Roberts Insurance Group Blog
Workers Compensation premiums is a hot-button topic for most business owners throughout Georgia. Not only can it be expensive, but it can be very difficult and time-consuming to fully understand. Lucky for you, we're going to break down the basics and discuss the top 3 reasons you're probably overpaying for your workers compensation insurance.
Reason #1: Your Workers Compensation Experience Modification Rate Is Not Accurate
If you've had workers compensation for any period of time, you may have heard of a term called an "Experience Modification Factor" or "Experience Modification Rate", often times abbreviated as "E-Mod". The E-Mod is a multiplier applied to your premium, based on your loss history (claims) relative to other businesses in your industry (your competitors).
The base e-mod is 1.0, meaning your premiums are average for your line of work. Those who have been in business for a while and have not had many (or any) claims, may receive an e-mod of less than 1.0, 0.8 for instance. This means that your workers comp premium is multiplied by 0.8, which will give you a lower premium than the average business in your industry. This essentially works as a 20% discount and gives you a leg-up on your competitors.
On the flip side, businesses who have had larger losses may receive a higher e-mod, like 1.5 for instance. In this scenario, the base premium is multiplied by 1.5, giving a 50% higher premium than the average business in the industry, which translates to a 50% surcharge on the policy. This puts your business at a disadvantage with your competition.
So What Can You Do About Your E-Mod?
The fact is, about 65% of e-mods are not accurate. There has been a miscalculation, or inaccurate reporting, that has led to the NCCI or the carrier calculating the wrong experience mod. The way we fix this is by doing an experience modification audit and presenting it to NCCI to have the rate corrected. In addition, many times we see that claims have been mismanaged. In these instances, companies have the option to pay for things out of pocket or reimburse the insurance company for claims-paid that will lower their e-mod (and save even more on their premiums). We will touch on this again in Reason #3.
Reason #2: Your Company Is Bidding Out Their Workers Comp To Multiple Brokers Every Renewal
On the surface, this probably seems like a good idea. In the commercial insurance world, it is not. It actually can cause your rates to go up, higher than they should, over time.
Why, you ask? When underwriters receive submissions from multiple brokers every year or see in your insurance history that your business changes companies every year, your business is no longer a target account because they know you will leave to save $1 in the future. When new accounts are underwritten, their goal is to keep you as a client for several years. When you make decisions and actions that indicate otherwise, they know longer have an incentive to bring you on as a new insured.
Something more practical would be finding an agent or broker that you trust, that has access to several carriers that serve your industry and serve it well. When it does come time to shop your coverage, underwriters are going to be much more willing to work with you and your broker to give you the very best value possible, so as to bring you on as a new client and keep you for years to come.
Reason #3: Your Company Does Not Have a Risk Management Plan
There is so much more that goes into risk management than an insurance policy. With as tricky as workers compensation premiums are nowadays, it is good to align with an agent or broker that helps you develop a sound risk management strategy outside of solely relying on your insurance.
What Do I Mean By That?
As a business, your company needs to have a claims management strategy, a safety training program, and a return to work program. All of these are things that you can implement to help eliminate or lower the severity or frequency of claims. Doing this will lower your premiums long term and your business will pay much less for your workers compensation and other types of insurance.
For example, would you pay $3,000 today for an injury to keep your premiums from rising $30,000 over the next 3 years? Would you implement an inexpensive safety program to prevent claims so that your premiums won't rise? Would you offer your injured an employee light duty work responsibilities to get them back to earning a living if it meant it would save you $50,000 in excess workers comp premiums? Yes, of course you would. These are no-brainers.
If you aren't getting this kind of advice for your commercial broker, contact us today at 678-250-8133!
The Roberts Insurance Group is a Georgia Insurance Broker specializing in commercial and personal insurance for our clients throughout the state of Georgia. We help our clients lower their cost of insurance with our superior claim and risk management expertise and our extensive carrier access. We are in the business of building relationships with our clients to help them grow and succeed. Contact us today to see what we can do for your family or business.