Unlike General Liability – Its Rate Basis will always be payroll
Unfortunately, Workers Compensation will ALWAYS be based on your actual payroll. There’s no way around it.
Workers Compensation Premium = Company Rate x (Remuneration / 100)
WAIT – you may say – I thought the STATES made the workers compensation rates?!
That is partially true. In Pennsylvania, the Pa Compensation Rating Bureau (PCRB) DOES make the rate for each class code.
Here are PCRB rates effective 4/1/2017
|Class Description||Class Code||PCRB Rate|
|Full Service Restaurant||975||1.25|
|Fast Food Restaurant||897||1.30|
Those rates are NOT what you get charged by your workers compensation insurance company. Each workers comp company has a Loss Cost Multiplier (LCM) that they apply to the PCRB rates that determines how much you’ll be charged for each $100 of payroll.
Here are NorGUARD rates effective 4/1/2017 after their 1.6020 LCM was applied.
|Class Description||Class Code||NorGUARD Retail Rate|
|Full Service Restaurant||975||2.05|
|Fast Food Restaurant||897||2.13|
Notice how much higher the company rates are than the PCRB “State” rates. NorGuard offers standard rates, that are a market norm, so its not because NorGUARD is expensive. It’s because these rates represent what insurance ACTUALLY costs, not what a regulator thinks it should!
Changing Rating Basis Won’t Work for Workers Comp.
Unlike general liability, we can’t beat your workers compensation insurance audit by changing your rating basis.
We do have a successful strategy that will ensure your annual audit bill for workers compensation is $0.00!
Beat Your Workers Compensation Insurance Audit with Pay As You Go processing
Since the rating basis can’t be changed for workers compensation like general liability, you need to beat the workers comp audit with a different strategy: modifying your payroll reporting method.
A typical workers compensation policy ONLY requires you to report actual payroll numbers after your policy period has ended. They then adjust your TOTAL ANNUAL PREMIUM based on the audit, and bill you for the total difference.
Pay As You Go workers compensation allows you to report your ACTUAL payroll on a regular basis, which then adjusts your premium to reflect the payrolls you processed during that period.
You can report on a monthly basis by yourself, or you can have your participating payroll provider report on a bi-weekly or weekly basis, depending on how often you pay.
Not every workers compensation insurance company offers a Pay As You Go option. Lets face it – its a new trend, and insurance companies move slowly.
Not every independent agency offers Pay As You Go workers compensation billing plans. Agencies, much like companies, can be slow to pick up on the latest shifts in the market.
Some payroll companies will offer to sell you the workers compensation insurance through an in-house insurance agency – as well as doing the payroll reporting for you.
This is not a very good idea for two reasons:
- Their insurance agency force tends to be located far away in a call center environment, and is staffed by agents of varying levels of qualification with questionable levels of turnover. (sourced to an anonymous insurance company rep who works with these payroll company “agencies”)
- They charge a fee every time they report your payroll to the workers compensation company!
The fee is really what gets me – they get paid a commission by the insurance company THEN charge their clients for some minor data entry. The fee may only be $8 – $15 per reporting period, but over a year that can be several hundred dollars, especially if you pay weekly!
Its totally double dipping! Except rather than being rude party-goers, they’ll dipping into their client’s wallets!
THERE IS A BETTER WAY
When Heritage Insurance Agency and Heartland Payment Systems work together, we provide you with Pay As You Go workers comp at some of the most competitive rates, with very little work for you to do, and (best of all) NO FEES for reporting the data to the insurance company.
My goal with this post is to help restaurant owners and operators IMPROVE their bottom line by creating an efficient, and stable restaurant insurance program that won’t punish you for success with a terrible insurance audit.
By teaming up with Heartland Payment Systems – I can keep more of your hard earned money in your pocket because of their focus on service, and the fact that they don’t tack on “junk fees” for a value added service like Pay As You Go workers compensation.