Ignoring Workers Compensation Insurance Now = Paying More Later

Ignoring Workers Compensation Insurance Means Future Larger Premiums

Many articles have appeared on this website after watching a process repeated multiple times.  An employer ignoring workers compensation insurance will soon pay more premiums to their carrier.  A self-insured employer will end up allocating more of their budget to Workers Comp payments.

Agents and risk managers ignoring their clients’ workers compensation insurance almost always results in having to explain a sharp increase in workers comp premiums.   Let us look at why workers comp remains “back-burner” insurance.

BTW – The above $100,000 bill is very real.  It was printed after the 1929 Depression.

Commercials Are Ignoring Workers Compensation Insurance

One can look to commercials on TV and radio over the last 10 years to see that workers comp is an ignored line of insurance until the premium audit bill arrives in the mail or an email.

I am not counting much of social media including YouTube(c) video advertisements.  I am referring to the very expensive spots on sporting and other major events.   A 30-second ad for the 2020 Super Bowl was $5.6 million. 

Over the years, GEICO (c) and Progressive (c) have increased their presence in all forms of media.  Other carriers such as State Farm (c) and Liberty Mutual possessed large advertising budgets.

How many of those commercials ended up ignoring workers compensation insurance totally?   I wrote an article on a carrier mentioning workers comp, but the one-sentence description of Workers Comp insurance was totally inaccurate. I will let the carrier that made the comment stay anonymous.

If anyone knows of a carrier mentioning Workers Comp in a commercial, please add a comment below.  Thanks.

Examples of Insured Not Ignoring Workers Compensation Insurance Cost

Two recent occurrences made me write this article.  One employer and an insurance agency decided to hire me to assess their current Workers Comp insurance situation.   Let us look at how those worked out for the employer in both cases.

Employer Assignment Showed Savings

An employer had recently hired a person with no workers comp background to try to lower their Experience Modification Factor (Mod).

They had to learn their Workers Comp system the hard way – by researching and asking questions.

Their Mods for the last three years were:

• 2020 – 1.09 (Not terrible – needed improvement)
• 2021 – .98 (Nice improvement)
• 2022 – .83 (26% lower Mod than two years previous)
• Forecasted 2023 –.80 (even lower – wow!)

I was brought in to forecast the 2023 Mod.  A person with no workers comp experience reduced their Mod significantly.   The key here was in 2019 they started paying attention to their Workers Comp Mod.

Agent Assignment Requested By Insured

I was brought in by an agency to reduce the Mod of a very large company that operates in 22+ states.   Due to three significant accidents with a company that had very low-risk classification codes, their Mod spiked to over 2.50.

I reviewed their loss runs, sent emails (not phone calls) to the adjusters asking about certain claims that were still open and the reserves on them.   It took two years, but the forecasted Mod for 2022 will very likely drop to 1.65 even with the three major claims still figuring into their Mod.

How did this happen?  The employer contacted the agent who contacted me for assistance.  The key is the employer stopped ignoring their Workers Compensation insurance.   If the insured kept ignoring their Mod and workers comp, the Mod would have likely stayed over 2.1.   That would have sustained enormous premiums for years.

How To Stop Ignoring Your Workers Comp Insurance Program

If you are reading this article, you are on your way.  Look over a loss run or a Mod sheet, call your agent to see what can be done for your Workers Comp program.  If you are self-insured, your TPA will provide stacks of info on how to pay attention to your program.

The formula is Complacency = paying more $$$.  (Plainly and Simply)

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