2024 NCCI MOD EXPERIENCE CHANGES

NCCI MOD CHANGES

A QUICK GUIDE FOR 2024 NCCI MOD EXPERIENCE CHANGES

The National Council on Compensation Insurance (NCCI) is updating its experience modification factor for 2024, starting from November 1, 2023, in different states.

Changes Overview:

The NCCI oversees workers’ compensation in 36 states, starting changes from Aug 1, 2024.

The basic formula stays the same, but some components are adjusted to better reflect each state’s cost differences.

Specific Changes:

• Switch from a nationwide to state-specific split point.

• Recalculation of state accident limitations.

Why These Changes Matter:

Although the main formula stays, these tweaks could raise or lower employer premiums.

Benefits of Changes:

• More accurate experience rating modifications.

• Fairer treatment for states with varying cost structures.

• Better performance in states with high or low claim costs.

• Less impact from large outlier claims.

• Fairer calculation of employer claim counts.

• Fairer allocation of credibility to each employer's loss history.

• Simplified calculations.

State-Specific Split Points:

The split point is vital in the formula. It divides each claim into two parts: primary (up to the split point) and excess (above it).

Why It Matters:

Primary losses have more weight in the formula. The D-ratio represents the expected percentage of losses below the split point.

The Change:

Each state gets its split point value based on its average claim costs. This aims for fairer modifications across states with different cost levels.

Impacts:

The changes will vary by state, affecting some businesses with higher or lower experience modifications.

Methodology for State Accident Limitations (SAL):

SAL caps excessive claims to keep modifications accurate. The revised SAL lowers caps across states.

Who's Affected:

NCCI-governed states and some independent bureau states. States with distinct plans won’t be affected.

Organizational Impacts:

Overall, no significant statewide premium impact is expected. Individual employer-level adjustments may vary, with most seeing changes of less than +/-5%.

#staffing #staffinginsurance #staffingworkerscompensation

Navigating Professional Liability Insurance: Occurrence Form vs. Claims-Made Form for Staffing Companies

PROFESSIONAL LIABILITY

The difference between Claims made vs Occurrence form.

In the competitive landscape of staffing companies, mitigating risks is paramount to ensuring sustainable growth and maintaining a stellar reputation. One essential aspect of risk management is securing the right type of professional liability insurance. Within the realm of liability coverage, two primary options stand out: occurrence form and claims-made form. In this blog, we'll delve into the differences between these two forms and shed light on why staffing companies that operate under a claims-made form should pay close attention to their retroactive dates and consider purchasing tail coverage when transitioning to an occurrence form.

Occurrence Form vs. Claims-Made Form: Understanding the Basics

Professional liability insurance, often referred to as errors and omissions (E&O) insurance, is designed to protect businesses from claims arising due to professional negligence, errors, or omissions in the services they provide. The fundamental distinction between occurrence and claims-made forms lies in how they cover incidents and claims that occur during different policy periods.

Occurrence Form:

• The occurrence form provides coverage for incidents that happen during the policy period, regardless of when the claim is filed. If an incident occurs while the policy is active, coverage will apply even if the claim is reported after the policy has expired. This means that the coverage is based on when the incident occurred, making it relatively straightforward to determine what incidents are covered.

  Claims-Made Form:

• The claims-made form provides coverage for claims that are reported during the policy period. Unlike the occurrence form, coverage is tied to the date the claim is made, not the date when the incident occurred. This often requires "retroactive dates" to be set, which define the start date for the coverage of incidents that occurred before the policy's inception. Any claims arising from incidents that occurred before the retroactive date would not be covered unless tail coverage is in place.

Why Retroactive Dates Matter:

For staffing companies that operate under a claims-made form, the retroactive date is a critical factor. If your company switches from claims-made to occurrence form coverage, you need to pay close attention to the retroactive date. Claims arising from incidents that occurred before the retroactive date might not be covered by your new occurrence form policy. This coverage gap could potentially expose your business to significant financial risks.

The Importance of Tail Coverage:

Tail coverage, also known as extended reporting period coverage (ERP), bridges the gap between a claims-made policy and an occurrence policy. When switching from claims-made to occurrence form coverage, it's prudent to consider purchasing tail coverage. Tail coverage allows you to report claims for incidents that occurred before the retroactive date, even though they fall under your new occurrence form policy. Essentially, it extends the reporting window for claims that would otherwise be excluded under the new policy. While tail coverage comes at an additional cost, it offers invaluable protection against potential future claims stemming from past incidents.

Professional liability insurance is an indispensable tool for safeguarding staffing companies against the complexities of today's business landscape. Understanding the distinction between occurrence and claims-made forms is crucial when selecting the appropriate coverage for your business. For staffing companies transitioning from claims-made to occurrence form coverage, the retroactive date and the consideration of tail coverage are of paramount importance. By staying informed and making the right choices, you can ensure that your company is well-prepared to navigate potential liabilities and maintain a strong foundation for growth.

Remember, when it comes to insurance, informed decisions today lead to secure tomorrows.

#staffing #staffinginsurance #staffingprofessionalliability #staffingworkerscompensation

Navigating Changes in Automatic Gratuities: Insights for Hospitality Staffing Agencies

Hospitality Staffing

How Automatic Gratuities can effect your workers compensation cost.

For staffing companies operating in the dynamic realm of hospitality, where gratuities form a vital part of employee income, recent developments are causing ripples of change. Automatic gratuities, a customary practice in restaurants and hospitality establishments, are undergoing transformations that could significantly impact not only how tips are managed but also the realm of workers' compensation premiums. In this article, we'll delve into this evolving landscape and offer insights tailored to staffing agencies in the hospitality sector.

Decoding Automatic Gratuities:

Automatic gratuities, commonly known as "auto-grats," have gained prevalence in the hospitality industry. These predetermined tips are directly added to customer bills, especially for larger groups or special occasions, ensuring equitable compensation for the workforce. The goal is to mitigate instances of inadequate tipping or omission of gratuities altogether.

A Changing Paradigm:

Yet, the paradigm of automatic gratuities is shifting, leading to changes that demand attention. Historically categorized as regular income, auto-grats are now being viewed differently, potentially impacting workers' compensation premiums – a crucial consideration for staffing agencies specializing in hospitality placements.

Influence on Workers' Compensation Premiums:

Workers' compensation premiums are fees paid by businesses to secure insurance coverage for employees who might sustain workplace injuries. These premiums are influenced by several factors, including industry classification, payroll size, and the frequency of compensation claims.

The evolving status of automatic gratuities has the potential to disrupt this equation. If auto-grats are reclassified as service charges rather than conventional wages, the payroll amount considered for premium calculation could undergo adjustment. Consequently, this might ripple through the overall cost of workers' compensation coverage for staffing agencies and their clientele.

Anticipating Opportunities and Challenges:

The evolving perspective on automatic gratuities brings forth a series of opportunities and challenges specific to staffing agencies. On one hand, agencies might need to navigate intricate payroll classifications and the potential for augmented workers' comp premiums. On the other hand, this change could catalyze a reevaluation of compensation models, potentially leading to elevated morale among the workforce and an enhanced standard of service.

Adapting Strategically:

As staffing agencies in hospitality embrace these shifts, strategic adaptability becomes paramount. The potential impact on workers' compensation premiums underscores the importance of reevaluating payroll processes and, potentially, seeking expert advice to navigate complexities. Moreover, fostering transparent communication with both placed employees and partnering establishments about tipping guidelines and any resultant adjustments is critical for fostering a harmonious working environment.

For staffing agencies specializing in hospitality placements, the evolving landscape of automatic gratuities extends beyond mere operational alterations. Keeping a pulse on these changes and their potential implications for workers' compensation premiums is vital. By staying informed, adapting nimbly, and prioritizing equitable treatment of staff, agencies can effectively navigate these shifts, continuing to provide exceptional staffing solutions that benefit both clients and employees within the hospitality sector.

#staffing #staffinginsurance #insurance #workerscompensation #staffingworkerscompensation

The Risks of Piggybacking: Why Staffing Insurance Companies Don't Allow It

NO PIGGYBACKING

Why Staffing Insurance Companies Don't Allow It

Staffing companies play a crucial role in today's dynamic job market by connecting employers with skilled workers. To safeguard their operations and mitigate potential risks, staffing companies often seek insurance coverage tailored to their unique needs. However, some staffing companies attempt to cut corners by piggybacking off another company's insurance policy, creating significant risks for both parties involved. In this blog, we will explore why insurance companies specializing in staffing insurance prohibit such practices and the potential consequences for both companies.

The Dangers of Piggybacking

Piggybacking refers to a scenario in which a staffing company seeks coverage under another staffing company's insurance policy rather than purchasing its own. While this might seem like a cost-saving measure, it exposes both companies to a host of risks that could prove financially devastating in the event of a claim.

1. Coverage Gaps: One of the most significant risks of piggybacking is that it may leave the uninsured or underinsured company exposed to various liabilities. The original insurance policy may not fully align with the second company's operations, leaving significant coverage gaps that could result in substantial losses during a claim.

2. Legal and Financial Repercussions: Insurance policies are tailored to specific businesses based on their unique risks. By piggybacking, a company may unintentionally violate the terms of the policy and face legal and financial repercussions. Furthermore, if the insurer discovers the unauthorized piggybacking, they could deny coverage, leading to severe financial consequences for the uninsured company.

3. Reputational Damage: Engaging in unethical practices like piggybacking could tarnish the reputation of both the uninsured and the host company. Clients, employees, and stakeholders may lose trust in the companies, impacting their ability to attract top talent and retain clients.

The Risks for the Host Insurance Company

While piggybacking primarily poses risks for the uninsured company, the host insurance company is not entirely immune from negative outcomes.

1. Increased Liability Exposure: The host insurance company faces higher liability exposure by covering another company under its policy. This could result in more claims, increased costs, and potential financial strain.

2. Breach of Contract: Most insurance policies explicitly prohibit sharing coverage with unrelated entities. If the insurer discovers the unauthorized arrangement, the host company could be in violation of its contract, potentially leading to policy cancellation or non-renewal.

3. Underwriting Issues: Insurance companies conduct thorough risk assessments when underwriting policies. By allowing unauthorized piggybacking, the host insurer's risk calculations become inaccurate, potentially impacting their ability to provide appropriate coverage to other clients.

Steps Taken by Insurance Carriers

When insurance carriers discover a staffing company engaging in piggybacking, they typically take the following steps:

1. Investigation: The insurance carrier conducts a thorough investigation to gather evidence and confirm the unauthorized arrangement.

2. Policy Cancellation or Non-Renewal: Upon confirmation of piggybacking, the insurer may cancel the host company's policy or decline to renew it at the end of the policy term.

Piggybacking off another staffing company's insurance policy may seem like a quick fix to avoid expenses, but the risks involved are substantial. Both the uninsured company and the host insurer face significant financial, legal, and reputational consequences. Insurance companies specializing in staffing insurance diligently enforce policies against piggybacking to protect their clients and maintain the integrity of the industry. It is essential for staffing companies to prioritize securing their own comprehensive insurance coverage tailored to their unique risks, thereby ensuring their long-term stability and success.

#staffing #staffinginsurance #insurance #staffingindustry #staffingpiggybacking #staffingagency #staffingworkerscompensation #workerscompensation

Unraveling the Mysteries: How Workers' Compensation Carriers Determine Treatment Costs and Settlements

Work Comp CLAIM

How Workers' Compensation Carriers Determine Treatment Costs and Settlements?

Workers' compensation insurance provides essential coverage for employees who suffer work-related injuries or illnesses. When an employee files a workers' compensation claim, one of the critical aspects is determining the cost of treatment and potential settlements. However, this process can often seem intricate and mysterious. In this blog, we'll shed light on how workers' compensation carriers calculate treatment costs and settlements based on the type of claim.

Assessing the Severity of the Injury:

The first step in determining the cost of treatment and potential settlements is assessing the severity of the injury or illness. Workers' compensation carriers rely on medical reports and evaluations from healthcare professionals to understand the extent of the harm and the necessary treatment. The more severe the injury, the higher the cost of treatment and potential compensation.

Medical Treatment Costs:

Once the severity of the injury is established, the workers' compensation carrier evaluates the medical treatment costs. This includes hospitalization, surgeries, medications, physical therapy, and any other medical expenses directly related to the injury or illness. The carrier may have established fee schedules or reimbursement rates for specific medical procedures to ensure reasonable costs.

Lost Wages and Disability Benefits:

In addition to medical treatment costs, workers' compensation carriers consider the impact of the injury on the employee's ability to work. If the injury results in a temporary or permanent disability that prevents the employee from working or reduces their earning capacity, the carrier will factor in lost wages and disability benefits. The level of disability and its effect on the employee's ability to earn will influence the amount of compensation provided.

Type of Workers' Compensation Claim:

Different types of workers' compensation claims can have varying implications for treatment costs and settlements. Here are some common types:
a. Medical-Only Claims: These claims involve minor injuries that require limited medical treatment, such as minor cuts or bruises. The cost of treatment is generally lower, and the employee may not receive a settlement beyond medical expenses.
b. Temporary Total Disability Claims: These claims arise when an employee's injuries temporarily prevent them from working. The carrier covers medical expenses and provides wage replacement benefits until the employee can return to work.
c. Permanent Total Disability Claims: In cases of severe and permanent injuries that leave the employee unable to work, the carrier will provide long-term disability benefits and cover ongoing medical expenses.
d. Permanent Partial Disability Claims: These claims involve injuries that result in permanent impairment but do not render the employee totally disabled. The settlement amount is based on the extent of impairment and its effect on future earning capacity.

Negotiations and Legal Factors:

In some instances, the injured employee and the workers' compensation carrier may not agree on the settlement amount or the extent of the injury's impact on earning capacity. This can lead to negotiations or even legal proceedings to resolve the matter. In such cases, a judge or an arbitrator may be involved in determining the final settlement amount.

Determining the cost of treatment and settlements in workers' compensation insurance claims is a complex process that involves evaluating the severity of the injury, medical treatment costs, lost wages, and the type of claim filed. Workers' compensation carriers strive to provide fair compensation that covers the injured employee's medical expenses and lost income while ensuring the sustainability of the insurance system. Through transparency and a thorough understanding of the process, employees and employers alike can navigate the workers' compensation system with greater confidence.

Protect Your Staffing Company with Wage and Hour Insurance

WAGE And HOUR

Protect Your Staffing Company with Wage and Hour Insurance

Running a staffing company comes with its fair share of risks and challenges. From recruiting and managing employees to ensuring legal compliance, staffing companies face unique liabilities in the ever-evolving landscape of labor laws. One crucial aspect that requires careful attention is wage and hour compliance. In this blog post, we will delve into the importance of wage and hour insurance for staffing companies, what it covers, and why it differs from employment practices liability insurance (EPLI).

Understanding Wage and Hour Insurance: Wage and hour insurance is a specialized form of coverage designed to protect staffing companies from claims related to wage and hour violations. It provides financial protection for allegations of unpaid wages, overtime violations, misclassification of employees, and other related claims. This type of insurance safeguards staffing companies against potential legal costs, settlements, and judgments resulting from such claims.

Wage and hour insurance typically covers the following areas for staffing companies:

1.     Unpaid Wages: This coverage includes claims related to miscalculated wages, unpaid overtime, missed breaks, or failure to pay employees for all hours worked.

2.     Misclassification: When employees are misclassified as independent contractors, wage and hour insurance can provide coverage for claims arising from misclassification violations.

3.     Meal and Rest Breaks: Claims related to denied or insufficient meal and rest breaks fall under this coverage, protecting staffing companies from potential legal liabilities.

4.     Recordkeeping Compliance: Insufficient recordkeeping can lead to penalties and fines. Wage and hour insurance can cover claims resulting from violations of recordkeeping requirements.

5.     Defense Costs: Legal defense expenses can be significant. Wage and hour insurance typically covers defense costs, including attorney fees and court-related expenses.

Why EPLI Insurance Does Not Include Wage and Hour Coverage: It's important to understand that employment practices liability insurance (EPLI) and wage and hour insurance are two distinct types of coverage, each serving a different purpose. While EPLI insurance provides protection against claims such as wrongful termination, discrimination, and harassment, it generally excludes wage and hour violations.

Wage and hour claims are considered separate from EPLI claims due to the unique nature of the risks involved. Wage and hour violations typically stem from alleged violations of federal, state, or local labor laws and regulations. These claims often require specific documentation and evidence related to hours worked, wages paid, and employee classification. Since the coverage scope and risks associated with wage and hour claims differ significantly from traditional employment practices claims, a specialized form of insurance is necessary.

As a staffing company, maintaining compliance with wage and hour regulations is crucial to mitigate potential legal risks and protect your business. Wage and hour insurance provides vital coverage against claims of unpaid wages, misclassification, and other violations related to labor laws. Remember that wage and hour insurance is distinct from EPLI insurance and offers specialized protection in this particular area.

When considering insurance coverage for your staffing company, it's essential to consult with an experienced insurance professional who can help assess your specific needs and recommend suitable policies. By investing in comprehensive insurance coverage, including wage and hour insurance, you can safeguard your business, employees, and reputation from the potential financial and legal consequences of wage and hour violations.

Why Staffing Companies Need Crime and Third-Party Theft Insurance

Crime & 3rd Party

Why Staffing Companies Need Crime and Third-Party Theft Insurance

As a staffing company, you know the importance of protecting your assets and employees from potential risks. One area that should not be overlooked is staffing insurance, specifically the coverage for crime and third-party theft.

Crime and third-party theft insurance provides protection against losses that may arise from fraudulent activities, theft, or dishonest acts committed by employees or third parties. This coverage can be crucial in mitigating the financial impact of such incidents and minimizing the risks associated with hiring and placing employees in client organizations.

Staffing companies should consider this coverage for several reasons. First, it provides protection against losses resulting from criminal activities committed by employees or third parties. Second, it can help to mitigate reputational damage by allowing the staffing company to respond quickly and effectively to such incidents. Third, it can help to maintain client relationships by ensuring that the staffing company is able to cover any losses that may occur as a result of criminal activities.

The coverage for crime and third-party theft typically includes losses resulting from theft, burglary, forgery, fraud, and embezzlement. This coverage can extend to losses resulting from both internal and external sources, such as clients or third-party vendors. Additionally, this coverage can also include reimbursement for costs associated with investigating and resolving such incidents.

The statistics surrounding theft in the workplace are sobering. According to a report by the Association of Certified Fraud Examiners, organizations lose an estimated 5% of their annual revenue to fraudulent activities, with the median loss being $150,000. Furthermore, the report found that smaller organizations, such as staffing companies, were at a greater risk of losses resulting from fraud.

Given these statistics, it is clear that staffing companies should take proactive steps to protect themselves against the risks associated with fraud and theft. Investing in crime and third-party theft insurance is one such step that can help to mitigate these risks and ensure the long-term success of the staffing company.

In conclusion, crime and third-party theft insurance is an essential component of any staffing company's risk management strategy. It provides protection against losses resulting from fraudulent activities, theft, or dishonest acts committed by employees or third parties. Given the prevalence of theft in the workplace, staffing companies should seriously consider investing in this coverage to protect themselves and their clients.