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Entries in Workers Compensation Insurance (5)


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.


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.



What is Workers Comp Insurance?


Workers Compensation Insurance is a type of insurance that is required by each state (some exceptions are made) to cover the employer when a worker is injured on the job. Some of the earliest workers comp insurance requirements became a reality in the early 1800’s. Before this, employees received no help when injured while working and often sued the company winning damages that could put the employer out of business. This type of insurance is paid for wholly by the company…. an employee is never required to contribute.

Every state has different requirements for Workers Compensation Insurance. The easiest way to get this insurance while staying on top of state requirements is to partner with a Professional Employer Organization (PEO). To find the perfect PEO visit http://PEO-Quote.com



Early Intervention Key to Reducing Workers' Comp Costs

The Public Entity Risk Institute (PERI), a Fairfax, VA nonprofit risk management training and educational organization, has released a resource guide for controlling workers compensations costs that focuses on using telephonic nurse injury reporting and triage as important early intervention. The PERI Day of Injury Resource Manual outlines an effective strategy lays out a proactive approach for addressing rising costs of workers’ compensation by establishing processes for responding to employee injuries starting right on the day of injury, says Gerard J. Hoetmer, executive director of PERI. “Our research presents compelling evidence that employer actions on the day of injury have a profound impact on the overall cost of workers comp claims.”

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Chatsworth, Calif. CEO and Wife Arrested for Alleged Workers' Compensation Fraud

Three suspects in connection with a workers’ compensation premium fraud investigation conducted by the California Department of Insurance (CDI), Fraud Division have been arrested. A felony complaint was issued by the Los Angeles County District Attorney’s Office charging Gad Leshem, 59, with four counts of premium fraud and one count of conspiracy. A felony complaint was also filed against Zeev Golan, 54, and Irit Golan, 52, charging both with four counts each of premium fraud and one count of conspiracy. Bail for each of the defendants has been set at $6.5 million dollars. If convicted, each of the defendants could be sentenced to a $50,000 fine or double the amount of the fraud and up to five years in state prison.

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