1. Worker’s Compensation
During this session we will review material covered on the worker’s compensation portion of the Commercial CD-ROM. Before we get started, are there any questions you have about the material on the CD?
List any questions you receive on a flip chart. If you can, answer them, or call your commercial sales specialist or underwriter for answers.
If you cannot answer the question, write down the name of the person asking the question and tell the class that you get the answer and fax it to them.

2. What Do We Write?
Farmers has elected to pursue ten historically profitable types of business under the worker’s compensation program.
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3. What Do We Write? Food Service Automotive Retailers
Artisan Contractors
Service Providers
Wholesaler Distributors
Printing
Light Manufacturing
Hotel/Motels
Agriculture
Farmers has determined that it can profitably underwrite accounts in the ten business groups listed on the screen. Note that we will write business for hotel/motels, light manufacturing and agriculture. These are lines of business where Farmers currently does not offer property and liability packages.

4. Eligible Risks
Within each of the industries, we have identified specific types of businesses, or standard industrial classifications (SIC Codes), that we are interested in writing.
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5. Eligible Risks Underwriting Grade
The next step is to determine the appropriate Workers Compensation Class Code. This class code is used to determine the Underwriting Grade and to apply a rate. Like the SIC code, it contains four digits. The two should not be confused.
You will often find that the prospects you work on have been mis-classified by their current insurance company. Understanding proper classification procedures can help you write accounts.

6. Underwriting Grades
Risks that produce small claims are assigned an underwriting grade of “1”.
Risks that produce catastrophic losses such as death, are assigned an underwriting grade of “5”.
Farmers adopted an underwriting grading system so our agents and underwriters would understand which accounts pose the greatest probability of loss to the company. Accounts which fall into underwriting grades 1,2 or 3 are desirable. Underwriting grades 4 and 5 are not.

7. Underwriting Grades
Farmers concentrates on writing risks with low severity
You should solicit prospects which have underwriting grades of 1, 2 or 3.
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8. Classification of Employees
Looks at the business of the employer not:
Separate employments
Occupations
Operations
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9. Multiple Classifications
If an employee is involved in more than one classification, his entire payroll will be assigned to the highest rated classification that he is involved in, unless exact payroll records are kept.
If exact records are kept, that employee’s payroll may be split.
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10. Standard Classification Exceptions
These occupations are common to so many businesses their payroll is always classified separately:
Clerical Office Employees
Drafting Employees
Drivers, Chauffeurs
Salespersons, Collectors or Messengers
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11. Classifications
For clerical payroll to be separated from other classifications, the clerical area must be physically separated from other work areas. Also, the person assigned clerical duties must perform clerical duties exclusively.
It is important to ask your prospective accounts what duties each employee performs. If an employee can be classified as clerical, it will probably save the account premium dollars.

12. Governing Classification
The classification with the greatest amount of payroll is considered the governing classification
When the payroll of an employee cannot be assigned to another classification, the payroll must be assigned to the governing classification.
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13. Small Percentage- Underwriting Grade 4
Risks with small percentage of UG 4 premium may be submitted to your underwriter for consideration. Contact your Worker’s Compensation or Commercial Service Center.
Sometimes you will find a prospect that has a very small percentage of UG 4 exposure. Say, 5%. If the account is excellent in every other measure, you may submit the account for consideration. Remember, an exception will be made only if you can establish that the exposure to loss from the UG 4 operation is not significant

14. Desirable Characteristics
Good Management
Good Loss Experience
Good Employee Selection
Low Employee Turnover
Accounts that produce no losses, or fewer losses than expected
Accounts with Good Safety Program
Desirable accounts will have several of these characteristics.

15. Characteristics of Less Desirable Accounts
Injuries caused by crime
Unsupervised employees
Employees who work above or below the work floor
Exposures to employees which cause back injuries
Limited incentive to return to work
Exposure to chemicals
Transportation of employees
These are characteristics which have caused loss problems on accounts in the past.

16. Three Company Marketing
Ultra Preferred- Mid Century Insurance Company
Preferred- Truck Insurance Exchange
Standard- Farmers Insurance Exchange
Worker’s Compensation accounts are also subject to our three company marketing plans.

17. Company Placement
Depends on the following characteristics of the account:
Loss experience
Management experience
Premium size
Underwriting grades
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18. Loss Experience
We reward prospects that have controlled their losses in the past. They can verify their good past experience by securing loss runs from their prior insurance carrier.

19. Business Experience
We give our best rates to those businesses that have had several years of experience managing and supervising employees.

20. Premium Size
Verify with your commercial specialist what the threshold is in your state.

21. Underwriting Grades
We offer our best pricing to those accounts that fit into the selected industries we have elected to pursue.

22. Premium Modification
The following premium modification plans are available in most states:
Account Completion Credit
Experience Modification Credit/Debit
Premium Discount (Based on Premium Size)
Schedule Rating
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23. Account Completion Credit
Allows a 5% discount on the worker’s compensation policy and the property and casualty package if both policies are written with Farmers.
To earn this credit the Federal Employer Identification Number (FEIN) must be shown on both the WC and package applications.
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24. Experience Modification
Experience rating plans compare an account’s past loss experience to the average experience for similar accounts.
If loss experience is better than average, a credit modification is generated.
If loss experience is worse than average, a debit modification is generated.
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25. Premium Discount
Premium discounts are credits to premium based on the size of the premium.
The larger the premium, the greater the discount.
These discounts are automatically calculated.
The customer does not have to take any special action to receive this discount.
It is cheaper for us to issue one large policy than several small policies. We pass this cost saving on to our policy holders as a premium discount.

26. Schedule Rating
Tailors the premium of an account based on specific characteristics inherent in that operation which are not already contemplated in the rate. For example: Low employee turnover
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27. Schedule Rating- Characteristics Evaluated
Schedule rating looks at management, employees and premises and equipment.

28. Schedule Rating- Characteristics Evaluated
Unique Characteristics
Medical Facilities
medical staff on premises
We also consider unique characteristics and medical facilities.

29. Schedule Rating Worksheet
Schedule rating worksheets should be completed by the agent for any account that qualifies for the Schedule Rating Plan. The worksheet requesting credits/debits should be submitted to the Commercial Service Center for approval and processing.
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30. Payment Plans Available
Annual Pay
8 pay
10 pay
Special 10
Monthly
Offering a prospect payment terms that fit their business can help you write the business.

31. Payment Plans/Terms
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32. Payment Plans/Terms (Continued)

33. Marketing Support
You should order a supply of these folders and visuals to use in your sales efforts.

34. Marketing Support(Continued)
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