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Whether you’re in business or starting a new business you need to know the basics of workers’ compensation insurance. Virtually every business that has employees other than the owner is required by state law to carry workers’ comp. But you need to be careful in choosing a policy. The fact is many insurance companies can get remarkably tricky when it comes to writing policies – in their bag of tricks are such ploys as classifying the type of work your employees do incorrectly, miscalculating so-called modification factors, and making a variety of other types of errors which, oddly enough, result in insurance costs to you that are higher than they need to be.

Beyond needing to hold your own against your workers’ compensation insurance carrier, there’s another reason to take a few minutes to learn more about this type of insurance, namely, fraud. Workers’ compensation fraud is the second largest category of white-collar fraud in the United States today, second only to income tax evasion. According to industry observers, fraud occurs in almost a fourth of all claims. It can take the form of employee fraud (an employee who’s been in an accident claiming to be injured more seriously than he/she really is), employer fraud (harassing employees who put in claims or trying to deceive the insurance company regarding the number of the company’s employees), or insurance company fraud (wrongfully denying legitimate claims).

In a good many businesses, like manufacturing and construction, workers’ comp is a major expense item – and also a major source of friction and confusion. But most business owners know little or nothing about how it works or how rates are calculated. It’s too complicated to cover in detail here, but I’ll try to touch upon most of the basics in this brief article.

Workers’ Compensation Basics

If you are in the type of business that is mandated by state law to purchase workers compensation benefits, this is something to take seriously. In some states, notably Florida and California, businesses are getting shut down and owners prosecuted criminally for failure to carry this type of insurance. In most states you need it if you have one or more employees – California being one of the few that requires it even for one-person businesses.

In most states you can purchase an insurance policy from a workers’ comp insurance company; however in five states (OH, ND, WA, WV, WY) you must obtain coverage through that jurisdiction’s state-operated fund. These state operated funds are called “monopoly state funds.”

Note that thirteen states maintain state funds which compete with private insurers. So in those thirteen, you can buy your policy either from a private insurance company or from the state fund (CA, AZ, MD, CO, ID, MI, MN, MT, NY, OR, OK, UT, PA).

If for some reason your company is found to be especially risky, you will have to get your insurance from a so-called “assigned risk” fund, and it costs considerably more. Workers’ compensation is regulated primarily by the states (and Washington DC) so there are 51 separate sets of rules which govern benefits, premiums, and coverage. However, a so-called “rating bureau” called the National Council on Compensation Insurance (NCCI) has developed a manual used by many states to regulate how insurance companies calculate your rates. NCCI states rely almost completely on this manual, while some other states have developed their own manuals. For example, Nevada sticks closely to the NCCI manual, whereas California has developed its own manual.

Workers’ comp policies tend to seem complicated and abstruse to the uninitiated. In addition, you can’t rely entirely on your insurance agent to decipher the technical terms, options, and requirements – remember, he/she has a vested interest in selling you as expensive a policy as possible. So if your premiums turn out to be fairly considerable, it’s a good idea to have your policy reviewed by a lawyer with workers’ comp experience or a consultant specializing in this field.

For example, you might ask whether you need a guaranteed-cost policy (a policy whose premiums remain the same no matter how many claims you file) or a loss-sensitive plan. The latter alternative will cut your costs but increase your exposure.

The basic formula insurance companies utilize to calculate your policy is to multiply a rate times hundred dollars of payroll. But what is this “rate”? Where does it come from? It is based on the classification of your company’s type of work performed. It’s always to your advantage to be in a relatively “safe” classification, such as office work, as opposed to a more injury-prone classification, such as mining. Experts warn that you should be vigilant that the insurance agent does not misclassify your company – such a “mistake” can easily double your premiums.

What’s more, insurance companies apply an “experience” factor to your premiums. This is a circumlocution for a multiplier calculated on the basis of your company’s claims history. The more or larger your claims, the larger the experience factor.

Understanding Assigned Risk Plans

What can you do if every private insurer in your state turns down your insurance application? In that case, you have to utilize the state’s assigned risk plan. This is expensive insurance. Yet, I’m told, many agents sell assigned risk insurance without bothering to mention it’s assigned, and the words “assigned risk” appear nowhere on the policy. Generally, rates and service are said to be better in NCCI states. However, even if your company is in an NCCI state you will probably get lower rates if you move to “voluntary” (i.e., not assigned risk) coverage as soon as possible.

Note that if you’re in a “monopoly” state – i.e, a state where there are no private insurers and you must use the monopoly state fund – you can still get put in an assigned risk plan. You should discuss this with your agent.

Important Tips Regarding Workers’ Compensation Insurance

– Your agent, working with his/her company’s underwriter, is responsible for deciding what classification codes to utilize in developing your premium rates, as well as the various other risk factors. Reportedly, mistakes and oversights are legion in these types of policies (usually favoring the insurance company), so review your policy carefully, preferably with the assistance of a professional who has experience in this field.

– Be sure to read your policy’s Information Page in detail – it contains the most important details you need to check.

– Be especially careful when your company hires independent contractors. If the independent contractor does not carry workers comp and is injured, you will be held responsible for all costs connected with the claim.

– Always be certain that you indicate as named insured all legal entities which are in any way connected with your business. For example, if you own the building it’s in, you should be named on your policy as legal owner of the property, as well as owner of the business.

– Also you should be cognizant of federal workers’ comp exposures. In addition to state requirements, some federal legislation also imposes liabilities on employers. You can add coverage for acts such as the following to your workers’ compensation policy by endorsement (i.e., by adding a supplement): Federal Coal Mine Health and Safety Act (benefits to miners who contract black lung disease; Longshore and Harbor Workers Compensation Act (benefits to employees injured in maritime employment); and Migrant and Seasonal Agricultural Worker Protection Act (housing and safety benefits to migrant and seasonal agricultural workers).

– The NCCI Manual is not used for calculating rates in: Delaware, California, Indiana, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Pennsylvania, Texas, and Wisconsin. (All other states use it.)

If either you or a consultant you hire feels that your premium rates are not what they should be, based on the rules and specifications in the NCCI Manual (or other state rating manual), your initial step should be to contact your agent, say the experts, and request changes; if this doesn’t work, then you should directly contact NCCI or the appropriate state rating bureau and point out the errors in your policy as it is written.

Is your company required to pay workers’ compensation benefits to illegal aliens? According to experts, the answer depends on whether the illegal alien qualifies under your state’s statute as an “employee” working “in the service of” another under a “contract of hire.” Thus far, Ohio and New York courts have upheld the right of aliens to receive benefits; Wyoming, Virginia, and Florida have not.

– Note that only Texas, among all 50 states, does not require employers to carry WC insurance.

A Word About Workers Compensation Fraud

Workers’ comp is a no-fault system for providing benefits to injured or ill workers while at the same time shielding employers from lawsuits. But the system is wide open to fraud on a number of fronts. Employers, attempting to reduce premiums, may understate their total number of employees or misrepresent the type of work they do; workers may claim benefits they’re not entitled to, for example, by exaggerating the seriousness of an injury; even insurers themselves may intentionally miscalculate premiums and this is, unfortunately, not uncommon.

Somewhat surprisingly, it’s employer fraud that is the major type of workers’ comp fraud. According to a recent study reported by the National Commission on State Workmen’s Compensation Laws, over 13% of employers studied were operating without legally required workers’ compensation insurance. In addition, others were found to be cheating the system by intentionally misclassifying or underreporting their payroll or by falsely representing employees as independent contractors.

Of course the best-known type of workers’ compensation fraud – the kind that is most often covered by the media — involves workers claiming disabilities that don’t exist. Most insurance companies have in recent years set up internal Special Investigative Units (SIU’s) to deal with this type of fraud. Claims adjusters report suspicious cases to their company’s SIU’s, which then use surveillance, background checks, medical records checks, videotaping and other tools to document fraud, then turn the cases over to the Attorney General for prosecution. Criminal penalties to workers trying to game the system can be extremely severe.

As an example of how the SIU investigation system works, CompSource Oklahoma recently investigated a female claimant who was receiving permanent total disability benefits for back injuries from a slip-and-fall accident. The company’s SIU team found that while receiving these benefits she was listed on the Internet as an officer of an outdoor recreational club. Surveillance was set up and it was found that she was engaged in mountain hiking, carrying heavy items and other activities suggesting she was not disabled. Criminal charges were filed and a conviction obtained, resulting in a lengthy prison term.

What’s the moral of the story? Simply this. Don’t commit workers’ comp fraud. Insurance companies now employ teams of specialized investigators who will doggedly pursue a any suspicious claim and, if fraud can be proven, will press charges without any hesitation whatsoever.

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Filed under: Careers

Creating a new business opportunity can be difficult for anyone, but especially when this is your first shot at a business. You see so many different options that it can almost become nauseating to consider the fact of starting your own business. You need to do some deep thinking to figure out which one is going to be the match for you.

First of all consider the skills and talents that you already possess. There are numerous areas you are talented in and probably some that you are not aware of that you should evaluate. Think about what jobs you have had and how that experience or experiences could help you out now.

Next take a look at schooling and education that you possess. It doesn’t have to be schooling you paid for that you also got a degree for. It can be many different forms of education that you get from the media or even from being around friends and family members that have their own business models.

Now that you have a large list of ideas you need to make sure that you write all of them down so you don’t forget them because they might spark further ideas of what you can do. Which of these is the most exciting to you and also which one do you feel has the most earning potential?

I would then look at places you can go to find out more information about the company. I would suggest that you look at competition and see if you can find advisers and be open and honest with them. They might even be willing to let you work with them on an intern basis.

These companies also could end up being solid investors for your business ideas. You also could have to consider getting money from an angel investor along with your potential competition. All of this could be a huge headache so you need to consider whether you really need it or not.

Look also at a bank or a venture capital firm that would be willing to offer you money. This could be a great path only if you have a solid business plan that makes sense to them and they can see how you are going to be successful step by step. This is why it is so important that you have plenty of case studies to verify that it is possible.

Now you have these steps taken care of and it is time to move forward with your business opportunity and make it a reality. Don’t stop and don’t ever give up because this could make a huge difference in your financial outcome.

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Filed under: Careers

Well it finally happened. President George W. Bush stepped forward and said “our economy is in danger” and faces a “great challenge”. Where did all of this begin and where do we go from here?

The war with Iraq might well have been the starting point. Consider this, the war costs $10,000,000,000.00 per month, a phenomenal sum. Our Federal debt now stretches out over the next three or four generations.

And, as I wrote in a previous article, each additional dollar which the Fed prints devalues each current dollar in circulation. What we have is a double whammy. Not only are we paying for the war, we are losing purchasing power because of the additional dollars in circulation – all ten billion – each month.

Add to this the high risks being taken by investors and investment bankers on Wall Street, particularly in the mortgage sector. Those risks came with huge consequences. As investors continued to lower the standards for home buyers, the ratio of defaults on mortgages rose. Banks and investors who held or were purchasing those mortgages were losing ground fast. But that was well over a year ago.

Interestingly enough, those most responsible for the largest losses, the C.E.O.’s, were let go or allowed to walk away, but certainly not empty handed. No, to the contrary, they received huge multimillion dollar “golden parachutes”. But the bleeding did not stop there.

There was, and is, a tremendous confluence of circumstances, the likes of which we as a nation have not faced. The value of real estate dropped, and when it came time for some people to refinance out of their existing adjustable rate mortgage, they had neither the cash on hand nor equity in their home to cover the costs. That of course, is assuming that they could even qualify for a new mortgage.

People can no longer refinance their mortgage as readily as a few years back, and in essence use their equity like cash in an ATM, which removes tremendous sums of dollars from all sectors of the economy. This slow down of spending or the reduction of the velocity of spending has a ripple effect throughout the entire economy.

Most recently, the Federal Government stepped in to bailout the nation’s two largest mortgage purchasers, Fannie Mae and Freddie Mac. We’ve also seen well established Wall Street firms and some major banks fall. The Fed also bailed out AIG, a infinitely important insurance company for $85,000,000,000.00, and now we are facing a $700,000,000,000.00 bailout.

I’m curious about two things. One is have you seen this coming for as long as I have? The other is, have you made plans to secure your and your family’s financial future?

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Filed under: Business

If you are talking to a company about oil and gas investments it is important to know the signs of a scam. There are scams in every industry or anything that pertains to money. Don’t let someone scam you of your money. Here are six easy ways to tell you are talking to a scammer.

1. If you are talking to an oil investments company who claims there is absolutely no risk with the investment, it is a scam. Oil is a risky investment. Any smart investor knows this and any company who tells you otherwise is lying. You can lose every dime when you invest in oil and gas. This is a fact. You can also make a killing, but the risk is very high.

2. If a gas investments company tells you that they have found a well that is guaranteed to make money, you know it is a scam. There is no guarantee that a well is not dry. If the investment firm knew 100% that the well was guaranteed they wouldn’t be asking you for your money. No well is for sure. You are taking the risk of the investment that it might not be.

3. Many scammers will tell you that a well known oil company is planning to start drilling in a particular area. Think about your investment. Are you investing in a location, the drilling company, or what? Drilling is about location but you cannot guarantee a location has oil.

4. It is also common for scammers to say they have landed a huge discovery and they want to share it with you for a price. This is not how oil investments work and you should be leery about anything like this. Many scammers offer e-books and other things that claim inside of them is the truth about investing and you will make a ton of money if you buy the products. Don’t fall for these types of scams.

5. The Better Business Bureau has many complaints from people about being scammed. If someone gets scammed they are quick to go to this resource. Always verify the company is not ripping people off.

If you are looking into oil and gas investing it is important you do plenty of research. You can trust people but you must always verify what they are saying is true. Many things being said to you may not even be worth wasting your time to verify because they are just not true. Understand that anyone who dumps their money and funds into gas investments is taking a serious risk. There are no ‘secret’ tips and there is no guarantee, ever.

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Filed under: Business

Business to business telemarketing can be an important part of your marketing program. The telemarketing team you hire can take inbound calls for your business or can make outgoing calls on yo

Telemarketing can be a successful marketing tool. It can be used for generating sales, getting subscriptions, and making business contacts. Telemarketing is effective as long as your telemarketing team is knowledgeable and has the skills to help your business. Here are six points to consider when building a telemarketing team.

Make sure your b2b telesales team has clearly defined responsibilities so that they can function as effectively as possible. Determine want you want your business to gain from their services whether it is to sell a product, gather information, process orders, or distribute information.

You should also set goals for your business to business telemarketing team so they have something to strive for and you can keep track of their performance. Set a target for what you need them to achieve whether it is a certain number of calls, a certain number of sales, or conversions.

Your b2b telesales team will also benefit from a relevant database which can be used to track client and business contacts. Invest in database software for your team that will allow them to keep track of each individual contact so that they do not miss a call back or other communication.

An important part of a successful telemarketing team is the script or pitch that they use. Your telesales team is only as good as the script they use so you will want to develop a script or basic sales presentation that is effective for your target market.

As you build your telemarketing team take into consideration the strengths and weakness of each team member. You can use this knowledge to your advantage because you will know in what areas your team will excel and in what areas they will need more work or training.

The most important thing to remember is to make sure that each team member understands what they are trying to accomplish with each call and has the tools necessary to do so. Team members will be much more successful if they understand the needs of your business.

Business to business telemarketing can help your business to reach its marketing goals if you have the right telemarketing team. Strong team members coupled with the right tools, goals, and clear responsibilities will ensure that your business succeeds.

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Filed under: Marketing