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Workers Compensation Rates Will Increase In 2013

Small Business WC Premiums To Rise By 25% For Some Industries

Many small and midsize companies will experience an increase in their workers compensation insurance premiums in 2013. The effects will not be felt equally across the broad range of industries. Companies and business owners who employ blue-collar occupations may see increases of 25-30 percent.  Business operations that involve staffing, home health care, landscaping, and maintenance may find that they are unable to obtain workers compensation coverage in the standard insurance markets. Companies who are faced with this situation may be forced to consider their state’s Joint Underwriters Association (JUA), the insurance pool of last resort, where premiums could be triple.

Workers’ compensation insurance provides coverage for an employee who is injured on the job. Coverage for injured employees typically includes medical and rehabilitation costs, as well as lost wages. In Connecticut, some employers are facing another significant rate increase for workers compensation insurance next year, potentially as high as 30 percent, if approved by state regulators. The proposed rate changes would go into effect January 1st 2013. Businesses in the manufacturing industry, for example, face an average rate increase of 6.8 percent, but the range includes increases as high as 27 percent and rate decreases of 13 percent, according to the rate filing submitted by National Council on Compensation Insurance (NCCI). The contracting industry faces an average 9.9 percent increase in premiums, with rate increases topping out at 30 percent.

The goods and services industry faces an average 7.6 percent rate increase, with the maximum rate hike of 28 percent and a rate decrease as low as 12 percent. Employers in Connecticut are grappling with the second highest workers compensation costs in the nation, until now.

In Delaware, a 40 percent increase in their workers comp premium rates is set to take effect on December 1st, making that state’s rates the second highest in the nation, behind Illinois.  The greatest concern is the effect an increase of 40 percent will have on small business owners. A business now paying $20,000 in workers’ compensation rates will be paying nearly $30,000, and a company paying $70,000 would be paying close to $100,000. This is conditioned on a business owner’s ability to find coverage at all.

  After Hurrican Sandy - Capacity May Dry Up

Hurricane Sandy swept across the East Coast destroying businesses and homes in Connecticut, New Jersey, and New York. The damage is expected to be billions of dollars. The industry states it can withstand claims of $50 billion dollars. What if claims exceed current projections? Insurers and investors allocate reserves to the various lines of coverage. When significant claims are paid, all lines of insurance are affected. Here is the current view of the market by Marsh, the world’s largest insurance broker.

Tracey Ant, primary placement leader in Marsh U.S. casualty practice, says that the workers compensation line of business “leads all commercial lines with the highest combined ratio” and results continue to deteriorate. The result is workers’ comp rates are on the increase. Insurers are taking other measures besides increasing rates by placing tighter controls over placements. “Profitability is more of a priority than growing their book of business.”

Business Owners Should Consider Alternative Options

Although, workers compensation will cost more next year, and some employers in blue-collar industries may not be able to secure coverage, there are still options available. Some employee leasing or staff leasing companies and professional employer organizations are still accepting certain risks at affordable rates. Companies who are faced with skyrocketing workers comp rate increases or non-renewals should consider working with an experienced PEO broker or employee leasing consultant for an alternative solution to their worker compensation problems.


Find a Professional Employer Organization at PEO.com

Leading Website to Locate PEOs and Employee Leasing Companies

Are you a small business owner or busy executive searching for assistance with managing your employee administration, benefits, and HR compliance responsibilities? Discovering the right solution has never been easier. Today, help finding an employee leasing or professional employer company is just a click away. Just type PEO on Google, Bing, Yahoo or your favorite search engine. Usually PEO.com appears first or second in the natural search, testimony to the site’s authority, content, and duration.

Click on the logo above to go the the PEO.com website  

The website is the brainchild of industry veteran and visionary Rod Diekema, who developed and launched PEO.com in 1997. The interface has changed over the years, with each new version contributing to an easy and safe user experience for the busy HR manager or business owner. Vistors to the site are treated to a soft and welcoming home page which offers the choice of searching for an HR outsourcing company by location or keyword. Trying to find local employee leasing companies in your state? Simply scroll down and pick the city nearest you.

Does your company require the services of a large national professional employer?  A search of PEO.com’s extensive database reveals Accord HR headquarted in Oklahoma City, OK has offices in Littleton, CO, New York and Syracuse, NY, Tampa, FL, and Tulsa OK. Boise, ID based Employers Resource serves clients with offices located from Anaheim CA, Atlanta, GA, to Dallas, Houston and San Antonio, Tx.

Maybe your the owner of a  small family business who is looking for a local “hands-on” HR company to relieve you of your payroll, HR administration, and employee benefit problems? High touch, high service professional employers like St. Louis, MO based Simploy HR or Employee Capital Management serving Michican and Illinois can be found with the click of a mouse.

Don’t take my word for it. Find an employee leasing firm or professional employer company that is right for you at PEO.com today. Not sure which types of PEO or HR organization is right for you? No problem. Knowledgeable PEO consultants and industry veterans are available to advise you of all your HR outsourcing options, and will help you find the best personnel management company for your company.


Why Employee Leasing and PEOs Are Dropping Risky Clients

Workers’ Compensation Markets Reported to be Shrinking

P & C insurance agents and employee leasing brokers will tell you that rates for workers compensation coverage have been the lowest on record for almost a decade. Work comp rates remain low in almost every state and occupation across the country. Much of the decrease in premiums was the result of a robust economy, spearheaded by a housing boom that led to record employment in the construction industry.

Insurers and employee leasing companies who specialize in construction and the building trades received billions in premiums. Powerful business associations lobbied state representatives to eliminate abuses to the system. Regulations passed to address tort reform were starting to take effect by reducing the frequency of WC claims filings and payment amounts.

While lower workers comp premiums is great news for business owners in general, and particularly for companies who employ workers in high risk jobs. This is not the case for workers compensation insurers, employee leasing companies and professional employer organizations that cover the risk when employees suffer an occupational injury.

In 2010, NCCI President and CEO Steve Klingel was quoted as saying “Today, the workers compensation industry faces a number of difficulties that will confront market stakeholders in the weeks and months to come.” Those difficulties include poor underwriting results, declining premiums, healthcare reform uncertainty, and now, an uptick in claim frequency added NNCI Chief Actuary Dennis Mealy.

Workers’ compensation insurance companies acknowledge that their costs continue to rise as premiums decline, according to a recent report released by the National Academy of Social Insurance. The drastic drop-off in workers’ being covered reflects the heavy impact the recession had on employment in the construction industry. According to the report, construction industry employment suffered a 19% drop making it the “hardest hit industry” between 2008 and 2009. Total cash benefits to injured workers and medical payments for their health care were $58.3 billion in 2009 compared to $58.1 billion in 2008, an increase of 0.4%.

What does this mean for business owners in construction, manufacturing, property maintenance, trucking and warehousing, and green companies involved in solar, water and wind energy production? Count on your operating costs for labor and personnel management to increase. Investments in risk avoidance, control, and risk management systems will pay dividends almost immediately. Implementing policies and procedures that enhance healthy and safe worksites create an environment which promotes greater job satisfaction, production, and employee and contractor retention.

If your current employee leasing company, professional employer organization, or workers’ compensation carrier is increasing rates, has given you notice of termination, or service is non existent, all is not lost. There are still many options available in the marketplace for blue collar and high risk occupations. Like many things in life, you just have to know where to look.



PEOs Eliminate an Employer's COBRA Administration Nightmare

Federal extension creates an administrative nightmare. Employers must notify laid-off workers or face penalties.

Just when business owners and employers where saying goodbye to 2009, the New Year welcomes them with another government mandate. A new extension of COBRA benefits. Unemployed workers got a holiday gift of extended subsidies for health care benefits — but employers will have to front the money and spread the news. The move is expected to help thousands of unemployed workers to keep their health care insurance for another six months, but will cause cash-flow problems and more paperwork for business owners.

Fortunately for our clients, most are currently outsourcing their payroll and employee benefits administration to an employee leasing company or professional employer organization, and won’t have to worry about it. That responsibility falls on their PEO who must contact laid off employees, extend the offer of benefits, handle the entire enrollment process, collect premiums, and provide payroll tax administration.

Unfortunately, the vast majority of employers, still have not discovered how a PEO can help to relieve or eliminate these tedious government mandates. For those of you, read below to learn about the new COBRA rules you can look forward to.

15 Month Extension and Reinstatement of Benefits

President Obama on Dec. 19 signed a six-month extension to federal stimulus funding for health care subsidies for workers laid off since the economy went into free-fall in mid-2008. The maximum length of the subsidy was extended from nine to 15 months, and eligibility was expanded to include workers laid off through the end of February. The initial window was for those laid off from Sept. 1, 2008, through Dec. 31, 2009.

Section 1010 of HR 3326, the Department of Defense Appropriations Act, extends:
• The time an individual can receive the COBRA subsidy from nine to 15 months.
• The subsidy to individuals who are involuntarily terminated today through Feb. 28, 2010.

It also allows:
• Certain individuals whose subsidy periods already expired and who failed to pay their full unsubsidized premiums to retroactively pay them.

Employers are required to:
• Notify former workers of the six-month extension and new February cut-off date.
• Notify and offer to reinstate former workers dropped from coverage when their initial nine-month period ended and those who paid full premiums after expiration. Refunds or credits may be due.

The subsidy:
• The federal government will pay 65 percent of COBRA health insurance premiums for eligible workers, but qualified workers have to pay the other 35 percent

Small and Midsize Business Owners Will Be Hit The Hardest

Vinny Catalano, area vice president at Gallagher Benefit Services said “Employers will need to allow (former) employees who had rolled off the subsidy an opportunity to roll back on for a total of 15 months,” That means tracking them down and getting them signed up again if they choose, as well as telling newly laid-off workers about the extended time limit. It also could mean money out of pocket because employers get reimbursed via tax credits rather than cash for the insurance premiums they have to pay. Unemployed workers hang on to coverage longer, especially if they are sick and need services. This can crank up health care costs for everybody at the company.

Michelle Dimarob, a lobbyist with the National Federation of Independent Business stated “it’s understandable people want to protect access to health care benefits, but to extend and expand the COBRA subsidy in the way it was set up is probably not the (proper) pathway to achieve the goal. It really does increase costs and cause cash-flow problems”. She added “the policy looks good on paper, but there are unintended consequences on employers”.

It looks like 2010 is starting off with a real bang for employers across the country. If you are feeling overwhelmed by the complex maze of compliance, regulations and government mandates, then you should consider a qualified HR outsourcing provider or PEO for your organization.

Sources: Sacramento Business Journal