When a business owner/employer makes a decision to change their workers compensation insurance company it usually has something to do with cost. While cost, or the premium you pay, is always a consideration, making a change to another insurance company should never be taken lightly and should not be made without careful consideration. Changing carriers can be tricky so here’s some things you should keep in mind.
- Make sure you’re changing for a good reason. Of course price should be one of the considerations but rarely the only one. Make sure you need to change. If you’ve been with the same insurance company for several years then believe it or not, you’ve developed a relationship with them that usually makes the whole process go smoother.
- Work with an agent familiar with your business. Changing carriers and changing agents can lead to problems with a new carrier who may not properly understand and classify your business correctly.
- Make sure the new carrier uses the correct classification codes on your policy. We’ve seen it many times before where a new carrier will accept a submission from an agent with different classification codes. Sometimes the agent will believe a different code is a better fit for your business and will write your policy using other classifications. Be careful if this happens! Your current codes could be wrong and require a change. There are ways to properly classify your business and make sure it’s correct. Do not be swayed by up front savings on premium because of a code change only to be surprised at audit by a correction and big unexpected bill!
- Don’t change renewal dates! Especially if your policy is experience rated. Moving a renewal date leads to moving an anniversary date which leads to confusion in regards the experience periods used for your experience modification rate and the possible use of split rating in the premium calculation of your policy. This means that the premium you start with may be changed mid-term. Something you may not be aware of when you buy the policy.
- Be able to provide detailed descriptions of your work processes. Job descriptions? Do you have them? If not be sure you can accurately describe each and every work process in your organization. For smaller business this should not be a problem but for large multi state operations it could be.
- Be sure you have your payroll records in shape. If your business is allowed to apply payroll separation make sure you have the time cards and payroll records for each employee to back up your numbers.
- Make sure you accurately project your payroll for the coming policy period by class. You want your payroll projection to be as close to your actual as possible. If you have had adjustments to your projected payroll over the year make sure you use that information when supplying your agent with numbers for a premium quote.
- Ask your agent for examples of what may happen if you change carriers. Most agents do a great job of assisting their clients with decisions about changing insurance carriers. Make sure you ask them detailed questions about what to expect with a change. If they can’t help you then call a workers compensation consultant for assistance.
- Keep these potential problems in mind:
- Changing mid-term can lead to problems with your experience modification rate;
- Changing mid-term can lead to problems with split rating of your policy (using more than one rate for a code during your policy period);
- Any change can lead to a reinterpretation of the rules as applied to your policy by the new insurance company;
- Changes can lead to re-classification of your business and reassignment of class codes to your policy;
- Even if you change to another company you must still go through the audit process. You agreed to do that when you bought the policy.
There you go. Just a few things to keep in mind and help you when changing your workers compensation insurance company.
Hope this helps out!