What can contractors do?
Contractors who find themselves with an EMR over 1.0 will likely
find themselves disqualified from bidding on some jobs.
Trying to reduce that rating will take some time, as EMR is
based on three years of claims history.
Dan Zeiler, owner of Dan Zeiler Insurance in Illinois, who
helps customers lower EMR, says it usually takes a couple of years
to start seeing a reduction in EMR for past claims and four years
for a claim to disappear from the calculations.
The key is not to have any workers comp claims, but if
there is a claim, contractors can take action to reduce its effect
on their EMR.
When a claim is filed, the insurance company sets up a reserve,
which is the amount it expects the claim to cost. It could be, though,
that the claim ends up being less than the reserve amount. That
can be achieved by helping the employee return to work without
filing for disability. If injured, they can be assigned clerical or other
duties that they could still perform. Some states offer a discount if
a worker does not file for disability.
Zeiler says contractors should be aware of when their insurance
companies report information to NCCI, because if the reserve
amount is submitted instead of the lower amount actually paid on
the claim, it could raise the EMR.
“If you’re not watching when your data is submitted to the
NCCI and you have excess reserves, you could be penalized for
that,” he said.
BUSINESS
Above all, though, contractors should implement and follow
organized safety programs and ensure all of their employees are
adhering to those programs.
“You do need to do all of the best practices to make sure you’re
not getting your employees hurt,” said Wampol. “…The best way
to control EMR is not to have any worker’s comp claims.”
Aside from that, Wampol says, many contractors don’t
understand the importance of EMR, and what they don’t know
is hurting them.
He explains that his company began an aggressive effort in
2006, by working with its insurance carrier to look at its reserves
on workers comp claims and how to reduce their costs. The result
has been a decrease in workers compensation costs by more than
half, he says. He encourages other contractors to do the same with
their insurance brokers.
“I’m surprised at the number of contractors who have not had
this conversation with their insurance carrier and with their insurance
broker and their risk managers because it is in the best interest
of your insurance carrier and your insurance broker for you to be a
good insurable risk,” he said. “Having that conversation…will typically
yield several pearls of things that you can look at.” t
This article was originally published by Equipment World and is
reprinted here with permission.
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