In 2006, a Milwaukee-based plumbing company was able to reduce its workers’ compensation insurance rate by 13 percent, even though the state raised the base rate by 17 percent.
Jim Lagina, owner of Lagina Plumbing Inc., purchased Louis Schmitt Plumbing from his boss on Jan. 1 and renamed the business. His workers’ compensation rate at Plumber Perth decrease is the result of three years of proactive approaches to the workplace and the creation of a safety culture, Lagina said.
“If you don’t play an active role in safety, people are casual and do the simplest things that can cost money, time and people,” Lagina said.
The state rate is determined by the state Department of Workforce Development’s Wisconsin Compensation Rating Bureau, which takes the average number of injuries per 1,000 man hours recorded for every plumbing company in Wisconsin. In 2005, the base rate was $5.65 per $100. In 2006, the state raised the rate as a result of an increasing number of injuries to $6.77 per $100.
A company’s payment is determined by their experience modification, or mod, a scoring system used by insurance companies to determine how much a company is charged. The average rating is 1, which means a company is paying exactly the base rate mandated by the state. If a company is over or under 1, that determines if they pay a percentage over or under the base rate.
For example, when Lagina Plumbing was Louis Schmitt Plumbing in 2004, the company had a mod of 1.19, which meant the company was paying about 10 percent more than the base rate.
“We had an example of a workers’ compensation injury where we were concerned it was not workers’ comp, but it made us aware that everything that goes on, we are responsible for,” Lagina said. “Apparently we needed another pair of eyes.”
In 2004, R&R Insurance Services Inc. in Waukesha teamed up with United Heartland Inc. in New Berlin to offer Louis Schmitt Plumbing and Lagina, who was an employee at the time, a proactive program aimed to lower the loss-time injuries that affect the cost of insurance.
The plan includes safety meetings once a month to remind workers of safety issues they have learned in the past and should always be aware of.
“They are friendly reminders of what to do and how safely so that you can get home,” Lagina said.
With the help of Jamie Vanderveldt, a construction specialist with R&R Insurance and Jim Kneaurschild of United Heartland, Lagina Plumbing also created a regular incentive program. If there is no loss-time injuries over each quarter and at the year end, the dividend money that Lagina receives back from the insurance companies is given right back to the employees, Lagina said.
“It helps everyone work safely,”he said.
As a result, Lagina Plumbing has had no Occupational Safety and Health Administration (OSHA) recordable loss-time injuries in 2005 and 2006. This lowered the company’s mod from 1.19 in 2004 to 1.09 in 2005 to 0.98 in 2006. The company is currently still in its 2006 fiscal year.
“This is something we work toward,” said Mike Delaney, director of risk management services for United Heartland. “It is not always an exact science because you are dealing with people. Usually it will take time to turn these programs around but the financial benefit to the account is pretty significant.”
Last year, the company’s safety record was 0.74, but because the mod combines three years, the score went up to 0.98. After this year, 2004 will be off of the mod calculation and Lagina’s perfect record over the past two years will really start to pay off. They will be closer to their perfect score.
“In the past year, we have taken it up to the next level with monthly safety meetings and more detailed talks about specific safety issues,” Vanderveldt said. “We are touching upon 12 different topics and keeping the issues in front of the guys because if it is out of sight, it is out of mind. They do not pay attention if it is not brought to their attention.”
Other programs put in place are a temporary duty program and return to work program. In the case that there is a loss-time injury, workers can get back to their normal job as soon as possible or provide help temporarily in the office until they are healed. This helps keep employee morale up but also helps keep claims costs down and hinders employees from filing false claims, Lagina said.
“The results are a testament of Jim Kneaurschild, Jim Lagina and Jamie Vanderveldt because they all have to work together and they all have to want to fix the problem, to work towards an environment and culture where they are not going to have losses,” Delaney said. “Without that, it is not going to work.”
