Workplace injuries are costing your business money in a many ways; increased insurance premiums, cost of hiring and replacement, lost efficiency, additional training, increased paperwork and administrative costs, and more.
When I speak with business owners and CFO’s they often tell me, “the rates are what they are so there is nothing you can do to change what I pay for work comp.” While the state and the NCCI (National Council on Compensation Insurance) do set the class code rates in Florida, the employer has much more control over their premiums than they initially think.
What Employers CANNOT Control:
The state sets the rate. Standard rates for Workers’ Compensation policies in the state of Florida are set by the NCCI. That means, whatever “class code” the job description of your employees fall into, is the rate you pay. Rate x Payroll = Standard Premium. But did you know, there is another factor that affects the rates you pay? And you have control over it!
Here’s What You CAN Control:
The Experience Modification Factor (The MOD). Every business that is subject to Workers’ Compensation develops their own MOD over time. The MOD is essentially a multiplier of your rates. It can (sometimes drastically) cause your Work Comp premium to increase or decrease based on how your most recent 3-year loss history compares with your competitors. The equation NCCI uses to calculate your MOD is complicated, but to simplify, if you have more Work Comp claims than your competitors and the claims dollars are higher, you are going to have a higher multiplier (MOD) than they will.
How You Can Control The MOD:
If your company has average claims frequency and costs, you’ll have a MOD of 1.00. If your claims frequency and costs are higher than your competitors, you’ll have a MOD greater than 1.00. If they are lower than your competitors, you’ll have a MOD less than 1.00.
Here is an example:
- Company A and B both have a base Work Comp premium of $50,000. Company A has lots of claims and a MOD of 1.35. Company B has very few claims and a MOD of 0.65.
- A’s Premium Calculation: $50,000 X 1.35 = $67,500 (That’s 35% more than their average competitor.)
- B’s Premium Calculation: $50,000 X 0.65 = $32,500 (That’s 35% less than their average competitor and less than half of A’s premium!)
Depending on the size and scope of your business, it may be unrealistic to eliminate all workplace injuries. However, the handling process is extremely important to reducing the dollar value of the claim. At Gulfshore Insurance, we work with you and provide materials, training, and awareness for your employees. We also have in-house Claims Specialists who are licensed adjusters, navigating each claim on your behalf.
Jeffrey Sanders, TRIP is Client Advisor at Gulfshore Insurance. Jeff works with a wide range of business clients to deliver strategic risk analysis, guidance, and insurance. Comments and questions are welcome at firstname.lastname@example.org
As we continue to invest in resources to improve our clients’ experience, we are excited to announce the adoption of Indio – Gulfshore Insurance’s Secure Online Insurance Application, Document Sharing, and Document Signature Platform.
We recognize how cumbersome the insurance application process can be for most. Indio is a tool that allows us to provide clients with a fully digital application, renewal, and document signature process! This secure online platform combines all of the different functions of a typical insurance renewal process into one easy platform. Here are some of the key features and efficiencies this will bring to our insurance process:
- Online portal allowing easy access to insurance applications/forms whenever and wherever clients need them.
- The ability to sign all applications and forms live on the platform.
- The ability to upload and download documents as needed in a secure environment to ensure nothing malicious is sent.
- The ability to assign applications, forms, or even sections within applications to specific points of contact within your organization; in turn, reducing the need to print, scan, or even sign forms offline.
- The security of knowing your data is confidential!
For more information, contact us today!
Did you know that…
- More than half of U.S. businesses have experienced a cyber attack in the past year.
- Of those businesses hacked, 72% spent $5,000 or more.
- 1 in 9 system compromises happen in under a minute.
- 83% of compromises took a week or more to detect.
- All 50 states require notification when a data breach occurs.
In recent years, cybersecurity threats have become increasingly complex, and businesses of all kinds – including the construction industry – face ever-growing risks to their reputation, their finances, their continuity of operations, and even to the safety of their job sites and equipment. A recent Forrester survey revealed that more than 75% of respondents in the construction, engineering and infrastructure industries had experienced a cyber-incident within the last 12 months. It is projected that cyber crime will cost businesses approximately $6 trillion per year on average through 2021.
Cyber threats can expose all of a company’s digital assets: business plans and acquisition strategies; proprietary construction plans and designs; customer, contractor, and supplier lists and pricing; personally identifiable information of employees and contractors; protected health information of personnel; and facilities security information. Cyber risk can also cause business interruption and reputational harm: for example, a ransomware attack might not lead to a loss of information, but by shutting down a company’s computer networks, and potentially destroying information, it can cause an enormous amount of lost productivity and business delay. And the ability for cyber attackers to hijack physical devices – from security cameras to vehicle telematics to industrial control systems – means that there is an ever-increasing risk of property damage and personal injury due to cybersecurity incidents.
There are a number of ways to mitigate cybersecurity risk, including:
- Policies and training. The very best IT can’t prevent human error. It’s essential to implement clear policies on cybersecurity basics like use of strong passwords, multi-factor authentication, use of encryption for sensitive data, and restrictions on the use of removable media. It’s also essential to train employees on best practices, including how to recognize potential phishing emails and sensitive information to which they have been granted access.
- Vendor management. Contracts with subcontractors, suppliers, and others are an essential component of mitigating cyber risk. Legal review of representations and warranties about the cyber practices of a business partner, along with appropriately tailored indemnification and hold harmless provisions, can be a foundation for mitigating cyber risk associated with doing business with third parties.
- Insurance. Cyber insurance is widely available and can be an effective component of an overall insurance program. Most cyber policies cover the costs of forensic investigation and breach notification associated with a cyber incident, but many do not cover other costs that could be associated with a cyber incident. For instance, a business email compromise, in which a spoofed email dupes a company into wiring money or employee information to a fraudulent account, is often covered under a crimes policy. However, property damage, personal injury, and environmental damage, all of which are possible consequences of a cyber-attack, may be more likely excluded from cyber coverage and, instead, covered under general liability or other policies. Because of the many ways in which cyber threats can play out, and the intricacies of the intersection of various insurance coverages, it is essential to assess cyber coverage in the context of a comprehensive insurance program.
Cyber-attacks now occur to every class and size of business. Although the steps listed above can’t eliminate cyber risk altogether, they can greatly reduce the likelihood of an incident, and reduce its cost and impact if one occurs. The high cost of cyber-attacks makes going without cyber insurance a real risk.
Working with a trusted insurance agent who has proven expertise in cyber security and familiarity with the unique risks posed to the construction industry is the best way for companies to ensure that they are adequately covered.
Under a change to an NCCI rule, policyholders must now report any changes in the ownership of their business to their insurance carrier within 90 days.
When the ownership of a business changes, such as through a sale, transfer, merger, consolidation, or formation of a new entity, the change can affect your workers’ compensation experience modification factor (“mod”) that is assigned by NCCI. In the past, application of a revised experience mod, due to ownership change, was effective on the date a policyholder reported the ownership change. If the ownership change was reported to NCCI within 90 days of the change, the revised mod was applied as of the date of the change. If the ownership change was reported more than 90 days after the change, the revised mod was only applied as of the next rating effective date.
NCCI was concerned that policyholders were delaying their reporting of ownership changes/combinability status in order to delay a change in their current experience mod, so they proposed a change to the rule. NCCI determined that ownership and/or combinability status changes should be reflected in the purchaser’s and the seller’s mods as quickly as possible to ensure that the correct premium for the exposure is charged.
As of January 1, 2019, businesses have 90 days to report changes in their ownership in writing to their insurance carrier. Reporting may be done via a Confidential Request for Information Form (ERM-14), or in a narrative on your company letterhead and signed by an officer. If the change in ownership results in NCCI recalculating your experience mod, the insurance carrier will apply the new mod retroactively to the date of the change in ownership, regardless of whether the revised mod is an increase or a decrease.
The rule change also now requires all policyholders to report ownership changes to their workers’ compensation provider, even if the policyholder is not experience rated.
As always, if you have any questions regarding this update, please feel free to contact us. We are here to help.
On March 7, 2019, the U.S. Department of Labor (DOL) released its long awaited proposed rule to amend current overtime regulations. Specifically, the proposed rule would raise the minimum salary threshold under the Fair Labor Standards Act (FLSA) “white collar” exemption to $35,308 per year ($679 per week). The proposal does not call for automatic adjustments to the salary threshold; however, it does propose updates to the salary threshold every four years.
Currently, employees with a salary below $455 per week ($23,660 annually) must be paid overtime if they work more than 40 hours per week. Employees making at least this salary level may be eligible for overtime based on their job duties. This salary level was set in 2004.
Full information about the proposed rule is available here.
The public will now have 60 days to submit comments about the proposed rule electronically at www.regulations.gov. The DOL will take time to review submitted comments and an effective date for the final rule is not expected until 2020.
Gulfshore Insurance will continue to monitor any updates to the FLSA exemption rules and provide updates as they become available.