Companies in Hong Kong continue to see employees' compensation (EC) costs soar as the frequency and severity of employee injuries push insurance premiums to new heights, says Marsh in a report.
The "Curbing the Costs of Employees' Compensation in Hong Kong" report reveals that companies have experienced a 20% to 30% increase in EC costs each year, making employees' compensation the largest insurance cost for most businesses.
For mid- to large-sized companies in certain industries, employees' compensation insurance costs are on par with costs for raw materials and power.
Rates are expected to continue rising, driven both by the increased frequency and severity of claims over the last five years and reductions in available insurance capacity as major insurers withdraw from the local EC market.
In the report, Marsh recommends companies adopt a new approach to EC, detailing a four-pronged approach that can reduce these costs by 30% or more, including safety management, injury management, claim management and insurer management.
"The employees' compensation situation in Hong Kong is becoming untenable for companies operating here," says Michael Lewis, Senior Vice President and Marsh's Workforce Strategies Practice Leader for Hong Kong. "The rising costs are hurting companies' productivity and competitiveness, and unnecessarily eating into their margins."
Lewis adds that by implementing pre-injury and post-injury strategies, companies can reduce their employees' compensation insurance premium costs by 30% or more and decrease the frequency of injury by 20% or more. This includes giving safety management board accountability and ensuring injured employees see appropriate specialists to speed up recovery times.