California Work Comp rates are being raised by most insurance companies. Business owners are in a position of trying to deal with declining revenues and increasing costs. In many cases, payroll reductions have actually driven the total insurance premium cost down, but the actual rates on the payroll you have left is going up. Once the California economy turns around, and it will turn around, the rate increases insurance companies are getting now will hit you just when your payrolls are rising.

Why are Work Comp Rates going Up in a Down Economy? Pinnacle Actuarial Resources, Inc. has put some thought into the answer to this question, and published it in their Research Brief linked here: “Competition gone awry” (page 4 of the newsletter).

Please post your comments and thoughts as to why Work Comp rates are going up, and more importantly, what can you do about it?

Chris Van Beurden
chrisvb@vanbeurden.com

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What is it that a Dentist wants from his Workers Comp?  As most dentists never use this State Mandated coverage, I assume that what they want is the lowest rate possible.  Do you agree?

For 15 years I have worked hard to provide dentists with the lowest cost Workers Compensation Insurance available.  In that time our program has become the 2nd largest dental insurance group in California.  But why not the largest?  If you are a dentist with a good claims history and you are not in our group, why would you want to pay more?  This is the question that I need your help in answering.

IS IT COVERAGE CONCERNS?:  All Work Comp coverage in California is statutory, meaning the State sets the coverage for all carriers, so there is no difference there.

IS IT CARRIER CONCERNS?:  We have never used a carrier with less than an “A”- AM Best Rating and we never will.

IS IT CONCERNS ABOUT FEES?:  Our program is one of the only programs for dentists that does not include fees.

IS IT CONCERNS ABOUT UNDERSTANDING THE NEEDS OF DENTISTS?: Our group presently insures over 3,000 dentists.  We are, to my knowledge, the only program that has ever changed the way claims are handled specifically for dentist.  We have developed easier payment plans and even integrated our Dental Work Comp Group with California’s largest Health provider to better protect dentist’s and their workers and to save even more money on both products.

So you tell me, why aren’t more dentists using this product?  I would love to hear your comments or suggestions.

Sincerely,

Brian Booth
Vice President/Dental Program Manager
bbooth@vanbeurden.com
Kingsburg • (559) 634-7140
Bbooth@vanbeurden.com
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For the Commercial Applicator, unlike any other profession, the Calif. Dept. of Pesticide Regulation not only mandates insurance limits in order to obtain & maintain the applicator’s license, they also define the coverage required. The three points of coverage are:

1. Covers crop or landscape or property damage as a result of a drift from the area of treatment.

2. Covers crop or landscape or property damage that may result from the handling of a pesticide or equipment failure during the pesticide application.

3. Covers bodily injury to persons not involved with the pesticide application when the pesticide is directly or indirectly applied on them and results in an illness, or injury.

Drift, Equipment failure and Bodily Injury are self explanatory. Where the coverage challenge exists is in the definition of “Handling”. “The term “Handle” is defined by the State of California Dept of Pesticide Regulation as: mixing, loading, transferring, applying (including chemigation), or assisting with the application of pesticides, maintaining, servicing, repairing, cleaning, handling equipment used in these activities that may contain residues, working with opened (including emptied but not rinsed) containers of pesticides, adjusting, repairing, or removing treatment site coverings, incorporating (mechanical or watered-in) pesticides into the soil, entering a treated area during any application or before the inhalation exposure level listed on pesticide product labeling has been reached or greenhouse ventilation criteria have been met.”

This wording requires the applicator to be responsible for damages to the surrounding area and to the crop the applicator is working with. Between the pollution exclusion and the “care custody & control” exclusion, the standard general liability policy excludes the required coverage.

In order to obtain the correct coverage, the applicator must purchase a policy specifically designed to cover the exposures outlined by Calif. DPR.  This type of policy is a specialty and not provided by most insurance carriers.

If you have questions about the required coverage or related issues – please contact me at: Direct Line (559) 634-7113 or email: jheinric@vanbeurden.com

Jeanette Heinrichs, CPIW, Vice President, Van Beurden Ins. Services, Inc.

Jeanette Heinrichs
Commercial Insurance
jheinric@vanbeurden.com
Kingsburg • (559) 634-7113
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In my interactions with employers the question about one year statute of limitations defense for a workers compensation claim (for a single incident) is brought up on a regular basis. Most employers don’t know to establish the one year statute of limitations defense an employer must meet its burden of proof that an applicant had actual knowledge of their eligibility for workers compensation benefits. Some of us might scratch our heads on this one? Let’s review the case of:

C.I.G.A. v. W.C.A.B (2008) 73 Cal. Comp. Cases 771 Second District

In this case, David Carls reported to work, in 1997, two hours early and during that time he stepped in a hole and twisted his body. He then went to the company office and laid on the floor. An injury report was completed but he was told, by his supervisor, that since his injury occurred prior to his shift, it was not considered work related. His employer did not give him a workers compensation claim form (DWC1). He received medical treatment. A few years later(in 2004) he filed his claim for this injury.  (some additional history ) Carls had suffered a work injury in 1996 received benefits and litigated that one in 1999 (he was familiar with workers compensation rights and benefits for his 1996 injury)

The court held that the employer did not meet its burden of proof that Carls was aware of his rights (for the 1997 injury), they stated in part: …Whether it was compensable depended upon whether “at the time of injury, (Carls was) performing service growing out of and incidental to his… employment and acting within the course of his employment”… The record contains no evidence suggesting that Carls had any reason to doubt his employer’s implication that the injury was not compensable. On the contrary, Carls testified that he sought treatment from his own physician. Thus, Carls awareness of his right to compensation for the 1996 injury did not necessarily inform him of his potential right to compensation for the 1997 injury. We conclude that such evidence was insufficient to overcome the presumption that Carls was ignorant to his compensation rights…

My lesson from the Carls case is, if an employee reports an industrial injury that results in time off beyond the employee’s work shift, at the time of the injury, or results in a need for medical treatment beyond first aid, GIVE the employee a claim form (DWC1) and document that you did. An employer should never deny workers compensation benefits to an employee,  leave that up to the insurance carrier. In all, I tell employers there is NO statute of limitations when a claim form is NOT provided.

Rene Sanchez
Work Comp Claims Liaison
rsanchez@vanbeurden.com
Kingsburg • (559) 634-7120
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The attached is the best article regarding the cost of health care that I have read in my 30 years of being involved in health insurance:

http://www.theatlantic.com/doc/200909/health-care/2

Gabe Rossetti
Employee Benefits
gabriel@vanbeurden.com
Los Osos • (805) 503-4726
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The next time you are looking for an insurance agent, consider asking them for some ideas that can help your business that are not insurance related. For example, I have several contractor clients that have now done business with each other because I got the chance to introduce them. You never know who will be doing what, and a good network can be a real value to a client. It’s all about getting out there and knowing what’s going on in their business.

Tom Moshier
Commercial Insurance
tmoshier@vanbeurden.com
Kingsburg • (559) 634-7139
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The cost of not working with your medical provider to have a comprehensive, full pay, return-to-work program is always a lot more than most of my clients would predict. When a claimant is not offered modified or light duty during a claim, the life of that claim is extended greatly and the individual claims costs will rise, simply from the fact that you are allowing the insurer to pay that claimant’s wage.

In your basic claim, the cost in modification increases caused by the payout for both medical and indemnity (payroll) to a claimant will come back threefold on the employer, especially for smaller claims as they are calculated at 100% of their value (no discounting in the calculation). This translates into future increases in premium to the client.

The biggest resistance we see is, “We have nothing for them to do”. Surely your staff can get together and outline something for them to do, and if you have already talked to your MPN doctor about your program and get a good outline on what the claimant “Can” do, instead of a list of things they “Can’t” do, then you can come up with something. My clients in the past have even used non-profit organizations in the local community to get claimants back to any kind of work that they can do with the work restrictions placed on them by the treating physician.

Making sure that you can accommodate any kind of restriction within your program will, in the end, save you quite a bit of money in premium savings through modification reductions. So meet with your primary treating physician, and get a plan in place to keep your people on the job. If you would like help in this area, feel free to contact me at (559) 634-7136 or at guyt@vanbeurden.com.

Guy Teafatiller
Commercial Insurance
guyt@vanbeurden.com
Kingsburg • (559) 634-7136
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On March 1st 2010 Cal-OSHA will mail assessments to employers with experience modifications of 125% or more as of 12/31/2009. Payment is due in 30 days or turned over to the State Franchise Tax Board for collection. The amount of the assessment is determined by the annual payroll generated in the last period. For FAQ’s including assessment amounts please check out https://www.dir.ca.gov/dosh/ticffaq.html . The cap was raised from $2,500 to $10,000 in mid 2008. There are a significant number of ex mod miscalculations due to claims and/or audit that can be reversed. If you would like to review your ex mod and workers comp program please contact me.

Mark O'Bryan, CWCA PWCA CISC
Commercial Insurance
mobryan@vanbeurden.com
Los Osos • (805) 503-4735
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Good morning world!

As many of you might know, Anthem Blue Cross filed a rate increase effecting individual policy holders in the state of California. This was originally going to take effect March 1st of 2010.  Since then the California Department of Insurance has stepped in to have Anthem Blue Cross justify their high rate increase. The California Department of Insurance will be hiring an independent actuary to review the requested rates.

The good news is the original rate increase will be delayed until May 1st, 2010 due to the audit. This will allow plenty of time to make plan changes or shop around. For more information please contact me or see the California Department of Insurance for the latest news and updates.

Have a great week!

Daniel Bittick
Employee Benefits
dbittick@vanbeurden.com
Paso Robles • (805) 238-2181 ext. 105
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Big News for buyers of church insurance!  GuideOne Insurance has updated their church insurance policy form effective December 1st, 2009 for new and renewing policies.  In their continuing effort to remain the leader in church insurance, GuideOne’s Faith Guard policy replaces their tried and trusted Cornerstone Plus form.

I have personally done business with GuideOne (the former Preferred Risk Mutual) since 1990, and they continue to offer (in my opinion) the very best in coverage and service,  all at a great price.

I was recently able to move a policy to Van Beurden from one of  GuideOne’s major competitors saving them money , but more importantly, broadening their insurance coverages giving them better protection for those unforeseen things that happen “in life”.

Great Stuff!

Call me and let’s discuss what I can do to help your church.

Brian Loven
Commercial Insurance
bloven@vanbeurden.com
Kingsburg • (559) 634-7115
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On November 9, 2009 Commissioner Poizner approved several changes to the experience rating formula used by the WCIRB (Workers’ Compensation Insurance Rating Bureau of California) to calculate experience modifiers.  These changes went into effect on January 1, 2010.

Experience Modifier Calculations

In order to understand the changes that occurred we will review the basics of the experience modification process.  An Ex Mod is a way of comparing your losses to other employers in similar lines of work.  Payroll and losses are gathered from all employers using the same class code, these figures are used to generate an expected loss rate, cost of injuries versus payroll.  A three year period of your actual loss rates is compared to the expected loss rates to determine your experience modifier.   All insurance companies must use your experience modifier when calculating your rate.  The Ex mod is a multiplier of the total premium with a 1.0 mod being average.

Changes in Primary and Excess Losses

The primary and excess portions of a claim are used to separate frequency from severity.  The thinking behind this is that an employer can control the number of claims but not the severity.

The old calculation broke down a claim using three tiers.  Tier one $1 – $2000 of a claim were entered at full value. $2001 – $8500 were still primary losses but at a degraded value based on employer size and industry.  $8501 + were entered as excess losses and a degraded value based on employer size and industry.

The WCIRB will now be using a two tear split.  Tier one $1 – $7000 will be primary and entered at full value.  Tier two $7001 + will be excess and enter as a degraded value based on company size and industry.

What is the Effect to Your Business

This change in calculation puts and increased focus on frequency and first dollars of a claim.  For employers with a large number of claims between $1 – $7000 this will equate to potentially a large jump in modifier.  The WCIRB expects the change to have a moderate to no affect on the modifier for 60% of companies.  The other 40% will see larger increases in their modifier with a projected 2% experiencing jumps of 40 points.

What Can You Do?

Two things that you should look at in addition to continuing a focus on safety are a complete return to work program and improving your clinic relationship.  With a focus of eliminating every dollar spent under $7000, it is more important now that you have no lost time injuries.  Make sure that you can accommodate every injury restriction, the clinic relationship plays into this.  Your clinic should know not to determine whether light duty is available, only to clarify what the work restrictions are.  In order to do this the clinic needs to understand your commitment to light duty and that you will accommodate the restrictions.  A strong clinic relationship also lends itself to having more claims be considered first aid, which should always be paid by you.

If you have any questions in regards to this article or would like to know if you modifier will be affected please feel free to contact me.  Also, please feel free to forward this to anyone you feel may benefit.

Thank you,

Kevin Frost, CWCP
Assistant Vice President
kfrost@vanbeurden.com
Kingsburg • (559) 634-7138
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Wellpoint, parent company of Anthem / Blue Cross has warned its individual policy holders that their rates may go up 39%, but the majority of their policy holders will have a 24% rate increase. They advise this is due to claims dollars paid out are higher than premiums brought in, among other reasons.

It appears that real health insurance reform is not going to happen anytime soon. With the recent election of the Republican senator in Massachusetts, the Democratic majority was ended. While many Americans did not like the direction that Health reform was going, I am concerned that reform will now take a back seat to other, also very important, priorities. America needs health insurance reform. Unless we collectively make changes, we will continue to see rate increases that Americans simply cannot continue to pay.

If you have an individual health insurance policy, be sure to contact your health insurance broker to review your specific needs. A broker can provide guidance, information and a variety of insurance companies with different plans and premiums.

Chris Van Beurden
chrisvb@vanbeurden.com

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Quality claims control (post injury) is and should be one of, if not the, main factor when purchasing California Workers Compensation Insurance in the current marketplace. It is important for business owners to carefully evaluate any new or financially suspect carrier to make sure that their modification (the controllable portion of your premium calculation) is not jeopardized for a one time savings in premium.

Why would you gamble a 10% one year savings and jeopardize a modification that saves you 42% each and every year? If the company that you go with (the cheapest) allows claims to go on and on, unimpeded, it will destroy your modification almost immediately. Claims from one year will affect your premium for up to 3 years. The running life of these claims is effectively 4 years.

The cheapest carriers may cut costs by eliminating various services, like effective cost containment in their claims division, in order to provide you with the lowest possible pricing. This elimination of services will adversely effect the cost of your claims, which will drive your modification higher in the long run.

So that one year’s 10% savings may end up costing you tens of thousands of dollars in premium over the life (3 year calculation period) of the claims costs generated that particular year. In a nutshell, I recommend that you take a long-term perspective regarding your total costs when  making your California Workers Compensation Insurance buying decision.

Guy Teafatiller
Commercial Insurance
guyt@vanbeurden.com
Kingsburg • (559) 634-7136
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Welcome to my blog.  I promise to post regularly to keep you up to date on important happenings in the insurance world.

Erik Van Beurden
Chief Executive Officer
erikvb@vanbeurden.com
Kingsburg • (559) 897-2975
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