Taking the Bite out of Business Insurance: Cash Back for Workers’ Compensation Insurance

Patrick H. Mazza, AAI

Patrick H. Mazza, AAI

“One of the most common business insurance policies written is for Workers’ Compensation Insurance,” says Patrick H. Mazza, AAI, a Business Insurance Specialist with MazzaBaker Insurance & Financial Services in Largo, FL. Mazza has 23 years’ experience in helping businesses connect with the right insurance carrier/s for their specific needs.

“What most business owners don’t know is that the quality of their safety program can earn them a flat (without regard to losses) dividend of as much as 20% on their workers’ compensation premium,” he relates.

Dividend on Workers’ Compensation Insurance?

Mazza says Workers’ Compensation is both the most simple and the most complex of policies to pitch to a business in Florida.

“Simple, because the National Council for Compensation Insurance (NCCI) sets the rates that insurance companies can charge for these policies,” says Mazza. “A business will pay exactly the same Workers’ Compensation premium no matter which insurance carrier writes the policy.

“But it’s also complex, because insurance carriers are allowed to return a portion of their premium in the form of a dividend to their customers. Depending on the size of the premium, that can be a significant sum.”

Mazza says his goal is to help his clients reduce their workers’ compensation losses so they can qualify for a policy with a higher dividend.

It’s not easy.

“Many businesses do not have a written safety program to speak of, and that makes it hard to convince an insurance carrier that a business is a good risk,” he says. “Every business needs a written safety program, it needs to be explained to their employees, and it has to have some teeth in it: holding employees accountable for using good safety practices on the job, conducting regularly scheduled safety meetings, and adhering to any safety procedures and requirements mandated by OSHA (Occupational Safety and Health Administration).”

Even then, the business has to show that its safety program is effective, by providing a prospective insurance carrier with a five year loss run report. If a company has a safety program but its loss history has a record with frequency and/or severity, there is little chance of landing a workers’ compensation plan that pays a dividend.

“There are differences in the workers’ compensation plans that pay dividends, too,” adds Mazza. Some will pay a “flat” (without regard to losses) dividend of 5% to 20%, while others are loss sensitive and pay based on a company’s claims history for the policy year. The higher the amount paid out in claims, the lower the dividend, if any.

Other Savings

Mazza adds that businesses that maintain a good claims history will lower their workers’ compensation premium by way of their Experience Modification Factor or EMF, in addition to the end-of-year dividend.

“The NCCI maintains records on average losses in any given industry,” says Mazza. “A business’s workers’ compensation claims are compared to the industry standard/average, and the EMF is applied to their premium. I’ve seen a contractor with 255 employees and a $300,000 annual premium pay about $135,000 in workers’ compensation premium thanks to a great claims history that earned them a .55 EMF. But it can work the other way, too.

“I’ve seen a different business with a poor claims history earn an EMF of 1.9. That means a workers’ compensation premium that should have cost $100,000 ended up costing the employer $190,000.”

Safety Pays

Workers’ compensation insurance is required by law for all businesses in the State of Florida, but insurance carriers aren’t required to write policies for businesses they deem too risky.

Mazza says that when a business can’t find an insurance carrier willing to write their policy in Florida, that business may have to buy their Workers’ Compensation Insurance with the state funded program called the Assigned Risk Pool.

“Based on a company’s past losses, some policies written in the Assigned Risk Pool can carry the maximum surcharge of 75%,” describes Mazza, “so for example, a workers’ compensation policy that would normally cost $100,000 will cost a business with bad losses $175,000 in the Assigned Risk Pool.”

If that seems a little expensive, Mazza says there’s a good reason: “Florida is serious about safety.” Placing a higher price on premiums for business that don’t share that dedication to safety sends a strong message.

Mazza offers a free consultation for any business that wants to know how it stacks up as a safe workplace. He can make suggestions for improving a safety program, and will take a look not only at their business’s current workers’ compensation policy, but also their entire insurance program and make suggestions if he finds ways to help save money.

MazzaBaker Insurance & Financial Services also offers:

  • Commercial Insurance
  • General Liability
  • PEO/Leasing
  • Group Medical Insurance
  • Payroll
  • Tax Credits
  • MORE

Patrick H. Mazza, AAI
Owner/Business Insurance Specialist
MazzaBaker Insurance & Financial Services
801 West Bay Drive, 4th Floor
Largo, FL 33770
727-641-7002 cell
727-683-1418 office
855-683-1418 Toll-free





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