Workers' Comp Insurers Embrace Self-Service Options for Payroll-Based Billing

Calculating the premium for workers' compensation insurance based on payroll is not new to the industry. However, carriers in the space are expanding the ways employers can provide them with the needed data by offering web-based, self-service approaches.

The industry standard for many years was to communicate with the major payroll providers, says Donato Monaco, VP of payroll alliances for The Hartford, who began in 1997 interfacing with Paychex and ADP. But that only allowed clients of those services to participate in the program.

To address this, in 2000 the Hartford-based carrier launched XactPay, allowing other payroll services to send data to the carrier. A Web version launched in late 2006, followed in 2007 by XactPay Web for Quickbooks Payroll for customers who use the Intuit service to manage their payroll. (The Hartford and Intuit also formed a strategic alliance to pitch each other's products to their customers in 2009, Insurance & Technology reported.)

Now, the solution reaches all policyholders with the release late last year of XactPay Express, a web-based service letting companies that self-manage their payroll take advantage of payroll-based premium pricing.

"This is a self-reporting payroll solution for companies that may not even use a payroll company," Monaco says. "Now all of our policyholders can do it [themselves] — and we've increased the size of the policy we can support as well."

XactPay also allows policyholders to get online employee classification and premium reports, allowing them to see their insurance costs more granularly, Monaco adds. He says that the payroll-based premium, coupled with the electronic reporting and billing, The Hartford's customers concentrate on growing their business, while giving the carrier some peace of mind.

"Typically, workers' compensation requires a large down payment based on estimated payrolls. That's difficult to do for some small companies that don't have access to the cash, or for large companies that don't want big surprises on a balance sheet — they'd rather do marketing or invest in their business or hire more personnel," Monaco explains. "We divide the premium into as many pay periods as they have, and we collect nearly 100% of our funds electronically. We don't have to worry about late payments or cancellations."

Monaco says that changing customer technology preferences have made it possible for XactPay to grow since its inception in the late 1990s.

"The landscape is changing —the business owner has requested more online capabilities," he says, noting that The Hartford also has an e-learning guide for workers' compensation and helps its workers' compensation agents create online content.

Key Risk, a Greensboro, N.C.-based workers' compensation carrier, launched its own payroll-based-premium calculating platform in December, called PremiumSync.

"By working together with our agent advisory council and leveraging the feedback from our independent agency force and their clients, we identified an opportunity to provide policyholders with a pay-as-you-go solution that offers the benefits of improved cash flow management, a streamlined audit process and the convenience of making premium payments automatically and over time," Becky Karr, COO and CFO for Key Risk, tells Insurance & Technology in an e-mail.

PremiumSync is available as part of MasterKey Connects, Key Risk's existing web-based service that also lets policyholders file and track claims; get reports; and access the carrier's medical provider network. Through PremiumSync, companies can enter the information manually, upload a report in a standard Excel-based template or upload a company-specific or payroll vendor custom report. The premium is calculated for the pay period and automatically the premium is debited from the policyholder’s bank account.

"Policyholders who select the PremiumSync billing option have access to an application within MasterKey Connects to submit payroll census information, view payment history, and manage their payroll data import," Karr adds. "Offering three options for submitting payroll information provides policyholders flexibility and allows us to accept multiple formats."

For interested policyholders, Key Risk offers a personalized orientation process to walk them through the steps to set up their account and select the best format for submitting their payroll data.

"Our agents and policyholders are accustomed to real-time, 24-hour service from us," Karr says. "We are committed to delivering better outcomes in workers’ compensation and meeting the needs of today’s increasingly sophisticated policyholders in a highly automated, competitive marketplace."

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio