North Carolina: Cracking Down on Non-Compliant Businesses for Workers Comp

Posted on March 6, 2013 by Shannon Dye

The current workers compensation system in the state of North Carolina is viewed by many as flawed. The current House and Senate have several bills that they are working to that will help reform the current workers compensation system.workers-compensation-laws

Reform is likely going to happen this year. There is one bill that looks like it is going to pass that will help with workers compensation reform. This will bill will hold more employers accountable in regards to workers compensation compliance.

The Labor Department, Revenue Department and Unemployment Tax division have teamed up to aggressively pursue businesses owners that do not follow the laws. An audit was performed  last year by investigators from the Division of Employment Security. The audit showed that of 2,637 businesses required to pay unemployment taxes, only 1% did and that 40% had incorrectly classified their workers.  In the past, very little has been done to catch violators of workers compensation and unemployment benefit laws.

The 3 departments are working together to help educate and enforce the laws. Since currently there has been no real focus on this issue, they will punish those businesses that choose not to follow the laws.

Even with employers that have been in compliance with the state laws, workers compensation costs are still on the rise. Workers compensation claims have been risen steadily not just industry wide, but more for North Carolina. According to the New Observer “Critics of the current system complain it’s rife with abuse and gives injured workers an incentive to stay at home. They cite a study by the nonprofit Workers Compensation Research Institute that found that total costs per claim in North Carolina averaged more than $42,000, 44 percent above the median of 16 states studied.” (Read more here:http://www.newsobserver.com/2011/04/10/1116636/workers-compensation-is-back-on.html#storylink=cpy)

Employers trying to get back into compliance or shop North Carolina workers comp coverage because of rising costs, would be wise to contact an independent agency like The Insurance Shop who have access to more than 30 insurance carriers.

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What Does it Mean to Include or Exclude an Owner or Officer from Workers Compensation Coverage?

Posted on March 6, 2013 by Josh Frerking

Whether you are a 1 or 2 man shop or a 100+ employee company one important area to address is whether you, as the owner of the company or company officer, should include yourself in coverage on your workers compensation policy.

When addressing this issue you are looking at a direct trade off for yourself personally that all owners/officers should fully understand.

The trade off is additional risk for the individual vs. additional premium. As an owner/officer of your company, most states give you the option to include or exclude yourself from coverage, however some states do not. This varies from state to state and your entity type in your state (i.e. LLC, S-Corp, C-Corp, Sole-Proprietor).

Rating for workers comp is based on your payroll, and each state assigns either a minimum and maximum payroll for owners or a flat payroll rate to be used for workers comp rating purposes on owners. If you decide to include yourself in coverage these rules state the limits of what your policy will be based on.

Let’s use Missouri as an example. They require a flat rate payroll amount. The payroll amount for an owner in Missouri as of 1/1/2013 is $36,900 for each owner. This means that each owner who is included would be adding this set amount of payroll for the workers comp premium.

For easy figuring lets say your company is a machine shop and the class code rate for your policy is $5.55 per $100 in payroll, this means the additional payroll comes out to an additional premium of $2,047.95. This is calculated as $36,900 X 0.0555=$2,047.95. These payrolls and rates will vary for business type and payroll amount as this formula shows.

This shows how the premium increase would be factored, It can be looked at as additional costs to you if you include yourself, or additional savings if you choose to exclude. However, the savings for owners/officers if they choose to exclude present added risk to those individuals. Now lets look at the additional risk you are taking on:

For that same machine shop operation, lets assume you are as a company officer making the same $36,900 per year. Workers Compensation covers Medical payments and a portion of lost wages. When you exclude your officer from coverage, this is the risk they are taking on personally.

This becomes both a financial decision for your company and personally to see where you would like to place the risk. This is a decision that should be made factoring in what other insurance you personally have as well as the risk you have in the work you do. If you are doing clerical work, your risk is typically much lower than if you performing roofing work, however the rates are much different as well.

Workers Comp Exclusions

 

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A Growing Player in the Workers Comp Marketplace

Posted on March 6, 2013 by AJ Schrage

Patriot National Insurance Group continues to grow at an impressive rate.  They are the parent company of Guarantee Insurance Company and offer access to Zurich American Insurance Company.  Patriot has long been one of the best access points to the workers comp marketplace for blue collar and other related businesses.

Patriot’s growth has recently been picked up by numerous news outlets such as this article:  http://www.bizjournals.com/southflorida/news/2013/02/06/patriot-national-insurance-group-adds.html.

Patriot National Insurance Group

Workers Compensation Shop has been proud to partner with Patriot National since 2005.  Patriot is one of the pioneers of Pay As You Go workers compensation insurance and works closely with out agency for this specialized coverage.

Patriot’s philosophy of quoting a wide range of businesses while offering business-friendly payment plans has allowed it to continue to grow in this challenging marketplace.

Recently, Patriot National Insurance’s rates have been strongest with home health care, assisted living, social service organization, artisan contractor, short haul trucking, concrete, landscaping, restaurant/bar and excavator businesses.

Start a workers compensation insurance quote today.

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Missouri Legislature Finally Stepping Up

Posted on February 28, 2013 by Tim

Missouri Workers Comp InsuranceIt’s only taken a rallying cry of 8 years, tons of bad publicity, and an easily avoidable $28,000,000 debt – but the Missouri Senate has finally done something worthwhile regarding workers compensation.

Last week, Senate Bill 1 passed by a whopping 32-2 margin. Assuming it doesn’t get messed up at the House level or once it hits Governor Jay Nixon’s desk (still large assumptions), the law would fix the insolvency of the Second Injury Fund and also remedy a huge error the legislature made during 2005 reforms.

The most important fix revolves around the Second Injury Fund, which is currently somewhere in the neighborhood of $28M in debt to 713 workers who were legitimately entitled to receiving benefits from Missouri. Instead of protecting these injured workers (which was the primary reason the Second Injury Fund even exists), the state has simply turned a blind eye to these debts.

With this proposal, the state tax on workers compensation policies will raise from 3.5% up to 7%. While this may feel like a stiff increase for business owners purchasing work comp policies, it’s still a vastly superior solution to the potential alternative – complete dissolution of the second injury fund. By all accounts, the increase should help bring the fund out of insolvency.

If the fund were to be absolved, it would place the burden of those claims back on insurance companies, which would in turn cause insurance companies to change or eliminate their willingness to write workers compensation altogether. Right now in Missouri, we enjoy a very competitive marketplace. The Insurance Shop represents 15+ carriers writing workers compensation in Missouri and I can tell you that they all compete with each other over pricing and obviously, that’s a good scenario for the insured. If the second injury fund didn’t exist, I would expect less competition and fewer carriers, which would ultimately drive up costs.

The second fix with this proposal brings toxic exposure diseases back into the workers compensation system. This is a critical fix to a major mistake made in the 2005 reform efforts to workers compensation that protects business owners. When this was removed in 2005, it opened businesses up to liability exposure in civil courts and basically eliminating the theory that workers compensation is the “sole remedy” for workplace injuries.

It’s tough to give kudos to the state legislature for potentially getting this done (the House and Governor still have to pass it before it becomes law), since it’s been an obvious and necessary solution for literally years … but at least they have finally pulled their heads out of the sand and worked out a compromise.

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Small Business Growth

Posted on February 28, 2013 by Alex McFarland
As a small business owner, you have many different aspects of your business that require your time and focus. What may have started out in a basement office has bloomed into your livelihood, and also your families future.
Many business owners handle everything from sales, to bidding jobs, to meeting with clients, and all the way down to making sure there are cleaning supplies to keep the office tidy.  Employers are pulled in many directions.
Insurance is another aspect of business growth that is extremely important. Not only to you as the business owner, but also to ensure that the business can continue to grow and prosper if there ever were to be an accident or an injury.
There are many different facets of insurance:  You have general liability and workers compensation insurance, which are the two most common, but also commercial auto, data breach, umbrellas, and employee practices liability and errors and omissions to name a few.
It is important to make sure that you work with an educated and informed insurance agent that has an understanding of the market you work in and also the insurance products that are best suited to protect you and your business.
At The Insurance Shop, LLC, we have a highly trained and licensed professional staff that specialize in commercial insurance solutions. We are licensed in all 50 states and have a broad knowledge-base that covers all different lines of business insurance coverage.  Give us a call today At 1-888-611-7467.
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Workers Compensation Safety

Posted on February 11, 2013 by Justin Bartmess

Workers Compensation Safety

There are several safety procedures a business owner can implement without setting up an official safety program that would cost additional money.  As a workers compensation professional one common reason I’ve seen for increasing workers compensation premiums is bad management or lack of safety procedures within the job place causing unnecessary claims.

In a society where it’s becoming increasingly difficult to prove a claim to be fraudulent, it’s more important to prevent unnecessary claims from occurring before they happen.

When a business has suffered claims in the past (frequency or severity), those claims will follow a businesses workers comp experience rating for the next 4-5 years.  This factor is referred to as a businesses workers compensation experience modification rating.

Frequent safety meetings

Monday morning meetings are typically the easiest for a business owner and gets the employees on the right track for the upcoming week.  Did you know a large portion of fraudulent claims occur on Monday?  Talk with your employees about proper lifting procedures, how to handle tools within the trade properly, ensure the employees have the proper safety gear needed to perform their daily duties, purchase and require employees to wear basic safety gear associated with your industry.

If you have troubles coming up with topics to discuss ask the employees for topics to discuss based on their day to day job duties.  What areas do they think will cause claims, how do you minimize that exposure.  These meetings can be short, they need to start the work week off on the correct foot and show you care as a business owner about their safety.

Owner of the business being active in day to day operations

Being present on the jobsite and communicating with employees help the owner/s understand what the employees are actually doing day to day.  Being active daily helps the owner/s quickly identify when an employee is doing something that increases their chances of being injured.  Being an active owner typically results in the employees paying closer attention to doing the job the right way instead of cutting corners.

Identify reasons for prior claims and correct those problems going forward

If your a business that suffered claims in the past, use the insurance carrier loss report to identify all claims (believe it or not some business owners are not aware a claim even occurred.)  Think about and discuss with your staff ways that particular injury could be prevented from happening in the future.

Appoint someone on your crew or within departments in your company as the leader or foreman

Have those key employees assist with monitoring safety within the workplace and ask them to assist with safety meetings.  Hold them accountable for their responsibilities and reward them when their efforts make a positive difference.

Put up a sign within the workplace that reminds employees daily the job place is X days injury free.  Give the employees an incentive to reach a certain number of days with no job place injuries.

Each of these small practices should help control losses and remind employees that safety is important.  Save money on insurance with good insurance safety practices.

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California Workers Compensation Insurance Rate Increased Planned for 2013

Posted on August 20, 2012 by Walt Capell

The CA WCIRP is currently considering a 12.6% rate increase for workers compensation insurance premiums effective January 1, 2013.  This represents an 11.2% increase beyond what the California Insurance Commissioner approved just a few months ago.

Driving forces beyond the CA work comp rate increase include higher loss ratios, increased medical costs, and lower wage growth throughout the State.  California already has some of the highest insurance rates in the country for workers compensation coverage.

It’s unfortunate for employers in the state since workers comp premium is funded entirely on their end.  Employees will likely not much see wage increases next year as a direct result of these higher rates.  The average increase in premium is a whopping $2.68 per hundred of payroll.

California employers should be diligent in shopping rates with several insurance companies to help control costs.  There are a few insurance companies doing business in CA who continue to remain profitable on coverage within the state.

Learn more about California workers compensation rates or visit the WCIRB.

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MIssouri Legislatures Pass New Workers Compensation Bill

Posted on April 30, 2012 by Walt Capell

The Missouri House passed a bill last Thursday which approves legislation barring employees from suing co-workers for job-related injuries.  Civil suit will not longer be an option aganist co-workers when employers have workers compensation coverage.

Co-employee liability bill is HB1540

A similar bill was passed in 2010, but Governor Jay Nixon vetoed the measure earlier this year.

This is a positive step and a necessary bill to help protect Missouri employees from co-worker lawsuits.  The bill prevents employers from having to manage an unfortunate circumstance in the middle of managing a claim.

Learn More about Missouri Workers Compensation Insurance.

 

 

 

 

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Negotiating the Best Workers Compensation Quotes

Posted on April 9, 2012 by Walt Capell

There has been a lot of talk lately about the workers compensation market hardening in 2012.  Many states have announced that their average rates for coverage are on the rise.  NCCI has indicated that carriers continue to file higher rates in most states across the country.Workers Compensation Quotes

For some employers who have a high experience modifier due to claims, higher rates may be inevitable.  However, there are a many employers with low MOD’s, or no experience modifiers, who may be able to quote coverage at lower rates than ever before.  The real trick is knowing how to shop for the best workers compensation quotes for your business.

10 Ways To Get Better Workers Compensation Quotes

1. Shop Several Work Comp Carriers

Not all insurance companies are created equal.  Carriers have a diverse appetite when it comes to workers compensation insurance.  Most states allow insurance companies to file and use their rates which means each carrier may be more, or less, competitive depending on their interest or profitability in each industry.  Shop at least 5 companies to make sure you find lower manual rates.  Many smaller agencies don’t have access to many markets, so shop around.

2. Understand Your Work Comp Codes

It is important to understand your class codes to ensure your agent (and insurance company) does not classify your operation into a more expensive code.  Too often, agents take the simple route and don’t properly classify all employees into the best and cheapest code.  All states allow for clerical and sales people to utilize 8810 and 8742 codes at a fraction of the cost of the company’s primary operation classification.  Some states also allow owners and officers to place a portion of their wages into these codes regardless of the actual work performed.

3. Ask for Policy Credits

* Most important.  Workers compensation insurance is based on subjective underwriting.  This means that an underwriter is allowed to reward some employers with lower rates.  Most states allow insurance companies to issue policy credits and/or debits on workers compensation quotes.  A typical state will allow a credit or debit up to 15% – 25% to be applied to each work comp quote.  If you receive a quote with no credits applied, or a debit, Ask your agent to request a policy credit from the insurance company.  Common reasons why underwriters issue policy credits include: 1. Good claims history, 2. Management/Owners experience, 3. Industry experience, and 4. Premium size.

4. Maximize Policy Discounts

Policy discounts are automatically applied to a policy as the total expected premium increases.  Most states utilize a specific table for determining discounts and insurance companies will include the available discounts based on quoted premium.  Discounts reward larger employers for having more employees or premium.  Don’t low ball your estimated premium to reduce your deposit.  Accurately estimating premium may help trigger discounts on your policy.

5. Consider Work Comp Deductible Options

Many insurance companies offer lower rates in exchange for sharing the risk and cost of claims.  If your premium is above average, ask your agent to present options including a $1000, $2,500, or $10.000 deductible option.  Workers compensation rates will decrease as your deductible increases.  Some insurance companies will also establish a “cap” on deductible payments and will manage the medical part of claims.

6. Understand Your Loss History

An experience modifier (MOD) is issued to an employer after being in business for a number of years, provided the premium reaches a certain dollar amount.  If you’ve been in business for more than 3 years and have never received an Experience Modification Worksheet from your State or NCCI, it means your premium is not large enough to establish an E-Mod.

A MOD is a neutral mechanism for creating automatic policy credits or debits for coverage based on you actual claim frequency and severity, as it relates to other employers in the same industry.  If you have an experience modifier of 1.0 it means you are at the industry norm and will not receive a MOD credit or debit on your policy.  Below 1.0 creates a credit- A .98 MOD equals a 2% credit.  A MOD above 1.0 means a debit will be applied.  A E-Mod of 1.05 means all carriers must issue an additional 5% debit on every work comp quote for your business.

7. Manage Your Experience Modifier

As with any reporting agency, mistakes happen.  Check your E-Mod worksheet each year and contact NCCI, or your insurance company, if you disagree with the claims being listed on the report, or the dollar amount being indicated.  It is not uncommon for MOD worksheets to include inaccurate data that may have an adverse affect on your ability to get lower workers compensation rates on your quotes.

8. Owner Exemptions

Most states allow owners and officers to exclude themselves from coverage.  Sometimes the rules are different depending on whether your business is a sole-proprietorship, LLC, or corporation. It also depends on the risks associated with your industry.  Many employers easily save over a thousand dollars on premium by properly excluding themselves from the policy. This is especially important in states with expensive premium for workers compensation insurance.  This exemption can come in handy when you are shopping California Workers Compensation Rates.  Ask your agent if you qualify to be excluded and request work comp quotes both ways to understand the difference in cost.

9. Don’t Bounce Insurance Companies

While it’s important to shop your rates and find the most affordable workers comp quotes, it’s not always a good ideal to move a policy each year.  Some carriers will actually debit a comp quote if a policyholder moves around too much.  Focus on the other tactics such as policy credits to achieve lower rates.  The benefit of having a good relationship may likely show up after you’ve had a claim or two.  Loyal policyholder may continue to benefit from affordable renewal quotes after a claim.

10. Negotiate Your Workers Comp Renewals

At the end of the day, every workers compensation quote is a multi-party negotiation.  Employers provide information to agents, and agents use the information to market the risk to their insurance companies or brokers.  Employers who understand and employ these tactics to negotiate with their agents will likely get better rates and more affordable quotes that the average employer.

Ready to put your skills to the test?

Shop for the best workers compensation quotes? 

Call today at (888) 611-7467, or visit us online at WorkersCompensationShop.com.

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Workers Compensation Class Codes

Posted on March 15, 2012 by Walt Capell

One of the most important aspects of pricing work comp insurance revolves around the classification system, or class codes.  Most states rely on the National Council on Compensation Insurance (NCCI) to develop and maintain workers’ comp codes, while a few states such as California and New York maintain their own classification system.  NCCI class codes are published, or updated, annually in the NCCI Scopes Manual.

The fact is that class codes and interpretation of codes can vary significantly by state.  Most states have special class codes that may only be applicable to employers in that state.  Additionally, each state may have different rules that apply to class codes.  For example, Missouri laws allow owners to automatically have 10% of their wages included for clerical (8810) or sales (8742) codes, regardless of what the business does.  Most other states require 100% of wages to be placed in the predominant job classification.

Because workers compensation class codes and rules change each year it is important for employers to stay abreast of changes to avoid audit surprises.  Just because an insurance agent tells you to use a particular classification code does not mean its the correct code.  Agents who specialize in workers comp coverage may be better informed and educated.  Owner have the right to contact NCCI and request guidance on class codes.  They may also contest the classification codes used on their policy up to 3 years prior.

As an Agency, we have come across a fair amount of insureds being misclassified over the past few years.  In some cases we have been able to reduce premium by 50% or more by simply reclassifying the job exposures with NCCI and communicating these changes with the appropriate insurance companies.

Employers are well advised to ask their agent for the scopes description of each of the class codes on their policy.  Job descriptions should be compared to the scopes descriptions to ensure similarity.  Finally, don’t be afraid to ask your agent about other classification codes that may be applicable to your business.  After all- you’re the one paying the premium.

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