Facts & Articles On The Different Types Of Insurance

Dirty Little Secret of Workers Compensation Insurance

Workers Compensation Insurance agents are paid commission based on the size of your company premium. The bigger the premium you pay the bigger your agent's commission. Your agent may never cause your premium to go up unnecessarily but has he done everything he can to reduce it and reduce his commission?

The first workers compensation law was enacted in the United States in 1911 by the State of Wisconsin. By 1948, every state had some form of "workman's comp." Basically this is a government mandated social insurance pact between employers and employees. Employers are forced to cover medical care and provide wage replacement for employees hurt on the job: in return workers compensation benefits becomes the only remedy available for workers. Even though courts have upheld this concept for almost one hundred years occasionally in cases of bad faith courts have over ridden this exclusive remedy.

Workers compensation is compulsory insurance in every state but Texas. With some few exceptions, all employers are mandated by law to carry workers compensation insurance.

Workers Compensation Insurance premium is calculated by how employees are classified by their specific work and the rate assigned to each employee classification.

Workers Compensation insurers attach a premium rate to each employee classification code. These rates must normally be approved by the state insurance regulatory agency in the state the policy is in effect in. Agency approval of the rate is based on numerous items. One of the items taken into account is adequacy of the rate. Rates must be adequate to maintain the financial condition of an insurance company. Adequate rates allow the insurance company to maintain surplus to meet current and future claims.. The classification code and its corresponding premium rate are part of the formula. The premium rate itself is expressed as dollars and cents per $100 dollars of payroll. The payroll for each classification code is estimated and then each $100 is multiplied by the rate. The calculated amount is the base premium. The base premium is then modified (change up or down) using rating plans and experience modification.

The experience modification is calculated from losses that the company has reported in the past. The insurance company used a government-approved formula to calculate an experience modification for each employer. The formula looks at paid losses, reserves necessary for claim made and payroll amounts for the past three years (usually). The experience modification shows average loss experience of employers with similar classified employees and works as a way to compare employers. The experience modification is added to the class rate, along with any other modifications and an estimated premium rate is created. This is called prospective rating and is the most commonly utilized rate plan.

The total premium for a workers compensation insurance policy is not certain until the policy period is complete and all payroll has been reported.

Now you know how the rates are calculated what is the "Dirty Little Secret"? In thirty years of working with companies I have never gone into a company of any size and found that its employees are correctly classified. The classification process is many times as much of an art as it is a science. Different people can look at the same job and classify it differently sometimes with extremely different results to the premium. Many classification titles are very similar but with much different rates. There are many jobs that don't have a specific classification but have to be fitted into something that makes sense. If the insurance company decides the classification do you think it will be the best possible choice for the employers lowest premium?

If an employer is not only knowledgeable but also aggressive about classifications who is going to see to it that they are the lowest possible premium rates. The insurance company makes more money out of higher premium rate classifications. The risk to the insurance company does not rise if the employee is misclassify into a classification that commands a premium rate of say $10.13 per $100 of payroll as say a rate of $1.01 per $100 of payroll. The insurance company just makes ten times as much revenue. If there is a claim it will be paid at the same amount regardless of what the premium was.

The insurance agent that supposedly has the employer's interest at heart makes ten times the commission if an employee is misrated as in the paragraph above. Is he going to take his time, energy and effort to deliberately cut his commissions by suggesting rate changes over his company's objection?

If as an employer you don't have an intimate knowledge of classification and ratings you need to either get the knowledge or hire someone who has it. You can't trust your agent to be objective about this. You are talking about taking money out of his pocket and out of the pocket of people that pay him. You don't pay him the insurance company does. It pays him a commission on what he sells you. Not necessarily on what you need. Your agent may be doing a bang up job but wouldn't you like to be sure?

Charles J. Read, CPA has been in the payroll, accounting and tax business for 30 years, the last fifteen in private practice. Mr. Read is the author of ?How to Start a New Business.?

To find professional payroll service at a budget price go to www.PayrollonaBudget.com a paperless payroll company.

For a full service payroll bureau with CPA?s on staff visit www.CustomPayroll.com .

See an excerpt of Mr. Read?s interviews from William Shatners ?Heartbeat of America? television show on the web sites linked above.

Other Article Sites

findabook.com  moneycd.info  a-mortgage.info   about-lemon-laws.info  aboutstudentloans.info
all-about-publishing.info  auctions-articles.info  bestcollege-university.com  bestispconnection.com
biblefolder.com  blogger-website.com  books-used.info  brokers-guide.info  buywindows.info  cable-dsl.info
career-miner.com  carpel-tunnel.info  cashinaflash.info  cashloanreviews.info  casinobell.com  chat-house.info
clearmycredit.info  collegeloantips.info  crones.info  depression-articles.info   dirnic.net  dishguides.info
divers-below.com  expodog.info   financewizz.com  fire-insurance.info  getgood.info  handleit.net   it-idea.info
health-supplies.info  hosting-right.com  insidealert.com  insurance-facts.info  jobs-employment.info
justgood.info  lookgold.net   lowcost-travel.info  money-source.info  myhostzone.info  numisblog.com
peoplesearchfinder.info  pr-articles.info  realeas.com   refinancing-guides.info  spyware-remove.info
telelot.info  the-law.info   toppaid.info  travel-deals.info  travelcorrect.com  wedding-guide-site.com
your-blog.info  your-credit.info

What Is Life Insurance Premium Finance?
A premium finance transaction involves the borrowing of money from a bank or hedge fund to pay the premiums of a newly originated insurance policy. Premium finance is available to seniors age 65 and older. The majority of financed policies have a face amount of over $1,000,000. The senior will borrow the money for a predetermined length of time ranging from 2 years to life. The same banks and hedge funds involved in life settlements are also the lenders for premium finance transactions.

Life Insurance For Over 50's | Feel Contended After Investing In The Life Insurance Policy
The term life insurance might be very difficult to listen to ears, but believe me my dear friends it is as safe and sound as the other way round Good care is taken of the policy holder?s needs always and the returns which their family will get after the policy holder?s death is also an added compensation

Term Life Versus Whole Life Insurance: Frequently Asked Questions
In this article we may once again look at whole life insurance vs term life insurance We may try to gain some clarity concerning this subject

Nationwide Insurance Launches SmartRide Program for Teens and Parents
In time for National Youth Traffic Safety Month, Nationwide Insurance has launched SmartRide(SM), a comprehensive teen driver program. The program empowers teens and parents and provides the right tools and resources to help teens become smarter and safer drivers. This is particularly important since automobile crashes are the leading cause of death among American teens.

Looking At Your Mortgage Insurance Options
Mortgage insurance is most definitely recommended for experienced homeowners and those looking to get on the property ladder for the first time alike because of what every individual policy offers. Mortgage insurance can protect your repayments, usually for up to a year, if you were to ever lose your job via redundancy or contract a long-term illness that will prevent you from working for a time.

DCG Goes Insurance Tech and Plans to Double Consulting Staff
With twenty-five years of service dedicated to the financial services industry, DeHayes Consulting Group (DCG Corporation) announced Monday that it has expanded its consulting capabilities to explore global opportunities for clients, and has launched a new series of services involving customized E-commerce solution and tied agent development.

Shop Around For Your Combined Home Insurance
Shopping online and selecting the right combined home insurance policy is imperative as they cost of protecting your home varies greatly depending on the provider you choose as well as the type of policy So, what does home insurance actually do

Five Helpful Ideas For Finding Affordable Life Insurance
Does affordable life insurance really exist? Not necessarily, but there are some things that will definitely make a difference. do you have a wife at home? How many kids do you have, if any? How old are you? What type of work do you do for a living? Do you have hobbies that would be considered risky or even dangerous to most people? These could be anything along the lines of scuba diving, skydiving, pilot, mountain climbing, race car driving, ect?

Pet Health Insurance - Should You Get it?
I am not going to lie, maintaining a healthy dog can be very expensive. Especially, if you take the dog to the vet 2 to 5 times a year. From shots to random injuries the cost can become expeditionary high. Although many people may think pet health insurance is an unnecessary expense, health insurance for your pet in the immediate can significantly save you money thereby helping you in times of emergency make decisions of life or death of your pet if serious health issue arise.

Toledo-based Roemer Insurance Invests In Employee Health and Wellness
Cash incentives for participating in WellBiz program and new on-site fitness center considered an investment in good health and firm's bottom line

How To Find The Best Rates On Health Insurance In Washington
When a resident of Washington State is deciding where to turn for health insurance coverage all the information out there can be confusing. Trying to find a plan that provides all the coverage needed at the best rate is challenging. If you are not one of the individuals who qualify for the Washington State Health Insurance Pool, you need to know a few basic facts to help you in your quest for affordable health care coverage:

Are You Looking For A Home Owner Insurance Quote In Florida?
Home owner insurance companies take many factors into consideration when coming up with a home owner insurance policy quote. Of course, one of those factors is where the home is located, and since Florida is notorious for experiencing hurricanes, home owner insurance companies are obviously going to take hurricane damage into consideration.

Cheap High Risk Home Insurance In Alabama
Everyone wants to insure their home - their biggest asset - but everyone also wants to find the best possible deal when it comes to their home insurance Fortunately there are several different ways for homeowners to get this in Alabama

Car Insurance Survival Guide Decreases Stress, Increases Savings
New web site lists the top mistakes to avoid when completing car insurance quotes online.