“Why is insurance the second most costly line on my Profit and Loss statement, yet the one I know the least about?”
“How do I know if I’m getting a good deal from my agent?”
If you’ve asked yourself these questions, you’re not alone. Insurance is still a mystery to many business owners. And it’s frustrating because you want to spend your time running your business, not learning about another industry you know little about.
How can you build up your “business insurance IQ”?
To understand any topic, it’s always helpful to start with the basics. So follow this brief primer to get a better handle on what you’re buying when you purchase New York business insurance.
What IS insurance and what is it for?
Many business owners still think of insurance as a tax, an expensive necessity to be kept at a minimum. But insurance is a form of risk management that’s essential to your businesses. As an entrepreneur, you’re a risk taker, testing your abilities in the marketplace every day. By reducing the financial consequences of fires, accidents, thefts, or other unforeseen events, insurance improves your odds.
Do I really need it?
In New York State, if you have any employees, you’re required to carry workers' compensation and disability benefits insurance. If you own a vehicle that’s used in your business, you need commercial auto insurance. If you lease your property, your landlord may require you to maintain a level of liability coverage as a condition of your lease. And your bank or your investors might require you to maintain life, business interruption, fire, or other insurance to protect their investments.
How does coverage benefit me?
Insurance isn't just about protecting against disaster. Offering a health benefits package can help attract and retain better employees. Borrowing against the equity in your life insurance or retirement fund is one way to raise capital for expansion, and it can improve your bank and supplier credit. Insurance can also protect your business income.
How do I know what I need?
It’s vital to design coverage that fits your needs and risks, and that requires planning and forethought. To know what you need, you first need to understand what risks need protecting. Determine your own needs, concerns, and priorities, and then talk to an insurance specialist who can explain the available coverages and help you develop an adequate program.
Do the math.
List every possible risk you face and evaluate the loss you could suffer from each. Cover your largest loss exposure first and use the highest deductible you can afford, since your premium depends in part on how much risk you’re willing to take on. Be careful to avoid duplicating coverage, but don't shortchange yourself on coverage either.
How do I choose an agent?
Here are some factors you should consider when choosing a New York business insurance partner:
- Size. You want a company large enough to handle your needs, but small enough to give you personalized service.
- Industry knowledge. Look for a partner who has experience in your industry and understands your business, your risks, and your needs.
- Price. Cost isn’t everything, but it’s obviously important to your bottom line. You want an agent who can offer you competitive quotes.
- Responsiveness. You want an insurance company that communicates well, responds to your needs in a timely manner, and has an excellent track record of customer service.
When you’re in the market for New York business insurance, you won’t find a more qualified partner than Milbrandt. With more than 150 years of experience providing New York business insurance coverage, we know your business and your needs.
Don’t take a chance with your New York business insurance. Download our free report “Ten Unexpected New York Business Exposures That Can Obliterate Your Profits in the Blink of an Eye” and avoid costly business exposures that can threaten your survival.
According to the most recent composite index by MarketScout, workers’ compensation rates increased more than six percent in April of this year. And as a New York employer, you’re still paying the highest taxes on workers’ compensation premiums in the nation.
With your insurance costs continuing to rise in this sluggish economy, you need to jump at every opportunity to reduce your risks, control costs, and trim your premiums.
Three main factors go into the calculation of your New York workers’ compensation premiums:
- The rate assigned to each payroll classification in your business;
- The total amount of your payroll for each classification; and
- Your Experience Modification Factor.
As an employer, the only one you can control is number three – your Experience Modification Factor, often referred to simply as your “mod.”
Your “workers compensation credit score”
Think of your mod as your “workers comp credit score.” It’s simply a number that represents your business’ claim history based on the last three years of claim payments made on your behalf. The mod assigned to your job classifications is a comparison of your claims record to that of all other employers in your state with the same job classification code(s). If your claim history and claim payments are higher than average, your mod – and your premiums – will be higher than average.
How can you lower your score? Try these five proven methods:
1. Implement a return to work program
If an employee hurts his back and you decide not to put him on light duty, that employee will collect benefits for as long as it takes him to fully recover, costing you thousands. And the total amount of the claim will be included in your mod calculations for the next three years. So it’s better to have the employee at work producing some value to your company while he recovers.
2. Establish a strong safety program
A safe worksite is crucial to reducing your mod because it can prevent many accidents and injuries. That translates into a lower claim payment history, a lower mod, and lower premiums. Commit to a culture of safety in your workplace, including the identification of all hazards, proper housekeeping, thorough safety training for all employees, regular safety meetings, and constant vigilance.
3. Never use uninsured subcontractors
Many employers – especially in the construction industry – fail to confirm and document proper workers comp coverage when they hire subcontractors. If a subcontractor doesn’t have their own coverage and they get injured while working for you, your workers' comp insurance picks up the tab. That increases your premium at the year-end premium audit and increases your mod for the next three years.
4. Review your job classifications
If your clerical person or insurance broker decided it would be easier to classify all of your employees as warehouse workers, your workers' comp premiums and your mod are all out of whack. A thorough review of each employee’s classification type could save you significantly on your premiums. Of course, it might result in higher premiums, but it’ll save you the cost of a fraud suit.
5. Explore your group rating options
Many insurers offer group discounts to recognized groups, so check on any industry groups you may be eligible to join. By accepting only companies whose loss experience is low, groups enjoy a lower group mod and lower premiums. Just make sure the group mod is lower than yours before you join.
When you need workers comp coverage, partner with the New York workers’ compensation experts at Milbrandt. We’ll design an insurance program that’ll help you reduce your costs while boosting your “workers comp credit score” – and your bottom line.
For another great New York business insurance tip, download our free report "Ten Unexpected New York Business Exposures" and discover what business exposures can obliterate your profits in the blink of an eye.
For decades, employers have operated under the threat of lawsuits involving discrimination, harassment, and retaliation in the workplace. But now there’s an even more menacing threat to your bottom line: wage and hour lawsuits.
While these lawsuits aren’t new, their numbers have skyrocketed in recent years. In 2011 alone, more than 7,000 collective actions were filed in federal court alleging wage and hour violations under the Fair Labor Standards Act (FLSA), an increase of about 400% since 2000 according to CNN Money. Some of the biggest violations are:
- Failure to pay overtime due to misclassification as exempt
- Requiring employees to work off-the-clock
- Misclassification of workers as independent contractors instead of employees
- Misclassification of exempt vs. non-exempt status
- Miscalculation of bonuses and commissions
Why the sudden explosion in wage and hour litigation?
Several factors have converged to drive this trend: A lethargic economy with greater demands on employees . . . malpractice reform that has left personal injury attorneys searching for new business opportunities . . . and exploitation of the Fair Labor Standards Act, a 75-year-old law that’s out of touch with today’s workplace.
A lot has changed since the FLSA was enacted in 1938. When jobs were plentiful, a disgruntled employee could merely change jobs. But in this tough economy, when employees are dissatisfied with their jobs, they feel stuck, angry and litigious.
Why is this threat so dangerous?
Wage and hour litigation can be a real threat for several reasons. First, data suggests that more than 70% of employers are not in full compliance with the FLSA, so they’re already on thin ice. And the Department of Labor is cracking down on compliance.
Second, there are a lot of gray areas involved. While anti-discrimination laws make sense to most employers, wage and hour laws are often counterintuitive.
Third, as businesses grow through mergers, acquisitions, or the rebound in the economy, their chances of being subject to a collective action also grow. More employees, more potential lawsuits. And collective actions involving multiple employees can only multiply your legal costs.
Your construction firm is not immune
The classification of workers as employees vs. independent contractors is the big stickler in most wage and hour lawsuits in the construction industry. The U.S. Department of Labor estimates that as many as 10 to 30 percent of all independent contractors are misclassified, so you could be at risk.
Many construction firms also mistakenly believe their Employment Practice Liability Insurance (EPLI) policy will defend them in a wage and hour claim. But many EPLI policies exclude wage and hour indemnification. So don’t assume you’re covered.
How can you protect yourself?
- Thoroughly review your New York construction insurance coverage with your agent to identify and mitigate exposures.
- Comply with worker classification rules and statutes and regulations regarding pay and hours.
- Perform regular audits of employee job descriptions and classifications.
- Stay updated on new legislation and case law.
- Keep complete and accurate employee records in electronic format.
With the Department of Labor cracking down on compliance and enforcement, now is the time to aggressively assess your wage and hour compliance, along with your insurance coverage. Follow the steps above to protect your construction business from a flood of litigation, and let the New York construction insurance experts at Milbrandt custom build a package that can help you weather any storm.
For other great New York construction insurance ideas, download our free case study collection, “How Six Contractors Discovered Risk Management Success with Milbrandt Insurance.”
Imagine this scenario…
While on a job site, you send an employee to a supplier to pick up a part you need. The employee drives his own vehicle, and on the way he hits a pedestrian, resulting in $50,000 in medical bills, lost wages, pain and suffering. Since the employee was driving for a business purpose, the pedestrian’s insurer denies coverage. And your business doesn’t have non-owned auto liability coverage, so the $50,000 loss isn’t covered.
Now you’re facing a lawsuit that could take your bottom line on an unexpected detour.
This is just one of many scenarios you could face if you’re operating without commercial auto coverage. The risk of a serious accident wiping out your business far exceeds the premiums you’ll pay for this needed New York business insurance coverage, so it doesn’t make sense to get sideswiped by a lawsuit when it’s so easy to avoid it.
How do you know if you need commercial auto coverage as part of your New York business insurance?
In general, you need a business auto policy if you:
- have vehicles owned by the company that are used in tasks related to your business;
- are using your vehicle to transport goods or people for a fee or using your vehicle to conduct a service;
- are hauling a considerable weight in tools or equipment or towing a trailer used to conduct your business;
- have employees who operate company vehicles.
What does business auto insurance cover?
A commercial auto policy covers three basic areas:
- Physical damage insurance - includes collision and comprehensive coverage;
- Liability insurance − includes bodily injury, property damage, and uninsured/underinsured motorist coverage;
- Other coverage − includes medical payments, towing and labor, rental reimbursement and auto loan or lease gap coverage.
Don’t believe these costly myths
Many business owners believe they’re immune from liability if their employees carry auto insurance. Others believe that if their vehicle is registered in their personal name instead of the business name, commercial coverage is not necessary and their personal auto policy will cover the auto.
These myths could cost you plenty if you buy into them. Most personal auto policies exclude coverage for using a vehicle for commercial purposes. And if you’re relying on your employees to have their own personal auto insurance, how do you know they aren’t driving uninsured without your knowledge? Without business auto coverage in place, you could be setting yourself up for an uncovered liability.
While it’s true that some commercial auto policies include non-owned auto liability coverage, several court decisions in recent years have led insurers to start limiting this coverage or requiring that it be purchased as a rider or endorsement. When choosing your commercial auto insurance, you can save money by finding a good insurer with broad based coverage that includes this coverage. But whether the coverage is included as part of your business auto policy or purchased as additional coverage, it’s critical to have it if you have employees who might use their personal vehicles for work purposes.
Don’t let a costly surprise take you and your profits on an unexpected detour. Let the New York business insurance experts at Milbrandt make sure you have the coverage you need to keep your operations – and your profits – rolling along smoothly.
For another great New York business insurance resource, download our free report “Ten Unexpected New York Business Exposures That can Obliterate Profits in the Blink of an Eye” and discover costly business exposures that can hurt your bottom line.
As a contractor, your CGL policy is one of the most important purchases you’ll make. It’s at the heart of your New York construction insurance and risk management program, and it creates the foundation for coordinating coverage with any necessary additional policies such as Builder’s Risk, Umbrella/Excess Liability, Professional Liability or Contractor’s Pollution Liability.
But with the constantly evolving nuances and complexities of the Commercial General Liability (CGL) policy, it’s no wonder this can be one of the biggest headaches for contractors. And according to a Towers Watson & Co. survey, general liability insurance rates are expected to increase anywhere from 5 to 20 percent this year, so the last thing you need is an expensive surprise due to a coverage misunderstanding.
To really understand the inner workings of your CGL policy, there are a host of construction insurance coverage issues you have to be aware of, some of them fairly obscure such as the “required degree of fortuity” or the role of causation in coverage interpretation. Then there are the exclusions, the exceptions to the exclusions, and a seemingly endless and impenetrable list of jargon.
Recent court cases involving construction defect claims have only complicated matters, with case law becoming more fluid and unpredictable all the time. Various courts across the country have come up with diametrically opposed interpretations of the meaning of “occurrence,” “property damage,” “arising out of,” and other terms in your CGL policy.
So how do you get a handle on understanding your CGL policy?
The first step is to understand what’s generally covered under a CGL policy. This policy provides coverage for liability arising from bodily injury, personal injury or damage to property of third parties. Standard construction insurance CGL coverage includes:
- Premises/operations
- Liability exposures arising from subcontractors or suppliers
- Contractual liability arising out of indemnity agreements found in contracts
- Products and completed operations
- Defense coverage
But when it comes to avoiding an “expensive surprise,” it’s even more important to understand what’s NOT covered under your policy before claims and allegations arise. And that can get dicey. Your policy can have any number of exclusions, including:
- Pollution
- Mold
- Damage to your product
- Damage to your work
- Property damage to impaired property
- Recall of your products, your work, or impaired property
And there are many more. So what can you do about potential losses that fall under these or any of the other ordinary liability exclusions? There are generally three ways you can deal with excluded coverage:
- Avoidance: cease the activities that give rise to the risk;
- Self-insure the risk or retention: continue the activity but agree to pay the resulting losses out of your own pocket; or
- Transfer the risk using insurance and various types of hold-harmless agreements.
Much of the case law surrounding the definitions of the terms in your CGL policy is the product of underwriters who haven’t had that much experience in the construction industry. So your best plan of attack is to work closely with your insurance professionals to craft a policy that takes every aspect of your business into account. Don’t leave anything to chance.
If you’re confused about your CGL policy, see the experts at Milbrandt. With more than 150 years of experience in New York construction insurance, we have the knowledge and expertise to craft a CGL policy that fits your business. And we’ll make sure you understand every word.
To learn more, download our case study collection, “How Six Contractors Discovered Risk Management Success with Milbrandt Insurance.”
Every year the insurance industry deals with fraud to the tune of about $80 billion, according to the Coalition Against Insurance Fraud. That’s more than twice the gold in Fort Knox and enough to fund the U.S. space program for five years! And according to the National Insurance Crime Bureau, workers' compensation fraud alone accounts for $5 billion of that liability each year.
But insurance companies aren’t the only victims. New York businesses like yours shell out millions of dollars every year in overtime expenses, production delays, medical and legal expenses, training costs for temporary help, and more – all due to workers compensation fraud.
How does New York workers’ compensation insurance fraud affect your business? Let us count the ways …
- Higher premiums. Insurers pass the high costs of fraud onto you, the policyholder, so you pay higher workers comp premiums.
- Lost jobs. Faced with skyrocketing premiums, many business owners are forced to reduce their workforce, move to another state, or even file for bankruptcy.
- Lost pay. Many business owners will freeze or reduce their employee’s pay in an effort to offset higher insurance premiums.
- Weakened business. Higher premiums can eat into your profits, raise prices for your customers, and even force you out of business. Honest businesses also have to work harder to compete against dishonest companies that illegally avoid workers comp insurance.
- Added stress for employees. When an employee leaves the job with a fake injury, fellow workers have to take up the slack, possibly creating safety issues and weakening company morale.
To spot workers comp fraud, watch for the most common warning signs:
- New hire has an accident
- Recent disciplinary action or termination
- Pending layoff, job change or retirement
- Poor attendance record or prior lost time claims
- No witnesses to accident/injury, or only witness is a personal friend of the employee
- Employee delays treatments, won’t sign authorizations, or refuses light-duty work offers
- Work restrictions are out of line with type or degree of injury
What can you do to fight New York workers’ compensation insurance fraud in your workplace?
If you want to protect your business against workers’ comp claims fraud, you need an effective fraud management strategy. Here are 8 steps you should include in that strategy:
- Earn your employees’ trust. Create a safe work environment with a safety program and procedures, listen to your employees’ concerns, correct safety issues immediately, and show you care about proper working conditions.
- Set guidelines. Let your employees know that your company has zero tolerance for fraud, that any proven fraud will be vigorously prosecuted, and that fraud cheats the company and threatens their jobs.
- Train your staff. Make sure your supervisors and managers are trained in fraud prevention.
- Screen applicants carefully. Conduct thorough pre-employment (post-offer) reference and background checks. Criminal backgrounds and a history of suspicious injury claims can be red flags for potential fraud.
- Report accidents. Require everyone to report all workplace accidents immediately, advise your insurance company about suspicious claims, and encourage active investigation of all accidents.
- Report fraud. Set up a fraud hotline number for your employees to report suspected fraud confidentially. Consider a reward program for reporting suspicious claims that lead to conviction.
- Watch for medical fraud. Be proactive about managing healthcare for your injured workers and thoroughly review all medical billings.
- Have a strong return to work program. Give your injured workers the means and the incentive to get back on the job.
Insurance fraud isn’t just your insurance company’s problem. It costs New York businesses like yours millions of dollars every year. Make sure you’re doing all you can to protect your business.
Count on the New York business insurance experts at Milbrandt for more ways to safeguard your business. Also, download our free report about why you may want to consider joining a New York workers’ compensation safety group.
Running a business requires you to navigate a minefield of variables and uncertainties beyond your control. But even among your challenges, there are some things you can count on:
- Your best competitors will always strive to become better;
- Your customers will always demand more;
- You’ll have to keep working smarter and harder to turn a profit;
- You’ll constantly be adjusting to new taxes, regulations, and added expenses; and
- You’ll always need the right New York business insurance to help you manage your risk.
It can be an uphill battle just to survive. So how can New York businesses boost their “degree of certainty” in this competitive market? How can you stay ahead of the competition and reach the next level?
While there’s no easy path to success, by focusing on a few critical areas of your business – both internal and external – and implementing a few key strategies, you can give your business success a higher “degree of certainty,” regardless of the market.
1. Conduct an internal review.
- Evaluate your leadership. Are you giving your business the necessary time, focus, equipment, capital, and everything else it needs to be successful? Do you effectively assign responsibility and expectations? If you want effective employees, you need effective leadership.
- Evaluate your processes. Examine what’s working and what needs to be improved. Identify any processes that are only in place because “that’s the way we’ve always done it.” Pay special attention to tasks that directly impact customers and affect the data you use to make business decisions.
- Evaluate your costs. Don’t assume you know how much things are costing you. Can you save money by renegotiating some vendor contracts? Can you identify an expensive mistake you made last year and ways to avoid it this year? Look for smart ways to cut costs and build up your cash reserves.
- Evaluate your risks. Conduct a top-to-bottom analysis of your risks with your New York business insurance carrier so you understand everything that’s at stake.
2. Take action internally.
- Reengage your employees. If you want passionate employees, engage them. Be sincere about their health, safety, and well-being. Help them eliminate frustrations in their jobs. Show them gratitude. Engaged employees handle problems on their own and actively look for ways to improve your business.
- Set goals. Setting goals is essential to keeping your business moving forward. Make them specific, measurable, and realistic. Then put a plan in motion to achieve those goals, and routinely check your progress.
- Reassess your coverage. Work with your New York business insurance provider to identify any unnecessary coverage or gaps in coverage.
3. Take action externally.
- Expand your offerings. Think of ways to give your customers added value with other products and services. Make it easy for customers to get what they need when they need it.
- Revamp your marketing. Maybe that money you’re pouring into ad space could be better spent on a digital marketing. Know your market, and market smart.
- Focus on retention. Always strive to build loyalty by giving current customers the kind of buying experience that keeps them coming back. Be creative and exceed their expectations.
As always, the New York business insurance experts at Milbrandt are here to help you boost your “degree of certainty.” If you’re looking for innovative new risk management solutions, let’s talk.
As the commercial insurance market continues to tighten, the construction industry continues to be among the hardest hit, especially here in New York.
Nationwide, commercial insurance prices rose 7% during the fourth quarter of 2012, the eighth straight quarter of rate increases, according to a Towers Watson & Co. survey. It was also the fourth consecutive quarter that saw price increases across every line, with increases in workers compensation and employment practice liability approaching double digits.
Although industry experts say market conditions for construction contractors haven’t reached the level of a broad hardening, your insurance cost structure has changed dramatically. And the pinch of the tightening market is starting to be felt by more and more construction contractors. While the rate increases in 2012 were largely targeted toward companies with poor loss histories, underwriters’ need for increased premium is going to affect many more contractors in 2013 and beyond.
New York contractors hit especially hard.
Premiums for certain lines of New York business insurance such as Commercial Excess or Commercial Umbrella have doubled or tripled for some general contractors. Even businesses outside of New York that have loss exposures in New York could be seeing double-digit increases soon.
What can you do to soften the blow?
Opportunities present themselves in both soft and hard insurance markets. In this tightening market, your best strategy is to double down on the fundamentals – risk management, loss control, and claims management.
As every construction contractor knows, every worksite incident is a potential general liability claim that can cost the company and its insurer thousands, if not millions of dollars. Here are eight fundamentals you should be focusing on to reduce your risk, and your insurance premiums:
1. Ramp up your safety efforts to prevent worksite accidents and claims from happening in the first place.
2. Don’t take on long-term construction projects without conducting a feasibility study of your insurance cost structure.
3. Order loss runs several times a year, not just at renewal.
4. Ask questions about the reserving practices of the insurance adjusters on large losses. High reserves are a red flag for higher insurance rates at renewal.
5. Conduct a feasibility study on your workers compensation costs. Know what your experience modification factor will be upon renewal; this calculation can contain costly errors that can drive up your premiums.
6. Perform a contract audit for each job to know how the risk is allocated, who gets left holding the bag in case of a claim, and whether all vendors and subcontractors have signed and executed contractors with proper insurance documentation.
7. Be aggressive when a worksite incident occurs. Collect photographs, witness statements, and all the facts, and provide your insurance carrier a detailed report so they can mount a defense on your behalf. This can significantly impact the amount the claim is reserved at and the amount it ultimately settles for.
8. Ask your insurance partner questions as you contemplate large new projects and contracts. There may be other ways to structure the insurance that are less expensive.
Conclusion
Those companies that have the strongest claims and loss histories will have a major competitive advantage in the New York construction insurance marketplace during this tightening insurance market. Sharpening your focus on the fundamentals of controlling that risk and properly managing claims can have a huge impact on your premiums, and on your current and future profits.
At Milbrandt, we have more than 150 years of combined experience in the New York construction industry. Let us provide you a customized comprehensive insurance package to help you manage your unique risks. And to learn more, download our case study collection, “How Six Contractors Discovered Risk Management Success with Milbrandt Insurance.”
Science has shown that human behavior is both observable and measurable. And that means it’s manageable.
When it comes to your workplace safety culture, it’s all about behaviors. And if you want to drill down into the at-risk behaviors that lead to New York business insurance claims, you might want to consider a Behavior-Based Safety program, which focuses on reducing at-risk behaviors in the workplace through observation and feedback. Behavior-based safety programs can help companies encourage safe behaviors, prevent claims and reduce New York workers compensation insurance claim frequency and severity. And that means lower costs.
Why traditional safety programs often fail
Many companies lack any systematic job safety training or feedback and reinforcement protocols. And employees in these types of workplaces are more prone to engage in unsafe behaviors because improper shortcuts often have benefits, while accidents are rare. They may be more comfortable without a hard hat or other safety device, and they figure if they can cut a few corners to make a deadline, it’s money in the bank.
That’s not the kind of safety culture you want in your New York business.
With rising insurance and workers’ compensation costs, businesses have more incentives than ever to improve their safety practices and create safe work environments. However, creating a safe workplace involves much more than implementing a few initiatives and requiring compliance. Safety is about people, and behavior is one of the biggest challenges.
What is Behavior-Based Safety?
Behavior-based safety (BBS) is a scientific approach to preventing workplace accidents by observing workers in their everyday work activities and providing positive reinforcement or motives for change. The concept grew out of the work of Herbert William Heinrich (born 1886), an American industrial safety pioneer from the 1930s. Heinrich concluded that approximately 88 percent of all workplace accidents are caused by unsafe worker behaviors, though others have disputed that figure.
Through a BBS program, companies can encourage safer behavior by rewarding employees who follow proper procedures. The process includes:
- Defining work procedures that can make employees safer;
- Measuring employees’ use of safe behaviors;
- Providing positive feedback to employees who follow procedures;
- Reinforcing good behaviors with group rewards and social recognition; and
- Conducting regular evaluations to see what safety measures can be improved.
According to statistics from the Occupational Health and Safety Administration (OSHA) and Mercer LLC, companies can see about a $3 to $6 savings in workers compensation claim costs for every $1 they spend on behavior-based safety programs.
That’s an impressive ROI.
To be successful, a BBS program must have everyone on board, from the CEO to the floor associates. A good BBS program will consist of:
- Common goals (employees and management involved in the process)
- Definition of what is expected (specific target behaviors derived from safety assessments)
- Observational data collection
- Decisions about how best to proceed based on those data
- Feedback to associates being observed
- Review
How can a BBS program lower your New York business insurance premiums?
BBS programs are often time-intensive to implement and integrate into a company’s overall safety culture, but once successfully implemented, they can help significantly reduce the number, frequency, and severity of workplace accidents. They’re an excellent tool for collecting data on the quality of a company’s safety management system. They also provide a scientific way to understand why people behave the way they do when it comes to safety. And properly applied, they can be an effective next step toward creating a truly proactive safety culture where loss prevention is a core value.
That’s good for reducing accidents, employee injuries, and your New York business insurance premiums.
Employers nationwide have been struggling under the burden of workers’ compensation costs for a long time. And here in New York, that burden is among the heaviest in the nation. According to a nationwide study of workers compensation costs conducted by the state of Oregon, New York State employers pay the nation’s fifth highest workers comp premiums. And when it comes to tax assessments on those premiums, those employers pay nearly five times the national average according to the Workers’ Compensation Policy Institute.
These costs continue to make it difficult for employers to provide services while controlling costs. And today, nearly six years after the 2007 reforms, overall costs to employers and taxpayers still haven’t declined, though benefits and the associated costs have continued to increase every year.
New York employers may finally get some welcome relief.
On January 22, Governor Andrew Cuomo outlined a proposal to strengthen the state’s workers’ comp system, representing the most comprehensive changes since the 2007 Reform Act. The proposal is designed to lower costs for employers, boost benefits for injured workers, and reduce some of the administrative burdens in the system. The governor stated that his plan would “provide greater transparency, equity and security to all stakeholders without infringing upon the right of injured workers.” Gov. Cuomo’s plan calls for:
- Simplifying and reducing assessments on employers;
- Closing the aggregate trust fund and the reopened cases fund;
- Issuing bonds to cover the $800 million in liabilities of the self-insured group trusts;
- Increasing the minimum weekly benefit for injured workers, for the first time since 1999, from $100 to $150;
- Eliminating unnecessary administrative burdens and costs;
- Promoting system-wide transparency, efficiency, equity, and consistency; and
- Creating more competition in the insurance market
Thumbs up from all sides
So far, Governor Cuomo’s proposal has gotten the thumbs up from the insurance industry, the business community, and labor interests alike.
The American Insurance Association (AIA), the National Association of Mutual Insurance Companies (NAMIC), and the Property Casualty Insurers Association of America (PCIAA) all support the proposals. And the New York Workers’ Compensation Alliance, a coalition of injured workers and people committed to protecting the rights of injured workers, also praised many aspects of Governor Cuomo’s proposal, noting that the closure of the 25-a Fund, or Reopened Case Fund, alone will reduce assessments on employers by 25 percent.
Gov. Cuomo claims his proposal will lower the cost of doing business in New York State and save businesses $1.3 billion. In his State of the State address he noted, “We must reduce the crushing burden of unemployment insurance and workers’ comp.” And with cost based competition from other states and nations more intense than ever, the workers’ comp burden also hampers the state’s ability to compete for jobs in this weak economy.
The magic pill?
Could this latest round of reforms finally be the relief employers have been waiting for? Only time will tell, but early indications look promising.
If you need help sorting it all out, contact the New York workers compensation insurance experts at Milbrandt Insurance. Also, download our free report about why you may want to consider joining a New York safety group.