Adjustments to workers' compensation can protect cash flow

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During a downturn, businesses must find ways to save money if they want to stay afloat. Photo credit: iStock / Getty Images Plus / Stork

Hotels across the country have been shut down or operating in a limited capacity for months due to COVID-19. With revenue down, hospitality executives need to continue finding ways to save money and manage cash flow until they can fully rebuild. Many don’t realize there are options to save with business insurance while still maintaining the necessary protections policies provide. 

Hotel executives should look into their workers’ compensation class codes. Many properties have employees who are still on payroll but are now at home or otherwise operating in lower risk job roles—for example, a chef who is no longer in the kitchen. Businesses may be eligible to shift these employees from their traditional class code to the clerical code. 

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This change often reflects a significant decrease in insurance rates. For example, one client went from about $11 to 70 cents per $100 of payroll. Changes stay in effect until each impacted employee is back in his or her traditional work setting, resulting in massive savings. 

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Modifications to workers’ compensation are easy to do at any time and can be quickly reversed once the employee resumes his or her previous role. Most importantly, modifications can be retroactively applied on most policies if you ask for it, leading to several months of savings going into effect from when the COVID-19 lockdown began.

Businesses also should be aware that many states’ Department of Insurance are reviewing claims related to employees testing positive for COVID-19 for possible removal from your workers’ compensation experience modification. If these claims are taken out, businesses will maintain a better claim history—saving them from higher rates in the future.

Andrea Luoni is the founder and CEO of RateCraft, a business advocate agency that helps organizations reduce their insurance costs. 

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