Take Care with Your Carrier
Want to lower your workers’ comp premiums? It’s all about relationships.
When I meet with business owners and they learn that I’m in the workers’ compensation business, one of the first questions to come up is, “How do I lower my workers’ comp premium?”
While many believe the answer to be simply “Don’t have any claims,” there are many other steps a business owner can take to better their position for lowering premiums, none of which is very complicated or burdensome for most businesses.
Unlike other lines of insurance that we buy where there are few markets available willing to take on this risk (for example, the very tight property insurance market), the workers’ comp market is rich, diverse and in many cases, local. There are more than 100 carriers offering workers’ comp coverage in Louisiana, including more than a dozen carriers headquartered in Louisiana. The largest writer of workers’ comp in the state, LWCC, is located in Baton Rouge.
The wide availability of workers’ comp carriers is important to understand and appreciate because this is where the buyer of the insurance has a significant advantage. In other words, these comp carriers will fight over your premium dollars, which usually leads to attractive pricing. And because nearly all workers’ comp policies are written on a 12-month basis, every year a policy goes through a renewal process. It is during this renewal process that a business has its best chance to lower its premium. How? By making sure that the workers’ comp carrier wants you as a continuing customer and understands that, because of the robust and competitive market, you have plenty of options.
Unlike other forms of insurance, where you rarely have an opportunity to engage employees of an insurance carrier, in workers’ compensation there are ample chances to let the carrier know who you are and what your value is as a customer. But it takes effort and sometimes strategic planning to accomplish this. You just don’t want to be a policy number. Insurance is no different than any other type of business where relationships matter. After all, in most cases the amount of money a business pays in insurance may be, after payroll, that business’s single biggest expense.
The key in getting the best pricing from your carrier is for the carrier to appreciate your business and value it, and fortunately in workers’ comp, you have plenty of opportunities to impress your carrier, although all may not always seem obvious. Below is a list of some of the opportunities a business has to leave a positive mark on its carrier:
Workers’ comp policies are priced with the anticipation that at some point you will have a workplace injury and will file a claim. So when you do have a claim, how you react is very important. First, the claim needs to be reported in a timely fashion — the same day. Second, you should be able to quickly provide the adjuster with all the important information regarding the accident and your employee. Once the claim is reported and is being handled, it is critical that you cooperate fully with the adjuster managing the claim.
Since workers’ comp pricing is calculated using payroll figures, every workers’ comp policy is audited annually to confirm that the estimated payroll at the beginning of the policy is in fact the correct payroll at year’s end. This auditing process can be an anxious time for a business owner, but it doesn’t have to be. The workers’ comp carrier uses forms to ask about your employees and how much they were paid, as well as questions about any subcontractors you may have used. Answering these forms and questions quickly and with the proper backup documentation will go a long way in positioning your company as a valued customer in the eyes of the workers’ comp carrier.
Most all workers’ comp carriers use loss control services to gain a better understanding of the risk that they are writing. Loss-control specialists will sometimes meet with businesses to verify the type of work the business is doing and how many employees are engaged in this work. These loss-control visits will also usually involve explaining to the business how to implement important internal procedures such as having a written drug policy or using a second injury fund questionnaire, both of which can limit the liability of a business when a claim occurs. It is important that the business be open to recommendations from the loss-control specialists and follow through with these recommendations. Doing so will show the workers’ comp carrier that the business is serious about implementing best practices that are in the best interest of both the business and the workers’ comp carrier.
Most policies are set up for monthly payments, and to keep the policy in force payments must be made on time. Unfortunately for some businesses, payments become irregular, and if they fall behind, the business risks either late fees or cancellation of the policy. The labor costs associated with administering policies with chronic irregular payments then becomes problematic for the workers’ comp carrier. Making payments monthly will impress your carrier and make your business a much more valuable account that your carrier will want to keep.
Many workers’ comp carriers, particularly local ones, offer workshops where insureds can learn about how the insurance coverage works. Some carriers also offer workshops on business topics like labor law, banking and the Affordable Care Act. At these workshops you can usually find staff members from your workers’ comp carrier, and this offers you a wonderful opportunity to introduce yourself to those who may very well have responsibilities in evaluating your account at renewal. Getting to know your carrier’s staff can only help your standing.
While taking any of these steps is not a guarantee for lower premium, in the long run it will make you a better risk in the eyes of workers’ comp carriers.
Mark C. Tullis has served as the LCI Workers’ Comp administrator since being appointed to this post in 1994 by the Board of Trustees. He is responsible for the day-to-day operation of LCI and reports directly to the Trustees.