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Most companies don’t get too excited about their business insurance. (It breaks our hearts, but we accept the reality.)
And when it comes to workers’ compensation, that’s a different beast altogether. We know most companies loathe managing their workers’ compensation policies.
But what if we told you it didn’t have to be that way? In fact, if you feel that negatively about your workers’ compensation, it might be a red flag that you aren’t working with the best insurance agent for you.
Workers’ comp is complicated, so unless you are an insurance expert yourself, then you probably need more help than you realize making sure your policy is accurate, avoiding audit issues, and not overpaying -- and a good insurance agency can do all of that for you!
In this article, we’ll outline all the things your insurance agent should be doing to help you with your workers’ compensation policy.
Review your policy for classification errors
When getting a workers’ comp policy, your insurance carrier will classify the work your company does with classification codes.
Some types of work are obviously riskier than others, so these classification codes (which each have their own rates) help determine your premium.
But because not all employees do the same type of work within most companies, most workers’ compensation policies have more than one type of classification code.
For example, an ornamental iron contractor may have class code 5040 (for iron erection), 5606 (for the executive supervisor), 8742 (for sales people), 8810 (for clerical people), and maybe even a few others.
Because classifying can get complex, it isn’t uncommon for insurance carriers to make mistakes when it comes to classification codes.
This could mean you are paying more than you need to for insurance, or it could mean you will be penalized when your insurance carrier audits you.
In fact, we’ve had cases where we were able to save companies thousands on their workers’ comp premiums because their prior agent had them misclassified.
That’s why you should always work with a workers’ compensation agent who reviews your policy to make sure you don’t have these types of classification errors.
Review your premium credits
Certain types of industries may be eligible for credits on their workers’ compensation premiums.
For example, certain construction classifications are eligible for the "Massachusetts Construction Classification Premium Adjustment Program".
There is also a "Qualified Loss Management Program" QLMP which is only available to certain types of policies, there are also some rate deviation credits available from certain carriers, and there is also the Merit Rating Program available for certain businesses with 0 claims.
Your insurance agent should be reviewing your workers’ compensation policy to make sure you are receiving all the credits and money savings opportunities available to you.
Train you on how to prepare for your audit
The dreaded audit.
For many businesses the annual workers’ compensation audit is a stressful and confusing time.
Between understanding why your premium is what it is, filling out all the documentation, making sure your information is accurate, and more, it’s a lot to navigate and can be complicated.
But it doesn’t have to be. If you work with an independent insurance agent, they should be a resource to you. They should be there to walk you through the audit process and answer any questions you may have about the audit.
But even if your current agent isn’t helping you, we certainly can! For more information about how to prepare for your audit, check out this article: 5 Steps to Get Through Your Workers Comp Audit.
Verify the accuracy of your experience modification factor
For workers’ compensation, something called an experience modification rating (EMR) (sometimes called experience modification factor) plays a key role in determining how much you’re paying.
The EMR is a metric used to calculate a company’s workers’ compensation risk, based on their number of claims and the claim costs over a three-year period. (the last four years, minus the most recent).
It’s kind of like a credit score for workers’ comp!
The number represents a ratio of a company’s cost of workers’ compensation claims compared to companies of similar size and industry. Essentially, it portrays the risk of insuring or working with your company, compared to your competitors.
Your insurance agent should be making sure your EMR is correct by:
- Determine if correct rating periods are used
- Check accuracy of payroll from audit
- Check accuracy of claims from Valuation Date loss runs (6 months post policy)
- Look for subrogation opportunities and other recoveries (you can correct current and 4 mods back)
- Make sure legal fees, etc. are not included in claim totals
- Make sure there are no ownership change issues
- Make sure there are no duplicate claims
Checking on these factors will ensure your EMR is accurate, which could save you money and ensure you won’t have any surprises during your audit.
Review your claims reports to reduce open claim reserves
Claim payments affect your business’ experience modification factor.
So your agent should review your open claims and help work with the claims adjusters to see if any claims can be closed, or have the reserves reduced or removed.
This process will help lower your business' experience mod factor, which in turn, will reduce your premium.
Accurately project your experience modification factor 6 months prior to issuance
If a policy is experience rated, the experience modification factor can be determined 6 months prior to the policy's renewal.
Your agent should be proactively determining your new factor to give an accurate policy premium estimation 6 months in advance, which helps your business budget appropriately, so there are no surprises at renewal.
Analyze the minimum mod and help develop a plan to reach it
For worker’s compensation insurance, there is a software program that agents can use that allows them to better manage their client’s policies.
It can not only help predict the upcoming experience modification but also inform the agent what the minimum experience factor is for a particular company.
Unfortunately, not many agents even use this software.
So you should be working with an agent who not only uses that software, but also knows what to do with that information.
A good agent can use that information to run various types of analysis on existing claims to help a client create a plan to reduce further injuries. This could be identifying bad hires (people with several claims) and how to improve hiring to prevent this, or identifying risk management techniques to eliminate frequency of certain claims (like safe lifting practices if there are lots of knee/arm/shoulder claims).
Get what you deserve from your workers’ comp agent
Working with an independent insurance agency is by no means a requirement.
The point of an insurance agent is to take much of the work off your plate to make your life easier.
So you really owe it to yourself to not work with an agent doing the bare minimum and instead work with someone who goes above and beyond to make sure your policies are accurate, you have enough coverage, and you aren’t paying more than you need to.
We do these things every day, so if you think we could be a good fit for your workers’ compensation, you may want to consider some of the other benefits of working with Berry Insurance by reading this article: 8 Benefits of Having Business Insurance with Berry Insurance.