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 Workers Compensation Application


Why value added services are more critical than ever!!!

In a market that may only have the states assigned risk program as its only choice, how do you shop an account or get your Workers Compensation premium down?

Ask yourself the following questions:

  • Are you properly rated for the exposures that exist? If not, is it possible to  get the class codes reassigned?
  • Is your  current experience modification correct? If not, what can be done to to get it fixed?
  • Do you have any open claims that are rotting in adjuster purgatory, with open reserves that are killing your experience modification?
  • Are you getting help from your agent to get  through the premium audit, or are you letting a $10 an hour accounts payable clerk do your job for you?

Any one of these problems or half a dozen causing your rates to balloon unnecessarily?  Every dollar that gets spent in wasted workers’ compensation premium takes $10 to $20 in additional sales to replace, depending on your industry.

If you are  in one of the trades where payroll and workers’ comp are the two largest expenses, not necessarily in this order, any one of these items could cause your business to go under because your will not be able to price a job competitively. Any one of these items could add 10 percent or more to the rate you are  paying. A sizeable claim could add as much as 100 percent.

Let me give you examples of each of the cases mentioned above.

A medical club was being classified with three different governing class codes—there should have only been one. The majority of payroll was placed in the 8017 class code, the governing class code. So, the only exception class codes should be 8810 (clerical) and outside sales, which is a zero for them. Instead, they had physicians, truck farms and trucking class codes used on the risk. This is adding an additional $30,000 per year in premium to the account. By arguing on audit that there should not be more than one class code being used, I am going to get this money returned to the client.

I have another client whose business is a bagel bakery. When they came to me, they had an experience modification of 1.58 that was putting them out of business. Upon review of their loss history, I found that they had a claim that was erroneous on their loss history. The erroneous claim was being reserved at $8,000 and upon review of their experience rating form, I found that the claim was showing up on it as well. This claim alone caused a 10-point change in the clients experience modification. This one error would have cost the client $30,000 over three years. By fixing it, along with cleaning up two of his claims, I was able to cut the clients insurance costs by 32 percent.

Open claims seem almost self-explanatory. Any decrease in a client’s reserves will create real rate relief for the client. If there are $50,000 to $100,000 in reserves and you can get a claim closed and remove unnecessary reserves, or help get an employee back to work to push the system along you are creating value for your clients. Every dollar in reserves that you can get removed directly affects your experience modification. If we can get $20,000 to $30,000 in reserves removed on a claim, that will do more than any amount of shopping premiums at renewal will ever be able to do for you.

Errors by the accounts payable clerk can cost a company big time. These people are not experts at workers’ comp—we are.

I have even seen clients where dozens of employees had to be reclassified at audit time, because the accounts payable clerk had incorrectly listed a profit sharing bonus as retail sales. Every clerical employee had been reclassified as the store’s NOC (Not Otherwise Classified). This error cost a company $15,000 that should never have owed it.

These are just four of 12 different ways that our agency brings value to our clients on a daily basis. If we aren’t aggressively doing everything possible to control your workers’ comp costs, we are going to find ourselves being replaced by brokers that will.

CorrectComp is an exclusive program of Old National Insurance that helps our  clients manage their workers’ compensation and general liability insurance costs.

If you feel your workers’ compensation and/or general liability insurance costs are out of control, you need CorrectComp. We help you bring control to your workers’ compensation plan.. In fact, workers’ compensation is the one insurance coverage which an employer can control–but only by using the right process. That process is OLD National Work Comp CorrectComp.

CorrectComp can help you save money and eliminate many of your workers’ compensation problems. Contact us via phone or email and we will arrange a convenient time to talk.

As Costs Rise, Take Charge of Your Workers’ Comp and General Liability Expenses-


For years, employers have been enjoying a workers’ compensation environment characterized by decliningpremiums and a marketplace flooded with insurance companies anxious to attract additional workers’ comppremium dollars.  Ask us about the minimum premium policy, also known as the “shadow policy.”

That may be changing. No one is anticipating a severe or immediate turnaround in the workers’ comp market,but there are indications that the pendulum is starting to swing back toward higher prices. The workers’ compmarket, many insurance professionals predict, will be characterized by either a leveling off or steadilyincreasing premiums. They also predict the withdrawal of some specialty writers who entered the market inthe first place only because they were convinced profits would be high.

Donald T. DeCarlo, a practicing attorney and the chairman, president and CEO of the American Society ofWorkers’ Comp Professionals, says three factors contributed to the soft workers’ comp marketplacecharacterized by low premium prices. They are: reform laws passed around the United States, a greateremphasis on combating fraud, and the introduction of managed care to the medical component of workers’comp insurance.

While reforms were effective, DeCarlo says, they did not stem the tide in losses or litigation to the extentsome had envisioned. He also points out that while managed care has reduced medical claims severity, thesesavings are being partly offset by an increase in claims frequency. And, he concludes, the “predatory andoverzealous” pricing strategies that were adopted by many workers’ comp insurers have proved to be flawedas investment income is declining and losses are mounting.Data released by the National Council on Compensation Insurance (NCCI) affirms the changing direction ofthe workers’ compensation marketplace. The NCCI reported a combined ratio of 117 percent for workers’comp insurers from September 1998 to September 1999. This means that for every $1.00 of workers’ comppremium generated, the industry paid out $1.17 in losses and expenses. The NCCI also reports that the year-to-date workers’ comp combined ratio continues to climb.

“We have been warning for some time of deteriorating market conditions, and these latest numbers only givefurther weight to our fears,” said NCCI president and CEO Bill Schrempf. He adds that “adjustments will berequired to restore workers’ compensation to a healthy environment.”

These “adjustments” are likely to take the form of higher premium rates. But experts say that employers cantake other steps to help control workers’ comp costs, regardless of the market conditions that may prevail. Asan employer, you should carefully consider these questions:


Is your business being placed in the most favorable and least costly workers comp classification?


Is your experience rating being closely monitored to reflect positive changes that may have occurred inyour operation’s claims history?


Are the reserves reasonable or excessive that your workers comp insurer sets in open cases? This question isparticularly critical because reserves play an important role in determining an employer’s individual rates.


Is your insurer aggressive in seeking reimbursement from third parties whose actions may have resulted inan on-the-job injury and a subsequent workers comp claim? Likewise, does your insurer aggressively pursuesecond injury fund benefits to reduce the cost of a compensation claim?


What investigative services will your insurer bring to the table to challenge a workers comp claim that issuspected of being fraudulent?


What types of services or resources will your insurer make available in the areas of loss control and riskmanagement?


Does your workers comp insurer willingly provide periodic claim reports to help you to understand yourcompany’s loss trends and to pinpoint safety areas that may raise a red flag?


Are your employees being well served by your insurer through quick claims resolution and promptpayment of benefits to those who qualify?

While you can’t control changing workers comp market conditions, you can take proactive steps to exertgreater control over the services you get for you premium dollars. Insurance agents and brokers stand ready tohelp their commercial clients analyze the many issues that affect workers comp coverage, while also helpingto identify the insurance that represents the best “fit” for each client’s individual needs.



Did You Know?

1. The insurance regulatory authorities in each state audit the reserving practices of workers’ compensation carriers to help identify and prevent potential insolvency. 

2. Reserves are set “conservatively” (somewhat higher than file documents support) to meet insurance department solvency criteria. 

3. These “conservative” reserving practices work against the employer. 


4. The employer has the right, within six months after policy expiration to audit their open workers’ compensation claim files and require that reserves reflect the actual file documentation. 

5. The result is a change in reserves specifically for unit statistical plan filing purposes, which lowers the experience modification.


The Answer

1. The CorrectComp system is a combination of workers’ compensation claim file auditors, reserving errors and other mistakes.  CorrectComp is supported by software capable of tracking both the field audit activity and the workers’ compensation claims reserve from inception to resolution. 

2. By verifying the experience modification rate calculation, CorrectComp can detect and correct errors which result in refunds to the employer. Examples are revised payroll audits not sent to bureau, same claim reported twice, payroll not correct. We could go on!

3. CorrectComp will improve the employers experience modification by periodically auditing the open workers’ compensation claim files.

4. Experience modifications CAN improve substantially over time with the help of CorrectComp.

5. The results are dramatic.

What about Workers Compensation Audits?  Who is audited? A company in the assigned risk plan or residual market will have an audit every year.  The auditor will generally require the following forms:

IRS Form 941-A Federal Income Tax Quarterly Report of Taxable Wages (need all 4 quarters)

  • IRS From 940-An Annual Report of Federal Taxable Wages
  • IRS Form 943-An Annual Repot of Federal Taxable Wages for Agricultural Employees
  • State Unemployment Quarterly Reports (need all 4 quarters)
  • IRS Form 1040 and Schedule C (page 1 and 2) if your business entity is a sole proprietorship
  • IRS Form 1065 and Schedule K-1 if you business entity is a partnership
  • Certificates of Insurance for Subcontractors
  • Payroll Journal
  • General Ledger

All workers compensation legislations has five specific objectives:

1. Prompt payment of adequate benefits to  injured workers or their dependents according to faxed and predetermined schedules of benefits.

2. Elimination of the costs of litigation to the employee, the employer and society as a whole.

3. Establishing a guaranteed benefits payment arrangement secured by

4. Promoting safety and health activities where the employer can easily observe the relationship between those activities and the costs of workers compensation benefits.

5. Providing medical and rehabilitation services to injured workers.


Employers Liability Insurance Defined-

      Employers liability insurance covers the common law or tort liability of an employer for employee injuries that fall outside the scope of the state law or act that are separate and distinguished from the liability imposed by workers compensation laws.


1. Our CorrectComp program can reduce costs for those EMPLOYERS involved in paid loss and incurred loss retrospective rating plans.CWCA 1 - CorrectComp

2. Our audit also finds subrogation possibilities, third party recovery potential, and simple clerical errors.

3.We also verify that final payroll audits are posted correctly on the NCCI or other State Bureau worksheet, as well as verify that claims are posted accurately.

4. Upon finding errors, we contact the carriers, file the corrections and follow-up to verify the experience modification has been corrected.

5. Upon your request, we project the experience modification six months ahead of NCCI or the State Bureau.

6. Most Employers cannot afford to be without a highly cost effective solution for their workers’ compensation premiums, especially controlling costs after the claim has occurred.


We Now Offer Marine Insurance  and have included some terminology and definitions for our clients:

Admiralty – refers to the common law of the sea, enforced by the federal Courts.  Seamen have certain rights and remedies against their employers under Admiralty Law, if injured on the job or during a voyage.

Jones Act – a federal law that extended the Federal Employer’s Liability Act (FELA) to give injured seamen the right to sue their employer in federal Admiralty courts for their work-related injuries.

Longshore – literally means “along the shore”. Refers to maritime employment, other than work as a seaman. Includes work building and repairing ships, loading and unloading ships, construction or repair of structures to enable waterborne commerce, and other work on or near navigable waters in support of waterborne commerce.

Maritime – generally means “pertaining to the sea”. In connection with the USL&H Act, “maritime” work means work that meets the “situs” and “status” tests, including  building and repairing ships, loading and unloading ships, construction or repair of structures that enable waterborne commerce, and other work on or near navigable waters in support of waterborne commerce.  Also references work in connection with the Jones Act.

Marina – a property or premises that provides waterfront facilities for recreational boating activities, typically launching, docking, storing, fueling and incidental servicing of boats.

MEL – “Marine Employers Liability” coverage, often provided under a P & I policy or monoline, to protect the employer against his liabilities under the Jones Act and Admiralty law for injury to his employed seamen.   Known as “Maritime Coverage” when provided as an endorsement to a Workers’ Compensation Insurance Policy.

Navigable water – a body of water or waterway which enables travel (in any size vessel) from one state to another or to the Gulf of Mexico or to an ocean

Political subdivision – is a unit of the federal or any state, county, or municipal government, or an agency established by one of them, such as a water district, or school district, or a recreational district

Situs – having “situs” means the work is on or adjacent to navigable waters.

Status – having “status” means the work is generally “maritime” in character, unless specifically excluded in the Longshore and Harbor Workers Act. Work as an employee of a political subdivision is also excluded.

Seaman – a maritime employee who works on a “vessel”, contributes to the functioning of the “vessel” and the accomplishment of its mission, and has a connection to the vessel or a commonly owned group of vessels.  The general working precedent is that an employee needs to spend at least 30% of their time on this vessel or group of vessels to be considered a “seaman”.

USL&H means the United States Longshore and Harbor Workers Compensation Act, a federal law in many respects like any state’s Workers’ Compensation law, except that it only applies to employers and employees engaged in maritime work.

Vessel – is a ship, boat, barge, or navigable work platform of any size.

Marine Insurance Terminology
This is a general guide only, individual circumstances and policy forms vary.

Bareboat Charter
The charter of a vessel without captain/crew.

Blue Water Vessel
One that sails outside the U.S., typically ocean-going or to/from the Caribbean.

Brown Water Vessel
A vessel, most typically a tug/barge, that operates in the river system or coastal U.S.

See umbrella.

Collision Liability
Liability for physical damage to another vessel you might hit. Typically included in the hull policy up to the limit of that hull policy.

DBA – Defense Base Act
A federal workers compensation program for private workers on a U.S. Defense base. It is usually required by contract, and is most frequently covered as part of an international policy.

DOHSA – Death on the High Seas Act
Available to seaman and non-seaman, A tort-based action for anyone who is killed upon the high seas beyond U.S. territorial water.

See Umbrella.

Physical damage to your own vessel.

Jones Act
The Merchant Marine Act of 1920, allows seamen a remedy to sue their employer for negligence in the event of injury or illness incurred in service of the vessel.

LOLL – Landing Owners Legal Liability
The inland version of Wharfingers Legal Liability. See below.

M&C – Maintenance & Cure
An absolute, “no-fault” liability to seamen (captain and crew). Maintenance is living expenses Cure is medial expenses incurred until maximum medical improvement.

Marine Umbrella
See Umbrella.

MEL – Maritime Employers Liability
A method of insuring an employer’s liability under Admiralty law (Jones Act, Maintenance & Cure etc.) to his employees. It provides similar coverage for employers as contained in a P&I policy. It does not cover Longshore or any third-party liabilities.

MGL – Marine General Liability
Similar to a normal general liability policy, it is something adapted to expand or eliminate the watercraft exclusion. Typically includes products/complete operations and all usual CGL coverages. It is often based on older versions of CGL forms.

MOLL – Marina Operators Legal Liability
Coverage for physical damage to vessels in the care custody and control. Often limited to “private pleasure vessels” only.

OCSLA – Outer Continental Shelf Lands Act
A federal workers compensation act which allows fixed platform workers on the Outer Continental Shelf access to the Longshore Act.
ORVA – Oceanographic Research Vessel Act
Allows scientists on officially classed research vessels access to the same benefits as seamen, without having to qualify under the Jones Act or sign seaman’s papers.

P&I – Protection and Indemnity
The marine equivalent of Automobile Liability, it covers the liability of a boat owner for bodily injury and property damage. It may include or exclude liability to captain or crew.

Srll – Ship Repairers Legal Liability
Physical damage to vessels, their cargo, and equipment in your care custody and control for the purpose of being repaired, or serviced.

StLL – Stevedores Legal Liability
Liability for cargo being loaded or unloaded from a vessel and damage to a vessel. Usually written with Terminal Operators Legal Liability in a combined form.

TLL – Terminal Operators Legal Liability
Liability for cargo in your care custody and control at a terminal prior to loading or after discharge from a vessel. Most commonly written in combination with Stevedores Legal Liability.

Towers Liability
Liability to a vessel and its cargo that you are towing or pushing.

Or marine umbrella. A combined excess policy. Sometimes has a dropdown provision. May or may not be excess over EL, Automobile or other non-marine policies. Wordings vary greatly.

Longshoreman’s and Harbor Workers Compensation Act. (Actually should be LHWCA). It is a federal workers compensation program designed predominately for “dockside” workers.

Wet Charter
The charter of a vessel with a captain/crew.

WhLL – Wharfingers Legal Liability
The marine version of “garage keepers legal liability.” Covers damage to vessels and their cargo which is in the insured’s care custody and control for storage, mooring, docking etc. Usually specifically excludes any repair work.


Longshore Questions and Answers:

What makes my employees eligible for benefits under Longshore?

Injured employees must past two tests: 1) the location of the work must be on navigable waters of the US. or in an “adjoining areaff and 2) the work cannot be excluded under the Act. These are defined in Sections 903(a) and 902 (3) respectively of the Act. Click here for a full copy of the Act 

How does Longshore cover my employees?

Longshore works very much like workers compensation except that in lieu of being run by each state individually it is administered by the federal government. Longshore coverage is most commonly provided by endorsing the W.C. policy as there is no coverage for Longshore benefits in the unendorsed policy.

Many states allow officers to be excluded or have a minimum number of employees before I am required to buy workers compensation insurance. Do these follow through to Longshore?

These do not follow through to Longshore. One part time Longshore employee is enough to trigger the need for coverage. Corporate officers doing any form of Longshore work are also required to be covered.

If I have Longshore insurance, do I need WC coverage as well?


Yes. Most businesses will have employees who do not qualify for Longshore benefits (clerical/sales etc) but even if you do not have these classes of employees W.C. provides the insurance necessary to do business in a particular state. The good news is that in most cases with a combined
W.C. Longshore policy the only charge for WC is the normal charge associated with excluded employees.

If I use subcontractors who do not have Longshore coverage what are the ramifications? If your subcontractor does not have coverage for Longshore you absolutely become liable for unpaid benefits regardless of whether you have or do not have coverage.  See Section 904(a) of the Act.

Is a sole proprietorship exempt from Longshore? 

A sole proprietor who has no employees can be exempt fROMm Longshore.  However a business is not considered a sole proprietor under Longshore if working “at the direction of another”, which removes most sole proprietors from this exemption.


Can Sole Proprietorships exempt their employees?


How do I obtain Longshore Insurance?

Longshore insurance must be purchased from an insurance carrier approved by the U.S. Department of Labor to write Longshore insurance. A list of approved carriers is available from [email protected]

It is best to use an agent who is familiar with Longshore to help guide you through that process.  Click here to email an agent:

[email protected]

Cell Phone for Immediate Response



Which Insurance companies are allowed to write Longshore Insurance?

Only those approved by the U.S. Department of Labor

A list of approved carriers is available from

However many are approved that rarely write the coverage.  An Insurance Company who specializes in Longshore will provide the correct support and dedicated claims handling.

What happens if I have an injury to a Longshore Employee but no valid Longshore Insurance?

The penalties are severe and are detailed in the Act Section 938.   Simply stated the employer and corporate officers personally are liable for any unpaid benefits under Longshore plus both also lose the protections of the Longshore Act and can be subject to a tort suit in additonal to the Longshore benefits.  In addition there is even the potential for jail time.

If my business is exempt from Longshore, am I also exempt from Jones Act and the other Admiralty liabilities?

No.  The Longshore exemptions have no effect on Jones Act or Admiralty liability.

When does Longshore stop and Admiralty Exposures start?

This is determined on a case by case basis, but the most common rule of thumb is that Admiralty benefits start when an employee spends more than 30% of their time in service of a particular vessel or identifiable fleet of vessels.

How do we report claims?

Claims should be reported to your insurance company as rapidly as possible.

In addition there are certain forms and requirements for filing with the U.S. Department of Labor.  A specialty Longshore carrier will be able to direct you on those.

Make sure you have available in a readily accessible location your carriers claims reporting hotline.  The faster claims are reported the better for everyone.



U.S. L. & H.:

Could Leave You High and Dry


The Longshoremen’s and Harbor Worker’s Compensation Act can provide both compensation and medical benefits to employees who were engaged in maritime employment.

When your PEO’s client, a welding company, received a call to perform a two-day job, it seemed quite run of the mill, nothing out of the ordinary. However, while on the job, one of the employees, unfortunately, got sparks in his eye, resulting in lost sight. On his road to recovery, you received the dreaded let-ter from the claimant’s attorney—a demand for permanent partial disabil­ity loss in the amount of $133,718, which was about four times the per­manent partial disability award in your state. Not the best news for your large deductible plan! Wondering how that could happen, you contin­ued to read on and discovered a refer­ence to Longshoremen’s and Harbor Worker’s Compensation Act. Uh, oh! “What’s that?”
After a grim consultation with your broker and attorney, the facts came to light: Your client sent a crew out to weld handrails onto the river-boat, docked down on the river. Because your employees were work­ing on navigable water, the claimant is entitled to federal Longshoremen’s and Harbor Worker’s Compensation Act benefits. After a short, painful les­son on the nature of this act, you real­ized that you should have more close­ly “scrutinized” your client’s jobs.
In 1927, the U.S. Congress passed the United States Longshoremen’s and Harbor Workers’ Compensation Act, sometimes referred to as U. S. L. & H. coverage, in response to court rulings that denied state workers’ compensa­tion benefits to maritime employees who were injured upon the navigable waters of the United States, because federal jurisdiction applied to these waters. The 1927 act provided both compensation and medical benefits to any employee engaged in maritime employment (except the crew mem­bers of a vessel) who suffered a work-related injury, disability, or death that occurred upon the navigable waters of the United States. Congress amended the act in 1972, instituting the follow­ing changes:
·  Prevention of injured maritime workers, subject to the act, from filing suit against the vessel owner on the basis of “unseaworthiness” of the vessel
·  Prohibition of third-party over suits
·  Benefits generally higher than those offered under state compensation laws
• “Status” and “situs” established as prerequisites for coverage under
 U. S. L. & H. In order for a claimant to collect under U. S. L. & H., he or she must be an employee defined in the act (sta­tus), and the injury must occur at a  location under the jurisdiction of the act (situs). Covered employees may include the following positions: long­shoremen, harbor workers, ship repairmen, shipbuilders, or ship-breakers. The employees also are required to be engaged in maritime activity upon the navigable waters of the United States, which includes any adjoining pier, wharf, dry dock, termi­nal, building way, marine rail-way, or adjoining area that is customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel. The act does exclude certain classes of employee work from cover-age: clubs, camps,recreational opera­tions, museums, retail store employ­ees, marinas, vendors, transporters, suppliers, “aquaculture” work on ves­sels under 65 feet, and clerical, secre­tarial, and data processing tasks.
A simple job, like welding handrails onto a riverboat, could leave you high and dry and deplete funds from your company bank account unnecessarily.

The covered injuries and diseases benefits are somewhat similar to the benefits provided by the states. A notable difference is that the willful act of a third person, directed against an employee because of his employ­ment, is covered under the U. S. L. & H. Act. Otherwise, coverage is pro­vided for any accidental death or injury occurring within the scope of employment, except for the death or injury due to intoxication or willful intent of the employee to kill or harm himself, which is not compensable.

If your PEO has a client conduct­ing work that has U. S. L. & H. exposure, you have serious reasons for con­cern. Generally, the benefits under U. S. L. & H. are substantially higher than the benefits proscribed by states for similar injuries. For example:

·  The total temporary maximum weekly benefit is $835.74; the mini-mum is $208.94.

·  There is no time limit set to the dis­ability. Payments continue for the duration of the disability, as claimed.

·  Sample income benefits for sched­uled injuries include $203,921 for total loss of hand; $62,680, thumb; $171,326, foot; and $167,148, total hearing loss.

·  Time limit for income benefits to a spouse if fatality occurs is unlimited, with a lump sum settlement two years after remarriage.

The U.S. Department of Labor administers the adjudication of claims for the Division of Longshore and Harbor Workers’ Compensation; appeals can make their way all the way to the U. S. Supreme Court.

From a risk management point of view, verify—with some urgency— that your present workers’ comp poli­cy includes, at the very least, inciden­tal U. S. L. & H. coverage specified in an endorsement. If an employee suf­fers a claim under this exposure, you could be liable for the difference in benefits between the state and federal levels. That could be quite an expo-sure! In addition, be very sure that you have a good grasp on the activities of your clients. A simple job, like weld­ing handrails onto a riverboat, could leave you in dry dock.

O Rickey Harris is an insurance specialist specializing in U.S.L.& H., Jones Act, Maritime Employers Liability. He can be reached at 1-877-896-2886. Toll Free Fax at 1-866-497-8606

Email: [email protected]


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