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Learn about the eligible industries, underwriting grades, and classification of employees for Workers' Compensation insurance. Find out about the different premium modification plans available.
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What Do We Write? • Farmers has elected to pursue ten historically profitable types of business under the worker’s compensation program.
Food Service Automotive Retailers Artisan Contractors Service Providers Wholesaler Distributors Printing Light Manufacturing Hotel/Motels Agriculture What Do We Write?
Eligible Risks • Within each of the industries, we have identified specific types of businesses, or standard industrial classifications (SIC Codes), that we are interested in writing.
Eligible Risks Underwriting Grade • The next step is to determine the appropriate Workers Compensation Class Code. This class code is used to determine the Underwriting Grade and to apply a rate. Like the SIC code, it contains four digits. The two should not be confused.
Underwriting Grades • Risks that produce small claims are assigned an underwriting grade of “1”. • Risks that produce catastrophic losses such as death, are assigned an underwriting grade of “5”.
Underwriting Grades • Farmers concentrates on writing risks with low severity • You should solicit prospects which have underwriting grades of 1, 2 or 3.
Classification of Employees • Looks at the business of the employer not: • Separate employments • Occupations • Operations
Multiple Classifications • If an employee is involved in more than one classification, his entire payroll will be assigned to the highest rated classification that he is involved in, unless exact payroll records are kept. • If exact records are kept, that employee’s payroll may be split.
Standard Classification Exceptions • These occupations are common to so many businesses their payroll is always classified separately: • Clerical Office Employees • Drafting Employees • Drivers, Chauffeurs • Salespersons, Collectors or Messengers
Classifications • For clerical payroll to be separated from other classifications, the clerical area must be physicallyseparated from other work areas. Also, the person assigned clerical duties must perform clerical duties exclusively.
Governing Classification • The classification with the greatest amount of payroll is considered the governing classification • When the payroll of an employee cannot be assigned to another classification, the payroll must be assigned to the governing classification.
Small Percentage- Underwriting Grade 4 • Risks with small percentage of UG 4 premium may be submitted to your underwriter for consideration. Contact your Worker’s Compensation or Commercial Service Center.
Good Management Good Loss Experience Good Employee Selection Low Employee Turnover Accounts that produce no losses, or fewer losses than expected Accounts with Good Safety Program Desirable Characteristics
Characteristics of Less Desirable Accounts • Injuries caused by crime • Unsupervised employees • Employees who work above or below the work floor • Exposures to employees which cause back injuries • Limited incentive to return to work • Exposure to chemicals • Transportation of employees
Three Company Marketing • Ultra Preferred- Mid Century Insurance Company • Preferred- Truck Insurance Exchange • Standard- Farmers Insurance Exchange
Company Placement • Depends on the following characteristics of the account: • Loss experience • Management experience • Premium size • Underwriting grades
Premium Modification • The following premium modification plans are available in most states: • Account Completion Credit • Experience Modification Credit/Debit • Premium Discount (Based on Premium Size) • Schedule Rating
Account Completion Credit • Allows a 5% discount on the worker’s compensation policy and the property and casualty package if both policies are written with Farmers. • To earn this credit the Federal Employer Identification Number (FEIN) must be shown on both the WC and package applications.
Experience Modification • Experience rating plans compare an account’s past loss experience to the average experience for similar accounts. • If loss experience is better than average, a credit modification is generated. • If loss experience is worse than average, a debit modification is generated.
Premium Discount • Premium discounts are credits to premium based on the size of the premium. • The larger the premium, the greater the discount. • These discounts are automatically calculated. • The customer does not have to take any special action to receive this discount.
Schedule Rating • Tailors the premium of an account based on specific characteristics inherent in that operation which are not already contemplated in the rate. For example: Low employee turnover
Schedule Rating- Characteristics Evaluated • Unique Characteristics • Medical Facilities • medical staff on premises
Schedule Rating Worksheet • Schedule rating worksheets should be completed by the agent for any account that qualifies for the Schedule Rating Plan. The worksheet requesting credits/debits should be submitted to the Commercial Service Center for approval and processing.
Payment Plans Available • Annual Pay • 8 pay • 10 pay • Special 10 • Monthly
