MDI offers workers? comp service via Internet

The Missouri Department of Insurance has opened a new Internet service that allows business owners to check basic workers' compensation rates available statewide for any type of employee.

According to a news release from the agency, MDI also will operate a toll-free telephone line to help business owners check their renewal premiums and shop for lower rates.

MDI Director Scott B. Lakin said the new Internet-based rate guide will improve substantially the information available to businesses, compared to a telephone service that opened in 1995 and became toll-free two years later.

"In using the Internet service, owners will need to provide less information about their businesses, and they are able to look at all insurers in the market rather than just the lowest 30 rates. They can get a much better feel for the total insurance savings possible for the mix of workers they employ," Lakin said.

The MDI Electronic Workers' Com-pensation Rate Hotline is available through the agency's Internet home page www.insurance.state.mo.us at no charge.

MDI will continue offering its toll-free telephone service at 888-200-1697. To use either service, owners need the job classification codes for their employees, which may be shown on the renewal notice.

New MDI toll-free service

Lakin also announced that MDI has installed a toll-free telephone number 800-394-0964 that will allow state workers compensation specialists to assist business owners and managers with coverage and premium problems.

One potential difficulty concerns so-called "schedule credits" that insurers deducted from premiums during the highly competitive mid- to late-1990s. After Missouri workers' comp was de-regulated in 1994, insurers were allowed to adopt a rating system that was used to grant discounts or credits of more than 50 percent.

These credits were supposed to account for safety improvements and other risk factors that were not yet reflected in the policyholder's claims history.

MDI acted to limit these credits when insurers began using them to cut rates mainly for marketing purposes unrelated to risk; states that did not do so, like California, have experienced highly volatile pricing and insurer insolvencies. The maximum Missouri credit now is 25 percent of the premium.

But with the rate upturn in the workers' comp market, anecdotal evidence indicates some insurers are dropping credits previously granted even though business owners are maintaining their safety and other efforts.

"As long as business owners continue their safety programs and the insurer's schedule rating plan allows such credits, the carriers cannot simply drop the credits to increase premiums," Lakin said. "General rate increases should occur through the basic rate, not the loss of properly earned credits."

MDI is preparing an advisory to insurers about the legal requirement to follow their schedule rating plans and honor proper credits.

Tips for managing costs

Make sure employees are listed correctly. A huge difference in insurance costs can exist, for example, between a clerical worker and heavy-equipment operator. The insured payroll should accurately reflect job classifications to keep costs accurate and to a minimum.

Check the business' legally required coverage. Generally, businesses with five or more employees and construction contractors with one worker must carry coverage. State law has exemptions for family members, farm laborers, domestic servants and some trucking owner-operators that can save businesses substantial amounts.

Shop around. Every three years or so or whenever a large rate increase appears on a renewal notice owners should check with at least three insurers to see if a competitor offers more affordable coverage. An independent agent usually has access to several insurers for rate comparisons.

Keep in mind the possibility of self-insurance or the Missouri Employers Mutual Insurance Co., which was created under state law particularly to provide affordable coverage for smaller businesses. Missouri Employers Mutual is now the state's largest workers' comp insurer.

Make the investment necessary in workplace safety to avoid accidents, improve claims histories and lower costs. Modify operating procedures that unnecessarily expose workers to injury.

Use a managed-care organization that has an established relationship with your insurer to save on medical treatment costs.

Establish a modified-duty program for workers returning from injury convalescence to cut overall claims against the workers' comp policy.

Pay all medical-only claims of $500 or less directly to avoid claims that will affect the company's insurance history and costs. (State laws require the reporting of all claims, however, to the Mis-souri Division of Workers' Compen-sation.)

Ask the insurer for loss runs and keep abreast of the carrier's handling of all open claims. Make sure the carrier acts to protect the business' long-term interests.