Florida implemented major changes to the workers’ compensation coverage system to provide relief to business owners. Major changes included; revising eligibility standards for disability benefits, setting limits on attorney fees, and revising medical fee schedules. The impact of these changes was a dramatic success with a 63.2% decrease in average rates through January of 2011.
The 8.9% increase in workers’ compensation rates effective January 1st 2012 on top of the 7.8% increase in 2011, is significant from the standpoint that the pendulum now appears poised to swing in the same direction as health insurance rates. Similar to health insurance, medical costs continue to escalate, pressuring loss costs which are measured by NCCI (National Council on Compensation Insurance), the largest provider of workers’ compensation and employee injury data in the nation.
There are several ways to combat increased workers’ compensation insurance costs whether you maintain and manage your own policies or whether they are bundled with other services such as payroll and health insurance through an employee leasing or Professional Employer Organization (PEO) firm. Loss experience can have a great impact on your premium and is measured in relation to your firm’s peer group via an experience modification factor. A factor of 1.0 is average (unity experience modification factor).
A credit or debit factor is applied based upon your individual loss experience. The control of implementation of a documented safety or drug-free program can provide several benefits for business owners and employees. Aside from the compliance aspect, a documented safety or drug-free program communicated by top management can help to establish positive rapport with employees by showing commitment to maintaining a safe and healthful workplace. Additional credits can be applied to workers’ compensation policies as a reward for having safety and drug-free policies in place. To learn about ways to reduce your workers’ compensation premium, click here.
Are you receiving a dividend from your workers’ compensation carrier as a result of favorable loss experience? The competition for Florida workers’ compensation business is intense with many carriers rewarding clients with favorable loss experience. As an employer with a dividend plan in place, you have the opportunity to recoup a portion of your premiums based on your individual loss experience.
If you are with a PEO or leasing firm, you may not be receiving a dividend, and consideration should be given to separation of the individual components of a bundled program. Separating or breaking out the payroll from the health and workers’ compensation insurance can provide substantial benefits including reduced costs and the opportunity to receive workers’ compensation dividends.
The beginning of the year is an ideal time to evaluate your insurance and payroll options as the impact of wage base limits are muted. Additionally, many workers’ compensation carriers offer “pay as you go” features which can be linked to payroll firms to provide continuity and a seamless administrative program which can provide you with the benefits of maintaining you own workers compensation policy.
We encourage you to evaluate you insurance options to mitigate escalation of cost increases. Contact CIS to help you with your evaluation.