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Workers' Compensation Insurance Options

What should a company operating in any industry segment do to reduce the impact of the uncertain workers’ comp market and obtain the most cost effective pricing? What must a firm in higher risk classes of business do? Select a broker/agent and advisors who have your specific industry segment experience and have access to insurance carriers or markets that insure or specialize in your industry. If the broker has facilitated creating a market for your industry or functions as a program administrator or MGU/MGA (Managing General Underwriter or Administrator), even better. Select brokers that have access to all types of workers’ comp insurance programs and who effectively explain and recommend a particular type of policy, including:

High Deductibles or SIR’s

Retrospective Rating or Min/Max’s

Captives Rent-a-Captives

Voluntary Guaranteed Cost or First Dolla

State funds and assigned risk pools (as a last resort)

Speak directly with the market about their programs/options, if possible. Never let a broker insulate you from the underwriter. A company’s story or uniqueness and the areas overviewed in this article should be presented by representatives of the company whenever possible.

Compile a complete and professional submission. An effective submission will, at a minimum, include a comprehensive company profile, five years of loss experience, payroll by class code, three to five years’ premium, overview of risk management/loss control program practices, financial statements, and officer and key management biographies.

Implement and maintain risk management, loss prevention, and claim or loss mitigation best practices. Research proven risk management best practices for your industry segment. Invest in the training and whatever cultural changes needed to implement and maintain proven loss prevention, safety engineering, injury and accident protocols, and internal claims management. Any effective and cutting edge risk management programs will impact every segment of a company’s operations from hiring practices, safety orientation and training, to site risk reduction or safety engineering, to effective injury and accident protocols including return to work programs.

Review your Experience Rating Modification for accuracy. Credible studies have demonstrated that a large percentage of Experience Modifiers that directly impact workers’ comp premium were incorrect and contained significant errors including claims or losses applicable to other policyholders or companies. This reality particularly impacts companies who obtain workers’ comp guaranteed cost or residual market policies, i.e. Assigned Risk Pools or State Funds. There are several firms who specialize in this service and base their fees on a reduction of premium or experience modification that applies to a workers’ comp policy or program.

Create as much financial strength as possible: improve your credit; D&B rating; accounts receivables, etc. There are a variety of resources in most industry segments that specialize in this area, often with performance-based fees.

Become a member of BizKeys and read the complete strategy written by Bill Nagel, President of Risk Control Services in Houston Texas and have access to a variety of helpful articles written by experts in their field.

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