How to keep your workers’ compensation premium in check
Once you understand how workers’ compensation premium payments for your business are established, you’ll see you have more control over them than you may think. We broke it down in steps so it’s easier to decipher.
Step 1: Apply the base rate
All businesses in a certain class or market receive a base rate, which has been predetermined by the National Council on Compensation Insurance (NCCI). The rate then is applied to your business’ payroll to adequately account for the number of employees.
Step 2: Adjust premium based on injuries
Next, you receive an Experience Rating Modification (MOD). This is simply the cost of your actual workers’ compensation claims during the first three of the last four years, divided by the expected losses for your business, which also are predetermined by the NCCI.
If your claim history is average, your MOD will be 1.0, and you’ll pay the base rate. If you have lower claims than average, your MOD will be less than 1.0, and you’ll receive a discount. On the other hand, if you had higher losses than expected, you’ll pay more for your coverage.
Step 3: Influence your MOD, influence your premium
To lower your premium, you need to lower your MOD. And that means you need to improve your claims – the number and the severity. It’s not easy to do, but partnering with the right independent agent and insurance company is a start.
At SECURA, we work closely with our business policyholders to create safety and return-to-work programs. A return-to-work program, designed to get an injured employee back to work in any capacity as soon as medically possible, is the golden ticket.
In fact, nearly 90 percent of injured employees will return to work after four weeks, whereas only 10 percent will return after 12 weeks. That’s why it’s so important to get them back to work quickly. In addition, the employee is likely to have higher morale once he or she is back, and you have the benefit of completed work and lower claim costs.
These programs take time and expertise to launch and run, so speak with your insurance agent or company to get started. For a SECURA agent who can help near you, visit www.secura.net.