Workers Compensation - PowerPoint

							Workers Compensation

                    Kathryn Crosby
                 C2 Consulting, Inc.
         kcrosby@c-2consulting.com
                     801.984.6092
         Session Overview
 The history of Workers Compensation
 What it is and is not
 What it covers
 Who has to have it
 What it costs
 Why costs are variable
 How costs can be controlled
     History of Workers Comp
 Before the beginning of the 20th Century,
  the only remedy injured workers had was
  a civil suit to the employer
 The employee had to pay medical
  expenses, and suffer the wage loss
 Around 1917, most states adopted a
  mandatory workers compensation law
                 What It Is
 Workers compensation insurance provides no-
  fault coverage, which allows employees who are
  injured on the job to receive benefits regardless
  of who caused the injury
 In return for providing coverage for their
  employees, employers receive exclusive remedy
  protection. This means that in most situations
  employees cannot sue employers for damages in
  relationship to workplace injuries
            What It Is Not
 Workers Compensation Insurance is not a
  get-out-of-jail-free system
 When an employee is injured, inspections,
  citations, and fines from local or national
  authorities could occur
 Workers Compensation costs are not the
  same to every employer
              What WC Covers
   For the employee, WC covers
    – Medical costs
    – Lost time wages (indemnity)
   For the employer, WC covers
    – Medical costs with no deductible
    – Lost time wages if the employee is unable to work
    – Liability insurance which protects employers from
      lawsuits filed against them outside the WC system
         Who Has To Have It?
 Utah law requires employers who have
  one or more employees (FT, PT, temp, or
  seasonal) obtain workers comp insurance
 Certain exclusions may apply
    – Sole proprietor
    – Directors and/or officers of a company
   Renewal of a contractors license requires
    verification of WC insurance
               What It Costs
 All Utah Workers Comp carriers use the same
  classification system that assigns a code to work
  activities
 This system is designed and maintained by the
  National Council on Compensation Insurance
  (NCCI)
 The NCCI also assigns base rates for each
  classification code. These base rates are based
  on loss experience of companies which
  employees assigned to that code.
             What It Costs
 Upon onset or renewal of a policy,
  employers are asked to estimate the $ in
  payroll for each of the classifications of
  their employees
 The base rate X payroll $ = manual policy
  $
 There can be adjustments to this manual
  policy $, either + or -
     Adjustments To Premium
 The number of and dollar value of claims
  charged against your policy or policies will
  have an effect on the premium you will
  pay
 An Experience Modification Rate (E-Mod,
  EMR, or X-mod) is calculated for most
  employers. It is based upon NCCI
  expected claims vs. actual claims for each
  classification
                    E-Mod
   Actual ÷ Expected
   For example $1000 ÷ $1000 = 1.0
   An E-Mod of 1.0 means that your company had
    exactly the # and value of claims that were
    expected
   Or, $800 ÷ $1000 = .80
   Or, $1200 ÷ $1000 = 1.20
   This E-Mod is applied to the manual premium
      What Does This Mean?
 The fewer accidents your company has,
  the lower the E-Mod can be
 This can be a competitive advantage
 Or, put you out of the game
     How To Control Your E-Mod
   Manage claim costs through
    – Early reporting and managing
    – Using the PPO network
    – Communication with adjuster
    – Drug and alcohol testing
    – Strong commitment to safety
    – Aggressive use of return to work program
    – Medical only claims
   How E-Mods Affect Premium
Company   Estimated Rate/$100 Premium
1         Payroll
          $100,000  $10       $10,000
E-Mod               .67       X .67
Total                         $6700
Premium
   How E-Mods Affect Premium
Company       Estimated Rate/$100 Premium
2             Payroll
              $100,000  $10       $10,000
E-Mod                   1.50      X 1.5
Total                             $15,000
Premium

Excess Cost
1 over 2                         $8300
           The Bottom Line
 Managing and controlling your workers
  compensation premium does help your
  ability to compete and your bottom line
 But, if the underlying reason you do it is
  for the money, it will backfire
 Safety is first, last, and always about
  people
Keep your people safe and
the numbers will take care
      of themselves