Rating Bureau Recommends Rate Increase, Albeit Slight

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The Workers’ Compensation Insurance Rating Bureau of California will ask for a benchmark rate increase of 0.1% for policies incepting on or after Jan. 1, 2018. But, in light of the insurance commissioner approving a 7.8% decrease for July 1 of this year, the benchmark rate for 2018 policies will still be nearly 8% less than it was at the start of 2017. The change would affect the benchmark rate – also known as the pure premium rate – which is a guidepost that insurers use to price their policies. That said, insurers are free to price their policies as…
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How Three Companies Reduced Their Workers’ Comp Costs

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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…
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Employers Protest Proposed First Aid Claims Rules

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California employers are protesting a part of the Workers’ Compensation Insurance Rating Bureau’s 2017 rate filing dealing with first aid claims, asking the insurance commissioner to delay adoption. Businesses say the proposed reporting provisions are unclear and inappropriate in light of impending changes that will exempt the first $250 of every claim from the experience rating calculation. Many employers simply do not report first aid claims in order to keep their experience modifier down, even though the Rating Bureau requires them to do so. Beginning in 2017, frequency will become a major part of the formula for calculating X-Mods. Under…
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New Law Tightens Workers’ Comp Exclusion for Officers, Board Members

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A new law has made changes to the officer exclusion for workers’ compensation in California but it could cause problems for policies that do not incept on Jan. 1. Starting in 2017, an officer can be only excluded from workers’ comp coverage if he or she owns 15% or more of the company’s stock. That’s changed from the current rules that set no ownership levels for officers and directors that want to claim a workers’ comp exclusion, which has created confusion as well as an opportunity for fraud. However, the law is written in such a way that it also…
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The Effects on Your X-Mod When Purchasing Another Company

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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…
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New X-Mod System Reduces Effect of One Large Claim

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One of the biggest complaints in workers’ comp – that one large claim can skew an employer’s X-Mod – is about to finally be addressed in California. The Workers’ Compensation Insurance Rating Bureau’s “split-point” experience rating system, in which an employer’s actual workers’ comp losses are divided into actual primary losses and actual excess losses, will be overhauled for 2017. The Bureau will do so by replacing the current static $7,000 split point for all industries and employer sizes with a variable split-point system. This change is expected to limit the impact of one large claim on an employer’s (particularly…
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Finding Ways to Reduce Human Errors that Cause Workplace Accidents

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An Indiana University of Pennsylvania professor is hoping that a study he is embarking on will yield new methods for reducing workplace injuries by identifying tools to motivate and engage workers in the safety process. The study will focus on human error and the role it plays in accidents, and accident prevention. Safety sciences professor Jan Wachter believes that human error in the workplace, while not completely preventable, can be managed by better tools to motivate and engage workers in the safety process. If his study yields new ways to manage safety in the workplace successfully, he hopes the results…
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Agency Recommends Further Rate Cuts for California Employers

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The reforms that were ushered in by the state Legislature in 2012 seem to be paying off, with the Workers’ Compensation Insurance Rating Bureau of California recommending that benchmark rates be cut by an average of 5% in July. The Rating Bureau has forwarded its recommendation for a mid-year rate cut to the California Department of Insurance, and the insurance commissioner will hold a hearing on the filing likely in May. The filing was made in reaction to lower-than-expected medical cost development, as well as the cost of indemnity benefits per claim. The Rating Bureau is recommending that the average…
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Identifying Problem Workers’ Comp Claims, Fraud with Predictive Modeling

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With decades of information in their databases, many insurers have started using those statistics to their advantage to intervene earlier in problem claims and to identify potential fraud. With years of data to rely on, insurers have identified certain triggers that can indicate that a claim may require additional intervention and more hands-on management. The predictive modeling program will alert a claims adjuster when it identifies certain parameters or events. This early identification of problem claims is helping employers and insurers achieve better outcomes for injured workers, as well as save money and time. As the trend continues, it should…
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Run FMLA Concurrently with Workers’ Comp for Long-term Absences

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Employers that run federal Family and Medical Leave Act benefits at the same time as workers’ comp benefits give themselves more leeway when employees are off work for workplace injuries for an extended period of time, a state supreme court has ruled. In the case of Kings Aire Inc. vs. Jorge Melendez, the Texas Supreme Court ruled that an employer who laid an employee off who had been out on workers’ comp concurrently with FMLA, but had exceeded the 12 weeks away that is allowed by the law, was entitled to do so. But regardless of the outcome of this…
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