Who’s in Charge of Your Workers Compensation Policy?

Many employers feel overwhelmed when it comes to getting a handle on their workers compensation program. It’s a funny product. After all, there are many seemingly unrelated areas that come together to create a workers compensation policy. Premium generation, policy structure and benefits are three of those areas. Who’s in charge? Well, it depends on what area of the policy you’re talking about.

Those areas having to do with premium generation are normally identified as and include:

  • Classification Codes
  • Rates
  • Experience Modification Rating or EMR
  • Scheduled Rating
  • Rating Payroll
  • Contractors Credits
  • Premium Credits

Premium generation issues are usually governed by rules set up by the rating bureau or advisory organization identified for the individual state in question.

Policy structure has to do with:

  • Policy Forms
  • Nationwide Endorsements
  • State Specific Endorsements
  • Special State Specific Forms

Policy structure issues will usually fall under the tutaledge of the state department of insurance.

Benefits has to do with:

  • Medical Payments for Injured Workers
  • Indemnity Payments (lost wages) for:
    • Permenant Total Disability 
    • Temporary Total Disability
    • Permanent Partial Disability
    • Temporary Partial Disability
  • Death Benefits

Benefit issues are what a workers compensation policy is really about! Providing compensation for an injured worker. State statute is the beginning point for benefit issues and in most states injured worker benefits fall under the guidance of the Department of Labor or similar state department.

So let’s put it together. A workers compensation policy has many individual parts. Some of those parts have to do with how a policy is put together, the language of the policy contract and endorsements to the policy that modify how a workers comp policy will respond under certain circumstances. Other parts have to do with how premium is generated, how work processes are identified and the application of appropriate rates for the type of work being performed is determined. And finally, the reason that a policy really exists, the payment of benefits for an injured worker, how those payments are determined and how an employee receives those payments. All of these work together to make up a workers compensation policy.

What’s the role of those involved with your policy:

  • The Insurance Company – To deliver the product to the employer by providing workers compensation insurance in accordance with the laws and rules that govern the policy for the state in which the coverage is provided. To collect the premium and perform the premium audit. To process claims.
  • Department of Insurance – Their role varies from state to state but in general a department of insurance oversees and approves policy forms, classification codes and rates for workers compensation policies issued within their state. They may have an oversight duty for appeals.
  • Rating Bureau or Advisory Organization – The rating bureau for any given state is, in most circumstances, an organization that is contracted by the state to develop rules for implementation of the workers compensation system. These rules will typically include how classifications are applied, how policy changes are processed, data collection and calculation of experience rating factors. They may be given the duty of classification code oversight and inspection for verification of correct application of codes.
  • Department of Labor – This state department will generally have oversight of how benefits are applied to injured workers. They will be responsible for claim settlements and appeals of benefit issues.
  • State Statute – The place it all begins! Statutes establish workers compensation for any given state. It’s here where you will find who needs to be included in coverage, who may be exempt, how coverage applies when working in other states, when coverage is required and what the benefits will be for an injured worker.

So who’s in charge of your policy? A lot of folks!!

Hope this helps you out in some way and thanks for reading!