Class Audits & Improved
Management Cut Care Provider’s Mod 44%
Insured
The business is a non-profit outpatient, long-term care provider with a
$20 million payroll for 512 employees spread over nine locations in the
metro-Denver area. The company assists elderly clients so that they are
able to remain at home by either picking them up from their homes each day
and bringing them to day-centers, or providing in-home nursing care when
necessary. They also coordinate and transport clients to medical appointments.
Situation
The employer had a mod of 1.71. The staff was classified in eight different
class codes, losses were three times higher than expected and the premium
was $321,734.
Assessment
Certified WorkComp Advisors (CWCAs) reviewed the client’s WorkComp
program. They found the employees were incorrectly classed by the previous
agent – who was not a certified advisor – and their auditor
had “found no exposure” for the office class code when in fact
close to $4 million of the insured’s payroll was strictly office personnel.
Internally, the company’s deductible was too low and there were no
loss prevention, safety or back to work programs in place.
Solution
Several solutions were needed and implemented. First, the CWCA proposed
a $1,000 deductible, to which the client agreed. Then the NCCI was called
in to perform a classification audit, first for the current policy year
and then for the two previous years. Next, safety specialists were brought
in to assess the business and the CWCA implemented the program, “HR
That Works.” Safety programs including Shoes For Crews – a non-slip
shoe program that reimburses the policyholder for the first $5,000 of a
claim if the worker slips while wearing the shoes – were established
for all their drivers. A dedicated WorkComp point person was identified
and that person now holds quarterly claims meetings with the adjuster, the
designated provider, and the CWCA.
Result
The deductible increase immediately eliminated 75% of their losses from
the reportable losses for the mod calculation. The class audit conducted
by NCCI for the current year reduced the number of classes from eight to
three and reduced the mod from 1.71 to 1.24. When the previous two years
were audited, that was further reduced to 1.11 and the client received back
premiums. In January 2005, the insured renewed their policy with a 0.96
mod. Despite the fact that the payroll had increased to over $20 million
from just $12 million the year before, the new premium was $337,114. Had
they renewed with that large of an increase in payroll and a mod of 1.71,
the premium would have been $587,846. That represents a savings of $250,732!.
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