Workers Compensation
Kathryn Crosby
C2 Consulting, Inc.
kcrosby@c-2consulting.com
801.984.6092
Session Overview
The history of Workers Compensation
 What it is and is not
 What it covers
 Who has to have it
 What it costs
 Why costs are variable
 How costs can be controlled

History of Workers Comp
Before the beginning of the 20th Century,
the only remedy injured workers had was
a civil suit to the employer
 The employee had to pay medical
expenses, and suffer the wage loss
 Around 1917, most states adopted a
mandatory workers compensation law

What It Is
Workers compensation insurance provides nofault coverage, which allows employees who are
injured on the job to receive benefits regardless
of who caused the injury
 In return for providing coverage for their
employees, employers receive exclusive remedy
protection. This means that in most situations
employees cannot sue employers for damages in
relationship to workplace injuries

What It Is Not
Workers Compensation Insurance is not a
get-out-of-jail-free system
 When an employee is injured, inspections,
citations, and fines from local or national
authorities could occur
 Workers Compensation costs are not the
same to every employer

What WC Covers

For the employee, WC covers
– Medical costs
– Lost time wages (indemnity)

For the employer, WC covers
– Medical costs with no deductible
– Lost time wages if the employee is unable to work
– Liability insurance which protects employers from
lawsuits filed against them outside the WC system
Who Has To Have It?
Utah law requires employers who have
one or more employees (FT, PT, temp, or
seasonal) obtain workers comp insurance
 Certain exclusions may apply

– Sole proprietor
– Directors and/or officers of a company

Renewal of a contractors license requires
verification of WC insurance
What It Costs
All Utah Workers Comp carriers use the same
classification system that assigns a code to work
activities
 This system is designed and maintained by the
National Council on Compensation Insurance
(NCCI)
 The NCCI also assigns base rates for each
classification code. These base rates are based
on loss experience of companies which
employees assigned to that code.

What It Costs
Upon onset or renewal of a policy,
employers are asked to estimate the $ in
payroll for each of the classifications of
their employees
 The base rate X payroll $ = manual policy
$
 There can be adjustments to this manual
policy $, either + or 
Adjustments To Premium
The number of and dollar value of claims
charged against your policy or policies will
have an effect on the premium you will
pay
 An Experience Modification Rate (E-Mod,
EMR, or X-mod) is calculated for most
employers. It is based upon NCCI
expected claims vs. actual claims for each
classification

E-Mod






Actual ÷ Expected
For example $1000 ÷ $1000 = 1.0
An E-Mod of 1.0 means that your company had
exactly the # and value of claims that were
expected
Or, $800 ÷ $1000 = .80
Or, $1200 ÷ $1000 = 1.20
This E-Mod is applied to the manual premium
What Does This Mean?
The fewer accidents your company has,
the lower the E-Mod can be
 This can be a competitive advantage
 Or, put you out of the game

How To Control Your E-Mod

Manage claim costs through
– Early reporting and managing
– Using the PPO network
– Communication with adjuster
– Drug and alcohol testing
– Strong commitment to safety
– Aggressive use of return to work program
– Medical only claims
How E-Mods Affect Premium
Company
1
E-Mod
Total
Premium
Estimated Rate/$100 Premium
Payroll
$100,000
$10
$10,000
.67
X .67
$6700
How E-Mods Affect Premium
Company
2
E-Mod
Total
Premium
Excess Cost
1 over 2
Estimated Rate/$100 Premium
Payroll
$100,000
$10
$10,000
1.50
X 1.5
$15,000
$8300
The Bottom Line
Managing and controlling your workers
compensation premium does help your
ability to compete and your bottom line
 But, if the underlying reason you do it is
for the money, it will backfire
 Safety is first, last, and always about
people

Keep your people safe and
the numbers will take care
of themselves