Yesterday, 04/13/10, I attended the WCIRB’s 2010 Experience Modification plan changes Seminar in Burbank.
This was a very informative two-hour seminar put on by Dave Bellusci, Senior VP and Chief Actuary of the Bureau, and one of his Senior Research Analysts.
I already knew the basics about the changes: Employers with Experience Modifications over 100 are likely to receive higher mods, and those under 100 will get lower mods.
But during the seminar I learned the following:
Ø how the new benchmarks will work,
Ø how the new Credibility values, (B and W values) will apply,
Ø That the Expected loss values will reflect results from 20 Industry groups the bureau identified,
Ø How the Rating forms themselves will undergo some helpful features, (including a loss-free rating number on Rating forms), starting in 2011.
All in all, it was very informative, and there was a lot more information.
If anyone reading this emails a question to me, I’ll be happy to research it to provide the best available answer. Here is a link to the WCIRB spotlight note about the changes: https://wcirbonline.org/wcirb/spotlight/spotlight_2009_11.html
In the meantime, Employers, do your best to “brace for impact”.
Focus on your fundamentals of claims management, injury prevention, and loss-control. These activities will serve you well because in the future it’s likely that your premium will increase.
Thank you,
Mike Vrchota
Too many Workers Compensation policyholders think that the most important date of the year is their renewal date. Guess what, it’s not. 
Without question, the far more important date of the year is six months after your renewal date. If your broker doesn’t know this, or talk about the importance of the Unit Statistical report and the Valuation date, you have the wrong broker.
If you are not experience rated or experience modified now, or ever expect to be, this won’t really apply to you. In California, only those businesses which pay somewhere around $15,000 in annual Workers Compensation premiums are experience modified. And it takes three policy years to become modified.
The California Workers Compensation Insurance Rating Bureau has key information about the Unit Statistical report here: https://wcirbonline.org/wcirb/Employer_Guide/usr.html
If your Experience rating is over 1.00 then become unsettled now if you have never heard the phrase, “Valuation date”.
You know the feeling, or you’ve heard the idea that the California Workers Compensation system is out of control. It sort of is, and sort of isn’t. There are things you can do. The next post will explain the very first thing to do.
Hint; it’s easy. And you can start to get control.
Cheers,
Mike Vrchota
A recent article in the Economist, (http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=14327185) highlights the heated competition between states on the prowl for companies to move into their state and leave California.
A lonely Nevada road
Sure, the ads can be humorous in their own way, but the issue is serious for business owners who want to stay in business, be profitable, and continue to employ folks in their local community, (which is the desire of most employers).
One step owners can do is take action and consult with an Insurance Broker to dig into their Work Comp plan to look for mistakes or overcharges. In some cases, significant funds have been recovered and positive changes have been made by qualified Brokers.
Recovering funds from previous errors, and making sure your Experience Modification and class codes are exactly where and what they should be may give some business owners the glimmer of light to see their way through challenging times, (like now). The methods and results being referenced can be seen at the Institute of Work Comp professionals, (IWCP), website: www.workcompprofessionals.com
Client Care Insurance is a Certified Work Comp Advisor agency helping California Employers, Human resource managers, (and those who help them), to quit losing money and develop powerful employee relationships for bottom-line improvement. Find a broker with a plan to put money back in your pocket.
Don’t move, improve.
Cheers, your Work Comp Wonk.
The Workers Compensation Insurance Rating Bureau, (www.wcirbonline.org), has filed for a January ‘10 pure premium advisory rate increase of 22.8% on all California Workers Compensation policies. This suggested increase is on the basis of claims data they’ve received and on some Workers Compensation cases winding a complicated path through the Workers Compensation Appeals Board, (the Supreme Court of Work Comp).
Last July the Bureau filed for a 23.7 pure premium increase, but the Commissioner of Insurance declined the Bureau’s advice and approved a zero premium increase. Various California carriers have raised rates, although, (generally), not to the extent the Bureau had advised.
Now, with the Bureau coming out again for a substantial advised adjustment, and with a Gubernatorial race coming next year, it could be that the Commissioner will again advise against any pure premium change.
The problem for California employers is that insurance carriers may be able to keep their rates mostly stable for the next 12-18 months, but at some point they’ll likely have to raise rates dramatically. After all, the Bureau is looking at all the claims data for all employers and policies in California, and their data tells them that carriers are sitting on ticking time bombs and the fuses are getting shorter by the minute.
So if you’re reading this, please call or write your broker and inquire about ideas and methods to reduce your Experience Modification. If your ex-mod is higher than 1.00, (which is just average – like a C in school), it’s possible you can make some moves and get your mod down. Do it, so you’ll be braced for impact. Cheers.
The statement above, made by the heroic pilot of US Airways Flight 1549 last January is an apt description of what employers must prepare for. The impact is higher Workers Compensation premiums.
It’s being reported that the Workers Compensation insurance rating bureau, (www.wcirbonline.org), actuarial committee may recommend a 27% pure premium increase to its governing committee. This incease may be in July 2009.
This means that the claims and related information being analyzed by the WCIRB show that the premiums the insurance companies are charging are too low for the claims they are paying.
Workers Compensation Executive, an award winning publication which reports on the California workers compensation industry, (http://www.wcexec.com/articles/WCE01-20090317-001.html), reports on this meeting.
Pre-reform & Post-reform average premium rates
During the past several years, the Bureau has been able to make once a year premium recommendations. Those recommendations have been to lower premiums. Premiums were lowered as a result of the substantial reforms the California legislature adopted, (SB899, SB228, and AB227) under the direction of CA Gov. Schwarzenegger. These reforms brought about much needed sanity for the California Workers Compensation coverage system. The reforms allowed the insurance companies to lower premiums across the board. They also allowed employers to get some relief from the astronomical premium increases they were experiencing earlier this decade.
At the same time, all the key parties which administer the California Workers Comp system have been waiting for claims payment data to see how the reforms have affected the Workers Compensation marketplace. Meaning, how have the policy reforms worked in practice for the injured employees, and how have they affected the claims paying ability of the insurance companies. Now that data is pouring in. The article mentions that court decisions have also had an effect on the dollar amounts being paid to injured employees.
To sum up, brace for impact now, in hopes that you can survive, if or when, you take a rate hit.
Work with your broker to make sure you have no open claims. If they don’t understand your urgency, help them, (or fire them).
This is going to be important for employers looking to keep their Workers Comp costs lower.
Your Agent/Broker CAN perform ex-mod maintenance. If they don’t know what that is, contact me, and look through prior posts to get informed about ex-mod improvement.
There are steps to be taken to guard your mod, if you like what you have now.
You can also improve it, if you have a higher ex-mod.
Please comment to let others know what you’re experiencing as it relates to your insurance company or your rates.
Cheers, your Work Comp wonk.
My desire for you concerning the audit is that you are victorious, not vanquished!
The overall goal, (victory), in this case is that you are charged only the audit premium that you may actually owe. It’s a fact that you would owe zero audit premium if your policy was estimated properly at the start of your policy year, (and there were no changes in payroll, class code or operations in the year).
However, for most businesses, some factors will change: you will hire someone, or you might have changed the job duties for some of your employees. Changes of this nature usually result in additional premium.
One of the first things you can do to improve your results is to create a team. This could consist of your CPA, (if they prepare your payroll reports/records), your Human Resources manager, or any appropriate person who has been managing the Work comp payroll and premium throughout the year.
The opposite of this approach is to just open the door to the auditor, hand them a stack of reports and carry on with business that day as usual. By the way, resist the temptation to have the auditor conduct the audit at your CPA’s office. Your CPA may not be familiar with your staff and is not likely to help the auditor accurately assign the payroll of each employee to the correct class code for the work they do.
Your helpful work comp auditor
Get complete contact information from the auditor. This way, if a question arises after he or she has left your business, you can reach them to provide answers they need, or get answers to questions you have.
Once you have a team, (or an appropriate person has been given this task), gather your State and Federal quarterly tax forms because those are the primary reports the auditor will need. Probably the most important factor here is to make certain that you align each employee payroll to his/her proper Workers Compensation Class code.
If you have overtime payroll, make sure it’s evident, (so that you receive the overtime credit).
Make sure that you point out all persons on payroll who are actually owners of the company, (because they are most likely excluded from coverage), and this payroll should not count. The auditor will most likely have a policy copy which will indicate who is an owner, and who is not.
If you are a contractor, make sure to have all the certificates from your sub-contractors on hand. The auditor has full, legal power, (from the California Workers Compensation system), to charge the labor costs of jobs you paid via a 1099 to a sub, unless you provide a valid Workers Compensation certificate from that sub.
These are basic steps to navigate you towards a successful audit. If you have an active agent/broker, he or she should be able provide some assistance and guidance to help you prepare. Comment on your audit stories and successes. Best wishes for agreeable auditors.
Cheers, your work comp wonk.
February 16th, 2009 in
Premium audit |
No Comments
A friend asked me, “Are there any certifications for Work Comp professionals”?
Her question is about Agents and Brokers offering Work Comp coverage.
I mentioned that the most common and well-known certification for Property and Casualty agents,
CPCU, requires only one overview class on Workers Compensation.
So this brings up the question: from whom should you get your Work Comp coverage?
How will you know if the Broker/Agent is experienced in Work Comp?
Considering that many businesses devote more premium dollars to Work Comp coverage than any other coverage line, it becomes more important to consider how businesses obtain their coverage, and from whom.
In the same way that every business is different, every Broker is different.
And, even if a Broker has letters after his or her name, it doesn’t mean that he/she is a good match for your company.
So what do you look for?
Before I mention other things, it’s important to mention that all the knowledge in the world doesn’t help if the person you’re working with isn’t providing integrity and transparency.
Beyond those basic character standards, there is a certain base of knowledge your Agent/Broker should readily display. Without going into detail, I submit the following list as a basic checklist.
Because the California Workers Compensation system is so large and presents, (untold) complexity at every turn, my first suggestion is to work with someone specializing in Workers Compensation coverage. Someone who is even…wonkish about it.
Now whether you have a specialist or not, the broker should have extensive knowledge of how your experience modification is calculated. If you’re not currently modified, he/she should be able to forecast when you will be, and what your mod might be.
He or she should also provide detailed suggestions to get your mod lowered, if it’s been on the high side, (over 1.00). They should know exactly what a Unit statistical report is, when it’s filed, and by whom, (this is the key report your insurance company provides to the Workers Compensation Bureau).
The broker should know how important it is to make certain that you are classified properly, and that your estimated premium is equivalent to the current payroll and operations. If you’re a contractor they should regularly advise you to keep current with all your sub-contractors to make sure you’re receiving valid and complete certificates of insurance.
In addition, they should show a willingness to be your partner as it relates to your premium audit. Your premium audit, (and the resulting audit premium), can become an unwelcome surprise if your broker does not provide meaningful knowledge about how you can prepare for the audit.
Please consider this a short treatment of a substantial subject. To summarize, your agent/broker can be involved in regular steps to lower your premiums, (if they know what steps to take). If you don’t see them involved, then they either don’t know what to do, or they are comfortable just renewing your policy each year. Are you ok with that? Let me know your thoughts.
Cheers, your Work Comp wonk
A leading Manufacturers publication reports that California is second to last in Work comp costs and benefits as measured by various Institutes, academies and government sources. The Industry Week Workers Compensation Expense report is basically reporting that Arizona comes out on top of all states for lowest Workers Compensation costs, and near the highest injured employee benefits. You have to click on the Workers Compensation rankings link within the article to see the full results, and if you do, look right at the bottom to see that California is second to last, just above Alaska.
For those of you employing Manufacturing staff, (and purchasing Workers Comp coverage in California),
this is probably not a surprise to you.
The article is helpful because it encourages Manufacturers to evaluate their Work Comp coverage and insurance carrier support. It also encourages employers to review employee safety options and education.
There’s a saying for those of us who help employers improve their Workers’ Compensation plans; the happier your employees, the lower your rates. Basically, after all is said and done, do everything you can to keep your staff safe, value them, and you’re likely to find that the happier they are, the less likely they are to burden you with careless or persistent claims.
I welcome input and comments from Manufacturers and other employers located here in California who don’t have the opportunity to pull up stakes and move to Arizona. Best wishes to all readers for Happy Holidays!!
Mike Vrchota
Commercial Insurance Specialist
California Employers have an option to self-pay certain Work Comp coverage claims themselves.
Some employers know this already, (even though they may not know the complete outline of the program). Other employers don’t know about it at all. I’m hoping all will benefit from learning some specifics about it.
The short definition of a first-aid claim: The employer pays the bill.
What! Why should I, the employer, pay the bill? I have insurance for that!
Agreed, you do have coverage for every injury suffered by your employees.
However, if your policy is experience-modified/experience-rated, and you have a nice mod,
don’t you want to keep it that way? The first-aid option allows your mod to stay un-affected by the small claim(s). They don’t count against you.
Even a small claim can have an effect on your mod. And if you’re in the kind of business that exposes your staff to regular cuts, abrasions and the like, you can really benefit from using the First-aid option. It also helps to have a nearby Industrial Medicine provider, (don’t bring your employee to the local Kaiser or hospital).
Make sure the clinic/provider knows that they should send the bill to you.
It even helps to have one of your staff visit the clinic and establish the billing with you.
Ok, so now the more official version, with actual list of typical and accepted First-aid treatments:
First Aid Claims (California Only)
In California, employers are permitted (under specific guidelines) to directly pay for their first-aid claims. This practice may have a positive effect in minimizing the impact on future experience modifications, and reduce the future cost of premiums. Employers should carefully evaluate if this is a desirable element of their workers compensation program.
Definition:
First aid, as defined by the California Labor Code and Regulations, is any one-time treatment, and any follow-up visit, for the purpose of observation of minor scratches, cuts, burns, splinters or other minor occupational injuries, which do not ordinarily require medical care.
Such one-time treatment, and follow-up visit for the purpose of observation, is considered first aid, even though provided by a physician or by other registered professional personnel.
Reporting:
All First Aid claims should be reported to your Workers’ Compensation Claims Office as a precautionary measure.
Examples of First-Aid Treatment:
The following are generally considered first-aid treatments:
- • Application of Antiseptics during the first visit to medical personnel
- • Treatment for first-degree burns
- • Application of bandage(s) during any visit to medical personnel
- • Use of elastic bandage(s) during first visit to medical personnel
- • Removal of foreign bodies not embedded in eye if only irrigation is required
- • Removal of foreign bodies from wound if procedure is uncomplicated, and is, for example, removed by tweezers or other simple technique
- • Use of non-prescription medications and administration of a single dose of prescription medication on first visit for minor injury or discomfort.
- • Soaking therapy on initial visit to medical personnel or removal of bandages by soaking
- • Application of hot or cold compress(es) during first visit to medical personnel
- • Application of ointment to abrasions to prevent drying or cracking
- • Application of heat therapy during first visit to medical personnel
- • Use of whirlpool-bath therapy during first visit to medical personnel
- • Negative X-ray diagnosis
- • Observation of injury during visit to medical personnel
The administration of tetanus shot(s) or booster(s), by itself, is not considered a medical treatment. However, if these shots are given in conjunction with more serious injuries they should not be considered First Aid. Injuries involving loss of consciousness, restriction of work or motion, or transfer to another job are also not First Aid.
So those are some facts about First Aid injury claims. It’s still recommended, (and actually required) that
all claims are reported to your carrier. However, First-Aid injuries will not be counted against your policy if you pay the medical bills.
Your agent/broker should be familiar with this process and assist you.
Also, he/she should work with your carrier to make sure the claim is classified as First-aid only.
Hopefully you have found the First-aid claims process to be helpful to yourself as the employer and to your injured employee.
Please feel free to add your comments, thoughts or experiences with handling of First-aid claims.
December 16th, 2008 in
First-aid claims |
4 Comments
Your Work Comp wonk is writing to advise you about new rates for State Compensation Insurance Fund policyholders effective 01/01/2009. Their premiums are increasing on average 8.9%
This will mean that some of you will pay more than that, some of you less.
There’s been a difference of opinion between three organizations which have various responsibilities as it relates to setting Workers Compensation premium rates here in California.
The WCIRB, (Workers Compensation Insurance Rating bureau), has recommended a 16.0% increase in premium rates, this is their recommendation to all Workers Compensation insurance companies here in California. They base their recommendations on the Claims payment data they are seeing from the insurance companies.
The Insurance Commissioner looked at the data and indicated that he felt premiums should only go up 5%.
Read his press release. The LA times writes about it in this article.
Well, the largest carrier in California, the State Compensation Insurance Fund, weighs in with their premium increase, read their premium increase news flash.
The way you may interpret this is that the WCIRB takes the most calculating look at the data, and comes out with what they believe to be the accurate reflection of where premiums need to go. The Insurance Commissioner is a politician, and one who is going to run for governor. Therefore, he would like to stay the friend of business, to the greatest extent possible, and publicize that things are not that bad, so he recommends a lower premium increase. And ultimately, the State Compensation Insurance Fund looks at everything and doesn’t want to lose policyholders because of higher rates. So they come in about mid-way.
If you are a Workers Compensation policyholder in California, you can expect higher premiums on your next renewal. This is big news, because premiums had been coming down from 2003 to 2007. Now, that trend may start heading the other way. But there are usually things you can do, with the help of your competent broker, to improve your bottom-line. If you lack an experienced broker, I gently suggest it may be time to contact one for a policy review. Perhaps even me. This is especially true for Experience-modified policyholders. You have greater opportunities, and potential pitfalls, than those who are not experience-rated.
Wishing there was better news.
