1. – KPA CONFIDENTIAL –
How To Reduce Your Workers Comp
Costs
March 17, 2010
2. Questions
• If you have questions
during the presentation,
please submit them using
the “Questions” feature
• Questions will be
answered at the end of the
webinar
3. History
Employee must prove:
• The employer was negligent
• The employee was not negligent
• The employer’s negligence was the cause of the employee’s
damages
Employer defenses:
• Contributory negligence
• Assumption of risk
• Fellow servant rule
4. Current Structure
The Great Trade Off
• No Fault System
• In the course of employment
• Scheduled Benefits
• Exclusive Remedy
Sources
• Monopolistic
• NV, ND, OH, WA, WV, WY
• Competitive State Fund
• Private Insurance
• Self Insurance
6. • Rates are pre-determined
• Common set of class codes
• Ensure accuracy with job descriptions
8380
8748
8810 9410
7380
Manual Premium
7. Manual Premium Example
• 6 Point Dealer Group
• 100 Employees at each location
• Annual Payroll of $5 million per dealership
600 Total Employees with $30 million in payroll
Payroll For Aacme Motors
8. Class
code
Employee Type % of
Payroll $ Payroll
Premium
$100 payroll
8380 Technicians/
Detailers/ Drivers 30% $9 mil $5
8748 Sales 30% $9 mil $2
8810 Administrative 40% $12 mil $1
Payroll For Aacme Motors
Manual Premium Example
9. • 8330 (Tech) $9,000,000 = $90,000 x $5.00 = $450,000
$100
• 8748 (Sales) $9,000,000 = $90,000 x $2.00 = $180,000
$100
• 8810 (Admin) $12,000,000 = $120,000 x $1.00 = $120,000
$100
Total manual premium: $750,000
Payroll For Aacme Motors
Manual Premium Calculation
11. Experience Modification
• Calculated by the National Council on Compensation
Insurance (NCCI) or a state agency
• 3 consecutive years are used to calculate a rating
• Excludes current and prior year
2004 2005 2006 2008
2005 2006 2007 2009
2006 2007 2008 2010
2007 2008 2009 2011
2008 2009 2010 2012
12. Experience Modification
• Calculated by the National Council on Compensation
Insurance (NCCI) or a state agency
• 3 consecutive years are used to calculate a rating
• Excludes current and prior year
• Frequency of claims is weighted higher than severity
• Used to compare businesses in the same industry
• Industry Average is set to “1”
$750,000 Manual Premium
Aacme Motors ABC Motors
Experience Mod .80 (-20%) 1.2 (+20%)
$600,0000 $900,000
A difference of $300,000!
13. Ratings are based on business characteristics the insurance
company thinks can make a difference in reducing future losses.
• Regular safety committee meetings
• Positive incentive programs
• Written safety programs
• Hazard inspections
• Ongoing safety training
• Timely reporting
• Claims Management
Scheduled Ratings, Credits and Discounts
15. Reducing Your WC Premium
• Eliminating sources of past losses
• Insurer’s understanding of the business
• Longevity with the insurer
• Competition
• Deductibles
• Loss Control Inspections
• Safety Program
• Return to Work Program
16. From the Employee’s Perspective
• Medical care: Paid for by the employer to help employees
recover from an injury or illness caused by work
• Temporary disability benefits: Payments to the employee if
there are lost wages because the injury prevents you from
doing the usual job while recovering
• Permanent disability benefits: Payments if the employee
doesn't recover completely
• Supplemental job displacement benefits (if your date of injury
is in 2004 or later in many states including CA): Vouchers to
help pay for retraining or skill enhancement if the employee
does not recover completely and don't return to work for your
employer
• Vocational rehabilitation (in some states in including CA): Job
placement counseling and possibly retraining for the employee
if they are unable to return the old job and the employer doesn't
offer other work
• Death benefits: Payments to the family if the employee dies
from a job injury or illness.
16– KPA CONFIDENTIAL –
17. Checklist for Reporting a Claim
• Post “How to Report a Claim”
poster in the workplace
• Provide instructions and claim
forms to employees during
orientation
• Complete the “First Report of
Injury” form and send to
Carrier/TPA without delay
• Follow up with your carrier/TPA-
be proactive!
17– KPA CONFIDENTIAL –
18. Claim Suppression
Never say to your employee who has
reported an injury or illness
• You didn’t really hurt yourself on the job.
• If we keep our work place accidents down,
employees will receive an incentive bonus. If you
file a claim you will cause all your co-workers to
lose their bonus.
• If you hurt yourself at work, you won’t be called
out for another job with this company.
• You’ll be fired if you file a claim.
• You don’t need to file a claim. We’ll take care of
it…
• Why don’t you put this on your health insurance?
18– KPA CONFIDENTIAL –
19. Restricted Duty (Light Duty)
• Follow the doctor’s orders
• Employers do not have “create work” to
fulfill restricted duty requests
• Employees may not refuse restricted duty if
restricted duty is reasonable (don’t make it
punitive)
• Studies show that employees offered light
duty return to work faster than employee
who are not offered light duty
19– KPA CONFIDENTIAL –
20. HIPAA and Workers’ Comp
• Always keep employee medical records
separate from other personnel files
• Do no share any information that is not
directly related to the claim without the
employees written permission
• Employees may not restrict protected
health information in regards to a workers’
comp claim
• Employees are entitled to copies of their
file
20– KPA CONFIDENTIAL –
21. Questions
• If you have questions
during the presentation,
please submit them using
the “Questions” feature
• Questions will be
answered at the end of the
webinar
23. Contact Information
23– KPA CONFIDENTIAL –
The recorded webinar and presentation slides will be emailed to
you today including your local representative’s contact information.
www.kpaonline.com
bross@kpaonline.com
866-356-1735