Two Minutes with Tom | Workers’ Comp

In this segment of Two Minutes with Tom, Tom Gaumond, President of G2 Insurance, discusses workers’ compensation and the 2 different factors that can potentially affect what you pay for workers’ comp.

Hey Everyone, Tom Gaumond with G2 Insurance Service here with today’s Two Minutes with Tom. Today, we’re going to talk about workers’ compensation. Now, if you’re a business owner in Wisconsin, you know that work comp is required and it’s there to protect your employees in case they ever get injured, pay for the medical bills, pay for their lost time. And in the state of Wisconsin, no matter which insurance company you go to, you pay the same rates based on your class of business because the state sets the rates. So if you’re a mechanic, no matter what company you go to, the rate is always going to start out the same place. But today we are going to talk about two different factors that can potentially affect what you pay for your workers’ comp costs. So the first one is what’s called an experience modification factor. Now, again, this is controlled by the state, so you can’t really do too much about it. But it’s based on your claims. And basically, it says that look, in your industry, if you are spending currently more than seven thousand seven hundred fifty dollars a year in workers’ comp, then the state can look at you and say you are either better than your industry or worse than your industry. And if you’re better, you get a discount. If you’re worse, you will get a surcharge. And those are all based on your premium versus what you actually have in claims.

So fewer claims, better discounts, more claims, higher claims, bigger claims more surcharge. Surcharges can be pretty hefty, up to 100 percent, discounts maybe around 30 percent, give or take. So that’s something that is again controlled by the state. But if you control your losses, you can have a hand in that. The second thing is dividends. So a dividend is a for Insurance Companies to say, look, we know you have to pay the same amount upfront, but we think you’re better than average, we think you have a good loss history, and if you come with us, you know, if you don’t have any losses this year, maybe we’ll give you 10 or 15 or 20 percent of your premium back. Now, usually, companies say you have to have about three thousand dollars in premium, at least to even start talking about a dividend. But once you get that, they can be dependent on your losses, they can be a flat amount. There’s a ton of different ways, but ultimately, it’s a way for the companies to say, hey, you’re a good client and we want to help you and we want to give you a little money back. So that is Two Minutes with Tom about workers’ comp. Hope you have found it insightful and helpful. Thanks for watching.