Why would a business owner want to make his workers comp program more appealing to an insurance company? How about lower premiums! So let’s talk about what an employer or business owner can do to beef up their workers comp program and find out about what insurance carriers look for when deciding to take on a new client.
For many insurance carriers workers compensation has always been looked at as the black sheep of the family. It’s a line of business that’s historically been a loser in profitability and at best a difficult, long tail exposure from a claims handling stand point. A line of business that’s not that well understood, even within underwriting departments of large national carriers. Simple in concept but complicated in details it’s just not like other insurance coverage. Dictated by a hodge podge of individual state statutes, rating bureau rules, with interpretation and application at many individual levels during it’s life cycle it’s a product that continues to confuse and cause trouble for employers and insurance providers alike.
With all that said you’ll still find there are many insurance companies out there who specialize in providing workers compensation and do a really great job doing it.
When approached to provide coverage for a new client an insurance company will typically look at:
- The clients business operations. The insurance company wants to know what the client does and will what they do fit within their appetite for providing coverage. That’s right, not all insurance carriers will provide coverage for all operations! It’s not uncommon for an individual carrier to stay away from construction type risks or other hazardous operations…think mining, off shore drilling, US L & H exposures etc.
- Loss History and Experience Modification Rate. Part of the underwriting process is to review a potential clients loss experience. The carrier will want to know how many claims they’ve had, frequency, and will want to know about large claims, severity and the type of claims that have occurred. This all plays into whether or not they will consider providing coverage for the new client.
Insurance carriers look to make a profit on each new account they take on. Never underestimate the power of profit! Here’s a few tips on how you can make your business stand out when searching for a new workers compensation insurance company:
- Start With Safety! Have a safety program in place. If you’re a small business, it doesn’t have to be complicated. A simple written safety program that you and your employees follow will go a long way. Make sure you indicate how claims are to be reported and where injured employees should go if injured.
- Review Your Claims! Get your hands on a copy of your “loss runs” a few times during the policy year. Don’t just assume your account has been profitable. Old claims can linger on with open reserves that effect your experience mod and profitability of your account. Be involved with your claims. If you’ve experienced claims and your loss runs don’t look the best, develop a plan (written is always better) to make improvements. Be proactive when it comes to your claim situations.
- Adopt A Return To Work Policy! Get injured employees back to work as soon as possible. Every dollar saved in claim payments will help improve your account picture.
- Develop Job Descriptions! Make everybody’s life easier by having written job descriptions for each of your employees. This will help with more accurate code classifications being used on your policy.
- Organize Your Payroll Records! Make sure your payroll records show work comp class codes by employee by job. It makes audits go easier.
Securing a better price for your workers compensation insurance can be a good thing. But you must remember, not all insurance carriers will want your business. Those that do will give the best pricing to those business owners who have taken an active role in preventing claims and who are able to provide organized and accurate information about their business.
Hope this helps out!