Earthquakes And Your North Carolina Property Insurance Policies – Will They Be Useless To You?

If you have lived your entire life in North Carolina, then earthquakes are probably not something that you think much about.  In our lifetimes, the earth under our feet has not shaken often or dramatically and we have built lifestyles and societies around the concept that the earth does not move under our feet.    But this year and last year are the 200^th anniversaries of the strongest earthquakes ever to occur in the continental United States.  These three earthquakes were so strong that they were felt from St. Louis and west all the way into northern New England.  And they happened right in our back yard.

In 1811 and 1812, three earthquakes on the New Madrid fault line were estimated at magnitudes above 8.0.  Aftershocks from these quakes numbered in the thousands and went on for several years.  These three mighty earthquakes were so strong that they caused the Mississippi river to reverse course and flow north for a period of time.  Most of the loss of life from these quakes occurred on the river where boats were capsized by the huge waves created by these quakes.  Most of the property damages occurred to crops where entire fields were churned to soup and rock falls buried fields.   But without the complicated and intricate infrastructure of our time with our underground gas lines and extensive property construction, there were no great fires and no huge loss of life figures to keep these earthquakes fresh in our memories.  For the most part the New Madrid earthquakes of 1811 and 1812 have been largely forgotten.

The New Madrid fault line runs in the vicinity of St. Louis to Memphis but because of the type of subterranean rock on the east coast, tremors and shocks from New Madrid are felt for thousands of miles.  In 1811 the New Madrid earthquake is said to have rung church bells in Boston.  This fact makes those of us living in and owning property in North Carolina a bit more vulnerable than we may think.

Experts now estimate that an 8.0 or higher earthquake originating on the New Madrid fault would probably leave behind damages well above $100 billion.  Yes, that is billion with a B.  In this part of the country we simply have not built for or prepared for earthquakes in the same way as has been done in California and Alaska where earthquakes are more common.   And worse still, most of those losses would be uninsured losses so recovery would be much slower and less efficient.

What does this mean for you?  Start by understanding that in NC, earthquake damage is not automatically covered by the standard homeowners insurance policy.   This is also true for those of you who own commercial property insured by the standard businessowners insurance policy or commercial property insurance policies.  Also, any homes that you own and that you rent to others, usually insured by a dwelling fire insurance policy, will also have no earthquake coverage.  How tough will it be to borrow money to rebuild your home or business when you have to compete with almost every other citizen doing the same thing?

But earthquake coverage is not unavailable, it’s just not automatically included in the standard policy form.  In almost every case you should be able to add earthquake coverage to your existing NC property insurance policies for an additional premium charge.   This coverage is generally more expensive for homes and buildings that are constructed of masonry or brick veneer compared to frame buildings.  This is because masonry structures don’t flex as well with the shaking ground and usually experience much greater damage from earthquakes.  Also, be careful to understand the special deductible forms that often apply to earthquake insurance.  Many even calculate the deductible that you must pay after a loss as a percentage of the total damage caused to your property by the quake.

With the 200^th anniversary of the strongest earthquakes ever to occur in the continental US here before us now, some might feel that having gone this far, we will never see one.  But seismologists will tell you that every year that passes without a New Madrid fault quake, simply increases the odds that it will happen next year.  Going without protection is much easier than getting it.  All you have to do to be uninsured is do nothing at all.  But if you would like some help in understanding your options for earthquake insurance on your North Carolina property, I hope you will give us a call, toll free at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

Mono-line Workers Compensation Insurance Companies – What Is It They Can Do Exactly?

Readers of my blog know that preach buying your workers compensation insurance policy from an insurance company that sells only workers compensation and no other types of policies.  This is because I have found that with their expertise and understanding of this insurance product they can reduce claims costs, and help get your employees back to work more quickly.  All of this helps them keep their rates low and save you money on your first policy with them as well as on your renewal policy.      Today I want to drill down deeper into this issue and help you understand what these extra services are and why they will cut your claims costs and save you money on your workers compensation insurance rates.  That way, when you are considering one of these insurance companies for your business, you will know which questions to ask.  Take it from me, not all of these mono-line workers compensation insurance companies are created equally.

To start, consider how these insurance companies often have an in depth medical bill review process for all medical claims.  The most talented at this have found that there are huge savings to be found simply by reviewing and challenging the medical bills themselves and their tricky coding.  Applying national guidelines for coding edits can often reveal huge savings by stopping some of the catch all codes where billing inaccuracies are often dumped.  One insurance company recently reported that unbundling overcharges found by in house bill reviews saved 49.8% on medical costs for an average claim.  Carefully applying medical limits and rulings to fees also generated savings of 38.46% on physician fee schedules.    Verifying the diagnosis according to medical records and examining medical records to ensure bill coding accuracy saved additional money on the medical portion of claims.

Now let’s take a look at some of the service options that have also proven to reduce the costs of workers compensation claims.  Companies that offer an online notice of injury and fast claims reporting have seen huge reductions in claims costs.  To learn how fast reporting cuts claim costs, read my blog on that topic here.   Another money saving approach has been to assign one claims adjuster to each company for all claims.  Imagine how having the same claims adjuster on every claim will cut down your time in claims processing and help you build a relationship with someone who will be working hard to help you reduce your claims costs and prevent claims from happening in the first place.  Implementing  proactive return to work programs that get the employee back to work in some kind of capacity sooner have proven to save the employer money both in terms of claims costs but in down time and replacement worker costs.  This not only shows other employees that you care about them, this also has the added benefit of getting the injured employee back to work full time much more quickly.    And many of these insurance companies employ highly trained and very experienced special investigation units.  These units investigate possible fraudulent claims to control unnecessary expenses associated with these kinds of claims.

Many employers who stumble on to a mono-line workers compensation insurance company to protect their business may only see the lower price on the front end.   And that can be a trap as often a mono-line workers comp company may come into a state with lower rates in an attempt to buy up business before raising their rates in years 2 and 3.  But to save you money today and tomorrow, an insurance company needs to be proactive in implementing techniques and training that will help reduce the frequency and severity of future claims as well as to reduce the costs of a claims that have already occurred.   

At Clinard Insurance Group we represent several fine mono-line workers compensation insurance companies that can save you money on your workers compensation insurance both today and tomorrow.  We insure hundred and hundreds of small businesses all across North Carolina and South Carolina.    If you would like help with your workers compensation insurance policy, please feel free to call us, toll free, at 877-687-7557.  

Work Comp Insurance Claims – Quick Filing Save You Money

Recently a study by The Hartford Financial Services Group found that the longer a business waits to file a workers compensation claim, the more that claim will cost.   This direct correlation is no surprise to me; I work in the insurance industry and see the effects of delayed claim reporting frequently.   However, for many businesses this correlation may not be so obvious.  And an even greater number of companies may not understand how higher claim costs will come back to bite them in insurance premiums down the road.  

A common first reaction to this study by many business owners and CEOs might be that they don’t really care about inflated claims costs because the insurance company is paying the claim, not them.  But higher claims costs in workers compensation will affect your rates both directly and indirectly and with delayed reporting also come lower productivity and fines levied against your company.    The indirect cost to your company are driven by the simple formula that the more money that every insurance company has to pay out in claims each year, the higher the rates will be for everyone the next year.  There is a more direct impact for business though.  Workers compensation is an experience rated insurance policy so this means that your loss results this year will show up in your own rates in future years by way of your experience modification factor.  The truth is, the higher your claims costs are now, then, the higher your work comp premium will be in the future.   The link to your experience modification factor is direct and undeniable.   It is important then for you to understand every way that you can reduce the amount paid out for your company’s workers compensation insurance claims.  And quick reporting is a simple fix for most companies.

The Hartford Study shows that the costs of delaying the reporting of a claim beyond the day of the accident increases the costs of the claim by greater and greater amounts as more time passes.  For example, the study reports that filing a claim between 7 and 14 days after a an accident occurs results in an average of 18% more paid for that claim than if the claim had been filed on the day that it happened.  Waiting 15 to 28 days will increase the costs of that same claim by an average of 30%.  Wait 29 or more days and you will see claims costs jump by 45%. 

To better understand why this happens, let’s take a quick look at some of the reasons why early reporting reduces the costs of claims.  Early reporting allows the insurance company to control the medical costs of the claim by directing the appropriate treatment and care for the injured worker.  Early reporting also reduces the duration of a claim’s total activity, which cuts down on the claims handling costs incurred by the insurance company for that claim.  By shortening the claim cycle, the insurance company can get your employee back to work sooner and this reduces your lost productivity.  Quick reporting also allows for better fraud detection and also reduces the chances of attorney involvement.  I don’t have to tell you why involving an attorney almost always drives up claims costs do I?

Looking at it from the other side, there are also a number of reasons why late reporting increases the totals costs of a workers compensation insurance claim.  Late claims reporting can often turn minor injuries into much larger ones with higher settlement costs.  If the insurance company is brought in late on a claim, then often you miss out on the chance to take advantage of the insurance company’s negotiated medical provider fees.  This almost always results in higher medical costs.  And don’t forget that you as the employer could face significant state fines for delayed claim reporting.

You should take some time to make sure that your managers have an established claims reporting process that kicks into action the minute you have a workplace accident that injures an employee.  Setting this up in advance and monitoring it to make sure that it is functioning effectively can save your company in lost productivity, fines and higher work comp insurance rates.  This is a simple way to save your company significant money.

At Clinard Insurance Group, we are  a full line, independent insurance agency located in Winston Salem NC.  We are very active in the workers compensation insurance market and we insure hundreds and hundreds of businesses all across North Carolina and South Carolina.  We would be happy to answer your questions about workers compensation and help you find a policy that will save you money, not only today but for years to come.  Please call us toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

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.