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.

Frozen Pipes And Your Insurance – Prevention Is The Key

It is estimated that almost a half million businesses and residences experience water damage losses  as a result of frozen pipes each year.  While most homeowners insurance policies and businessowners insurance policies will pay for these losses, this kind of preventable loss is a terrible black mark on your insurance record.  But more importantly, protecting your pipes in advance could save you from the huge problems associated with experiencing this kind of catastrophe.  This article will give you some tips on what to do now, before the cold weather sets in to keep your home or your business safe from this type of loss.

The first step in this loss prevention process is to protect the pipes themselves.  If your pipes are in a vulnerable spot like the attic or the crawlspace, then they need proper insulation.   Be sure to insulate both the hot and the cold lines.  Next study the environment for these pipes.  You should seal any leaks to the attic or space that might allow enough cold air into that space to freeze the pipes.  And don’t forget to  disconnect your garden hoses and drain your  sprinkler system to reduce the chance of freezing at those points in the system.

Now when you know that a hard freeze is coming, there are some additional things you can do for the short term to protect your pipes.  You can let warm water trickle from the faucets overnight, particularly on an exterior wall, or on a long stretch of unprotected pipe.  Also, you can open cabinet doors to allow heat to reach non-insulated pipes under sinks.  If you do this and have small children don’t forget to put all poisons and dangerous chemicals out of their reach.  And on those hard freeze nights, don’t turn your thermostat down.  You will need as much heat as possible to protect your pipes.  I know this might run up your heating bill a bit but  that cost is nothing compared to damage from burst pipes.

 If your pipes do freeze, don’t panic, it doesn’t mean that they have burst.  There is still a good chance that you can avoid a large water loss claim.  First of all, turn on the faucets and leave them on.  The water pushing against the melting ice in the pipe will speed up the melting process.   Next try to locate where your pipe is actually frozen.  If you can do this, then you can try to safely apply heat to the frozen area.  You can wrap the pipes in towels soaked in hot water, or you can use an electric hair dryer or an electric heating pad.  Do not use a blow torch, kerosene or any other open flame to heat the pipe.  These techniques could leave you with a home destroyed by fire!  If all of this fails, or if you are uncomfortable with this step, then call a licensed, professional plumber to help you.

In NC, the standard homeowners form will almost always cover loss to your home and your contents from water damage as a result of a burst pipe.  But insurance protection should be your last resort.  Preventing the loss in the first case will save you time, money and heartache.    In this case, an ounce of prevention is definitely worth a pound or more of cure.

At Clinard Insurance Group, located in Winston Salem, NC, we want all insurance buyers to be informed consumers.  If we can help you with your home insurance, your auto insurance or even your business insurance, please call us, toll free, at 877-687-7557.

Texting Teens and Car Insurance – A Very Expensive Habit

Car insurance rates for teen drivers are much more expensive than car insurance for experienced drivers.  This is because young drivers need time to develop their skills behind the wheel and to learn good judgment when operating a vehicle.  Texting adds an additional layer of risk for these young drivers.

Many teenagers use texting as their main form of interaction with their friends.  They use texts to chat, make plans and even just waste time when they are bored.  Over time this behavior can lead to what I call chronic texting.    These chronic texting teens are always on the alert for an incoming text.  These incoming texts always trump any other form of communication or activity that the teenager is engaged in at the time.  Who among us has not experienced the frustration of losing your child’s attention in the middle of a conversation as their phone buzzes to announce an incoming text.  Their reactions are almost so automatic that they don’t even know they are doing it.  They look down at their phones and for a moment they have simply forgotten everything else in their immediate environment.  The text takes top priority for all of their attention.  Now this behavior is annoying enough when it happens in the middle of a conversation with you or at a restaurant.  But if it happens while they are driving, then we are dealing with extreme danger for them and all drivers around them.  Combine chronic texting with a teenager’s lack of driving experience and you have a recipe for personal disaster on the highway.

A Miami Dade jury recently awarded $8.8 million to the family of a woman killed in a crash caused by a teenager who was speeding and texting.    The boy’s phone records show an outgoing text from his phone at 8:19 pm.  The paramedics were called to the accident at 8:21 pm.  Think what this means; if your child is driving and texting and causes an accident, the court is going to know that your child was texting while driving.  Do you think this information might influence the judgment amount against your child and by inference you, the owner of the vehicle?  Yes it will.  This information is going to mean a lot more money out of your pocket.  So if the safety angle isn’t enough to get you to establish some hard rules with your teen driver, maybe the financial argument will hold some sway.    This is serious stuff, people are dying out there!

Any parent with assets to lose whose teenager is driving should seriously consider buying higher liability limits on his or her auto insurance policy.  You may even want to add a personal umbrella policy to your portfolio of insurance policies for limits above those allowed on the auto policy.  I would advise every parent with a teen driver to adopt a two pronged approach to this problem.  First of all, talk to your child and help them understand that the phone may not be used at all while they are driving.  Model this behavior yourself; your children learn from your behavior.  If you have young children be aware that they are learning from you now so put down that phone while you drive.  Secondly, have a conversation with your insurance agent and buy as high of a liability insurance limit as you can afford to protect your assets from the risk of your young drivers on your policy.

At Clinard Insurance Group, we are committed to helping our clients become informed insurance buyers.  If you would like help with your teen driver car insurance, or if you would like a quote on your auto insurance, please visit us on the web at www.ClinardInsurance.com, or call us, toll free at 877-687-7557.  We have a number of free tools for parent of teen drivers.  To learn more about them, please visit our teen driver insurance page.