Creating a Strong Safety Program for Your Fleet Drivers

While most operations with an automotive or trucking fleet focus on safety, few businesses are actually monitoring their drivers to make sure they are adhering to the company’s rules, a new study has found.

Many companies only pull reports on their drivers’ records on an annual basis, which means they miss important developments like a DUI or a few moving violations that will increase the cost of insuring them.

In fact, 70% of companies with fleets do not even monitor their drivers and 60% don’t have a safety program in place, according to the study by SambaSafety, a firm that provides background screening and driver safety records for companies.

The key to having a successful driver safety program in place requires management buy-in and a company-wide culture focused on safety that encompasses not only a company’s fleet drivers, but also anybody in the operation that may drive their personal vehicles on occasional company business.

SambaSafety recommends:

Motivating staff to be safer – The company advises against just issuing warnings like “slow down” and “put away the phone,” and instead focusing on what’s at stake if they don’t. Instead of numbers and checklists, make a presentation that lets them think in terms of their well-being, or even loss of life, for the best response.

Providing strong safety leadership – Creating a safety culture requires leadership to model the behaviors that all employees should adopt.

Not just focusing on fleet drivers – Any employees that use their vehicles for work must also be part of the training and they should know that you expect the same safe behavior of anybody you employ that drives.

Drive home the point that an employer can be responsible for anything that happens when employees are conducting company business, even if they are running to the office supply store for you.

Being consistent – Just because you have a safety policy, it may not be enough to get you off the hook if one of your drivers causes an accident. Companies can be held responsible if they do not have proactive intervention policies and detailed documentation.

Using data to your advantage — Collecting data on your employees’ driving habits can greatly improve your ability to make sure you have a safe fleet of drivers. And the best way to do that is through continuous driver monitoring.

“The right data can help employers accurately reward those who are doing well, too, and securely keep up with disciplinary actions toward those who are missing the mark,” SambaSafety says in its report.
Do you have a strong safety policy for your drivers? The company recommends that you ask the following of your safety program:

  • Was the policy established with input from key stakeholders?
  • Has it been clearly communicated to all employees?
  • Does it tie in to company goals and mission?
  • Do employees receive regular reminders and updates about safety policies?
  • Is it aspirational and values-based rather than simply disciplinary?
  • Is there complete buy-in from top management?
  • Is the policy uniformly enforced?
  • Is there a fair, diverse, professional board for incident review?
  • Is data properly used to increase compliance?
  • Is it time for an update?

Silica Safety Enforcement Delayed for Construction Industry

Cal/OSHA has delayed enforcement of its crystalline silica safety standard for the construction industry for another three months to ensure the California rules are in synch with federal rules on the dangerous airborne matter. The move came after Fed OSHA announced April 6 a delay in adoption of the crystalline silica standard for the sector “to conduct additional outreach and provide educational materials and guidance for employers.”

The silica rules have already been in effect for general industry since 2016 and the delay in enforcement is only for the construction industry. Enforcement for the construction sector was slated to start June 23, but that’s been changed to Sept. 23 under the new order. Under the new silica standard, the permissible exposure limit is 50 micrograms per cubic meter of air, compared to the old standard of 100. The California standard is similar to the federal standard, which the industry is challenging in a federal lawsuit. One outfit, the American Chemistry Council, wrote to the Cal/OSHA standards board that the 50 micrograms level is unnecessary and that the current standard, in place since 1971, has markedly reduced the cases of silicosis.

Industry has complained that the cost of complying with the new standard for employers nationwide will be about $6 billion, although Fed-OSHA says it will cost $371 million for employers to fall in line. The sticking point for the federal construction silica rule is that it requires wet cutting of silica-containing materials to reduce the chances of particles in the air. The California rules allow for wet cutting and dry cutting with vacuum saws that suck in the particles before they escape into the air. Contractors would rather cut dry rather than wet.

Fed-OSHA’s requirements were also scheduled to take effect on June 23, but the agency announced that implementation would be delayed by three months to give industry a chance to provide data showing that dry vacuum cutting is just as safe in reducing crystalline silica dust as wet cutting. While Cal/OSHA’s move only delays enforcement, the silica rule is already on the books and employers should comply with it.

All construction employers covered by the standard are required to:

  • Establish and implement a written exposure control plan that identifies tasks that involve exposure and methods used to protect workers, including procedures to restrict access to work areas where high exposures may occur.
  • Designate a competent person to implement the written exposure control plan.
  • Restrict housekeeping practices that expose workers to silica where feasible alternatives are available.
  • Offer medical exams – including chest X-rays and lung function tests – every three years for workers who are required by the standard to wear a respirator for 30 or more days per year.
  • Train workers on work operations that result in silica exposure and ways to limit exposure.
  • Keep records of workers’ silica exposure and medical exams.

 

If you have not started complying, you should get your new safety protocols in place now. You have an additional three months to do so.

 

Insurance Commissioner Okays Benchmark Rate Decrease for California Employers

California’s insurance commissioner has approved a recommendation to reduce average baseline rates on workers’ compensation policies by 7.8% at the mid-year mark.

The mid-year reduction to the baseline rate is largely the result of reforms that were introduced in 2013 that have sped up the settlement process for claims (including many long-term claims), in addition to reducing medical costs. Also, because of these reforms the cost of adjusting workers’ comp claims in California has dropped over the past few years.

Insurance carriers use the benchmark rate – also known as the pure premium rate – as a starting point for pricing their policies. The benchmark rate is an average across all industries and employers may or may not see decreases in their workers’ comp premium come renewal as many other factors are at play, not the least of which is the employer’s own safety history.

Insurers are free to price their policies as they wish under California insurance law. Region is also important and insurers are pricing policies for Southern California employers higher than for the rest of the state due to the continuing problem of cumulative trauma claims being filed by workers post-termination, mostly in the greater Los Angeles area.

“Cumulative injury claims often involve multiple injuries [that have developed over time], are very frequently litigated, are filed disproportionately in the Los Angeles Basin and often are filed on a post-termination basis,” the Workers’ Compensation Insurance Rating Bureau stated in a report on the state of the market as of Dec. 31, 2016. Indeed, while cumulative trauma claims accounted for just 8% of all claims in 2005, in 2015 they comprised 18% of all claims, according to the Bureau.

The state insurance commissioner sets the benchmark rate with guidance from the Rating Bureau, which recommended a 7.8% rise to him in April. The approved rate is 7.8% less than the pure premium rate for policies incepting on or after Jan. 1, 2017. The average advisory pure premium rate starting July 1 will be $2.02 per $100 of payroll. That’s compared with $2.19 per $100 of payroll as of Jan. 1. The pure premium rate is a reflection of an overall decline in the total cost of claims thanks to SB 869, the legislation that was signed into law in 2013.

By addressing numerous cost drivers it has helped reduce medical costs, expedite claims settlements, and reduced the frequency of workers’ compensation claims. The legislation also increased benefits for some injured workers. As a result, the average projected ultimate cost of a claim increased to $82,234 at the end of 2016, compared to $74,699 in 2013.

Court Decision Shows Extent of Employer Liability for Traveling Employees

The employer of a worker who causes damage during their off hours on a business trip may be held liable for them acting “in the scope of their employment,” according to a federal court decision.

The ruling will allow the case to go forward after the court declined to uphold the employer’s motion to dismiss it as a defendant in the lawsuit after its employee had caused $147,000 in damage to a hotel room while on a business trip. The employee fell asleep while frying egg rolls on the stovetop in his room, after which a fire broke out.

The case illustrates the importance of having policies in place for traveling workers in order to reduce your company’s liability when they are on a trip on your behalf.

Lloyd’s of London paid for the original damage but later sued the worker and his employer, FlightSafety International Inc., to collect the damages. Lloyd’s says that by virtue of the fact that he was on a business trip, the man was acting within the scope of his employment when he started the fire.

Hence, FlightSafety is also liable for the damages to the Residence Inn in Wichita, Kansas.

In making its case, Lloyd’s said that FlightSafety had a contract for its employees to stay with the hotel chain. “The entire purpose of defendant Foster’s trip was business on behalf of defendant FlightSafety,” Lloyd’s wrote in its complaint.

The court said that it was not yet clear if the worker was acting outside the scope of his employment and that that fact needs to be tried at the trial court level.

The decision sends the case back to the trial court for hearing.

 

The takeaway

It’s quite common for employees to engage in risky behavior when on business trips. On Call International in a 2015 survey of 1,000 business travelers found that:

  • 27% of respondents admitted to binge drinking while on work-related trips, and
  • 11% said they had picked up a stranger at a bar while traveling for their jobs.

 

With these findings in mind and in light of this decision, employers should keep in mind that other courts have also found them liable when their workers are driving during their off hours while on a business trip, say going out to dinner on their own.

While responsibility ultimately falls on the business traveler to act in a responsible and safe manner, employers should establish appropriate parameters and rules and be clear about the expectations it has of its employees while they are out representing the organization.

Companies Struggle with Benefits Compliance

More and more employers are being overwhelmed by all of the compliance requirements associated with managing employee benefits.

The Guardian Life Insurance Company of America’s “Benefits Balancing Act” study found that 60% of employers are feeling overwhelmed with the increased complexity of managing their benefits programs. One of the main reasons for the additional burden is the Affordable Care Act, with its myriad of compliance and reporting requirements.

The employer mandate and the documentation and new filing requirements with the IRS are high on the list of compliance issues, as are evolving Family Medical Leave Act (FMLA) and ERISA requirements.

Interestingly, larger firms with 100 or more employees are having the hardest time, with 70% saying they are especially challenged by installing new coverages, changing carriers and employee communications and enrollment.

The shackles of compliance are so great that it’s the number one benefits-related concern for nearly 30 % of employers, the study found. In fact, 70% said that their firms are not equipped to keep up with the steady changes in federal and state laws governing employee benefits.

The top areas of compliance concern are:

  • The ACA excise tax (“Cadillac tax”)
  • Changes to paid parental leave laws
  • ACA employer mandate
  • ERISA requirements
  • State and local FMLA requirements

 

In terms of administration the top concerns are:

  • Employee communications and education
  • Adding new benefits or changing plans and insurers
  • Establishing electronic data interchanges
  • Account management and service delivery
  • Claims and employee customer service
  • Enrolling employees

 

What companies are doing

As the regulatory landscape has shifted so dramatically over the last seven years, many employers have opted for outsourcing their benefits compliance.

This may be an especially smart move for smaller employers, which often do not have in-house benefits administration resources.

 

Among employers outsourcing at least some benefits activities, the study found that:

  • 50% use the services of a broker
  • 25% use an insurance company
  • 25% use a third-party vendor (enrollment firm, HR services firm or a private exchange)

Why You Can’t Afford to Not Have Professional Liability Insurance

At some point, most businesses are involved in some type of legal dispute, be it over an alleged physical or property damage to a third party or financial injury to a competitor, client or vendor.

And you’d surely want an insurance backstop in case you are targeted, to help pay for legal costs and any settlements or judgments. The type of liability that your business is going to face will depend on the type of work that you do.

If you’re in a service trade, the chances of your work causing someone physical damage or harm are remote, but you could still be sued for not living up to your part of a contract or if your services caused a client to lose money.

The costs of defending against a lawsuit of that type could quickly mount, even if you come out victorious in the end. Those costs would have to be borne out of pocket if you didn’t have the appropriate insurance.

The costs of not carrying professional liability insurance in many services trades can be a disaster to your finances as a lawsuit can catch you by surprise, even for work that you may have done years ago.

 

The unfunded lawsuit

Here’s a scenario that could leave you scrambling for funds. You run an engineering firm and a manufacturer sues your business after one of the machine parts that you designed failed, causing one of the client’s machines to seize up, resulting in $58,000 in damage to the machine and production downtime.

The lawsuit accuses your firm of negligence. Your business could be facing serious financial hardship as the suit asks for the cost of repairs and the lost production.

Here’s what you’re looking at:

  • Attorneys’ fees – Depending on where you live, these can range from $150 to $400 an hour, or more if you go with a topflight law firm.
  • Court expenses – Fees for copying, filing and other miscellaneous tasks all add up.
  • Other legal fees – You may need to call expert witnesses, as well.
  • Damages or settlements – Even if you try to reach a settlement with your client, they may opt to take the case to trial in hope of winning the full amount of the damages they are claiming.

 

You can see how the costs can quickly mount and if it gets to a damages or settlements stage, the costs will increase significantly.

You should know too that even if the case was frivolous, you’d still have to pay attorneys to defend it and file motions to have it tossed out of court. That alone could run you at least $5,000 in legal fees – a lot of money to pay out of pocket.

In fact, the U.S. Small Business Administration estimated in a recent study that legal costs for litigation ranged from $3,000 to $150,000, and only one-third of small business owners reported spending less than $10,000.

And there can be other fallout, as well. Perhaps word has gotten out about the lawsuit, damaging your reputation and ability to attract new clients and retaining existing ones.

And if one client has sued, others who may have held off and had similar experiences could also file suit.

 

Professional liability insurance

Insurance could have saved you from these significant expenses. The coverage, which is relatively inexpensive, is what’s known as “claims-made” coverage.

That means your policy must be active when the alleged incident occurred and when the claim is filed, in order to receive your benefits.

Client allegations that your work caused them a financial loss are often covered by a professional liability policy.

Professional liability insurance can cover errors and oversights with your work, as well as legal fees and the cost of settlements or judgments.

Cost: The average yearly cost of professional liability insurance for a small business, regardless of the limits chosen or the industry of the business, was $985.49 in 2015, according to the Insurance Information Institute. The median was $758.00.

GOP Releases Legislation to Gut and Replace ACA

House Republicans have filed legislation that would repeal most of the Affordable Care Act, including measures to eliminate the employer and individual mandates.

But from the get-go the legislation – backed by the House leadership – was panned by the GOP’s conservative wing, which said it doesn’t go far enough to completely get rid of the ACA, casting doubt on the prospects of it getting passed.

And Congressional Democrats immediately voiced their absolute opposition to the bill, vowing to vote ‘No’ on the legislation.

While passage in the House would be a bit easier, the slim 51-49 vote edge that Republicans hold in the Senate means it’s unclear whether the bill can pass in its present form.

But for now, this is the only piece of viable legislation that’s been floated to gut the ACA, and replace it with a scaled-down version.

The leadership is mindful that they cannot do an outright repeal, since it would affect some 20 million people who have been able to secure health insurance under the ACA.

The bill, called the American Health Care Act, would be phased in over time and would keep the ACA’s premium subsidies for policies purchased through insurance exchanges until 2020, as well as fund Medicaid expansion under the ACA for the same time.

This is just the first draft, and because of the opposition from conservatives in the Republican Party, the current version will not likely be the final one.

House Speaker Paul Ryan has said he wants to see the bill passed by Congress by the end of April. In other words, there will be a lot of work to do in very short order.

 

Here are some of the major provisions of the bill:

  • Eliminating the employer mandate that requires employers with 50 or more full-time or full-time equivalent workers to offer health insurance.
  • Eliminating the individual mandate requiring Americans to be covered either through their employment or by purchasing coverage on the open market or a health insurance exchange.
  • Ending the funding for Medicaid expansion as of 2020.
  • Converting the Medicaid to a program of capped per-capita federal grants to the states, starting in 2019.
  • Eliminating the subsidies available under the ACA and replacing them with age-based, refundable premium tax credits to help people buy insurance. Under the ACA subsidies are based on income, not age, and the proposed age-based tax credits generally would be smaller than the ACA’s.
    The tax credits proposed by House Republicans would start at $2,000 a year for a person under 30, rising to a maximum of $4,000 for a person 60 or older. A family could receive up to $14,000 in credits.
  • Removing ACA taxes and penalties (adding a premium incentive for continuous coverage and allowing insurers to tack on a 30% surcharge for people who let their policies lapse).
  • Protecting employer exclusion (tax write-off for employers and pre-tax for employees).
  • Retaining the “Cadillac tax” on high-value plans, but delaying its implementation to 2025 from 2020.
  • Eliminating the requirement that plans must offer minimum essential benefits.
  • Offering states $100 billion over nine years to establish high-risk pools or other mechanisms for stabilizing the individual insurance market.
  • Allowing insurers to charge older individuals five times higher premiums than they charge younger people. That’s compared with the 3 to 1 ratio under the ACA.
  • Expanding and promoting health savings accounts.

 

 

The fate of the legislation remains to be seen and under the proposal, it would surely not live up to President Trump’s promise that individual plans would be better and less expensive under the GOP’s ACA replacement.

 

We will keep you posted as the legislation develops.

 

 

 

Baseline Health Tests Can Shave Workers’ Comp Claims Costs

More employers are testing new hires in physical jobs to establish a baseline in case they ever file a workers’ comp claim down the road.

The aim is to establish what physical ailments and pain the new hire already has, so if they are injured you can find out if they aggravated an existing injury or it’s just an existing injury that’s flaring up. And if done correctly, baseline testing doesn’t infringe on the worker’s rights or health privacy.

Baseline testing should not be confused with physical evaluations that are conducted after a job offer, but prior to placement, to ensure the new hire doesn’t have physical constraints that would keep them from performing their job. The data in a baseline evaluation cannot be used for that.

In fact, the data collected in baseline testing is kept sealed from the employer.

 

How it works

Baseline testing is best conducted on workers in physical jobs.

Baseline tests measure the signals traveling in the nerves and muscles, and include the use of electromyography. The tests are non-invasive and often include range-of-motion testing.

Employers that send their employees for testing cannot view the test results unless the information is needed to confirm or refute a subsequent injury.

If a worker files a claim for a soft-tissue or repetitive motion injury, the employer can order a second test, which will be used by the insurance claims adjuster or treating physician to compare to the baseline test. If there is no change in pathology, the claims administrator can deny the claim and the chances are high it won’t be contested.

To avoid problems with singling out specific workers or disabilities, you should perform this testing on the entire workforce – or at least in all of your physical jobs.

Under the law, you can order baseline testing at any time on any employee, and not just when they are hired.

The good thing about the testing is that it can identify legitimate claims. Since there is a baseline, when doctors compare and see a change in pathology, they can order treatment and workers’ comp insurance pays for it and the worker’s time away from work.

On the other hand, a second test can show irrefutable evidence that there was no chain in pathology and so the injury that the worker is claiming is likely not work-related.

 

Savings

Anecdotally, employers that use baseline testing see tremendous results in their workers’ comp claims.

According to an article in <i>Business Insurance</i>, Wisconsin-based Marten Transport since starting baseline testing in 2015:

  • Has seen its rate of soft-tissue injury claims for new hires drop from 3.3 per 100 new hires to 1.4.
  • Has had only three of the 37 claims filed by new hires in their first six months showing actual injuries beyond soft-tissue pain that was documented when they began working.

 

Marten Transport conducts the tests as part of its employment agreement and uses a third-party company to carry them out.

The non-profit organization, the Gatesway Foundation, started using baseline testing by contracting with California-based Emerge Diagnostics to rein in its spiraling workers’ comp costs.

It had been experiencing a high share of work-related musculoskeletal injuries (soft-tissue) claims, like injuries to muscles, tendons, ligaments, joints, cartilage and spinal discs.

The year prior to implementing baseline testing, the foundation’s developed claims losses were $1 million. In the first six months of the next policy year, prior to implementing the program, the foundation’s developed losses were $500,000 but, in the latter half of the year – after implementation – losses had dropped to $30,000.

Overall, it reduced claims costs by $316,544 and the program cost $9,200 – a return on investment of 3,441%.

 

The takeaway
As mentioned, workers in physical jobs are the best candidates for baseline testing. That includes both light and heavy manufacturing, construction, agriculture, cleaning services and movers, to name a few.

But it could also be applied to any job that involves any type of repetitive motion, even without physical exertion.

How Three Companies Reduced Their Workers’ Comp Costs

We’ve told you often in these pages about various workplace safety and claims management techniques, but sometimes it’s good to learn from the first-hand experiences of other employers.

The National Underwriter insurance trade publication recently profiled three companies that had reduced their workers’ comp costs using a combination of claims management and safety initiatives.

You can use their experience to apply similar programs at your company.

 

SMS Holdings’ experience

This housekeeping and maintenance service provider did not roll out a one-size-fits-all approach to safety at is multiple locations in 46 states.

The company instead took a silo approach to improving safety by having its front line staff and their supervisors come up with programs to enhance safety at each work site.

It created safety committees at each of its locations that hold pre-shift safety huddles. Site managers also host weekly safety talks with employees that address hazards that are unique to the location, near misses or more general safety rules.

The company also started a safety-tracking program that provides a forum for managers to exchange ideas on how injuries could have been prevented.

SMS Holdings revised its injury reporting system, standardized claims instructions and forms and provided a claims checklist for its managers. Also, the company provides injured workers with a packet that outlines the process for handling their workers’ comp claim and includes all the forms and contact information they need.

The company says its claims litigation rate fell to 11% of all claims in 2015, from 18% in 2014 since implementing the changes. The number of claims dropped more than 14%, and claims that required lost time from work plunged 52% – all while the payroll has increased by 14%.

 

Seaboard Foods LLC

After noting a strong uptick in claims, this self-insured pork producer started working more closely with its third-party administrator, which handles its workers’ comp claims, to mine the company’s injury claims for data.

Seaboard, a 5,000-employee company in a small Texas town with a local network of providers, doesn’t always include the required specialist.

The company now ensures that every injured worker receives the appropriate specialized medical care right at the time of injury, even if that means that the employee see a specialist in another town. They can drive themselves and get reimbursed for mileage, but if they can’t, then the company arranges transportation.

Seaboard also started looking for and contracting with new service providers – like physical therapy and pharmacy management firms – that could demonstrate through data how they are able to reduce costs.

Finally, the company started holding quarterly meetings with its senior leadership, workers’ comp team, third-party administrator and workers’ compensation attorney to review claims. They set goals and objectives for closing claims as early as possible and identifying particular claims that the company would try to close prior to the next quarter.

To address injuries sustained in the cutting and packing lines, the company started conducting job-demand analyses to identify how employees get hurt doing certain tasks, and then evaluating workers to make sure they are fit for the work they’ve been assigned.

Finally, it started a “work conditioning program” that helps workers get their bodies in shape to deal with the physical demands of repetitive motions they encounter in the workplace.

All of this has paid off, and between 2012 and 2015 reduced Seaboard’s annual claims numbers by 46%. In addition, claims costs dropped 69% in that period.

 

Stater Bros. Markets

This supermarket chain started a new program focused on education and injury prevention for all of its employees, be they cashiers at its 168 stores or workers at its 2-million acre warehouse and distribution center in San Bernardino, Calif.

Some changes were small, like requiring all employees who use knives to wear a chain-link metal mesh glove on the hand opposite the one wielding the knife. This reduced cutting injuries from an average of 200 a year to none.

The company reviewed all of the clinics its injured workers are sent to, identifying and selecting facilities based on level of customer service and cleanliness.

The company also started a training regimen that rotates from store to store to train staff and low-level managers on injury prevention, focusing mainly on avoiding sprains and strains – the most common injuries in its stores.

For its warehouse employees, Stater introduced a program called “Ice Pack” in which physical therapists are available onsite at its corporate campus to help employees with taping, wrapping and icing parts of the body to help them do their jobs more efficiently or recover after a shift.

Finally, to address rising prescription drug expenses, it conducted a claims review to identify problematic prescription patterns. It met with the health care providers its employees use and worked with pain-management doctors to find alternatives to prescribing so many drugs, which employees often are not taking.

Since it started this program, Stater has reduced its prescription drug costs by $1 million over two years.

 

 

The Effects on Your X-Mod When Purchasing Another Company

Many companies are often taken off guard when their workers’ comp X-Mod shoots up after a merger or acquisition. The experience modifier spike is usually the result of the other employer having a less than stellar workplace safety record and high workers’ comp claims costs. But there are pre-emptive steps you can take to understand the impact of the merger on your X-Mod and the more you know, the better chance you’ll have at coping with the changed circumstances. The reason is that workers’ compensation rating bureaus have strict rules regarding mergers and acquisitions to ensure that companies don’t engage in shell games to hide their true workers’ comp claims experience. The majority of states have the same rules for ownership changes and their effect on X-Mods. First, let’s look at what a rating bureau will consider to be a change in ownership. Typically that would mean: • All or a portion of the ownership in an entity is sold, transferred or conveyed from one person to another. • An entity is dissolved or non-operative, and a new entity is formed. • Two or more corporations undergo a statutory merger or consolidation. • All or most of the tangible or intangible assets of an entity are sold, transferred or conveyed to another entity. • A trusteeship or receivership is set up, either voluntarily or at the direction of the courts, to operate a business.

What will happen Rating bureaus will have something known as the “Notification of Change in Ownership Endorsement,” which requires that the purchasing party or merged entity report the ownership change within 90 days of the transaction. Once that is done, the rating bureau will combine the experience of the two companies on a weighted basis to calculate a new X-Mod. It will do that by transferring the experience of the selling entity to that of the purchasing entity. It’s the rating bureau’s job to review information you submit and make a decision as to how the change in ownership will affect the X-Mod for both the selling and purchasing entity. They will decide, according to the rules for the purchasing entity, whether the modification factor will be adjusted to reflect the experience of the newly acquired entity.

What you need to do An ownership change can have a number of ramifications for an employer in terms of workers’ comp, the most significant of which would be a change to its X-Mod. It may also have an effect on your anniversary rating date and your rating effective date. If you run the purchasing entity, the best course of action is to review the workers’ compensation history of the company being purchased so you have a full understanding of its workers’ comp experience. If they have a high incidence of workplace injuries, you can take pre-emptive safety measures when integrating the other company’s workforce. You should also come to us if you know that you will be merging or acquiring another entity. We can run a test calculation to approximate what your new X-Mod will be. We will pull your company’s data from the unit statistical report that your insurer submitted to the rating bureau, as well as that of the company you are purchasing. We can at that point determine the accuracy of the report in terms of your claims costs, payroll and classification codes. Once we have the other employer’s information, we can crunch the numbers to come up with an estimate for your new X-Mod. One more thing: Failure to report changes in ownership to your insurer may be considered X-Mod evasion and has serious implications. If the rating bureau determines evasion, it can go back as far as it chooses to examine your workers’ comp history.