“I need a lower class code because my workers comp is so expensive!” – Sorry, it doesn’t work that way..

Now that’s a phrase we hear way too often! Why do so many employers believe they can lower their workers compensation insurance cost simply by having a lower class code used on their policy? Where did they get that idea? Are those of us in the insurance industry not educating our clients the way we should? Let’s talk.

I believe that insurance agents and brokers do a good job of educating their clients about how the workers compensation pricing mechanism works. They take their roles of overseeing their clients insurance needs seriously. It’s only when I hear an employer make a comment like the title of this blog that I have to step back and wonder just what’s going on. It’s usually then that I remember that there are many different distribution methods that an employer can tap into to secure their workers compensation coverage. I admit it, I come from the old school where an insurance agent works directly with his client to provide the best options for fulfilling their client (employers) needs. But it’s not necessarily like that these days. There are so many other options out there where an employer may secure workers compensation coverage direct on-line or through some brokerage firm remote from the employers part of the country. While these distribution methods may make it easier they also open up a variety of potential future problems. It’s difficult for an employer to be educated about workers comp by their agent, when their agent is non-existent!

For those employers out there who have bought their workers comp policy on-line or from a remote broker of some kind and who do not have a local agent they work with lets put the record straight. You cannot willy nilly change your classification codes just to “lower” your premium! You see, proper classification of an employers work operations is not the ending but the beginning! Properly classifying a risk is the place where it all starts!

Here’s a few tips employers can use:

  1. Throw out the thought of looking for a lower class code just to get a lower premium. It really doesn’t work that way!
  2. Concentrate on providing details about the actual work operations being performed by your workers.
  3. Work with your workers compensation provider to develop the correct class code for use on the policy by correctly identifying those codes that apply to the actual work operations performed.
  4. Let the chips fall where they may! Remember that proper classification drives the entire workers compensation system!

It’s doing it right that ultimately develops the correct premium for any employers workers compensation exposure. And doing it right means starting with the proper classification of work operations.

Hope this helps you out!