First of all what does this mean? First of all what does this mean?
We often find ourselves BELIEVING what a customer may say like “the price — meaning the Workers Compensation (WC) dividend for WC — is extremely important.” If a business does not have any or very few losses over time, we as an insurance agency are on board with this expressed desire.
On the other hand, if an account has losses or the propensity to have them a WC dividend should be given less consideration. Why? It is in this environment many business owners find out the price —including the lure of a WC dividend—does not equal the resulting cost in the end.
The WC insurance companies paying higher WC dividends generally do not have the same abilities and back room metrics to truly help bring down your WC premiums. It is all a trade-off wherein a WC company pays a high dividend OR that money is spent on their progressive high skill sets and back room metrics thereby reducing your experience modification and hence your WC costs.
The Starr Group is incredibly picky about who we use for WC as the companies are all very different. As an example, one of our favorite WC companies reserves losses, your losses, to a minimum NOT a maximum! Now that is highly unusual and desirable. If you have claims would you rather have a high WC dividend or a lower one with reserves set a minimums? I would take and recommend the later all day long.
As in any industry there are progressive and less progressive players who align themselves with customers ideally fit to match their needs. Then it simply is a matter of having the proper guidance as to what you need relative to your data. The point is: never buy a WC dividend, rather first determine if you are a company that can have the luxury, meaning no or few losses, of thinking that way.
Merry Christmas to all and a prosperous New Year!
Tim Starr, CIC, CRM, CRIS, CWCA, ABOwner & CEO, The Starr Group