Insurance

	Worker' Comp		Health Insurance		Liability Insurance
	Why is comp so unstable?		Health Insurance Basics		Liability Insurance Overview
	How are rates calculated?		How is Insurance Priced?		Typical Savings for Members
	How is safety history measured?		Pitfalls		Who is the company and what do they do for you?
	How do insurers handle claims?		Setting up a Plan		What is a Risk Retention Group?
	What does a broker do?		Get a Quote		What should I do next?
	Tips on reporting an injury

We sponsor three insurance groups for our members:

Liability Insurance in partnership with NCIC. We offer good, reasonably priced liability insurance through brokers and sponsoring assocoaition throughout California. This is excellent insurance at reasonable rates. Residential and Commercial, New Contractors, Condo Wraps and a special Artisan program.

Worker's Compensation insurance through the BECC Group 571 Chapter 13 and Golden State Builders Exchanges group 713 Chapter 224. Underwritten by State Fund this program gives a six percent premium reduction and many other savings with the added benefit of group protection. Members of the Peninsula Builders Exchange with a good safety and loss record are eligible for additional discounts plus annual reviews of all open claims by our independent consultant. For more information on this group program please ask your insurance broker or call the Peninsula Builders Exchange at 650-591-4486.

Health, Dental, Life and other policies to keep your employees and their families healthy. Our group offers a wide menu of health plans plus dental, life and other insurance. Our plans feature competitive rates, plus excellent service. We are the only plan that understands Health Savings Accounts! Perfect for the small to medium size contractor. Call us at 650-591-4486 or use the downloadable form for more information on this excellent program.

We also help our members with Bonding, Auto, General Liability and other business protection.

Get a Quote
Don't have a broker but need a quote on health or worker's comp? Download here and fill out the form and fax or mail it to us and we will have one of our insurance associates give you a call. Its painless and you should check your coverage cost and quality every year or two. You will need Adobe Acrobat Reader to download the form. Most computers already have it, but if you don't click on the image below to go to the Adobe download site.

Why is Comp. Insurance so Unstable?
In this up and down market some new issues have emerged; When worker's comp was deregulated several years ago many insurance companies entered the California market. The result was a lowering of rates. Lower rates through competition sounded great but many companies lost money and pulled out (or were kicked out), of the California market. This resulted in one of the 6 remaining carriers (the one that was not allowed to turn customers away) getting over 50% of the business. Then the State reformed the excessive medical costs and the market fell. As of this writing insurance carriers are returning to the California market. We are currently (2007) at the bottom of the rate fluctuation cycle and the pendulum will begin to swing back. The general trend, based upon current losses, appears to be one of rate increase over the coming years. Your best defense against high rates is a good safety program, claims review, and a company with a stable history.

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How Are Worker's Compensation Insurance Rates Calculated?
Your rates are based upon a variety of factors, these include the type of work you do, your loss history and the size of your premium. Each year all California insurance companies file their rates for each classification with the insurance commissioner. These become the "published rate". The base rates are normally classified by occupation. Office workers have low rates of around 1 or 2 %, while sheetmetal workers and carpenters are rated at 10 to 20% or higher. The insurance company then adjusts those rates for individual companies and groups. For example, a rate for an electrician may be filed at 9%, but if the employer has a good loss history the company may lower the rate to 7% because there is less chance of a claim from a good employer. Premium size is also considered by most companies. Large premiums, generally $25,000 and above, are often discounted 10% or more. This is because a large policy is easier (and cheaper) to administer than several small ones. Different insurers prefer different classifications or types of business. Some insurance companies do not like to write construction insurance and therefore price it high. Others may want construction business and price more competitively. Your rates are basically a combination of what you do, how safely you do it and the size of your annual premium.

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How is Safety History Measured?
There are two measurements of safety history, loss ratio and Experience Modification (EXMOD). Loss ratio is the amount of payments made compared to the amount of premium earned. For example, a company that has an annual premium of $10,000 and claims payments of $5,000 would have a loss ratio of 50%. Generally 60% and below is considered pretty good. EXMOD is a convoluted formula averaging the last three years of claims and incidents. Basically an EXMOD of 100 is average. Below 100 is good and above 100 is bad. At 125 and above the employer must pay a surcharge to the State because of their poor safety history. The EXMOD is an important factor in determining your rate and this information is always requested by insurers before pricing a new policy. Your current insurer can give you your EXMOD upon request.

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How do Insurers Handle Claims?
When an employee is injured medical attention should be provided immediately and the insurer notified. The insurer will review the submitted claim and then assign a "Standard Reserve" to the claim. These reserves are money which is set aside for the payment of the claim's costs. This standard reserve is an averaged cost for that type of injury. For example, an injury noted as "cut finger" may receive a standard reserve of $26,000 (Yes! 26K for a cut finger!) This would include all types of cut fingers ranging from "two stitches and back to work", at an actual cost of $400 to "right index finger missing", and a permanent disability. When the claim is finally closed the standard reserve is replaced with the actual amount paid out. This sounds reasonable but there is another element. A new claim is assigned an adjuster in the insurance company. This adjuster normally handles 125 to over 200 "open" claims. It is his or her job to follow the claim, make phone calls, resolve problems and determine when the claim is fully paid and resolved and then close it and assign the actual cost in place of the initial standard reserve. If the adjuster does their job the process works well enough, but if the claim remains open after it should have been closed, the standard reserve number remains as the cost. This becomes a problem because each year the insurance company is required to report all claims cost, by insured, to the State. If you have a claim which is completed, but has not been closed, the standard reserve will be reported instead of the actual cost. If the standard reserve was higher than the actual cost your loss ratio and EXMOD will be calculated with the higher number. This will affect the premium you pay for the next three years. It is a good idea to find out who the adjuster is on your open claims and work with them to make sure the claim is progressing and the files are closed when the claims are resolved.

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What Does a Broker Do?
There are two ways insurance is sold; A few companies are "direct writers" who sell directly to the employer, but most are "brokered companies" who contract with numerous insurance brokers to sell their product. While no method is clearly better, construction companies are generally better off obtaining insurance through a broker. Brokers make between 5% and 15% (normally 10%) of premium on a policy. While this sounds high a good broker does several important things; First, they keep abreast of the market and can match you with a company that is offering a good rate for your premium size and the type of work you do. Second, they negotiate the rate for you with the insurer and often save you their commission on this alone. Third, a good broker will follow up on open claims to make sure they are closed in a timely manner. A good broker will also steer you away from the less desirable companies. In general, going through a broker will get you better coverage at a lower cost than you could obtain yourself by going direct. Worker's comp. is only part of the insurance you need. A good broker will provide the same services for liability, vehicle and bonding coverage.

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Health Insurance Basics
Health insurance programs provide medical and often dental coverage for you and your employees. In general the health insurance industry is in a period of economic stress and the service levels and physician providers vary greatly. There is no stabilization of this in the foreseeable future.

Insurance is obviously important because the cost of medical care can be a severe burden on a family. Health insurance is also an important component in retaining employees. This workplace benefit is one of the major factors employees use in job selection. As an employer you are more competitive by offering a reasonable salary with health benefits than you are by offering a great salary with no benefits. Companies with medical coverage for employees have fewer worker's comp. claims. Health policies normally are priced by employee age. The older the more expensive. There are few terms used for health insurance which you should become familiar with:

HMO - Health Maintenance Organization - One stop shopping (Kaiser in this area) where you go to one place for all of your health needs.
PPO - Preferred Provide Organization - You pick the physician you want from the list of participating doctors. Outside care possible at higher cost.
POS - Point of Service is a combination of PPO and HMO usually selected at time of sign-up.
Co-Pay - Each time you use the service you pay a nominal charge. Normally $10 to $20.
Guaranteed Enrollment - No one is refused and the rate stays the same for higher risk employees.
Open Enrollment - Annual period when you can join or switch plan providers.
Group - A pool of people or companies on which the rates are calculated

There are no bargains in California for health insurance. Small employers (less than about 30 employees) should shop based upon service rather than price. A poorly administered plan will become a time consuming nightmare of employee complaints and telephone calls to the insurance company.

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How is Insurance Priced?
Health Insurance is priced by plan features and the age of the employee. HMO's are generally the least expensive and older people are charged a higher rate because they use more services. There are two basic types of pricing; individual and group. Individual pricing looks at each employee separately. If you have a medical condition you will be rated higher (charged more) a physical exam is often required before enrollment. Group policies offer rates based upon the averaging the expected group costs and usually do not charge more for employees with existing health problems. Normally groups are priced by single person, person with spouse, Person with children (no spouse) and family, which counts all the children regardless of number. Following is an example of a Kaiser plan showing age and family size:

The Following Rates are from 2004 !!! You need to have an HSA to get these rates today!

The rate is based upon the employee's age in group plans. There are hidden costs to the employer with health plans. These costs generally center around administration. Many insurance companies are poorly managed and are constantly paying late, denying claims that should be paid and generally messing up the paperwork. If you get one of these you will have to respond to numerous problems on behalf of your employees. Get a plan that has an administrator or broker who will interface on your behalf. This way you have the employee contact the administrator / broker directly and get a better, faster resolution with no effort or cost on your part.

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Pitfalls
When someone is trying to sell you an insurance program everything sounds rosy, but there are a few things you need to watch out for.

Providers - The booklet may be full of doctors and dentists but are they really there? Check out the number of participating physicians and actually call a few to see if they still take the plan!

Administration - Who resolves problems and how. Insurance companies are often terrible at paperwork so get the problem resolution set up front.


Other Coverage - Can you also get dental, chiropractic and Life? If you want them get the package all at once through the same broker.

Shop Around - Don't talk to just one source. Compare based upon service - not just cost. Cost won't vary much but service will vary greatly. The first price break is for a group of 5 or more and it is generally 10%.

Don't Offer a Single Plan - Try to offer a menu of plans options. By doing this you satisfy the desires of your employees. If you are a small company this won't be possible.

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Setting up a Plan
People are fussy about medical coverage. They may have a favorite doctor or especially like, or dislike, one provider so choose several providers for your plan.

You can pay for full coverage or offer your employees a partial payment. For example, you may offer to pay up to $300 per month for health coverage. Anything over $300 is deducted from the employee's check. Although not the best employee plan it is better than nothing.

You will need to provide the carrier with some paperwork about your company and offer coverage to all of your employees. There is normally a requirement that a certain percentage of the workforce enroll. (50% if employee pays part, 100% if employer pays all) If an employee has other insurance (usually from a spouse's employment) they are not counted in the total. Many employers require that all employees have health insurance. Employees working less than 20 or 30 hours a week are generally not eligible.

Healt Savings Accounts - Basically they give you better coverage for less money. By the end of this decade it is predicted that 70% of all employee health plans will be HSA plans. To see an example of members experience with HSA's and other insurance plans click HERE

Health Savings Account Management - HSA's are best managed by a special HSA bank that does only that. They charge the employee only a few dollars a month and issue special health plan credit cards and maintain all of the employee's health cost records. They also answer employee questions and explain how the few rules work. Your local bank knows nothing about HSA's and will be of little help. HSA's are VERY easy to set up and administer if you use an HSA bank.

Determine the employee waiting period. This is the period new employees must wait for coverage to begin and ranges from 0 to 365 days - your choice. Existing conditions at time of enrollment in yopur plan may not be covered right away.

Get billing, administration and problem resolution straight right at the beginning, before you sign!

What about peole who are not in a group? In California a group is 2 or more people. If a person has a health issue, such as diabetes and they are not in a group, it can be very difficult (ie expensive) to get insurance! There is a State program where you can purchase expensive coverage but first try as hard as you cen to get into, or form, a group! A good broker may be able to help you.

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Get a Quote
Need a quote on health or worker's comp? Download here and fill out the form and fax or mail it to us and we will have one of our insurance associates give you a call. Its painless and you should check your coverage cost and quality every year or two. You will need Adobe Acrobat Reader to download the form. Most computers already have it, but if you don't click on the image below to go to the Adobe download site.

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Liability Insurance

Peninsula Builders Exchange is proud to partner with NCIC in bringing good and reasonably priced liability insurance to California associations. This group focuses on a market segment that many other companies ignore and will provide very competitive rates for:

• General and Sub Contractors
• Residential
• Commercial
• Tracts             
• New Contractors
• Condo Wraps available
• Special “Artisan” program for small contractors
• 5% discount for group members
• Lower rates

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Here are some typical savings for members

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Call us - or have your broker call to see if NCIC is right for your company!

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What is a Risk Retention Group??
In 1981 the federal Products Liability Risk Retention Act was passed that allowed for the creation of Risk Retention Groups (not to be confused with Risk Purchasing Groups). As the name implies, the original act focused on manufacturing operations.

In 1986 the Act was broadened to address any group (homogenous) that wanted to create its own insurance companies to write liability insurance. The Act was passed because the individual states and the "traditional" market were not addressing the product liability crisis as well as general liability for various market segments of the economy. At the time the medical sector, transportation and other professional classes were facing a liability crisis.

 Very simply a Risk Retention Group is an insurance company that has to be owned by its insureds. It can take the form of a mutual, reciprocal or stock company. NCIC was formed as a stock company, with each insured owning common stock of the company.

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What should I do next?
We recommend that you get a quote and see if this program is for you. Call Tom at 650-591-4486 for referral to a broker and association who sponsors PorBuilders.