Two Things You Can Do Today to Lower Your Business Insurance Premiums to Weather the Coronavirus Storm
Last week was tough. Call after call, I spoke with business owners and others in management roles who are feeling scared and anxious right now for obvious reasons. Due to the effects of the Coronavirus, they’ve already had to either lay off staff or furlough their hours to save on operational costs.
Some were calling to inquire about canceling their insurance coverage entirely until we get through this storm. My advice has been that we might not need to go down that road right now.
Before taking such drastic matters, here are two things you can do today to lower your insurance premiums without sacrificing or eliminating your current coverage:
- Review your estimated annual sales with your commercial insurance agent/broker and make adjustments to your liability insurance policies. Liability insurance premium is typically rated in accordance with gross annual sales/revenues, subject to audit at the end of the policy term. Rather than wait for the audit at the end of your current policy term, adjust your policy now to get the premium down which will help save on your monthly costs.
- For your Workers Compensation insurance policy, review your estimated annual payrolls and make any adjustments now rather than wait for the annual audit or canceling the policy altogether. If you’re at a standstill and do not have any payroll, or very minimal payroll, make the adjustment now.
Insurance carriers are making billing accommodations and extending grace periods for cancellations by as many as 60 days. Call your insurance carrier billing departments right away and explain your situation. Do not wait. They’ll most certainly make accommodations based on the current state of affairs.
Times are challenging for the entire world right now, but I believe we’ll get through this just as fast as we were thrown into it. Although insurance premiums aren’t the only operational cost for a business, they are one that we can control now by taking these types of measures. By doing this and maintaining your coverage, you won’t have to go through the process of re-applying for insurance once things are back to “normal.”
This too shall pass.
For all outpatient physician practices and clinics including physical therapists, acupuncturists, chiropractors, dialysis, x-ray laboratory services; and blood, body fluid, and tissue collection and testing.
We have a quality Workers Compensation insurance carrier applying major credits off the 8834 physicians class code. I haven’t found another carrier who can compete with them in this market.
I found this to be true for two of my clients in the past month as we marketed their workers’ compensation insurance policy renewals.
If you know of a doctor who is interested in us exploring this option on their behalf, please share this message. Now is a good time to start looking ahead at 2019 as you’re reviewing operational expenses and budgets.
It’s that time of year when employers are required to tally the number of entries on their “Log of Work-related Injuries and Illnesses” (OSHA Form 300), and post the “Summary of Work-related Injuries and Illnesses” (OSHA Form 300A) in a prominent location.
The OSHA Summary Form 300A is required to be posted in the workplace beginning Feb. 1, 2018, and must remain posted for the entire three months of February, March, and April. It should be in an easily visible location so that employees are aware of the injuries and illnesses occurring in their workplace.
Employers that had 11 or more employees the previous year — except those in certain low-hazard establishments in the retail, professional services, finance and real estate sectors — are required to maintain records of all work-related injuries and illnesses, and post the summary of their records for the 2017 calendar year.
Many employers under Federal OSHA are required to electronically submit the summary of injuries and illnesses to OSHA. To ensure your entire management team is aware of these changes, I suggest making OSHA’s Recordkeeping Rule one of your first training sessions of the new year.
During a quick day trip down to San Diego last weekend, I caught this billboard from the San Diego County District Attorney which kind of took me by surprise. Picturing a handcuffed jail inmate it reads “Commit Workers’ Comp Fraud, Get A New Outfit.” In addition, “don’t do it, don’t tolerate it, report it” with a phone number to call right there. As a commercial insurance professional who sees’s businesses affected by this often, it was kind of refreshing to see actually. Here’s the sign:
Taken straight from the California Department of Insurance:
In California, workers’ compensation insurance is a no-fault system. Injured employees need not prove an injury was someone else’s fault in order to receive workers’ compensation benefits for an on-the-job injury. In addition to medical expenses being covered for injured employees, some injured workers are entitled to recover a portion of lost wages resulting from an injury. Fraudulent workers’ compensation claims can be an enticing target for criminals.
Workers’ compensation insurance fraud occurs in simple and complex schemes that often require difficult and lengthy investigations. Employees may exaggerate or even fabricate injuries. At the other end of the spectrum, white-collar criminals, including doctors and lawyers, entice, pay, and conspire with others to defraud the system by creating false or exaggerated claims, overtreating, and over prescribing harmful and addictive drugs. Insurance companies “pick up the tab,” passing the cost onto policyholders, taxpayers, and the general public.
The Workers’ Compensation Fraud Program was established in 1991. The legislature made workers’ compensation fraud a felony, required insurers to report suspected fraud, and established a mechanism for funding enforcement and prosecution activities. The legislation established the Fraud Assessment Commission to determine the level of assessments to fund investigation and prosecution of workers’ compensation insurance fraud.
Funding for the program comes from California employers who are legally required to be insured or self-insured. The total aggregate assessment for the fiscal year 2015-16 was $58,862,000.
During the fiscal year 2015-16, the Fraud Division identified and reported 5,380 suspected fraud cases; (SFCs) assigned 502 new cases, made 249 arrests and referred 167 cases to prosecuting authorities. Potential loss amounted to $193,354,616.
All employers in the state of California that use employee labor must purchase and maintain Workers’ Compensation insurance. This requirement extends to contracting with and hiring subcontractors.
Here are some steps you can take to better manage your insurance and safety program when it comes to working with subcontractors:
Selecting A Subcontractor
Before a subcontractor begins work, confirm they are licensed and insured. You should only contract with licensed and insured subcontractors. Not having valid Workers Compensation insurance coverage renders a subcontractors license VOID. (Business and Profession Code 7152.2)
- Verify the subcontractors license: Contact the Contractors State License Board (CSLB). Visit http://www.cslb.ca.gov or call (800) 321-CSLB (2752).
- Verify the subcontractor is insured: Request a copy of their Certificate of Insurance that demonstrates Workers’ Compensation (WC) and General Liability (GL) insurance us current and active.
- Read the Certificate of Insurance and confirm the following:
- Named Insured: Verify the certificate shows the subcontractors company as the named insured.
- Types of Insurance Coverage: At a minimum they should have WC and GL coverage with limits of liability that adhere to the state minimum.
- Dates of Coverage: Make sure the policy is active, that the policy has not lapsed, and the dates extend through the end of the project or contract
- Confirm Coverage: Call the subcontractor’s agent or the insurance company to confirm information
- Request Updated Certificates of Insurance: If you work with the same subcontractors from year to year, mark your calendar to request updated certificates annually
- What if a subcontractor is unlicensed and not insured?
- “I’m a sole owner and exempt from insurance.” If this owner is working for you, most of the time they become a statutory employee and they would be covered under your Workers’ Compensation insurance policy
- Also, CA Labor Code 2750.5 presumes that an unlicensed person who performs work requiring a license is an employee and not an independent contractor. Verify licensing and insurance coverage!
What an Uninsured Subcontractor Can Cost You
- Legal Costs: The CSLB may initiate disciplinary action which may require you to hire legal counsel
- Increase in Insurance Premiums: As the uninsured subcontractor may be considered an employee, payments made to the uninsured subcontractor will be identified when your WC policy is audited resulting in additional premium.
- Claims Experience and Increased Costs: Your WC Insurance will be responsible for any injury to the subcontractor and their employees. Any claims paid under your policy will negatively affect your claims experience and all claims paid will apply to your experience modification factor three years, which can increase your insurance costs.
- Increase in Employment Taxes: You may be liable to the Employment Development Department for any unpaid contributions and tax withholding’s for the uninsured subcontractors employees
- Loss of Coverage: Under the California Insurance Code Sections 311 and 359, when an insured has misrepresented or concealed facts that are material to the application for insurance, the underwriter may rescind coverage or cancel the policy. Review your WC policy application, did you say yes or no to the use of subcontractors or sublet of work without certificates of insurance?
If you need loss control information to improve your loss prevention efforts, contact me anytime to discuss.
According to OSHA, “Safety cultures consist of shared beliefs, practices, and attitudes that exist at an establishment. Culture is the atmosphere created by those beliefs, attitudes, etc., which shape our behavior.”
Safety culture is the overall organizational attitude, belief, and values associated with safety in the workplace.
See the three key elements of a safety culture from Employers Compensation Insurance Company:
Many small and medium-sized businesses fail to invest in safety, when they’re the ones that can benefit the most from it. They have the most to lose in the face of a costly workplace accident. Creating a climate of safety doesn’t have to break the bank and it doesn’t require a large investment of time or a committed safety officer. Contact me today if you need help for your business.
Research is showing that, for every dollar a business invests in preventative measures, they’re seeing a four dollar return on that investment.
File this under the No Surprise folder but a new study by the Workers’ Compensation Insurance Rating Bureau show that Los Angeles has the highest workers’ comp claim costs in California.
Among other key findings, “The Los Angeles/Long Beach Area is the most litigious region in California. Medical legal costs are over 2.8 percent of total incurred costs on indemnity claims in the Los Angeles/Long Beach area compared with 2.0 percent statewide.”
“Indemnity claim frequencies in the Los Angeles/Long Beach area were 24.0 percent higher” than the rest of the state of California.
Read more here from the Insurance Journal:
As frustrating as this is, none of it surprises me. Not a week goes by where I don’t see a workers’ comp claim come across my desk for “cumulative trauma” or “repetitive motion” from an attorney after termination of an employee. And as I always say, nobody hurts more from this than the honest business owner trying to get by everyday running an honest business. They’re the ones paying the costs of these claims.
Here’s a map showing the regional differences of indemnity claims as a share of the total claims counts in California: