Connecting workplace safety, claims history, and premium control

Most business owners think of insurance premiums as something that “just go up every year.” Market conditions, carrier appetites, and industry trends certainly play a role. But one factor consistently has a direct and measurable impact: how safety programs directly impact your insurance costs.

Insurance carriers do not simply insure buildings and equipment. They insure behavior, processes, and risk management discipline. A strong safety program tells underwriters that your business is intentional about preventing losses. A weak or nonexistent one tells a very different story.

Here is how safety programs directly influence your insurance costs, and why investing in safety often pays for itself.

Safety Programs Shape Your Claims History

Your claims history is one of the first things an underwriter reviews. Frequent or severe claims signal higher risk, regardless of industry. A well-structured safety program reduces both the frequency and severity of claims, which directly improves how your business is viewed by insurance carriers.

For example, consider two manufacturing companies with similar size and revenue. One has a formal safety program with regular training, documented procedures, and incident reporting. The other relies on informal practices and on-the-job learning. Over time, the company with no formal program experiences more workers compensation claims from repetitive strain injuries and minor accidents. Even if each claim is small, the volume adds up.

Carriers track patterns. A strong safety program helps break those patterns before they become expensive trends.

Safety Performance Impacts Your Experience Modification Factor

For businesses with workers compensation insurance, your experience modification factor, often called an “e-mod,” plays a major role in your premium. This factor compares your loss history to similar businesses in your industry. A lower e-mod means lower premiums. A higher e-mod means you are paying more than average.

Safety programs influence this number more than almost anything else. Training, hazard assessments, return-to-work programs, and proactive injury management all contribute to fewer and less severe claims. That directly improves your e-mod over time.

As an example, a construction company that implements daily jobsite safety meetings and formal fall protection training may significantly reduce injury severity. Even when incidents occur, quicker reporting and modified duty options help control claim costs. Over several policy periods, that improved performance can translate into meaningful premium savings.

Underwriters Reward Businesses That Prove They Manage Risk

Insurance carriers prefer predictability. A documented safety program gives underwriters confidence that your business understands its exposures and actively works to reduce them. That confidence often results in more favorable pricing, broader coverage terms, and better carrier options.

During renewals or marketing efforts, underwriters may ask for details about safety training, written manuals, and loss control initiatives. Businesses that can provide this information stand out. Those that cannot are often placed in higher-risk pricing tiers or limited carrier pools.

For instance, a logistics company that documents driver training, vehicle inspections, and telematics monitoring demonstrates accountability. Even in a challenging auto insurance market, that business may receive more competitive terms than a similar company with no formal program.

Safety is not just about preventing accidents. It is about proving to insurers that your business takes risk seriously.

Turning Safety Into a Long-Term Cost Control Strategy

A safety program is not a one-time project. It is an ongoing process that evolves with your business. The payoff is not only fewer injuries and safer employees, but also better control over one of your largest operating expenses.

Insurance is reactive by nature, but safety is proactive. When the two work together, the financial impact can be significant.

If you have questions about how your safety program affects your insurance costs, or if you want guidance on strengthening your program, contact your Hertvik Insurance Group agent. We are here to help you turn safety into a smart risk management and cost control strategy.