1. Return to Work Programs Effect On The Bottom Line Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224

2. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Workers’ Compensation Costs How are premiums calculated? How do losses impact premium? How does a Return to Work Program help control costs?

3. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Workers’ Compensation Premiums Several factors determine WC premium –Class Code: Different job classes involve a different degree of risk. They are weighed using a rating when calculating premium (example: administration vs. construction). –Payroll –Experience Modification Factor –Other Considerations

4. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Case Example: ABC Manufacturing Desc. Of Job Class Code Annual Payroll Divide by 100 Rate per $100 Manual Prem. Furniture Mfg. 2883 $600,446 6,0044.46$26,777 Clerical8810$42,170421.7.310$131 Total Manual Premium= $26,908

5. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Manual Premium Your manual premium is the premium before any other factors are applied. The experience modification factor is applied to the manual premium.

6. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 What is the Experience Modifier? It is the number used by the insurance industry to compare a company’s injury experience with similar companies. It either will decrease or increase your premium depending on injury history. Frequency and severity of claims impact the experience modifier.

7. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Experience Modifier All businesses start with a 1.0 experience mod. A High Mod (e.g. 1.5) can increase WC costs by 50%. What is your company’s experience modifier (mod rate)? Debit Mod. Credit Mod. 1.0 1.5.70

8. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Use of the Experience Mod. Manual Premium x Exp. Mod.= Premium* $26,908 x 1.5= $40,362 $26,908 x.7 = $18,835 Difference between good mod vs. poor mod= $21,527 * Additional credits or debits may apply.

9. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 ABC Manufacturing: A look at the effective use of RTW What if ABC used RTW each year? How would that effect their premium? How would it effect their experience modifier?

10. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 RTW Impact : ABC Manufacturer Claim Cost Cost After RTW Claim Savings Mod Point Savings 1 yr. Prem. Savings 3 yr. Prem. Savings $12,000$8,0004,000.731197$591 $6,000$3,0003,0003.8391,033$3,099 $7,500$3,5004,0003.199861$2,583 $25,500$12,50013,0002.377639$1917 Mod Savings: 10.146 Premium Savings: $8,190

11. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Return to Work and Experience Modifier Your experience modifier can change each year. A bad year will impact the modifier for THREE years. By returning an employee back to work, you not only CONTROL negative impact to your mod. for the current year, but it’s impact for the next three years.

12. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Translating RTW Savings to Sales Assuming a 4% profit margin- How many dollars in sales did RTW save? $8,190 /.04 = $204,750 in sales.

13. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 RTW Impact to Experience Mod. ABC Manufacturing saved $8,190 in direct premium costs by providing transitional work options on 4 claims. Consistently applied, the use of RTW could cumulatively have greater impact on experience mod.

14. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Total Injury Costs: Direct vs. Indirect Costs Direct claims costs are just the tip of the iceberg. Cost of injuries are much more than the cost of a claim. Indirect Costs: Administrative time, retraining, loss of production, damaged equipment, etc. can cost up to 4 times the direct cost.

15. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Effect of Return to Work… Decreased cost of the claim and the impact of the “experience mod.” Workers are utilized and productive. Claim is more effectively managed. Result = better use of employee, lower costs, effective management of claim.

16. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 How to Control Your Experience Mod? Establish a good safety program. Fewer accidents = fewer costs. Report claims promptly and use a quality medical provider. Good treatment = controlled costs. Implement a proactive Return to Work Program.

17. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Returning injured workers as soon as medically safe… Reduces cost of lost wages Reduces severity. Discourages fraud and malingering Improves communication and reduces litigation.

18. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Other Premium Factors Insurance markets favor those with effective safety programs. Insurance markets favor those who proactively use RTW programs to reduce costs. Good insurance risks can gain pricing leverage by demonstrating they control costs.

19. Vincent & Vincent Companies (Dept. of Loss Control Engineering) P.O. Box 304 Freeland, PA 18224 Conclusion Worker’s Compensation costs can be controlled with: Accident Prevention: The best way to control WC costs Return to Work Programs: Post accident, this is a key element to controlling costs. For additional information, contact us at 570-636-3688 or inspections@vvcompanies.com inspections@vvcompanies.com Thank You!