Workers’ compensation is part of doing business in Pennsylvania. Whether you have a small, medium or large business in the Keystone State, you likely must purchase workers’ compensation insurance. While keeping your workers safe is likely a top priority, you do not want to devote more resources than necessary to your workers’ compensation coverage. Enrolling in a dividend program may help you control costs.

While not available to all employers, workers’ compensation dividend plans do as their name suggests. That is, if your company maintains a low loss ratio, it may receive a portion of the insurance company’s profits. There are some other advantages of enrolling in this type of insurance coverage, though.

Financial incentives

Your organization likely already has a reason to keep employees safe at work. If you are looking for an additional incentive, though, a dividend plan may offer it. When you promote workplace safety and reduce injuries, you also likely increase your company’s odds of receiving a dividend.

No reverse penalty

While employers with low loss ratios often realize a financial benefit from enrolling in a dividend program, there is typically no reverse penalty. That is, if your organization has a large number of claims or a few high-value ones, you likely do not have to pay a financial penalty. You may, however, lose your eligibility to continue to participate in the dividend plan.

Drawbacks

While the financial advantage of participating in a dividend program is clear, there are some drawbacks you should consider. Specifically, keeping your loss ratio low does not guarantee your company will receive a dividend payment. On the contrary, with most plans, electing to pay dividends falls within the sole discretion of the insurer. Further, your workers’ compensation insurance provider simply may not offer a dividend plan.

Workplace safety is vitally important to the success of any business. If you are looking to promote safety while controlling costs, though, enrolling in a workers’ compensation dividend program may be right for your organization.