Pub. 18 2019-2020 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E N O . 2 , 2 0 1 9 16 new jersey auto retailer BY CHARLES RUSSO NJ CAR Zero Injury Program Produces Incredible Savings For Participating Dealers Just a few years ago, employee injury rates were climbing in the auto retail industry. It was getting more difficult to find insurance carriers that would write worker’s compensa- tion coverage for dealerships and coverage was getting extremely expensive. Changes were needed as rising injury rates and costs resulted in ongoing issues with insurability and dealership profit- ability. The New Jersey workers compensation system is inten- tionally structured to financially penalize insureds that have too many employee injuries and financially reward those that don’t. Regardless of what anyone says, poor performers will always pay more than their peers. NJ CAR knew members needed a straight- forward way to help track the health and safety of their employees. Two measures every business should track when reviewing its own performance are loss ratio and modification factor. Loss ratio iden- tifies how well a dealership location is doing at preventing employee injury. A pure loss ratio represents the claims an insurance company pays versus the premium it earns. Essentially dollars in versus dol- lars out. An insurance carrier that pays $100,000 in claims during a policy year but only earns $50,000 in premium paid out $2 for every $1 of premium collected. An insurance company is not going to insure this business if this happens year after year. The modification factor ( or mod ) takes a business’s previous three years loss history and calculates a factor that helps determine the final premium that business will pay. A business’s mod factor is a strong indicator of whether a business’s injury prevention strategies were good, average or bad over this time. A 1.00 mod factor has no impact on premium. Anything above a 1.00 is bad because it raises premium. Anything below a 1.00 is good because it lowers premium. A business’s worker’s compensation premium goes up or down based on its personal mod factor. In order to gain a better understanding of where the industry stood in relation to worker’s compensation claims, NJ CAR staff interviewed dealerships that traditionally had the fewest employee injuries. This allowed the Coalition to identify those safety practices and management attitudes that work best, and the NJ CAR Zero Injury Program ( ZIP ) was born. One of the main differences between the NJ CAR program and most other programs is the involvement of a dedicated Risk Spe- cialist who provides professional loss control services to assist members in achieving their safety objectives. Most other safety programs lack this critical component and that’s why they fail. NJ CAR’s ZIP is tailored entirely to the loss control needs of dealer members. Most participating dealers, regardless of previous performance, are saving money. To date, many participants have reduced their costs by well over 50 percent, and the NJ CARWorker’s Compensation Program has returned over $500,000 in dividends to participating dealers. The chart above shows the results of dealerships that have participated in ZIP versus those that have not. Both groups had what would be considered high, low and mid-range performers per individual loss ratio and historical losses ( mod factor ). ZIP and its unique approach to the