“Comp is comp is comp. There's nothing you can do aboutit.”

Some version of this refrain is often repeated each year byinsurance agents and buyers.

They've been trained to accept that because workers'compensation coverage is statutory, the only way to buy it is tofind the lowest price. Why not? Each policy offers the samecoverage, and injured employees receive the same benefits when theysuffer a disaster. Don't they?

But the truth of the matter is that workers' compensation costs can be controlled.And the path to controlling them begins with making certain thatall relevant information is current and accurate, down to thesmallest detail. Think of a detective speaking with a witness to acrime:

“Tell me everything you know, even if you think it's notimportant.”

So where to begin?

Step 1. Business classification

Classifying the business correctly is the first step. In moststates there are more than 500 different workers' compensationclassifications, which can make it a challenge to find the correctcodes to apply to the business. Getting it right requires trulyunderstanding the client's business and having access to therelevant rating bureau's classification definitions. What does thebusiness do? How do they do it? What materials do they use? Thesequestions can all be critical to determining the correctclassification.

The most common mistake we see is agents copying the informationfrom the existing policy when submitting the new application.Businesses and classifications change, so even if the code that wason the policy before was correct at the time, it may not be correcttoday!

Related: Good news for Florida companies: Workers' comp ratedecreasing

Why is getting the code correct so important? The correct codemay determine the rate the insurance company charges but moreimportantly, it will determine the rating values that are used onthe experience modification. Although it may seem like a good ideato choose a less expensive classification because it will lower thepremium, in the long run that lower rated code will result in anexperience mod that is higher than it should be.

A higher mod may lead to an increase in premium or even aninability to be hired for jobs if the mod gets too high. If youfind multiple classifications that are similar, talk to thebusiness owner. Show them the classification descriptions and askwhich seems like the best fit.

Don't have the classification descriptions? Many independentbureaus make them available for free on their websites. If you'rein a state governed by the National Council on CompensationInsurance (NCCI), you'll need to subscribe to the Scopes Manual. Werecommend purchasing NCCI's “Mini E-Library,” which contains theBasic Manual, Experience Rating Plan and the Scopes Manual. Accessto the rules that govern workers' compensation in your state iscritical to being able to do good work for your clients.

Step 2. Premium audit

Once the business is properly classified, we fast forward to theend of the policy and the premium audit. In most businesses(excluding construction, agriculture and staffing, plus some otherspecial circumstances), employees are assigned to the governingclassification unless they meet the standard class exceptions. Formost class codes, these exceptions are clerical workers, outsidesales and drivers.

Agents should work with the employer to ensure that eachemployee is properly classified before the auditor arrives. If aclerical employee is misclassified as someone exposed to thegeneral risk of the business, the business is beingovercharged.

Related: The opioid epidemic in workers'comp

Beyond classifying the employees correctly, it's critical thatemployers keep track of money (or substitutes for money) they giveto employees that does not count toward the workers' compensationpremium calculation. Rules on this excluded money vary from stateto state, so check your state's Basic Manual for specifics. What'staxable and what you pay workers' compensation premiums on are twodifferent things!

The majority of workers' compensation premium audits areincorrect. Although some of these errors certainly fall on theauditors themselves, most of the overcharges are the result ofemployers not keeping their records in a way that allows theauditor to complete the audit correctly. It's up to agents to makesure their clients are prepared.

Step 3. Recovery at work

Building an effective Recovery at Work program is anothercrucial piece in controlling workers' comp costs. This programshould be designed to make sure that any injured employee hasproductive work to do, even if the employee can't return to thefull duty job right away.

Employees who recover at work, and their employers, reap manybenefits. Employees tend to recover more quickly when back on thejob. Employers can reap the benefit of not losing 100% of theemployees' productivity while they are unable to perform theirregular duty job.

Being at work makes it less likely that an employee will hire anattorney during the workers' comp claim process. Complex cases maybenefit from the involvement of legal professionals, but most casesare not complex and attorney involvement serves to dramaticallyextend the cost and duration of the workers' comp injuryprocess.

On top of these benefits, in most states, if the employeereturns to work before lost wage payments from the insurancecompany kick in, the employer will get a 70% discount on the injurywhen it is calculated into the experience mod. Keeping an injury“medical only” dramatically reduces an injury's actual cost andalso reduces the impact that injury has on the employer's premiumcosts.

Driving an employer's workers' compensation costs to theirlowest legal minimum can be a challenging process. Taking the stepsto accurately classify the business, being sure the audit iscompleted correctly and building a recovery at work program arethree steps that every agent can take with their clients to startthe process.

Related: Lives reclaimed: Understanding the hurdles faced byinjured workers

Kevin Ring is the lead workers' compensation analyst for theInstitute of WorkCompProfessionals, the Asheville, N.C.-basedorganization that trains insurance agents to help employers reduceworkers' compensation expenses. He may be contacted at828-274-0959 or [email protected].