How to combat firming insurance prices through loss control

The insurance market is always cycling between hard and soft. As it firmed up over the past few years, employers have had fewer low-price options.

Expect your broker to communicate with you about prices, says Craig Hassinger, president of SeibertKeck Insurance Agency. In this environment, even if it’s not a typical market turn, employers have had to take the initiative.

“Business owners need to proactively work to eliminate risk by putting in place policies and procedures that need to be formally written down and followed,” he says.

Smart Business spoke with Hassinger about how to react to the hardening market and premium increases.

What’s the difference between a soft and hard insurance market?

In a soft market, insurance companies look to gain market share and grow, so they take on more risk at lower prices. This is good for the insured to a point because there are more options. However, it’s called a cycle for a reason, and a soft market tends to quickly change — and competitive insurance options dry up. As insurance companies take on more underpriced risk, they start to get bad results, which eats away at their surplus and they pull back. This turn is usually predicated after a catastrophe such as 9/11.

What are the current market conditions?

Rather than just one catastrophe, the turn over the past few years is more because of a series of weather events. These property-driven stresses on the market have hurt insurers and pricing has firmed.

Previously, the insurance market turned on a dime from soft to hard — all rates across the board. In this market, only some prices increased. Property and workers’ compensation premiums went up, while liability and vehicle rates stayed pretty even. Insurance companies’ base portfolios are not making a whole lot, so they eventually have to make up the difference with larger premium increases or covering less risk.

Insurance companies have hit those with high-loss ratios hard with premium increases or non-renewing policies. In these cases, it can be hard to find replacement insurance. However, the best of the best are still treated well — businesses with low-loss ratios.

Have some industries been hit harder because of the unevenness of the turn?

Yes. A property manager who manages apartment buildings or commercial office buildings was probably hit harder. Other industries that rely more on liability and vehicle insurance may not have seen as much change.

Regardless of industry, make sure your loss control program is up to date and follow any risk management recommendations from your insurance company or broker. You also may need to increase deductibles or further spread your risk.

How can you combat the harder market?

Business owners need to do what’s necessary to become the best of the best. Put in policies and procedures to mitigate your risk and decrease losses. For example, employers can utilize systems like Fleet Watch, which closely monitors drivers and vehicle usage to provide data. Employers can drill down, find risks and eliminate them to keep rates down.

Employers also should use data provided by their broker to reach the right decisions, such as whether to raise deductibles or stop loss limits.

A good broker will help analyze everything from your current vendor/client contracts to previous losses. There might be risks you aren’t aware of. For instance, there could be a better way to create a contract so you push the risk out to a subcontractor. Communicate with your broker regularly. Brokers typically have a stewardship meeting well before the renewal to go over your policies and formulate a renewal strategy. If your renewal includes diminished coverage or added exclusions, then it may simply be a matter of pushback. You and your broker might tell your insurance company that if this is to be done, then something will be needed in return, while being prepared to look elsewhere. A proactive broker handles these negotiations for you.

Combatting this market cycle is about consistent loss control and having a strong business model. A little dose of long-term thinking combined with a professional insurance broker goes a long way in helping you navigate through the hard and soft market cycles.

How your business is impacted by new ACA reporting requirements

There are a few new reporting requirements the Affordable Care Act (ACA) has created, but with the overwhelming amount of disparate information on the topic, many employers still have more questions than answers.

They want to know which are necessary for them, when the reporting is to be done and whether or not there are fees involved.

“Companies need to be sure their team understands what is required to satisfy these new ACA regulations,” says Tobias Kennedy, executive vice president, Montage Insurance Solutions.

Smart Business spoke with Kennedy about a few of the key points of the ACA from a reporting standpoint.

What do employers need to understand about the Patient Centered Outcomes Research Institute fees?

Patient Centered Outcomes Research Institute fees are also known as PCOR, PICORI, PCORI or CERF fees. This is a relatively small fee that fully insured companies can be assured their carrier handles automatically. However, companies who are self-funded and have a health reimbursement arrangement (HRA) are responsible for this fee.

If your company is self-funded and has an HRA, or if you are unsure if this applies to you, ask your broker or work with a CPA to ask about the second quarter Form 720, which is due by July 31. Depending on the plan anniversary, the fee is either $1 per year per covered life or $2 per year per covered life with most companies using a ‘snapshot average’ method of calculating the figure of lives covered in the fee — although there are a few different safe harbors.

How is the reinsurance fee being handled under the ACA?

A reinsurance fee is also calculated off of the number of covered lives, but it is a substantially higher amount. The fee for 2014 is $63 per year per covered life with 2015 and 2016 fees not announced yet, other than to say they ‘will decrease.’ The calculation for the number of covered lives is due by Nov. 15 and is submitted to the Department of Health and Human Services (HHS).

Similar to the PCOR fees, fully insured groups will have this done for them by their carriers, whereas self-funded companies will need to take action. Also, similar to the PCOR fees, there are a few different safe harbors and companies will want to work with their consultants to correctly apply whichever they deem most suitable.

Within 30 days of submitting the count to HHS, companies will be notified of the amount they owe, and that payment will be due back within 30 days of the company’s receipt of notice.

What about Forms 6055 and 6056?

Forms 6055 and 6056 are simply reporting measures and do not levy fees. The first time this comes into play is in 2016 for the 2015, so companies have a little more time on this than the PCOR/reinsurance fees.

The 6055 is where insurance carriers and self-funded companies report all of the people they cover, and it deals with the individual mandate. Basically, it is a resource for the government to double-check that people who claim to have an insurance policy — and thus to have satisfied the individual mandate — are indeed covered.

The 6056 is a report where companies list out all of the employees they offer coverage to, which helps the government with the subsidies. This is required by all applicable large employers — fully insured or self-funded. Because subsidies are only available to people not otherwise offered affordable coverage, this helps the exchange track people that might be applying for subsidies but who are actually ineligible because of their employer’s offering.

Remember if you need any additional help or have any questions about ACA reporting requirements, don’t hesitate to contact your health care reform experts.

Insights Business Insurance is brought to you by Montage Insurance Solutions

How to stay ahead of disaster using flood insurance and these safety tips

With spring showers and summer thunderstorms that can result in an excess of surface water, it is important to talk safety and insurance coverage. In fact, flooding is the most frequently occurring natural disaster in Ohio, according to the Ohio Emergency Management Agency.

Flood coverage is not included in a home, renter, condo or rental property policy. Everyone lies in some type of flood zone and should be prepared; flood insurance is not just for high-risk areas.

Smart Business spoke with Kevin Franczkowski, a client advisor at SeibertKeck Insurance Agency, about flood insurance, safety and the cleanup afterwards.

In insurance, what is the definition of flood?

Flood is an excess of water on land that is normally dry, including inland tidal waters; unusual and rapid accumulation or runoff of surface waters from any source; or collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood.

What should homeowners know about flood insurance?

The average cost of a flood policy is around $600 — this will vary based on your flood zone. Your insurance agent can determine your zone. Special flood hazard areas and costal areas typically have a higher chance of flooding, resulting in higher premiums.

According to the National Flood Insurance Program, the average flood claim for U.S. homeowners is about $30,000 and does not always result in a total loss.

It is important to note that flood damage from wind-driven rain is not covered. Rain or wind-driven rain, and hail damage are not in the same damage category as floods. Wind-driven rain damage, regardless of the cause, is a covered peril like wind or lightning, which may have caused an opening in which rain has entered and caused water damage to the home or personal property. The National Flood Insurance Program considers the resulting puddles and damage to be windstorm-related, not flood-related.

How should you respond after a flood?

Your home has been flooded. Although floodwaters may be down in some areas, many dangers still exist. Here are some things to remember in the days ahead:

  • Play it safe. Additional flooding or flash floods can occur. If your car stalls in rapidly rising waters, get out immediately and climb to higher ground. Use local alerts and warning systems to stay up to date on information and expert advice.
  • Stay away from damaged areas unless your assistance has been specifically requested by police, fire or relief organization.
  • Emergency workers will be assisting people in flooded areas. Help them by staying off the roads and out of the way.
  • Stay out of any building if it is surrounded by floodwaters.
  • Use extreme caution when entering buildings; there may be hidden damage, particularly in foundations.

What are some tips for cleaning up and repairing your home?

Turn off the electricity at the main breaker or fuse box, even if the power is off in your community. That way, you can decide when your home is dry enough to turn it back on.

The American Red Cross can provide you with information on safely entering and cleaning your house, as well as cleanup kits with a mop, broom, bucket and cleaning supplies. Listen to your radio for information on assistance that may be provided by the state or federal government or other organizations.
Contact your insurance agent to discuss claims.

If you hire cleanup or repair contractors, check references and be sure they are qualified to do the job. Be wary of people who drive through your neighborhood offering to help with clean up or repairs.

How can you get started on getting flood coverage?

A flood policy, unlike a typical home policy, has a 30-day waiting period, so call your insurance agent early and get the process started. He or she will walk you through the entire process, including your risks, your insurance options, the flood zone of your home and a quote for flood insurance.

Insights Business Insurance is brought to you by SeibertKeck

How to prepare for travel accidents and emergencies with insurance

As business activity expands, staff and salespeople spend more time on the road, which increases the risk of accidents and emergencies. At the same time, business owners may travel extensively for work and personal reasons.

Health, life and workers’ compensation insurance may not cover the risks sufficiently — and in some cases won’t cover them at all. But travel accident coverage is insurance intended to cover losses incurred while traveling domestically or internationally.

“The types of losses covered with travel accident coverage range from inconvenient flight delay to cancellation due to illness or even a serious medical emergency,” says Marc McTeague, executive vice president at SeibertKeck Insurance Agency. “It can also extend to help pay for a variety of services from transporting a loved one to the location where the insured is hospitalized to location translation services.”

Smart Business spoke with McTeague about travel accident coverage and how it can protect your employees — and yourself.

How is travel accident coverage used?

Travel accident helps fill coverage gaps, in the U.S. and abroad, by combining three components into one policy:

  • Travel assistance coverage and services range from lost luggage and identity theft assistance to medical and legal referrals, emergency transportation and medical specialists.
  • Medical evacuation, repatriation and out-of-country medical coverage reimburses the costs of emergency treatment and transportation for injured or sick employees, and pays to bring them home.
  • Accidental death and dismemberment coverage pays a lump sum for accident loss of life, limb, sight, speech or hearing.

How often do you run across people who don’t even know this kind of coverage exists?

Very often — it is a coverage that is overlooked. It’s common to review property, liability and automobile coverage, and even suggest umbrella and crime coverage, but travel insurance can be forgotten.

Who benefits from this insurance?

Coverage should be reviewed for any organization with employees who travel frequently, as it protects your company, employees and travel investments. Any company with international manufacturing and sales should also consider a separate policy. Consult with a trusted insurance adviser for company travel plans as well as personal trips to review all of your options.

What are tips for setting up this coverage?

Some policies offer a limited amount of coverage for an insured while away from the office, but the coverage is not comprehensive enough to cover a serious accident or travel emergencies. The cost of the policy is far less than any expense you would face in the event of a claim.

Travel accident insurance also provides protection far beyond typical travel coverage offered through the Internet and credit card companies. A credit card company may be able to refund fraudulent charges or protect you from identity theft, but a travel accident policy can pay for health expenses. For example, if medical costs are incurred as a result of an accident or illness when the insured is traveling abroad, health insurance companies may take weeks or months to reimburse medical providers. A travel accident policy can pay on the spot, which is critical in countries like Mexico where full payment is required before discharge.

Another component is accidental death and dismemberment coverage that provides protection for travel that not only takes place on common carriers but also chartered aircraft or watercraft.

Finally, with trip delay coverage, if the insured’s trip is delayed 12 or more hours due to inclement weather, hijacking, a natural disaster or terrorist act, the policy pays for a few days of food and temporary lodging until travel becomes possible.

Is there anything else you’d like to discuss?

This coverage is also for local traveling — sending workers to a trade show or out of town meetings.

As companies reach further across the globe and travelers explore more exotic and adventurous locations, the need for travel accident insurance has increased. Take time now to consider the health and safety risks before you or your employees face illness, accidental injury or other unfortunate events without the right resources.

Insights Business Insurance is brought to you by SeibertKeck

How to prepare for travel accidents and emergencies with insurance

As business activity expands, staff and salespeople spend more time on the road, which increases the risk of accidents and emergencies. At the same time, business owners may travel extensively for work and personal reasons.

Health, life and workers’ compensation insurance may not cover the risks sufficiently — and in some cases won’t cover them at all. But travel accident coverage is insurance intended to cover losses incurred while traveling domestically or internationally.

“The types of losses covered with travel accident coverage range from inconvenient flight delay to cancellation due to illness or even a serious medical emergency,” says Todd Winter, executive vice president at SeibertKeck Insurance Agency. “It can also extend to help pay for a variety of services from transporting a loved one to the location where the insured is hospitalized to location translation services.”

Smart Business spoke with Winter about travel accident coverage and how it can protect your employees — and yourself.

How is travel accident coverage used?

Travel accident helps fill coverage gaps, in the U.S. and abroad, by combining three components into one policy:

  Travel assistance coverage and services range from lost luggage and identity theft assistance to medical and legal referrals, emergency transportation and medical specialists.

  Medical evacuation, repatriation and out-of-country medical coverage reimburses the costs of emergency treatment and transportation for injured or sick employees, and pays to bring them home.

  Accidental death and dismemberment coverage pays a lump sum for accident loss of life, limb, sight, speech or hearing.

How often do you run across people who don’t even know this kind of coverage exists?
Very often — it is a coverage that is overlooked. It’s common to review property, liability and automobile coverage, and even suggest umbrella and crime coverage, but travel insurance can be forgotten.

Who benefits from this insurance?

Coverage should be reviewed for any organization with employees who travel frequently, as it protects your company, employees and travel investments. Any company with international manufacturing and sales should also consider a separate policy. Consult with a trusted insurance adviser for company travel plans as well as personal trips to review all of your options.

What are tips for setting up this coverage?

Some policies offer a limited amount of coverage for an insured while away from the office, but the coverage is not comprehensive enough to cover a serious accident or travel emergencies. The cost of the policy is far less than any expense you would face in the event of a claim.

Travel accident insurance also provides protection far beyond typical travel coverage offered through the Internet and credit card companies. A credit card company may be able to refund fraudulent charges or protect you from identity theft, but a travel accident policy can pay for health expenses. For example, if medical costs are incurred as a result of an accident or illness when the insured is traveling abroad, health insurance companies may take weeks or months to reimburse medical providers. A travel accident policy can pay on the spot, which is critical in countries like Mexico where full payment is required before discharge.

Another component is accidental death and dismemberment coverage that provides protection for travel that not only takes place on common carriers but also chartered aircraft or watercraft.

Finally, with trip delay coverage, if the insured’s trip is delayed 12 or more hours due to inclement weather, hijacking, a natural disaster or terrorist act, the policy pays for a few days of food and temporary lodging until travel becomes possible.

Is there anything else you’d like to discuss?

This coverage is also for local traveling — sending workers to a trade show or out of town meetings.

As companies reach further across the globe and travelers explore more exotic and adventurous locations, the need for travel accident insurance has increased. Take time now to consider the health and safety risks before you or your employees face illness, accidental injury or other unfortunate events without the right resources. ●

Insights Business Insurance is brought to you by SeibertKeck

How insurance can protect against benefit plan mismanagement

Peter Bern, CEO, Leverity Insurance Group

Peter Bern, CEO, Leverity Insurance Group

Companies can be held liable if they breach their fiduciary duties in managing employee benefit programs such as pensions, profit sharing, health care and 401(k) plans.

This risk remains even if you hire a third party to manage your plans.

“A lot of companies have hired these outside consultants to manage 401(k) and other pension plans in an attempt to mitigate exposure. In reality, they still have liability because they chose the consultant,” says Peter Bern, CEO of Leverity Insurance Group.

Smart Business spoke with Bern about what fiduciary liability insurance covers and how it fits with other business insurance policies.

Who is considered a fiduciary?

A fiduciary is the individual responsible for controlling the management of employee benefit plans, investment of funds, and controlling or disposing of plan assets. That includes consulting firms, attorneys, accountants and other entities that service pension plans.

A fiduciary is required to:

  • Act solely in the interest of plan participants and their beneficiaries with the exclusive purpose of providing benefits to them.
  • Carry out their duties prudently.
  • Follow plan documents.
  • Diversify plan investments.
  • Ensure plan expenses are reasonable.

The Department of Labor (DOL) was concerned about plan expenses in the 2012 issuance of a final regulation under the Employee Retirement Income Security Act of 1974 (ERISA). Workers lost significant amounts of retirement savings after the 2008 financial crisis, and the DOL sought to make fiduciaries more accountable for controlling fees and selecting appropriate investment options.

Companies can limit liability by giving plan participants control over investments in their accounts. However, they must be given a broad range of investment options and sufficient information to make informed decisions.

What is the company’s responsibility in hiring a third party to manage plans?

It’s important to have a documented process by which you rate and select a third-party service provider. Survey a number of potential providers, asking the same information and providing the same requirements. That will enable a meaningful comparison and give a sound basis for reaching your decision.

Whether you’re selecting the investments yourself or utilizing a third party, it’s important to provide employees with a sufficient number of options.

Does an ERISA bond protect you from liability?

An ERISA bond or employee dishonesty policy with ERISA compliance only protects you from theft, not from mismanagement of funds, programs, pensions or health plans — all of the major exposures that exist.

Business owners also might think they’re protected under directors and officers (D&O) insurance, but there are certain exclusions in those policies concerning fiduciary liability. D&O, employment practices and fiduciary liability insurance are often secured as an insurance package because if someone perceives that the business didn’t perform as well as it should and was mismanaged, you could potentially seek damages on the D&O and/or fiduciary line of coverage.

Of these aforementioned product lines, fiduciary liability insurance is the least expensive, and most cost-effective. Another line of coverage that should be secured in your insurance portfolio is employee benefit liability, which specifically protects benefits managers from mistakes and omissions made in the administration of various employee programs. These typically involve minor issues about proper filing and enrollment, but do not provide coverage against any problems related to investing.

In summary, some of the responsibilities of a fiduciary are vague — what does monitoring investments mean? Also, sudden swings in a turbulent stock market can bring risks to even the best of fiduciaries. Fiduciary liability insurance can help defend the reputation of the company and its management team.

Peter Bern is the CEO of Leverity Insurance Group. Reach him at (216) 861-2727 or [email protected]

Insights Business Insurance is brought to you by Leverity Insurance Group

How to weigh your options for cutting back or restructuring benefits

Mary Policky, assistant vice president, Momentous Insurance Brokerage, Inc

Mary Policky, assistant vice president, Momentous Insurance Brokerage, Inc

No matter what type or size of a business, health care tends to be one of the leading employer costs. Although the Affordable Care Act (ACA) was intended to reduce costs, businesses are finding themselves on the receiving end of double-digit rate increases each year.

“Because of these hefty increases, employers are searching for more creative ways to reduce costs, while ensuring their benefits package remains competitive in the employment sector,” says Mary Policky, assistant vice president at Momentous Insurance Brokerage, Inc.

Smart Business spoke with Policky about how to reduce or restructure health benefits offerings in tough times.

When should a company consider reducing or restructuring benefits?

First, they should review their policies at the beginning of each fiscal year to determine a budget dedicated to the employee benefit package.

Then, they should do a mid-year plan review, which is also a good time to re-educate employees on important benefits available to them, such as various types of preventative care, which may be covered at no cost to the employee.

Lastly, review policies near open enrollment. Typically, the carrier releases renewal rates 60 to 90 days prior to the plan expiration date. That’s the time to shop around and research opportunities with other carriers, as well as alternate plans with the current carrier.

What’s the first step to figuring out where to make cuts or restructure?

A key factor is determining how much you want to spend. The challenge is how to significantly reduce the premium without sending employees into a tailspin from extreme changes, such as increasing deductibles and copays, which inevitably raise financial concern. Additionally, it’s a good idea to conduct employee surveys to determine their areas of concern, such as office visit copays, in-network doctors, prescription drugs, etc.

It’s also beneficial to have your broker provide benchmark information to see where you are in the industry, and where your competition is. More and more, employees are seeing that medical benefits are a vital part of their total compensation package, and will often consider a reduction in salary if the company offers comprehensive plans.

Generally, what low-hanging fruit can businesses look at first?

In addition to the deductible and copays, they should review the provider network. A company with 30 employees enrolled in an HMO plan typically spends $18,000 per month. By changing to a limited network, the premium reduces to $13,000 a month — a 28 percent savings. You can use disruption reports to gauge how many current doctors are in a new limited network.

Many employers are moving toward consumer-driven plans, such as health savings accounts (HSA) or health reimbursement arrangements (HRA). These plans allow employers to give each employee a fixed dollar amount to choose how they want to spend it on medical expenses. These tax-advantaged plans result in a lower premium and less rich benefits. However, a portion of the premium cost savings can be given back to employees to use for deductibles/copays. Also, with cost decisions in the hands of employees, the onus is on them to make better health decisions.

But it’s not always about reducing benefits. Adding wellness or disease management programs help create a healthier workforce and reduce premium increases.

What’s the best way to communicate to employees?

Employers often underestimate the need for clear communication and making sure that employees truly understand their benefits. Make time for mid-year reviews, webinars, conference calls and/or payroll stuffers. If you must raise rates, inform employees as soon as possible. Also, inform employees how much of the increase the employer is absorbing. A great way to convey this is through benefits statements, which show the total cost of benefits, and how much the employer is contributing.

Health care reform is just one of the many reasons to have a broker help navigate constant changes in the marketplace and tailor a plan to fit the company’s needs.

Mary Policky is an assistant vice president at Momentous Insurance Brokerage, Inc. Reach her at (818) 574-0426 or [email protected]

Blog: Get more information on employee benefits and other important insurance topics at www.momentousins.com/blog.

Insights Business Insurance is brought to you by Momentous Insurance Brokerage, Inc.

How Ohio’s group rating is still the best option for small and midsize companies

Cliff Baseler, Vice President, Best Hoovler Insurance Services Inc., member of the SeibertKeck Group

Cliff Baseler, Vice President, Best Hoovler Insurance Services Inc., member of the SeibertKeck Group

If your company has 500 employees or less, you want to be in a group rating program to get better workers’ compensation rates. Some court rulings have decreased the amount of group credits and increased rates for group rated employers.

“It’s still the best thing going for the small to medium-size employer,” says Cliff Baseler, vice president at Best Hoovler McTeague Insurance Services Inc., a SeibertKeck company. “The group is a fantastic idea, and an employer can receive much lower workers’ compensation premiums.”

Smart Business spoke with Baseler about the advantages of a group rating program and how the landscape has changed.

How does group rating save money?

The Ohio Bureau of Workers’ Compensation (BWC) allows employers with better than average claim histories to join together through a sponsoring organization for the purpose of being rated as a large group. As a standalone business with no losses, you might only develop an experience modification of a 5 to 7 percent credit off your rates. However, when combined with thousands of other companies in a group, your company can earn up to a 53 percent credit to your base rates. The credits can vary for individual businesses, depending on your type of business, whom you are grouped with, final loss figures, total enrollment and reported payroll.

What are other benefits of enrolling?

A third-party administrator (TPA) will manage your claims cost-effectively and aggressively, as well as representing you at Industrial Commission hearings for contested claims. You also have real-time access to claims information rather than trying to obtain it directly from the BWC.

The TPA physically reviews your rates and classifications assigned to your company. Many times the company classifications are wrong because of a change in operations or they were incorrect from the beginning. All of this can result in higher premiums.
The TPA also provides training, education, bulletins, seminars, newsletters, etc. It will help you receive various other credits for safety or a drug-free environment too.

What happens if you have a large loss?

With a group rating, if you have a shock loss, a death claim or a large medical claim, you can be asked to leave at the end of the policy year. Typically that precludes you from any group for two or three years, as all groups look at your current year and the previous three years of claim history. After you’ve been relatively loss free for two or three years, many groups allow you to re-enroll.

The problem is you might have been enjoying 45 percent credit, but now have a 35 percent debit — an 80-percentage point rate swing. For a lot of small businesses, that creates a financial strain since premiums can double the next year. Extra dollars in premiums could result in a workforce reduction.

If asked to leave, you still can sign a contract with the TPA to help you limit and possibly prevent other losses with the goal of returning to a group plan.

How are recent court rulings impacting workers’ compensation?

Some recent rulings in favor of plaintiffs in Cuyahoga County have hurt the rating structure of group plans. The argument was that if Company A has a bad claims history and pays a $20 rate per hundred, but Company B is in a group rating paying $5 per hundred, that creates an unfair advantage in a public bid situation.

As a result, the BWC decreased the maximum group credit to 53 percent and raised classification rates as much as 21 percentage points versus nongroup rates. This action seeks to equalize the playing field, in the court’s opinion.

Also, the governor authorized the release of $1 billion of ‘overpaid premiums’ to private employers and public taxing groups for the 2011 rating year as a result of another court ruling. Employers are receiving rebate checks for 56 percent of premiums paid.

With the increase in rates for groups and the decrease in the credits, many companies have to decide whether to stay in the group. While it may no longer be as cost-effective, you get extra services — aggressive claims management, hearing representation, rate analysis, etc. — and service means everything to your experience and rates.

Cliff Baseler is vice president at Best Hoovler McTeague Insurance Services Inc., a SeibertKeck company. Reach him at (614) 246-7475 [email protected]

To keep up with the latest insurance news and how your company could be impacted, sign up to receive our newsletter at www.seibertkeck.com.

Insights Business Insurance is brought to you by SeibertKeck

How Ohio’s group rating is still the best option for small and midsize companies

Richard B. Hite, CEO, SeibertKeck Insurance Agency

Richard B. Hite, CEO, SeibertKeck Insurance Agency

If your company has 500 employees or less, you want to be in a group rating program to get better workers’ compensation rates. However, some court rulings have decreased the amount of group credits and increased rates for group rated employers.

“It’s still the best thing going for the small to medium-size employer,” says Richard B. Hite, CEO at SeibertKeck Insurance Agency. “The group is a fantastic idea, and an employer can receive much lower workers’ compensation premiums.”

Smart Business spoke with Hite about the advantages of a group rating program and how the landscape has changed.

How does group rating save money?

The Ohio Bureau of Workers’ Compensation (BWC) allows employers with better than average claim histories to join together through a sponsoring organization for the purpose of being rated as a large group. As a standalone business with no losses, you might only develop an experience modification of a 5 to 7 percent credit off your rates. However, when combined with thousands of other companies in a group, your company can earn up to a 53 percent credit to your base rates. The credits can vary for individual businesses, depending on your type of business, whom you are grouped with, final loss figures, total enrollment and reported payroll.

What are other benefits of enrolling?

A third-party administrator (TPA) will manage your claims cost-effectively and aggressively, as well as representing you at Industrial Commission hearings for contested claims. You also have real-time access to claims information rather than trying to obtain it directly from the BWC.

The TPA physically reviews your rates and classifications assigned to your company. Many times the company classifications are wrong because of a change in operations or they were incorrect from the beginning. All of this can result in higher premiums.

The TPA also provides training, education, bulletins, seminars, newsletters, etc. It will help you receive various other credits for safety or a drug-free environment, too.

What happens if you have a large loss?

With a group rating, if you have a shock loss, a death claim or a large medical claim, you can be asked to leave at the end of the policy year. Typically that precludes you from any group for two or three years, as all groups look at your current year and the previous three years of claim history. After you’ve been relatively loss free for two or three years, many groups allow you to re-enroll.

The problem is you might have been enjoying 45 percent credit, but now have a 35 percent debit — an 80-percentage point rate swing. For a lot of small businesses, that creates a financial strain since premiums can double the next year. Extra dollars in premiums could result in a workforce reduction.

If asked to leave, you still can sign a contract with the TPA to help you limit and possibly prevent other losses with the goal of returning to a group plan.

How are recent court rulings impacting workers’ compensation?

Some recent rulings in favor of plaintiffs in Cuyahoga County have hurt the rating structure of group plans. The argument was that if Company A has a bad claims history and pays a $20 rate per hundred, but Company B is in a group rating paying $5 per hundred, that creates an unfair advantage in a public bid situation because of the lower workers’ compensation costs.

As a result, the BWC decreased the maximum group credit to 53 percent and raised classification rates as much as 21 percentage points versus nongroup rates. This action seeks to equalize the playing field, in the court’s opinion.

In addition, on May 3 the governor authorized the release of $1 billion of ‘overpaid premiums’ to private employers and public taxing groups for the 2011 rating year as a result of another court ruling. Employers are receiving rebate checks for 56 percent of premiums paid in 2011.

With the increase in rates for groups and the decrease in the credits, many companies have to decide whether to stay in the group. While it may no longer be as cost-effective, you get extra services — aggressive claims management, hearing representation, rate analysis, etc. — and service means everything to your experience and rates.

Richard B. Hite is CEO at SeibertKeck Insurance Agency. Reach him at (330) 865-6573 or [email protected]

To keep up with the latest insurance news and how your company could be impacted, sign up to receive our newsletter at www.seibertkeck.com.

Insights Business Insurance is brought to you by SeibertKeck

How to buy insurance for summer fun — boats, RVs, motorcycles, etc.

Kevin Franczkowski, client advisor, SeibertKeck Insurance Agency, Inc.

Kevin Franczkowski, client advisor, SeibertKeck Insurance Agency, Inc.

Summer time is best spent outdoors. Jumping in the pool. Taking the boat out. Getting away for a road trip on your motorcycle. However, it is easier to enjoy the great weather when you know your summer “toys” are properly insured.
“The season of summer usually conjures up feelings of fun, especially vacations, swimming, boating, fishing, picnics and other outdoor activities, but along with the fun comes responsibility,” says Kevin Franczkowski, client advisor at SeibertKeck Insurance Agency, Inc.
Smart Business spoke with Franczkowski about how to handle insurance for these extra items.

What is personal lines insurance?
Personal lines insurance is a layer of protection that provides coverage for you and your assets, such as your home, car and possessions, against damage, theft and other potential risks.

When it comes to boats, jet skis, RVs, motorcycles, summer cars, pools, etc., what insurance should you have?
Watercraft, such as boats or jet skis, are placed under a marine policy. These annual policies would provide coverage for bodily injury and property damage. Bodily injury is any injury that you caused to someone else’s body, while property damage is damage caused to the boat.
Recreational vehicles (RVs), motorcycles and summer cars require an auto policy separate from your everyday auto policy that is specialized for unique autos. In some cases, a company will be able to add the watercraft and/or special vehicle to your current home policy as an endorsement.
While pools typically are covered under your homeowner’s policy, there are specific requirements to ensure safety. These include, but are not limited to, the depth of the water with diving boards, slides and fence specifications, such as height, area around the pool, self-closing and self-latching gates. Be sure to check with your agent for specific rules and regulations for your pool.

How can you make sure these items are insured to value, and what kind of cost could you be looking at?
While it is important to insure all of your summer toys, it is even more important that they are insured properly and to value; this is critical at a time of loss. The value of the item is best determined by using the year, make, model, value and any customized additions. These details are often reviewed at the annual renewal of your policy for updates and additions.
Premiums also will vary based on many factors. A stand-alone marine policy for a pontoon-style boat valued at $10,000 could have an annual premium of anywhere from $500 to $750, but this is all contingent on the individual’s underwriting information such as insurance score and loss history. Also, some companies provide credits if you package all your insurance, meaning you place your boat with your home and auto. This would also apply to an RV or motorcycle.

Are there ways to save on the premium upfront without jeopardizing important coverage?
Premium savings on ‘toys’ are similar to savings on your current insurance program. Your insurance score, loss history, location, age and marital status will influence the rates applied. The better your insurance score, the lower your premium — just as a high claims history will result in higher premiums.

What else do you need to know about this kind of coverage?
When making a claim, the first step is to contact the proper authorities to help if someone is injured. Then, you will need to call your insurance agent with the details of the event and secure the contact information needed from all parties. Taking photos and obtaining contact information from witnesses is highly encouraged. Your claims adjustor will assist in the entire process.
Surprisingly, most homeowner’s insurance does not cover summer toys for your kids, such as mini-electric cars and scooters. Considered a toy, these are often overlooked but have the potential to be harmful.
When purchasing ‘toys’ it is best to advise your insurance agent immediately. He or she will make sure they are properly insured to value and be able to offer some safety tips to ensure you have a safe and fun summer.

Kevin Franczkowski is a client advisor at SeibertKeck Insurance Agency, Inc. Reach him at (330) 867-3140 or [email protected]

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