Written Claims Management and Early Return-to-Work System - High Quality Paper Required - 12 Hours
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Coverage-Underwriting-EMRLecturePPTFA171.pptxOSH 390 Workers’ Comp Lecture
Coverage Options
Underwriting
EMR
1
How is Worker’s Comp State Specific?
Rates
Business / Employee Classifications
Renewal and Cancellation Requirements
Compensability of Claims
Benefits
Claim Resolution & Adjudication
and More
2
Sources Of Coverage
Competitive Market
Monopolistic State Systems
State Funds
High Risk Pools
Group Self-Insurance
Individual Self-Insured
See pp. 25-26
3
The Players
Agents and / or Brokers
Carriers
Company
State
See pp . 122-124
4
Self Insurance
Asset Requirements
Surety Requirements
Guarantee Requirements
Third Party Claims Administrators
Reporting Requirements
5
Module 2 Underwriting Worker’s Comp
Calculating Premiums
Experience Modification Rating (EMR)
Corresponding Chomp Comp Chapters:
Chapter 3
Chapter 4
Chapter 5
Chapter 13
6
Basis for Premiums
Projected Payroll
Classification Codes
Governing Class
Standard Exceptions
Manual Rates
Experience Rating
Credits / Debits
7
Classification Manual Rate Payroll Premium
(8810) Clerical .24 $150,000 $ 360
(6382) Outside Sales .35 $175,000 $ 613
(2394) Assembly 3.56 $ 75,000 $ 2,670
(3114) Tool Mfg. 5.01 $975,000 $ 48,848
______________________________________________________________ MANUAL PREMIUM $ 52,490
Understanding Premiums
8
None of us want any of the employees at our company to be injured on the job, and that is perhaps the strongest motivator for developing a strong and effective loss control program.
But another strong motivator for having a strong and effective loss control program is to keep your workers’ comp premiums under control… right? The good news is that virtually everything that we will talk about today can help you reduce your workers’ comp premiums.
If we are going to try to influence our premiums, we should at least know how they are calculated.
There’s 4 things on this screen to understand
Classifications
Manual Rates
Premium
Manual Premium
Please take a look at this screen and let e know if there is anything that you don’t understand.
The next step is to apply the experience modifier. Has everyone heard of an experience modifier before?
What about EMR?
Purpose: Equitable Premium Calculation
Adjust Manual Rate
Account for Individual Co.’s Loss History
Frequency
Severity
National Council on Compensation Insurance (NCCI) or State Rating Bureau / Board
Considers Loss from Previous Three, Full Policy Years
9
Used to predict the future losses of an individual company, using past claims data.
Lower than Average Losses = Below 1.00 (Credit)
Average Losses = 1.00 (No Impact on Premium)
Higher than Average Losses = Above 1.00 (Debit)
Experience Modification Factor
10
An experience modification factor (a.k.a. mod, EMF) is a factor used to adjust your manual premium up or down, based upon your past losses.
The goal of using an experience modifier is to predict the losses your company will incur in the upcoming policy year.
For now, all you need to know is that an experience mod less than 1.0 is good and an experience mod of more than 1 is bad.
If you incur more workers’ comp losses than the average company in your industry, your mod will rise. If you incur fewer workers’ comp losses than the average company in your industry your mod will decrease.
EMR Terms To Know
LOSS
Ratable Loss
Non Ratable Loss
Primary Loss
Excess Loss
Med Only
Lost Time
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Example 1
Company A
Carpal Tunnel Claim
Loss = $99,999
Company B
Catastrophic Claim
Loss = $247,345
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Example 1: EMR Impact
Loss Counting Toward Company A’s EMR…
$99,999
Loss Counting Toward Company B’s EMR…
$100,000
Only $1 difference in EMR calculation
13
Example 2
Company A
Moe Skeeter
Lumbar Strain Lifting
Treated by
Dr. Doogood
Conservative Trtmt. – No Lost Time
Claim Costs = $5000.00
Company B
Justin X. Sample
Lumbar Strain Lifting
Treated by
Dr. Shyster
Less Conservative – 28 Days Lost Time
Claim Costs = $5000.00
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Example 2: EMR Impact
Loss Counting Toward Company A’s EMR…
$1500
Loss Counting Toward Company B’s EMR…
$5000
Loss for Med Only is Reduced by 70%
EMR measures accident management;
not safety management.
15
Classification Manual Rate Payroll Premium
(8810) Clerical .24 $150,000 $ 360
(6382) Outside Sales .35 $175,000 $ 613
(2394) Assembly 3.56 $ 75,000 $ 2,670
(3114) Tool Mfg. 5.01 $975,000 $ 48,848
______________________________________________________________ MANUAL PREMIUM $ 52,490
EXPERIENCE MOD 0.89
MODIFIED PREMIUM $ 46,716
Understanding Premiums
16
This screen shows the experience mod applied to the manual premium. This company has done well and has a credit mod (meaning that it is less than 1.00). Multiplied against the manual premium, a .89 experience mod results in an 11% reduction.
Now it’s time to apply schedule credits or debits
Scheduled Credits/Debits
Management Commitment
Employee Section and Training
Safety Devices
Premises Care and Condition
Medical Facilities
17
Schedule credits/debits are characteristics of your individual business for which underwriters are permitted to apply discounts or increase the premium.
These include such broad areas as
Management Commitment
Employee Section and Training
Safety Devises
Premises Care and Condition
Medical Facilities
Classification Manual Rate Payroll Premium
(8810) Clerical .24 $150,000 $ 360
(6382) Outside Sales .35 $175,000 $ 613
(2394) Assembly 3.56 $ 75,000 $ 2,670
(3114) Tool Mfg. 5.01 $975,000 $ 48,848
______________________________________________________________ MANUAL PREMIUM $ 52,490
EXPERIENCE MOD 0.89 MODIFIED PREMIUM $ 46,716
SCHEDULE CREDIT (20%) -$ 9,343
PREMIUM DISCOUNT (-7%) -$ 654
NET PREMIUM $ 36,719
More than a $15,000 savings
compared with the manual premium !!!
Understanding Premiums
18
This screen shows the application of a 20% schedule credit and a &% premium discount.
The premium credit is fairly simple. The greater your modified premium, the greater the discount.
As you can see this company saves more than $15,000 on their workers’ comp premium.
If you have specific questions about workers’ comp premiums, you can ask them now or on a break. If there’s none right now, I’d like to turn the presentation over to Barry Spurlock so we can begin talking about what you can do to influence your premiums long-term.
Channels for Loss ControlCredits
Broker / Agent Submissions
Pre-Quote Inspections (a.k.a. surveys)
Periodic / Pre-renewal Inspections
Special Underwriting Requests
19
Dimensions of Loss Control Credits
Culture
Risks Avoided
Risks Transferred
Regulatory History
Purposeful Hazard ID Processes
Formalized Safety Systems
Engineering Controls
Training
Frequency
Substance
Mitigation Measures
Hiring and Retention Practices
Actions to Previous Losses
Observable Work Behaviors
Observable Work Environment
20
Tapping Resources
Insurance Carrier Awards and Certification Programs
Utilization of Offered Loss Control Services
Rapport with Loss Control Consultant
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