In this issue:
» Keep Your Workplace Safe From Rising Workers' Comp Costs
» Your Workers' Comp Policy
» Rates Increasing
» Massachusetts Independent Contractor Law
» Insurance Defined: Directors' & Officers' Liability

Your Workers' Comp Policy
Your insurance agent can help you shop for the most suitable workers' comp coverage at the most reasonable price.
You may, for example, be able to obtain a rate deviation with certain insurance carriers, based on your underwriting characteristics.
Choice of a carrier should also be based on how well your carrier fits your needs. If you intend to take an aggressive stand on controlling claims, you'll need an insurer that does, too.
Your agent should ensure that your workers are classified correctly, that your payroll is accurate and that reserves properly reflect your experience. If employees are classified in riskier positions than is warranted, your premiums will be higher than they should be.
Also make certain premiums are calculated based on the correct payroll amount. Be certain that vertime pay is exempted when premiums are calculated.
Another factor that will have a significant impact on your premiums is, of course, your experience. If your history of workplace injury is favorable, your premiums will be significantly lower. The employer and agent should keep good data about claims, so they can develop longterm metrics that measure improvements in their workers' compensation program.

Maximum Wage For Workers' Comp Calculations Increasing
New maximum wage limits used in calculating workers' compensation rates in Massachusetts and Connecticut are increasing.
The maximum wage for an active officer in Connecticut will be $52,000 in 2008, up from $39,000 in 2007 and $26,000 in 2006. The maximum wage in Massachusetts, likewise, will be $52,000 a year, or 1,000 a week.
In addition, the Massachusetts Division of Insurance approved new workers' compensation insurance rates effective Sept. 1, 2008 that will be 1% lower than current rates. This is the ninth time rates have dropped since 1994, a 68% reduction over the past 14 years.

Massachusetts Independent Contractor Law
How independent are your independent contractors?
Unless they meet criteria established by the Massachusetts legislature in 2004, you may have to pay for their workers' compensation insurance, Social Security contributions and other benefits.
In response to perceived abuse of independent contractor regulations, Massachusetts laws were amended and the following criteria were established for determining whether workers are independent contractors, rather than employees:

• The worker must be free from the employer's control and direction when performing a

• The service provided must be outside the employer's usual course of business
• The person providing the service must be engaged in an independent trade, occupation,

In addition, the Workers' Compensation Rating and Inspection Bureau recently issued new audit guidelines (Circular Letter 2071) for enforcing the Independent Contractor Law. The guidelines are designed to ensure:

• Consistent application of the Independent Contractor Law
• Consistent treatment of Certificates of Insurance

Massachusetts LLC, Sole Proprietor Payroll Determination
The Workers' Compensation Rating and Inspection Bureau recently issued new guidelines for determining payroll for calculating workers' compensation rates (Circular Letter 2070). The guidelines apply to sole proprietors, partners of legal partnerships and members of limited liability corporations (LLCs).

Insurance Defined: Directors' & Officers' Liability
Your company's directors and officers are subject to greater risk than ever before. The actions of a single individual could put everyone who has responsibility for managing the company at risk.
As a result, directors' and officers' liability coverage is typically needed just to attract and
retain the talent you need to run your company.
McGrath Insurance works with both public and private companies to help directors and
officers understand their responsibilities and coverage needs.
The company needs to carefully consider the purchase of the policy. For example, the
ability to protect directors and officers may provide a competitive advantage in attracting
and retaining excellent professionals to serve as directors and officers. A careful review and negotiations with D/O insurance carriers on policy terms, conditons and agreements should reduce or mitigate the cost of claims when they occur.

These articles are adapted from a more in-depth article that appeared in the Worcester Business Journal.  For the complete article, or for additional information about how to lower your workers' compensation costs, contact: McGrath Insurance Group at 508-347-6850 or sfoucher@mcgrathinsurance.com. 

These articles were written for informational purposes only and should not be construed as providing legal advice.

Employment Opportunities
McGrath Insurance is seeking experienced salespeople who are interested in joining
a growing, independent insurance agency. For more information, visit the career
opportunities section of our Web site at http://www.mcgrathinsurance.com//.

To receive McGrath Insurance Advocate electronically, send an e-mail with your name, company name and e-mail address to: Sandy Foucher at sfoucher@mcgrathinsurance.com.