July 24, 2015 | Industry Insights

Inside Your Workers’ Compensation Premium

Share This:

Workers’ Compensation insurance for most businesses, including logistics service providers and transportation intermediaries, represents a significant operational expense with companies looking for ways to drive down costs. Some of the measures that help mitigate exposures of on-the-job-accidents and injuries and reduce cost drivers include safety programs and training, return-to-work programs, claims analysis, and a review of claims management and reporting procedures. In addition, a review of your Workers’ Compensation policies and related documents, including your experience modification worksheet, payroll audits, employee classifications, and loss-sensitive rating adjustments, is critical in determining where improvements can be made and where possible problems or miscalculations may exit.

The premium for a Workers’ Compensation policy involves several components including whether an industry has low or high injury frequencies, how a specific firm’s losses compares to their industry standard (represented by your experience modification), how employees are classified, and a company’s payroll. Each should be evaluated carefully. For example, an experience modification factor of 1.0 is considered to be the industry average. A mod factor more than 1.0 means that your firm’s losses are worse than expected and a surcharge will be added to the premium. A mod factor less than 1.0 means losses are better than expected, resulting in a premium discount. Monitoring your firm’s mod factor can play an integral part in reducing Workers’ Compensation premium costs, specifically for companies that have more than $10,000 in premium in a single state. It also provides a great way for businesses to benchmark how their loss prevention and control practices stack up to other companies in the same industry.

How you calculate your payroll is also important. Payroll for Workers’ Compensation includes wages in addition to things like vacation pay, holiday pay, bonuses (including stock), sick pay, auto allowances and commissions, and more. An audit is done at the end of the policy period to reconcile the estimated against the actual payroll amount. It’s important to be diligent when calculating payroll and understanding what is included when determining this amount.

Employee job classifications should be examined carefully. You want to make sure each of your employees are classified properly. For example, a clerical employee would have a lower risk of injury that a worker loading cargo and should be classified appropriately.

In addition, if you have subcontractors or independents working for you, be sure they aren’t being misclassified. This is particularly important in the wake of recent guidance issued by the Department of Labor (DOL) in classifying employees vs. independent contractors. The DOL issued a multi-factor “economic realities” test to use as classification assessment. These factors typically include: the extent to which the work performed is an integral part of the employer’s business; the worker’s opportunity for profit or loss depending on his or her managerial skill; the extent of the relative investments of the employer and the worker; whether the work performed requires special skill and initiative; the permanency of the relationship; and the degree of control exercised or retained by the employer. It’s important to take these guidelines into consideration, as not only can your Workers’ Compensation premium be impacted but you could also end up facing wage-and-hour violations and other non-compliance issues under the Fair Labor Standards Act (FLSA).

Roanoke Trade provides a full package of insurance coverages to the transportation and logistics industry, including Workers’ Compensation. We will review your current policies and related documentation, safety programs, claims management and other factors that affect your premium to help reduce your exposures and get costs under control. Ultimately, this also makes for a more productive and healthier staff. Please contact our specialists at 1-800-ROANOKE (800-762-6653).

Share This:

Related


Roanoke Introduces New Client Experience Department!

Roanoke Insurance Group is excited to announce the formation of our Client Experience department. This new department will be led by Amanda Barlow, who has served our clients in a variety of capacities throughout her tenure at Roanoke. Most recently as the Regional Vice President of our Western region. Roanoke’s Kylie Reinert will join Amanda […]

Industry Insights

Unlocking Success: The Key Elements of Carrier Vetting and Managing Liability

By: Andrew Johnson, Account Executive, Roanoke Insurance Group Inc. The freight brokerage industry as we know it today began in the late 1970s and early 1980s, around the time of the Motor Carrier Act of 1980. Before the passage of this landmark legislation, regulations were too restrictive to make freight brokerage a viable business segment. […]

Industry Insights

Thank You to Karen Groff

We have important news to share with you. Karen Groff, President of Roanoke Insurance Group, has decided to leave the organization. Although our hearts are heavy with this news, we respect her decision and wish her all the best in her future endeavors. Karen played an integral role in Roanoke’s success over the past 30 […]

Corporate Communiqué, Industry Insights

Roanoke is the leading provider of insurance and surety solutions for transportation and logistics providers. In fact, we are recognized as the most reliable source for U.S. customs bonds.

Contact

If you have any questions or need help, feel free to contact with our team.

800-762-6653

US CORPORATE HEADQUARTERS

1501 E. Woodfield Road

Suite 400W

Schaumburg, IL 60173


CANADA CORPORATE HEADQUARTERS

390 Bay Street

Munich Re Centre, 22nd Floor

Toronto, ON M5H 2Y2

Solutions that Go the Distance.

© 2024 Roanoke Insurance Group Inc. A Munich Re company

Better Business Bureau logoCoverholder at Lloyd's logo