Questions and Answers

Key Issues to be Aware of Regarding Workers' Comp Insurance…(Click question for answer)

1. At what point am I required by the State of Minnesota to carry Workers' Comp coverage for my employees?

When your agricultural payroll exceeds $46,572 annually as of January 1, 2012.

2. What if my annual agricultural payroll is below $46,572?

You have 2 Options:

1. You can purchase a workers' comp policy to cover your employees, no matter what the size of your payroll; as injuries do not discriminate.
2. Or, purchasing a farm liability policy of $300,000 and medical pay of $5,000 on the same policy will preclude buying workers' compensation insurance in Minnesota for payrolls between $8,000 and $46,572. Check your farm liability policy to see what exclusions are in it, because workers' comp will fill those gaps!

3. What does Workers' Compensation cover?

A policy will cover medical expenses related to the injury and approved by the insurance carrier; and 2/3 of lost pay. (See a more detailed list of benefits by clicking on: As an employer, why should I consider carrying workers' compensation insurance coverage?)

4. It was only a small injury that cost $50.00. Why not pay this myself instead of reporting it to my workers' comp carrier?

1. You may be showing acceptance of future liability when you cover the cost of the injury yourself. 
2. For the small injury noted above, you just added another $50 to your premium by paying this bill yourself.
3. In a "Medical Only - No Lost Time" claim, you are paying 100% of the bill; whereas, the carrier pays according to a fee schedule.
   For example: A particular $52.50 bill was reduced by $39.27; leaving the carrier to pay $13.23. And not even the $13.23 is used in a policyholder's e-mod calculation (if an e-mod applies to you). Only 70% or $9.26 would be applied to the e-mod. It's not helping you to pay 100% of the bill. Use your workers' comp policy the way it is supposed to be used!

5. I had an employee injured during harvest and now it's a month later. Since I didn't report it within 5 days as advised, should I bother calling it in now?

Most definitely YES! If you have a concern, call Brenda at the Pool toll free at 888-217-5100. Otherwise, use one of the following methods listed below.

FOR INJURIES THAT OCCURRED AFTER 12/31/2010:

1. Complete online at:  www.sfmic.com
2. Or FAX the completed "First Report of Injury" form to SFM's Toll Free Fax Number 800-944-1169.  Click here for the SFM "First Report of Injury" form.
3. Or CALL SFM at 800-922-5246.  They will need the injured employee's name, social security number and information about the accident. They will assist you in completing the First Report of Injury form over the phone. Use the copy of the “First Report of Injury” form that was sent with your policy as a guideline of what will be asked.

Did an accident occur with no known injury at the time or it's a "band-aid" type injury? Report the accident as an "Incident Only" in the event that medical treatment is needed at a later date. We had a simple finger "band-aid fix" injury that required surgery six months later. Call in even the "band-aid" injuries!



FOR INJURIES THAT OCCURRED PRIOR TO 12/31/2010:

1. CALL BERKLEY’S TOLL FREE NUMBER: 1-800-449-7707 Ext. 3461.  They will need the injured employee's name, social security number and information about the accident. They will assist you in completing the First Report of Injury form over the phone. Use the copy of the “First Report of Injury” form that was sent with your policy as a guideline of what will be asked.
2. Or FAX the completed "First Report of Injury" form to Berkley's Toll Free Fax Number 800-593-4578.  Click here for a "First Report of Injury" form.
3. Or E-mail the "First Report of Injury" form to:  bracfroi@berkleyrisk.com.

Did an accident occur with no known injury at the time or it's a "band-aid" type injury? Report the accident as an "Incident Only" in the event that medical treatment is needed at a later date. We had a simple finger "band-aid fix" injury that required surgery six months later. Call in even the "band-aid" injuries!

6. When is an e-mod applied to your policy?

An Experience Modification rating is a credit or debit factor based on your business’ loss and payroll history. You are eligible for an e-mod if you meet the following criteria;

1. Employers who average $5,000 unmodified audited premium* in Minnesota per year during the three-year rating period;
2. or $10,000 total premium in the last year of a rating period;
3. or $10,000 total premium in the last two years of a rating period.

*Unmodified audited premium = Audited premium before the modification is applied.

7. As an employer, why should I consider carrying Workers' Compensation insurance coverage?

• The State of Minnesota requires workers comp if your agricultural payroll exceeds $46,572 annually as of January 1, 2012.
• You need an option to cover any gaps in coverage that your farm liability policy may exclude.
• If you hire any employees whose duties could place them at risk for an injury.
• Being in the Pool assists you in absorbing a major loss, such as the death of an employee. Your rates continue to be based off the group as a whole. See "Part C" below regarding death benefits.
• Workers Comp provides the following benefits for your employees:
  1. Medical Benefits - Medical treatment is covered for work-related injuries that are approved by the insurance carrier
  2. Wage Replacement
     1. If temporarily unable to work -
        1. 2/3 of the employee's pre-injury wages are paid.
        2. Subject to a three-day waiting period.
        3. Subject to minimums and maximums.
        4. 130-week cap.
     2. If temporarily unable to work at full wage but can work part time or at a transitional job - 2/3 of the difference between reduced wage & pre-injury wage.
        1. Subject to a three-day waiting period.
        2. Subject to minimums and maximums.
        3. Subject to 225-week cap.
     3. If the employee has a lasting physical impairment - A total dollar amount based on the percentage of impairment will be paid.
        1. Typically paid in installments over time.
     4. If the employee is unable to ever work again - 2/3 of pre-injury wage paid until the presumed retirement age.
        1. Subject to maximums and minimums.
  3. Death Benefit
     1. Provides up to a maximum of $15,000 in burial expenses.
     2. Spouse and dependent children would receive 2/3 of the employee's average weekly wage.
     3. The benefit decreases when the last child graduates from high school or until age 25 if they go on to college, and ends 10 years later.
     4. If married and no children, the spouse would receive one-half of the employee's average weekly wage for 10 years. The surviving spouse is also eligible for vocational training benefits to help get back on track financially.
• The Pool provides competitive and affordable workers' comp coverage to farmers listed below in Minnesota OR growers in North Dakota who farm in Minnesota.  Note:  The Farmers Insurance Pool cannot provide coverage to farmers who farm in North Dakota.  We currently provide coverage to:
  1. MN Grain Farmers, MN Row Crop Operations and MN Dairy Producers.
  2. Minnesota sugarbeet growers who belong to American Crystal Sugar Cooperative, Moorhead, MN; Minn-Dak Farmers Cooperative, Wahpeton, ND; and Southern Minnesota Beet Sugar Cooperative, Renville, MN. 

  As stated earlier, in Minnesota, if your payroll is more than $46,572, it is mandatory to carry workers' comp coverage. Many of our policyholders are under the $46,572 amount and recognize the need to fill the gap where their farm liability policy may not cover.

• A workers' compensation insurance policy through the Farmers Insurance Pool also provides Employers' Liability Insurance coverage with $1,000,000 limits.

8. What factors affect workers' compensation premium rates?

1. The attacks on the World Trade Center and the Pentagon on 9/11/2001 drove the property & casualty industry into an already hardening market at that time. Be aware that, over time, not all P&C lines will start reflecting a softer market at the same time. In Minnesota, workers' comp prices continue to be affected by the factors listed below.
2. The following is a concise list of the factors driving pricing in today's market.
   1. Higher claims frequency.
   2. Longer periods of disability.
   3. Rising medical costs.
      • About half of medical care financed by the workers' comp system is subject to a state-set fee schedule. These fees are more than double for workers' comp than what medicare pays for comparable care.
      • Charges among hospitals vary dramatically for the same service.
      • Increasing prescription drug costs.
   4. More pre-existing risk factors. Especially obesity, diabetes and an aging workforce. These are contributing to the incidence and severity of injury, and hampering recovery.
   5. More social complications. Chemical dependency, mental health, family problems, and history of violence are impacting and complicating a greater proportion of claims.
   6. More benefits extending past the presumed retirement age.
   7. More permanent total disability claims.
   8. Gradual rise in cultural and language barriers. Claims are impacted by interpreter costs and fewer work alternatives.
   9. Impact of interest rates on investment income.
   10. Cost of reinsurance. Particularly for employers' liability and other states' coverages. Risk of terrorism is acute for workers' compensation because coverage exclusions are not possible and reinsurance is virtually unavailable for these events.
   11. Extremely low pricing in the past decade. Many Minnesota employers had the benefit of pricing in the past decade that probably was lower than it should have been given the higher-than-expected cost of claims during the latter part of the decade.

These trends and circumstances are putting continued pressure on workers’ comp pricing. The bottom line is to price workers' comp coverage that adequately reflects the risk. The same philosophy that needs to be applied to any line of insurance.

9. What can I do as a Grower?

• Be diligent in your hiring practices for farm laborers. Hire smart!
  1. Is your prospective employee physically capable of doing the required job functions?
  2. You cannot screen for prior injuries, but you can have specific job descriptions written to improve your interview process.
  3. Consider a standard physical exam for all prospective employees.
• Implement whatever safety measures are necessary in your operation, so that your place of work does not become an "injury waiting to happen." Do you need any specific safety equipment; ie. safety goggles, gloves, boots, shields). Would training on specific equipment help in preventing an accident?
• Claims that need ONLY medical treatment and the employee has NO LOST TIME from the job are discounted 70%, so only 30% is included in your e-mod calculation. Take advantage of the medical-only discount and return your employee back on the job within three days to help keep your e-mod under control. Reporting the claim right away is also extremely important to avoid a late reporting penalty.
• An employee that is off work for four days or more will trigger the payment of workers’ comp wage-loss benefits. Working with our Claims Representative to return the employee back to work as soon as medically possible, will assist you in keeping your losses under control.
  • Work with the treating doctor.
  • Can the employee be brought back to a modified version of the pre-injury job?
  • Or re-assigned to a transitional type job?

I know it is difficult in your farm operations to find "other" work within the operation, but some creative thinking or working with the Claims Rep may affect the bottom line for that claim and subsequently, your e-mod and premium!