Help insurance clients reduce workers’ compensation costs
Wednesday, September 12, 2018/Insureon Solutions, Products
Workers’ compensation insurance can be a nightmare for your commercial lines clients. They usually know they need the coverage, but paying the premiums can be a heavy burden. Plus, they usually face high costs for not carrying workers' compensation.
There isn’t much you can do about workers’ compensation requirements, but you can help your commercial clients keep their premiums down. The key? Show them how to control their experience modification factor.
What is the experience modification factor?
Most simply, the experience modification factor, or e-mod, is a multiplier that compares a business’s loss history and payroll to others in its industry. Fewer or less expensive claims than the industry average mean a business’s e-mod is less than 1.0, and that results in a lower premium.
The savings can be significant. Let’s say a client’s manual premium is $10,000 with an e-mod of 1.2. The premium comes out to $12,000. A client with the same manual premium but an e-mod of 0.75 only pays $7,500. That’s a savings of $4,500.
Saving your clients money is a good way to keep them in your book and the residual commission flowing. Here are a few tips to share with your insurance clients who want to keep their premiums down.
1. Help insurance clients manage risk
One way to reduce workers’ compensation claims is to think about workplace safety. Of course, worksites can vary greatly, but you can give your clients some basic tips, like:
- Keep aisles clear of tripping hazards.
- Provide protective gear to your employees.
- Train and retrain all employees on proper safety protocols.
- Perform regular safety checks on equipment and work areas.
- Make sure equipment has space around it and is easily accessible.
Some businesses are more vulnerable to workers’ comp claims. Your insurance clients in industries like construction, janitorial, allied health, and manufacturing may have specific areas of concern. Learning about industry issues may make you even more valuable to these clients.
2. Teach insurance clients to bring employees back to work
Clearly, you don’t want to push injured employees to work before they are ready, but getting them back to work sooner may lessen the impact of their claim. Most states have a waiting period. Injured employees must miss work during the waiting period before they can receive lost wages. If they return to work before the end of the required waiting period, the claim is considered medical-only and just 30 percent of costs are factored into the e-mod.
Your clients may be able to smooth an employee’s return by:
- Modifying the employee’s workstation.
- Offering reduced or flexible hours.
- Changing the tasks.
Explain to your clients that how an injury is handled from the beginning often dictates how a claim goes, too. If they show concern for their injured workers and demonstrate looking forward to their return, they may be able to minimize the impact.
3. Show insurance clients how to spot for fraud
According to the Coalition Against Insurance Fraud, one in 10 business owners are worried about being the victim of a false workers’ compensation claim. Moreover, one in five aren’t sure if they could spot a false claim.
This is an opportunity to give your insurance clients a little piece of mind. Share with them these workers’ compensation insurance fraud warning signs:
- No one witnesses the incident.
- The employee refuses treatment.
- The employee gets contradictory diagnoses.
- The employee waits to report the incident without a reason.
- The employee reports an injury on Monday morning.
- The incident coincides with a change in employment.
- The employee hires an attorney immediately.
- The incident does not make sense.
These factors don’t necessarily prove fraud; however, they are red flags. Tell your clients to investigate a claim more thoroughly if they have suspicions.
Your insurance clients can also be accused of fraud, especially if they misclassify employees. Learn more in “Help small commercial clients avoid big worker classification fines.”