Author, Dave Garcia, President, Rancho Mesa Insurance Services, Inc.
Many years ago, when I was a young producer, one workers’ compensation carrier legend pulled me aside and told me never to forget that a workers’ compensation decision is not a one-year decision, but at least a 4-year decision. Of course, policies are only written on a one-year basis but what he was teaching me was that the carrier you choose will handle all the claims you have through your Experience Modification cycle. So, evaluating and recommending a workers’ compensation partner for my clients just became a much more thorough analysis of many critical factors beyond just the premium.
I understand and want to acknowledge that competitive pricing is very important, yet other than price, most business owners are not sure what to look for when comparing carriers. All businesses should consider the following in their evaluation of a workers’ compensation carrier:
What is the A.M. Best rating of the carrier?
How long have they been in the State workers’ compensation marketplace?
What is their premium volume within the State?
What “in-house” services does the carrier provide? Two services for special consideration are:
The Claims Department
Loss Control Service
How does their medical cost containment numbers compare to the industry averages?
How does their claim closing rates compare to the industry average?
Are the following services available?
Telemedicine
Nurse Triage
For any businesses that pay above $250,000 in annual premium, should consider these additional questions:
Does the carrier offer a dedicated indemnity claims examiner for your business?
Does the carrier offer Claim Review Meetings?
Does the carrier offer a Client Services coordinator?
Does the carrier offer on-line claim status information?
What loss sensitive programs do they offer?
Further, for any businesses that are exploring loss sensitive programs (usually above $400,000 in annual premium) like deductible workers’ compensation, they should evaluate the following:
What are the terms of the letter of credit required?
Is there a Loss Conversion Factor (LCF)?
Is a Loss Fund required?
How are Allocated Loss Adjustment Expenses (ALAE) handled?
Is there a policy deductible aggregate?
Are there any claims handling charges?
Are there Medical Cost Containment charges?
Since many of the concepts and terms above require a deeper understanding and explanation, listen to my podcast episodes where I examine this topic in greater detail.
Also, consider attending one or both of my live webinars that cover this topic and afford you the opportunity to ask questions. Register for our Thursday April 1, 2021 webinar where I will focus on businesses with annual premiums below $400,000, and/or register for my Thursday April 8, 2021, webinar where I will deal specifically with deductible workers’ compensation. Both webinars will be 30 minutes in length.
If you would prefer to speak with me directly, I can be reached at (619) 937-0170 or email me at dgarcia@ranchomesa.com.
I wish you all a safe and profitable 2021.