Ask the Expert: Insurance Questions from the Lawn and Landscape Industry

Author, Drew Garcia, NALP National Program Director, Rancho Mesa Insurance Services, Inc.


How can I control and/or lower my experience rating?

Without getting into detail about the formula or governing insurance bodies, here are some key items to focus on in order to lower your experience rating (i.e., experience modification, MOD), no matter your jurisdiction.

Frequency vs. Severity (Proactively Track and Eliminate the Claim Before it Happens)
Analyze your work related injuries and near misses to search for trends that will help to prevent similar claims from occurring.  Your rating will typically see more of a negative impact with multiple claims (frequency) as opposed to one large loss (severity).  Frequency drives the probability for more claims to occur in the future which would make your company a higher risk to insurer.  

Return to Work (Make it Mandatory)
All claims may potentially impact the experience rating in one way or another, with frequency having a large role in the mathematical formula.  Another key part of managing claim costs is the focus on reducing indemnity expenses on every claim.  By returning an employee to work you eliminate any claim cost that would have been allocated to temporary disability.  The savings you will see on your experience MOD is remarkable.  If you need help creating a return to work program, reach out to your workers compensation insurance carrier for guidance.  If you decide to implement any of these strategies going forward, implement a mandatory Return to Work program.  

An injured employee will earn $400 a week on temporary disability and is estimated to need three months of recovery.  The claim closes three months later with a total incurred claim cost of $4,800 in indemnity (wages) and $2,000 in medical, equaling $6,800.

With a Return to Work program, the injured employee is right back to work on modified duty and earns no temporary disability.  The claim closes for $2,000.  Not only will the claim have less of an effect on your experience MOD, but you will also have constant communication with the injured employee, which keeps them feeling part of the team, boosts their morale, and perhaps expedites the length of the injury.

Carrier Analytics (Save a $1 Today That Will Cost You $5 in the Future)
Who is handling your insurance claims?  When you purchase workers compensation insurance, you are buying a company’s ability to handle claims and how those claims are handled will determine your experience MOD, your cost, and your bottom line for years to come.  Carrier benchmarking reports are becoming critical in helping to evaluate the impact each carrier will have on your claim experience.  You should place your insurance with a carrier who has a history of writing policies for your specific industry and a proven track record of closing claims faster than the industry, and for less money, because that money is what drives your modifier through the roof. 

What are your thoughts on a safety incentive program?

I would suggest safety recognition as opposed to safety incentive, here’s why. An incentive program might keep employees from reporting work related injuries in fear that they might “ruin” a streak of consecutive days without an injury.  You do not want to make an employee fearful of reporting an injury.  OSHA and the Department of Labor have started to enforce these “dis-incentive” programs in a more visible way.

Safety recognition would mean identifying an employee who has successfully executed your company’s standard safety requirements or has gone above and beyond to better the company’s safety culture.  A type of recognition could be handing out raffle tickets to employees who have executed standard safety protocol and having a monthly drawing for prizes.

What is the key to having a safe company?  We have all the safety programs; we do tailgates every week; and, we still have claims, routinely!

In one word, the companies that experience the best safety records all share this common trait, communication. You can have all the compliance based safety programs in place but without superior communication they will lack true execution.  Proactively communicating with your team in the field, every day, is what it takes.  Safety must become a common attribute employees think of when they talk about your company.  It takes participation and “buy-in” on all levels from ownership to employee.  Employees must understand the exposures and job hazards associated with their work, but, the culture you are trying to create within your company should generate excellent decision making, like employees who think:

  • “I probably shouldn’t lift this alone.”
  • “That slope looks wet."
  • “I should pick this up before someone steps on it.”

You cannot buy a good safety company. Like anything in life, it is earned.  With a concentrated effort, you can establish a solid safety program that becomes routine and everyone in your company will benefit from it.