Experience Mod Formulas Are Changing – How Will This Affect Your Workers Compensation Insurance? October 18, 2011

One unique feature of work comp insurance is that there is a direct link between the rates that you pay and the losses you’ve had in the past.  The conduit for this process is the experience modification factor, a rate modifier on your work comp policy that increases or reduces the rates you pay based on your past loss experience.   You can learn more about experience modification factors and how they are calculated, by clicking here.

The NCCI (National Council on Compensation Insurance) is the entity that maintins the experience modification factor process.  The current mod formula has been unchanged for many years.   This formula estimates what the expected losses will be for each company, based on their class codes and their payroll levels.  Next it compares your expected losses with your actual losses to see where you stand in the spectrum of all businesses.    There are two parts to this formula; one that measures loss frequency and another that measures loss severity.  The loss frequency side of the equation is what is changing the most with the new rules.  This portion of the formula caps the maximum amount of all losses at $5000.   So, for instance,  if your company has a $5000 loss and another loss that is $100,000, they will both carry the same weight on this side of the modification formula.   This means that a company with several small losses may have a higher mod factor than one with one large loss, even though the company with the one large loss may have had a greater total loss payout that year.   

The new modification calculation formula  will change the $5,000 cap on the frequency side of the equation.  The cap changes will be phased in over time between 2013 and 2015, and by the time the phase in is complete; the cap will have been increased to $17,000.  After 2015 this cap will be indexed annually for inflation. 

So what should you do to get ready for these new rules?   The information that I am seeing seems to indicate that if your mod is less than 1.0, then you will probably see an even lower mod under the new formula.   This impact is greatest for the lowest mods.  For example, it is expected that a mod of .83 today would translate to roughly a mod of .77 in 2013, but one of .99 will only reduce to .98.  This same dynamic works in the opposite direction as well.  Mods above 1.0 are expected to go higher under the new formula.    A 1.14 mod should turn into a 1.18 while a 1.69 mod will become a 2.01 mod.  In the final analysis, with this new formula in place,  those with losses are going to pay more for their work comp and those that control and reduce their losses will see lower mods.
So what does this mean for you?  Well now you have even more reason to control you loss costs.  You have both more to gain and more to lose.  When shopping for workers compensation, it is even more important now that you select an insurance company with significant loss control and return to work programs.  Workers compensation insurance in NC is a specialty line and there are companies here  that do nothing except workers compensation insurance.  The advantages that these companies will have in loss control and back to work support  will now mean even more to you over the long run.

At Clinard Insurance Group, in Winston Salem NC, we are an independent insurance agency handling hundreds of workers compensation policies for our clients all across North Carolina.  Our knowledge and experience with   workers compensation insurance can save you big money on your workers compensation policy, both today and 5 years from now.  Give us a call today, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com and let us get to work for you right away, helping you carve away some of your workers compensation expenses.

Workers Compensation Insurance – When It Comes To Claims, Time is Money March 24, 2011

The old adage that time is money is certainly true when it comes to handling workers compensation claims.  While the Form 19 claims form no longer states that the claim must be filed within 5 days of the accident or injury occurrence, moving fast on a workers compensation claim has a big impact on the size of the claim and the subsequent loss costs that will affect the employer.  If you are an employer with employees and have a workers compensation policy, you should take a little bit of time before a claim happens to discuss with your agent what you will need to do to move the claim forward quickly.

Take a quick look at some insurance industry statistics related to the speed of claims reporting. 

Claims reported two weeks after the occurrence had an 18% higher payout than claims reported in the first week.

Claims reported three weeks after the injury had a 47% increase in total loss costs over those reported in the first week.

And to drill down further, claims reported in days 5 through 7 after the occurrence had a larger claim cost than those reported in days 1 through 4.

Claims reported with only a 3 day delay had an increased medical cost of 16% over those reported on the day of the occurrence.

And we can also see this trend in terms of litigation costs associated with late reporting of workers compensation claims.  Claims with a only a 3 day delay in reporting have a 50% greater chance of ending up in litigation.  And litigation will increase the total costs of the claims and drive up your workers compensation premiums over time.  To see how claims costs affect your premiums, click here.

So how does quicker reporting help to reduce the costs of a workers compensation claim?  First of all, it allows the insurance company to contact all parties involved more quickly and this reduces the costs and chances of litigation.  Once the injured worker has hired an attorney to represent him, then the claims process slows down considerably as the communication process now has another step involved.  Quick claim reporting also allows the insurance company to get involved with the injured worker sooner and begin to develop plans to get the injured worker back to work in a shorter time.  This not only reduces the costs of your future workers compensation claims, but it also cuts your downtime costs right away.

Last of all, consider that the longer the employee is out of work, the greater the burden on other co- workers in your company.  This negative impact can hurt morale and can also lead to a higher risk of injury to the remaining workers on the job.  In addition, hiring and training a temporary replacement worker can be very expensive.

At Clinard Insurance Group, in Winston Salem, NC  we want all insurance buyers to be informed consumers.  Looking only at the policy costs can be a deceiving way to purchase insurance and might leave your company out in the cold.  If we can help you with your business insurance, your workers compensation insurance, your general liability insurance, commercial auto insurance or life insurance, please call us, toll free at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

The source information for this article was pulled from other articles that can be found in their entirety at www.InsuranceAnswerGuy.com.

Workers Compensation Insurance – What About Your Safety Program January 11, 2011

Workers compensation insurance for many industries, especially those in construction such as painting contractors, HVAC companies, electricians, landscapers and plumbers just to name a few, can be a huge piece of the insurance budget.  In addition, with workers compensation insurance in NC, your policy is experience rated, which means your losses follow you around for years and add to the cost of your particular policy.  So why don’t more contractors embrace safety training?

The answer of course is complicated but one of the biggest reason you see so little safety training in the small contractor’s world is that either the contractor doesn’t understand how much it can impact his bottom line, or if he does, he just doesn’t know where to start.  This is where company selection can be crucial to the small contractor.  There are some companies out there that specialize in workers compensation insurance and don’t deal in any other types of policies.  One of the advantages of using these types of companies is that often they will provide you with lots of safety training tools for free.

These tools can range from helping you meet posting requirements in your shop to advice and help with safety services and even helping you develop and create a true, on the job safety training program for all of your employees.  One example of a company that does this very well is Summit Insurance.   Take a quick look at the offerings that they have on their web site by clicking here.   You can see that they are fully engaged with their clients to help them find ways to reduce accidents and downtime associated with injuries.

Let’s face it, when you have a workers comp claim it will cost you money on your policy eventually.  But more importantly, think of the immediate costs of stopping work to get your injured employee to the doctor and the downtime associated with waiting on an employee to get back to work.   A large percent of accidents that occur on construction sites are preventable with better education and better rules enforcement.  If you are already spending money on a work comp policy, you should ask yourself what your insurance company is doing to help you reduce and prevent accidents.   Remember, there is much more to the workers compensation policy than just the rate, or the bottom line price.   As you can see, there are huge hidden costs in the process and you need to hire a workers comp company that will help you manage those huge hidden costs.

Clinard Insurance Group is a NC insurance agent who specializes in helping small contractors and construction trades all across North Carolina.  We understand your difficulties and we speak your language.   We have developed specialty programs for all different types of small contractor groups including a landscapers insurance program, and electricians’ insurance program, a special insurance program for painters, an HVAC insurance program, a plumbers insurance program and many others.  If you need help with your business insurance, please call us toll free at 877-687-7557 or visit us on the web at www.thecontractorshelper.com.

This article was pulled and written from source information, all of which may be found in its entirety at www.InsuranceAnswerGuy.com.

NC Work Comp Insurance – Not All Rates Are Created Equal October 27, 2010

If you have a business with employees in NC, then chances are you are have at least a passing familiarity with work comp insurance and how it is set up.  In my conversations with lots of different types of business owners all across North Carolina, I have found that many wrongly assume that workers compensation rates are the same from one company to the next.  Nothing could be further from the truth.  This article will go over the rating process and how the rates are established and what this means for you, the business owner and insurance consumer.

Let’s start with the easy part, the policy coverage itself.  In NC, all workers compensation policies have the same coverage form.  The coverage is statutory, which means that it follows the current NC workers compensation statutes.  Therefore, with the exception of a few items, all policies are basically the same.  The rates however, are not the same. 

Each insurance company has to file their rates with the NC Rate Bureau for each different classification of labor that they write.  And while company A may love to insure landscapers and their rate would reflect that, company B may not want to write this class of business, so their rates might be higher for that classification. 

So what does this mean for you?  Well, if you own a business in NC and are buying workers compensation insurance, then you should take some time to understand the marketplace and make sure that you have purchased your coverage from a company that is eager to write your business and has the rates to reflect that eagerness.  Also, in the past it may have been wise to always place your workers compensation insurance with the same company that handles your general liability insurance, your business auto insurance or your commercial property insurance.  The workers compensation marketplace in North Carolina has changed quite a bit over the past 15 years and now there are many insurance companies out there that write only workers compensation insurance.  We call these monoline work comp companies and they are a good choice for lots of NC business owners because the are not only able to offer very competitive rates on the classes of business that they want to write, but also, they often have loss control and back to work programs that are more effective and more helpful to small businesses.

At Clinard Insurance Group in Winston Salem, NC, we specialize in helping small businesses all across NC with their workers compensation insurance policies.  We have created special insurance programs for plumbers insurance, HVAC insurance, carpenters insurance, painters insurance, restaurant insurance, floor and tile installers’ insurance, landscapers insurance and electricians insurance.  If you need help with your workers compensation insurance or any other insurance policies, please feel free to call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

The source information for this article was pulled from other articles which can be found at www.InsuranceAnswerGuy.com.

Workers Comp Back To Work Issues – Avoid These Common Mistakes August 31, 2010

Workers compensation insurance is a necessary evil for most employers.  How you handle on the job injuries and more importantly how you handle the out of work situations that you will face with your employees will go a long way toward impacting your future workers compensation costs.  Read below to see some common mistakes that some employers make in this regard and what you can do as an employer to avoid these mistakes and minimize your future workers compensations costs.

The first step towards understanding back to work issues is to understand why it is important for you to be involved.  Some employers take the attitude that the claim has been filed and it is the insurance company’s money now so why worry about it.  This belief couldn’t be farther from the truth.  This is in fact your money as your future rates are determined by today’s claims experience.  And to make matters worse, you will pay over a 3 year period for any one year’s mistakes to the impact is essentially tripled.  Click here to read my blog about the workers compensation experience modification factor and how it affects your bottom line now and in the future.  Now bear in mind that  workers compensation rules are different for every state but this is a guideline that can help you avoid some common errors that employers often make.

Mistake #1 – The Economy is bad and I can’t afford to keep employees on the job who are not able to do the job.  Actually, you can’t afford not to.  Remember, if you are not able to make an offer of light work to an injured employee then your employee will likely continue to receive a good part of their salary as work comp benefits from your insurance company while contributing nothing to your company.  Other employees will have to pick up the slack or you may have to hire and train new workers.  Research shows that healing happens faster for employees who are productive and that a transitional duty program can get them back to work quicker and save you more money in the long run.

Mistake #2 – My injured employee wasn’t all that productive before the injury so I’d rather not keep him on with light duty now that he is injured.  Don’t fall into this trap.  Dealing with non-productive employees is a human resource issue, not a workers compensation issue.  You should always deal with this type of problem through your HR department.  Also, a less productive employee is more likely to take a case through the long and costly workers compensation legal system.  Get them healthy and back to work first, and then deal with their lack of productivity.

Mistake #3 – I don’t think my employee is hurt as bad as he says, in fact I saw him out fishing last week.  This is an example where the insurance company you choose can help or hurt you.  You are often best served by a dedicated workers compensation company with a structured back to work program.   One of  the insurance companies that we use, Summit Insurance Group, has a back to work tool kit and structured back to work program to help you as an employer get your injured employees back to work and off the work comp rocking chair paycheck as quickly as possible.  This is not something you should tackle on your own and you need an insurance company that is dedicated to this process so that your premiums stay low in the future.

Mistake (Concern type)  #4 –  My employees doctor says she should stay at home but she just has a desk job.  You should work with your claim adjuster and your employee to make sure that the doctor has a clear understanding of the job requirements to see if the person really must be written out of work.  Constant and clear communications between you, the employee, the doctor and the claims department can help you resolve these issues and some job modifications may make it possible to get your employee back to work sooner.  Remember to get your employees job description to their physician as quickly as possible and ask for any medical restrictions that need to apply to any transitional duty.

Mistake #5  Losing touch with workers once they are injured increases the fear of a lawsuit.   This is true and many employers find themselves in a nether world where they are afraid to contact their injured employee and wanting to know what is going on with the injury.  This is why having a back to work program in place before the injury occurs is so important.  A good back to work program will encourage you to reach out to your injured employee and help you know what you can and can’t say and how to say it.  They even include greeting cards that you may want to send to let your injured employee know that you are thinking of them.

It is clear that having a plan for injured workers before they are hurt will help you make the transitions more smooth and over time will reduce your workers compensation costs tremendously.  You should choose an agent who understands workers compensation insurance well and can help you gain access to specialized workers compensation insurance companies with back to work plans, dedicated claims staff and even nurses on call, all of which will help you reduce downtime and out of work time for your employees.  Don’t just chase the lowest priced workers compensation rates, rather consider carefully what support you will have after a claim when choosing your workers compensation agent and company.

At Clinard Insuranc e Group in Winston Salem, NC, we specialize in helping all kinds of  businesses with their workers compensation insurance needs.   Our specialization can help you not only find extremely low rates on your workers compensation insurance, but also will help you minimize claims and out of work time, thus saving you money over the long haul as well.  If you need help or have questions about your North Carolina Workers Compensation Insurance Policy, please call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

The source information for this article was pulled from various sources, one of which is www.InsuranceAnswerGuy.com.