We’ve spent some time in this space discussing the Jones Act and the Longshore and Harbor Workers Compensation Act (USL&H).
Now let’s talk about another layer of protection for employees: State workers’ compensation insurance, which for many small shipyards can be a primary coverage for employees.
The action of every employee at a yard can have a dramatic effect on the cost of a workers’ compensation insurance policy.
Here’s why:
A workers’ compensation base premium is calculated by two things: Job classifications for each employee (based on the work they are doing) and the payroll associated with each classification. Your premium is multiplied by your “experience mod.” A neutral experience mod is 1.0. With yards experiencing frequent or expensive claims, the experience mod will increase, as will your premium. For yards with no claims, this number and your premium will go down.
The calculation of an experience mod is based on the prior three years. When a claim occurs, you can reduce the negative impact of an injured employee on your mod by getting them back to work as soon as possible. Medical-only claims are weighted far less than indemnity benefits claims.
Aside from telling your employees to be careful and not get hurt there are other ways to help create a safer workspace. For starters, contact your workers’ compensation company. They will have all sorts of workshops and webinars to assist you, very often at no cost to you. Schedule a visit with their loss control department and have one of their safety management consultants do a walk-through of your facility.
This can be an annual event and help you track improvements or areas of concern. Your state department of labor also has consultation services available. By having a new set of eyes view your facility and workforce, simple improvements can be made that can lead to a safer work environment.
Finally, review your experience mod work sheet with your agent. Mistakes in coding can have a negative effect on your policy.
Recently we were reviewing a boatyard’s report and noticed a claim that should have been coded as medical-only had been coded incorrectly as indemnity. This had a dramatic effect to the mod in the wrong direction and once corrected reduced the insured’s premium. Have a chat with your agent, it could save you some money.
