Workers’ Compensation insurance is a necessary cost when running any kind of business that employs one or more workers. However, though most business owners know they need this coverage, they don’t always understand the best way to obtain it. For insurance agents who specialize in offering workers’ compensation coverage, it’s important to note some of the most common mistakes made when obtaining or maintaining workers’ compensation coverage so that you can help your clients avoid them in the future.
1. Lower rates aren’t always the best option.
With online options and declining rates, customers tend to try and rate shop on their own for the lowest price. With those low prices often comes poor customer service or shoddy coverage they don’t understand. Don’t underestimate your relationship with your business clients, you can use it to their advantage when negotiating coverage. Having extensive knowledge of workers’ compensation as well as the client’s individual business’s needs can help you secure a low rate and excellent coverage.
2. Rates won’t stay low.
Workers’ compensation coverage has historically repeated a price cycle in a foreseeable pattern. Rates go down, workers compensation management is put on the back burner for employers, claim costs do not follow the downward trend, insurance company profits diminish and rates go back up. If employers do not continue to manage their workplace injuries effectively and continue to file claims, the rates will increase and wipe out any money saved during the low rate period.
3. Workers’ Compensation is not just a necessary business expense.
Workers’ compensation is an ongoing process, and a manageable aspect of a business that should be handled properly. Workers’ compensation can provide a positive return on investment, if injuries are managed effectively and employees are able to return back to work quickly and safely.
4. Lower rates do not necessarily mean cost reduction.
Workers’ compensation works like a line of credit to finance the costs of workplace injuries. The “Mod” (Experience Modification Factor) of each employer personalizes the cost of insurance to the loss performance of each employer. Generally, employers are compared with others in the same industry, and premiums are figured from there. It is still up to the employer to work on reducing costs all year long, otherwise their rates can easily increase when they renew coverage.
5. Workers’ Compensation can relate directly to employee retention.
Turnover, even without an injury, can cost a company quite a bit of money, anywhere from 50 to 150% of an employee’s salary. If work-related injuries are not managed properly, an employee could be away from their job for quite some time. Statistics show that employees who do not return to work within 12 weeks, there is only a 50% chance they will return. That percentage drops, the longer they stay away.
Workplace response to an injury is so important – it can have a far larger impact on employee retention than an employee’s satisfaction with their medical care for the injury. Having a plan in place for how to deal after an injury occurs (not just preventative measures) can often make or break an employee’s decision to return to their position.
With a variety of carriers and competitive rates, American Team Managers (ATM Insurance) is an independently-owned insurance wholesaler and managing general agent. Our friendly and knowledgeable staff can help you find your clients the best workers’ compensation insurance solutions for their business needs.
About American Team Managers Insurance Services
Founded in 1998 by Chris C. Michaels, American Team Managers Insurance Services (ATM) has provided wholesale and MGA services to more than 5,000 independent insurance agents throughout the United States. Our goal is to establish close, long-term relationships with our agency partners and insurance carriers and provide competitive products for the Exclusive and Non-Exclusive markets that we serve. For more information on our products and services, give us a call at (714) 414-1200 to speak to a representative.