Industry Featured: Restaurants
The second in a series of articles that highlight the advantages and disadvantages of the Texas Nonsubscription Option
A large number of restaurants have had great success as non-subscribers in Texas. This includes all types of restaurants from fast food to white tablecloth restaurants, including McDonald's, Wendy's, Grandy's, Arby's, Jack in the Box, Texas Land and Cattle, Chuck's Hamburgers, Jimmy Lu's, Good Eats, El Chico, Mariano's, La Hacienda Ranch, Hooters and many more.
Non-subscription appears to work well for this industry by offering practical strategies to deal with characteristics unique to the restaurant setting, including younger employees, lower wages and high employee turnover.
Because wages are low, injured employees are often able to maintain their same standard of living while receiving traditional workers' compensation benefits without having to return to work. Non-subscription can offer an effective approach to eliminating this disincentive.
Under traditional workers' compensation, the lack of an incentive to return to work is facilitated by the ease of finding a medical provider that will certify an employee as unable to work, thus allowing injury benefits to continue. Effective non-subscriber programs often require that an injured worker off work be under the care of a company-credentialed physician in order to be eligible for benefits. Since the restaurant employer will typically use an occupational medicine clinic whose doctors will be familiar with a restaurant worker's duties, employees will only be certified to be off work when it is truly medically appropriate.
Because many non-subscribing employers are self-funding a portion of their benefit claims, they are keenly aware that it is in their best interest to invest in robust safety programs. The hazards inherent in the industry make focusing on safety particularly important.
For example, the work area behind the bar tends to be very slippery due to the constant spillage, melting ice, washing of glasses, etc. In order to avoid slip-and-fall injuries, many restaurants purchase expensive mats to put in the bar area to absorb the excess liquid. While this approach may be effective in addressing slip-and-falls, it can lead to an increase in back injuries as employees lift the heavy, water-soaked mats to take them out for cleaning. Because non-subscribing employers and their employees tend to be more invested in their safety programs, this type of conflict is generally recognized early and a more effective solution can be put in place.
Proper and regular training can be one of the most effective means of reducing common injuries. While the high turnover in the restaurant industry requires greater training by both subscribers and non-subscribers, the non-subscriber once again has a greater incentive to invest more in such training.
Regardless of whether an employer administers a traditional workers' comp program or non-subscribes, most injuries occur to employees who have been on the job less than six months. A great number of those injuries are attributable to "bad hires."
Due to the high employee turnover common in the restaurant industry, a larger number of employees have less than six months' experience than is typical of most other industries. High employee turnover also makes it more difficult to avoid "bad hires" than in most industries because the volume of new hires makes pre-employment drug screens, background checks, pre-employment physicals, etc., cost prohibitive. While this is true for both subscribers and non-subscribers, a proper non-subscribing program provides restaurant management greater coordination of claims protocols, which means a better opportunity to avoid questionable claims. For example, as a non-subscriber, the restaurant can require an employee to report their on-the-job injury immediately, reducing the chance for suspicious claims to be filed days or even weeks after an alleged injury occurred.
Traditional workers' compensation programs allow the injured employee 30 days from the date of the alleged injury to report it. This reporting period can even be extended beyond the 30 days. Requiring more timely reporting not only provides injured workers quicker access to medical care, but also is an effective measure to reduce non-work-related injuries. This is important within the industry since many employees moonlight and perform other functions where they might sustain injuries away from the restaurant. A lack of health insurance for restaurant workers can contribute to an increasing number of non-work-related injuries being reported as on-the-job injuries. Non-subscribers' reporting requirements can help eliminate this deception.
Since injured workers are paid a percentage of their "wages" while off work due to a job-related injury, wage reporting is also a complication in the restaurant industry. Waitstaff, bartenders, etc., typically receive very low hourly wages, depending instead on tips for the major portion of their wages. There is, of course, a great temptation not to report such tips to avoid Social Security, W-2 withholding and other deductions. This tends to produce underreporting of wages, causing an injured employee's temporary income benefits or wage continuation benefits to be artificially low. Since non-subscribing employers typically encourage early return-to-work and modified duty programs, non-subscription provides a better opportunity to allow an injured employee to return to work sooner and reduce the need to remain on the lower-paying disability program.
With the high number of restaurants that fail each year, containing costs is essential, so it is not surprising that the vast majority of restaurants choose to non-subscribe. Greater efficiencies and coordination of claims combined with increased focus on safety can yield significant cost savings while also providing better medical outcomes for injured workers.
In our increasingly connected world, social media has the ability to create new relationships with clients and customers, and to strengthen the relationships you already have. But many independent insurance agents are using social media without considering their strategy or tracking their results. In a PropertyCasualty360 post from the archives that we thought was worth revisiting, Paul Pennelli gives these seven tips for making social media work for your business.
To read the full article, click here.
Investors searching for the next disruptive technology to upend markets and make millions have set their attention on peer-to-peer insurance. Here's what you need to know now.
Peer-to-peer insurance is a relatively new twist on the old model of a mutual insurance company, one made possible by the instant connectivity of the Internet. And just as Napster changed the music recording industry and Uber changed local transportation — both examples of peer-to-peer networks roiling markets — peer-to-peer insurance has the potential to change the structure of centralized risk-pooling.
Peer-to-peer insurance allows insureds to pool their capital, self-organize and self-administer their own insurance, according to the National Association of Insurance Commissioners (NAIC). This lowers costs to consumers. Much like a mutual insurance company, peer-to-peer insurance also return profits to policyholders.
The digital nature of the platform means consumers can get online quotes quickly. In New York City, where startup Lemonade is selling home and renter insurance peer-to-peer, consumers can get a quote in less than three minutes online and have their coverage begin instantly, according to Value Penguin.
Peer-to-peer insurance may be new in the U.S., but it is an emerging model overseas, with examples found in Germany, the United Kingdom and China, according to NAIC.
Government regulations — different in every state for insurance — seem to be the biggest obstacle thwarting the growth of this new business model in the U.S. The NAIC believes peer-to-peer insurance should be regulated by state insurance departments.