Workers Compensation

1. Workers Compensation Kathryn Crosby C2 Consulting, Inc. kcrosby@c-2consulting.com 801.984.6092

2. Session Overview • The history of Workers Compensation • What it is and is not • What it covers • Who has to have it • What it costs • Why costs are variable • How costs can be controlled

3. History of Workers Comp • Before the beginning of the 20th Century, the only remedy injured workers had was a civil suit to the employer • The employee had to pay medical expenses, and suffer the wage loss • Around 1917, most states adopted a mandatory workers compensation law

4. What It Is • Workers compensation insurance provides no- fault coverage, which allows employees who are injured on the job to receive benefits regardless of who caused the injury • In return for providing coverage for their employees, employers receive exclusive remedy protection. This means that in most situations employees cannot sue employers for damages in relationship to workplace injuries

5. What It Is Not • Workers Compensation Insurance is not a get-out-of-jail-free system • When an employee is injured, inspections, citations, and fines from local or national authorities could occur • Workers Compensation costs are not the same to every employer

6. What WC Covers • For the employee, WC covers • Medical costs • Lost time wages (indemnity) • For the employer, WC covers • Medical costs with no deductible • Lost time wages if the employee is unable to work • Liability insurance which protects employers from lawsuits filed against them outside the WC system

7. Who Has To Have It? • Utah law requires employers who have one or more employees (FT, PT, temp, or seasonal) obtain workers comp insurance • Certain exclusions may apply • Sole proprietor • Directors and/or officers of a company • Renewal of a contractors license requires verification of WC insurance

8. What It Costs • All Utah Workers Comp carriers use the same classification system that assigns a code to work activities • This system is designed and maintained by the National Council on Compensation Insurance (NCCI) • The NCCI also assigns base rates for each classification code. These base rates are based on loss experience of companies which employees assigned to that code.

9. What It Costs • Upon onset or renewal of a policy, employers are asked to estimate the $ in payroll for each of the classifications of their employees • The base rate X payroll $ = manual policy $ • There can be adjustments to this manual policy $, either + or -

10. Adjustments To Premium • The number of and dollar value of claims charged against your policy or policies will have an effect on the premium you will pay • An Experience Modification Rate (E-Mod, EMR, or X-mod) is calculated for most employers. It is based upon NCCI expected claims vs. actual claims for each classification

11. E-Mod • Actual ÷ Expected • For example $1000 ÷ $1000 = 1.0 • An E-Mod of 1.0 means that your company had exactly the # and value of claims that were expected • Or, $800 ÷ $1000 = .80 • Or, $1200 ÷ $1000 = 1.20 • This E-Mod is applied to the manual premium

12. What Does This Mean? • The fewer accidents your company has, the lower the E-Mod can be • This can be a competitive advantage • Or, put you out of the game

13. How To Control Your E-Mod • Manage claim costs through • Early reporting and managing • Using the PPO network • Communication with adjuster • Drug and alcohol testing • Strong commitment to safety • Aggressive use of return to work program • Medical only claims

14. How E-Mods Affect Premium

15. How E-Mods Affect Premium

16. The Bottom Line • Managing and controlling your workers compensation premium does help your ability to compete and your bottom line • But, if the underlying reason you do it is for the money, it will backfire • Safety is first, last, and always about people

17. Keep your people safe and the numbers will take care of themselves