Workers Compensation: High Risk, High MOD.... doesn't always mean High Cost!
Workers compensation insurance is probably the most volatile and costly line of commercial insurance for any blue collar industry. Requirements vary between each state, but in most, it becomes mandatory if you have 1 to 3 employees. There are several avenues for procuring workers compensation insurance. The traditional insurance market through your insurance agent is typically the first place to start. Usually, if a company has no prior coverage, has a lapse in coverage, or has had adverse loss history, traditional insurance carriers are not an option.
But what does a company do that cant get workers compensation in the standard insurance marketplace? Typically, the next option is the State Fund or Assigned Risk Pool where rates are exponentially higher than the standard market. Depending on the state your company is located, being forced in to the State Fund can be catastrophic for a small business owner. For instance, if you are a General Contractor in Georgia, your unmodified workers compensation rate $107.15. That means for every $100 of payroll you pay an employee, you are paying $107.15 in workers compensation insurance. If you think that is bad, be happy you are not a roofing company in Georgia who's rate is $120.29! Lets put that in to perspective from a premium standpoint. A small roofing company with 8 employees would probably be conservatively around $200,000 in annualized payroll. That would equate to $240,580 in workers compensation premium and would require anywhere from a 25%-50% deposit premium ($60,145 to $120,290)! I know that sounds unfathomable but it is the reality of the commercial insurance and workers compensation landscape these days.
How does a small business keep their doors open and stay in business with those exorbitant insurance rates? Well... good news! There are other options. This is where Reliance Brokers can step in and help. Professional Employer Organizations (PEOs) are rapidly becoming an extremely popular form of insurance procurement and administrative outsourcing. Essentially, a PEO can pool a large number of companies under a master workers compensation policy and provide coverage on a pay as you go program. This pay as you go model eliminates any large up-front deposit premium and eliminates the year end audit. Additionally, a PEO provides far more service and support than a traditional workers comp policy alone. A PEO program provides full payroll processing and payroll tax administration, safety and loss control, human resource administration, and employee benefits. A small business can achieve an economy of scale and large pooled employer purchasing power through a PEO which they can't achieve on their own. A PEO can typically provide all of this at a fraction of the cost as the workers compensation premium alone in the State Insurance Fund.
If you company is considered high risk, has a high experience MOD, never had workers comp coverage, or has a lapse in coverage... Reliance Brokers can help! We specialize in high risk workers compensation and can typically save our clients 20%-40% compared to State Fund. Get in touch today and let us help!