The October 2013 Loss Cost Rates have been published by the New York Workers Compensation Rating Board and those businesses with Class Codes 5536 – Air Conditioning Contractors and Class Code 5538 Sheet Metal Contractors will see a significant increase in their workers compensation renewals starting on or after October 1st.
Air Conditioning Contractors will experience an increase of about 12.8% in “loss costs” and Sheet Metal Contractors will see a 17.2% increase in “loss costs”. Loss Costs are the base rates formulated by the state which are then multiplied by an insurance company’s “loss cost multiplier” to arrive at the rate found in your policy. Every insurance company has different multipliers filed with the state, but it is the loss cost rate which will predominately influence the final premium, in addition to changes in assessments and your particular experience modifier. If your modifier goes down this year you will not feel the full impact of these increases, but if it remains the same or goes up the increase may be more severe.
So, what can you do to reduce the impact of this rate increase if you’re in the Air Conditioning or Sheet Metal business? Well, you can “shop around” – but the traditional process of calling a bunch of agents to get quotes has very limited impact. It creates confusion in the marketplace and may actually work against you to gaining credible results. A better method is to work with your current broker or one that specializes in Workers Compensation to search the marketplace for alternatives. Depending on the size of your account premium there may be alternatives to straight “guaranteed cost” programs. The State Insurance Fund, a long time popular carrier for contractors may be losing its luster this coming year with changes to the assessment program, program manager fees, and its high loss cost multipliers. Other issues to consider: review your loss history for accuracy prior to your experience mod being developed; audit your experience modifier for accuracy; implement a safety and loss control program to potentially gain a discount on your coverage; and finally make sure your payroll is being accurately recorded and audited so that you’re taking advantage of payroll caps and territorial adjustments.
Need help? Give me a call in New City, NY to see if our unique risk management process can help reduce your long term costs.