That’s a great question! And a great answer is…it depends! You see the cheapest price for workers compensation policy may not really be the best premium. For some employers it may have more to do with availability than cost.
To begin, getting the best price for a workers comp policy is actually dictated by two basic influences.
1. The current market place for workers compensation coverage –
Workers compensation insurance, it’s availability and it’s cost, have a great deal to do with what’s happening in the current insurance market place. Insurance companies ride the waves when it comes to providing this coverage and being able to do so at a profit, which translates into competitive pricing for employers, can be dictated by influences outside the control of any particular insurance company. Considerations to the availability of coverage directly relate to the current health of the workers compensation market place and are typically expressed in terms of “hard” or “soft” markets. When an insurance company makes money with any line of insurance coverage you’ll see them become more and more competitive when it comes to pricing and appetite. When they lose money you’ll see a tightening up of availability and increase in cost.
Legislative actions play an important part and can influence the market in a positive or negative way. You’ll find many individual states have gone through legislative overhauls of their workers compensation systems. The recent trend has been to toughen up workers comp laws in regards definitions of work related injuries and the treatment of fraud which in turn has provided relief from stress on the system in many states. The result being a more favorable market place in those states with tougher laws. Good for employers, maybe not so good for employees but for many states these legislative actions have made their states attractive for insurance carriers looking to provide workers compensation coverage at competitive rates. Simply put, positive legislative actions free up competition between insurance companies which ultimately translates to lower costs for claims which translates to lower rates for employers.
While employers may have some legislative influence through different business groups and associations, it’s a very long range process taking years of work through the political process to bring about change. And for the most part out of the hands of the in the trenches, daily grind kind of employer. So an employer seeking the best price possible on their workers comp policy should look to what they can do to make their business as attractive as possible in regards securing workers comp coverage. Which brings us to number 2.
2. The individual attributes of an employers operation –
What makes a business a good workers comp account? Here’s a few items to consider:
- Your Business Operations – Are you in a high hazard type of business such as demolition, blasting, gas or oil production, refining, fracking, Ariel work, mining, road or highway work, underground excavation, tower construction, bridge construction or high steel work? And yes there are more by the way. High hazard risks are treated with kid gloves when it comes to placing workers comp coverage. Just be aware that the business operations of an employer will have a great influence on availability of coverage. Pricing for these types of risks becomes secondary to availability.
- Claims History – Have you reviewed your claims? Begin by looking over your loss history. Make sure you have a handle on outstanding or open claims. Contact an independent workers compensation consultant and have your claims reviewed! It’s an important tool you can use in presenting the best representation of your company to a workers comp insurance company.
- Claims Management – How do you address work place injuries? Do you have written procedures that address how an injured employee is treated? Do you have a return to work or RTW program in place? Do you recognize the importance of getting an injured worker back to work as soon as possible? Do you work with a TPA or manage your claims in house?
- Safety In The Work Place – Do you run a safe work place? What’s your safety record? Do you have a safety program in place? Does your safety record reflect your efforts in safety? Are you successful in reducing claims? Have you had OSHA violations? Almost every insurance company will check your OSHA record. Make sure you know about violations and can address the corrections put in place.
- Accurate Record Keeping – How do you keep your payroll records? Do the reflect accurate separation of payroll if allowed?
- Previous Coverage – Do you have a stable track record with your previous workers comp insurance company? Have you maintained coverage without lapse or gaps? To access preferred carriers you’ll want to show that you’ve had continuous coverage. Cancellation for non-payment of premium doesn’t look good on your record. New carriers will typically refuse to provide coverage when they discover you have unpaid or outstanding audit or policy balances. So make sure you take care of old business.
These are just a few things to think about when it comes to making your business as attractive as possible when shopping around for new workers comp coverage!
Hope this helps you out! Thanks!
