Aug 01, 2023Could a Work Comp Captive Benefit Your Business?
The Advantages of a Work Comp Captive in Retail
Worker injuries and illnesses are rising in the retail sector. Managers who are looking for ways to control risks and reduce costs should consider the advantage of a work comp captive.
The Surge in Retail Injuries
The U.S. Bureau of Labor Statistics (BLS) says there were 2.8 million nonfatal workplace injuries and illnesses in 2022. This is a 7.5% increase compared to 2021. According to Safety + Health, the number of injuries remained stable, but a surge in respiratory illnesses caused the overall rate to increase. The retail trade industry had the second highest number of recordable cases of respiratory illnesses, surpassed only by the healthcare and social assistance industry.
Moreover, the retail sector saw the greatest increase in injury and illness rates of all industries. The Jackman Law Firm analyzed BLS data and found that the incident rate at general U.S. retail stores grew by 37% between 2017 and 2021, increasing from an incident rate of 4.1 per 100 workers to 5.6 per 100 workers.
The Hidden Dangers Lurking in Retail
At first glance, retail doesn’t seem like a particularly dangerous occupation. However, there are many hidden hazards. Most obviously, retail workers typically work directly with the public. This puts them at risk for contagions as well as workplace violence. Plus, wet surfaces and tripping hazards can cause falls. Furthermore, retail workers may be required to handle heavy objects, which may sometimes be on tall shelves or stacked up high. In some cases, retail workers may also operate dangerous machinery, such as a forklift or a meat slicer at a grocery store deli, or they may handle hazardous materials, such as cleaning supplies or certain types of items for sale.
The BLS reported that the following types of events led to injuries or illnesses involving days away from work among retail workers in 2020:
- Exposure to harmful substances or environments: 5,770 incidents.
- Falls on the same level: 5,630 incidents.
- Being struck by an object or equipment: 4,060 incidents.
- Overexertion in lifting or lowering: 3,350 incidents.
- Falls to a lower level: 1,500 incidents.
Many Workplace Injuries Are Preventable
Workplace injuries are common in retail, but this doesn’t mean they are inevitable. Good risk management practices can help employers lower the rate of injury and illness.
OSHA says most workplace injuries and illnesses don’t happen for no reason: they are usually both predictable and preventable. It’s for this reason that OSHA uses the term “incident” instead of “accident.” A look at the most common injuries in retail supports this viewpoint – the same types of injuries and illnesses occur time and again.
However, your workplace may experience slightly different illnesses or injuries. OSHA recommends using your incident log to find and fix hazards. For example, if you’ve had slip and fall injuries, you may need to fix some housekeeping-related hazards. If you’ve had a back injury, you may need to train workers in safe lifting techniques.
Take Control of Your Insurance with a Work Comp Captive
Your experience modification (ex-mod) factor is typically based on the last three years of claims history. A high ex-mod means you have a higher-than-average claim rate for your industry and, therefore, higher-than-average work comp premiums. On the other hand, a low ex-mod means you have a lower-than-average claim rate – and you’ll see lower premiums … eventually. If you had an expensive claim last year, your claims history will still haunt you for a while.
Companies who are serious about risk management and driving down their ex-mod can often achieve significant savings by joining a work comp captive instead of continuing with a traditional insurance model.
A captive insurance company exists solely to provide insurance for the parent company or companies that own it. When you form or join a captive, you are part of a group of companies that are committed to proactive risk management practices that outperform the industry average.
As an owner/member, you have a greater ability to take control of costs. You don’t have to worry about your rates increasing due to industry-wide trends that don’t reflect your company’s unique loss experience. You also control how you handle claims to quickly contain losses and take care of your employees. Captive members can gain access to loss trend data, enabling them to address exposures that are leading to frequent or severe losses. If the group outperforms projected losses, captive owners reap the rewards. Furthermore, captive structures can have tax advantages.
While captive structures do involve a bit more “skin in the game,” reinsurance layers are in place to prevent exposure to catastrophic losses and third-party administrators are typically hired to manage claims and some other administrative tasks.
Is a Captive Work Comp Program Right for Your Company?
A captive work comp program may not be a good fit for every company. However, if you are serious about risk management and loss control, a captive strategy may be just what you need to take control of your risks.
Tangram’s Bodega Insurance Program is a member-owned group captive. Learn more.