3 Considerations When Opening in a New State
Tips for Moving Office Locations
About a year ago, my wife and I moved into a new home. The most difficult part wasn’t the “heavy lifting”, like moving furniture or making the multiple drives back and forth from our old place to the new. The most difficult part was staying on top of the smaller (yet very important) details associated with the move. Things like notifying our utilities of the new service address, changing our address with the post office, changing addresses on credit cards, at work, banking, etc. The small items we overlooked seemed to take up just as much time!
This whole moving process got me thinking about when our clients expand into new states. Besides just moving physically, what items do you need to think about that are often overlooked? Specifically from a Workers' Compensation (WC) insurance perspective, here’s what businesses should consider before opening doors in a new state:
1. Is your current WC carrier filed and licensed in the state into which you’re moving?
- Not all insurance carriers are licensed in all 50 states – many are regional and can write WC in only a handful of states. If you move into a state where your insurance carrier isn’t filed and have claim, you risk not having it covered.
- If your current carrier isn’t licensed in the new state(s), you may need to seek a new carrier (depending on your expansion footprint), or be placed temporarily into the assigned risk pool for coverage within those states.
2. Is the state you're moving into NCCI rated?
- Not all states use the same class code system as NCCI. For example, Pennsylvania uses an entirely different classification system. Ensure you’re using the correct code, especially in a new state.
- Another noteworthy item is that some non-NCCI states (like California) calculate an entirely separate Experience Mod.
3. Do you understand the WC benefits and WC rates in that state?
- Prior to getting into a new state, discuss with your broker the current pricing environment. How does it compare to other states in which you operate? For example, Indiana benefits from lower/more competitive WC rates as compared to other states, while California is on the other end of the spectrum.
- Benefits for injured workers also vary quite a bit state to state.
Besides just physically moving your ‘office’ from one location to another, discuss with your broker the impact moving into a new state may have on your workers’ compensation program.
- Workers’ Compensation E-Book
- NCCI Anniversary Rating Dates
- Understanding A.M. Best Ratings
- Staffing & PEO M&A Due Diligence
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