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Workers Compensation

NCCI Regulatory Digest

This online newsletter contains timely and relevant workers compensation issues of particular interest to insurance agents and producers. New issues will be featured quarterly.

Big "I" Virtual University Workers Comp Articles
When the work comp policy expires, it is time for the audit. As every agent knows, work comp premium is generally based on payroll; thus, the two most important questions are: 1) what remuneration is included in the audit; and 2) what remuneration is excluded from the audit? Of the two questions, knowing what payroll is excluded from the audit might be the more important information – as this is where most mistakes are made. This article lists the payroll inclusions and exclusions.
Once the mystery is removed from the experience mod worksheet, development of the lowest possible experience mod is quite easy. This article shows how to develop the lowest possible mod while at the same time highlighting the fact that achieving this mod may not have the intended result.
The following is an article written by Tennessee Big “I” member (and the very first VU newsletter subscriber) Alan Johnson, CPCU, ARM-P, AIS, AINS about a recent Tennessee Court of Appeals case that ruled that, even if all parties agree that someone is an independent contractor, the GC’s workers compensation insurer can still charge premium for them on the premise that the NCCI policy provides a defense if the independent contractor later sues for employee status. The court ruled that the insurer is entitled to premium for this exposure even though all parties agree that the contractor was not an employee. The court does not address the issue of whether the insurer should be able to charge FULL premium given that the coverage is only for defense and not for statutory benefits. At the end of Alan’s article, we provide more information from our Iowa association related to this issue and how this is more than an isolated problem.
The National Council on Compensation Insurance’s (NCCI’s) Workers’ Compensation Experience Rating worksheet looks daunting at first. But once all the acronyms, shorthand and calculations are understood – it can be appreciated for the thing of beauty that it really is (OK, maybe that’s a bit of hyperbole). Grab a copy of the X-Mod Worksheet and let’s learn how to interpret it.
Workers’ compensation is simple, it provides sole remedy protection for the injured worker. The difficulty in work comp arises from state and federal laws and non-traditional employer/employee relationships. This article addresses three workers’ compensation endorsements every agent must understand and know when to use.
Your client decides to move its workers’ compensation coverage to a PEO, you need to know the answer to three questions: 1) What does the PEO do for my client? 2) How is my client’s work comp affected? 3) What information about PEOs and WC does my client need?
What distinguishes an employee from an independent contractor? Do IRS guidelines govern this? (Hint: NO!) In this article, we'll take a look at this issue from the standpoint of statutory requirements or case law decisions, including how a couple of states define the criteria used to determine whether a person is an employee or independent contractor.
Many organizations use volunteers to transport kids and senior citizens or provide personal services in homes or medical facilities. How are these uncompensated volunteers treated from a coverage standpoint compared to employees? When it comes to workers compensation, you may be in for a shock.
Sometimes errors in the mod occur, and these errors can cost the employer money through increased premium costs. Therefore it's important to go 'looking for trouble' to know how to identify such errors, and how to get them corrected.
In your agency, I bet it is common practice to review renewals 6-8 months in advance, right? Right! (he says sarcastically)  Well, if the workers compensation is experience rated, there are some things that may need attention that far in advance. Such vigilance may save your insured BIG bucks. Included in this article is a downloadable chart that provides a timeline indicating what and when certain actions should be taken to avoid surprises at renewal time.
Our 'Ask an Expert' service got this question recently: 'I have a customer that has not had a workers comp loss in over 8 years. How do you explain that his mod went from .91 to .93? Also, how is the 'stabilizing value' determined on the mod worksheet and what does it represent?' Take a look at this WC Q&A to find out how mods can increase without an increase in losses...and a lot more!
​​​Numerous questions arrive at the VU about workers compensation modifications. Be sure to use the VU search function to find several articles on this subject, including calculations and correcting errors. Here are two more:
An insured received revised audits from their workers compensation carrier stating that the class codes used on policies three and four years ago were incorrect and the carrier was requesting additional premium. Can the insurer go back over three years from the policy expiration, revise the class codes, and collect premium?
Most businesses today are looking for ways to cut expenses in order to bolster the bottom line. The following 'Ask an Expert' question illustrates one tactic being used: 'If an owner of a business excludes himself from WC coverage and he is injured on the job, will his medical insurance respond?'
In general, the CGL policy excludes claims that arise out of employment related injuries. Those claims are generally best covered by workers compensation and employers liability coverages. However, a fairly common type of claim arises out of third-party-over actions and coverage–under CGL, WC and/or EL policies–can depend on several factors. In this article, we'll examine this often confusing issue.
If you are meeting with a prospective client, ask for a copy of his most recent experience rating worksheet. Performing the following quick analyses can give you good insight into the client's operations. Also, if you are reviewing an existing client's renewal, the following three quick analyses will help you stay informed about the client's operations.
One of the few email discussion lists I participate in is a Yahoo! Groups list called 'RiskList.' Recently, the topic of discussion was illegal aliens and workers compensation. Some of issues discussed include whether or not they're covered under workers compensation laws and what kind of impact they may be having on loss experience.
There was a time when a high workers compensation experience mod could be reduced to 1.00 simply be creating a new corporation and transferring ownership to it. Since the new owner had no prior experience, the mod would revert to 1.00, despite the fact that the exact same ownership, management, workers, and processes were in place. That's not possible now and hasn't been for many years under NCCI rules.
An insured loss was set up with a reserve of $550,000 over three years ago. It was settled this year for only $5,800; however, the insured has been living with this $500K reserve in his experience mod for over two years. Now that this huge reserve has has been paid at only a penny per reserve dollar, can he get his new mod and past mods reduced with a return of premium?