Developing a Work Comp Chargeback System for Your Company is as Easy as 1-2-3
To develop an allocation program that is right for you, first identify and analyze what you want to motivate, then develop your process around those goals. AND, once you've developed the allocation program, be prepared to make adjustments. I recommend charging back down to the division/group results because it motivates operations management to focus on safety and loss prevention as well as return-to-work and post-loss efforts. Use a "carrot and stick" approach where divisions are charged back for all losses incurred in that month on a dollar for dollar basis. Then give credits as goals are accomplished. Here is an example: 1. Charge each division with the total incurred each month. 2. If the claim was reported within 3 days of occurrence, apply a 20% refund. 3. If the employee returned to work within 4 days (either transitional or full duty) apply a 30 percent refund. 4. If a claim closes within 90 days, apply a 20% discount. 5. Calculate: 2, 3 & 4 to get the total charge for the claim for the month and subtract from previous charges. This can be done in a database or spreadsheet. Ask your accounting department the best way to implement a chargeback system, but make sure it's a "carrot and stick" approach. For further assistance, you may want to discuss this with your property casualty insurance broker, agent, or a consultant, who may be able to give you insight into the data you have available and other allocation plan designs. Author: Rebecca Shafer, J.D. consults for mid-market and national accounts focusing on project management, risk management assessments, data review, benchmarking, and development of Workers' Compensation and Injury Management Programs. Projects focus on development of training and education programs, document design, evaluation and integration of insurance claims administration and TPA services. Contact her at: RShafer@ReduceYourWorkersComp.com
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker about workers' comp issues.
