Log Home Distributor's Workers' Compensation Savings Has It Barking Up The Right Tree

Insured

The insured is a Wisconsin-based, privately-held, family-owned business that distributes custom log home component packages. The company employs more than 60 people and has annual revenues in excess of $11 million.

Situation

The company was experiencing significant fluctuations in its Experience Modification Factor, ranging from 1.11 to as high as 1.61, as well as a high annual premium of $48,000, which lead management to attend an educational workshop presented by Comp-Save Solutions of Ansay/Ansay & Associates LLC.

Assessment

Certified WorkComp Advisors (CWCAs) from Ansay/Mosinee reviewed the situation and found the company did not understand how Workers' Compensation claims costs translate into overall expenses. There was no internal process to monitor or review claims when an injury occurred and the company was also working with health professionals who were not up to speed on occupational medicine, a carrier with little expertise in Workers' Compensation, and there was no effective return-to-work program in place. As a result, there were open claims remaining on the books and possible unnecessary indemnity payments being made.

Solution

The Advisor for Ansay/Mosinee immediately began working with the company's HR Director and individual department managers to educate them on the entire Workers' Compensation process. They also set up meetings with medical professionals well versed in occupational medicine, worked on an improved return-to-work program, and moved to close any outstanding claims. They also rewrote their insurance to a "Workers Compensation only" carrier to provide a focus on loss prevention and claims management. Because of their expertise in Workers' Compensation, the Advisors examined the classification code. In prior years, the company was coded under "lumber yard," with a rate of $6.10. Based on the scope of work, the Advisor was able to able to obtain the more favorable classification of "wood preserving," which brought the rate down significantly to $2.95.

Result

The reclassification (which was retroactive to 2009) and ongoing education within the company resulted in a $12,000 credit on the company's 2009 audit. The annual Workers' Comp premium has been reduced from the $48,000 to $18,400 in 2010. In addition, the Experience MOD dropped to 1.05 in 2010, and is projected to be .94 in 2011, resulting in additional savings.

Correcting misclassification a good sign for outdoor sign company

Insured

The insured is an outdoor sign company located in central Wisconsin with fewer than 10 employees. The company's annual revenue is just under $2,000,000.

Situation

The company's annual Worker's Compensation premium was extremely high, based on the number of employees and their level of duties. Employees were either classified as working in the print shop or at a higher risk classification as outdoor workers hanging the signs.

Assessment

CWCA's from Ansay & Associates LLC investigated the company's payroll allocation and uncovered a textbook example of misclassification. It was determined that the entire $80,000 payroll was tied up in an $8 class code, which was the classification for the work performed by the higher-risk outdoor employees. This group had fewer employees than those than the print shop group and their duties were limited seasonally. It was discovered that only $4,000 of the payroll should have been allocated to the outdoor workers, as the company hadn't realized that they could split the payroll over two codes, a situation that had been going on for many years.

Solution

Calls were made to the insurance company and time sheets documenting the hours spent in each class code by the day for all employees were submitted. Based on this evidence, the company was able split the payroll into an $8 code for the outdoor laborers and a $3 code for those lower-risk employees working in the print shop.

Result

As a result of the investigation, the company saw its annual premium go from $18,000 per year to $6,000 per year, saving $12,000 per year in premiums.

Implementation of Comprehensive Workers' Compensation Program Saves Modular Home Manufacturer $5,000 and Lowers Experience Mod

Insured

Based in Central Wisconsin, the company is a manufacturer of modular homes with more than 40 employees.

Situation

The company's Experience Modification Factor had climbed steadily to 1.07 and management did not understand why this was occurring.

Assessment

Certified WorkComp Advisors (CWCAs) from Ansay & Associates LLC were called in to review the claims after one of the owners attended a Workers' Compensation workshop sponsored by the agency.

The Advisors discovered that the insurance company had made a coding mistake with a series of claims relating to knee, shoulder and hand injuries. Some had been miscoded as indemnity claims instead of medical-only claims. In Wisconsin, as in some other states medical-only claims are discounted 70%, while claims involving indemnity and medical are charged at 100%. This coding error had driven up the company Experience Mod.

Solution

The CWCAs requested that the insurance company inform the rating bureau of the error and correct both the coding and the Experience Mod. In addition, the CWCAs developed a Workers' Comp plan for the company, including regular meetings with management to review Workers' Comp issues, setting up mandatory safety meetings, coordinating loss control services and claims monitoring.

In addition, a relationship between the company and an occupational medical clinic was established for the treatment of job-related injuries. Working with the clinic, drug testing and return-to-work programs were implemented. A return-to-work program helps keep the injured employee focused on recovery at work and helps in reducing both medical expenses and time off the job.

Result

As a result of the work by Comp-Save's CWCAs, the company's Experience Mod dropped from 1.07 to 1.00, netting the company a $5,000 annual premium savings, while the overall Workers' Comp plan will produce continued cost reductions over the years.

Rib Mountain Glass Discovers Value of Independent Agent

Rib Mountain Glass - Wausau, WI

Insured

Located in Wausau, WI, Rib Mountain Glass specializes in glass for commercial entrances and storefronts, construction glazing and retail glass sales. With 40 employees, the company had sales revenue in 2005 of approximately $2.5 million.

Situation

Ansay & Associates LLC Agency began insuring Rib Mountain Glass in 1995. In 2002, the company moved its account to a direct insurance carrier at a time when rates were increasing and lower pricing seemed to be the issue for the owners.

The direct writer promised the coverage would be the same as that which was provided by Ansay & Associates LLC. It wasn't. The direct writer also agreed to provide Rib Mountain Glass with a safety manual. What they received was a "generic template" from a web site that was not specific to the glass business. To use the manual, Rib Mountain had to revise it for its purposes. When it came to issuing Certificates of Insurance, the direct writer did not charge for them initially when ordered with the policy; however, it then began charging $50 to $150 for each Certificate.

Assessment

The Rib Mountain experience illustrates several important issues:

• Insurance policies that appear to be identical can be quite different. It is often difficult for insureds, who are not familiar with coverage issues, to identify the differences.
• Extra charges for Certificates of Insurance. Certificates are essential to doing business as a contractor. Since Ansay & Associates LLC never charges for Certificates, Rib Mountain's management assumed there would be no charge from the direct writer.
• The value of the independent agent. Through this experience, Rib Mountain Glass discovered the value of having an independent agent manage its insurance program.
• The value of a Certified WorkComp Advisor. A Certified WorkComp Advisor at Ansay & Associates LLC reviewed Rib Mountain's coverage and found the direct writer's handling of claims had not been good. Some claims that should have been cleared in a year were still open two years later. Rib Mountain's Experience Modification Factor (Mod), which had been 0.66 in 2002 when they left Ansay & Associates LLC, nearly doubled from 2002 to 2004, reaching 1.17 in 2004. The increase meant that Rib Mountain was paying $30,000 more in premium costs than it did in 2002

Solution

Six months into the 2005 policy year, a representative of Ansay & Associates LLC made a courtesy call on Rib Mountain to see how the direct writer's program was performing. It was then that Rib Mountain's management requested a meeting in 90 days to move the account back to Ansay & Associates LLC. This occurred on the anniversary of the policy.

As Wisconsin's only agency with Certified WorkComp Advisors who are trained by the Institute of WorkComp Professionals, Ansay & Associates LLC knew how to handle Rib Mountain's claims properly and in the most cost effective manner.

Result

Ansay & Associates LLC has been able to stem the tide of Rib Mountain's rising Mod. For 2006, Mosinee has projected the client's Mod will be 1.11 and should continue to drop as the improperly handled claims are cleared. Says a representative of Rib Mountain Glass, "With Mosinee's help, we are understanding WorkComp better and using their guidance we're learning how to get our rates and costs under control."

Taking the creative route: A Divided Mod Saves Contract

It's a well-known fact that a company's Experience Mod has an effect on its bottom line because of the additional Workers' Comp costs that result from it. However, sometimes a high Experience Mod can also directly affect how you do business.

An HVAC service company in Wausau, WI, was in danger of losing its largest account. In the interest of promoting onsite job safety, the customer, one of the country's largest paper manufacturers, had established a policy that it would not do business with any vendor whose Experience Mod was greater than 1.0.

The company could ill afford to lose his largest customer, so the employer turned to one of Wisconsin's only Certified WorkComp Advisors, Judy Jacobs, for assistance.

"Since the paper company only did business with the company's Service Department, we broke apart their Experience Mod by departments such as electrical, residential, plumbing and service," says Jacobs, director of Comp-Save Solutions for Ansay & Associates LLC in Mosinee, WI. "They sent us the claims numbers and we plugged them into ModMaster. This showed us how each department affected the Mod and what the Mod would be for each department individually."

In dividing the company by departments, Jacobs discovered that much of the basis for the Mod was from the company's Residential Plumbing division, not the industrial service division that did business with the paper company. "In fact, we found the Service Department did not have a single claim that contributed to the Mod, which means as a stand-alone company that department would have an Experience Mod well below 1.0," says Jacobs.

The department's sub-1.0 Experience Mod satisfied the paper company and enabled Comp-Save's client to keep the contract. It also inspired the president to bring in Jacobs to teach all of his employees about their roles in controlling Workers' Compensation costs.

Kathy Danen, Business Consultant

Concentrated Employment Program, Inc., Ashland, WI

As a business consultant for Concentrated Employment Program, Inc., of Ashland, WI, Kathy Danen helps employers find the information and training they need to provide them with the knowledge to run their organizations better.

One subject about which she felt many of her clients could use more knowledge was Workers' Compensation. Before she could help her clients, though, she needed to educate herself on the subject, so she attended "You CAN Cut Your Worker's Comp Costs," a workshop conducted by Judy A. Jacobs, Certified WorkComp Advisor and director of Comp-Save Solutions for Ansay & Associates LLC Agency, Inc. in Mosinee, WI.

"She blew me away," says Danen of her own workshop experience. "Her knowledge on the subject of Workers' Comp was incredible. Plus, she's a fantastic speaker and breaks up the presentation so that you don't lose interest."

Convinced that Jacobs could provide her clients with the information they needed to understand Workers' Compensation better, she arranged for Jacobs to conduct a pair of workshops for them.

"We had 25 to 30 employers attend one workshop in Medford and about another 25 or so attend one in Ladysmith," recalls Danen. "They all thought she helped them understand Workers' Compensation better and they got lots of good advice from her on how to improve their programs."

Danen added that many of her clients also commented on Jacobs' willingness to work with them and resolve even specific issues.

"She stayed after sessions and answered questions that some of my clients preferred not to ask in front of other people," said Danen. "Some of them even contacted Jacobs after the workshop to work with her on their Workers' Compensation programs."

Based on how much Jacobs was able to help the employers in the first two sessions, Danen plans to invite Jacobs to conduct another workshop for her clients in the very near future.

Old Business Learns New Tricks from Comp-Save Solutions Workshop

Even as he prepares to celebrate the 50th anniversary of his family's business in 2007, France Sales & Service President Elmer France knows there is still much out there to learn about Workers' Compensation insurance.

That's why when the company recently encountered what he calls a "Worker's Comp situation," he invited Judy A. Jacobs, director of Comp-Save Solutions for Ansay & Associates LLC and a Certified WorkComp Advisor, to speak to his company about the intricacies of Workers' Compensation.

"It was a truly educational and enlightening experience for all of our employees," says France of Jacobs' workshop. "Workers' Comp is quite complicated and so many people really don't understand how Workers' Compensation works. Ms. Jacobs' presentation, though, made things much clearer and easier to understand."

France was not the only one impressed with the workshop. "The comments I got on it from employees afterward were that they enjoyed the program and now have a far better understanding of Workers' Comp than they did before. She really did an excellent job. It was a wonderful experience. It's something, I think, that could benefit every small business."