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Trends for 2017: Workers' Comp Edition

Trends for 2017: Workers' Comp Edition

Some brokers struggle to help clients these days. It's not easy. Rising health care costs seem to be an inevitable part of doing business today. While the skyrocketing costs cannot be ignored, there are ways to decrease risk and manage premiums in the wide world of workers' comp.


Workers' Comp Trends in 2017

As we enter 2017, changes and trends in the workers' comp world are coming. Brokers may have niche opportunities to help businesses and clients by keeping workers' comp costs in line.

Here are six workers' comp trends to pay attention to:

1. Rising Premiums

High claims typically lead to high premiums. This is the insurance industry in a nutshell. That's the bad news, but it gets worse. Certain insurance companies have seen more claims, longer breaks from work, and higher dollar amounts being claimed. That's a recipe for high premiums. And many predict these premiums will continue to go up due to increasing costs for prescription drugs and an aging workforce. If change is to happen quickly, most brokers note it'll come from within an organization – not to the system.


2. Bad Management

One way companies may control workers' comp costs is through better management of pharmaceutical benefits. Opioid use has continued to rise in the United States. As such, many employers require workers' comp claims using opioids to have a weaning off strategy at the start. Another way to manage benefits is limiting where employees can get pharmaceuticals. Getting drugs from the physician's office typically costs more than at an off-site pharmacy.


3. Plentiful Partnerships

Certain workers' comp programs have developed relationships with facilities that specialize in work-related injuries specific to their industry. While requiring workers' comp claimants to choose a particular occupational medicine clinic is barred, a recommendation is legal. Brokers can help make an introduction in these scenarios.


4. More Technology

Innovations in the medical field incorporate technology to give patients options. Telemedicine is one such trend. Instead of visiting a doctor's office, a patient can call in on a smartphone or iPad at any time during the day or night. This is especially useful for people who work nights and mornings. Other programs have incorporated a hotline that connects injured employees to a health care professional immediately.


5. Cultural Focus

A culture of getting back to work is essential to ensure the success of a workers' comp program. Employees who want to get healthy and get back to work can save a company a lot of money. One way to potentially get employees back faster is through support. Most companies don't contact employees while they're off on a workers' comp claim. A phone call or card from a supervisor could help an employee recover mentally and physically.

Many were surprised to learn that over 80% of a workers' comp program costs go towards 5% of the claims. This means employees away from the job for a long time eat up more costs than anything else. Getting these people back on the job on schedule can be significant for workers' comp programs.


6. Keep Things Safe

While workers' comp programs are in place for a reason, the easiest way to potentially control costs is through a safety program at the workplace. Many have found the costs of incorporating more safety programs and measures to be minimal compared to the cost of workers' comp when an employee gets injured.

Certain companies have found a large financial incentive to focusing on safety and doing things the correct way. A broker can play a significant role in helping companies manage workers' comp costs by focusing on safety. 


For more information regarding workers compensation contact Skyline Risk Management, Inc. at (718) 267-6600. 

5 Simple Ways to Improve Return-to-Work Incentives & Reduce Workers' Comp Costs

5 Simple Ways to Improve Return-to-Work Incentives & Reduce Workers' Comp Costs

Workers' compensation can be confusing. However, the system is built on one thing: mutual accountability. As an employee, you put trust in your employer and insurer to promptly pay out your benefits. As an employer, you expect your employees to return to work as soon as possible. Everyone expects honesty.

While there are expectations, the workers' compensation system offers disincentives to employees who come back early. Many small businesses have workers' compensation systems that encourage employees to stay out of work as long as possible.


What You Need to Do

As a small business owner, you need to find a way to get your employees back to work as soon as possible. The quicker your employee gets back, the less money your workers' compensation program will cost you.

Here is how to reduce workers' comp costs and incentivize employees to come back quickly:

  • Remove All Disincentives

If your employees have no reason to come back to work quickly, they won't. Look into your workers' compensation program and see where you can encourage employees to come back promptly by removing the benefits of staying out of work.

  • Get Proactive

Look throughout your company and see how you can make improvements to the workers' compensation system without infringing on your employees’ rights. Many companies find the benefits employees receive when injured to be excessive upon further examination. Once you identify excessive benefits, it's easy to take proactive action and cut them out.

  • Be Detailed

Employees will find a way to take advantage of any system – that is just human nature. Thus, you need to clearly communicate all policies regarding work injuries and set firm expectations. Give every employee written procedures and policies the day they are hired. Create guidelines to report an injury.

  • Communicate Through the Process

It is imperative that small business owners communicate with the employee throughout the injury, recovery, and return. Find out how your employee is recovering and healing. Get updates. While you should never put pressure on an employee, you need to maintain contact and show support. Then, once the employee comes back, make sure you communicate what they can do through the healing process and what their transitional duties will be.

  • Contest Claims If Need Be

If you believe one of your employees is abusing the system, do not be afraid to contest the claims that come in. This is especially true if the employee is non-compliant or seems to be extending the disability too much. Small business owners should also contest claims where new conditions develop after the injury. Just understand that contesting a claim will often require investigations, documentation, and medical examinations. These things will often require your resources as the business owner.


Encourage Your Employees to Work

The best way to manage your workers' compensation costs is through encouraging employees to get back to work. If you remove the incentive to stay away from work, you'll find employees come back faster than ever before. If you keep offering excessive incentives to employees who don't come back to work, your costs will continue to rise.

Have an employee or two abusing their right to workers compensation? Contact Skyline Risk Management, Inc. at (718) 267-6600 to voice your concerns. 

Four Ways to Take Action and Reduce Loss on Workers’ Compensation Claims

Four Ways to Take Action and Reduce Loss on Workers’ Compensation Claims

In this age of everyone suing everyone, it is essential that companies find ways to protect themselves against workers’ compensation claims. One sector that is at a high risk for claims is the manufacturing industry. The risks come with the small to mid-market companies that cannot find the partners they need to help them target their dangers and find techniques they can use to reduce the costs of the losses for which they are at the greatest risk. These four tips can help manufacturing companies reduce the cost of these claims now and in the future.


1. Evaluate History of Past Claims

To manage your claims in the future, you have to understand what has happened in the past. This means that you have to look at workers’ compensation claims and take corrective action to reduce loss. This evaluation should include:

  • Analyzing the trends of claims that are affecting your company via loss experience and cost.
  • Developing a corrective plan based on your evaluation.
  • Detailing the financial gains that can be achieved by implementing the corrective plan.

This process of evaluation can reduce insurance premiums by as much as 15% within the first year, which is a substantial cost savings.


2. Reduce Time to Close Claims

One of the easiest ways to reduce the cost of claims is to close claims quickly. To do this, your company needs to conduct claims reviews personally, on a regular timetable, with your insurance claim adjusters, to decide whether:

  • Open claims need to be closed due to the circumstances of the claims
  • Claim reserves that are at a high level should be adjusted downward

These two decisions have been shown to be very effective in reducing the number of open claims, and this lowers the cost of premiums, simply due to the reduced time spent on claims. By having quarterly claims review with your insurance adjuster you can reduce claims by as much as 20%.


3. Control Workers’ Compensation Premiums

Analyzing the workers’ compensation experience modification ratings (EMR) can allow you to regain some control over the premiums. Even though they are very complex, you need to routinely evaluate the modifier to determine if it is still accurate and to see how it is going to impact future premiums. This is a big part of keeping premiums at a stable level.


4. New Hire Screening

One of the best ways to prevent workers’ compensation claims is to evaluate the hiring process. Employment screening can ensure that a candidate’s physical ability is considered, based on their detailed job description, to ensure that they can do the job you are considering for them. New workers are more apt to be injured and file a worker’s compensation claim than experienced ones. Pre-hiring screening can help to decrease the likelihood of someone being injured on the job and, thus, decrease loss.

Smart risk management strategies that flow from evaluating the past, to screening new hires, to controlling premiums, to reducing the amount of time to close claims all work together to help decrease the loss costs. These workers’ compensation tips are a start to help you on your journey to decrease the effect of workers’ compensation claims and help you to become more profitable in your industry. 

Form more information about reducing your workers compensation claims and costs contact a Skyline Risk Management, Inc. professional at (718) 267-6600 to voice your concerns.

Top 5 Reasons for Contractors to Consider Environmental Insurance

Top 5 Reasons for Contractors to Consider Environmental Insurance

Most construction contractors are acutely aware of their need for General Liability, Workers' Compensation, and Inland Marine insurance. Rarely will a construction contractor even consider that their company may be tied up in court for performing work that damaged the environment, but it happens, and it happens more frequently than you would imagine.


The U.S. Environmental Protection Agency has determined that contractors working in the construction industry have a significantly high potential for contributing to environmental damages. The EPA considers general contractors, subcontractors, engineers, and architects as the group of usual suspects when it comes to environmental pollution and the resulting damages pollution causes. 

Unfortunately, only a small percentage of active contractors recognize the significant risk of environmental claims that can result from their activities because claim activity is something they pay little attention to until if affects their livelihood.


Environmental Example:

XYZ Grading Services was hired to excavate some trenches on the perimeter of a residential construction project. The soil that was excavated was temporarily piled up on a nearby vacant industrial property. When the excavated trenches were backfilled by the contractor, the excess soil was spread across the construction site and used for grading purposes.

Not long following the completion of the construction project, dioxin was found in other soil at the industrial site where the excavated soil was temporarily stored. After further testing, dioxin was also found in the soil that was spread around the residential construction project. After EPA testing had been completed, it was determined that the contamination had also seeped from the surface into a water supply.

A number of parties to the project were found liable for the pollution which included the XYZ Grading Services and became responsible for a multimillion-dollar cleanup. XYZ Grading Services, a family owned business that had survived for three generations, no longer exists.


Important Reasons for Consideration

Certainly, a typical environmental pollution case should motivate contractors to consider environmental insurance, but if not, consider the following reasons below:

1.      Most General Liability and Professional Liability policies exclude coverage for pollution claims.

2.      Spills of toxic chemicals that are stored and used at job sites such as solvents, finishers, and fuel can lead to a pollution claim.

3.      Exposure resulting from hazardous materials such as fiberglass, asbestos, lead paint, and mercury that is not properly disposed of.

4.      Storm water run-off from project sites due to lack of a safe drainage strategy.

5.      Inadvertently puncturing an underground pipeline or storage tank that causes the release of hazardous materials.

All of the episodes listed above can affect General Contractors and subcontractors as well. Any contractor or subcontractor that becomes a party to a project can be held directly or indirectly responsible for a pollution claim and the significant costs of remediation.


Environmental Insurance Coverage

Fortunately for construction-related contractors, there is a stand-alone Environmental Insurance product that can provide financial protection for defense costs, settlement agreements, and judgments awarded by the court.

Typically, Environmental Insurance Coverage will provide several coverage options:

  • Can be purchased on a claims-made or occurrence basis.
  • Will provide coverage for third-party claims of bodily injury or property damage and environmental damage that results in remediation costs.
  • Can be site-specific for properties owned by the contractor.
  • Coverage for storage and staging of equipment used at a covered job site.
  • Ability to expand the definition of pollution conditions.

SKYLINE

Knowing that your contracting business is operating in a highly regulated and litigious industry, it is incumbent upon each general contractor and subcontractor to transfer the very present risk of polluting the environment and the costs associated with cleaning up the mess you caused. 

To better under your pollution risk and the most effective way to transfer your risk, contact the insurance professionals at Skyline Risk Management, Inc. (718) 267-6600.

Workers' Compensation Insurance Rate Changes In New York

Workers' Compensation Insurance Rate Changes In New York

The insurance world is filled with legalities. Regulations change each and every day. Many claim this is to keep the industry as honest as possible. One legality regarding increasing costs revolves around applying for any price increase over 7% in the state of New York.

The law was created to prevent insurance companies from significantly increasing prices without going through legal proceedings proving that the cost is justified. As such, on May 13 the New York Compensation Insurance Rating Board (NYCIRB) filed a petition with the Department of Financial Services requesting a 9.3% overall loss cost increase.


How It Works

After the NYCIRB petitioned the Department of Financial Services, a hearing was scheduled for June 28. The proceedings were held in the Department's State Street office in New York City. Along with the NYCIRB, the Department will oversee the hearing with the superintendent and her staff.

NYCIRB used two years of policy data to calculate the overall loss cost, using a number of multiplicative factors.

Understanding the Testimony

Throughout the hearing, nine individuals testified for or against the proposed rate hike. The statements revolved around a number of factors. Seven individuals testified in favor of the increase. Two people believed the hike was not justified. These individuals saw the increase as another attempt to charge the “little guy” more money, while corporations continued to line their pockets.

Those who testified for the increase included individuals from the Workers' Compensation Board, members of the NYCIRB, private insurance carriers, and more. The focus of those speaking in favor of the increase was to refer back to the data and remind the superintendent that companies must turn a profit to stay in business.

The main argument stated that new insurers wouldn't enter the marketplace if it's nearly impossible to make money in the industry. With less competition, individuals seeking coverage will have fewer options, and all industries working toward a monopoly are inefficient.

The End Result

Not only did the Department of Financial Services hear in-person testimonies, but they also took written submissions into account before making their final decision. Collectively, a few groups wrote in to the hearing with objections. Two groups which offered strong opposition included the New York State AFL-CIO and the Business and Labor Coalition of New York. These groups opposed the filing because of the potential cost increases, employers and workers would incur. Both groups ignored the fact that the loss cost calculations must be considered in the decision.

After deliberation, the Department of Financial Services made their decision. The Department recognized that maintaining a healthy workers' compensation system is absolutely vital to the health of the economy of the great state of New York. The superintendent knew the decision was necessary, as it would affect many New Yorkers.

While price increases are typically frowned upon, the Business Council of New York State and their support for the increase ultimately swayed the Department. As the state's largest employer association, it was illuminating that this group was fully in favor of an increase.

As such, the Department of Financial Services ended up approving the NYCIRB’s application for a 9.3% increase. The rate hike should become active on October 1. 


If you have questions about workers compensation contact Skyline Risk Management, Inc. at (718) 267-6600 to voice your concerns. 


Affordable Care Act: A Year-By-Year Overview

Affordable Care Act: A Year-By-Year Overview

The Affordable Care Act, often referred to as Obamacare, although passed by the Congress in 2010, was designed to be phased in each year with 2016 marked as full implementation. Along the way there have been challenges by some of the states and challenges by Congress; but, alas, the full-blown Affordable Care Act (ACA) has arrived. Each year, portions of this massive healthcare reform act were implemented, and the most significant are as follows:

2010

Patient's Bill of Rights - This provision was designed to protect U.S. consumers from alleged abuses of the insurance industry. It also called for free preventative services to begin for U.S. consumers who become insure. There was also an additional twenty changes included with the 2010 implementations.

2011

Medicare members are offered key preventive services at no cost and receive a 50% savings on brand-name drugs while in the "donut hole." There are an additional eight components that were also implemented in 2011.

2012

This year was all about improving healthcare quality and reducing paperwork and administrative costs in the healthcare industry. 2012 was also the year for the implementation of CLASS, a voluntary long-term care insurance solution. There were also four other major implementations in 2012.

2013

This was the year when open enrollment began for the Health Insurance Marketplace and will be remembered for the many failures of the HealthCare.Gov online portal. There were also four other major implementations that went into effect.

2014

2014 is considered by many to be the year of the consumer. Pre-existing conditions, annual limits of coverage, and clinical trial coverage were the highlights for 2014.

2015

Physicians who provide a higher quality of care rather than volume of care will receive higher payments than physicians who provide a lower quality of care.

2016

2016 is scheduled as the year for complete implementation of the employer mandate:

  • Any business that employs at least 50 full-time employees will be required to offer at least 95% of the full-time employees health insurance to avoid penalties.
  • The definition of "affordability" is changed to 9.66% of an employee's total household income.
  • Employers will be penalized for failure to provide minimum essential coverage to employees or offering an inadequate health plan. The new penalty under section 4980H(a) is increased to $2,160per full-time employee in excess of 30 employees.
  • If an employer offers minimum essential coverage the doesn't satisfy the requirements of "Minimum Value and Affordability," a penalty will be levied if a full-time employee receives a premium tax credit to buy insurance on an exchange as a result of the following:

1.      The employer health coverage did not offer "minimum value".

2.      The employer health coverage was considered "unaffordable."


Challenges Over the Years

Although the ACA was passed by the Congress, it was done so on a razor thin margin and therefore there were many who felt that the massive health care overhaul might not pass constitutional muster, and so challenges were certainly to follow:

  • Early on Republicans in 26 states challenged the mandate in the act, saying it was an unconstitutional expansion of federal power. The Supreme Court heard the case and in June of 2012 ruled that it was constitutional.
  • In June of 2014 after a case was filed by Hobby Lobby that complained that the ACA forced closely held businesses to violate religious convictions while being required to pay for contraception, the Supreme Court ruled against the ACA.
  • In another case in 2015, the Supreme Court ruled that health insurance subsidies could be awarded in states that set up their own and exchanges and in states that did not.

Whatever your feelings are regarding the Affordable Care Act, most can agree that it is a massive piece of legislation that is complex and confusing. To make certain that your business is adhering to the rules and regulations, contact an insurance professional at Skyline Risk Management  (718) 267-6600 to learn more about managing your employee benefits.


4 Steps to Mitigate Risk In Your Supply Chain

4 Steps to Mitigate Risk In Your Supply Chain

It's becoming increasingly difficult to avoid litigation in today's society. Many businesses, big and small, have been hit with lawsuits that hinder profits. Some firms even have to file for bankruptcy as a result of these claims.

To avoid such lawsuits, it's important to use common sense. Make sure your workplace is as safe as it can be. Fall into compliance with any and all regulations. Write out all your safety policies and procedures, and then make them readily available for all to read.

Just Imagine

Think about a scenario where a company hires a contractor to remove natural gas lines. This contractor is known and trusted, but he then hires two subcontractors to help with the project. One of these contractors makes a grave error, which results in two employees suffering from severe burns.

So who is on the hook for medical bills and the forthcoming lawsuit? In this example, the original company that hired the contractor is now responsible. Now, this may not be a big deal. If your company has workers' compensation and employer liability insurance, then you might be all set.

The Scary Thing About Contractors

Contractor lawsuits can be scary ordeals, and they're becoming increasingly common in today's contractor economy. In industries where the majority of employees are contractors (say 50-75 % of employees), the risks are greatly magnified.

It's hard to manage employees and ensure safety when the workforce is out of your company’s immediate supervision. In those cases, employees complying with your company's safety procedures and policies cannot be guaranteed.


The First Step to Protection

If you own a company or manage a supply chain, then protecting your business should be high on your priority list. While contractors can bring vulnerabilities, you understand that it's impossible to get many jobs done without them. Using contractors is just a part of doing business these days.

To keep your company protected, there is one thing you can do – create a verification process. Had the perfect contractor pre-qualification process been in place, the situation described above could have easily been avoided.

Here's how to implement a verification process:

1. Emphasize Safety

Create safety expectations and standards. Communicate these rules to any contractor before hiring. Hold meetings with your regular contractors regarding safety. Offer safety policies and procedures in written format for all involved.

 

2. Dig Deeper

Dive into the data. Look at objective measures to grade the contractor's performance. Use supply chain risk management audits with written protocol to ensure objectivity.

 

3. Create Criteria

Once you have settled on criteria by which you will judge your contractors, clearly communicate these criteria to any contractors you may hire.  Let each contractor know that safety is more important than price and your company will select the safest people to work with, not just the cheapest.

 

4. Manage

Keep company-wide rules and standards in place by maintaining a real-time database of every contractor. Continually update this database. Any possible user should be able to access the information at any time of the day.


Your Verification System

By keeping an up-to-date database of verified and reliable contractors, your company will avoid the vast majority of frivolous lawsuits that are a result of the contractor economy.

Your system can verify that every contractor has the necessary insurance and endorsements. This would remove a company's liability if an issue and lawsuit were to occur. In this scenario, both the contractors would be fighting a lawsuit – not the company.


It's Worth It?

If you keep updating your contractor verification system, you will mitigate a significant amount of risk in your supply chain. Not meeting contractual requirements and regulatory issues will become a thing of the past. In the present, you'll find reduced risk and often cost savings. 

 

If you have questions about sub-contractor insurance standards contact Skyline Risk Management, Inc., (718) 267-6600 to voice your concerns. 


4 Builders Risk Coverage Trends Affecting Contractors

4 Builders Risk Coverage Trends Affecting Contractors

Construction of the Twin Towers - NYC - Early 1970s

Construction of the Twin Towers - NYC - Early 1970s

Construction is big business in the United States, and it's booming. Due to this fact, the market for builders risk insurance has soared. Yet many insurance agencies have not been able to turn this potential source of considerable revenue into any type of profit.

Many cite the lack of insurance agencies offering builders risk insurance to the unique nature of these policies. Every single carrier offers different types of policies, and many find that builders risk plans tend to be significantly more complicated than other property policies.

Plus, a single construction company may be required to hold numerous different types of policies. This can be confusing for even the most knowledgeable contractors. As such, it's important to pay attention to recent trends in the industry. This will ensure you can accurately obtain builders risk coverage for your business:


1. Flexible Limits

Demand has skyrocketed for flexible limits regarding builders risk coverage. Changeable limits are vital for ordinance, law, landscaping, and temporary structure projects. You can wrap the heightened sub-limit into a premium charge for your business if you seek this type of coverage. Builders love increasing the sub-limit above the traditional $100,000 average, and the premium is usually worth paying for such a feature.

 

2. Soft Costs and Delays

Agents and brokers have a job to scrutinize any project that seeks builders risk insurance and ask every "what if?" possible. Many items are only examined after a loss, especially when soft costs and delayed expenses are considered. Investigate these issues by conducting meetings regularly and educating your workforce on builders risk hazards. 

 

3. Policy Warrants

Many insurance companies are now requiring warrants to go along with builders risk insurance. For example, a company will say there are certain things you must have as part of the project to ensure your builders risk policy will kick into effect in the event of an emergency. Most of the time, these warranties are loss prevention techniques that a contractor or builder may not have had on the job site initially.

 

4. One-Stop Shopping

Back in the day, there were dozens of different types of coverage forms constructions companies and builders could utilize. These coverages included separate installation, general liability, riggers liability, and so many more. Different sectors within the construction market could get what they needed quickly and easily.

However, things have changed. With crossover between markets and trades increasing in the construction industry, there is a need for a one-size-fits-all policy for builders. To that end, insurance companies have come through. Complex construction operations now require a builder's policy that covers any and every construction operation and project.


Understanding Builders Risk Coverage

By diving deep into builders risk and noticing current trends, you'll stay ahead of the game and ahead of competitors Remember to read the fine print and understand that every builders risk policy is unique.

 

If you have questions about Builder's Risk policies contact Skyline Risk Management, Inc., (718) 267-6600 to voice your concerns. 

Reduce Your Mod Rate by Combining Entities?

Reduce Your Mod Rate by Combining Entities?

For companies suffering from increasing mod rates, and with insurance premiums on the rise, it is no shocker that your bottom line is being effected. Sometimes a solid alternative is to combine entities to ease these costs. 

How Can it Help?

As a business owner, if you have several organizations under the same management and control, it may help if the entities are combined for the purpose of experience modification calculations. It used to be that if you created a new corporation and then transferred the ownership to it, you could effectively reduce your worker's comp mod factor back to 1.00.

Then the beloved NCCI stepped in and killed that strategy and implemented a new three point approach for ownership changes.

The NCCI 3 Point Rule

Simply put, when there is an ownership change in a company, the experience rating of the former company is acquired by the new surviving company or owner(s).The only way this experience rating does not transfer to the new organization is if all three of the following conditions are met:

1.      There must be a material change in ownership. If there is any ownership continuation, the interest must have been less than one third ownership before the change or less than one half ownership after the change.

2.      There must be a change in operations that is enough to result in a reclassification of the governing class code.

3.      There must be a modification in the process and hazard of the operation.

The good news is if all three conditions are met, the experience of the previous organization(s) is excluded from the new organization. In reality, this is unlikely to be the case because it would be like an RV repair shop being sold and reopened as an accounting firm. If the new owner does not have an established mod factor, the mod of the new entity becomes 1.00 when the experience is excluded because the three points listed above have been met. If not, a mod will be calculated from the combined experience of the old entity and the new one.

Business owners need to understand that experience and loss control is a function of an entity's ownership and process. The new rules negate the past attempts by insureds to get around the rating plan. For example, if an insured who has earned a high mod in one state because of poor experience, that same insured cannot open a "dummy" corporation in another state and then transfer ownership to lower the mod on the remaining corporation and then give the new on a 1.00.

For more information about reducing your modification rate, contact an insurance professional at Skyline Risk Management, Inc. (718) 267-6600 to help address your concerns. 

Save Money: Self-Insured Workers Comp

Save Money: Self-Insured Workers Comp

For those companies that find themselves in what seems to be a losing battle with Worker's Compensation Costs, there is an alternative. Almost every state allows qualified companies to self-insure their worker's compensation insurance. Since most worker's compensation insurance companies report about 75% of premium dollars are going to claims expense, the balance is going to agent commissions, administrative expenses, marketing, and profits.

In some states, the smaller companies that do not qualify to self-insure also have an alternative. Smaller companies can join a pool of other small companies which is generally done through a trade association, and combine their assets which will allow them to self-insure.

How it Works

Qualified companies who elect to self-insure can manage their claims in-house or use a third party administrator. The administrator will for a fee, handle the required paperwork and benefit payments to your claimants. There is also "excess insurance" available (similar to reinsurance) that can protect the organization if claims surpass an amount that is determined by the self-insured company. Most companies that elect to self-insure feel they can do a more efficient job of administering the program and understand their risks better than a standard insurer. These companies focus on the risk of their employees rather than the industry as a whole.

Industries that Benefit The Most

High-risk industries tend to be the better candidate for self-insuring. Certainly low-risk industries like a professional organization or sales company are already paying very low rates in the standard insurance marketplace so their ROI for self-insuring would be little to none. Companies operating in manufacturing and construction realize substantial savings since when they self-insure, they avoid the premium swings in the standard market, and can manage their expenses more efficiently than a standard insurer. Companies that implement comprehensive safety programs and apply resources to mitigate risks will experience significant savings by reducing claims, operating more efficiently, and eliminating profit and expenses.

Is it Right For You?

These are several considerations that need to be made before electing to self-insure:

·         Is it allowed in your jurisdiction? The first thing to verify is whether your state will allow you to self-insure, and if so, what are the qualifications.

·         Are there resources available? There will certainly be an investment that must be made by the company, and this could be considerable. If the organization is seriously being punished with workers compensation costs, it is certainly a good time to decide if these resources should be directed to a self-insured plan.

·         Claims History - If your safety protocols have been successful in mitigating the risks associated with your industry and yet you are paying the standard rate for your classification, it certainly may be time to consider self-insuring.

·         Qualifications - The state in which you operate will have the qualifications needed to operate a self-insured worker's compensation plan. Visit your state's worker's compensation website to review and make an informed decision as to whether self-insuring is the better move for your company.

Worker's Compensation can be a convoluted subject that can become more cumbersome depending on your jurisdiction. Take the step to contact a worker's compensation professional at Skyline Risk Management, (718) 267-6600 to get the information you need to make an informed decision about saving money on your Worker's Compensation premium.

Understanding Risk Management

Understanding Risk Management

For any organization to appropriately manage the risks involved with being in business, the management has to be more than simply renewing insurance policies. Yes, your insurance is always a key part of any risk management strategy, but there is more than one piece to the puzzle.

Identification

To properly approach the task of risk management, the first thing that has to happen is the identification of any existing risks that can jeopardize your business financially.  Although simple to say, this task can be difficult. After all, risk management involves predicting the future based on past experience and expertise. A risk manager must look to their key employees and management staff for insights and look externally to professionals you trust and other specialists.

Risk Appetite

Before the risk management strategy begins, the organization will need to determine how much risk you're willing to afford and accept, or your "risk appetite." After which you'll need to identify the measures the organization currently has in place and what is still needed in order to help manage the risk. Once the risks have been identified and prioritized, the organization will then determine how they should be managed. There are three options to consider:

1.      Avoidance - Avoidance is when the organization decides not to embark on a certain activity because the risks exceed the expected benefits

2.      Acceptance  - Acceptance happens when an informed decision is made to accept a potential risk because the benefit is significantly greater than the risks.

3.      Transfer  - This takes place when the organization elects to transfer the risk to a third party insurance company or by contract with a non-insurance organization, however, when transfer is elected, it is typically not 100% because of the deductibles involved

When risks are transferred to an insurance company, the deductibles act as a motivator because the insured will typically attempt to reduce the risk because of their responsibility to accept a portion of it. For example, if your business that is acting as a General Contractor, requires all subcontractors to obtain and pay for their own insurance, the subcontractors are motivated to reduce risks that could result in a claim where they will have to pay deductibles out-of-pocket.

In cases where a General Contractor is purchasing Wrap-Up insurance that covers the General Contractor and its subcontractors, the limits and deductibles will be significantly higher which increases the exposure for the General Contractor. As the general contractor, your deductible responsibility would could be increased to $50,000 or $100,000. Knowing this, you could build this risk into your project bid or transfer it to your insurer who could pay the difference between your chosen deductible and the higher deductible under Wrap-Up policy.

Every industry contains unique risks and exposures that must be properly managed to avoid the inherent financial consequences that can result. It's important for the risk manager to be able to call on experts in the industry to define and ultimately mitigate them. After implementing a comprehensive quality assurance and safety practices program that are targeted to minimize the identified exposures, the risk manager can make an informed decision to avoid, accept, or transfer the risks that remain.

For professional advice about your organization's exposures, contact Skyline Risk Management, Inc. (718) 267-6600 for help with identifying your exposures and how to mitigate them in the best possible manner.

8 Critical Steps to Construction Contractor Safety

8 Critical Steps to Construction Contractor Safety

Safety should be the top priority for all contractors in the construction industry. We all know that hardhats, safety glasses, and steel-toed boots are part of the norm, however what reduces accidents and deaths, and leads to lower premiums, is an efficient and effective safety plan.

The Bureau of Labor Statistics reports that approximately 150,000 construction site injuries occur every year, and almost 19% of all workplace fatalities happen in the construction industry. In construction, detailed precautions can prevent big problems, and creating a safety plan is a great place to start.

1.      Create a Safety Plan

The contractor's first responsibility to it's workers is to maintain a safe work environment. This plan should be comprehensive, memorialized, and issued to every worker at the job site. Your plan should highlight emergency procedures and policies, identify hazards, provide for safety training, and record incidents as they occur. At least one manager should be identified as a “Safety Manager” and have the responsibility of training workers according to the program.

2.      Fall Prevention

The most notorious accident on job sites results from falls, particularly when it comes to the use of ladders. Ladders should be inspected regularly for broken steps, missing bolts, and any damaged parts, and always, without fail, placed on a level area. Workers should be aware of the one-to-four rule, which means the bottom of the ladder should extend about one foot for every four feet the ladder will be extended.

3.      Lift and Carry - Manual labor on construction sites typically involves more precautions when lifting or carrying heavy equipment. Statistics reveal that one in five workers will suffer from a lower back injury during their working lifetime. To help reduce back injuries, have employees bend from the knees while their feet are about shoulder-width apart, and be sure to shift their feet to change direction when carrying objects close to their waist level.

4.      Ergonomic Equipment - To help workers reduce fatigue, avoid injuries and strains, and to increase productivity, construction contractors should consider investing in ergonomic equipment. This would include safety items such as ladder caddies, rubber handled power tools, and seat cushions, which work with the worker's natural movements and reduce the risk of musculus-skeletal disorders than result in back pain.

5.      Heat Stress - Workers should be made aware of the three stages of heat stress, cramps, heat exhaustion, and heat stroke. Workers should be trained to hydrate properly before and during work by drinking 10 ounces of water every 20 minutes. Workers outside in extreme heat should have work tents or umbrellas to reduce the heat from the sun.

6.      Electrical Safety - After falls, electrocutions are the leading cause of construction fatalities. Workers should be instructed to inspect electrical equipment regularly and above all, stay clear of the water when working with electrical equipment. Damaged electrical cords should always be replaced rather than spliced or taped.

7.      Worker Visibility - Workers involved with side of the highway work or directing traffic around a construction site should always be provided with bright orange or yellow clothing or vests. This philosophy is even more important for highway work taking place during nigh time hours.

8.      Natural Hazards - Most workers don't consider an insect bite as a natural hazard until it results in an injury that prevents them from going to work. Insect bites and stings are very common in construction areas and can lead to serious injury if a worker has an allergy to the bite and attempts to continue working.

With many construction jobs, new workers are brought on board that may or may not have much construction experience. These new workers should be thoroughly trained on job-site safety to maintain a safe working environment, and reduce injuries while on the job.

Safety in the workplace will always be the employer's first line of defense when it comes to the cost of workers' compensation insurance. If you have questions about construction contractor safety contact Skyline Risk Management, Inc. at (718) 267-6600 to discuss your concerns. 

Tips for Construction Project Wrap-Ups

Tips for Construction Project Wrap-Ups

Many large construction projects have become more difficult to finance because of certain economic and logistical challenges in the construction marketplace. An overall increase in construction costs, risk management controls, and an uptick in litigation also contributes to the challenge.

Wrap-Up Defined

Wrap-up programs, also referred to as Owner Controlled Insurance Programs and Contractor Controlled Insurance Programs, bring all the construction insurance costs into one master policy which eliminates the gaps in coverage. The Wrap-up program sponsor can be the project owner, general contractor, or construction manager and allows contractors of all tiers to enroll in the program.

The typical coverage usually included are workers' compensation insurance, employers liability insurance,  general liability, commercial umbrella and builder's risk insurance while commercial auto liability and inland marine are excluded from the policy and should be insured on a separate policy by the contractors in their individual insurance programs.

Where Wrap-Ups are Used

Generally, a wrap-up policy is used on large projects where project costs are estimated to exceed $100 million dollars. The policy sponsor or master entity will purchase the policy thereby providing the insurance benefits of broader coverage and higher limits, delivering safety and claims management, coverage for difficult subcontractor risks, and delivering a significantreduction in insurance costs for those entities enrolled. Typical construction projects that make use of Wrap-ups are:

·         Schools and Municipal programs

·         Condominiums and single family home communities

·         Office and medical complexes

·         High rise office buildings

·         Municipal infrastructures

·         Refineries and chemical plants

·         Automobile plants

·         Industrial complexes

Solutions and Compliance

The insurance organization offering the wrap-up program typically assists with studies, compliance issues, and claims management responsibilities involved with managing the wrap-up program. They will initiate a feasibility study to determine whether a wrap-up is a viable solution for the construction project at hand and determine the lines of coverage included and the estimated savings for the sponsor of the program.

The insurance organization will also determine the regulatory requirements in the project's jurisdiction and develop manuals that outline the enrollment process and the program details which includes coverage required and offered under the program. The insurance administrator will typically assign a team consisting of a Risk Manager, Claims Professional, Safety Professional, and CCIP Administrator to help manage all aspects of the program. The Safety Professional generally offers consulting services specific to the wrap-up in an aggressive manner and provides employee training while the Claims Professional will provide analysis and management of claims. 

Why the Emphasis on Feasibility?

A well- conducted feasibility study is used to uncover exposures and project characteristics that could affect the wrap-up program in either a positive or negative manner. Most importantly for the stakeholders, the feasibility study will determine the ROI for the program and the coverage solutions that could be realized by all members of the wrap-up. It's important to note that the realistic feasibility study should also include a current and well-prepared proforma for the project. The proforma paints an accurate financial picture of the project as it takes all costs into consideration and then calculates the ROI based on the costs anticipated. If you have questions about construction project wrap-ups contact Skyline Risk Management, Inc. at (718) 267-6600 to discuss your concerns. 

5 Ways to Reduce Workers' Compensation Claims

5 Ways to Reduce Workers' Compensation Claims

Any business that has witnessed their Workers' Compensation rates creeping up over the years, certainly understands that claims are the culprit behind policy increases.

The average claim amount continues to rise along with the cost of health care, and diagnostic testing. As employers sustain these continued increases it becomes more difficult for an organization to realize a profit. In some areas of the balance sheet, there may be little that can be done to reduce costs and increase profits. As a result, the employer must pass the additional costs on to the consumer and hopefully remain competitive.

In this circumstance, the best way to turn a larger profit is to strategically manage your Workers' Compensation policy.

Claim Reduction = Lower Rates

As we know, most states control workers' compensation rates, which are set according to the class of business. When a business knows their costs of workers' compensation in advance, they can set their prices for services and products accordingly. But when they experience claims during the year they are subject to rate increases resulting from claims that are filed. Knowing this, the employer's best defense will always be a great offense, and that can be accomplished by implementing Physical Abilities Testing (PAT).

1.      Pre-Employment Tests - It makes sense that a worker who may not be physically capable of performing basic job responsibilities is more likely to experience “on-the-job injuries” than a worker who is physically capable. Implementing a pre-hire physical abilities test can help the employer make certain that the prospective employee is physically capable of completing the physical tasks associated with the position. The test should be based on the specific tasks related to the job and be administered after a conditional employment offer has been made. If the employee fails this portion of the PAT, the employment offer can be rescinded.

2.      Pre-Transfer Testing - Just because an employee can easily lift 50 pounds doesn't necessarily mean that they can also regularly walk 300 yards from one end of a warehouse to another. Employees that are being considered for transfer to another job with different physical demands should also be tested for physical abilities specific to the new tasks required following the transfer.

3.      Re-Testing - Physical abilities can change over time, especially for employees that have aged or put on weight during their employment. In order to make certain that current employees remain physically able to complete employment-related tasks, re-testing over time will ensure that your employees will remain fit for the tasks they're expected to perform.

4.      Tests due to Reasonable Suspicion - Employees returning from leave due to health reasons may not be as physically fit as they claim. A reasonable suspicion should lead to physical testing to make certain they are still physically able to complete work-related physical tasks. An employer owes it to the employee to make certain they are physically able to safely perform their duties. PAT testing will allow both parties to confirm this and can also protect other workers in the workplace.

5.      Post Injury Testing - Post injury testing of employees returning from work after an injury will help promote safety in the workplace. The testing will take the guessing out of the return to work decisions and enable the employer to devise a return to work plan if needed.

A well-designed and implemented physical abilities testing program that is used consistently in the workplace can reduce workers' compensation claims resulting in stable rates year after year. Physical Abilities Testing (PAT) is a proven and cost-effective strategy for improving a company’s ROI. If you have questions about workers compensation contact Skyline Risk Management, Inc. at (718) 267-6600 to discuss your concerns.