2011 was a difficult year for insurance companies all across the board.  Much of their stress came from the more than $50 billion in property related claims due to storms and bad weather events all across the country.  But workers compensation claims are only very slightly affected by weather, yet the year end numbers for the workers compensation industry indicate that things are not all rosy with this type of insurance either.  And bad experience for the insurance industry will almost always result in higher rates for business owners in the near future.  In this article I will highlight some of the bad news statistics that point to higher workers compensation insurance rates for business owners in the coming year, and then I will give you some insider tips on how you can avoid being stuck with these higher rates.

First let’s take a look at some of the numbers.  In 2011, the nationwide lost-time claims frequency posted a 3 percent increase.  This may not sound like much, but consider that this is the first time since 1997 that this measure increased from the previous year.  Is this a one-time blip or a bell weather signal for changes ahead in workers compensation lost time claims?  I think it may be the latter.

Added to this problem of increased claims frequency is the unsettling result that net written premium for the insurance companies declined by 1.3% in 2011.  Now it doesn’t take a rocket scientist to realize that if claims are going up and premiums are going down, then something has to give.  That something will be the rates that you pay for your work comp insurance policy.  Insurance companies like to measure the money that they take in (premiums you pay) against the money that they pay out for claims.  They call this measure a loss ratio.  If this loss ratio rises above 100%, then the insurance companies are losing money.  In 2011 the loss ratio for workers compensation insurance in the U.S. increased to an astonishing 118.1%.  This is the highest level since the year 2000 when it was 121%. 

So what is the problem?  Well there are a few and none of them seem to show any signs of letting up in the near future, which is why I am predicting higher workers compensation rates across the board.  First of all is the rising costs of medicine which now accounts for 60% of the workers compensation total claim payout.  Medical inflation is running at 6% currently, far above that for most other items that you buy.  Poor economic conditions are also a factor as there is a greater tendency for fraud in bad economic environments.  In addition, the work force is getting older and more obese each year and these factors are also putting a strain on the claims costs both medical and time out of work.

So what must you do to keep your business from being swept up in the work comp rate increases that are bound to happen in 2012?  Well I think the first thing you should do is take a good look at your work comp policy and your work comp carrier.  There is a growing market segment of work comp only companies out there today.  These companies realize that to make money in this business and to keep rates low for their customers, they need to be much more proactive in the prevention of claims as well as the recovery process.  These companies will have loss control programs that can help you prevent claims from happening in the first place.  They also tend to have nurses and claims case workers on staff to double check all medical bills for errors and fraud and to help your injured worker heal and get back to work as quickly as possible.

We have several of these specialty work comp companies in our stable of fine insurance companies with whom we do business.  If you have questions about your work comp insurance, or if you would like a quote to see just how much you can save on your workers compensation insurance, please give us a call, toll free, at 877-687-7557.  We look forward to hearing from you soon.

Nearly a half million businesses and residences suffer from water damage as a result of frozen pipes each year.  Do you know if your businessowners insurance policy or your homeowners insurance policy will cover the damage caused by this type of loss?  Did you know that nearly all of these losses are completely preventable?  Having a large preventable loss can spell trouble between you and your insurance company and that alone is enough reason to avoid this type of loss.  But the pure hassle that you will go through if you experience a burst pipe situation should be enough to motivate you to take precautions now, before the really cold temperatures hit.

Let’s take a look at some of the steps that you can take to keep your pipes a bit safer.  Start by protecting the pipes themselves.  If your pipes are in a vulnerable spot like the attic or the crawlspace, you should be sure to insulate them properly.   Both the hot and the cold lines should be insulated.  Next take a look at their environment.  Seal any leaks to the attic or space that might allow enough cold air into that space to freeze the pipes.  Last of all, disconnect your garden hoses and drain sprinkler systems to lessen the chance of freezing at those points in the system.

When a hard freeze is coming, there are some additional steps that you can take for the short term to protect your pipes.  You could let warm water trickle from the faucets overnight, particularly on an exterior wall, or on a long stretch of unprotected pipe.  Next, open cabinet doors to allow heat to reach non-insulated pipes under sinks.  Last of all, don’t turn your thermostat down at night when in a hard freeze.  You will need as much heat as possible to protect your pipes.  Paying a little more now on the heating bill to avoid the mess of burst pipes is a fair tradeoff.

If your pipes do freeze, it doesn’t mean that they have burst.  You may still be able to save them.  Here are a few things that you can do.  First of all, turn on the water at the faucets and leave it on.  As the frozen area starts to melt, water will move and help melt the rest of it.  Next try to locate the frozen area of your pipe.  If you are able to do this, then try to safely apply heat to the frozen area.  You can wrap them in towels soaked in hot water, or use a hair dryer or an electric heating pad.  Do not use a blow torch, kerosene or any other open flame to heat the pipe.  These techniques could leave you with a home destroyed by fire!  If none of these techniques work, then call a licensed, professional plumber.

In NC, the standard homeowners form will almost always cover loss to your home and your contents from water damage as a result of a burst pipe.  But this protection should be your last resort.  This type of claim leaves a nasty mark on your claims record and will almost certainly cost you in terms of higher homeowners insurance rates in the future.  In this case, an ounce of prevention is definitely worth a pound or more of cure.