A major part of of the bidding (RFP) process to acquire a new client is estimating costs (burden rate) and markups. Workers’ compensation rates are the most fluid part of the overall burden rate due to the many factors (State, Job Description and Code) influencing the actual premium. An error could result in loss of real profit due to an increase over budgeted cost.
In order for a staffing company to understand their workers compensation costs, awareness of rates for different class codes and states is necessary. Correct classification of employees is imperative to avoid a negative audit (resulting in additional unexpected catch up premiums) at the end of the policy term. Analysis must include a review of each client in each state, evaluating pay rates, to class code rates per $100 of payroll.
Furthermore, loss history needs to be evaluated. Every workers compensation claim effects the overall MOD which results in a percentage increase of overall premium for future premium periods. Without factoring in this modification, future premiums can be underestimated while markups on a negotiated contract remained locked in on previous years pricing.
Data analytics is extremely important in all industries and can make or break a deal in the staffing industry. Understanding Loss cost factors and variances in rates and states can be the difference between breaking even and consistent profit.
Want to see how Insurnt can optimize your Workers’ Compensation rates? Contact Us to schedule a demo!