NC Workers Compensation Insurance Standoff – the Industrial Commission Blinks

Workers compensation insurance was designed as a compromise to keep businesses running and to more quickly return injured workers back to the job.  The simple agreement took away most of the employee’s rights to sue the employer and in response they were guaranteed certain benefits if injured, made sick or killed on the job.  The rules of the North Carolina Workers Compensation System have been presided over by the NC Industrial Commission.  These rules have favored the employer over the employee for quite some time now and this month the Industrial Commission showed once again that their sympathies lie with the employer over the injured employee. 

In early May, 2012, Governor Bev Perdue ordered a swift reform of our system.  She was made aware of a number of claims filed by injured employees against their uninsured employers that have gone unpaid for years.   In a show of strong action, the North Carolina Industrial Commission rounded up about 100 delinquent employers and threatened them with jail time should they not pay their injured employees what they are due.  It was beginning to look like the unpaid injured employees were finally going to be treated fairly by their government.

But let’s back up a bit.  If the employer’s part of the work comp bargain is to carry a workers compensation insurance policy, then how did we end up with so many uninsured employee injuries?  This can happen in several ways.  An employer could fail to make a payment and have its work comp insurance policy cancelled.  Or they could just decide to drop the coverage or never buy it in the first place since the NC Industrial Commission has never set up a system for finding the uninsured employers out there.  Or, they may simply not have to buy a policy due to a crazy rule in North Carolina.  This rule states that if you have less than 3 employees, you don’t have to purchase a policy if you don’t want to.  If you don’t buy a policy though, you still have to pay for all loses that occur to your employees just as if you were the insurance company.  This rule makes no sense to me.   Why should a small employer be more able to pay for on the job injuries of its employees than a larger employer?  I would think that a small employer is even less likely to have the assets needed to pay a claim.  NC is one of the few states with such a silly rule and to go along with this, NC also has one of the most lax enforcement of the workers compensation rules that you will find.  It is estimated that in NC there are as many as 10,000 employers with no insurance coverage at all.

With Governor Perdue’s new initiative to find the scofflaws and make them pay or go to jail, there was a glimmer of hope that someday we might not hear any more of these sad stories where an employee is maimed for life and the employer, not having purchased any workers compensation insurance, claims that he has no assets to pay the claim.  But now, as we saw this week, when push came to shove, the North Carolina Industrial Commission chose the welfare of the employers over the injured employees.  No employers were thrown in jail, those that couldn’t or wouldn’t pay what is owed to injured workers were granted extensions to make good on their settlements.  Businesses can now flaunt the law and not purchase work comp insurance and do so with impunity.  Will the Industrial Commission find ways to identify them and force them to obey the law like other states do?  Will they change the law to force all employers with any employees at all to purchase a policy to protect what they don’t have the assets to protect?  I doubt it.

Clinard Insurance Group, located in Winston Salem, NC insures thousands of small businesses all across the state.  We urge every business with any employees at all to buy a workers compensation insurance policy to protect their assets and their employees.   If you would like help with your workers compensation insurance, please call us toll free, at 877-687-7557.

Hidden Costs Of Workplace Accidents and Injuries

If you own a business that has operations in North Carolina, then you should buy workers compensation insurance to protect your company from financial losses caused by workplace accidents.  Buying a work comp insurance policy should not be the end of your analysis of  the risks associated with workplace injuries.  As a business owner, you should understand the hidden costs that are associated with workplace accidents as these hidden costs can be enormous.  If you take the time to understand the hidden costs, you will better understand the importance of implementing safety procedures to try and reduce both the frequency and the severity of on the job accidents.

So what is the difference between direct costs and indirect costs related to workplace injuries?  Let’s take a moment to explore each of these costs and how they can impact your bottom line.

We can start with direct costs since they are  the easiest to measure and understand.  Direct costs can include the medical costs for the injured employee, from hospital and physician expenses to pharmacy and physical therapy outlays.   We must also include the compensation payments to the injured worker for loss of income as well as dependent payments and death benefits.  When a claim turns ugly, you can add in legal fees and settlement costs as well.   The workers compensation insurance company will bear most all of the direct costs we have mentioned so far.

The other category of direct costs is the costs that are borne by the employer.  The most obvious of these is the workers compensation insurance premium.  Your company has some limited control over this direct cost when you find lower insurance rates and are able to keep your payroll numbers low.  The other direct cost that an employer could face here are the increase in workers compensation premiums due to past losses.  This is the additional premium that is associated with an increase in your experience modification factor.

What about the indirect costs associated with workplace accidents and injuries?  These  cost will certainly vary from one kind of business operation  to another.   Your business could face higher costs in terms of lost productivity and service standards, the additional costs of hiring temporary labor to replace the injured worker or the costs of paying non-injured workers overtime pay to bridge the gap while your injured worker is recovering.  Your company  might also face the additional costs of hiring and training replacement workers for the injured ones.  And there are accident investigation and administrative follow up costs associated with any work place injury claim.  Last of all, a workplace accident could force your company to face lost sales.

Indirect costs of a workplace accident are generally thought to calculate at 4 times the amount of direct costs in a workplace accident.  We can run a quick calculation that might help shed light on the  magnitude of the indirect costs problem.  Let’s say you have a workplace accident that generates a workers compensation claim of $20,000.  While this seems like a large number, this is not unusual.   This means that your indirect costs would run at about $80,000.  Now if your company has a profit margin of 5% (which is pretty close to an average), then you will need to generate additional sales in your business of $1.6 million to cover the indirect costs of this claim.   These numbers just cannot be ignored.

Your takeaway as a business owner is that reducing the frequency and severity of workers compensation claims is a critical link in your profit equation.  So what should you do?  I would suggest that you choose an insurance company that specializes in workers compensation insurance only when you buy your next workers compensation policy.  These specialty companies have real world expertise in claims management as well as loss control programs.  Often they offer these loss control programs at no charge to their policyholders.   At Clinard Insurance we write workers compensation insurance for hundreds and hundreds of small businesses all across North Carolina and South Carolina.   If you would like help with your workers compensation insurance as well as help getting your workplace accident indirect costs under control, please call us, toll free, at 877-687-7557 and we will put our experience and know how in this area to work for you, saving you money and helping you reduce your workplace accidents.

Workers Compensation Insurance Rates Under Stress From 2011 Results

2011 was a tough year for most insurance companies out there.  This is mostly due to the more than $50 billion in property related claims from storms and bad weather events all across the country.  Of course workers compensation claims are not much affected by weather events, yet the 2011 numbers for the workers compensation insurance industry are not good.  And when the insurance industry loses money, that almost always portends higher rates for business owners in the near future.  This article will highlight some of the bad numbers that point to higher workers compensation insurance rates for the coming year.  Then I will show you how you can avoid facing higher rates this year for your business.

First look at some of the numbers.  In 2011, there was a 3% increase in the frequency of lost time claims.  These are claims where the insurance company is paying the injured worker a salary while the worker recovers from an injury.  3% may not sound like much, but this is the first time since 1997 that this measure increased from the previous year.  Is this a one-time blip or a signal for changes ahead in workers compensation lost time claims?  I think it may be the latter.

Compounding this problem is the unsettling result that net written premium for the insurance companies declined by 1.3% in 2011.  Now it doesn’t take a genius to understand that when claims are going up and premiums are going down something has to give somewhere.  I believe the breaking point will be the rates that you pay for your work comp insurance policy.  Insurance companies measure the money that they take in against the money that they pay out for claims.  This calculation is referred to as a loss ratio.  If the loss ratio rises above 100%, then the insurance company has lost money.  In 2011 the industry wide loss ratio for workers compensation insurance in the U.S. increased to an astonishing 118.1%.  This is the highest level since the year 2000 when it was 121%.  This means that in order to break even, the insurance companies need to average 18.1% return on the money that they hold while waiting to pay claims.  There are not many places where you can find a safe 18% return out there.

So what is the cause of these deteriorating results?  There are several of course, and none of them seem to show any signs of letting up in the near future, which is why I am predicting higher workers compensation rates across the board.  The biggest elephant in the room is the rising costs of medicine which now accounts for 60% of the workers compensation total claim payout.  With medical inflation running at 6% this part of the problem is going to be with us for the long haul.  Poor economic conditions are also a factor as there is a greater tendency for fraud in bad economic environments.  Also, the work force is getting older and more obese each year and this puts a strain on the claims costs both from a frequency of loss and a severity of loss perspective.

So what can you do to keep your work comp rates as low as possible in 2012 and beyond?  I suggest that you begin by taking a good look at your work comp policy and your work comp insurance company.  There is a growing market segment of work comp only companies out there today. These are companies that specialize in workers compensation only.   They don’t write auto insurance or home insurance or life insurance, they write only workers compensation insurance.   These companies understand that to make money in this business and to keep rates low for their customers, they need to be much more proactive in the prevention of claims as well as the recovery process.  They typically have loss control programs that can help you prevent claims from happening.  They often have nurses and claims case workers on staff to double check all medical bills for errors and fraud and to help your injured worker heal and get back to work as quickly as possible.

At Clinard Insurance Group we want all insurance buyers to be informed insurance consumers.  We can help connect you with a specialized workers compensation insurance company so that your rates can remain lower even while your competitors face huge workers compensation insurance rate increases.  If you have questions about your work comp insurance, or if you would like a quote to see just how much you can save on your workers compensation insurance, please give us a call, toll free, at 877-687-7557.  We look forward to hearing from you soon.

Workers Compensation Insurance – When It Comes To Claims, Time is Money

The old adage that time is money is certainly true when it comes to handling workers compensation claims. While the Form 19 claims form no longer states that the claim must be filed within 5 days of the accident or injury occurrence, moving fast on a workers compensation claim has a big impact on the size of the claim and the subsequent loss costs that will affect the employer. If you are an employer with employees and have a workers compensation policy, you should take a little bit of time before a claim happens to discuss with your agent what you will need to do to move the claim forward quickly.

Take a quick look at some insurance industry statistics related to the speed of claims reporting.

Claims reported two weeks after the occurrence had an 18% higher payout than claims reported in the first week.

Claims reported three weeks after the injury had a 47% increase in total loss costs over those reported in the first week.

And to drill down further, claims reported in days 5 through 7 after the occurrence had a larger claim cost than those reported in days 1 through 4.

Claims reported with only a 3 day delay had an increased medical cost of 16% over those reported on the day of the occurrence.

And we can also see this trend in terms of litigation costs associated with late reporting of workers compensation claims. Claims with a only a 3 day delay in reporting have a 50% greater chance of ending up in litigation. And litigation will increase the total costs of the claims and drive up your workers compensation premiums over time. To see how claims costs affect your premiums, click here.

So how does quicker reporting help to reduce the costs of a workers compensation claim? First of all, it allows the insurance company to contact all parties involved more quickly and this reduces the costs and chances of litigation. Once the injured worker has hired an attorney to represent him, then the claims process slows down considerably as the communication process now has another step involved. Quick claim reporting also allows the insurance company to get involved with the injured worker sooner and begin to develop plans to get the injured worker back to work in a shorter time. This not only reduces the costs of your future workers compensation claims, but it also cuts your downtime costs right away.

Last of all, consider that the longer the employee is out of work, the greater the burden on other co- workers in your company. This negative impact can hurt morale and can also lead to a higher risk of injury to the remaining workers on the job. In addition, hiring and training a temporary replacement worker can be very expensive.

At Clinard Insurance Group, in Winston Salem, NC we want all insurance buyers to be informed consumers. Looking only at the policy costs can be a deceiving way to purchase insurance and might leave your company out in the cold. If we can help you with your business insurance, your workers compensation insurance, your general liability insurance, commercial auto insurance or life insurance, please call us, toll free at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

The source information for this article was pulled from other articles that can be found in their entirety at www.InsuranceAnswerGuy.com.

Workers Compensation Insurance – What About Your Safety Program

Workers compensation insurance for many industries, especially those in construction such as painting contractors, HVAC companies, electricians, landscapers and plumbers just to name a few, can be a huge piece of the insurance budget. In addition, with workers compensation insurance in NC, your policy is experience rated, which means your losses follow you around for years and add to the cost of your particular policy. So why don’t more contractors embrace safety training?

The answer of course is complicated but one of the biggest reason you see so little safety training in the small contractor’s world is that either the contractor doesn’t understand how much it can impact his bottom line, or if he does, he just doesn’t know where to start. This is where company selection can be crucial to the small contractor. There are some companies out there that specialize in workers compensation insurance and don’t deal in any other types of policies. One of the advantages of using these types of companies is that often they will provide you with lots of safety training tools for free.

These tools can range from helping you meet posting requirements in your shop to advice and help with safety services and even helping you develop and create a true, on the job safety training program for all of your employees. One example of a company that does this very well is Summit Insurance. Take a quick look at the offerings that they have on their web site by clicking here. You can see that they are fully engaged with their clients to help them find ways to reduce accidents and downtime associated with injuries.

Let’s face it, when you have a workers comp claim it will cost you money on your policy eventually. But more importantly, think of the immediate costs of stopping work to get your injured employee to the doctor and the downtime associated with waiting on an employee to get back to work. A large percent of accidents that occur on construction sites are preventable with better education and better rules enforcement. If you are already spending money on a work comp policy, you should ask yourself what your insurance company is doing to help you reduce and prevent accidents. Remember, there is much more to the workers compensation policy than just the rate, or the bottom line price. As you can see, there are huge hidden costs in the process and you need to hire a workers comp company that will help you manage those huge hidden costs.

Clinard Insurance Group is a NC insurance agent who specializes in helping small contractors and construction trades all across North Carolina. We understand your difficulties and we speak your language. We have developed specialty programs for all different types of small contractor groups including a landscapers insurance program, and electricians’ insurance program, a special insurance program for painters, an HVAC insurance program, a plumbers insurance program and many others. If you need help with your business insurance, please call us toll free at 877-687-7557 or visit us on the web at www.thecontractorshelper.com.

This article was pulled and written from source information, all of which may be found in its entirety at www.InsuranceAnswerGuy.com.

NC Work Comp Insurance – Not All Rates Are Created Equal

If you have a business with employees in NC, then chances are you are have at least a passing familiarity with work comp insurance and how it is set up. In my conversations with lots of different types of business owners all across North Carolina, I have found that many wrongly assume that workers compensation rates are the same from one company to the next. Nothing could be further from the truth. This article will go over the rating process and how the rates are established and what this means for you, the business owner and insurance consumer.

Let’s start with the easy part, the policy coverage itself. In NC, all workers compensation policies have the same coverage form. The coverage is statutory, which means that it follows the current NC workers compensation statutes. Therefore, with the exception of a few items, all policies are basically the same. The rates however, are not the same.

Each insurance company has to file their rates with the NC Rate Bureau for each different classification of labor that they write. And while company A may love to insure landscapers and their rate would reflect that, company B may not want to write this class of business, so their rates might be higher for that classification.

So what does this mean for you? Well, if you own a business in NC and are buying workers compensation insurance, then you should take some time to understand the marketplace and make sure that you have purchased your coverage from a company that is eager to write your business and has the rates to reflect that eagerness. Also, in the past it may have been wise to always place your workers compensation insurance with the same company that handles your general liability insurance, your business auto insurance or your commercial property insurance. The workers compensation marketplace in North Carolina has changed quite a bit over the past 15 years and now there are many insurance companies out there that write only workers compensation insurance. We call these monoline work comp companies and they are a good choice for lots of NC business owners because the are not only able to offer very competitive rates on the classes of business that they want to write, but also, they often have loss control and back to work programs that are more effective and more helpful to small businesses.

At Clinard Insurance Group in Winston Salem, NC, we specialize in helping small businesses all across NC with their workers compensation insurance policies. We have created special insurance programs for plumbers insurance, HVAC insurance, carpenters insurance, painters insurance, restaurant insurance, floor and tile installers’ insurance, landscapers insurance and electricians insurance. If you need help with your workers compensation insurance or any other insurance policies, please feel free to call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

The source information for this article was pulled from other articles which can be found at www.InsuranceAnswerGuy.com.

Workers Comp Back To Work Issues – Avoid These Common Mistakes

Workers compensation insurance is a necessary evil for most employers. How you handle on the job injuries and more importantly how you handle the out of work situations that you will face with your employees will go a long way toward impacting your future workers compensation costs. Read below to see some common mistakes that some employers make in this regard and what you can do as an employer to avoid these mistakes and minimize your future workers compensations costs.

The first step towards understanding back to work issues is to understand why it is important for you to be involved. Some employers take the attitude that the claim has been filed and it is the insurance company’s money now so why worry about it. This belief couldn’t be farther from the truth. This is in fact your money as your future rates are determined by today’s claims experience. And to make matters worse, you will pay over a 3 year period for any one year’s mistakes to the impact is essentially tripled. Click here to read my blog about the workers compensation experience modification factor and how it affects your bottom line now and in the future. Now bear in mind that workers compensation rules are different for every state but this is a guideline that can help you avoid some common errors that employers often make.

Mistake #1 – The Economy is bad and I can’t afford to keep employees on the job who are not able to do the job. Actually, you can’t afford not to. Remember, if you are not able to make an offer of light work to an injured employee then your employee will likely continue to receive a good part of their salary as work comp benefits from your insurance company while contributing nothing to your company. Other employees will have to pick up the slack or you may have to hire and train new workers. Research shows that healing happens faster for employees who are productive and that a transitional duty program can get them back to work quicker and save you more money in the long run.

Mistake #2 – My injured employee wasn’t all that productive before the injury so I’d rather not keep him on with light duty now that he is injured. Don’t fall into this trap. Dealing with non-productive employees is a human resource issue, not a workers compensation issue. You should always deal with this type of problem through your HR department. Also, a less productive employee is more likely to take a case through the long and costly workers compensation legal system. Get them healthy and back to work first, and then deal with their lack of productivity.

Mistake #3 – I don’t think my employee is hurt as bad as he says, in fact I saw him out fishing last week. This is an example where the insurance company you choose can help or hurt you. You are often best served by a dedicated workers compensation company with a structured back to work program. One of the insurance companies that we use, Summit Insurance Group, has a back to work tool kit and structured back to work program to help you as an employer get your injured employees back to work and off the work comp rocking chair paycheck as quickly as possible. This is not something you should tackle on your own and you need an insurance company that is dedicated to this process so that your premiums stay low in the future.

Mistake (Concern type) #4 - My employees doctor says she should stay at home but she just has a desk job. You should work with your claim adjuster and your employee to make sure that the doctor has a clear understanding of the job requirements to see if the person really must be written out of work. Constant and clear communications between you, the employee, the doctor and the claims department can help you resolve these issues and some job modifications may make it possible to get your employee back to work sooner. Remember to get your employees job description to their physician as quickly as possible and ask for any medical restrictions that need to apply to any transitional duty.

Mistake #5 Losing touch with workers once they are injured increases the fear of a lawsuit. This is true and many employers find themselves in a nether world where they are afraid to contact their injured employee and wanting to know what is going on with the injury. This is why having a back to work program in place before the injury occurs is so important. A good back to work program will encourage you to reach out to your injured employee and help you know what you can and can’t say and how to say it. They even include greeting cards that you may want to send to let your injured employee know that you are thinking of them.

It is clear that having a plan for injured workers before they are hurt will help you make the transitions more smooth and over time will reduce your workers compensation costs tremendously. You should choose an agent who understands workers compensation insurance well and can help you gain access to specialized workers compensation insurance companies with back to work plans, dedicated claims staff and even nurses on call, all of which will help you reduce downtime and out of work time for your employees. Don’t just chase the lowest priced workers compensation rates, rather consider carefully what support you will have after a claim when choosing your workers compensation agent and company.

At Clinard Insuranc e Group in Winston Salem, NC, we specialize in helping all kinds of businesses with their workers compensation insurance needs. Our specialization can help you not only find extremely low rates on your workers compensation insurance, but also will help you minimize claims and out of work time, thus saving you money over the long haul as well. If you need help or have questions about your North Carolina Workers Compensation Insurance Policy, please call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

The source information for this article was pulled from various sources, one of which is www.InsuranceAnswerGuy.com.