Tag: Workers’ Compensation Insurance

Should you Price Check a Flat Renewal Quote?

In meeting with carrier representatives frequently, I always get updates on the marketplace from a broad array of perspectives. Recently, one of the common themes in the current marketplace is that many renewal quotes are a similar price to what they were in the last year. However, carriers are often pricing quotes for new business to that carrier at very low rates in an attempt to win additional business in a flat market.

For example, as I was price checking my upcoming renewal accounts recently, I was able to save one client around 20% on their policy even though their renewal quote with their carrier had not changed from the prior year. By having their renewal policy price checked, this client saved 20%. It’s not to say you should move your business insurance every year as there are advantages to having continuity with one carrier in case claims or service issues arise. However, potential savings can exist even if your renewal pricing is the same as last year’s pricing.

The current marketplace has several carriers notably pricing aggressively to compete for new business opportunities. One of the carriers that comes to mind right away for workers’ compensation insurance is The Hartford. They are discounting their base rates up to 40% for certain business types and in certain states. It is a hard to beat combination when an A rated carrier with excellent customer service is pricing as low as any carrier in the marketplace for certain businesses.

Another carrier that comes to mind is GUARD Insurance. They are another A rated carrier that is affiliated with insurance giant, Berkshire Hathaway. GUARD has been rapidly expanding into the marketplace for small and mid-sized businesses. If you haven’t shopped your business insurance in a few years, GUARD may not have been an available option at the time you decided on a carrier. Now, they are the leading carrier for many industries (particularly certain artisan contractors) in the marketplace and also offer excellent customer service.

There are so many variables that it is hard to write generally about some of the best carriers in the marketplace for particular businesses. However, AmTrust, Employers, FirstComp and Travelers are all highly rated carriers which offer great customer service and are pricing certain industries very aggressively to attempt to grow their business.

There can be other reasons that it may make sense to price check your business insurance. For one, your claims history may be more favorable than it was several years ago.   Other insurance carriers may offer more favorable payment plans than you currently have. An example in the workers compensation arena is that pay as you go insurance might be available. Over time, different carriers happen to prefer certain industries more or less than they do at other times. That can lead to better pricing in some cases than may have been available at different points in time.

Without checking prices, it’s hard to know whether or not there might be better options out there than your current carrier.

OH NO! AUDITS!?!

This past week I went to a training seminar on workers’ compensation insurance. I showed up to this event expecting to learn about claims,  class codes, and all the new products coming out. When I got to the seminar I first sat down at the table I was assigned to. While I introduced myself to all the other insurance agents, I asked them, “What do you expect to learn this week?” To my surprise, everyone wanted to learn about audits. Everyone wanted to learn about things like how an audit works, who does the audit and why do we need to do them? I really was shocked that so many agents didn’t know much about an audit.

What is an audit?:

Workers’ compensation policies are issued with estimated payroll figures for the policy period. An audit is completed at the end of the policy period in order to determine the final policy premium. It can be completed either by phone, mail, or physical visit.

How to prepare for an Audit:

Assemble all financial documents that you have accumulated throughout the year. You should really start at the beginning of each policy year. Things that will be helpful/needed: payroll books, 941s, SUTAs, 1099s, checkbook (which is best if you have a separate checkbook for personal and business), general ledger, or tax records and lastly all Certificates of Insurance. It is very important to know that all grossed wages are used, for example wages for all payroll, commissions, bonuses and lodging allowance.

Who does the audit?:

Typically it is the actual carrier that will do the audit. Your agent will be able to assist you, but it will be the carrier that will proceed with the actual audit. There are times where the carrier can use a third party as the auditors.

When do audits take place?:

Audits typically take place at the end of the policy year. Your agent can request a quarterly, monthly or semi-annual audit for your company. The reason they might suggest that you do one mid-term, is to check on your payroll. It is always best to get the most accurate payroll, but sometimes we might have to actually estimate what an employee will make in a year. When we estimate the payroll, it is always nice to check to see if you are close or going over the estimated payroll. It is a lot easier to adjust payroll during the policy term, than to do it after. It is also a lot nicer to not have to pay any additional premium at the end of the term.

I understand that audits can be stressful and just a pain in the butt, but they are necessary. But if you are prepared for the audit, then you will be okay. The auditor isn’t after you or after your business. They just want to make sure you are paying the correct premium. They also want to make sure that you are classified correctly. So don’t think that audits have to be the end of the world, just breathe and relax. With this advise you will be all set for the audit. You can always call your insurance agent and they will gladly assist you with any additional information you might need.

Safety Programs and Meetings

The importance of a Safety Programs and Meetings

Safety programs and meetings may seem like a time consuming task and they may seem like they do not make much of a difference until you have had a claim. Even the best run operations will eventually have some sort of work related injury occur. Whether it is a law firm who has a legal assistant injured in an auto accident or a construction worker who has a back strain occur on the job, something will generally happen the longer you are in business.

All carriers ask if you have a written safety program.  This DOES come into play when agents are generating your quote and analyzing your business. For instance, if your business has a written safety program and conducts weekly safety meetings on a variety of topics than an underwriter might understand if you are having a year where a couple injuries occur. If you do not have these policies in place, your business may end up having a claims total higher than your premium paid. This may cause your current carrier to cancel you for claims.  All of a sudden you can’t find an insurance carrier to cover your business.

I have had many clients in this exact situation.  If your business has a safety program in place, what we have been able to do is make a case to the carrier on your behalf by using examples of your safety program and meetings conducted. We do this so when the carrier reviews your business they will take into account all of the right things you are doing and chalk up the recent stretch of losses to more of an outlier than an actual reflection of the way you run your business. On the flip side if you are not having regular safety meetings or do not have a written safety program than it is much harder to convince an underwriter that these losses are a fluke. With no examples to give them on why they will not happen again most underwriters and carriers will decline to offer a quote. This is because on paper it looks like there are no supporting arguments showing there is a plan in place to minimize the exposure in the future.

Now that we have established the importance of safety programs and meetings and programs, lets look at an outline that can be used. Meetings don’t have to be long.  They can be quite quick and effective if you are prepared.

1. PLAN your meeting in advance by looking at topics you have encountered in your years of running the business, industry related issues, or ideas from your workforce.

2. Help your workforce see or understand what you are talking about through pictures and videos. Not everyone learns or is engaged the same way. Pictures and videos will allow you to show specific examples of the point you are hoping to make.

3. Tell your employees how to apply the information you have presented and see if they have any questions, thoughts or concerns.

4. Attendance should be required and not optional.

5. Document attendance so if it ever comes up you can show you are constantly training your employees on safety.

This is a simple guideline you can follow that will keep your team focused for the 10-30 minutes it may take to conduct safety meeting. Meetings don’t need to be long or cumbersome but they should be to the point and deliver your message in an efficient, effective manner.

What is the Walsh Test and why does it matter?

The W.A.L.S.H. Test is an acronym to determine which state has jurisdiction for a Workers Compensation Claim when more than one state is involved in the incident. This is most relevant for businesses who operate across state lines. This applies whenever an injury occurs in a state away from a company’s primary headquarter, and is a way the courts use to determine how workers’ compensation coverage will apply.

Walsh is an acronym judges use to determine jurisdiction for a workers’ compensation claim. The acronym stands for:

  • Worked
  • Accident
  • Lived
  • Salaried
  • Hired

The weight of each part of the jurisdiction depends on the position of the term in the acronym W.A.L.S.H. Worked carries the most importance and Hired has the least importance when considering jurisdiction. The higher on the list the higher the relevance in relation to jurisdiction.

This comes in to play when a city, like Kansas City, MO for example, has businesses frequently operating in more than one state. More complicated instances occur with trucking companies or in the airline industry. One hypothetical example might be where a truck driver lives in Iowa. The truck driver gets hired by XYZ Trucking Company just across the border in Minnesota. XYZ Trucking Company is headquartered in California, which is where the truck driver is salaried. The truck driver gets in to a wreck in Georgia.

  • Worked –           Many states
  • Accident –          Georgia
  • Lived –                Iowa
  • Salaried –           California
  • Hired –                Minnesota

In this instance Georgia would probably have Jurisdiction. This is because the truck driver works in many different states, so W would lose relevance. Where the Accident took place is next on the Walsh Test. The fact that the truck driver Lived in Iowa has less relevance to this case.  So does the fact they were Salaried in California or were Hired in Minnesota.

Salaried and Hired are typically lowest on the totem pole because they have the least to do with the accident itself. The fact that a truck driver is Salaried in California and was Hired in Minnesota does not have much to do with a workers’ compensation claim regarding an Accident in Georgia.

Where the employee Worked and where the Accident took place have the highest relevance. This is because where the worker does business most of the time and where the accident took place have the most to do with this specific occurrence.

The one situation where the W.A.L.S.H. does not take effect is in monopolistic states. These states are North Dakota, Ohio, Washington and Wyoming. These monopolistic states require an employer to obtain workers compensation insurance from a compulsory state fund or qualify as a self-insurer.  It is critically important to let your agent know everything your business is doing and especially where. This can allow your agent to provide the correct coverage to protect your business when an occurrence takes place in one of these monopolistic states.

So the W.A.L.S.H. Test is a tool judges use to determine jurisdiction in Workers’ Compensation Claims.  It is relevant to businesses who operate across state lines. Where your employees do their work can make all the difference in your company being liable for a Workers Compensation Claim — and to determine if your policy will cover the claim. Talk long and honestly with your agent about where and how you do business, and make sure that you have a state listed in section 3A of your workers compensation policy if you have an employee that might get injured in another state.