An Imperial Valley farm labor contractor (FLC) in business for more than 20 years.
This FLC had been with the same broker since its founding, however, the broker was solely focused on booking premiums and disappeared after renewals. They never took the time to educate the FLC on how insurance was priced and placed, nor did they offer any consulting support services to help the client reduce losses. In our first meeting with the FLC we discovered they were being non-renewed by their auto-liability carrier and were unable to secure this critical coverage for their 15 buses. As we did further discovery, we also learned their workers’ compensation premiums were spiking, but they had no idea why.
The Solution and Results
The solutions for both challenges started with client education, followed by marketing and placement expertise, and the introduction of value-added risk control and claims services.
- Auto Liability – We determined the non-renewing carrier had become very concerned by large fluctuations in the bus fleet count. Because of our knowledge of the auto insurance market for agricultural clients, we placed this client with a specialist carrier who understood the fluctuations were simply due to the seasonal nature of the harvesting business. We even successfully negotiated a premium credit based on this seasonal variability. Further, our loss control team has begun to introduce safe driver training programs to their operators.
- Workers’ Compensation – Their premiums were being negatively impacted by a debit Experience Modification Factor (X Mod) of 1.45. To compute an X Mod the carrier establishes an average premium for all insureds in a class of business and assigns a starting adjustment factor of 1.0. Then depending on an individual firm’s loss history, premium is either credited or debited based on historical losses. We took the time to explain how X Mods work and why 5-6 larger claims were affecting their pricing with a 1.45 penalty factor. We also brought in our claims consultants to do an extensive open claims review which resulted in a meaningful reduction in claim values. Due to the number of years of loss history included in X Mod computations, premium reductions can be expected over the next two years as older years’ losses drop out. The client now understands the factors that drive their workers’ compensation insurance costs, especially loss prevention, and are working closely with our risk-control team to create an aggressive safety and loss-prevention program.
- Program analyses
- Claims advocacy
- Loss control consulting