Welcome to WCF
The Components of Your Policy & Premium Demystified Lee Wuchner Assistant Vice President Risk Management 385.351.8313 lwuchner@wcfgroup.com
Discussion Topics • WIIFM – Why WCF • Utah Insurance Regulatory Agencies • Key Provisions of Your Policy • How Your Premium is Determined
Ground Rules • Ask questions anytime • The more you understand the concepts presented here, the better you will be able to manage your workers compensation costs and reduce them over time.
Did You Know WCF is rated “A” Excellent by A.M. Best & Company (an insurance rating organization). A.M. Best’s rationale for the rating included the following statement: “The ratings reflect WCF's superior capitalization, strong operating performance and dominant position in the Utah workers' compensation market. The ratings further acknowledge the company's experienced management team, unparalleled local presence and excellent reputation among Utah policyholders for its high level of service and profit sharing . These positive attributes are driven by WCF's adherence to sound underwriting principles, aggressive claims management, effective loss control services and conservative investment guidelines.” WCF is a mutual company , meaning you, our policyholders, are the owners of the company. We are quasi-public , a private company that is also the insurer of last resort for Utah business.
Your WCF Policy - WIIFM. • Peace of Mind . If one of your employees incurs a work- related injury, they will be well taken care of with high quality medical care and continual case management. • Value . Not a tax, nor just a cost of doing business. WCF provides a superior WC product which will help you manage and control your long-term WC costs. • Resources . Because we’re good at what we do, we have the financial strength to provide our employees and customers with the tools and knowledge they need to be successful. • Services . From claim management to safety services to medical cost management to premium audit, everyone at WCF works for you to help you manage your WC program and reduce your costs over the long term.
Utah Regulatory • Department of Insurance (3) – Oversees Insurance Industry in Utah (regulations, enforcement, approval of filings) – Wealth of information online at www.insurance.utah.gov • Labor Commission (3) – Mission is to lead in achieving safety & fairness in Utah’s workplaces – Adjudicates disputes between injured workers and you (us) – A variety of resources on WC at www.laborcommission.utah.gov • Workers’ CompCheck – to verify employer has WC insurance • National Council on Compensation Insurance (NCCI) – Designated Rating Organization in Utah – All carriers must follow their manuals, use their loss costs and the employer experience modifications they promulgate.
Regulatory – Out of State Employees Employees Temporarily Out of State . • Entitled to compensation under Utah law IF in a state Utah has a reciprocity agreement with (list in packet). • Duration out of Utah must be < six months. • Unless, prior to the end of the six months you file for a longer duration. • Truckers are subject to the provisions of HB308 (flyer in packet). Employees Hired or Who Regularly Work, Out of State or for Which Utah Has No Reciprocity Agreement With. • Generally not covered by your Utah policy. • Coverage must be obtained in that state. • WCF may be able to write this for you (3).
Your Policy Standard Policy (copy in packet) as filed by NCCI and used by all carriers. By accepting it, you accept all terms and conditions contained within it. • Part One – Workers’ Compensation • Part Two – Employers Liability • Part Three – Other States • Part Four – Your Duties if an Injury Occurs • Part Five – Premium • Part Six - Conditions
Part One – Workers Compensation (3) • Work Related Injury • Arising Out of & in the Course Of Employment • Be Aware of Section F – Payments You Must Make: – Your Serious & Willful Misconduct – Employ an Employee in Violation of the Law – Fail to Comply with a Health or Safety Law or Regulation – Discharge, Coerce or Otherwise Discriminate…
Part Two – Employers Liability (3) • Arising Out Of & in the Course Of Employment • You Become Legally Obligated to Pay • Key Exclusions: – WC – Intentional Acts – Harassment, Discipline, Discrimination, etc – Federal Acts
Part Three – Other States • Only applies if one or more states are listed in item 3C of the Information Page (WCF policies are Utah only but we have the capability to consider writing your non-Utah operations). • Item 3A are your key states – where you have operations at the time of policy issuance. • If you have work on the effective date of the policy in any state not listed in item 3A, coverage is not provided unless we are notified within 30 days. • We have a relationship with Advantage Workers Compensation Insurance Company to write in other states. • Notify your agent/representative/WCF immediately if you start operations in another state .
Part Four – Your Duties • Tell us at once of any work-related injury. • Provide for immediate medical/other services as needed. • Cooperate. • Do not interfere with our right to recover from others ( may reduce the ultimate cost of the claim). • Do not make voluntary payments/ expenses/ obligations except at your own cost.
Part Five - Premium • Our Filings and (NCCI) manuals apply. • Classifications will be corrected if incorrect. • Remuneration includes your employees, officers and all other persons that could make us liable under Part One – Workers Compensation. • You will pay all premium when due. • You will keep proper records and allow our auditors to audit them. • We will conduct a final audit (note premium provisions for cancelled policies).
Part Six - Conditions • We have the right to inspect but are not obligated to do so. • Inspections relate only to the insurability of the workplace and the premiums to be charged. • Cancellation provisions: – You may cancel (short-rate penalty) – We may cancel (pro-rata) – See endorsement to your policy
Your Premium • Information Page – Schedule of Operations Payrolls – Classifications – Rates – Employers Liability – Experience Rating – Schedule Rating – Association Discount – Premium Discount – Terrorism
Premium Determination • Payrolls . Are provided to us via the Application for Coverage and are considered estimates until final audit (interim adjustments possible). Accurate estimates (in total and by class) are key to avoiding surprises at the final audit. • Classifications (5) . Are based on information provided in the Application and subject to change if incorrect. Correct classifications are critical to ensuring the integrity of the classification system and another way to avoid final audit surprises. • Rates (5) . Are based on the class and rate tier. All carriers file loss cost modifiers applied to NCCI loss costs (resulting in different rates by carrier) . Rates generally apply for one year based on your Anniversary Rating Date (generally your policy dates). • Employers Liability . Additional charge applies for limits greater than standard (100/500/100).
Premium Determination – cont. • Experience Rating (11) . Mandatory if you qualify ($3,500 in 2 of 3 years or $7,000 in 1 year). Calculated by NCCI based on carrier unit statistical filings. Is the same regardless of carrier. The intent of Experience Rating is to incent employers to provide their employees with a safe workplace. Manage this to manage your costs . • Schedule Rating (5) . Amends the premium based on behaviors and characteristics of your company. Seven categories for a total of +/- 25%. Every policy > $5,000 is considered for schedule rating. • Association Discount (9) . A credit of 5% if you are a member of one of WCF’s five trade associations and meet the qualifications for eligibility prior to your policy effective date .
Premium Determination – cont. • Premium Discount (5) . Recognizes policy handling expenses are similar regardless of premium. Percentage discounts that start at $5,000 of premium based on a table. • Terrorism . Mandatory charge for all carriers. NCCI sets the loss cost and carriers apply their loss cost modifiers to determine the final rate. There are two factors, one for terrorism (foreign and domestic) and one for catastrophes. • Dividends . While dividends cannot be guaranteed and must be approved by our Board of Directors, WCF has paid dividends every year since 1992 to the tune of over $315m. • Rating Plan. Final premium determination will depend on your rating plan; Guaranteed Cost or loss sensitive (Retrospective Rating or Large Deductible).
Loss Cost Rate Changes Utah 15.0% 12.6% 11.2% 10.0% 5.9% 4.2% 5.0% 0.0% 0.0% 0.0% 0.0% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010P -5.0% -6.0% -7.2% -8.2% -7.8% -2.8% -10.0% -8.5% -10.1% -9.6% -11.9% -15.0% -16.3% -20.0% 20
Policyholder Dividends (In Millions) $50 $46.7 $45 $41.8 $39.8 $40 $35 $30.9 $30 $25.5 $25 $19.9 $19.5 $20 $17.1 $16.8 $15.0 $15 $9.8 $5.8 $7.0 $8.4 $8.7 $6.0 $8.0 $10 $7.3 $2.4 $3.0 $5 $- 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 21
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