Most decisions people make are based on their knowledge and prior experience. The same is true for shopping for workers' compensation insurance for your company. If you company has an acceptable claims' history, your workers' compensation insurer normally renews your policy based on the current premium rate for your job classifications and total payroll.
I just spoke with a yoga studio owner that had not obtained workers comp coverage until this year, but now the state of NY is trying to collect premiums for all prior years when the yoga instructors were not covered.
However, you may take a look at the new premium for the upcoming renewal and say “Whoa, that is too much.” As calling your broker to complain is an unpleasant task, you put it off. (Now, if you are in a monopolistic state, skip the rest of this information, pay the new higher premium and ask for a premium audit).
You know from personal experience that when your car insurance went up, you called your agent the day before the policy was to expire. Your car insurance agent asked a few questions, switched you to a new company with a lower rate, effective the next day. So, based on your car insurance experience, you wait until the day before your workers' compensation policy expiration to call your workers' compensation broker. You quickly learn switching workers' compensation insurance is not as easy as switching car insurance. You are now in trouble.
The broker needs updated information from your company in order to shop new work comp insurers. In order to get you quality quotes, the broker needs all your job classifications and for each of them. As the premium rates may have changed recently, the broker will have to contact each potential insurer and, in those states having one, the state fund. While some insurers may give the broker an immediate quote, there will be some insurers will not be able to do so until an underwriter has reviewed the request for new business.
You now realize you must plan ahead for a workers' compensation quote.
Sample Plan for Applying for a Workers' Compensation Quote
BEFORE YOU APPLY
Lower your experience modification rate (a comparison between your company and other companies in your industry) by:
1. Having an effective safety program to eliminate claims.
2. Having an established protocol to report injuries timely.
3. Having trained supervisors and management team.
4. Having an effective return-to-work program with transitional duty.
5. Utilizing the medical cost management program of your work comp insurer.
HOW OFTEN TO APPLY TO GET NEW WORK COMP COVERAGE
If you apply for new coverage with a new work comp insurer every year, you will quickly get the reputation as a “shopper” which will result in the insurers not considering your application seriously. The insurers will be reluctant to bid, if they bid at all, as they figure you are more trouble then you are worth and they know they cannot count on your company renewing.
If you rarely shop for new coverage, and have been with the same work comp insurer for many years, their pricing may no longer be competitive. The insurer's initial pricing may have seen yearly price increases making it the most expensive insurer.
In addition to increased pricing, if you never apply for new coverage, your loyalty and business may become taken for granted. The level of service from the broker and from the work comp insurer gradually declines as they assume you will always be there.
Since you should not shop for new coverage every year and should not stay forever with the same carrier, the question becomes how often to apply for new coverage? The most professional brokers normally recommend shopping the market every three or four years. This tactic keeps premiums in line, plus the broker and the carrier stay focused on providing great service to your company.
WHEN TO APPLY
If you have been with the same work comp insurer for three or four years, then six months before your current policy renewal, ask your broker to arrange for a premium audit if you feel your work comp premiums are too high. An independent audit of the work comp premium could result in a nice refund (or if you have not been working to lower your experience modification rate, it could result in additional premium owed).
Your broker may feel the current work comp insurer offers great service. Ask your broker to negotiate the best possible deal with the current insurer. You may get a price quote that would be hard to beat, and would save you the disruption and expense of switching to a new insurer. Problem solved.
However, if you do not feel the current work comp insurer service is good, and you are not happy with the pricing, then it is time to look elsewhere. Three months before your renewal date, ask your broker to shop your coverage with three to five other work comp insurers. This gives the broker adequate time to prepare the presentation of your company to the potential new insurers and it gives the potential new insurers time to evaluate your company.
At forty-five days prior to the expiration date of the current work comp policy, the broker should have all the information gathered for you. Review and evaluate the information looking for the best combination of pricing and service.
No later than 30 days prior to the end of the current policy advise your broker of your selection of the new work comp insurer. This will give the broker and the insurer the necessary lead-time to get the policy issued and everything place for the new coverage.
AFTER THE INCEPTION OF THE NEW POLICY
When the new work comp insurance policy is received, review it carefully. If there is anything needing change, work with your broker to quickly get the corrections done. (workersxzcompxzkit)
Start planning for the next renewal or the next time you shop for work comp insurance by working to reduce your on-going work comp cost. Contact us for assistance with your shopping for new coverage or lowering your workers’ compensation cost.
Podcast/Webcast: How To Prevent Fraudulent Workers' Compensation Claims Click Here http://www.workerscompkit.com/gallagher/podcast/Fraudulent_Workers_
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WC Books: http://www.reduceyourworkerscomp.com/workers-comp-books-manuals.php
TD Calculator: www.reduceyourworkerscomp.com/transitional-duty-cost-calculator.php
WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
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