Part Two: Debits
Earlier this week I made the point that when it comes to purchasing Workers’ Compensation Insurance the price is not the price. There are two factors that can change your rate. In my earlier post I covered credits now it’s time to look at its evil twin, debits. Debits simply put are add on costs that the workers compensation insurance carrier add to your rate.
There are a number of reasons that a carrier will debit your account. The first has to do with whether or not they actually like the aspect of the business they are writing. In other words, there are policies that carry greater risks for the insurance company. In the case of workers compensation it is much safer to cover an office worker than it is to cover say, a tree trimmer. One of the ways that the policy writer can cover their potential risk is to charge more, or add a debit, to the policy that covers the tree trimmer.
Another reason to add a debit is claims history. Some companies are better at managing injury. I’ve written a number of blogs about how safety programs, early reporting of injury, using nurse triage, and having a return to work program are just some of a whole number of steps that can help keep your Workers compensation claims to a minimum. Earlier in the week I wrote how these things can help get you credits. Well, not having these things in place can actually add debits to your account. If a policy writer sees that you have a high number of claims and/or your claims last longer than average they can debit your account.
The third main reason for debits has to do with the health, not of your workers but of the insurance company. A debit is a great way to generate quick cash. If the company is hurting from having to pay out a wave of claims all at once they may try to make up for the shortfall by assigning debits. This can also happen with companies that have been offering too many discounts for too long. Sooner or later they have to pay the piper or try to get you to pay their piper. There are also carriers who add debits, sometimes up to 20%, just to see if they can sell it.
So what can you do? It comes down to having a good broker. A good broker knows the state of the industry and can avoid unhealthy insurers. In addition, no matter who wrote your policy your broker should always ask and not just once but twice to remove any debits on the account.
So talk to your broker or give us a call. Make sure you are getting the credits you deserve and get rid of the debits you don’t. Remember the price isn’t the price until you’ve exhausted all possibilities.