SMP reports that many States are increasing Workers Compensation Premiums
PR Web |
Workers Compensation Premiums are high and continue to increase each year (http://www.insurancejournal.com). Paying attention to classification codes and MOD rates may save thousands.
Company's cringe each time an invoice is opened and the insurance premium notices are no exception.
Workers comp premiums are state regulated and may be confusing and complex. Employee Classification Codes and Rate Modification designations are often hard to understand and the wrong code may be costing a lot of money.
Here is an example: A plastic injection molder with two hundred-employees may have many different classification codes. In
What can be done?
Additionally, one should check with the states workers compensation rating board for further guidance and risk classification.
Start with a general understanding of the classifications. Codes pertaining to a company's employee classification codes will be found on the current policy. Pay attention to the rate change dates. New ratings are generated from the state rating bureaus several times per year.
Once you understand the classifications, you can begin to audit the policy. A spreadsheet with a list of employees and corresponding codes will be helpful. Remember to look at the multiple sub-classifications. All machine operators are not coded the same. The rates may be significantly different. A machinist on the floor of the factory full time is different from a machine operator working in an office. Each code assigns a level of risk and higher risk codes are costly.
Now that your worksheet is complete, prepare a letter to the insurance carrier indicating the errors. Most times carriers will make the adjustments resulting in lower premiums. If they deny the changes and you still feel strongly, you can appeal to the state workers compensation rating bureau.
Workers compensation insurance premiums may be one of the highest cost line items for a company. Focusing on the classifications and experience modification rating may save a company a
Try it yourself or consult with a specialized audit practitioner.
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