivate employees and achieve greater adoption of safe work behaviors.


Although most elements of a company’s risk profile stem from the physical workplace and the nature of work teams perform, employees themselves also play a critical role, in terms of the attitudes and traits they bring to the jobsite. Even the most rigorous safety program will fall short in the hands of a disengaged or risk-taking employee.

To hedge against individual employee-level risk factors, incorporate personality profile assessments or “physical ability pre-employment testing” into the hiring process. Personality tests can evaluate a candidate’s personal values, attributes and life skills. Meanwhile, physical ability testing has been shown to reduce injury rates in physically demanding fields. (At present, only about one-third of large construction companies use personality profiling as a hiring tool.)


Return-to-work programs are designed to facilitate re-entry for workers, at the earliest date possible, following any injury or illness. These programs can include “light duty” work, modified work stations or a more flexible work schedule for a set period. Not only do these programs help reduce insurance costs, they help employees return to work sooner, which prevents against long-term income loss and minimizes other effects of career disruption.


Preventing accidents gets a whole lot easier if the risk manager knows where they’re happening. And for many construction companies, serious injuries tend to occur on the road. Transportation incidents lead to more on-the-job fatalities than any other type. In fact, roadway incidents accounted for 1,264 work-related deaths in 2015—nearly twice the number of deaths caused by falls. So whether the “fleet” is comprised of 10 company vehicles or two hundred, fleet safety and driver training warrant a special place in a safety program.

Prioritizing workplace safety to protect team members is more than just the right thing to do. Study after study proves comprehensive safety programs drive serious returns. Fewer injuries will improve the experience modification rate or EMR. (Insurance companies use injury data from the previous three years to calculate EMR, which has a direct impact on workers’ comp premiums.) Investing in safety programs is also shown to improve employee satisfaction and productivity. So if the goal is profitability, there’s no safer bet.

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