The most successful executives and entrepreneurs we know, admire and read about are those who surround themselves with advisors who are experts in their fields. Just as our primary care medical doctor has helped us over the years to maintain good health….and through difficult medical or emotional times, so can a Workers’ Comp Advisor guide a business to wellness. Wouldn’t it be to your advantage to have that type of relationship with your insurance advisor for the business challenges you face as an employer or manager?
I believe the typical way insurance is purchased is actually detrimental to the decision maker and the organization they represent. Many employers focus solely on the rate that is being offered and use that rate as the determining factor in accepting or rejecting a proposal.
Did you know that according to the national organization RIMS**, “only 59% of the risk cost is in the policy premium.” What about the other 49%? (An employer can pay over & above his policy premium the 49% in lost management time & resources; lost productivity; lost customers & revenue; overtime pay; other indirect cost & lost opportunities) Actually, workers’ comp is like no other insurance program. It is like a line of credit – use it and you pay it back plus more.
In addition, Frank Pennachio of the Worker Comp Advisors Group has determined that “80% of the workers’ comp Experience Modifications are either mismanaged or have errors.” That leaves abundant opportunities for employers to work with a Professional WorkComp Advisor to lower costs, while making their job easier.
Here is a basic action plan that an employer, and their insurance advisor, should already be implementing to take control of workers’ comp and related costs:
1 – Claims evaluation date – review each claim to confirm the values & information is realistic. This should be done before this data is submitted to the Workers’ Compensation Rating Bureau to prevent future premium overcharges. Periodic monitoring of insurance company claims handling should also be scheduled. This is a most important opportunity for employers & their advisor to assure claim reserves are appropriate and with this knowledge, is an appropriate time to make a projection of the future renewal premiums the employer can expect to pay.
2 – First Aid Claims option – the California Labor Code*** allows employers the opportunity to pay for qualified workers’ comp claims and not have them included in their Experience Modification calculation. The employer can avoid paying 2 to 4 times the size of the claim in future premium increases through this process. This is commonly over looked because insurance brokers fail to help employers set up this process and/or when an insurance company disputes the medical practioners decision for a claim to be First Aid. Most brokers do not become involved to help the employer.
3 – Medical Treatment Provider qualification – confirm a medical treatment protocol and Return to Work Process is used to get injured employees quickly back on the job. An employer can no longer expect that an insurance company recommended medical provider will effectively and efficiently treat injured workers and properly communicate with employers. Most brokers fail their clients by not confirming the medical provider can and will meet the needs of the employer.
4 – Experience Modification checkup – since about 80% of the Experience Modifications contain errors or are mismanaged, an assessment needs to take place to determine what areas need attention and provide a repair process.
5 – Compliance – to avoid OSHA fines/penalties for non-compliance & to prevent claims, your facilities and operation should be surveyed and your Injury Illness Prevention Plan kept up to date.
6 – Employee Classification confirmation – assuring that employees are properly placed and that your overall operations are appropriately classified to avoid premium over charges.
7 – Job Descriptions – helps medical professionals to properly treat & return employees to work, thus helping you to control your costs.
By following these proven steps completely and consistently you and your organization will experience the following:
• Lower costs
• Productivity increases
• More time to focus on your organizations goals and objectives
• Management of your insurance becomes easier
** RIMS is The Risk and Insurance Management Society, Inc. (RIMS) is a not-for-profit organization dedicated to advancing the practice of risk management. Founded in 1950, RIMS represents more than 3,500 industrial, service, nonprofit, charitable and governmental entities. The Society serves more than 10,000 risk management professionals around the world.
***Title 8, California Code of Regulations, section 9780(d)