Saving Money on Workers Compensation: Safety Procedures

by Grant Davis | Insurance, Workers Compensation

How To Save Money on Workers Compensation

The key to saving money on your workers compensation is more than just stopping a few accidents; it is having sound safety procedures designed to continually improve. By having an Occupational Safety and Health Administration (OSHA) compliant safety program can reduce injuries, illnesses and save Workers Compensation dollars.

A broker from GDI Insurance Agency, Inc. will do this for you and can offer additional ways to save money on your workers comp insurance.

Safety Program Goals

Investigate near-miss incidents to prevent future accidents. Seventy-five percent of accidents are preceded by a near miss.
Create a risk control service plan based on your workers’ compensation losses. Pay particular attention to frequency and severity of claims to craft an appropriate plan.
Justify your risk control expenditures strategically to senior management so you receive the budget you need. Be sure they understand the importance of your company’s safety program and the money it saves in the long run.
Based on your experience with prior claims, create a workers’ compensation cost allocation program. Budget money by examining what types of claims you’ve had over the past several years and their cost.
Benchmark your company’s workers’ compensation performance against other comparable companies in your industry. This will help you identify areas to improve upon.

General Safety Procedures

Protect your employees by minimizing any job hazards. You should always be evaluating every aspects of your workplace to ensure the safest environment possible.
Prepare emergency announcements, and do test runs of emergency response systems to familiarize employees.
Choose a practical flooring surface, not just one that looks nice. Often, the best looking floors can be the most dangerous and will be slippery when wet.
Customize work spaces to fit each employee’s needs through ergonomic adjustments. By ensuring that an employee’s work space is tailored, you create a safer environment less prone to bodily stress or injury, and thus, less prone to workers’ compensation claims.
Educate your employees on the safest way to lift objects. Squatting with bent knees minimizes the stress to the back, regardless of what is being lifted.
Create a policy on distracted driving. Motor vehicle accidents account for a large percentage of work-related fatalities. Eating and drinking, cell phone use and music devices are all possible sources of distraction behind the wheel. The use of such devices could also be illegal, as more state and federal agencies crack down on distracted driving. A good policy can help prevent fatalities and limit liability for your company.
Along the same lines, prohibit texting while driving regardless of whether or not your state specifically prohibits the practice. Texting while driving makes an employee 23 times more likely to have an accident. A federal ban prohibiting divers of commercial vehicles from texting has also been recently enacted. Create a written policy for both distracted driving and texting while driving, and have all employees sign off on it.
Establish and enforce disciplinary measures for safety violations. There should be some type of corrective action for any employee who doesn’t abide by safety requirements.
Train your supervisors in-house. They may have previously been trained as supervisors in general, but they need to also be trained in your particular work environment.

Learn More About Workers Compensation

Download our “Money Saving Workers Compensation Tips”. This PDF is full of Workers Compensation strategies that will positively effect your bottom line.

California’s Leader in Workers Compensation Insurance and Risk Management

As one of the fastest growing agencies in California, .GDI Insurance Agency, Inc is able to provide its clients with the latest and greatest of what the insurance industry has to offer and much, much more. With locations across the heart of California’s Central Valley and beyond to provide a local feel to the solutions and services we provide our clients. We pride ourselves on exceeding our client’s expectations in every interaction to make sure that our client’s know how much we value and appreciate their business.

Contact us today 1-209-634-2929 for your California Workers Compensation insurance quote!

WORKERS COMPENSATION AUDITS: The Good. The Bad. And The Ugly

by Matthew Davis MBA, CPCU, AAI | GDI Insurance, Insurance, Workers Compensation

Workers Compensation Audits

At GDI Insurance Agency, Inc., we have been inundated with countless new clients that are all suffering from similar – if not the same – issues regarding Workers’ Compensation Audits that have gone awry.

We’ve found that the majority of these insurance customers with Audit Issues are located in and around the Turlock, CA area (many of which most are businesses most local residents would recognize).

Nearly all the clients were told something along the lines of, “…the audit is what it is and there’s not much that can be done about it”, or some variation thereof.

More often than not, that type of statement is FALSE!

In nearly every instance we’ve recently come across, there have been actions that were able to be taken in order to correct inaccurate audits. If an employer’s payroll at the end of a policy year is materially greater than he/she estimated at the beginning of the policy, then an audit should be anticipated (in many, BUT NOT ALL cases).

I’ve had two cases come across my desk recently that were so incorrect that if the clients would not have come to GDI Insurance for help that they may have jeopardized their own solvency. I now feel compelled to share one of their stories.

STORY 1 – Firm Located in Turlock, CA

The firm was once a client of GDI Insurance Agency up until 2005 when they decided to utilize another broker who offered them a slight premium savings. In 2010 GDI was asked to take a look at the Workers Compensation policy as they were being given an invoice for an additional 125%+ of their quoted premium as their Audit. Their original policy was quoted right at $65,000 for the year and at the end of that year their audit from the insurance company demanded an additional $85,000.

We agreed to look into the audit and discovered that the prior agent/broker had done nothing wrong, BUT… at the same time did not take the couple of tiny steps that would have aided their client. We stepped in an discovered that the root of the audit was due to a miscommunication between the independent auditor for the company and the client’s staff revolving around operations the auditor assumed the client was performing, but in actuality never performed (or ever plans to perform).

In the end the client had higher payroll and did have to pay an amount at the end of the audit of only $4,000. The audit was decreased by 95% by our office simply looking at the material and bringing up a few points of discussion with the auditor.

Why didn’t the prior agent/broker offer to help???

It is relatively known to many insurance customers that ALL premiums paid are commissionable their agent, and in California agents can make as much as 10-12% or more commission on workers compensation policies. So the prior agent had no incentive to offer to assist the client to correct the audit as they were hoping to receive an additional $8,500+ on the policy for simply letting the audit stand incorrect.

So what are The Good, The Bad and The Ugly of workers compensation audits?

THE UGLY – Are those audits that have been paid based on incorrect information or lack of explanation to the client.

THE BAD – Are those audits that are not yet paid, but are billed based on inaccurate data.

THE GOOD – Are those audits that go by without a hitch and are understood by the customer.

If you believe you are the subject of a bad insurance audit, either for workers compensation or any other type of policy, Talk To The Experts and GDI Insurance Agency, Inc. in Turlock by calling 1-209-634-2929 or visiting us online at www.gdiinsurance.com.

Matthew Davis MBA, AAI

Nonprofits – The Added Exposure to High Workers Compensation Cost

by Grant Davis | Insurance, Non Profit Organizations, Workers Compensation

Nonprofit Agencies and Workers Compensation

With the recent changes to the California Insurance Marketplace, specifically the recent adjustments by the Workers Compensation Insurance Rating Bureau (“WCIRB”) to the way in which Experience Modification Factors (“X-Mod”) are calculated; many organizations were not prepared for the full impact of the changes. It can be especially burdensome for Nonprofit Agencies and Service Organizations that may have a higher susceptibility to loss than other organizations.

Further, Service and/or Mission Oriented Nonprofit Agencies and Nonprofit Organizations have a unique exposure when it comes to injuries to workers (and volunteers) – they typically care too much.

Experience Modification Factor Calculation Change

The WCIRB recently adjusted its way of calculating an organization’s X-Mod by doing away with the fixed value for the Primary Threshold for Losses and replacing it with a formula that creates a sliding scale, Effective January 1, 2017. This sliding scale is intended to give a larger Primary Threshold to larger employers (i.e. Organizations with larger payrolls).

The impact we’ve seen has been a compounding of the impact/magnitude of losses on an organization’s X-Mod, which in turn equates to a similar impact to their Workers Compensation premium.

We recently witnessed one of our Nonprofit agencies clients have an increase in their X-Mod of nearly 15% due almost entirely to the change in the calculation. We’ve been working diligently with this Nonprofit as they have approx. 50 employees and volunteers and this 15% increase in their X-Mod will result in an increase in Workers Compensation premium of no less than $18,000 for just this year alone.

Employees at Nonprofit Agencies

If we take a quick moment and think of a Nonprofit, Service Organization, etc. that we are fond of; what is one of the key components of what makes that Nonprofit, Service Organization, etc. successful? It’s the PEOPLE. The people care, and many times they can care too much. Unfortunately, many times it’s the same people who care so much for the organization that can expose it to unnecessary financial hardship due to an injury.

Example: A Nonprofit is serves meals to members of the community in need. One caring employee sees that there is a pallet of food that needs to be put away. This employee takes it upon themselves to roll up his/her sleeves and “help out”. The pallet contains 40-pound boxes of frozen meat and it needs to be put in the walk-in freezer. The employee feeling the cold of the freezer decides to hurry, twists while lifting one of the last boxes and suffers a lower back injury.

In the example, the employee’s motives were altruistic, however depending on the severity of his/her injury the Nonprofit could be facing steep insurance premium implications. Sadly, this situation happens all too often amongst both employees and volunteers in Nonprofits and Service Organizations.

Volunteers

Many Nonprofit organizations depend, either in whole or in part, on the work and contribution of volunteers. Volunteers are a seemingly “No-Brainer” for Nonprofits to utilize as much as possible, and while this is true there are some potential costs that Directors, Board Members, etc. should be cognizant of.

Although Volunteers do not create a payroll expense, they do create a risk to insurance
Injuries sustained by Volunteers are treated the same as those to Employees
The Cost implications of Volunteer injuries are the same as those of Employees
X-Mod implications are compounded and/or Multiplied by Volunteer injuries
a.The X-Mod is calculated using both Payroll (reduces the factor) and Claim Cost (increases the factor) – Volunteers only contribute to the Claim Cost

To better insulate the Workers Compensation Cost Structure of any Nonprofit, Service Organization, or any other organization for that matter; training and accountability become critical. Although volunteer labor is commonly discounted as “not costing anything”, volunteers should be treated and trained the same or as similar as possible to regular employees.

The best Defense is ALWAYS a good offense, and the same is true in defending against claims. Training, guidance, and open dialogue as to why it is needed can provide incalculable benefits to the organization’s Workers Compensation Cost Structure.

If you would like further details on Workers Compensation Cost Structure Strategies, X-Mod Factors, or anything else, please contact GDI Insurance Agency, Inc.

Matthew Davis

President

How To Save Money On Your Workers Compensation Insurance

by Grant Davis | Business Insurance, Insurance, Workers Compensation

To save money on your workers compensation insurance starts with working with a large insurance broker like GDI Insurance.

Save Money on Your Workers Compensation

GDI Insurance Agency, Inc. represents the majority of major workers compensation insurance companies so we can get you quotes from a large number of insurance companies at one time. We also use comparative rating programs, where we can enter your information and get quotes from just about every insurance company in the state. Even the ones we don’t represent!

Premium Credits Available

Workers Compensation Insurance is driven by premium credits as high as 50% off plus your workers comp modification factor can cut your rates further. It can also raise your rates if you aren’t careful. I was sent a notice by the workers compensation rating bureau today on aa dairy I had tried to work with two years ago. Their premium is up 49% in the last two years and they have no idea why. Their modification factor went up but also their last audit wasn’t completed so it shows on the states website incomplete. Seems like a lot of money to pay for workers compensation insurance to not know why something has gone up 49%! Find out how to save money on your workers compensation below.

Below is a brief overview of some key parts you need to pay attention to if you want to keep your workers compensation rates down. Of course you can just let GDI Insurance Agency handle it for you by calling us at 888-991-2929

Safety Program Goals

Investigate near-miss incidents to prevent future accidents. Seventy-five percent of accidents are preceded by a near miss.
Create a risk control service plan based on your workers’ compensation losses. Pay particular attention to frequency and severity of claims to craft an appropriate plan.
Justify your risk control expenditures strategically to senior management so you receive the budget you need. Be sure they understand the importance of your company’s safety program and the money it saves in the long run.
Based on your experience with prior claims, create a workers’ compensation cost allocation program. Budget money by examining what types of claims you’ve had over the past several years and the costs.
Benchmark your company’s workers’ compensation performance against other comparable companies in your industry. This will help you identify areas to improve upon.

General Safety Procedures

Protect your employees by minimizing any job hazards. You should always be evaluating every aspect of your workplace to ensure the safest environment possible.
Prepare emergency announcements and do test runs of emergency response systems to familiarize employees.
Choose a practical flooring surface, not just one that looks nice. Often, the best looking floors can be the most dangerous and will be slippery when wet.
Customize workspaces to fit each employee’s needs through ergonomic adjustments. By ensuring that an employee’s work space is tailored, you create a safer environment less prone to bodily stress or injury, and thus, less prone to workers’ compensation claims.
Educate your employees on the safest way to lift objects. Squatting with bent knees minimizes the stress to the back, regardless of what is being lifted.
Create a policy on distracted driving. Motor vehicle accidents account for a large percentage of work-related fatalities. Eating and drinking, cell phone use and music devices are all possible sources of distraction behind the wheel. The use of such devices could also be illegal, as more state and federal agencies crack down on distracted driving. A good policy can help prevent fatalities and limit liability for your company.
Along the same lines, prohibit texting while driving regardless of whether or not your state specifically prohibits the practice. Texting while driving makes an employee 23 times more likely to have an accident. A federal ban prohibiting drivers of commercial vehicles from texting has also been recently enacted. Create a written policy for both distracted driving and texting while driving, and have all employees sign off on it.
Establish and enforce disciplinary measures for safety violations. There should be some type of corrective action for any employee who doesn’t abide by safety requirements.
Train your supervisors in-house. They may have previously been trained as supervisors in general, but they need to also be trained in your particular work environment.

Return to Work Strategies

Job offers should always be made in writing and should thoroughly describe the offered position to ensure the hire is fit for all duties.
When the job is offered, send a formal job offer package along with the offer letter. Make sure it includes all the benefits the potential employee is eligible for, including return to work policies and procedures, so there is no confusion later.
When developing a temporary assignment for someone returning to work, find useful tasks that are not covered by other areas of the company—the goal is not to take work away from another employee.
Create a written job description and job analysis for all transitional duty jobs. These jobs should match physical capabilities with the work that needs to be done so that they are both useful and appropriate.
Hold employees working temporary assignments or transitional duty jobs to the same work rules as other employees. This prevents devaluation of the job by employees and sends the message that they are still contributing to the company.
Develop and maintain a close working relationship with medical providers. Make sure they understand your business so they can help you evaluate return to work policies, procedures and cases.
For all employees assigned to temporary work, monitor their medical health regularly. Make sure they are doing well physically and, if they are making progress, find out from their physician if they can move forward to more demanding tasks.
Develop and maintain a close working relationship with claims adjusters. Make sure they know your return to work program, and ask them for advice and suggestions to improve it.
Resist the temptation to turn temporary job assignments into indirect punishment. Understand that the work is therapy for the returning employee; make sure to stay positive and keep the work meaningful.
Consider establishing a transitional duty pay rate. It will be less than what the employee would earn working their normal job, but make sure it is consistent among all employees on transitional duty.
For return to work program employees, stay in frequent touch from the time of the return to work offer letter until they return to full working status. You should be accessible for them to be sure their return to work is progressing smoothly.
Develop a return to work plan for every injury that results in lost time. Communicate with the employee’s doctor so you understand when and how they can progress to various work tasks.

Claims Management

Contact your injured workers early and often. This will let them know that you care about them, which can help keep morale up and encourage their return to full, regular duty.
Consider unconventional or outside-the-box treatment if it will help an employee recover and return faster.
If your state allows you to direct or encourage employees to use certain doctors, use doctors who understand your business whenever possible. This will help ensure the best treatment for your employees and hopefully aid in return to work scenarios, keeping claims costs down.
Integrate strategic wellness programs into your company to help reduce injuries. Understand how chronic conditions, like obesity and diabetes, can affect or cause other injuries. Managing such diseases properly can reduce workers’ compensation claims costs.
Explain workers’ compensation benefits, programs and expectations during new employee orientation to keep future claims costs down. Make sure employees understand that they will not be punished in any way for making a claim or reporting an injury, and explain the importance of promptly reporting any injury or incident.
Make return to work a priority across your entire organization – every job should have a return to work provision, and every employee should know about it. Return to work program awareness should not just be the job of human resources or your claims adjuster.
Keep up to date on laws that impact your workers’ compensation claims. Be sure to know your requirements and responsibilities as an employer and how to address any possible or suspected fraud.
Keep tabs on what your claims administrator is doing; you should always know what is happening with a claim.

Claims Investigation

Exercise due diligence when investigating a claim. Beyond speaking to the direct supervisor and the injured employee, interview other witnesses or co-workers who could shed light on the situation.
After an incident or claim, be sure to investigate early and keep all the information organized. Make sure you gather all appropriate evidence and information so it can be verified later.
Determine whether the employee was actually working on the date that they claim to have been injured. Discrepancies or falsities happen often, particularly with late claims.

Medical Considerations

Make sure that your occupational medical practitioner does a thorough and proper examination when an employee first goes to see them; this way, you will not be surprised when the independent medical examiner (IME) tells you that you have a problem claimant. This includes performing Waddell’s tests when there is a lower back injury involved.
A diagnosis should be supported by the conditions of the accident. If the two don’t match up, then the diagnosed injury could be a result of something not directly related to work functions. In these situations, be very careful of what you pay for.
Don’t pay a bill for a surgery or procedure without reading the operative report. Sometimes it can contain things that had nothing to do with the incident that should not be your financial responsibility.
Don’t let diagnostic tests dictate your case management; tests only prove that there is an injury, not whether it happened at your workplace.
For a quick and easy way to save money, refer employees to physicians that you trust to provide legitimate findings and diagnoses.
Before a surgery takes place, establish whether it was caused by a work-related condition. Doctors may suggest surgery a bit more readily when they know it is a workers’ compensation claim.
Make sure that diagnoses are legitimate and universally accepted before you pay a claim. For instance, don’t list “pain” as your work-related diagnosis. Pain is a subjective finding—you cannot qualify it or quantify it.
Know the basics about common medical terms that you may encounter. For example, fibromyalgia is not a diagnosis; it is a symptom. The word itself means “pain in the fibrous tissue” (the suffix “algia” always indicates a symptom).
Be wary of paying for surgeries or operations caused by arthritis. Arthritis is not caused by trauma and thus cannot result from an on-the-job injury; therefore, in most cases, it should not be considered a workers’ compensation claim. The only exception is arthritis caused by repetitive trauma, found in employees who do a lot of squatting, kneeling or repetitive hand and finger movements.
Be wary of other common claims that may be masked as workers’ compensation injuries. For example, in general, trauma does not affect an existing replaced knee, making it rare for necessary loose knee replacement to be work-related.

Legal Considerations

Know and understand the interplay between your state workers’ compensation laws, the American with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA).
Keep your legal counsel in the loop on workplace injuries right from the beginning. The first 24 hours after an incident are crucial, and your lawyer needs to be informed about conditions, investigations and any updates.
When hiring, provide detailed job descriptions that include an accurate percentage of the amount of work that is physical. This may prevent later legal disputes.
Document and file everything throughout the workers’ compensation and return to work processes, as it may become relevant information if there is a claim or later dispute.
After an incident, review the employee’s personnel file. This will help you understand the employee better, and it may offer clues or tendencies for potential fraud or a vendetta against a co-worker or manager.
After an incident, your legal team or representative should do an on-site inspection where the injury occurred. Be sure that they interview others who do a similar job in addition to any witnesses.
If there are changes in the diagnosis, the accident needs to be re-evaluated. It may not have happened as reported.
Keep an organized case chronology, documenting everything from initial claim to the close of a case. This includes previous history of the employee that may be relevant (past disputes with co-workers, claims history, problems at home, etc).
Make sure to provide the IME with everything you have, including your chronology.
Before a trial, make sure your witnesses are prepared. Someone from the company should be present at every hearing; it’s important to make sure that everyone is always on the same page.

Workers Compensation Specialists

GDI Insurance Agency offers comprehensive worker compensation insurance packages. Our California Workers Compensation Savings Program has more information on how to save money.

Controlling Construction Workers Compensation Insurance Costs

by Grant Davis | Construction, Insurance, Workers Compensation

Controlling Construction Workers’ Compensation Costs

Has your construction business experienced rising workers compensation costs?

Are they caused by On-the-job accidents? Or just general annual rate increases? Or a combination of both? If so, your first response was most likely aimed at trying to reduce workers compensation costs and spending by asking for more premium quotes. While this may seem like the best approach the reality is typically getting more quotes can have a 5-20% impact on your insurance costs. While premium credits and modification factor reductions can reduce your premiums over 50%!

I always ask new clients what premium credits they received at the last renewal from your current insurance company, what credits were available they didn’t receive and what their companies 5 year risk reduction plan is to maximize premium credits and reduce your modification factor? Surprisingly over 90% of new clients I ask have no insurance cost reduction plan in place!

How does it start?

A sound safety program designed to continuously improve can yield significant workers compensation costs savings by reducing injuries and illnesses—ultimately reducing workers’ compensation costs in the long run. I have clients that tell me they don’t need to have a great plan because they aren’t having losses. To which I quickly reply that I met a gentleman that claims he once threw 11 straight 7’s in Vegas also! He was lucky, but statistics caught up with him. Insurance companies don’t respond to low claims because of luck! They give premium credits when you have a plan and work the plan and have a low claims frequency on purpose!

Here is a key hint for you: All insurance companies respond favorably to companies that take an active, aggressive and documented role in improving safety for their employees. By this I mean they offer premium credits!

It starts with a safety program! So here are 5 Steps to Building a Solid Safety Program

You can control workers compensation costs with five easily implementable steps designed to create a well-rounded safety program that produces a safer job site, achieves OSHA compliance and reduces accidents—saving your bottom line.

Let GDI Insurance Agency, Inc. help your company develop your safety programs required by the OSHA standards.
Integrate those programs into daily operations.
Investigate all injuries and illnesses and create an Injury and Illness Prevention Program.
Provide training to develop safety competence in all employees.
Audit your programs and your worksite on a regular basis to stimulate continuous improvement.

Develop Programs Required by OSHA Standards

In addition to being a requirement for those in the construction industry, OSHA standards provide a good pathway to incident reductions. Many accidents stem from poorly developed or poorly implemented OSHA programs: not using the proper fall restraint system when working at heights more than 6 feet, improper use of personal protective equipment when working with hazardous job site materials and poor lifting techniques resulting in back strains are just a few examples.

OSHA construction standards require that written programs be developed and then communicated to workers. Experience shows that companies with thoroughly developed, OSHA-compliant programs have fewer accidents, more productive employees and lower workers’ compensation costs. GDI provides these plans for all our clients!

Integrate Programs into Daily Operations

Policies alone won’t get results; your safety program must move from paper to practice impacting your bottom line. Achieving this requires a strategic plan clearly communicated to workers, good execution, and a culture that both inspires and rewards people to do their best.

When developing your safety initiative, there must be an emphasis on helping your site foreman succeed. If the site foreman understands the safety program and is motivated to make it work, it succeeds; if not, the program is a source of struggle and an endless drain on resources. Providing your site foreman with knowledge and skills through training is critical to the success of your safety program.

A solid OSHA program, integrated into your worksite’s daily operation and led by competent site supervisors, is just the beginning. Successful safety programs are also proactive instead of reactive.

Investigate All Injuries and Illnesses

Accident investigations provide an excellent source of information on real or potential issues present on the job site. Because workers’ compensation covers a worker’s wages for injuries or illnesses that arise from or out of the course of employment, increasing claims drive up workers’ compensation costs. To reduce costs, you must reduce accidents. And the ability to reduce accidents is significantly enhanced when they are fully investigated instead of simply being reported.

Accident reports cite facts; accident investigations go deeper to uncover the root cause of an accident and make improvements to prevent its reoccurrence. To stop your workers’ compensation costs from rising unnecessarily, you must have an effective accident investigation process. Unless you can determine the root cause of an accident, recommendations for improvement will remain fruitless. Again, training proves beneficial because a site supervisor skilled in incident analysis is a better problem solver for all types of project management issues, not just safety.

All Accidents Should Be Investigated To Find Out What Went Wrong and Why.

GDI Insurance Agency, Inc. has the HR systems that support this documentation. Some may suggest investigating every accident is a bit over the top and only those that incur significant costs are worthy of scrutiny, but this approach is shortsighted. If your emphasis is only on those incidents that must be recorded on the OSHA 300 log, you ignore the single largest accident category: first aid-only incidents. Many firms focus solely on recordable or lost-time accidents because of the significant costs involved, but they don’t realize that the small costs and high numbers of first aid-only incidents really add up.

Reducing serious accidents means you must reduce your overall rate of all accidents—including first aid-only incidents. That only happens when every incident is fully investigated, and corrective actions are identified and integrated into daily job tasks.

Training and Auditing for Continuous Improvement

The final steps focus on training and auditing your program for continuous improvement. Training plays a significant role in safety and in reducing workers’ compensation costs. The goal of training is to develop competent people who have the knowledge, skill and understanding to perform assigned job responsibilities. Competence, more than anything else, will drive down costs. Site supervisors must have the knowledge and ability to integrate programs into each job on the job site so that employees know what is expected of them.

Once the programs are developed and implemented, they must be reviewed on a regular basis to make sure they are still relevant and effective. This might require a significant change in how you manage your safety program, but if your workers compensation costs are high, it may be time to make this leap.

Tangible Benefits

Studies indicate there is a return on investment and that firms see direct bottom-line benefits with a properly designed, implemented and integrated safety program.
A competency-based safety program is compliant with OSHA construction requirements and therefore reduces the threat of OSHA fines.
A competency-based safety program lowers accidents, which reduces workers’ compensation costs. When incidents do occur, a competency-based safety program fully evaluates the issue and finds the root cause to prevent reoccurrence and provides a job site that is free from recognized hazards.
A safer job site creates better morale and improves employee retention. Auditing keeps your programs fresh and effective, and drives continuous improvement.
A competency-based program produces people who are fully engaged in every aspect of their job, producing high-quality craftsmanship.

How Can GDI Insurance Agency Assist You?

At GDI Insurance Agency, Inc., we are committed to helping you with your workers compensation costs by establishing a strong safety program that minimizes your workers’ compensation exposures.

This may seem like a lot of work. But consider what you are paying for your workers compensation insurance! Call me Grant Davis today and let me help you take control of your workers compensation costs! AKA: Lets lower that premium! 1-209-634-2929 I can also tell you more about our OSHA compliance, safety program resources and workers compensation insurance cost reduction programs.

CALIFORNIA WORKERS COMPENSATION: New Variable Split Point

by Grant Davis | Insurance, Workers Compensation

Workers Comp Insurance Variable Split Point

Lack of Mass Publication of the Change from the Governing Body (WCIRB)
Failure of Agents/Brokers to properly inform and prepare their clients

In response to the large number of new prospective clients we’ve come in contact with that were ill prepared for the change, we are providing the following information as a quick reference guide (“Cheat Sheet”).

What is Experience Rating & Why do we have an X-Mod?

The intent of Experience Rating is to provide a multiplier/factor by which Workers Compensation insurance premiums can be more adequately charged to businesses based more closely to their risk/hazard level. Ideally a business with ZERO claims should pay a lower Rate as compared to a business with multiple Workers Compensation claims/injuries.

The WCIRB created the Experience Modification Rating Factor, also known as the “X-Mod”, “Mod”, “ERM” (Experience Rating Modifier), as a means to REQUIRE carriers to account for the approximate level of risk of each insured/business – which in turn should eliminate the majority of Gamesmanship in rating of individual policies.

How does my X-Mod impact my Workers Compensation Premium?

X-Mod is Less than 100 (1.00): Considered a “Credit” X-Mod in that the business will receive a credit from the factor on their Workers Compensation Premium. Example: A business with an X-Mod of 0.87 would result in the business receiving a rate that is 13% lower than that of an “average” business.

X-Mod is 100 (1.00): Considered a “Neutral” X-Mod in that the business will not receive either a credit or a debit from the factor on their Workers Compensation Premium. Example: A business with an X-Mod of 1.00 would result in the business receiving a rate that is the same as an “average” business.

X-Mod is Greater than 100 (1.00): Considered a “Debit” X-Mod in that the business will receive a debit (or surcharge) from the factor on their Workers Compensation Premium. Example: A business with an X-Mod of 1.13 would result in the business receiving a rate that is 13% higher than that of an “average” business.

The Previous Change

The last change to the California Experience Modification Factor calculation in went effective January 1, 2010 and increased the Primary Loss Threshold to $7,000.00. At the time, it caused an effective rate increase across the marketplace on an almost blanket basis without the consent or contribution of any individual carriers. Many businesses that are experience rated have not seen their Workers Compensation NET RATES (effective rate paid once all credits and debits are applied) decrease even though many carriers have taken compounding rate decreases across recent years.

Experience Modification Factor Calculation Change

Businesses that are experience rated are now subject to California’s New Variable Split Point Experience Rating System. This means that as their payroll and operation grows, as will their Primary Loss Threshold.

The impact we’ve seen has been a compounding of the impact/magnitude of losses on an organization’s X-Mod, which in turn equates to a similar impact to their Workers Compensation premium.

mod formula

We recently witnessed one of our Nonprofit clients have an increase in their X-Mod of nearly 15% due almost entirely to the change in the calculation. We’ve been working diligently with this Nonprofit as they have approx. 50 employees and volunteers and this 15% increase in their X-Mod will result in an increase in Workers Compensation premium of no less than $18,000 for just this year alone.

Matthew Davis

President

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