Workers’ Compensation Insurance Update
Rates: By now you’ve heard the Good News that Workers Company rates have dropped for the fourth straight year. On July 16, 2019 the New York State Department of Financial Services approved an average Workers’ Compensation Insurance rate decrease of 10% for new policies or renewal policies issued on or after October 1, 2019. For the New York State Construction Industry, 46 of the 50 most common construction classifications went down – the most decreases seen in a number of years.
Experience Mods: While lowers rates is always a good thing, keep an eye on your Experience Mod. I say this because the experience mod is an actuarial comparison of your losses against the premiums you’ve paid. As such if your losses for the past three years stayed the same but your premiums decreased, your mod would be going up. Combine this with the increase loss payments and the mod starts to get ugly. Unfortunately, Project Owners and GCs continue to use Mods for prequalifying Contractors/Subs, which even the developers of the Experience Mod formula (National Council on Compensation Insurance – NCCI) do not feel the Mod is an adequate measure of a contractor’s overall safety practices. Consider these situations –
- You have an employee who submits a claim for occupational injuries which results in $200,000 of medical and indemnity payments. If you are a small to medium sized contractor your mod is going to go over 1.00. But if you are a large contractor you could have an occupational loss plus other losses and your mod will remain well under 1.00. Same loss different Mod results.
- You’re a plumber whose employee twists his knee walking on the site, because your payrolls are not large your mod increases considerably compared to the site contractor whose employees are paid considerably more per hour whose mod would stay below 1.00 for the same loss. Again, the injury in the same but the impact on the mod is not the same.
Occupational Injuries: While Projects are safer and there are fewer snap crackle pop injuries, the number of occupational injuries is on the rise. An occupational injury is one that has been building up over years of joint stress – i.e. the Laborer who has been lifting materials year after year or the tin knocker who has been climbing ladders for years. These and many other joint losses are being pushed back by the health insurance providers as workers comp and the employee friendly Comp judges aren’t pushing back causing the Contractor/Employer of record at the time the employee decides to make a claim to be laden with the entire loss. Yes, once the claim is closed out if can be apportioned to all the employee’s previous employers but that take years and in the meantime the Contractor’s experience mod takes a hit that can’t be reversed. As a result, contractors are keeping a closer eye on their employees so as not to be tagged in this game of roulette.
Safety: With all these items, Safety continues to be a priority, to do otherwise will increase your chance of falling victim to most if not all the above scenarios.
Kevin Viana, Vice President, Specialty Risks Division
Marshall & Sterling, Inc.
For a copy of the update 2019 Rates please feel free to drop an email to email@example.com