ChatGPT Question From Company Owner on Advisory Rates and Loss Cost Multipliers
A business owner with a construction company in multiple states was reading through the J&L blog (thanks) and had a question about Advisory Rates, Loss Cost Multipliers, and other terms. She commented that so many terms are confusing to follow.
BTW, the business had operations in CA, NY, FL, and the Carolinas. I answered her email late last night. I thought that if this business owner was confused by some of the terms in this blog, others were too.
So, let us cover what I emailed – but not the same advice on Advisory Rates and Loss Cost Multipliers. My suggestion was to more directly view what the business was being charged for Workers Comp rates.
Infamous Dec Page
The Declarations Page appears at the front of the Workers Comp policy. The D in DICEE is for Declarations Page. You should have a page of rates for each state that you are operating in now. Those rates do not directly come from Advisory Rates. The Loss Cost Multiplier is multiplied by the Advisory Rate to give you what is on the Dec Page. Let’s move away from those terms for now.
Your Workers Comp policy Dec Page will have the Class Codes, Insurance Carrier Rates for those Class Codes, and policy premium. Those are the Workers Comp insurance premium charges that you should cover with your agent in detail.
Do those Class Codes describe your current business? No one knows what your company does better than you. One thing to watch for is what your website says that you do if it is out of date. Check out that last link for the 3 insurance carrier departments that look at your website.
Yes, everyone that owns a website says that it is always under construction. That is true with the J&L website.
Even More Infamous Policy Parts – Could Contain Loss Cost Multipliers Indirectly.
Endorsements that occur during the policy period may be numerous or none at all. Always, and I do mean always, read the Endorsements – the last section of the DICEE policy part. I have seen one set of Endorsements total more than 25,000 pages. Yes, that many of them. How the Insurance Carrier or your Agent views your business can change rapidly and severely.
Hey, wait, I Do Not Have Time To Read All This Info
Assign it to an intern from your local college (Junior or Senior). Have them research information on this website or use AI to define some of the terms. Your reference letter at the end of their assignment is golden for a job search. Pay them – no volunteers.
I have learned more about my own business through the eyes of a college intern over the years.
Final advice – concentrate on your policy and premium audits,….URL not the Advisory Rates and Loss Cost Multipliers.
