Members of Associated Builders & Contractors’ Sierra chapter received premium refunds from Builders Insurance Company as part of the workers’ comp insurer’s “retro” plan. A retrospective rating plan is one in which the employers’ actual losses are used to calculate the ultimate premium, according to Ron Landram, ABC’s special guest at the luncheon. Landram is vice president of Risk Services-Nevada, which serves as administrator for Builders Insurance Co., one of the two largest workers’ comp providers in Nevada.
“The usual practice in the insurance industry is that the policyholder is given the price at the beginning of the policy’s coverage period,” Landram said. “In a retro, the final premium price is determined by policyholders’ results. No insurance companies are required to offer retro premium programs,” Landram pointed out, “but Builders Insurance finds that this is an excellent way of motivating – and rewarding – on-the-job safety efforts by employers.”
Landram noted that Builders Insurance distinguishes itself by providing workers’ comp coverage – as well as comprehensive safety and fraud-reduction measures – designed to help participating companies reduce on-the-job injuries, and in doing so, reduce both workers’ comp claims, and the cost of those claims. In doing so, Builders Insurance achieved a loss ratio of just 37 percent in fiscal year 2005 – down from 42 percent a year ago for construction industry workers comp claims. Because of this, Builders Insurance is able to offer retro premium programs and other discounts and benefits to policyholders.
The total return of premiums under this retro program – in the Reno/Northern Nevada area alone – was just more than $200,000. Half of this total was handed out at the ABC meeting last week – with the remainder paid of the Reno/Northern Nevada area retro return of premium to be paid out over the next 12 months.
Among the 19 recipient companies honored at the ABC luncheon last week, several Reno-area employers earned substantial returns for keeping their on-the-job injury rates low. Moana Nursery, one of northern Nevada’s largest suppliers of landscaping products, left the meeting $32,684 richer; Precision Plumbing & Heating received $23,064, and Artistic Fence got $20,422. In each case, these retro-program rebates rewarded exceptional and effective on-the-job safety programs operated by these companies, and supported through classroom and on-the-job safety training programs by Builders Insurance its administrator, Risk Services-Nevada.
Members of the association who signed up for worker’s comp with Builders Insurance were invited to join the program, and the disbursements on July 26 reflected results from the 2004-2005 policy year.
The Builders Insurance retro program includes all ABC Sierra Chapter members who are also BIC policyholders, as a whole, so losses were tabulated as a group instead of doing so on an individual basis. Some retrospective rating programs offered by carriers set the maximum premium 110 or 120 percent or more, according to Landram, so if the group participant should sustain high losses they could actually pay more than normal modified premium.
“With Builders Insurance, however, under no conditions can you pay more than normal modified premium, based on actual results,” Landram said. “This year, the retro return was at 20 percent. Within a couple of years those who stay in the program long-term, could start seeing multiple checks each year.”
Source: Builders Insurance
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