As costs rise for business owners across industries, controlling operational costs like insurance premium is more important than ever. But how much control do you really have over your premium bill? 

The answer is good news: In workers compensation, you have more influence over these expenses than you might realize. 

Understanding how your work comp premium is calculated is the first step toward controlling these costs. Once you know what drives your premium, you can implement strategies that protect both your people and your profits. 

We’ve been a leading work comp provider for 30 years and have seen firsthand how businesses can reduce their premium over time. Here are our top proven strategies to reduce costs while building safer, more productive workplaces. 

Quick action checklist: Start reducing costs today 

How does your business stack up? Before we dive into the details, see how many of these boxes you can check: 

Building a safety program 
✅ Create written safety rules for your top workplace hazards 
✅ Schedule monthly safety meetings with your team 
✅ Conduct safety training during onboarding and annually 
✅ Develop incident response and investigation plans 
✅ Use post-offer employment testing for new hires 
✅ Apply for a safety grant to fund safety equipment 
Proactively managing claims 
✅ Set up 24-hour injury reporting procedures 
✅ Identify preferred medical providers for workplace injuries 
✅ Use telehealth and nurse triage services 
✅ Create a return-to-work program with light duty options 
✅ Conduct post-incident drug and alcohol testing 
✅ Ask about subrogation recovery efforts 
Keeping accurate payroll records 
✅ Keep detailed documentation of employee job duties 
✅ Review and update classifications regularly 
✅ Gather payroll summaries and contractor certificates 
✅ Set up Pay as You Go billing to avoid audit surprises 
✅ Work with premium consultants to verify accuracy 
Partnering with experts 
✅ Work with an independent agent 
✅ Choose a specialized work comp carrier 
✅ Evaluate carriers’ in-house vs. outsourced services 
✅ Ask about available safety and claims management resources 

Strategy 1: Build a comprehensive safety program 

Creating a safety-first workplace is the most powerful way to reduce work comp costs. By preventing injuries from happening, you avoid the direct and indirect costs that follow workplace incidents. 

Safety policies and training programs 

Here’s where to start – and if you already have a safety program, use this as a checklist to assess how you’re doing. 

✅ Checklist: Creating a safety program 

  • Conduct in-depth safety training. These training sessions educate employees on safety guidelines, ensuring they are prepared to handle safety procedures. Consider comprehensive safety training during onboarding and annually for all employees. 
  • Foster a culture of prevention. Encourage safety as a mindset, not just a compliance measure. Show employees that you care about getting them home safely to their loved ones at the end of each day. 
  • Create an incident response plan. Focus on common risks and unique industry dangers. Prepare to respond quickly if incidents occur. Conduct an incident investigation afterward to identify what went wrong and how to prevent it next time. 

Prioritizing safety inside and outside the workplace doesn’t just have a tangible impact on your e-mod and premium. It also boosts employee well-being, increases retention, and improves efficiency. 

💡 Pro tip: If safety hasn’t been at the forefront of your workplace culture in the past, don’t worry. Start with small changes to build momentum. 

“It’s often easier to have short-term goals to measure your success instead of the grandiose, long-term goal of zero claims,” explained Sheila Schmidt, MEM Safety & Risk Services Regional Manager. “The habits and activities are going to be your short-term goals, which are going to get you to your ultimate goals of employee safety, injury reduction, claims reduction, and premium reduction.” 

Safety equipment and technology investments 

While policies and training create the foundation, investing in the right safety equipment can deliver exceptional returns. 

✅ Checklist: Tech that prevents injuries 

  • Material handling equipment that reduces manual lifting 
  • Personal protective equipment tailored to specific job hazards 

📘 Case study: Vacuum lift improves safety and productivity 

Koonse Glass Company invested $33,000 in a SmartLift vacuum lift to handle large glass panels weighing 200-500 pounds. By preventing injuries and saving time over the equipment’s five-year lifetime, Koonse achieved a 191% return on investment, nearly doubling their money while protecting their employees. 

Did you know? MEM’s Safety Grant program provides one-to-one matching funds up to $10,000 annually, helping businesses double their safety investments. Since 2016, grant recipients have seen a dramatic reduction in claims in areas where safety equipment was put in place. 

Learn more: MEM’s safety grant program and application process > 

Strategy 2: Manage claims proactively 

If an injury does happen, your response in the first hours and days can determine whether a claim becomes a minor expense or a major cost driver that impacts your future premium. 

Immediate incident response 

Quick, decisive action followed by proactive claims management can minimize the impact a claim has on your e-mod and insurance costs. 

✅ Checklist: Incident response and medical care 

  • Immediately assess care. Take care of the employee first. Assess the severity of the injury and seek emergency help if needed. 
  • Report the injury ASAP. Reporting the injury to your work comp carrier immediately helps control medical expenses and minimize lost wages. It may even mean the claim can be processed as medical-only, reducing its impact on your e-mod. 
  • Direct medical care when possible. Employers’ right to direct medical care varies by state. Use this right when available to ensure injured workers receive appropriate, cost-effective treatment. 

Did you know? MEM’s in-house nurse case management team provides dedicated support throughout the claims process. “There is no additional cost to the medical file for the services that the nurse case management team is providing,” explained Lyndi Barthel, MEM’s Medical Services Manager. “At some carriers, there is an additional expense that goes toward the claim for a nurse to manage the files.” 

Return to work and cost control 

Getting employees back to productive work safely and quickly reduces claim costs, maintains team morale and productivity, and leads to better medical outcomes for the employee. 

✅ Checklist: Controlling claim costs 

  • Conduct post-incident drug and alcohol testing. If being under the influence led to the worker’s injury, penalties may be applied (these vary by state), reducing claim costs. 
  • Report suspected fraud. Your carrier will conduct a thorough fraud investigation to identify and prevent fraudulent claims from continuing through the work comp system. 
  • Ask about subrogation recovery. Insurance companies often conduct subrogation to recover funds from third parties responsible for an incident, reducing claim costs. In 2024, MEM recovered $3.4 million through subrogation efforts. 

“When we receive a recovery, that impacts the final cost of the claim. That’s a benefit to the insured because their e-mod is influenced by the cost of claims,” explained Michelle Palmer from MEM’s subrogation team. 

Strategy 3: Maintain accurate payroll and classification records 

For many businesses, payroll and even employee classification evolve throughout the year. The estimated premium you paid at the beginning of the year might need an adjustment, determined by your premium audit. Keeping detailed and up-to-date payroll records ensures you pay the right premium. 

✅ Checklist: Reviewing and maintaining accurate payroll 

  • Keep detailed documentation. Support your classification decisions with records of the job duties performed by each employee. 
  • Review and adjust classifications regularly. Consistently review and update employee classifications to align with their current duties. 
  • Prepare for your audit. Gather documents like payroll summaries, tax statements, and 1099 forms for contractors. 
  • Engage with consultants. Work with premium consultants to verify that your employee classifications are accurate, helping prevent overcharges. 

“The whole point of doing the audit is to get the correct premium,” explained Tina Austin, MEM Premium Consultant Supervisor. “We don’t want to overcharge the customer, and we don’t want to undercharge the customer.” 

Routinely reviewing employee classifications and keeping detailed payroll records means you’re prepared to work with your auditor for any necessary premium adjustments. 

Need help preparing for your audit? Download our audit preparation checklist > 

Did you know? Monthly payment options can help you sidestep audit surprises and large adjustments at your policy’s end. MEM’s Pay as You Go lets you pay your premium based on your actual payroll throughout the year. This option can help you improve cash flow and pay for only the coverage you need. 

Strategy 4: Partner with specialized experts 

The insurance professionals you work with can make or break your cost control efforts. Choose work comp partners who offer specialized expertise and resources to follow through on the strategies we’ve discussed. 

Choosing insurance partners 

Not all work comp carriers offer the same level of service or specialization. The difference between a specialized carrier and a big-name multiline company can impact your costs and outcomes. 

✅ Checklist: Choosing an agent and carrier 

  • Partner with an independent agent. These agents work with multiple carriers, offering a range of options tailored to your needs. They prioritize your interests, ensuring the best coverage at competitive rates. 
  • Choose a specialized work comp carrier. Carriers with deep expertise in work comp can offer value-added programs and services like telehealth, return-to-work, safety training, and more. 

A captive agent with a multiline carrier may offer convenience. However, you’ll see the highest long-term return from choosing true partners that offer cost control strategies and resources. 

📍 Read more: How to Choose an Insurance Agent / How to Choose a Work Comp Carrier 

In-house services save you money 

At MEM, work comp is all we do, so we have the in-house services and programs to help you improve your e-mod and reduce costs over time: 

  • Claims support: In-house nurse case managers, claims adjusters, and medical management teams 
  • Safety services: Dedicated safety consultants, on-site risk assessments, and safety grant program 
  • Premium consultation: Dedicated team to ensure accurate classifications and billing 
  • Legal support: Internal law firm to defend claims 

“CompLegal is our internal law firm. We handle approximately 95% of the claims that go to legal,” explained Laura Sides-Cooper, MEM’s Managing Attorney. “Keeping so many claims in-house and having a high retention rate reduces the legal costs associated with defending workers compensation claims.” 

Those cost savings translate to lower claim costs and less impact on your e-mod. With the right work comp partners, your policy isn’t just a commodity, but an asset. 

Work comp is a valuable business asset 

If your work comp bill feels like a “cost of doing business,” flip the script. With the right partners, your policy provides not just coverage, but active support for building a safer, more productive, and more profitable business. 

At MEM, we’ve spent 30 years helping businesses understand and control their work comp costs. Our A- rating from AM Best reflects our financial stability and commitment to delivering value to our policyholders. 

To learn more about partnering with MEM for work comp, reach out to your agent or find an agent here.