Our Program Can Help High-Risk Workers’ Comp Clients Control Their Experience Modifier and Total Program Costs
August 25, 2016
Unfortunately, insurance agents and brokers have few options to offer clients impacted by high experience modifiers. The State Fund offers last-resort coverage, but there’s no guarantee that this option will be affordable for your clients over the long term. Furthermore, the nature of the State Fund provides no incentive to keep rates low or engage with clients to reduce claims.
Pride Risk Vice President Greg Craddock discusses the drawbacks of relying on the State Fund for workers’ comp coverage.
How the State Fund Fails to Deliver Value to Clients With High Mods
The State Fund exists solely to provide workers’ compensation insurance for companies that cannot find any other source of coverage in the market. As a government bureaucracy, the State Fund can be rigid and inflexible in its approach to underwriting risk—offering a one-size-fits-all solution
Typically, the State Fund will do a black-and-white actuarial analysis of a company—assess the claims history and experience modifier, calculate a premium, issue a policy, pay claims as they arise, and then restart the cycle at renewal time. In this system, little attention is paid to the interests of individual clients.
Premiums and total program costs associated with coverage provided by the State Fund may fail to account for the business case of why a company is a “good” risk—for instance, there may be a reason why an unusually large claim happened or the organization could be investing in programs to improve workplace safety.
Additionally, the State Fund has no mechanisms to help clients prevent or mitigate claims. Over the long term, costs can spiral out of control due to inadequate risk management—making workers’ compensation coverage unaffordable and putting your clients at risk of going out of business.
Help Bring Down Clients' Mods With a Specialized High-Risk Workers' Comp Solution
Pride Risk Solutions connects insurance agents and brokers to an alternative program for high-risk workers' comp clients. This alternative workers’ comp solution aligns the program’s interests with those of the client—because everyone benefits when costs are reduced through safety programs or effective claims management.
As a for-profit enterprise, the Pride Risk program has a vested interest in:
- Keeping premiums as low as possible to remain competitive in the market
- Controlling total program costs through proactive risk management and loss control
- Managing workers’ comp claims to minimize costs and help workers get back on the job
A byproduct of this program’s focus on proactive risk and claim management is that clients are able to bring down their experience modifiers over time by preventing out-of-control claims. In turn, a lower mod results in falling costs and ensures that the client will have viable options in the marketplace going forward.
After 24 months in the high-risk program, Pride Risk clients are typically able to lower their mod by an average of 25% to 30%. The following success stories demonstrate the substantial opportunity you have to deliver savings to your workers’ comp clients by providing an alternative to the State Fund.
CA Manufacturer Reduces Mod From 6.38 to Less Than 4.00—and Cuts Costs 39%
- Continued coverage from the State Fund became unaffordable due to a skyrocketing mod
- The high-risk program reduced upfront costs and enabled the client to implement systematic loss control and risk management measures—generating long-term savings
NYC Ambulance Company Saves $800,000 in First Year With High-Risk Program
- A company with 1,700 employees and $62 million in payroll faced an unaffordable Sate Fund renewal premium and deposit due to an increased mod
- After engaging with Pride Risk, the client was able to reduce total program costs from over $6 million to approximately $5.2 million