A revision to the formula for calculating Workers Compensation rates is saving premium dollars for companies in a large number of states since the first of this year.
The change involves the experience modification (“mod”), the premium credit or debit that businesses receive for their claims experience. The mod compares your claim experience to that of other firms in your industry; if your experience is good, you’ll get a premium credit if not, you’ll receive a debit.
What has changed is the “split point” between the primary and excess portions of a claim. This value is important because the primary portion of each claim has a far larger impact on predicting an employer’s mod than does the excess portion. For the past two decades, the split point has been $5,000. However, inflation has both eroded the primary/excess split point and hurt its predictive power; the mod doesn’t give enough credit to good experience and doesn’t penalize poor experience enough. The change raises the split point to $10,000 in 2013, $13,500 in 2014, and an estimated $17,000 in 2015.
In 26 of the 38 states that have approved the new formula, a survey of more than 75,000 businesses by the National Council on Compensation Insurance found that 62% of them will see their rates fall by 5% or less this year. Another 11% will enjoy decreases of 5% to 10%, while rates will stay unchanged for 4.5%. Fewer than one in four (22.5%) – mostly larger businesses – would see a rate increase.
Our Workers Comp specialists would be happy to discuss the revised experience mod formula with you – and make sure that you enjoy the cost savings that it can provide. Feel free to get in touch with us at any time.
Read more
Nearly six million traffic accidents occur in the U.S. every year – more than 16,000 a day (or one every 10 seconds).
If your company owns, operates, or uses motor vehicles – or if you have employees who use their cars for business purposes – you need Commercial Auto Insurance to provide financial protection against losses from mishaps that occur behind the wheel.
This valuable policy provides these coverages:
- Bodily Injury Liability pays the cost of bodily injury to others from accidents for which you are responsible. If you’re sued, it also pays your defense and court costs.
- Property Damage Liability picks up the tab for property damage to others for which you are responsible, as well as defense and court expenses.
- Personal Injury/Medical Payments usually covers medical and funeral expenses for bodily injury from an accident that involves an insured vehicle.
- Collision pays for a covered vehicle that is damaged by a collision with another vehicle or object.
- Comprehensive Coverage pays for a covered auto that is stolen or that is damaged by causes other than collision or reckless driving.
- Uninsured/Underinsured Motorists covers injuries and, in some cases, property damage, when you’re involved in an accident with another person who either doesn’t have Auto Insurance or carry enough coverage.
Before you purchase or renew your Commercial Auto Insurance ask yourself these questions: 1) how much Liability Coverage you should buy, and 2) how large of a deductible should you choose?
We’d be happy to help you choose the most cost effective policy for your needs. Just give us a call.
Read more
The number of mid-market employers giving Group Health plan members incentives to participate in wellness programs has more than doubled since 2010, says a recent report by Fidelity Management and Research L.L.C.
The study found that more than three in four midsize businesses (77%) – those with fewer than 5,000 employees – offered employees monetary rewards tied to wellness activities and health management outcomes in 2011, compared with fewer than two in five (38%) that provided cash incentives in 2010. Overall, nearly nine in ten employers surveyed (86%) gave some type of incentive for wellness activities and/or outcomes in 2011, up from with 63% a year earlier.
The average value of incentives offered to employees and their dependents has also increased substantially. For the 2013 plan year, the average employee incentive value will reach $521, up from $460 in 2011; while the average incentive value for dependents will grow to $465 this year, from $390 in 2011.
Despite the rapid increase in mid-market businesses offering incentives for wellness program participation, they’re still less likely than larger employers to provide these rewards. The value of incentives also remains lower among midmarket employers than those given by larger businesses. Less than half of midsize firms (45%) offered inducements for healthy behavior worth $500 or more, compared with 50% of large employers and 68% of very large employers.
“As the cost of providing health care continues to increase, employers recognize one of the key ways to manage their company’s costs is to give incentives to their workforce for leading a healthier lifestyle,” says Adam Stavisky, Fidelity Senior Vice President/ Benefits Consulting.
If you’d like to implement, or a revise, an incentive program to help keep your workers stay more healthy – and, thus, more productive – just let us know. We’re here to help!
Read more
In today’s increasingly complex and litigious business environment, your corporate officers and board of directors – the brains of the company – need protection against personal financial liability arising from their corporate activities.
These people are highly vulnerable to lawsuits by investors, employees, vendors, competitors, customers, regulators and others, alleging misconduct for a wide variety of activities, such as:
- Providing inaccurate or unlawful advice.
- Fraud and malfeasance.
- Misrepresentation of company assets.
- Failure to comply with workplace laws.
- Poor hiring decisions. (A Towers Perrin survey found that 40% of all reported D&O claims involved flawed employment practices.)
Directors & Officers Liability (D&O) Insurance will pick up the tab for legal fees, settlements, and other expenses from such litigation. This gives your officers and directors financial peace of mind in carrying out their corporate activities, and provides a valuable incentive for attracting, and keeping quality people who can help grow your business.
There’s a widespread need for this coverage. One in six company executives (17%) surveyed by Inc. Magazine believe that their business will experience a D&O-related loss within the next year.
These policies usually offer two types of coverage known as “sides.” Side A protects directors and officers from personal financial liability if the company is unable to indemnify them. (For example, during a bankruptcy or dissolution.) Side B coverage reimburses the company if it indemnifies directors and officers. (For example, when shareholders file suit against them.) A third coverage – sometimes known as Side C – comes into play when both the company and individual officers and directors face lawsuits.
To learn more about how D&O Insurance can help minimize the financial risks of litigation for your company and your top people, feel free to get in touch with us at any time.
Read more
Large corporations often use “alternative risk financing” – assuming some of their own risks, in addition to buying insurance – as a way to improve cash flow and lower their total costs. However, this technique can offer substantial benefits for medium-sized companies that face significant potential risks from one line of insurance, such as Workers Comp, General Liability, or Auto Liability.
Basic alternative risk financing methods include:
- Guaranteed cost insurance – the company pays a premium based either on a rate, such as payroll or property values, or a flat amount.
- Incurred loss retrospective rating plans (“retro) – use a standard premium adjusted after policy expiration based on loss experience.
- Large-deductible plans – the organization assumes a substantial (often $50,000 to $250,000) per-accident or per-occurrence deductible.
- Self-insurance – the firm retains its loss obligations and pays them as they become due.
- Captive insurance – this variation on self-insurance pre-funds risks through an insurance subsidiary (“captive”) usually owned by the parent company.
Because each of these methods has advantages and disadvantages, your choice should depend on the situation and needs of your business. For example, a guaranteed cost plan minimizes the upside risk, but won’t help your cash flow; while a captive usually costs the least to finance, but can be expensive to administer.
Whichever alternative risk financing option you choose, make sure your accounting and human resources departments educate managers on their responsibilities in daily hands-on administration of the program. The more widespread their “buy-in,” the stronger your bottom line.
We’d be happy to help you select and develop an alternative risk financing program that’s tailored to your needs. Just give us a call.
Read more
Given the dramatic impact of social media on the speed and delivery of news and information, it makes sense to make this fast-growing technology part of your risk management program.
More and more reputational crises — such as the recent stranding of the Carnival Triumph cruise ship — are born on social networking platforms and can grow exponentially if mishandled. Consider how Apple Inc. responded to consumer displeasure with the iPhone 4 shortly after its 2010 introduction. Negative comments about the product spread quickly over social media channels, but were largely ignored by Apple executives until mainstream news outlets began reporting on its flaws.
Failing to actively engage social media users in conversations about crisis or business practice of your company means losing an invaluable opportunity to protect your reputation. Otherwise, you risk having other people tell your story.
Social media participation gives you a way to enhance this reputation through regular interaction with customers, business partners and the public. Using this tool to develop relationships and help people, rather than just sell products and services, can create some valuable allies.
Encouraging your employees to participate in social media offers a great way to use them as advocates for your company. A 2012 poll of more than 1,000 registered voters by Hill+Knowlton Strategies found that a corporation’s employees are the second-most trusted source of information about its business practices, second only to friends and family members.
Read more
