On November 27, 2017, Guarantee Insurance Company (“GIC”) was ordered liquidated by the Second Judicial Circuit Court in Leon County, Florida. The Florida Department of Financial Services (“Department”) is the court appointed Receiver of GIC.
What does this mean to you?
Well, if you’re insured with Guarantee Insurance Co., it means you have a very short window to find a new insurance carrier!
Have you ever noticed a scheduled credit on your policy? Ever wonder why it’s there?
Often times brokers are able to negotiate these on your behalf, but sometimes the scheduled credits are adjusted based on the experience MOD changes.
Picture this…
It’s 2017 and you’re at the last year of your debit experience MOD of a 1.25. Your current WC policy for that year has a scheduled credit of .80, easing some of the pain of your current debit MOD rating. Your renewal policy comes in for 2018 with a new MOD of .78 and low and behold your scheduled credit is now a scheduled debit of 1.10. What gives? Virtually all of the premium savings you were expecting is gone!
I sound like a broken record on this, but you can’t manage what you don’t understand! Insurance terms and policies are far from commonplace for most of us.
For those of you that don’t live and breath insurance, here’s an in depth list of insurance terms and what they mean to you.
I often get the question on what’s not chargeable by an auditor, but what about a simple list of what they can charge for?
Here is a list of what IS chargeable under a workers’ comp audit. There are variations but this is a good starting point of what is included in an insurance audit!
Ever thought of not complying with your work comp insurance audit? In years past failure to comply with an audit might have caused an estimated audit with exposures inflated by 50% and some carriers were forgiving enough to process non compliant audits with no additional payroll increases. With the new changes you may want to reconsider unless you’re ready for a potential 200% increase in exposures!
Does your policy have the endorsement WC 00 04 24?
2016-14: Audit Noncompliance Charge for WC Policies
NCCI has established an Audit Noncompliance Charge Endorsement (WC 00 04 24) that will be included on all new and renewal workers’ compensation policies effective January 1, 2017. The endorsement enables an insurance carrier to apply an Audit Noncompliance Charge to a workers’ compensation policy if the policyholder does not comply with the annual premium audit of their records. When attached to policies, the endorsement will include the estimated annual payroll (in the Basis of Audit Noncompliance Charge section) and the annual premium multiplier that may be applied for noncompliance (in the Maximum Audit Noncompliance Charge Multiplier section).
When reviewing your loss runs or mod worksheet you’ll run into the codes or following descriptions. A quick overview of the common injury types are outlined below.
You’ve got your MOD Sheet and you already know how to read it.
A quick review of key pieces of information and areas we’ve discovered over the years that can be addressed quickly.
If red flags go up as you’re checking your MOD sheet, take notes, send your agent a quick email and make sure you KNOW and UNDERSTAND you’re getting rated correctly!
While nearly every business owner is familiar with their “loss runs” it’s surprising how many companies aren’t reviewing their claims data on a regular basis. Loss runs are a snapshot of all your claims, open and closed, for a given period of time.
Listen to this scenario and ask yourself if this is how you operate. 60-90 days out of your insurance renewal your receptionist or office managers are fielding call after call from agents and brokers looking to quote your insurance. Maybe you “shop” every year or maybe it’s been a few years now and reluctantly you decide it’s time to bid out your insurance. The new agent comes in and before he can give you the pricing, he needs to get a hold of your loss runs. The meeting is over and your current agent or carrier reluctantly release the information, knowing very well, you’re making the request for competing agents and brokers. Maybe when you get your loss runs you notice a claim or two that surprises you, either by a larger payout than you expected or were aware of or perhaps one that’s still open that could be closed. A quick phone call to your broker and things are fixed or at least you get a good explanation of what happened to make the claim spiral the way it did.
Regardless whether you changed carriers, brokers, or otherwise, this is how many business owners only experience with their loss history.
I’m sure we can all agree there’s a better way to handle this. At the same time, what if your company isn’t large enough to have a full time risk manager or safety manager who can review the claims on regular basis. Let’s suppose the burden of reviewing the insurance and claims history is on a CFO, office manager, or owner. Take it a step further that whoever that individual is just doesn’t have time to review claims on a regular basis.
So what should you do?
These two simple steps can have an immediate and drastic impact on your market rates when you shop the insurance, as well as the price you’ll pay for years to come.
Next post we’ll review the dollar impact with some claims examples.
So what if you don’t have an experience rating? In order to qualify for a rating with NCCI, you need to meet certain criteria. These qualifications can and do vary by state, but you first need to meet the states minimum premium level for experience rating. If your premium was $6750 but that was including a MOD rating of 1.5, you don’t actually qualify for a MOD since your standard or manual premium is actually only $4,500 if your state had a $5,000 manual minimum premium limit to qualify. In this instance, having a manual minimum premium below the eligibility requirements actually saves you from a debit experience rating!
Experience Rating Eligibility in Maryland.
A risk is eligible for intrastate experience rating when the payrolls or other exposures developed in the last year or last two years of the experience period produced a premium of at least $10,000. If more than two years, an average annual premium of at least $5,000 is required.
As I mentioned, the eligibility amounts vary by state. As of 10/4/2017 the NCCI requirements are listed below.
A risk qualifies for experience rating when its subject premium, developed in its experience period, meets or exceeds the minimum eligibility amount shown in the State Table of Subject Premium Eligibility Amounts in Rule 2-A-2-c. Refer to Rule 2-E-1 to determine a risk’s experience period.
|
| State | Rating Effective Date | Column A ($) | Column B ($) |
|---|---|---|---|
| AK | 7/1/17 and after | 5,000 | 2,500 |
| 6/30/17 and before | 5,000 | 2,500 | |
| AL | 9/1/17 and after | 10,000 | 5,000 |
| 8/31/17 and before | 10,000 | 5,000 | |
| AR | 1/1/18 and after | 8,000 | 4,000 |
| 12/31/17 and before | 8,000 | 4,000 | |
| AZ | 7/1/17 and after | 6,000 | 3,000 |
| 6/30/17 and before | 6,000 | 3,000 | |
| CO | 7/1/17 and after | 8,500 | 4,250 |
| 6/30/17 and before | 8,000 | 4,000 | |
| CT | 7/1/17 and after | 11,500 | 5,750 |
| 6/30/17 and before | 11,000 | 5,500 | |
| DC | 5/1/18 and after | 7,000 | 3,500 |
| 4/30/18 and before | 7,000 | 3,500 | |
| FL | 7/1/17 and after | 10,500 | 5,250 |
| 6/30/17 and before | 10,000 | 5,000 | |
| GA | 9/1/17 and after | 10,500 | 5,250 |
| 8/31/17 and before | 10,000 | 5,000 | |
| HI | 7/1/17 and after | 5,000 | 2,500 |
| 6/30/17 and before | 5,000 | 2,500 | |
| IA | 7/1/17 and after | 8,000 | 4,000 |
| 6/30/17 and before | 7,500 | 3,750 | |
| ID | 7/1/17 and after | 6,000 | 3,000 |
| 6/30/17 and before | 6,000 | 3,000 | |
| IL | 7/1/17 and after | 10,500 | 5,250 |
| 6/30/17 and before | 10,000 | 5,000 | |
| IN | 7/1/17 and after | 5,000 | 2,500 |
| 6/30/17 and before | 5,000 | 2,500 | |
| KS | 7/1/17 and after | 8,000 | 4,000 |
| 1/1/16 to 6/30/17 | 6,000 | 3,000 | |
| 12/31/15 and before | 4,500 | 2,250 | |
| KY | 4/1/18 and after | 10,500 | 5,250 |
| 3/31/18 and before | 10,000 | 5,000 | |
| LA | 11/1/17 and after | 10,500 | 5,250 |
| 10/31/17 and before | 10,000 | 5,000 | |
| MD | 7/1/17 and after | 10,000 | 5,000 |
| 6/30/17 and before | 10,000 | 5,000 | |
| ME | 10/1/17 and after | 9,500 | 4,750 |
| 9/30/17 and before | 9,000 | 4,500 | |
| MO | 7/1/17 and after | 7,000 | 3,500 |
| 6/30/17 and before | 7,000 | 3,500 | |
| MS | 9/1/17 and after | 9,000 | 4,500 |
| 8/31/17 and before | 9,000 | 4,500 | |
| MT | 7/1/16 and after | 10,000 | 5,000 |
| 6/30/16 and before | 5,000 | 2,500 | |
| NC | 4/1/16 and after | 10,000 | 5,000 |
| 3/31/16 and before | 8,000 | 4,000 | |
| NE | 8/1/17 and after | 6,000 | 3,000 |
| 7/31/17 and before | 6,000 | 3,000 | |
| NH | 7/1/17 and after | 11,500 | 5,750 |
| 6/30/17 and before | 11,000 | 5,500 | |
| NM | 7/1/17 and after | 9,000 | 4,500 |
| 6/30/17 and before | 9,000 | 4,500 | |
| NV | 9/1/17 and after | 6,000 | 3,000 |
| 8/31/17 and before | 6,000 | 3,000 | |
| OK | 7/1/17 and after | 10,500 | 5,250 |
| 6/30/17 and before | 10,000 | 5,000 | |
| OR | 7/1/17 and after | 5,000 | 2,500 |
| 6/30/17 and before | 5,000 | 2,500 | |
| RI | 2/1/18 and after | 10,500 | 5,250 |
| 1/31/18 and before | 10,000 | 5,000 | |
| SC | 3/1/18 and after | 9,000 | 4,500 |
| 2/28/18 and before | 9,000 | 4,500 | |
| SD | 1/1/18 and after | 8,000 | 4,000 |
| 12/31/17 and before | 7,500 | 3,750 | |
| TN | 9/1/17 and after | 9,000 | 4,500 |
| 8/31/17 and before | 9,000 | 4,500 | |
| UT | 6/1/18 and after | 7,000 | 3,500 |
| 5/31/18 and before | 7,000 | 3,500 | |
| VA | 10/1/17 and after | 7,000 | 3,500 |
| 9/30/17 and before | 7,000 | 3,500 | |
| VT | 10/1/17 and after | 8,000 | 4,000 |
| 9/30/17 and before | 8,000 | 4,000 | |
| WV | 5/1/18 and after | 9,000 | 4,500 |
| 7/1/08 to 4/30/18 | 9,000 | 4,500 |
Experience Rating Plan Manual should be referenced for the latest approved
Some of you have asked about the actual formula. Here it is!
The experience rating modification formula:
• Is used to determine the experience rating modification for all risks eligible for experience rating. • Includes the data of all states in a risk’s experience period to produce an experience rating modification.
Primary Losses Stabilizing Value Ratable Excess Totals Actual Primary Losses + (1 minus Weighting Value)
x
Expected Excess Losses+ Ballast Value + Weighting Value
x
Actual Excess Losses= Total A Expected Primary Losses + (1 minus Weighting Value)
x
Expected Excess Losses+ Ballast Value + Weighting Value
x
Expected Excess Losses= Total B For the experience rating modification, divide Total A by Total B, then round to two decimal places.
