WC account Losses 189 X-mod hard class codes

[dgarzoli]

CALIFORNIA- I have an account whose x-mod went to 189 this year following $160K in claims the past three years. Class codes include truckers and millwrights. I had a voluntary carrier on it last two years but they finally bailed. Of course I have State Fund on stand by but another agent is also trying to quote this. I can't think of any voluntary carrier who will want this account but I want to run it past this board and see if any of you know something I don't.............

[Big Dog]

For that high of an xmod, there are safety issues that your insured isn't addressing. At this point, they're going to need to be proactive. Your insured is also most likely looking at being surcharged. There may be carriers willing to entertain the account, but they'll loss control the heck out of it and expect the insured to comply with every recommendation.

[kevinraz]

The only way a standard carrier is going to write something with a mod of 1.89 is if they get top management sign off or if an underwriter disregards their authority letter.

Remember there are two sides to this coin: they have a bad loss history and are not doing anything about it and they are also hurting your loss ratio with your carriers. You would probably be better off writing this as assigned risk or letting it walk and give the claims to another agency.

[dgarzoli]

Believe me I have talked to them till i'm red in the face about safety, supervision, etc. to no avail. It's not really affecting our loss ratio as we placed it through a wholesaler, not one of our standard accounts.

[JohnnyLaw]

Guys we don't have enough data to label this customer as having a bad safety program. This may be one claim where fraud or a recurring of an existing injury has occurred. Also could be a claim that was not managed well by the insurer, i.e. no IME's ordered, RTW pushed, etc. My guess is that this account has severity and not frequency issues and is up to date from a compliance standpoint with DOT , etc. guidelines. I would help them put together a RTW written program and try to promote them this way through US Risk underwriters. I have written a iron and steel contractor that had a very substandard LR and X Mod and they have been model customer for last two years. I do not know if Praetorian Insurance Company/QBE writes in CA or not , but if they do give them a go.

[Shagster1261]

Might need to consider a move to a PEO as well. There are several PEO's that might look at something like this, especially if it is NOT a frequency issue but more one of severity. Find a PEO which is well established, over 15 years, and let them do their thing... They will probably demand loss control and the insured will have no choice but compliance or hitting the road. So if you can show the employer the employee safety and fiscal benefits of this option, you might find this will become one of your standard accounts...
just my humble opinion....

[consult1]

There is not enough info here. Some important factors are:

• What was their mod prior to the last 3 years?
  What is their premium? (A $160K claim has a bigger effect on a $20K premium than a $2mil premium.)
  You also have to look at the claims. Were they a shock loss, frequently the same claim, etc.
  You have to evaluate the safety/risk structure of the company.

Your Statement:

Believe me I have talked to them till i'm red in the face about safety, supervision, etc. to no avail.

says to me that management doesn't really care about safety. They made their bed, now they must lay in it.

Let me get Freakonomics here. There is a hidden, added cost to running a business. Let's call it the "safety cost." You can either pay for it as training, safety equipment, maintenance, etc., OR you can pay for it as higher premiums, poorer quality coverage, fines,etc.

The difference is that by investing those dollars in safety pays off in other areas too: Better quality product/service, efficiency, lower costs, better public opinion, etc. That leads to another benefit, happier employees, better class of employee, etc. The bottom line: higher profits. The opposite is true as well.

Perhaps presenting the situation this way to your client may help them understand where they are at and that there is no cheap, easy fix.

[dgarzoli]

Last years premium was $110K. Prior mod was a 147. They frequency and severity claims both. I love the freakonmics lesson. I will pass that on for sure.

[Shawna64]

The easy answer...BBSI. Pricing is usually pretty good at that mod, and the program forces safety.

[dgarzoli]

Who is BBSI and where can they be accessed? We are down to the wire on this. State Fund has quoted and the other competing broker has promised a quote by the end of the day today for a 1/1 renewal. The sketchy thing about this other broker is that has counseled the insured to put all of his 7219 -Trucking firms payroll into 8017-Stores retail class code using the analogy that his "trucks are delivering store products, not unlike eggs or milk....." The problem is that is completely untrue........the 7219 class code is in place because this company has a long haul western states trucking division. I advised him that if he does this, he can be assured of being found out during an audit and paying up then, but I suppose it could be worth the risk on the employers part when the premium is over $200K.............

This is going to suck to lose this account, especially if I lose it due to some unscrupulous activity.....

[Shagster1261]

BBSI is Barrett Business Services Inc. and you can reach one of their offices at 909-605-6862. I worked with Matt there for a few years and they are quite good! With your time crunch on this account however, they won't be able to help you. They usually need at least a few days as they want to pre-inspect...
As for the changing payrolls just show your client any article about WC payroll fraud fines and jail terms and ask if the up front 'savings' will be worth it when they land in jail?
Good luck!

[JTR]

All of the information posted on this subject has been good advice, But what I have found over many years handling some difficult company's is that until the premium reaches a level that causes the company pain in revenue or profits the owners or senior management will not implement any safety measures to control their number of accidents or severty of injuries.

I have worked with many company's that tell everyone that their wc cost is the cost of doing business in their industry. Well until that cost hurts them, they usually will do nothing but beat up their broker and allow other brokers to quote against you. The amount of time you spend on this account,if you are being honest with yourself, is not cost effective.

[dgarzoli]

Though I would post a little update...................lost the account in January. Competing broker assured the client his combo HR solution/WC would be the end all to all of his problems. My client jumps ships, only to be immediately cancelled after the broker strung him along and caused an un needed 3 month lapse in coverage. That broker then places my former client with State Fund-which was the proposal I had presented! (My State Fund quote had expired while the other guy was dickin around with the account until the market was unblocked). Moreover, based on the down payment they had to make, the other broker waay low balled the actual payroll numbers or as stated earlier moved it all to the cheapest class code and got the down payment to a number they could swallow.


Trying now to take it back with a BOR...............we will see how that goes.

[crsmith777]

I'd suggest you talk to a WC specialist. I can help. 800-418-9763 x3674

Not promising miracles, but can at least talk you through this one.

[jwns2864]

Go back and rework the loss ratio using the new mod and higher premiums for the past years...look's better right? You have to find an underwriter who likes to get the benefit of the high rates but did not have to pay the losses. Then you have to present a service program that will improve the risk. It takes an insured that understands the true cost of WC claims in production, turnover ect. It's your job to put it together...charge a fee and quote net of commissions.