Workers comp is among the most loss-sensitive policies issued to your insureds. The more they use it, the higher their premiums. With the goal of keeping losses low – and holding onto valued clients – agents need to be aware of the key milestones in the policy year. Today we outline the flow of the policy year: what happens, when, and what insureds need to know in order to manage their costs.
Most people know when their policy begins: the date when the old policy ends and the new one begins. However, if this is the only focal point for policy-holder awareness, opportunities to control the cost of insurance will be missed. The new policy – and new experience mod – are the culmination of a year-long process: not so much the beginning, but the end. There is work to be done prior to the inception of the next policy.
Three Months In
The most important milestone for controlling insurance cost is just three months into the new policy. This is the last opportunity to review open claims that will impact next year’s experience mod. Agents should secure loss runs no later than the three month mark and schedule a claims review to discuss strategies on all open claims: for example, three months after PY 19 begins, losses in policy years 2016, 2017 and 2018 should be reviewed. NOTE: the RAIS workers compensation consultant is available to members to analyze the data and participate in the telephonic claims review, ensuring that each open claim has an active strategy toward closure.
Six Months In
Six months into the PY 19 policy, the carrier submits the unit statistical report, which includes loss data for calculation of the PY 20 experience mod. The unit stat report for PY 20 includes losses from PY 16 through PY 18 (losses prior to PY 16 are no longer included in the calculation). Once this report is submitted, it’s too late to change the numbers that go into next year’s rating: hence the importance of reviewing open claims in the first quarter. Six months in the RAIS workers compensation consultant (see below) will be able to project the PY 20 experience mod.
Nine Months In
For insureds with at least one large open claim, a quarterly claims review is often necessary. Every open claim needs to be benchmarked and tracked until it is closed.
New Policy Inception
By following the key milestones throughout the policy year, there should be no surprises when the new policy begins: the insured will know what the new experience mod will be before it is formally issued and will have an active strategy to resolve any open claims. If the experience mod is high, the insured will know how long claims will impact the cost of insurance. Because losses stay with the insured for three years, it’s important to take the long view: losses during the rating period and included in the experience mod might be high, but with an active claims strategy, an understanding of the insurance cycle and a little patience, a credit mod is usually no more than a year or two away.
Senior Workers Compensation Consultant