One of our primary goals is to educate employers about the workers compensation process. Particularly premium related issues and it occurs to me that I’ve never really discussed the importance of choosing the right insurance agent. So in this post I’ll line out some basic information about workers compensation insurance agents, what you should look for and how to choose an agent that will work best for you!
Insurance agents, contrary to popular belief, are not all the same! There are two basic types of agents:
- Direct Writers – Insurance agents who are employees of a single, specific insurance company. They typically represent that company’s line of products to the public and have no access to other insurance company products. Direct writing agents are guided by what their company decides. If an adverse situation develops with a client, they would not be able to offer options outside of their company.
- Independent Agents – Insurance agents who typically are employees of an independent insurance agency. An independent insurance agency normally represents many different insurance companies and are able to offer a variety of different products to the public. Agents working for an independent agency will have access to the insurance carriers with which the agency has a contractual relationship. There can be differences between independent agencies as not all insurance companies contract with all agencies. Typically the independent agent will be able to offer the employer several different options when shopping for workers compensation insurance. Perhaps the biggest difference is in the variety of choices available for an employer.
There used to be a big difference between insurance agents and insurance brokers but these days that difference is becoming more and more clouded and less and less important. For the most part an employer seeking workers comp insurance will be unaware of the broker or agent status of the agent they choose. Most states have, or are in the process of converting the agent / broker licensing situation into a more common inclusive insurance producer status.
Things to look for while choosing a workers compensation agent:
- Does the agent work in the commercial insurance arena? – I mentioned it above, the differences between agents, and one of the big differences is that between a personal lines experienced agent and one who works with commercial lines products. As far as personal lines goes, think homeowners or personal auto insurance. With commercial lines, think workers compensation, general liability, business auto and business property. An agent with commercial insurance experience should typically have a better understanding of the workers comp premium process than an agent specializing in personal lines products.
- Does the agent have experience working with workers compensation policies? – Workers comp can be tricky for an agent not familiar with the premium generating and audit process. The agent is the front line when it comes to assigning classification codes to the employers employees. Classification code rates determine the manual premium and is the starting point for the pricing of a policy. Using incorrect codes may give the employer an incorrect low premium up front and may lead to unforeseen high audits at the end of the policy.
- Does the agent have an understanding of the premium generating process? – The agent should be able to educate you as to the premium process, effects of experience rating or emods and audit process and effect claims may have on your premium. They should be able to assist you and provide answers to the questions you ask about these items.
- What about professional desiginations? – Professional designations are a benchmark that an agent has taken it upon themselves to be involved in their own professional development. While simply having a professional designation may not imply expertise in workers comp, when combined with experience it is a good indicator of someone who should be able to help when needed.
- Will the agent have the resources to service the employers account? – Depending on the complexity of the policy; number of classification codes used; type of work and product produced; multi or single state exposures and number of employees, a workers compensation program can be demanding on the resources available for an employer. Some employers will require assistance with safety programs, return to work plans and various other loss control programs. Assistance with claim issues, loss sensitive rating and experience modification rating may be required. An agent should be capable of guiding an employer through these types of programs and special issues.
- Will the agent provide annual policy reviews? – An important step in the communication process of managing an insurance policy. Things change. Employers change their operations, the insurance market place evolves and pricing matters are effected. An annual policy review helps the agent and employer stay in touch and on top of such matters.
So while these may be just a few of the items you should pay attention to when searching for a workers compensation insurance agent they should give you an idea of what to be looking for in an agent. From an agents stand point, the process of selling and servicing a workers comp policy can involve much than an employer may realize. There’s a lot of great, knowledgeable agents out there willing to help an employer work their way through securing a good workers comp program.
I hope this helps you out! Thanks!