Paramedic Systems of Wisconsin 20 th Annual EMS Conference

Insured & Uninsured Costs There are 2 types of costs associated with accidents –Direct Costs – normally covered by insurance –Indirect Costs – normally not covered by insurance

Costs of an Accident We are going to talk about the different types of losses that the underwriter needs to rate to cover your risk and then you need to convince him that you should get a quote. –Worker’s Compensation. –Liability exposure – both bodily injury and property damage. –Auto Physical Damage exposure. –Uninsured or hidden costs of accidents.

What does the Underwriter think of when they are rating your risk?

Workers’ Compensation Premium A Workers Compensation premium is based on pay roll, job classification and loss history Rates are determined by the state for each job category i.e., The experience modification formula is based on expected losses to actual losses. –frequency –severity –3 years of experience For 2007 policy year use 2003, 2004 and 2005 For 2008 policy year use 2004, 2005 and 2006

Workers Compensation Rates –Description: POLICE OFFICERS & DRIVERS 10/01/2007 $ /01/2006$ /01/2005$ /01/2004$3.14 –Description: FIREFIGHTERS & DRIVERS - NON-VOLUNTEER 10/01/2007 $ /01/2006 $ /01/2005 $ /01/2004 $4.64

Ambulance Service Companies Code Description: DRIVERS, CHAUFFEURS, MESSENGERS, AND THEIR HELPERS NOC-COMMERCIAL (Applies to employees engaged in such duties on or in connection with a vehicle. This classification also includes garage employees and employees using bicycles in their operations. Duties include, but are not limited to, delivering products owned by the employer. Code 7380 does not apply when the basic classification wording includes drivers, chauffeurs and their helpers. If a separate legal entity is established for delivery of products owned by the employer, assign exposure to Code 7228 or Code Subject to Rule IV.B. Messenger and courier deliveries of owned documents or goods made by foot or public transportation are assigned to the governing class code.) CHAUFFEURS, DRIVERS, MESSENGERS, AND THEIR HELPERS NOC-COMMERCIAL (Applies to employees engaged in such duties on or in connection with a vehicle This classification also includes garage employees and employees using bicycles in their operations. Duties include, but are not limited to, delivering products owned by the employer. Code 7380 does not apply when the basic classification wording includes drivers, chauffeurs and their helpers. If a separate legal entity is established for delivery of products owned by the employer, assign exposure to Code 7228 or Code 7229.) DISTRIBUTING CO (Employees transport to location in cars & trucks.) GEOPHYSICAL EXPLORATION NOC-ALL EMPLOYEES & DRIVERS (Core drilling to be separately rated as Code Drilling NOC.) ICE CREAM VENDORS - MOBILE & DRIVERS AUTOMOBILE TRANSPORT DRIVING CARS ON RAILCARS AUTOMOBILE TRANSPORT SINGLE OR IN TANDEM BANKS AND TRUST COS-ARMORED CAR CREWS-NOT CONTRACT SANITATION SERVICE - DRIVERS SCHOOL BUS DRIVERS (Drivers employed by school.) SEA WEED OR LAKE WEED - TRUCKING - ON LAND SOFT DRINK DISTRIBUTORS - DRIVERS TELEPHONE BOOK DELIVERY WATER SAMPLES FROM INLAND LAKES WINE OR SPIRIT MERCHANTS-DRIVERS AMBULANCE SERVICE COMPANIES: ALL EMPLOYEES & DRIVERS AUTO HAULAWAY OR DRIVEAWAY & DRIVERS: DRIVEAWAY & TANDEM FIRE EXTINGUISHER - SERVICE OR RECHARGE & DRIVERS

Ambulance Service Companies 7705 Code: Description: AMBULANCE SERVICE COMPANIES AND EMS (EMERGENCY MEDICAL SERVICE) PROVIDERS & DRIVERS

Ambulance Service Companies Code /01/2007 $ /01/2006 $ /01/2005 $ /01/2004 $ /01/2003 $ /01/2002 $6.33 Code /1/07$5.26

Compare Ambulance Service to Fire Ambulance Service Companies (code 7380) is 79% higher than the fire code over the last 20 years. That is a $2.18 rate difference. Risk is so bad that the WCRB is splitting out the exposure into its own code 7705.

Experience Mod - Example Your losses have a direct impact on your experience modification factor A bad year stays with your for 3 years in terms of its impact on your WC premium Employees wages while on light duty are not charged against your loss history Employees off on WC can impact your insurance for 3 years

Experience Mod - Example break even $1.20 per $1.00 in insurance.80 - $.80 per $1.00 in insurance

Experience Mod Example If your manual premium for your business is $50,000. (That is rate times payroll times.01) An experience mod of you pay $46,580 for your WC insurance Range of mod’s for CVMIC Members is.62 – 1.48 With a mod of.62 you pay $29,309 With a mod of 1.48 you pay $68,396 for the same insurance

Accident Costs - continued Accident Costs - continued Direct Costs: –Medical –Lost wages – when covered by WC –Permanent partial disability –Total disability

Accident Costs - continued Accident Costs - continued Indirect Costs: –Employee benefits & wage continuation –Investigation –Supervisory time –Claims handling time –Reports and paperwork –Equipment damage and 3rd party liability –Lost productivity –Rescheduling staff –Overtime –Retraining –Reduced productivity and morale –Increased workers’ compensation costs –Hiring and selection costs

Accident Costs When considering a workers compensation accident it is not uncommon that “indirect or hidden” costs can be 4-10 times “direct” costs (medical, indemnity and permanent partial disability)

Cost of a Vehicle Accident Example #1 Medical payments $ 400 Wage payments ($20/hr - 1 wk) $ 800 Third party liability $ 3,500 Property damage $ 1,000 Supervisor’s time ($30/hr - 5 hrs) $ 150 Personnel's time ($25/hr - 5 hrs) $ 125 Overtime (1 wk ) $ 400 Total cost $ 6,375 Direct WC costs $ 1,200 Indirect costs $ 5,175 Ratio 5.3 to1

Cost of an Accident Example # 2 Employee ($20/hr off) $ 240 $ 514* (employee misses 1 1/2 days) Medical (emergency room) $ 120 $ 120* Overtime ($10/hr) $ 80 $ 566* Supervisor’s time ($30/hr – 2hr) $ 60 $ 60* Personnel’s time ($25/hr – 2hr) $ 50 $ 50* Total costs $ 550 $ 1310* Ratio 4.6/1 10.8/1* Fire Fighter *

Accident Costs for a Vehicle Accident Third Party Liability Auto Physical Damage Workers Compensation Hidden Costs

Cost of a Vehicle Accident Third party liability $ 3,500 (Auto liability) Property damage $ 1,000 (Auto Physical) Medical payments $ 800 (WC) Wage payments ($20/hr-2 days) $ 320 (Hidden) Supervisor’s time (30/hr-3 hrs) $ 90 (Hidden) Overtime (2 days ) $ 160 (Hidden) Total cost $ 5,870 How much of the above is covered by insurance? How often do you see the true cost of an accident?