Author, Drew Garcia, with Rancho Mesa Insurance Services, is the program director for NALP’s Workers’ Compensation Program.
Ever wonder why your insurance rates high when your competitors are low? There are reasons for that including, frequency of claims, severity of claims, experience rating, average claim cost incurred, operations, trends, loss ratio etc. If you evaluate your risk profile you can take action to lower your premiums.
Here are 4 factors that help shape your risk profile.
FREQUENCY OF CLAIM
The number of workers’ compensation claims you average per million dollars in payroll.
Calculation = # of claims / (annual payroll/$1,000,000)
Evaluate – How often are you having workers’ compensation claims and how does that compare to other landscape companies in your region or state? You can expect your insurance premiums to be higher if your frequency rate of claim is higher than the average.
Action – If you are having a frequency issue, you need to assess;
– Trends (back, hand, wrist, knee…)
– Cause (lifting, punctures, slips…)
– Implement corrective actions to help mitigate the risks associated with your claims. Take it to the next level and evaluate “near misses.” Treat a “near miss” as if it were a claim and strategize a corrective action to prevent it from happening in the future.
LOST TIME CLAIMS (INDEMNITY)
The number of “lost time” claims your company has per million dollars in payroll. These are the claims in which your employee loses time away from work.
Calculation = # of lost time claims / (annual payroll/$1,000,000)
Evaluate – How often are you having workers’ compensation claims that result in lost time and how does that compare to other landscape companies in your region or state? You can expect your insurance premiums to be higher if your Indemnity rate of claim is higher than the average.
Action – If you are having an indemnity issue, you need to assess;
– Trends (back, hand, wrist, knee…)
– Cause (lifting, punctures, slips…)
– Implement corrective actions to help mitigate the risks associated with your claims. Establish a “return to work program” which allows your injured employees an opportunity to come back to work on limited duty. This will help you monitor your employee’s progress and keep them feeling a part of the team.
EXPERIENCE RATING
Your experience rating is a combination of your loss data and total payroll when compared to your industry typically but not always, over a three year period. Your experience rating has the ability to credit or debit pricing accordingly based on your history.
Action – Controlling your frequency and indemnity claims will ultimately be reflected in your experience rating.
OPERATIONS
Heavier operations would include hardscape construction, tree trimming, and snow removal in which generally heavier machinery and product is used thus a higher exposure to injury. Compare these types of landscape operations to a lighter exposure such as landscape maintenance; mowing, edging and pruning.
Action – Identifying the exposures that are unique to your operations and then implementing safety programs catered to your exposures will help protect your employees. Although your operations might consist of heavier exposures, you have the ability to implement tactics to mitigate the claims from happening and subjectively making your risk profile more appealing. Don’t wait for the injury to occur, be proactive and stop the claim before it transpires.
Your risk profile has already been created whether you know it or not. The opportunity for you to own it and improve it is always available. To look at lowering your workers’ compensation insurance, take a look at NALP’s new program.
