Cable Installers

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Cable television companies provide television programs to customers over both fiber optic and coaxial cables. They can be provided both digitally and via satellite, but someone must install the equipment that makes these technologies work. This is where companies spring up to provide this needed service for both cable providers and television viewers. Cable Installers are usually employed by cable service providers, but in some instances they are employed as sub-contracted labor. All sub-contract labor is generally required to have specific coverage limits per their agreement with the cable contractor. This is where their workers compensation coverage is a requirement in most states.

Workers Compensation Class Codes - Cable Installers

What are the concerns for cable installers relating to Workers Comp?

The first concern related to workers’ compensation coverage is whether the installer is an employee for a cable provider or whether they are an independent contractor. If they are an employee of the company than the company is responsible for carrying the proper workers compensation coverage for them as an employee. Now if they are a contractor, depending upon the state the installer may need to purchase coverage for themselves and for their business if they have employees working for them. It is important to speak with an independent insurance agent and the proper governing body in the state in which you operate in to make sure you have the proper coverage.

What other insurance might a cable installer need?

  • General Liability
  • Inland Marine Coverage
  • Commercial Auto Insurance
  • Workers Compensation

In most states, workers compensation and general liability are required by law for most businesses. Again it is important to check with the state governing agency to determine what your business is required to carry. In most states this is the department of insurance. Two additional coverages that are beneficial to many cable installers are commercial auto and inland marine coverage. Commercial auto is needed regardless of whether you are driving your own personal car for work or a company owned car. If you do drive your personal car for work than you can get a policy called hired and non-owned auto policy. This will cover the liability the business faces that is not covered by your personal auto policy. An inland marine policy will cover any specialized equipment or tools that you have with you in transit. Because of the remote nature of this work, most of the time the installer is located at a third party site. During the time that the installer is driving from location to location they are at risk of damaging their vehicle and the tools located inside it or any additional equipment attached to a trailer. The problem is that a standard commercial auto policy will not cover additional equipment. It just covers the vehicle. For that reason you may need inland marine coverage. An independent insurance agent can help you determine if you need this coverage, and if so, how much you actually need.

Classification Codes for Cable Installers

Commercial insurance companies use various liability classification systems in order to classify and rate coverage premiums for Cable Installation. Here are the most common business insurance classifications for Cable Installers:

Business Liability Category: TV and Media Installation

SIC Business Insurance Codes:

  • 4841: Cable and Other Pay TV Services

NAICS Liability Classifications:

  • 517110: Wired Telecommunications Carriers
  • 515210: Cable and Other Subscription Programming

Business ISO General Liability:

  • 91315: Cable and Subscription TV Companies

Common Workers Compensation Class Codes:

  • 7536: Cable Installation and Construction
  • 8901: Cable and Telecommunications—Office Employees
  • 7600: Cable TV or Satellite—Other Employees and Drivers
  • 6325: Conduit Construction—for Cables or Wires
  • 8742: Outside Sales Persons


Work Comp Rates are on the Decline

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Many States have Work Comp Rates that are Changing in 2018.  

Work Comp is the only Commercial Insurance Line going down, but most states have rates that are going to decrease significantly in 2018.  The second half of the year, is when the governing body for the workers compensation system in each state makes the decision to set rates on different classification codes. So far in 2017, 36 out of 50 states are deciding to decrease their work comp rates. Several states are seeing significant decreases. According to Business Insurance, 13 states show rate-decrease filings of between 10% and 16.3%.

Work Comp Rates are on the decline in 2018.

Here are a list of several recommendations from NCCI and State governing bodies throughout the US.


The NCCI is recommending a 12.7 percent decrease in rates for 2018. The reason for this significant of a decrease in Colorado is related to ongoing efforts by employers to prevent workplace injuries. Also included in the reasons for the significant decrease in work comp rates is the declining or stabling figures in frequency of claims, duration of claims, severity of injuries and medical costs.


NCCI recommends a 10.9% workers compensation premium rate decrease for Illinois.


The 2017 rate filing, which will impact rates in 2018 is an average reduction of 4.6 percent for work comp rates.

New Mexico

The New Mexico Office of Superintendent of Insurance has announced an average 16percent reduction in workers compensation pure premiums for 2018.

West Virginia     

NCCI recently filing for a 10.3 percent reduction in work comp rates with the state Insurance Commission.


The Idaho Department of Insurance has received a proposal from the NCCI for an overall rate drop of 5.8 percent percent to workers’ compensation insurance. This rate has not yet been approved, but employers can expect a decline in work comp rates.


Montana’s state-mandated workers’ compensation insurance fund has announced it is returning a record $40 million in dividends to most of the businesses and organizations it insures.

Work Comp Rates in 2018 are decreasing in 36 out of 50 states.


The 2017 rate filing by NCCI for workers’ comp shows a decrease of 8.4 percent in the voluntary base rate and a decrease of 7.8 percent for assigned risk workers’ compensation rates. Adding together the rate decreases Kansas business owners saw in 2016, the rates will have dropped 20 percent in the voluntary base rate and 18 percent in the assigned risk rate over the past two years.


NCCI Files 12% Decrease for Tennessee Workers’ Comp Loss Costs, as a result of a decline frequency and severity of claims.


Connecticut has had a recommendation of 14.1 percent reduction on average in the “loss cost” formula which helps determine rates. This rate has not yet been approved, but employers can expect a significant decline in work comp rates.


Washington’s Department of Labor and Industries has recommended a drop of 2.5% in 2018.


NCCI has announced an 8.7 percent average reduction in premiums for Iowa employers beginning in January 2018.


Florida businesses may need help the most because of hurricanes that have ravaged the state and a workers compensation system that has been in flux for the past few years.  NCCI has recommended an average 9.3 percent reduction in workers’ compensation premiums in 2018. This reduction comes after an average increase in 2017 of more than 14 percent.


Oregon workers comp rates are dropping for fifth straight year.  They have actually declined about an average of one-third since 2013.  In 2018, Oregon employers will see a drop by an average of 14 percent, according to the Department of Consumer and Business Services.


Oklahoma will have an average decrease of 16.3 percent for 2018 work comp rates.


Michigan’s Workers’ Compensation System continues to benefit workers and job providers as the state’s pure premium advisory rate for work comp insurance will decrease by 9.3 percent for 2018. This has contributed to a cumulative decrease of 45 percent from 2011-2018, saving Michigan employers an estimated $446 million in workers’ compensation premiums



Florida Work Comp Market still in Flux

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This time the Florida Work Comp Market is benefiting the Business Owners who are getting a 9.6% decrease.

For more than a year now, the Florida Work Comp Market has been unstable to say the least. A year ago the National Council on Compensation Insurance (NCCI) recommended a 14.5percent increase which was eventually approved. This increase was in response to two court cases (Castellanos vs Next Door Company and Westphal vs City of St. Petersburg) and state bill 1402. Most within the insurance industry and the business community predicted the state legislatures would enact measures in the first half of 2017 to stabilize the workers comp system in Florida. Those measures failed and the instability has continued.

Florida Work Comp Market

In response to the lack of response from the Florida Legislature, NCCI has taken steps to stabilize the markets after last years large increase in work comp rates. This years’ recommended decrease includes a statewide average premium decrease of 9.3 percent. NCCI said a large part of the recommended decrease stems from improvement in claim frequency of more than eight percent over the last two years. Because this recommended decrease mostly reflects data that pre-dates the Castellanos and Westphal decisions, it would be wise of insureds to not expect this decreased rate to continue in the future.  Carriers are beginning to receive data relating to the impact of Castellanos and Westphal.  As this data continues to mature business owners can expect carriers to adjust their rates accordingly.

Florida is a state that requires employers to carry workers compensation coverage.  The Florida Office of Insurance Regulation has stated it will review the recommendations by NCCI. They plan to evaluate the impact of this decrease in relation to the insurance marketplace as well as employers. A public hearing to discuss this matter will be conducted in October.

Workers Compensation Insurance in 2017 has been a very changing industry. Especially in the state of Florida and many states are using the issues facing Florida as a cautionary tale to get the system in their state in line.

Dry Cleaners

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It’s never fun to think about the risks your dry cleaners business faces, but ignoring them will never make those risks go away.  Knowing exactly what you are and are not covered for is, in some situations, the difference between being closed for a week and your business having to close its doors permanently.  There are many different types of risk a dry cleaners faces. Those risks can be dramatically different from the risks of a painter, an electrician or even a lawyer. If your machinery breaks and you have to be closed for a few weeks while you wait for a part, will your insurance cover that down time? If you damage a clients clothes and your business gets sued, will your insurance cover the lawsuit. If an employee is hurt on the job, how much and what types of medical coverage will your insurance pay for. These are questions you need to have the answers to when you are deciding to buy workers compensation insurance for your dry cleaning business.

Get your questions answered about workers compensation insurance for dry cleaners businesses at My Insurance Question.

Partnering with an independent insurance agent is a good place to start. Independent agents have the ability to shop your workers compensation insurance policy around to many carriers and not just one or a select few. Not all carriers excel at every industry. Some provide better coverage at better prices for certain industries depending upon the appetites of each carrier. Independent agents know what carriers work better with different industries. If you can take just a few moments to let your agent know about the intricacies of your business and the priorities of you as a business owner, they can more than likely find the best coverage to meet your unique needs.

Many Dry Cleaners have a laundromat attached to their business. Find out how this will impact your commercial insurance at My Insurance Question.


Dry Cleaners Liability Classification Codes

Commercial insurance companies use various liability classification systems in order to classify and rate coverage premiums for Dry Cleaners. Here are the most common business insurance classification for businesses that perform dry cleaning services:

Business Liability Category: Service Business

SIC Business Insurance Codes:

•   7216- Drycleaning facilities- Except Rugs

•   7216- Drycleaning and Laundry- Coin Operated

NAICS Liability Classifications:

•   812320- Dry Cleaning and Laundry Services (not coin operated)

•   812310- Coin Operated Dry Cleaning and Laundry Store

Business ISO General Liability:

•   Code: 14732- Dry Cleaners and Laundry Stores Front (receiving station)

•   Code: 14733- Dry Cleaners and Laundry Store

•   Code: 45678- Dry Cleaning and Laundry Plants

Common Workers Compensation Class Codes:

•   2586- Dry Cleaning Plant- All Employees

•   2589- Dry Cleaning or Laundry- Retail Store and Drivers

•   2590- New York- Dry Cleaning or Laundry Store

•   8017- Retail Store (Pick-up and Drop-off only)


Natural Disaster Preparedness

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With the devastation people have experienced this hurricane season in both Texas and now in Florida it is a wise time to create a natural disaster preparedness plan for your business.  The risks your business will face are going to be different depending upon where your business is located and the industry you operate in. speaking with a risk management professional can be the first step towards determining how much risk your business faces, what types of risk you actually face and how to best mitigate those risks.  Here are four tips to help you protect your business from the impact of a natural disaster.

What can the Business Community learn about Natural Disaster Preparedness from the hurricanes in Texas and Florida?

In the wake of Hurricanes Harvey and Irma, now is a great time to develop a Natural Disaster Preparedness plan for your small business.


Call your insurance agent

Every disaster readiness plan should start with a phone call or in person meeting with your insurance agent. It is wise to partner with an independent insurance agent because they interact with many different carriers and can do a better job of making sure your business gets the most extensive coverage at rock bottom prices. Insurance agents also have a unique perspective because they interact with customers on a daily basis who have had to file a claim when something went wrong at their business. They can use those experiences to help you realize risks you may not realize you face and they can help you protect your business to the fullest.

Create a Disaster Readiness Kit

Depending upon where you live and the industry of your business, the contents of this kit may be defense. The size of your staff will make a difference as well. First aid supplies, batteries, water and canned foods should be the start of this kit. Depending upon how far you want to take your preparedness kit, you can also include a generator, fuel, flashlights or even solar chargers. Your insurance agent can help you come up with a list of things you may need and is a great place to go for guidance.

Create a communication plan and practice it periodically

There are many ways to communicate with your employees during a time of emergency. The best plans have numerous ways to get out a message during a time when communication lines are down. First you need to find the ways in which your employees like to receive their messages. Many people today do a majority of their communicating via their mobile device, but it is not wise to expect all employees to communicate in this manner. Some may still prefer to receive an email, text message or even an actual phone call. Again, the best way to make sure all employees receive the message is to have numerous ways to communicate with your employees. Once you have a plan in place, it is important to test out your system periodically. This is important because you want to know that your messages can get through when electricity and all communications systems are up and running. Once you know the system will work when things are up and running it is important to than test for when one or all of the ways of communicating are down.

Create a Business Continuity Plan

This is especially important if you are not just a regional business. As many people realize right now that when a disaster happens in one area of the country, business keeps on churning in other parts of the country or internationally. If you have businesses that are expecting shipments to be received or services rendered than you need to prepare for when you cannot preform those services. You may find that you need to consult with a lawyer to get language into a contract for when you are not physically able to perform your contractual obligations. It is good to be prepared for this types of situations, but nothing is better than establishing a good relationship with all parties.customers and keeping open good lines of communication. Most people and businesses will understand when a disaster strikes that business may be interrupted. Giving them a heads up if you know in advance a disaster is coming will go a long way towards getting your third parties on your side when you cannot fulfill your obligations because of a natural disaster.

Assigned Risk Provider

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 What is the Assigned Risk Provider?

The assigned risk provider is also frequently referred to as The State Fund or The PoolQuestion Mark: What is the assigned risk provider?

Workers’ Compensation Insurance is required by law in 48 out of 50 states in the country. Oklahoma and Texas are the only two exceptions to this rule. The workers compensation system was was designed to provide medical coverage and some lost wages for workers who are hurt will performing normal business operations. It benefits the employers by preventing lawsuits that result from injuries that occur as a normal part of the business duties. Now if the business is not following normal safety procedures for their industry they can still be held liable for injuries to their employees.

Workers compensation systems are governed by each individual state government. They determine what types of business can exclude themselves from coverage. Some industries, like artisan contractors for example, do not have to carry coverage on themselves or their employees.  The individual states also determine how rates are determined by insurance carriers who offer coverage within their state. Most states partner with the National Council on Compensation Insurance (NCCI) to determine rates for different class codes. Some states; like Utah for example, have their own rating system administered by a government organization. Most use the basic guidelines of the NCCI system.


The Assigned Risk Provider is frequently referred to as 'the pool'.

An additional responsibility of the states is setting up a provider of last resort for the employer’s of the state. This provider of last resort is also referred to as the assigned risk provider, the state fund or sometimes the pool. This assigned risk provider is designated as the provider of last resort for businesses who can’t find coverage on the open market. In most cases this provider is noticeably more expensive.

Businesses end up having to purchase coverage from the assigned risk provider for a number of reasons.  Some businesses are in a high risk industry that no carriers are willing to quote coverage to businesses in this industry. Sometimes the business is forced to purchase coverage from the assigned risk provider because the business has had too many claims within a short period time. A final common reason for winding up in the pool is because the business just does not generate enough revenue to justify the amount of risk their business takes on. Most states have some type of requirement for the business to try to obtain coverage from a certain number of providers on the open market before they can apply to the assigned risk provider.

There are three main ways states go about providing employers with an assigned risk provider. States can provide their own fund, some states use NCCI and some states have a partner carrier who guarantees coverage for employers who cannot find coverage on the open market. Typically states who have a strong assigned risk provider enjoy the best rates on workers comp insurance. There are different ways to provide this strong provider, but typically the stronger this provider, the lower the rates employers pay.

Utah is a good example of strong state provider. The fund is called the Workers’ Compensation Fund. It controls 57% of the market and is the main reason Utah enjoys some of the lowest rates in the country. Colorado is another state who operates their workers compensation system a tad differently than most states. Colorado has a partnership with Pinnacol. Pinnacol was begun around the time workers’ compensation became a requirement in the state and it was designed in partnership with the state government to guarantee competing coverage with carriers on the open market.  This partnership does a fairly good job of keeping the rates reasonable for the employer’s of Colorado. Both of these states enjoy some of the lowest rates on Workers’ Compensation Insurance because of their strong Assigned Risk Providers. New York is an example of a state who operates their own assigned risk provider, but does not compete as well to keep rates reasonable. New Yorks’ state fund administered as a non profit agency. The state also has very difficult regulatory compliance regulations for employers in relation to workers compensation coverage. These regulations force many carriers out of the state market. These factors contribute to New York to having some of the highest workers compensation rates in the entire country.

Administering the workers compensation system in a given state is left up to each individual state. There are three main ways states go about doing this service to the business community. Some handle it themselves, others partner with an outside carrier and some contract this service out to a company like NCCI. All three ways can be effective and they each have their own challenges. The strength of these assigned risk providers goes a long way towards determining what employers across the state pay for workers compensation coverage and they will for the foreseeable future.

Gun Clubs

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Gun Clubs and Shooting Ranges

Gun Clubs and Shooting Ranges provide facilities for customers to practice and compete shooting at targets with various types of firearms.  Some ranges are indoors and allow shooting primarily with handguns at fairly short ranges. Other facilities may include outdoor facilities that allow for more long range shooting where larger firearms are present.  Many facilities offer lessons for beginners and concealed carry classes for people interested in self-defense.  Some facilities offer sales of weapons and accessories, rentals of weapons and even repair for damaged weapons.  Many facilities offer periodic tournaments and other competitions. Each of these aspects of the business bring with them additional risks.  Depending upon the business activities of each individual gun club or shooting range the liability needs for each business can be drastically different.

Gun Clubs and Shooting Ranges

Workers Compensation Risks for Gun Clubs and Shooting Ranges

As most business owners know, the risks facing a gun shop are very unique to each individual business and industry. The risks of running a gun shop are different then that of a food truck or an accounting firm.  Many of the Workers Compensation Exposures at gun clubs and shooting ranges are similar to many facilities open to the public. Slips, trips and falls are common causes of injuries in these facilities. There is an elevated amount of risk when a firearm is involved in one of the accidents. This is because of the severity of an injury when a firearm is involved. Businesses in this industry do not typically have a higher frequency of claims, but the claims do tend to be more severe. Because of the severity of these risks, employees should be well-trained and everyone should be required to wear proper safety equipment including ear and eye protection.

Employees who work in this industry face both short term and long term risks. Ear protection is important to protect the long term hearing health of your staff.  Additionally eye protection should be worn at all times when in the presence of live fire. It is wise of a business to provide this safety equipment for the employees and to spend a little extra in order to get safety equipment that is comfortable to wear. Spending additional investment on adequate safety and training programs can go a long way towards keeping your staff safe.  A safe staff is a happy and productive staff.  Taking additional time to protect your employees will help them be more productive and can prevent a costly insurance claim.


Shooting Range Liability Classification Codes

Commercial insurance companies use various liability classification systems in order to classify and rate coverage premiums for Gun Ranges. Here are the most common business insurance classification for Shooting Clubs:

Business Liability Category: Recreation and Sports


SIC Business Insurance Codes:

    •   7997- Membership Sports and Recreation Clubs

NAICS Liability Classifications:

    •   713990- Other Amusement and Recreation Industries

Business ISO General Liability:

•   Code: 47253- Indoor Rifle or Pistol Ranges

•   Code: 47254- Outdoor Rifle or Gun Ranges

•   Code: 48206- Skeet Shooting or Trap Shooting Ranges

Common Workers Compensation Class Codes:

    •   9180- Amusement Operations- Shooting Clubs



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As a florist, a business owner has chosen an industry that is very diverse and has specialized business insurance needs.  Those insurance needs differ from other small businesses. The diversity of this industry can include providing arrangements for both weddings and funerals. Many of these occassions require you to provide just the right touch at a moment’s notice. This diversity in the floral industry brings about specialized business insurance needs that differ from other small businesses. As far as workers compensation risks, the first and foremost risk results to lifting which can cause back injuries, sprains and strains resulting from slips and falls.

FInd the best answers to your questions about workers compensation insurance for a florist at

In order to combat these risks, employees should be provided with the proper safety equipment for a florist. Your business has to train your employees on the proper techniques to prevent risks. Also, realize the risks you face in this industry are different than the risk of an electrician or a home health care business. Never assume your employees no how to keep themselves safe or that they value safety. Delivery drivers should have thorough background checks done on them that include periodic driving records. The driving records should be pulled yearly if not more frequently.

Securing proper insurance coverage in the floral industry does not have to be a difficult process. Partnering with an experienced independent insurance agent is a good idea because they can help you determine what exact risks you face and how to best combat those risks. No matter who you choose to partner with as an agent, the buying process should begin with a thorough discussion of your business operations. Taking a little bit of additional time to let them know what exactly your employees do and do not do on a daily basis can help you avoid catastrophe down the road. Insurance agents interact with small business owners not only when they are purchasing insurance coverage, but also when claims occur. They have to interact with business owners in the immediate aftermath of a disaster. They can use this experience to help you prevent a catastrophic claim that may cause you to close the doors of your business permanently.  Flowers from a florist.

Independent agents are the best to partner with because they have the ability to shop your policy around to multiple carriers in an effort to secure a better price and even better coverage. This is especially important if you have employees who drive as a part of their daily duties. Driving risks tend to cause claims to rise in both frequency and severity for small businesses. Because of this fact, insurance carriers charge more in premium to cover a business that has a driving risk. No matter what risks your business does face, partnering with an experienced independent insurance agent will always help you secure the best coverage at the lowest premium possible.


Business Liability Category: Retail Stores- Flowers

SIC Business Insurance Codes:

•   5992- Florist

•   5992- Flowers, Nursery Stock, and Florist Supplies

NAICS Liability Classifications:

•   453110- Florist and Flower Shops

•   453998- Other Miscellaneous Retail Stores

Business Insurance ISO General Liability:

    •   Code: 12841- Florist

Common Workers Compensation Class Codes:

    •   8001- Retail Flower Shops and Drivers


Accounting Firms

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Accountants handle clients’ financial records. Their services are provided to both individuals and businesses. With the diversity in the work that accountants do, and the fact they are dealing with sensitive financial information, the level of risk in this industry is unique. Bodily-injury claims are not very high, but the severity of loss from financial data can be extremely high.

Accounting firms

An accounting firm may or may not carry the Certified Public Accountant (CPA) certification. The need for the CPA certification depends on the type of work each accountant will provide and the purpose or type of financial statements the accountant will prepare for the client.  The more employees a business has with proper certifications the more likely they are to get additional credits and debits offered by an insurance carrier to help off-set the cost of insurance premium.

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Some accountants may also act as financial planners and offer investment advice.  If they do, this also adds to the amount of risk the business takes on and can impact the type of coverage the business needs to secure and the limits they will need in response to these risks. One type of risk to consider is related to the property your office is located in. Whether you own the property or rent will have an impact on the types of coverage you will need.

A majority of insurance carriers commonly write Business Owners Policies for accounting firms with less than 50 employees. Most find that a BOP policy is the best way to go because it saves accountants 15% – 20% on their coverage when bundling policies.  Buying each policy as a stand alone decreases the likelihood carriers will offer as many available credits and debits on a policy.  When insurance underwriters know they are going to get multiple lines of coverage from your business they have more incentive to compete for your business.  Working with an experienced independent insurance agent can help mitigate these problems and ensure your business does not have any gaps in coverage.


Common Workers Compensation Class Codes:

•   8803- Accountant, Auditor; traveling

    •   8810- Clerical; office only


Interpreting the Loss Ratio

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The loss ratio is a quick and easy way for an insurer to determine the profitability of a workers compensation insurance policy.  It is calculated simply by dividing the incurred losses by the total earned premium.  Therefore, a company with a very low loss ratio would be considered a very profitable policy, and an employer with a very high one would be less profitable or not profitable at all.  The loss ratio can be looked at in two different perspectives.  From the insurer’s side, it represents the percent of earned premium that they need to set aside to pay off incurred claims.  From the insureds perspective, the loss ratio represents the amount of premium paid that will be returned to cover the cost of their claims.  By knowing the loss ratio, the insured can also determine the amount of money that the insurer keeps as payment for expenses and risk.  Take for instance a company with a loss ratio of 95%.  That would mean that for every $1.00 of premium paid, the company is receiving $0.95 of insurance coverage, which would most likely result in loss for the insurer after they pay expenses.  If the company with a 95% loss ratio paid a total of $25,000 in premium, then the insurer would only be left with $1,250 to cover their expenses.  A company with a loss ratio of >100% would be receiving more money for claims than it is paying out for premium, and would cause the insurer to lose even more money.  This gives incentive for insurers to write more policies with employers that have a low loss ratio.  If it writes a company with a 45% loss ratio, it will have 55% of the paid premium to cover its expenses and produce profit.

Find the answers to your Small Business Loss Ratio Questions at Workers Compensation Class

You can also use the loss ratio to look at the insurer’s profitability.  For example, an insurance company that has a book of business that pays $100 million in premium has a loss ratio of 40%.  This would mean the company earns $60 million in profit.  If the same company had a loss ratio of 50%, it would only earn $50 million in profit (before expenses).  Another ratio that is very similar to the simple loss ratio is the combined ratio.  The combined ratio is the loss ratio with the various insurance expenses included.  It is calculated by: (Total incurred losses + Total expenses incurred) ÷ (The total premium earned) = Combined ratio.  The NCCI lists that the combined ratio for the entire workers compensation market in 2014 was 100%, and it was 94% in 2015.  The 94% combined ratio of 2015 represents the first underwriting gain of the workers compensation market since 2006, when it was 93%.


There are a few reasons why a company may have a high loss ratio.  The most obvious reason is that the company has a bad history of losses.  Therefore a high loss ratio can sometimes indicate that a company is riskier.  However, the frequency and severity of the claims listed on the loss history must be analyzed to understand why the ratio is so high.  If it seems there is a high amount of small claims, the insurer could insist the company does something to change its operations and/or safety procedures to help stop or slow down the amount of claims.  If it is a small amount of high severity claims, perhaps the insurer should help the company mitigate the cost of the claims.  A high loss ratio could also be the indicator that the insured is being charged too low of a premium rate.  This could be due to a misclassification of payrolls or just a soft insurance market (soft meaning premium rates of the market are lower than usual).  In this instance the insurer would be inclined to fix misclassified employees, and perhaps increase the premium rates being charged if they can.


There are also a few reasons why a company would have a low loss ratio.  The simplest reason being that the company has suffered little to no losses while they have been insured.  The insurer would see this as a highly profitable policy, whereas the insured may view it as an inefficient use of their resources.  While it would seem like the right thing to do for insurers to seek the lowest possible loss ratios, it is not always beneficial.  Very low loss ratios can also be an indicator that premium rates are too high.  When rates are too high it results in slower growth, and this can cause the company to lose market share.  Depending on the strategy of the firm, maintaining growth and achieving certain market shares may be the goals that management is pressured by.  Also, when premium rates are too high it is likely that profit is not being maximized.  For example, imagine a firm that has a book of business with $100 million in earned premium, and a loss ratio of 40%. It would be earning $60 million in profit.  However, if the firm was to lower their rates it would increase their amount of earned premium to $125 million while also increasing their loss ratio to 50%.  This would cause them to earn $62.5 million in profit, which is a $2.5 million increase in profit.  Even though the company’s loss ratio increases, they earn increased profit and therefore benefit from lowering their premium rates.