How the heck is my NJ Workers Compensation Premium determined and what can I do about it?
There is often confusion regarding how premiums are determined for workers compensation in the state of NJ across all classes of business. We find the perception from many employers is that they believe there isn't much which can be done to reduce the cost of workers compensation and the rates are what the rates are but I am here to say that that is NOT the case and you have control!
At the broadest level, Workers Compensation rates are determined by a number of factors with the three largest being payroll, the modification factor and claims.
The Modification Factor is a great way to measure how an that businesses workers compensation program compares to the rest of that industry and class of business. If the Modification Factor is a 1.00, that equates to being in-line with the average for that particular class of business. Modification Factors below 1.00 receive credits while those above 1.00 receive a debit or penalty.
While we can not fully control if an employee gets injured on the job, there are methods and strategies which can be implemented to reduce the modification factor and ultimately reduce cost. One method includes handling claims in a particular way and forecasting future modifications to be able to budget properly for this line of coverage. There are also a number of credits available in NJ but you need to know where to look to see if you qualify.
If your Modification Factor is over 1.00, we should have a conversation. Below is my contact information so please shoot me a note to discuss.
Steve Edelstein, CWCC, RCIP
973-669-2303
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5 年Great read, Steve!