Selling and servicing a workers compensation insurance policy can be a thorn in the side of insurance agents and agencies alike. What on the surface seems to be an insignificant policy usually sold because it’s mandated coverage required by some state statute, it’s often not given the respect or consideration its impact may have on an employers bottom line let alone when premium classification or premium audit problems occur.
As independent workers compensation consultants, we often work with employers who find themselves facing serious monetary and/or legal issues because of misunderstandings, lack of communication or just a general lack of diligence when the original policy is first set up. Ok, so selling and servicing a workers comp policy is not rocket science! But there are some critical points that apply to both the insurance agent and the employer/client that need to be followed when the policy is first established. Let’s talk about a few of them.
For the agent:
- Don’t sell workers compensation insurance on price alone. There’s much more to a good workers comp program than just cost. Consider the best carrier match for your client.
- Consider the best program options for your client; Fixed cost or guaranteed plans compared to loss sensitive retrospective plans; Deductible plans; Dividend plans, etc.
- Educate your client! Teach your client about the workers compensation process; the classification process and how to properly classify their employees; the way a deposit premium works; how proper payroll separation may be allowed; how the audit process works; how premium modifiers like experience modification factors, schedule credits, merit rating and other credit and debit factors influence the cost of their program; and what to expect in the claim process and what their rights and duties may be.
- Ask the right questions! Gather correct payroll or remuneration information to be used on the policy; assign proper classification codes to the risk. Many agents make the mistake of choosing the lower cost code when the more appropriate correct code may lead to higher premium…it’s a fooler because at audit the error will be corrected. Be sure to verify the proper business entity; ask about and verify other ownership and combinability of other entities issues. Do not be surprised by unknown exposures!
- Make sure you get the right forms completed! When dealing with inclusion or exclusion of Corporate Officers, LLC Members, Partnerships or Sole Proprietorship make sure you have the proper forms for your state completed and filed with the governing authorities if required. Know the rules of your state!
For the employer/client:
- Be forthcoming with information about your business, the work process your employees perform and the compensation you provide.
- Work with your agent to gain a full understanding of the workers compensation process from how your premium is calculated to how the claim process works.
- Understand your responsibilities and educate yourself about the function of the workers compensation policy you’ve purchased.
- Ask questions! If during your policy period you somehow change or modify your business operations…be sure to talk with your agent about how those changes may impact your workers comp policy and premium. Ask about your options of inclusion or exclusion from coverage as the owner of the business. Ask about anything you think may have an impact on your policy
So you can see there’s much more to the process of setting up a workers comp policy than just finding the cheapest premium. Both the agent and client/employer are responsible for learning the process and if they need help in understanding or have questions should seek help. We’ve worked with many clients who’ve experienced costly problems related to just the few items I mentioned above.
Final thoughts…whether you’re an agent or employer, learn about the process and ask questions! If you’re experiencing a premium, premium audit or code problem contact our office, we may be able to help!
Hope this helps you out! Thanks!
