Intoxication and a Denied Work Comp Claim

The Illinois Workers Compensation Reform Bill of 2011 allowed for the denial of benefits when intoxication was the primary cause of an employee injury.  Our office recently had the first case where a claim has been denied.   

An employee of a local landscape contractor stuck his hand under a mower guard.  Needless to say the result wasn’t good for the employees hand.   A supervisor, following claim procedures, went to the sight to investigate and document the incident.  The employee was then driven to their assigned occupational health clinic for treatment.  This landscape contractor includes post-accident drug screening in their loss control program.  The employee was tested and a number of illegal substances were found to be in this employees blood system.  A claim was submitted to the workers compensation carrier and with the encouragement of the employer - the claim was denied.  

We ran the numbers through our workers compensation experience modification calculation tool.  The minimum claim cost including treatment and indemnification benefits is estimated to be $15,000.  The effect on the mod was 14% and a three year additional premium cost to the employer of $12,627.

We can help your business establish a drug free program. Options include:

  • Post-Offer (pre-employment) Testing
  • Probable Suspicion / Reasonable Cause Testing
  • Post-Accident Testing
  • Random Testing

Please reach out to us if we can be of any assistance.

Dan Zeiler

dan@zeiler.com

708.597.5900 x134

 

 

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Experience Modification Looks Complicated, But It Isn't

 

Experience modification (experience mod) is a key factor when monitoring workers compensation premiums. Experience mod is a rating factor that determines your workers compensation premium based on loss experience. A 1.0 rating means expected losses equal actual losses that occur. A rating below 1.0 indicates that actual losses occurred are less than expected losses, resulting in a lower premium. A rating above 1.0 means actual losses are higher than expected losses, resulting in a higher premium. In short, your experience mod compares your workers compensation claims to companies of similar size and industry.  

Experience mod ratings are calculated based on certain components. One component is the payroll for the business. Workers compensation claims are highly dependent on payroll numbers being accurate, therefore payroll figures are often audited. A second component is the loss history of the business. The loss history can be determined from analyzing claim data that has been filed. When calculating the premium for the policy, items such as the frequency of claims are essential to provide an accurate premium. It gives an insight as to how the business operates and if there are trends regarding workers compensation claims. The last component is reserves used for claims. Claim data provides information to help compute payments, and reserves are required for claim totals. Reserves are assigned to open claims and represent future payouts. Claim adjusters often handle large amounts of claims, so it is imperative to have open claims reviewed for accuracy to avoid the formulation of the experience mod can become incorrect.  

In the real world injuries will happen, but the response can help keep your experience modification rate from increasing. Having a plan to manage injuries and workers compensation claims is imperative for getting control. An effective safety program that eliminates hazards is the starting point. Also, your experience mod is influenced more by small, frequent losses rather than large infrequent ones. Implementing a Return to Work Program is important for any business. Having a program in place will help lower days off which in turn will keep your experience mod down. For example, if an employee sprains their ankle, what can you do to decrease their days off? Can they input data while sitting at a computer or maybe help out somewhere else? Read our article  Illinois Workers Compensation Insurance - Keep Your Premiums Low  to learn more.

If you have questions or would like more information, call any of our 3 locations in the Chicago-land area today. Our customer service representatives are eager to share their knowledge and speak with you about any insurance related topic. Zeiler Insurance is an independent insurance agency and has been providing quality customer service for 101 years in our Alsip, Chicago, and Gurnee locations. Our goal is to help you understand insurance as well as provide you with the most competitive insurance rates in the industry. Whether you are a customer or just want more information, let us help you with our years of expertise in the insurance business.

Dan
dan@zeiler.com
708.597.5900 x134
http://www.zeiler.com

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How Workers Comp Experience Rating Can Save You Money

How does safety pay dividends to the business owner? Time and resources spent on developing a culture of safety repays the business in the long run. Safety cultures rely on reducing the number of workers compensation claims, in return, the odds of a disastrous claim are reduced.

Business owners with workers compensation experience modification above 1.25 need to review their safety policies with professionals. It is possible one year or even one claim causes this situation; but it should not be ignored. Discover and repair the root cause.

A 1.01 to 1.25 modification indicates worse than average experience. State rates can be less than adequate for a short period of time. The actuarial or mathematical calculations just incorrectly reflect the average expected claims. Slightly elevated modifications may be caused by these issues; however, review your losses by department in these cases and see if a problem area exists.

For slightly elevated modifications, review the safety program and types of losses. Seek out a professional risk manager for help if needed. Look for patterns in the losses, and consider changes in safety equipment or procedures to reduce problem issues.

Proactively nurturing a safety culture will pay long-term dividends. Experience modifications will decrease with positive results. How?

Each state calculates workers compensation experience modifications independently. Many states do utilize the services of the National Council on Compensation Insurance (NCCI) to gather data and promulgate base rates and experience modifications; but each state regulates its own workers compensation system such as Illinois workers compensation. 

Workers compensation experience rating predicts future behavior by analyzing past performance. It is a consequence of loss control performance, neither a reward for no losses nor a punishment for too many claims.

The generic formula for experience modifications follows some rules:

Just as payrolls are the basis for the standard premium, they form the basis for expected claims. Payroll is multiplied by an average claim factor to produce total expected claims.A discount factor is then applied to predict the potential severity of the claims.The product of this equation is expected losses.Actual medical only (MO) claims combine and report as a number of claims/total amount. Some states designate the MO claims as primary (maximum average) and excess, and then apply a discount rate to one or both of these amounts.Most states set a limit on the value of any one claim, and then discount large claims on a sliding scale.This historical claim experience is divided by expected losses. That quotient is the experience modification.

The insurance industry spends millions of dollars to find ways to predict the future. Loss analysts discovered one important fact: the best predictor of future claims is the frequency with which companies suffer losses in the past.

Frequency reflects the number of claims per employee, usually expressed as claims per payroll unit ($100), claims per year, or claims per time unit. Frequency, however, more importantly, reflects the safety culture of the business.

If the frequency of claims is predictable, how about the severity of an individual loss? No, severity, the magnitude of the loss, is not predictable. With greater frequency, however, comes greater odds that a severe claim will occur. For more information on controlling costs, read Employers: Control Your Workers' Comp Costs.

Experience modifications indicate the status of the safety culture within a business. Good management listens to risk management and loss control experts who ultimately reduce workers' compensation costs and possibly the workers compensation premium. 

If you have questions or would like more information, call any of our 3 locations in the Chicago-land area today. Our customer service representatives are eager to share their knowledge and speak with you about any insurance related topic. Zeiler Insurance is an independent insurance agent and has been providing quality customer service for 101 years in our Alsip, Chicago, and Gurnee locations. Our goal is to help you understand insurance as well as provide you with the most competitive insurance rates in the industry. Whether you are a customer or just want more information, let us help you with our years of expertise in the insurance business.

Dan
dan@zeiler.com
708.597.5900 x134
www.zeiler.com

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Illinois Workers Compensation Insurance ERA Credit

I want to remind you about the importance of taking advantage of the Experience Rating Adjustment (ERA) factor offered in Illinois. 
 
I'm working with a potential client on ways to help control their Workers Compensation insurance expense.  The incidents on the Specific Loss Report shown below are actual claims on the Experience Mod of a Chicago, Illinois business.
 
The report below shows the effect of three claims on the Experience Mod and the additional premium projected (for the three years that it affects the Mod):
1.) A large loss ($113,256). Kind of what you might expect from the mechanics of an insurance policy. The company gets hit with a loss and your premium is affected with paying a surcharge. In this case the three year cost is $28,266 with a 17% effect on the workers compensation experience mod.
2.) A small claim ($2,883) that included “indemnity”.  Indemnity is basically disability payments for time off for the injured worker.  This employee sprained his ankle.  Take a peek at the three year claim cost…Yep!!  $5,519. The Insurance Company actually profits on this one.
3.) A second small claim ($2,083).  This claim was medical only with no “indemnity” paid.  As you can see, the three year cost on this claim is $1,206.
 
The reason for the big difference between 2 and 3?  Experience Rating Adjustment (ERA) factor. Only 70% of the claim cost is used in the experience modification calculation for Medical Only Claims. The purpose of which is to encourage businesses to report small claims.
 
 
Going back to our employee that sprained his ankle - what type of work could you have him do around the office, even though his ankle is sprained, so that his days "off" don't rack up your Experience Mod? 
 
Do you think you might have some safety manuals he could read or better yet maybe even wash a truck or two?
 
From the report, this claim affected the mod by 3.35%.  What if the mod for this business was floating in the 1.00 area?  
 
 
On a side note - If this example involved a contractor, this 3.35% could have disqualified the contractor from the Contractor Classification Premium Adjustment Program (CCPAP). These credits can be 40% of the Workers Compensation premium.
 
Please call with questions.
 
Dan Zeiler
 
708.597.5900 x134
 
dan@zeiler.com
 
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Five Ways to Avoid OSHA Penalties

Five Ways to Avoid OSHA Penalties

During the first half of October 2014, the U.S. Occupational Safety and Health Administration announced a dozen citations against employers. A New Hampshire roofing contractor was fined $61,600 for not providing adequate fall protection. A Connecticut roofing contractor faces several citations following a fatal accident in July. A metal parts processor in Ohio was cited for 10 serious violations and $64,000 in fines over the accidental death of a supervisor. A cabinet maker in New Jersey faces a six-figure fine for exposing employees to a carcinogenic chemical. The death of an employee on a conveyor belt has a Mississippi lumberyard facing a $75,000 penalty.

Noncompliance with OSHA regulations can cost employers a lot of money. The good news is that complying does not have to be cumbersome or expensive. These procedures and attitudes can help a company keep its name out of an OSHA news release.

Improve record keeping. Good documentation is an employer's first defense against an OSHA inquiry. Information gaps in the OSHA 300 log (the record of work-related injuries and illnesses) may prompt inspectors to conduct comprehensive safety audits of businesses. Filling in missing information for the past three to five years can save your business a lot of grief and expense. Check personnel files and workers' compensation loss records for details of accidents.

Focus on ergonomics. Preventing repetitive motion disorders can help businesses avoid citations and penalties. It also reduces workers' compensation insurance premiums in the long run. Analyze how workers are performing their tasks and look for ways to reduce the strain on their joints, necks and backs.

Fix the routine violations first. Some safety issues are simple and cost little or nothing to correct. For example:
•Blocked exits
•Lack of protective equipment, such as gloves and safety goggles
•Poor housekeeping
•Improper storage of materials such as flammable liquids

These problems can accumulate over time. OSHA has penalized businesses with large numbers of violations like these, so it pays to monitor and correct them.

Have a plan for disasters. The weather has become more volatile, as the tornadoes of recent years and storms like 2012's Superstorm Sandy have shown. Contagions such as the Ebola virus can come seemingly from out of nowhere. Businesses must be ready for the unexpected. Disaster plans should include:
•Training for employees on what to do in the event of an emergency
•Procedures for safe evacuation from the building
•Workplace hygiene
•Stockpiling of emergency supplies such as first-aid kits
•Training for employees on how to administer first aid and CPR
•Arrangements for operating from remote locations
•Communications with employees, their families, customers and vendors

Although OSHA is not concerned with some of these aspects of the plan, having them in place will help the business survive the event.

View safety as a profit driver, not a cost center. Preventing workplace injuries costs money, but it also can improve a business's profitability. Some project owners and general contractors will consider bids only from contractors with workers' compensation experience modifications lower than 1.0. Firms with a reputation for safe operations will attract better workers. Also, insurance does not cover many of the costs from workplace accidents, such as time spent on investigating the incident, reduced employee morale, lost productivity, reporting costs, and the cost of OSHA penalties. Money saved on prevented accidents goes straight to the bottom line.

Some workplace injuries occur despite an employer's best efforts to prevent them. However, reasonable steps to improve workplace safety reduce the frequency and severity of injuries, make the business more competitive, and avoid problems when an OSHA inspector visits. To learn more, speak with us!

If you have questions or concerns on this issue, do not hesitate to call Zeiler Insurance and speak to one of our customer service representatives. As an independent agency, Zeiler Insurance prides itself with quality customer services for the people of the Chicago-land area and the rest of the Midwest. Customer or not, we can review your insurance and see if you are being protected appropriately for the right price.

-Dan Zeiler

danz@zeiler.com

(708) 597-5900  X134

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Understanding How Illinois Workers Compensation Experience Rating Works

Understanding How Illinois Workers Compensation Experience Rating Works  

Many people wonder why it is necessary to use experience rating to predict future losses if workers' compensation rates are designed for this purpose. Experience rating can benefit employers. The prospects of both bad credits and debits are implicit in the majority of risk-specific programs dealing with experience rating. Since it gives an employer some influence in how much the final premium will be, this gives an incentive for them to develop their loss prevention strategies. It is also good for them to form incentives that encourage injured employees to return to work as soon as they are able. When this happens, experience rating can be beneficial to employers by increasing occupational safety and health.

Experience rating shows a refinement in processes of premium determination. It creates a net premium cost for employers, which means their costs will be appropriate for the provided coverage. Experience rating shares or spreads the cost of a loss with all group members who are likely to go through similar losses. Although the probability and cost of injuries for an entire group as a whole may not be accurately predictable, it is not possible to decide which member of the group will ultimately be responsible for costs.

This is why there is insurance. If it were possible or easy to predict, group members who do not experience loss would not have any incentive to purchase coverage. Meanwhile, the premium charge for members experiencing losses would need to include the loss costs. Serious injuries to individuals are usually rare, but the totals can be minor amounts or reach well into the millions. For workers' compensation, the easiest rating method is manual rating. With this system, employers are categorized according to business classifications or operations. Group losses are estimated and then added as an average.

Employers are assigned to specific classifications to make sure the rates they receive are reflective of the costs all similar employers have. While each classification comes with similar risks, individual ones are different in some ways. However, experience rating is designed to reflect individual differences. Insurance providers would be able to look for employers with lower costs and avoid ones with higher costs if the rating system were only manual. The system needs to be refined to avoid such a scenario, and experience rating falls under that category.

With workers' compensation experience rating, individual employers' loss and payroll data are analyzed over time. The most recent three years of data is reviewed against similar groups' risks to determine the experience modification. An employer that has better experience ratings will be given credits, but those with less will be given debit ratings.

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Illinois Workers Compensation Insurance and the Work Comp Contractor Credit

Illinois Workers Compensation Insurance and the Work Comp Contractor Credit

For Illinois Contractors, one of the most important reasons for managing your Experience Modification Factor is the Illinois Contractor Classification Premium Adjustment Program (CCPAP).  In order to qualify for this credit your Work Comp Mod must be 1.00 or less.  AND, this credit can be as high as 40% which can be the difference in your bottom line for securing new business.

It's important to understand that controlling your long term costs take more than just getting an Illinois Workers Compensation Insurance quote at your policies renewal every year.  If you're struggling with your mod and would like to learn more on how to control it - give me a call.   Contact Info Link 

To learn more about CCPAP, including an overview of the program and how to complete an application, view the webinar available at NCCI.com via this link.


CCPAP Webinar

 

 

 

 

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Common Mistakes Employers Make Regarding Workers' Compensation

Common Mistakes Employers Make Regarding Workers' Compensation

Most employers look at workers' compensation as just another necessary evil and unavoidable cost of doing business. It's usually one of those out of sight, out of mind things when rates are low. It's not until an employer is hit with a rate hike that they really start to give some thought to their workers' compensation rates.

Employers need to constantly look at workers' compensation as a tool to improve their business's bottom line, and they certainly need to make an effort to keep their low rates over the long-term so that they can take advantage of some significant savings.

Here are four common mistakes made by employers that frequently deter their workers' compensation savings:

1. Assuming that lower rates equate to lower costs.

Don't make the faulty assumption that your cost will automatically go down just because your rates have been reduced. Workers' compensation insurers use an experience modification factor to examine the actual losses incurred by the insured company and establish cost. The actual losses are compared to other industry-alike companies. If the insured company's past losses are below average, then the insurer gives the company a credit rating lowering their premium, but an added surcharge is applied to the premium if the insured company's past losses are above average.

2. Believing that employers have little control when it comes to the expense of workers' compensation.

Employers know they've got to have workers' compensation insurance. However, this acknowledgment shouldn't lend to an employer thinking they've got to pay excessively for it; employers don't and shouldn't.
Cost reduction starts at the hiring process. Initiate effective interview techniques and background checks to help ensure the right people are hired for the right jobs. That said, there's no way to completely eliminate the possibility of injuries in a workplace. Therefore, it's equally important to have an effective return-to-work program in place to simultaneously assist injured workers return to work as soon as possible and reduce the cost of their claims.

3. Neglecting or de-emphasizing cost containment and injury management during low rate periods.

Safety should be an unyielding focus at all times. This will not only help a company reduce their claim numbers, but also keep their rates low over the long-term. Employers need to keep an eye on the issues that frequently impact the costs of claims, such as medical care costs and lost wages. Also, remember that open claims mean escalating costs and negative impacts to the company's modification factor. Of course, this causes an increased cost for coverage.

4. Not making the association between cost containment and worker retention.

Studies have shown that fewer accidents occur among skilled workforces, but even skilled workers can have an accident. A large part of whether or not an injured skilled employee returns to work is based on how their employer responds to them during and after recovery. An important part of an employer's response will be in having a return-to-work program that includes maintaining constant contact with all injured workers and their health care providers to monitor how they're recovering and when and how they can get back to work as soon as possible. Skilled employees that are kept in the loop with a return to work program's periodic phone calls about what workplace changes are occurring in their absence are more likely to return. On the other hand, skilled employees that feel forgotten, undervalued, and disconnected aren't very likely to return. 

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Illinois Workers Compensation Experience Rating Formula To Change

 Illinois Workers Compensation Experience Rating Formula To Change

The National Council on Compensation Insurance (NCCI) has announced changes in the formula that is used to calculate experience modifiers for employers in most states and Illinois is one of them.  Currently claims under $5,000 are weighted heavier then claims over $5,000…  in the work comp world this $5,000 mark is called the “split point”.

 In this change the split point will be incrementally increased from the current $5,000 to $10,000 in 2013 and $13,500 in 2014. Thereafter, the split point will be tied to an inflationary index that will start at $15,000.  NCCI cites medical inflation as the reason for the changes, and a need to make premiums more reflective of an employer's loss experience.  For example, in the first year of these changes, contractors with no losses greater than $5,000 should see a drop in their experience modification rating (EMR) factor, while those with a relatively large number of losses approaching or exceeding $10,000 will see an increase in their Experience Modification Factor.  There is no cap on how much an employer's EMR can increase in a given policy year.

These changes will impact all industries but perhaps the construction industry more than most due to minimum EMR requirements imposed on contractors by many project owners just to qualify to bid on a project.  Furthermore, it could affect eligibility for the contractors credit premium adjustment program (CCPAP), which provides discounts to contractors who pay higher than the state average hourly wage for employees in certain construction classifications. In Illinois contractors must have an EMR of 1.0 or lower to be eligible for the CCPAP discount.

Unfortunately, because the experience rating period covers prior years' losses, contractors will not have the opportunity to implement strategies that could reduce the impact of the changes before they become effective. However, contractors do need to prepare for the changes by calculating an estimate of their new EMR and account for the difference in premium in their 2013 budget.  If you feel that these changes may adversely affect your work comp mod we can work up an estimate of the new mod to see the full impact.

 

For more detail on the subject the NCCI has produced a few videos on the subject:

Mod Change Introduction – 8 minutes

 

 

 

 

 

Detailed review of Experience Mod Changes – 24 minutes

 

 

 

 

 

Feel free to contact me with any questions.

Dan Zeiler

708.293.5500

dan@zeiler.com

 

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Illinois Workers Compensation Modification Factor - Is it correct?

Having a handle on the method of computing your experience modification factor for your workers compensation is a must. Because of the many factors and hands involved in the process the potential of error  is very high.

 

  • As you know, your work comp premium is based on your payroll and the payroll used to compute your mod is derived from your payroll audits. Have you checked that the correct payroll is being used on the workers compensation mod worksheet? Are you confident that the payroll audit was correct? 
  • Experience mods are also developed from your loss history. Do you know when and where the claim data is pulled in order to compute your mod? 
  • When claim data is provided for the computation, any open reserves are used for the claim totals. Do you know that a claim adjuster can handle hundreds of workers comp cases? Have your open reserves been reviewed prior to claim data being sent to formulate your mod?

 

Mod Errors

 

We work with many businesses in the Chicago Illinois market. Our  processes ensure that your insurance premiums are at the minimum. Feel free to contact me with any questions.

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Illinois Workers Compensation Experience Modification

Have a contractor client who had an employee with a bad back.  He was under medication and having regular treatments right up to the validation date.  Talking with the claims adjuster shortly before the validation date, we still weren’t sure if surgery was going to be needed.   Validation date hit and a $69,000 claim was added to the mod.   A month or so later there was no medical activity with the employee and he was on the job – actually he never took any time off.  Adjuster agreed to close the claim which went from $69,000 Med + Indemnity to $9,000 Med only.

I braced the employer as to the consequences of this claim and the effect on the mod.  Mod jumped 10 points to 1.05 and for the first time this employer did not qualify for the IL Contractor Credit…  another 40 points.   My plan was to work with the underwriter on additional scheduled credits to take the bite out of the additional premium for this one policy year.

A few weeks ago I received a call from the underwriter who was already working on this October renewal…  he noticed the huge premium increase.  I actually had to do a little explaining on the claim situation but he agreed to contact his NCCI unit at Hartford and see what he could do to refile the unit stat detail - which was done.  I just received the notification of the mod adjustment and we’re back under 1.00.  Employer is thrilled.

Thanks Hartford!

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Illinois Workers Compensation - Do you know your "Validation Date"

One of the many tasks we perform for our customers is to review open claims. Open claims usually have reserves assigned to them which are anticipated future payouts.  Unfortunately, many reserves can be excessive or just ignored due to the work load of the claim adjuster.  This will effect your Workers Compensation Premium.

 

The magic date to be concerned with is called your “validation date”. This is the date that your claims experience is reported to the National Council on Compensation Insurance (NCCI). Should any “reserves” be mismanaged… your experience modification factor will suffer adversely. The “validation date” is 6 months prior to your workers compensation anniversary date.

 

Make sure your reserves are being managed in order to keep your workers compensation premiums low. 

 

Rather than just quote your workers compensation insurance once a year, we have a process to continually manage your long term workers comp costs and premiums. We work with many companies in the Illinois IL and Chicago area
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Assigned Risk Adjustment Program

 

Assigned Risk Adjustment Program – (ARAP)

 

Another reason you should carefully manage your Workers Compensation Insurance Program and Employee work related injuries.

 

A Workers Compensation Insurance Policy is unlike other insurance policies, in that it acts more like a finance mechanism than an insurance policy. Insurance Companies don’t pay for Work Related Injuries, Employers do!

 

The ARAP is just one more surprise lurking in the shadows of your Experience Rating Modification Worksheet that you had better understand before dismissing the affect of mismanaging your Workers’ Compensation Program.

 

The ARAP modification is applied after the Experience Modification and does not replace it. Salt in the wound to Employers that are forced out of the Voluntary Market, the ARAP can add an additional 49% to the cost of your Workers’ Compensation Insurance Premium.  

 

Read more about the Assigned Risk Adjustment Program in NCCI’s article Did You Know….

 

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Illinois Workers Compensation Experience Modification

I want to congratulate MTI Power Services of Marseilles IL for their perfect 2011 Work Comp Mod.  MTI is a large energy contractor and this year their mod will be .66.  From management to supervisors and ultimately the employees...  congratulations for a great job controlling your mod!

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Illinois Workers Compensation Subcontractor Safety Questionnaire

I’m working with a customer this morning on a Subcontractor Safety Questionnaire. As we’ve talked about in the past… workers compensation claims don’t just affect your premiums. Keeping your Illinois Workers Compensation Experience Modification Factor under  1.00 can be a qualifing consideration for many jobs. (see our Opportunity Cost post on 4/8/2010)

Part of this subcontractor safety questionnaire for this Illinois Contractor requires your OSHA Recordable Injury Rate. The Department of Labor has a nice write up and a calculation tool for determining your OSHA recordable injury frequency rate. The online calculator will not only show your numbers but it will also show how you compare with other businesses. It can show the comparison for just Illinois and even differentiate by SIC code.   Check it out.

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Illinois Workers Compensation Experience Modification

I've had a few inquiries into how to obtain your Illinois Workers Compensation Experience Modification Worksheet.   It’s very easy for the business owner – just need to call the National Council on Compensation Insurance (NCCI). Here’s their contact information:

 

Phone: 800.622.4123 (choose option#4)

Fax: 561.893.1191

Email: modmail@ncci.com

 

 

It’ll be helpful to have your Risk ID Number. Your risk ID number is a 9 digit number and in the state of Illinois it begins with 12. You can find it on an old experience mod sheet or feel free to give me a call… I can look it up on the NCCI database (Dan – direct line: 708.293.5500).

 

Your insurance agent can also obtain your Workers Comp Experience Mod but we are charged $25 per worksheet. Anyone else needs your written authorization to obtain your mod and they will then also be charged $25.

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Workers Compensation Program Goals

Implementing a comprehensive plan to drive down your Workers Compensation Experience Modification can be daunting task.   Where do you begin?  

Here is a "To Do List" that will get you started down the road to effectively managing your Experience Modification.  

#1 – Have robust hiring practices that include the use of a conditional offer of employment and a robust medical screening that does not let 100% of the people through.

#2 – Actively measure and intentionally improve the safety culture of the workplace.

#3 – Have a well-trained injury management coordinator with clear authority and responsibility to oversee the rapid recovery and return-to-work of any injured employees.

#4 – Train supervisors to understand the importance of their relationships with employees and to optimally manage the post-injury supervisor / employee relationship.

#5 – Have a robust return-to-work program that ALL employees are aware of (there is some hidden psychology here) that gets employees back to work before indemnity payments start  - a big benefit in ERA states!

#6 – Establish and nurture a working partnership with a medical clinic that will ensure effective medical screenings and, in the case of an injury, the right treatment plan that will lead to the most rapid return to work possible.

These are just a few of the steps we recommend you implement to effectively manage your Illinois Workers Comp program and reduce your work comp rates. 

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Workers Compensation Experience Rating Formula

What is the average cost per claim for losses used in experience rating in Illinois?


Published in the NCCI Experience Rating Plan Manual, the Illinois Table of Expected Loss Rates and Discount Ratios includes includes the Table of Weighting Values and Table of Ballast Values, in addition to several limiting factors that are used to determine your experience rating. 

According to the Experience Rating Plan Manual:

Experience rating modification factors determined by the formula in Rule 2-D-1 are subject to a cap if the debit modification exceeds a specific amount. The risk-specific maximum debit modification is determined as follows:

Maximum Debit Modification = 1 + {(0.00005)[(Total Expected Losses) + (2)(Total Expected Losses)/(G)]}

The maximum debit modification for an interstate risk is limited to the cap for the state with the largest amount of expected losses.

“G” is a factor equal to a state's average cost per claim for losses used in experience rating, divided by 1000.   For Illinois in 2010, "G" is 13.70. 

Therefore, the average cost per claim for losses used in experience rating in Illinois is $13,700.

 

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Illinois Workers Compensation - Your Validation Date

One of the many tasks we perform for our customers is to review open claims. Open claims usually have reserves assigned to them which are anticipated future payouts.  Unfortunately, many reserves can be excessive or just ignored due to the work load of the claim adjuster.  This will effect your Workers Compensation Premium.

 

The magic date to be concerned with is called your “validation date”. This is the date that your claims experience is reported to the National Council on Compensation Insurance (NCCI). Should any “reserves” be mismanaged… your experience modification factor will suffer adversely. The “validation date” is 6 months prior to your workers compensation anniversary date.

 

Make sure your reserves are being managed in order to keep your workers compensation premiums low. 

 

Rather than just quote your workers compensation insurance once a year, we have a process to continually manage your long term workers comp costs and premiums. We work with many companies in the Illinois IL and Chicago area.
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