Construction Risk Blog

Need Help Understanding the Basics of Your Experience Mod?

Totally confused about how your experience mod was developed?  Trying to weed through formulas can be daunting and really unnecessary for the employer(you!) to understand the basics of how the experience mod is developed.

NCCI (National Council on Compensation Insurance) collects data from your Construction Insurance Carrier.  This data consists of audited payroll for the 3 years prior to your current year, as well as claim amounts for the same time period.   The claim amounts are incurred dollars (reserves plus amounts paid).

NCCI develops expected loss rates for each WC classification each January 1^st.  The rate is multiplied times your payroll and the final amount or expected loss amount is compared to your actual claim dollars.   If your actual claim dollars exceed the expected your mod is in excess of 1.00, or a debit mod.  If your actual claim dollars are less than the expected loss amount your mod is below 1.00, or is referred to as a credit mod. 

In today’s economy many employers are reducing their workforce and thus payrolls are decreasing.  If you maintain the same amount of incurred losses, but payrolls are reduced and therefore expected losses are reduced you will be seeing an increase in your mod.  Unfortunately, many employers had that happen in 2010.  We hope to see a stablizing of the expected loss rates in 2011, but since NCCI does not release those until December, it's anyones guess!

 There are many more intricate parts to the actual calculation, but as long as you know the basic of  “expected losses versus actual incurred losses”  you should have a better understanding of the calculation.   

If you're a Connecticut construction firm that needs experience mod help; whether it means reducing claims or making a plan to get your experience mod back down to below 1.00, Construction Risk Advisors can help.  Our two full-time, in house claim advisors spend a combined 100 hours a week helping our construction clients achieve their minimum experience mod and in doing so achieve the best workers comp insurance rates possible.  Give us a call at 800-252-9864 or drop us a line if you want to see how low your mod can go!

How Fast Do Workers Compensation Claims Need to be Reported?

Is the timely reporting of workers compensation claims really that important? Absolutely! The smallest claim can turn into a 6 figure nightmare merely by not being reported promptly. A delay of just a few days can alter the outcome of a claim and raise the associated claim dollars through the roof!

Having trouble believing this? Well, here are some reasons:

First and foremost is treatment for the injury. We have seen many "sore shoulders" go unattended only to end up with the employee seeking treatment in the middle of the night at the local Emergency Department. The charges for Emergency Room visits are easily 3 times those of an Occupational Health Clinic, so the medical costs of this incident just tripled. Emergency room providers are great at what they handle - emergencies! But they tend to handle the work related injury by automatically keeping the employee out of work an average of 3-5 days .....another increase to the cost of the claim!

Those same shoulder and soft tissue injuries that went untreated for several days, can eventually become major surgery issues, lost time claims with substantial permanency ratings, and in many cases full and final settlements. By reporting the claim immediately, the employer can and should direct the injured worker to the local occupational health clinic thus hopefully mitigating the overall cost of the claim.

An employer should never delay reporting a claim or directing the injured worker for treatment. Either of these can result in a disgruntled employee who ultimately hires an attorney. Attorney involvement on Workers' Comp claims slows down the progress of the claim resulting in increased dollars.

Insurance carriers have specific time lines in which to make payment to a claimant and meet other standards. If these are missed due to a claim being reported late, the carrier can still incur fines for not meeting required deadlines. These fines become an expense on your Workers' Comp claim!

Hopefully these are reasons enough for you to encourage your employees to report all incidents immediately and for you to report the incident to the carrier the same day. This quick response can help contain your claim dollars as well as keep your experience mod and premium lower that your competitors!

If one of your construction laborers or foremen were injured on the job, does your construction firm already have an established relationship with an Occupational Health Clinic?  Did your insurance agent help you with this and provide job descriptions for the clinic to keep on file?  Construction Risk Advisors has relationships with many of the occupational health clinics that treat injured Connecticut contractors every day.   We can help facilitate this for your company as well as work together to prevent the claim in the first place!

Who Wants Some Free Experience Mod Help ?

One of my salespeople had a conversation today with an irate prospect. This company owner had just learned that their workers compensation experience mod rate (EMR for short) is about to go up significantly. This wasn't just going to cost more money but possible threaten this company's ability to bid work. Wouldn't you be upset, too?

You should never be surprised by a change in your workers comp experience mod. Whether your experience mod goes up or down, you should know well in advance. If you don't, then you have a problem with your insurance agent.

Unfortunately, most insurance agents think that it's YOUR experience mod so it's YOUR problem. To a point that is true. There is only so much that any outsider can do to help influence the direction of your experience modification factor and the safety procedures of a Connecticut Contractor. But why are you paying your agent a commission on that workers comp policy? Is their only job to show up once a year and say, "I'm sorry but your experience mod went up 20 points because of that loss three years ago which means your premium is up $32,000 (which means I make more money). And by the way, maybe you should hire a safety manager".

What's wrong with this picture? The insurance agent brings bad news. The insurance agent provides no services to help you solve the problem. The agent makes more money which you pay him as part of your premium. You suffer. That sounds like a win/win!

Forgive my sarcasm. I just can't figure out why business owners put up with this treatment. Not only will they accept this lousy service, but they'll stay with a joker like this as long as he keeps bringing them cheap insurance. If your experience mod keeps going up, you don't have cheap insurance.

Whether your experience mod is presently high or low, you should have a plan in place to improve it to its lowest possible level. You may never achieve the goal of getting your experience mod to this level, but you'll be a hell of a lot better off than your competitor who has no goal.

Last week we brought great news to a contractor client. After three years of working together, we achieved their lowest possible experience mod. When they initially signed on as a client, their experience mod was a 1.12, and by implementing our expert claims management and improving their safety program, we helped them get down to a .84!It was exhilarating for both of us. They saved a lot of money and with our help, will continue to save (around 12K annually!). We executed the plan we promised and delivered the results.

Don't let your experience mod be a mystery any longer. Work on it every day like any other goal you set for your construction firm, and you too, will celebrate success.

Are you a Connecticut Contractor that needs experience mod help? The workers compensation experts at Construction Risk Advisors are only an email or phone call away. We'd be happy to take a look at your experience mod and safety program, and offer any help we can to make you a safer and more profitable construction firm as part of our innovative Test Drive program.

Getting Injured Workers Back to Work….even Contractors

You have heard about the benefits and cost savings if you bring an injured contractor back to modified duty. But, how can an injured worker bring any value to a construction site?

Before we examine ideas on return to work, first we need to recognize that "RTW" is beneficial for both the employee and employer. Statistics show that workers who remain in their regular routine recover quicker then those that don't! In fact, the majority of injured workers who are out of work for 12 weeks or more never return to their original jobs. The benefit to the employer? Why reduced workers comp claim costs of course and therefore, a positive impact on your experience mod and the morale of your work force!

Your employee handbook should include your "RTW" policy. This policy should clearly state that modified duty will be provided when possible, for a limited time period. The limited time period is important as you most likely do not have a modified duty position that can be a permanent position.

So, now that we have covered the benefits of returning injured workers and the importance of having a statement in your employee handbook, you are still saying "but we don't have anything for him/her to do". When it comes to modified duty you should first look at what can be temporarily changed in the worker's usual job - can someone else do the heavier lifting? But if there is absolutely no way to modify the current job, you may need to be a bit creative in providing meaningful and productive work. Is it time for an inventory review? Can the person (within their restrictions) be a safety or traffic person at the Construction Site? Do you have paperwork to be done in the jobsite trailer? Did you know that you can even pay your employee while they work at the local soup kitchen, library, or retirement home? As long as the employer is providing modified work within the medical restrictions and the employee gives their consent, the employee and the employer are both benefiting!

The next time you have an injured worker released to modified duty don't immediately say "We're a Construction Company, what can they possibly be thinking". Instead, think outside the box and help the injured worker recover quicker and help you to save workers compensation claim dollars.

Contractors: Is your Experience Mod accurate?

At least 50% of the NCCI mod worksheets we review for our clients are in error. The most likely error is missing payroll. Not from your standard program but if you are a contractor engaged in OCIP(Owner Controlled Insurance Program) and CCIP(Contractor Controlled Insurance Program) jobs, that's where the errors occur!

A few years ago we had a large contractor that was hovering at a 1.00 mod - and we all know what that can mean! While verifying their mod worksheet we noted that all the payroll and Workers Comp claims under the standard program were included, but realizing a high percentage of work had been done under OCIPs and CCIPs we wondered why that wasn't reflected on the experience modification worksheet. After several months of tracking down the individual at each carrier responsible for filing the data and finally having that data provided, the mod went from 1.00 to .97!

Missing payroll is not the only error that can occur. Incorrect payroll, misclassification of construction workers, or duplication of claims also cause many, many errors. Your experience mod rate is only as good as the data that is entered into the system!

So, if your mod hasn't been verified lately now is the time to do it! Who knows, you may be able to reduce your mod by several points!

Need someone to verify your experience mod?  The claims team at Construction Risk Advisors has been successfully recovering misallocated premium and experience mod dollars for Connecticut contractors for a long time!  

Connecticut Employers: Workers Compensation & Modified Duty --Worthwhile or a Waste of Time?

We've all heard of it - light duty, modified duty, restricted duty, and transitional duty. Regardless of what you call it, you have an injured worker who can't do their regular job and the claim adjuster is asking you to bring them back to work!

Employers and HR personnel struggle with this daily, and it seems construction companies usually have the most difficulty in developing jobs within the worker's restrictions. So should you even bother to try? The answer is absolutely Yes!

First and foremost it has been proven that keeping an injured construction worker in their normal routine (getting up, going to work, etc) helps in the recovery process. Next is the fact that by providing modified duty work you are sending the message to employees that having a work related injury does not automatically result in time off from the job. Finally, by bringing the injured worker back it is helping to reduce the claim costs and thus have a more positive effect on your experience mod.

It's a good idea to have pre-developed modified duties or jobs. We all have things we would like to accomplish, if we only had some extra time. Start keeping a running list of these and you have started your modified duty list!

So the next time the adjuster asks if you have modified duty available, don't sigh and roll your eyes - pull out your list, say yes and get that employee back to work!

 

Need help developing a Return to Work program for your construction firm?  We can help!  There are other options than just having your injured worker counting paperclips and shredding paper. Get in touch with one of the Construction Risk Advisors and we can guide you as well as help prevent the injury in the first place!

How to Ruin Your Construction Company’s Safety Reputation Overnight

Would Massey Energy have lost twenty-nine workers in a mining accident on April 5th if safety training was a strong cultural value? Would Toyota have recalled 2.3 million vehicles in January of 2010 if safety was of paramount concern in the design of their cars?

I think the answer to both these questions is, "No". These companies were not focused on safety and it cost people their lives.

Google either one of these safety disasters and you'll get tired of hitting the "Next" button after the 10th page. In the short run, and maybe forever, both these companies have seriously tarnished their image. The public thinks company profit was more important than human lives. Who wants to be known for that?

Connecticut Contractors of all types are involved in dangerous work every day. If there was an unfortunate disaster on one of your jobsites, would your safety training practices stand up to the scrutiny of the press? How much would your reputation suffer? How long would you be on OSHA's "hit list"? How well would you be able to document your company's safety practices?

Unfortunately, many Connecticut construction firms don't consider safety training in their strategic plans. Nor do they consider the safety training capabilities of the insurance agent or insurance company they choose each year. Far too often the focus is on price and risk management is ignored.

Who is protecting your company's reputation? Risk management is not about buying cheap insurance. If you have an insurance agent whose only focus is selling you cheap insurance, you've hired the wrong one. Don't wait to see your name in the paper before getting a risk advisor who helps make safety your highest priority.

Finding a Chief Risk Officer for Your Connecticut Construction Firm

In my last post, I talked about finding the Hulk Hogan of insurance agents. To be more formal, you want a CRO or Chief Risk Officer. Since you probably don't have one on staff, you've got to find one and make him or her one of your Trusted Advisors.

Construction risk management has become a field unto itself. There is probably no more complicated area of insurance than insurance for contractors. The best practitioners are all specialists. It has become impossible to dabble in construction insurance. It's a full time job and you need the best.

It's a down economy, bid lists are long and all that "stimulus" money must have ended up in someone else's checkbook. So I'm not suggesting that you create a new position in your company just for insurance. I am suggesting that you outsource the risk management function to someone who has the skills and training to be your CRO. That is definitely not your typical insurance agent, mainly trained to sell you insurance policies.

Why is this so important? Think about the way you manage risk now. If you're like most of your peers, you've given "insurance buying" responsibilities to either someone on your finance staff or someone in the HR function. Even though their responsibility is limited to managing your insurance, they haven't even been trained to do that much less be your internal CRO. Do you really think that having a part time, overworked insurance buyer with no formal training is the best way to protect your business from catastrophic loss? I didn't think so.

You're probably thinking that you are paying your insurance agent to protect your business. Think again. First of all, most of them lack any level of training beyond what they learned to get a license. That's not very much when you consider half the curriculum was dedicated to homeowners and auto insurance and you can take the training in a week. If you want to see a deer in the headlights, ask your insurance agent if he is your CRO?

Insurance protects the most valuable asset you own, your business. And you need more than just insurance in today's world. You need a full complement of risk management services and a talented team of people who can execute a plan to mitigate and manage the risks faced by your business. Cheap insurance managed part time or a crack risk management team looking out for you like a bodyguard.

You decide.

Who's the Bodyguard for your Construction Company?

Returning from a business trip recently I was relaxing in the Delta Sky Club at Hartsfield International in Atlanta. As I sipped a soda and ate some pretzels, Hulk Hogan walked in with a small entourage. He looks the same in real life as on TV - as big as a mountain and a little older but the same guy, the same twelve-time world heavyweight champion. He's 56 years old but you wouldn't want to mess with him. He is still "winning" fights this year! Read about it on wikipedia

What does Hulk Hogan have to do with insurance for contractors? A lot, if you look at the world through my eyes.

If you ever needed a bodyguard, he's your man. Read his biography at the link above. He got in the ring with the biggest and the baddest and came out on top. He was the face of WWF(Now WWE). He is a winner and the world knows it. Hogan fought to the finish and intimidated other giants of the game. If I could choose a bodyguard, Hulk Hogan would be my first choice.

If you're a business owner, after protecting your life and family, your business would probably come next. For most construction company owners, their business is their most valuable asset. But surprisingly, I can almost guarantee, none of you know the biography of the person you have chosen to protect your business, your insurance agent or broker. Why is that? How could that be?

It's simple really. Contractors buy insurance the same way they operate in their own world - low bidders win. So instead of making insurance choices based on the capabilities of the people providing the service, they buy cheap insurance.

Do you really think there is no difference between a risk advisor with thirty years of experience and a trainee insurance agent with a cheap price? After all the hard work you've put into building your business, do you really want to entrust its protection to someone you've just met? Someone whose training and skills are unknown to you?

Insurance for contractors is as complex now as it has ever been. The risks you encounter can easily produce multi-million dollar liabilities. If your workers compensation claims aren't managed properly, your EMR (experience Mod Rate) can skyrocket and destroy your ability to compete.

Don't trust the protection of your business to just anyone. When you look across the desk the next time you make an insurance buying decision, ask yourself this: Is this the Hulk Hogan of insurance agents? If you have any doubt, reconsider. Your business depends on it.

Does Your Construction Jobsite Safety Program Need a Jump Start?

Does your safety program need a jump start?
The medical profession has learned that most of us aren't going to eat a healthy diet and exercise regularly. That's why they've invented Lipitor, beta blockers and other drugs that will help delay the inevitable. The ultimate rescue device is the AED or Automatic External Defibrillator. With one of these gizmos we can be just like the doctors we see on TV calling out "Clear", applying the paddles or pads, and shocking the heart back into its normal rhythm. AEDs save a lot of lives and you see them everywhere now, from hallways in buildings to construction jobsites.

Every construction company needs a healthy diet of safety training to prevent worker injuries and avoid excessive workers compensation insurance costs. Do you have a safety culture that constantly reinforces the importance of safe work practices or is it almost time to prime the defibrillator paddles because disaster has struck and your experience mod rate (EMR) is about to enter the RED Zone?

Unfortunately, the average construction company is like the average person. We want to implement the quick fix when we receive the diagnosis. We don't want to proactively do the right things every day so we avoid the problem in the first place. As individuals, we'll go on the starvation diet and get ourselves back in shape but we won't commit to a regular practice of diet and exercise.

A construction company can act the same way. Safety doesn't become a priority until something bad happens and insurance costs spike. Then, instead of focusing on the cause i.e. unsafe workers, you go on the equivalent of a starvation diet, going out to bid to buy cheaper insurance. Just like a Yo-yo diet, you get into a circular loop because you never treat the cause.

Construction companies, like individuals, have a choice to make. You either stay focused on diet/exercise/safety OR you endlessly bounce back and forth between the edge of disaster and recovery, never knowing what it's like to always be in the safe zone.

Don't wait until your company requires the equivalent of an AED. Hire a Risk Advisortoday and create a permanent culture of safety. It will be the best investment you make this year.