The NYS Workers' Compensation Law requires that employers obtain and continuously keep in effect workers' compensation coverage for all their employees. There are limited situations where businesses are exempt from providing workers' compensation coverage. Click here for more information on exemptions.
Employers may obtain workers' compensation insurance coverage in the following manner:
- purchasing a workers' compensation insurance policy from one of the approximately 800 private sector insurance carriers authorized to write such insurance in New York State (contact your insurance broker or insurers listed in the Yellow Pages or on the Internet);
- purchasing a workers' compensation insurance policy from the New York State Insurance Fund, a quasi-public insurance carrier in New York State (contact your insurance broker or go to www.nysif.com);
- becoming authorized by the Workers' Compensation Board to be self-insured for workers' compensation (only very large companies have the financial ability to become self-insured -- to date approximately 150 businesses are self-insured);
- becoming part of a group self-insurance plan authorized by the Workers' Compensation Board (such plans are offered as part of safety groups for certain industries).
Insurance Coverage Rates
The New York State Workers’ Compensation Insurance Rating Board (http://www.wcb.state.ny.us/) sets the parameters for the cost of a workers’ comp insurance policy. In general such cost is based upon the following factors:
a. manual rates: the nature of the work performed by each class of employees
b. number of employees
c. salary/payroll of each employee
d. overall payroll for the company
e. experience rates: prior history of workers’ compensation claims made against the company and the total amount paid out
f. whether officers and covered or excluded
The cost of workers’ compensation insurance can vary, but usually only based upon the number of employees and the nature of the work they perform... Obviously a clerical employee has a lower incidence of injury than a construction company’s laborers. The more hazardous the job, the higher the insurance.
Overall, the cost of the insurance premium will differ from carrier to carrier based upon the services each insurer provides. Despite their assurances to the contrary, in reality, some carriers will provide the bare bones services, which only includes employee coverage. The more the carrier does to aid the employee in their time of need, the greater the likelihood that employee will return to work sooner. If the injured employee returns to work sooner, the cost of the claim to the insurance carrier is decreased. Eventually, the savings is passed along to you in the form of a lower payout and a smaller increase in next year’s premium.
Select an Appropriate Carrier
When selecting a workers’ compensation insurance carrier, it’s best to remember the old adage and not to be “penny-wise and pound foolish.” All workers’ compensation carriers are neither created the same way, nor do they all operate the same way.
Using an insurance broker will make the process simpler and can provide one stop shopping for rates. For those business managers who want to know firsthand the nature of the services that such carrier provides, calling the carrier directly can be invaluable. Whether you use a broker or not, insist that all carriers send you brochures and informational packages for your review.
In my experience, some carriers handle claims in a more comprehensive and efficient manner than others and are better suited for certain types of companies. Before obtaining workers’ compensation insurance, a company should contact numerous carriers in order to obtain information regarding claims handling procedures, experience of adjusters, types and size of other companies they represent and the names of the companies they represent.
Choosing an insurance carrier solely based on the cost of the premium can have a detrimental effect not only on the company checkbook, but also upon the operation of the business. The loss of a key employee to a work-related injury and the improper handling of their claim could increase the time the employee is away from the job as well as your rates.
When “interviewing” prospective insurance carriers, you want to find out certain information regarding how long they have been underwriting insurance policies, how long they have been underwriting workers’ compensation policies. Obtain a list of some of the companies they represent and find out what differentiates them from other insurance carriers.
This author has had excellent experience with carriers that include: The Hartford (www.thehartford.com), Liberty Mutual Insurance Company (www.libertymutual.com), GCG Risk Management (www.gardencitygroup.com) and New Hampshire Insurance Company c/o AIG Claims Service (www.accessaig.com). Of course, the State Insurance Fund tends to be a bit less expensive, but as stated above, it tends to have less experienced claims adjusters. Less experience sometimes can lead to more time the employee is away from the job and a greater monetary payout on the claim itself which may result in higher future premiums.