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Every employer is required to carry worker’s compensation insurance which is regulated by the state.  Therefore, employers with employees in multiple states must ensure they have the appropriate coverage.  This article will provide some information on how rates are determined and proactive steps an employer can take to manage their claims.

Each year on April 1st, the NYS Compensation Rating Bureau (PCRB) publishes the “new” Loss Costs (base rates) for the next twelve months. Every insurance company starts with these rates. The insurance carrier then adds a LCM (Loss Cost Multiplier) which is the second component of the employer’s rate. When the state published loss cost is multiplied by the insurance carrier’s LCM, the final rate appears on the declaration sheet of the employer’s policy.   LCMs vary widely between and within insurance carriers. The “best” or lowest LCMs are reserved for the best accounts (those with the best experience or fewest losses) and these can be as low as 1.000 or even a bit less, although it is very difficult to convince an insurance company to offer lower rates.

For example: If one insurance company (A) has an LCM of 1.250 and another insurance company (B) has an LCM of 1.500, the second insurance company will charge 20 percent more for the same class code. There are several other factors, including an experience modification that may be applied to the base premiums before arriving at the final estimated policy premium.

We work very diligently to obtain the best (lowest) LCM available for our clients, which directly impacts the ultimate net premium for our clients.

Other credits which can also help to reduce an employer’s ultimate net costs are credit mods (experience modifications less than 1.000), Safety Committee credits (5%), with a certified safety committee, schedule credits (state allows for +or- 25% credit/debit) and premium discounts.

If you would like more information about how we can help you manage your worker’s compensation costs, please reach out to us at 855-667-4621 and we will be certain to help you!

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