If you are going to sell business insurance to the business community, you need a strong basic understanding of workers compensation insurance. While companies will be concerned about having insurance for their buildings, inventory, and vehicles, and will understand the need for various types of property insurance, the same companies will look at work comp insurance as a governmental mandated cost of doing business.
As their agent, you need to be able to explain to your client business the importance of workers compensation and how it works.
While your clients, the companies, will think about their property insurance exposures, they will have a far higher frequency of workers compensation claims then property claims. Therefore, selling and servicing workers compensation insurance can be challenging for any agent, even experienced ones. The successful insurance agent will be the agent who can explain the advantages of all types of business insurance including workers compensation.(WCxKit)
A major part of the challenge of workers compensation insurance is the way it is different from the other various business lines. With property insurance, the cost of the claim can normally be ascertained fairly quickly and easily. The longer life of some work comp claims, along with the variables of medical treatment, income replacement, and a third party (the employee) who has a different perspective and different motivation, makes the evaluation of the cost of the work comp claim much more complex.
The complexity of work comp is what often keeps insurance agents from being as educated in workers comp as they are in the other insurance products they sell and service. However, learning the parameters of work comp is not nearly as difficult as you might think. To assist you in becoming more proficient in work comp, we have put together a guide that has become quite popular both with agents/brokers and with risk managers/corporate financial control management.
Our guide will assist agents in better understanding the entire work comp process which will assist you, the agent, in providing a higher level of service to your clients when they have a claim or even when they just want a better understanding of workers compensation. The chapters of the guide that will be of special interest to insurance agents include:
1. How an employer should assess their work comp program.
2. How the employer should structure their work comp team.
3. The forms and documents the employer will need to process/submit their work comp claims.
4. The training the employer will need in their work comp program.
5. The management and monitoring of the employer’s work comp program.
Additionally, as the agent, you will want to understand what is going on with the client’s work comp claims. Learning more about the claim progress will allow you to answer the questions your clients have about their claims. Knowing the differences between the way property and work comp claims are handled will allow you to better service your clients. Some of the topics that benefit insurance agents and allow for a better understanding of workers compensation include:
1. The role of the third party administrator in the work comp claim.
2. The differences between bundled and unbundled services.
3. The importance of proper account handling instructions.
4. The role of medical management in the claim.
5. The best practices of work comp claim handling.
6. The ability of the employer to control the selection of the medical providers.
7. The importance of a return to work program at the client.
8. The importance of a solid safety program.
9. How to fight fraudulent claims. WCxKit
It is important that the agent can answer all of their client’s insurance questions including the questions on workers compensation. We encourage you to learn work comp to the point that you can answers all your client’s questions. If you want to know more about cost containment, learn more about our book Workers Compensation Management Program: Reduce Costs 20% to 50%.
Author Rebecca Shafer
, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Manage Your Workers Compensation: Reduce Costs 20-50% www.WCManual.com.
Contact: RShafer@ReduceYourWorkersComp.com.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.
If you are a risk manager that has been with a company for a long time, you probably have developed a relationship with some of your employees. If you are an agent, and you have been in the business a long time, you probably know your book of business very well and would do anything to keep them happy and to keep them coming back to you for their insurance needs. Same thing for the risk manager: They do what it takes to resolve their employee claim problems.
But, when workers comp is brought in, this is the elephant in the room. As much as you — the employer, agent, etc. — want to help the employee, there is only so much you can do. Comp is a separate issue, with another party handling the actual claim and the compensability of the claim. It is not like glass damage where a risk manager’s agent says, “Do not worry about it; we can file a claim with the carrier and they will pay.” Sometimes they will not. It is the same with work comp. No matter how great a person your injured worker is, there is a chance their case will not get accepted for whatever the reason.
This puts you in an awkward scenario. Your employee is coming to you for help, but you are essentially powerless. Or, you are the agent and your client is upset that the carrier you recommended will not cover this particular comp claim. What do you do? Here is some advice for when you are caught in the middle:(WCxKit)
1. Get both sides of the story.
If you are only listening to what your employee is saying, you are only getting one side of the story. This will show how involved you are with your claims. If you do not talk to your adjuster a lot, or if you do not know who your adjuster even is, chances are you will be confused as well. But you cannot take the side of your employee without also hearing the facts from your adjuster — especially if this is a questionable, subjective claim to begin with. You may want to protect your employees, but both of you cannot team up against your carrier, who, by the way, is working hard to investigate all claims and make the proper decisions, which in the end affect your overall premium.
Take the time and call the adjuster. Get their side of the story. If there is something you do not understand, ask them to explain it. Make sure you really understand what the issue is and why it is there. This way you will understand what is going on, and you can explain it to your disgruntled employee. Carriers do not create these laws, they only abide by them, and they are different state to state. Each adjuster has different styles as well, so if a worker had a comp claim similar to one six years ago and it was accepted, and now the same thing happened and now it is denied — find out why. Make sure the adjuster has legal evidence to back it up.
It could also not even be denied; maybe it is just suspended pending results of investigation or upon receipt of medical records. Whatever the case, call your adjuster and talk to them about it before you start choosing sides on who is right and who is wrong.
2. Meet and discuss in person with all parties and counsel.
The best way to decide who is right and who is wrong is to meet up. The employee can come as well, but it is probably best they do not — at least not at this point. But you, as the employer, should go discuss the case in person and roundtable it with all of the involved players.
If this case has a potential for litigation, get local counsel or the house counsel the carrier uses involved. This way you can all discuss the file in a global aspect, and also plan for the ramifications should certain decisions be made. Going over pros/cons, future exposures, and the costs involved with all of those decisions helps not only you as the employer, but the adjuster as well. This forces him to get deep into the file, discuss monetary values, develop plans of action, etc. It can only produce a better outcome for all.
3. Find a middle ground for plans of action, if possible.
Just because you talk about the file and you meet up in person does not mean you will all agree on what to do. At the end of the day, the employer gets affected by these decisions through their premium. Or, if self-insured, it is your money heading out the door on this file. This is where the employer has to be involved in some of the decisions.
If you are not satisfied with what you are hearing, see if there is a middle ground, or a non-aggressive approach everyone agrees on. This is where independent medical examinations (IMEs) can be done. Nurse case managers can help, voc assessments can be performed, etc. Then after you have compiled all this info, and go over the pros, cons and monetary values of each one, then you may choose a strategy.
Maybe you do not want the carrier to take the ultra-aggressive approach because it could backfire. But you do not want them to roll over either, so find a common ground you all agree with. This way, not only are you involved in the process, but you are also involved in decision making. The adjuster wants to make the employer happy because she is also a client. But you have to abide by the statutes within your state of jurisdiction. Explore your options, and come out of that meeting with an agreed-upon plan. Not just agreeing to disagree.
4. The adjuster knows best.
Let us say you have been a risk mgr for a long time. This does not mean you are the adjuster. The adjuster has had medical and legal training, negotiation training, and she is up to date with the current law changes and trends. Adjusters know which doctors’ opinions are not worth the paper they are written on. They also know the doctors who will “slash for cash” — meaning they will perform surgery at the drop of a hat. Those doctors are out there, and hopefully your employee is not being treated by one of them.
When push comes to shove, the adjuster and counsel probably know best about what options you should be taking. Thorough discussion should bring you to this point. At the end of the day, the carrier is going to protect themselves from exposure just as much as they are trying to protect you. But be sure you understand why they are doing what they are doing. This effective communication will help you understand why the plan is what it is, and why it is best for you and your company.
5. Leave your personal feelings behind.
The hardest part from the employer perspective is not to drag personal feelings into a decision. Whether the injured worker is your best pal or your worst hire, you cannot bring those feelings into your overall decision on what to do on the file. You can alert the adjuster to these feelings, but you cannot let it influence your decision.
In the end, the decision must be fair, and it must be backed by legal precedence. The carrier is not going to deny a claim just because they feel like it. There is a reason. On the flip side you cannot force a carrier to accept a claim they are not going to accept. They understand that this worker may be your friend and you want to do what is best for them, but you cannot force the issue. All you can tell them is that this person is your buddy and you want what is fair. Again, it comes down to communication. Know why they are doing what they are doing, and you will walk away understanding why the decisions are what they are.
In conclusion, no matter who is injured, when they are injured, or what they were doing when they were injured, you will have a personal feeling about why a claim should be accepted or denied for whatever reason. But, at the same time, you have to educate yourself on why claims are accepted or denied. You can accomplish this through communication.(WCxKit)
We talk a lot about being involved with your claims, and the examples stated above point to why you need to be involved, and why you need to understand why claim decisions are made. You need to know your carrier or third party administrator (TPA) makes these decisions to protect your company and your interests, as well as their own. The decision should be fair, backed by legal statute, and ethical. Whether the claim is accepted or denied, it will be a fair decision.
Author Rebecca Shafer
, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Manage Your Workers Compensation: Reduce Costs 20-50% www.WCManual.com.
Contact: RShafer@ReduceYourWorkersComp.com.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.
While more colleges are now offering majors in risk management and insurance than there were available just ten or twenty years ago, many of the people who come in to the field of risk management and the even more specialized field of Workers Compensation Manager, do not have previous experience or backgrounds in workers compensation. It is nothing unusual in this day of tight hiring practices and double duty jobs for the new workers comp manager to also be working in another department such as finance or human resources. It becomes a learn-as-you-go-experience.
We know the new workers comp manager, even the one who has been a workers comp adjuster, often needs a guide on what to anticipate in the new role. Therefore, we have put together a list of 10 things it helps to know about the job. Here is our list of ten things the new workers compensation manager knows, but no one will tell. (WCxKit)
1. The Safety Manager is your new best friend.
The better the safety manager does the job, the easier the new WC manager’s job will be, as fewer accidents means fewer workers compensation claims to be made. Ask the safety manager what can be done to eliminate accidents and injuries.
2. Learn how to read the loss run.
The loss run provides tons of useful information on the nature and the extent of the injuries. Learn about the types of injuries that occur most often and discuss with the Safety Manager what can be done to eliminate the frequent reoccurrences. Review the loss run to see how much money is being spent on medical and how much money is paid out in indemnity benefits. Look for areas where costs can be reduced. Customize the loss run; ask friends about the most helpful stats they have on their loss run, and include those on yours.
3. Know your insurer.
The insurance company that writes the workers compensation insurance is the insurer. The term “insurance carrier” will also be used. This does not mean they carry premiums to the bank. It is an old fashion term for carrying the burden of insurance loss. (Not to be confused with “insured” which is the employer). Learn about the insurer. Are they a mammoth insurance company who writes workers compensation as one of many types of insurance, or are they a smaller regional or local company that specializes in workers compensation. What services do they offer as part of you program or at low cost. Ask them to explain ALL of their services, not just those they pre-select.
4. Know the cost of workers compensation.
Learn what is paid for workers compensation insurance each year, and if the premium is paid monthly, quarterly, or annually. Learn policy dates and which way the premium has been trending in recent years. (Declining premiums are a good sign the safety manager is doing his job well, while increasing premiums indicates a need to team with the Safety Manager to reduce the number of claims and the severity of the claims that do occur. Know how to translate this into total dollars spent on workers compenstion and use this
calculator to gain managment support.
5. Timing is everything.
The most successful workers compensation managers are the ones that learn time is of the essence in almost everything done as a work comp manager. New injury? Report it immediately to the claims office and immediately advise the medical provider's office of the transitional duty program. New disability slip? Coordinate with the injured employee's supervisor on how to accommodate the light duty work slip. New information on an older claim? Call the adjuster and share it with her so she can act on the information while it is still beneficial.
6. Sometimes it is time to babysit.
Injuries do happen. The employee needs to know the company still cares after the worker is no longer able to work. If there is a workers compensation coordinator, you can delegate to her the job of keeping in touch with all the injured workers until they are back to work doing transitional duty. The best policy is to contact the injured employee after each medical appointment to learn of any issues with their medical treatment, their return to work status and any concerns they have about their job or their work comp claim. By showing the injured employees the employer cares, it will have an overall effect of lowering cost of workers compensation.
7. Know the adjuster(s).
The adjuster is now a new best friend. A competent adjuster who does the job well will make the WC manager’s job easier. The better the working relationship with the adjuster, the fewer snags encountered on workers compensation claims. (The fewer adjusters to work with, the easier it is to learn their strong points and weak points. If the claims are not already consolidated with the minimum number of adjusters possible to cover the claims, work toward consolidating claims with the best adjusters available.
8. Know your insurance broker.
The broker is now a third new best friend. A mistake a lot of new workers comp managers make is thinking the broker works for or is an employee of the insurance company. The broker is a knowledgeable business person who works for the employer as an advisor. The broker's main job is to keep the employer (insured) happy. Discuss with the broker what benefits are provided. Hold the broker to this, and the new job will get easier. Expect more than simply an annual stewardship report. Ask the broker to be proactive and make suggestions about your workers compensation program. Many brokers provide our
workers compensation manual to their clients at no charge, so make sure you get one from your broker if available, otherwise, purchase it directly from us.
9. Know the return to work program.
The better the company's transitional duty program, also known as modified duty or light duty, the quicker and faster the workers compensation claims will come to an end. The company is going to be paying the cost of the indemnity benefits through higher workers comp premiums. To reduce the cost of those benefits, return the employee to modified duty. While the injured employee may not be as productive as an uninjured employee, all the productivity of the injured employee on light duty is benefiting the company to some extent while reducing the cost of the claim. Use the
transitional duty calculator to demonstrate cost savings.
10. Review the claim files.
If asked, most third party administrators or insurance companies will arrange online access to the claim file notes where the adjuster records the activities and events of the claim. While the file notes are helpful, they do not tell the whole story. Go to the claims office and read everything in the claim files. The claims office will probably try to talk you into doing an on-line review, but an in-person review with the adjuster(s) about the claims will provide the most information. There are also claim consultants who do claim file audits, if that is preferable. (WCxKit)
Good luck in the new role as the work comp manager. Use the ideas and consult our website often for advice on workers compensation.
Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing, publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.
In the world of insurance, it is hard to tell if your carrier or third-party administrator (TPA) is doing a good job if you do not interact with them often. Of course, the goal is to have as little interaction with them as possible — if you do not have to file any claims that is a good thing.
But, accidents will eventually happen. Property damage happens. Workers get injured. Customers get injured. So how can you tell if your carrier or TPA is doing a great job and looking out for your bottom line? (WCxKit)
5 Ways to Tell Your TPA Is Looking Out for Your Bottom Line:
1. Ask your injured workers when they return to work how their interaction went.
Your injured worker should have had plenty of interaction with their adjuster during the course of the file. The amount of interaction depends on the severity of the injury, but they should at least be able to name their adjuster and give some feedback on how the claim went.
If your injured employee’s claim was denied, you may not get a truthful answer. But, for a normal, routine claim that was accepted and uncomplicated, the worker’s responses should be a good indicator of how their claims process went.
A sample of questions you might ask a recently returned worker:
Was the adjuster helpful?
Did he or she explain you worker’s rights as defined by the Comp Act?
Did he or she explain your medical condition to you?
Did the adjuster return phone calls promptly?
Did the adjuster listen to your questions and answer them to your satisfaction?
Any negative responses to these questions is usually a good indicator of how your carrier is doing while handling your claims. A lot of negative responses from your workers could indicate it is time to explore using another carrier or TPA.
2. Ask your agent what they hear about your carrier or TPA within the industry.
If you have a good-sized agency, or broker, that handles your insurance needs, it should be more than familiar with their clients' companies. If you ask for an unedited opinion, chances are they will give it to you. Agents hear a lot about the pros and cons of certain carriers and TPAs from other clients. Issues an agent speaks of may or may not be of importance to you, but, the more information you have the better.
Ask your agent about these factors to learn about your carrier or TPA:
What is the carrier’s reputation with other agents?
What does your agent hear about the carrier or TPA’s litigation response; do they deny and fight every claim, or accept and pay out on every claim? (either is bad – there should be a balanced approach)
How are their reserving practices? Do they constantly bump or stair-step reserves? Do they inflate reserves in an effort to raise premiums?
How are their adjusters? Do they return calls and help agents with questions or are they impossible to reach?
How is the carrier’s local management? Are they knowledgeable and experienced?
Does your carrier/TPA write a lot of businesses like yours, similar in size?
Does this carrier/TPA only like to write very large national accounts or do they prefer lower-level, local markets?
How are your TPA’s underwriters? Are they usually accurate or do they have to do a lot of work when submitting a premium estimate?
All of these questions will give you a feeling about how your business fits in with the other businesses your carrier/TPA writes for. A smaller company that uses a carrier/TPA that prefers large national accounts may find their business needs are not tended to when you need them.
3. Ask for a meeting with your carrier/TPA management and the team of adjusters assigned to your account.
The best option is a team handling your account within your immediate community. If it is a major road trip to meet with your insurance team, question if they are the right fit for you; if it's a flight, question it even further. Some businesses want that local presence so they can physically meet with them when issues arise. Some businesses do not really care about the location, as long as their needs are met immediately. It is your choice. Consider TPAs that will provide a dedicated unit ON SITE at your location if you wish; yes, there is a price for such a high level of service, but the overall value may have an excellent ROI. Short-sighted companies concerned only with today's price rather than total price might want to reconsider the price-first approach.
Every Carrier/TPA knows who would be handling your claims if any were to happen, so meet with this person. Get to know him or her and find out about their industry experience. Find out if you mesh with them or not. If you get a good vibe, then there should not be a lot to worry about. But, if you walk away feeling less than confident, you already know you should start shopping around before it is too late. Check their "grades" – the best TPAs score their adjusters.
4. Ask for your business peers thoughts.
This will not apply to everyone, but typically if you are a niche business and know your competition, ask your peers about their experiences. Ask how their claims were handled and if they were satisfied. All business competition aside, most managers run into the same people from their competition at certain events, trade shows, etc. If you are amicable with any of them, it will not hurt to ask. It is almost like a test drive. If your competitors had bad experiences with certain carriers/TPAs, chances are you would as well. This can save a when it is your turn to file a claim with your Carrier/TPA.
5. Do your research.
Most Carriers/TPAs will have websites that show their capabilities, office locations, new technology, agent relationships, etc. Do some searching around to see who you like.
Some things to look for include:
Who has cutting-edge technology for claim handling?
Who has invested time and effort into research and hiring practices to ensure they have the best of the best in staffing adjusters and counsel?
Who has local offices in your area?
Which agents are partnered up with your carriers/TPAs of choice?
Is your carrier/TPA involved in local charities and in giving back to their community?
Not all of these items may play a factor in learning if you have the right carrier/TPA for your business needs, but it cannot hurt to find out the answer to some of these questions. (WCxKit)
The goal is to not ever have to file an insurance claim. But, as we all know, that is unlikely. You will have to cross paths with your carrier/TPA at some point. Making sure you have the right one who will take care of your needs when you need it the most is worth the effort. Ask around; do your research, and take time to meet with your prospective team of insurance professionals. This will help you know you made the right choice, and not a choice you will regret when you need help or have questions about your insurance needs.
Author Rebecca Shafer
, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing, publishing, pharmaceuticals, retail, hospitality, and manufacturing. Rebecca is the author of Manage Your Workers Compensation Program. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.
Our WC Book: www.WCManual.com
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.
Nothing in this article is intended as legal advice. Seek the assistance of an attorney in drafting your next TPA contract.
The self-insured employer was livid. In the self-insured employer's eyes, the third-party administrator (TPA), who had
handled their workers compensation claim files for three years, had not lived up to promises made when discussing the claims handling contract. The self-insured employer remembered the TPA had promised “excellent claim service” and “cost control," but the self-insured employer had to deal with
inquiries from the Workers Compensation Board, complaints from unpaid medical providers, and their average claim cost was up almost 50 percent in just
three years.
The self-insured employer wanted to sue the TPA for breach of contract. The attorney the self-insured employer consulted with had a different idea. Instead of suing for a breach of contract, the attorney recommended a lawsuit for the TPA's breach of their fiduciary responsibilities.(WCxKit)
Why? The relationship between a self-insured employer and a TPA of claims is one of trust and faith. The self-insured employer relies on the TPA to act in every instance in a manner that is in the best interest of the self-insured employer. In this case, the self-insured employer was relying on and trusting the TPA to handle their workers compensation claims with the same due diligence and professionalism they would expect from a workers compensation insurance company. As the self-insured employer was paying the TPA to handle the self-insured employer's financial obligations (the payment of workers compensation claims) and trusting the TPA to handle their assets (their money) in a prudent and careful manner, a fiduciary relationship was established between the self-insured employer and the TPA.
The self-insured employer relied on the TPA’s superior workers compensation claims knowledge and claims handling skills in the management of the self-insured employer's workers compensation claims program. The self-insured employer relied on the TPA to put the interest of the self-insured employer ahead of the TPA own interest in every claims handling decision made.
The TPA is in the business of adjusting insurance claims. The self-insured employer is in the business of manufacturing plastics. Therefore, the TPA's knowledge and understanding of workers compensation claims is far superior to that of the self-insure employer. The TPA was being compensated to provide the self-insured employer with claims handling, guidance, counseling and advice on their workers compensation claims. At any point where the TPA saw the self-insured employer making an incorrect decision on a workers compensation claim, the TPA had both a duty and the responsibility of a fiduciary to explain both the ramifications and the probable outcome of an incorrect claims handling decision. The self-insured employer was of the opinion the TPA had repeatedly failed to provide proper guidance.
The self-insured employer was trusting the TPA to handle the self-insured employer’s workers compensation claims in accordance with generally accepted standards (commonly known as best practices) within the insurance industry. The original contract between the self-insured employer and the TPA was silent on the subject of claim quality. Best practices for claims handling had not been incorporated into the contract. The purpose of best practices is to
control claim costs while providing the insured/self insured with a quality claims product. Each time the TPA adjuster, claims supervisor or claims manager failed to follow the generally accepted claims handling standards, they were breaching their fiduciary responsibility to the self-insured employer, but not their contractual requirements.
The original contract between the self-insured employer and the TPA also had not specified the number of claim files each adjuster would be assigned. The adjusters at the TPA were handling an average of 180 workers compensation files each. This number of claims is far above what a claims adjuster can properly handle. The TPA knew or definitely should have known a claims inventory/workload of this size was unrealistic and generally accepted claims handling standards could not be met. Each time the claims supervisor or claims manager assigned a new workers compensation claim to the claims adjuster with a claims inventory of 180 files, the TPA was intentionally breaching their fiduciary responsibility to the self-insured employer.
Any time a self-insured employer and a TPA enter into a claims handling agreement, the self-insured employer should be sure the contract specifies it is a fiduciary agreement. The contract should incorporate the best practices in claims handling. The contract should specify the number of claims files that can be assigned to any one adjuster. The contract should also specify how any damages the self-insured employer incurs due to the TPA's breach of fiduciary responsibilities will be resolved.(WCxKit)
Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing, publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.
Often it is assumed the designated adjuster(s) working on your workers compensation files is a good adjuster. But, you know what “they” say about “assuming.” Use these eight tips to judge your adjuster(s) overall ability and effectiveness.
1. Timely Contact with All Parties
Track how often the adjuster makes timely contacts. If your Best Practices say claimants, medical providers, and the employee's supervisor must be contacted within 24 hours of the first report of an accident, expect your adjuster to be making timely contacts with all parties at least 90% of the time. The higher the percentage, the better. Timely initial contacts go a long ways toward establishing the future tone of your claims and establish the adjuster as the person in charge. (WCxKit)
2. The Accuracy of Reserves
When you look at your loss run and compare what the claim settled for against the claim reserves you gain insight into the ability of the adjuster to evaluate the claim. If you see a lot of reserve changes right before the claim settles, then the adjuster is either inexperienced at evaluating the claim or is indifferent to the impact reserves have on your company. If you see the reserves on the claim were established since the adjuster obtained key medical information on the injured employee, you know the adjuster is looking out for your financial interests.
3. Responsiveness
Does the adjuster always answer the phone when you call, or do you often have to leave messages and wait a few days to hear back? When you send e-mails, do you get a prompt response, or do you forget what the subject of the e-mail was by the time the adjuster responds? A good adjuster tries to keep you informed about your claims and takes the time to respond to your questions and needs. The quicker the response from the adjuster, the better the adjuster.
4. Payments Timely
If your employee complains the TTD or TPD check did not arrive on time, then the adjuster is not organized (or may have too many claims to handle properly). You should expect never to hear from an employee about the indemnity check not arriving. If your employees are receiving dunning notices from their doctors on medical bills, then the adjuster is not processing the bills timely. While any adjuster may occasionally have a medical bill or other missed expense, you or your employees should not be constantly getting reminders on medical bills.
5. The Number of Employees Lost to Attorneys
The good adjuster stays in contact with employees out on workers comp. The great adjuster builds rapport with the employees and the employees make an effort to keep their adjuster informed as to their medical progress and their ability to return to work. The poor adjuster has a higher percentage of employees represented by an attorney then the good adjuster. As the percentage of employees represented by attorneys is impacted by the legal climate in your locale, you must consider the results of your adjuster compared to other adjusters in the same locale.
6. Knowledge of Workers Compensation
When you have a question about workers comp in general, the good adjuster can answer it for you, (or at least get you the answer). If the adjuster does not know the answer, or tells you it would be better for you to talk to a workers comp attorney or the adjuster's supervisor, the adjuster's workers comp knowledge is weaker than it should be. The good adjuster knows all the ins and outs of state statutes and is willing to share that information with the employer.
7. Claim Quality Audit Scores
Often claim offices do not want to talk about their claim quality audit scores. This often arises out of a concern that the employer may not understand that the 100% perfect claim file seldom happens. However, the good workers comp adjuster scores in the 90+ percentile. Ask the adjuster for a copy of the most recent audit score. The good adjuster is glad to share it with you. The weak adjuster probably has reasons why it cannot be shared.
8. Closed Files Reopened
Every adjuster knows the best file is the closed file. However, it is seldom a good idea to close a file prematurely. The good adjuster makes sure all aspects of the claim are resolved, all medical bill paid, all indemnity checks issued, and all expenses paid before closing the file. If you see more than a few reopened files on the loss run report, than the adjuster is closing claims prematurely. (WCxKit)
None of these 8 criteria alone indicate a good or poor adjuster. When the adjuster is strong in all 8 areas, you have a great adjuster working your claims. If the adjuster is weak in most of these areas, it is time to consider requesting another adjuster to handle your workers comp claims. Having a strong adjuster on your claim files makes your life easier and saves money. A few select TPA's DO actually "grade" their adjusters, giving monthly bonuses to those that excel, and get high grades – nearing 100.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com or 860-553-6604.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.
Your insurance broker is in business, just like you are in business. The first rule of any business is to make a profit. Therefore, while insurance brokers have the employers best interest at heart in most situations, there are times brokers wish employers knew more about their workers compensation program, but in the effort to protect their own business interest, they “bite their tongues” and “keep their mouths shut.”
In fairness to insurance brokers, they mention most of the following areas in their sales presentations, but when employers ignore their advice, they move on to the next subject in the interest of their own business. Here are seven areas your broker wishes every employer knew more about. (WCxKit)
1. Premiums & Price Decisions
Many employers will shop for both their insurance broker and their workers compensation insurance based solely on the price. In workers compensation, this can be a major mistake because future workers compensation premiums are based partially on what is paid out on claims. If the insurance broker puts you with the “cheapest” insurance company, and poor claim service is provided and pays out more than necessary on claims, the overall
cost of your workers compensation insurance program will be higher – sometimes much higher - in the long run. The knowledgeable broker will know which insurance companies provide the best claims service, resulting in your company paying a little bit more in premium now, but a lot less over time.
2. Claims Management Help
The insurance broker often assists with claims management. This can include everything from reporting the claims to the state workers comp board and to the insurance carrier, to being sure the employer has met all state imposed reporting obligations. The broker may also arrange for loss runs that identify the information your company needs to set benchmarks and performance goals. The broker may be able to help facilitate better settlements and help work out problems with the insurance company.
3. Customer Service Keeps Business
Smart brokers know that while price may get them in the door, it is customer service that keeps your business coming back. The level of professionalism of the account executive assigned to your program is key to your happiness with the customer service. The broker's account executive will often do a comprehensive analysis of your business and strive to place your workers comp coverage with the insurance company that provides you with both strong claims management and good customer service.
4. Employer Loyalty to Broker
The broker is counting on your loyalty to their company. The cost associated with recruiting new business, setting up new accounts and getting a new account off to a
good start often exceeds the commission the broker earns from a new account in the first year. What the broker is counting on is
keeping your business, as the cost of renewing your program each year is substantially less than the cost of obtaining your new business. Your loyalty and renewals are the broker's profit. A thank you to your broker would be much appreciated.
5. New Business vs Retained Business
Even though the first year of an insurance program is often not profitable for a broker, the broker continues to search and solicit new business to increase future profits. The broker walks a fine line between promising too much service and providing plenty of service to get new business from the employers who shop for more than price. There is an expression … "Treat your clients as if they were prospects." Clients should expect to receive the same level of service after they have given the broker their business as they did when they were a prospect.
6. Broker Assistance Expertise
If you will listen to your broker, there are many ways the broker can assist you in reducing your workers comp claim costs. The broker will be familiar with many services that can help you. Just because they are telling you (educating you) about those services, doesn't mean the services are not necessary or you are being sold a bill of goods. Don't make a buying decision either becuase your broker is telling you about it or not. Brokers have oodles of valuable experience so it behooves you to take advantage of the expertise. And, ask brokers if they have specialized personel such as cost containment experts you can work with.
a. Claim cost reduction:
- Safety programs including safety manuals, guidelines, and bulletins
- Loss Control/Prevention programs
- Return to work programs
- Fraud prevention
- Medical networks including both triage and case management
b. Financial cost control:
- Flexible payment programs
- Pay-as-you-go programs
c. Administrative issues:
- Loss reporting
- On-line policy information
- Claim assistance
- State reports
- Loss runs
6. Broker Size and Fit
Your insurance broker can be of almost any size from the national heavyweights who have an office in every major city, to the regional powerhouses dominating the local market or their section of the country, to the boutique brokers specializing in one or a few industries. (WCxKit)
A small employer with a limited number of employees can place business with the giant insurance agencies, the regional brokers, or the local specialty broker but the large employer has more clout with their broker if they represent a larger piece of their broker's pie. No broker will tell you your account is too big or too small. Brokers want all business they can get, but a business wants a broker that's the right size for their business. Having said that, most brokers work very hard for their clients.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.
Great broker/agents are like magicians. They listen to your insurance issues, and with a sweep of their laptop they display a handful of carriers ready to solve your biggest Insurance problems, and they all compete to be the lucky one chosen to provide your company with all insurance needs. Brokers are near and dear to my heart, having worked with them for over 25 years, so take this with a grain of salt. Most brokers are open and honest, but there are a few that are less candid and some that don't know the difference between claim handling capabilities of carriers, and they don't have first hand experience with the multitude of services a carrier offers.
The truth is, some of these carriers can be a wolf in sheep’s clothing. Some may be worse than others. Some may be fantastic in one area, but awful in the next. Foolishly, some employers go with the cheapest option. The “cheap” choice always comes back to haunt them when the wheels fall off later down the road. The goal should be TOTAL loss costs.
Here are five generalized issues that may affect the employer-carrier relationship…
1 – The squeaky wheel gets the grease
It just might not be an unheard of concept that the bigger employers with the higher premiums get more attention and better customer service than smaller employers. The truth is people can’t be everywhere at once. Sure, bigger accounts get more attention because they bring higher claim volume and have more day-to-day interaction with adjusters than smaller accounts. But, that shouldn’t mean just because an employer has only 5-10 claims per year the business needs shouldn’t be met both promptly and professionally. If you are not getting the service you demand when you need it, it is time to switch carriers. Every claim should be handled properly and correctly, regardless of how large the premium.
2 – The adjusters have issues
Larger carriers often have high turnover. Every adjuster is different and with a different skill set. State licensing, current active caseload, years of claim experience, customer service skills, and medical knowledge are only a few items in the long list of demands an adjuster must meet. While there are many great adjusters, there are also some poor ones. Some are so poor at handling claims they are marking time until the insurance company replaces them.
An agent/broker probably will not tell an employer a certain carrier is being dropped by other employers because the adjusters assigned to their accounts were terrible. It’s important to meet and get to know the adjusters handing your account before you commit to bringing your business to them. If you do not get a good vibe, its best to keep looking. If the adjuster cannot sell themselves and their skills to you, then you might as well save yourself the headache they are going to cause later on when you need them and they let you down.
3 – There's not an actual person handing claims in your jurisdiction
Having an adjuster within the local area can be a great asset. Typically, these adjusters are up to date with current legal trends within their state, as well as physician/attorney/judge reputations within your claims jurisdiction.
For example, if you do business in Michigan, and your Adjuster is in Texas, chances are the adjuster is not informed about current insurance trends in Michigan, and that can hurt you and the outcome of your claims. Within each state, the cities and counties throughout the area can have a completely different demeanor than others within the same state. This is an extremely important fact to know, and it should determine how the claim is handled. Maybe a judge in one county is very pro-employee, and no matter what evidence you have when determining the compensability of the case, these factors would not come into play. Doctors in one area of the state could be very aggressive, whereas another group of doctors in another area is very liberal with their treatment and causal relation determinations. This unseen factor cannot be overlooked, as it plays a role in every case the adjuster handles.
4 – We pushed this carrier on you
Some agents/brokers choose to write business only with certain carriers and others do not. If your agent only presents two carriers to choose from, you aren’t getting a very big picture of the available insurance market. Now this is not to say you should be given a laundry list of carriers. Instead, make sure you have what you think is a good, comprehensive list to choose from, and make your agent/broker work for you.
The broker/agent should be able to tell you why one carrier fits your needs better than others. Let them educate you on the pros/cons of each carrier they know and heard about. Meet with your top 3 choices. If they care about getting your business, they will gladly take the time to meet with you and go over your insurance needs and they will tell you what they bring to the table and, more importantly, why they are better than the competition. A good broker will help sort through the multitude of information you will be given.
5 – Carriers may bait you with a low premium
Some carriers want to write every business and write as much business as they can. They may do this by underbidding their competition and baiting you with a low premium. In the end, the carrier hopes you will not have a large claim or other large loss for them to deal with or absorb from a financial standpoint.
The loss ratio is always king for carriers (premium-billed vs claims dollars spent). However, these carriers do not last forever and quite often end up unable to meet their financial obligations. They dissolve their companies, leaving you with a huge mess to clean up. If you thought claims were hard to deal with imagine doing them with a bankrupt carrier. Remember the old saying, “You get what you pay for.” This is true when it comes to picking a company to provide you with Insurance or administration. If something seems too good to be true, it probably is.
Summary
Picking a carrier to handle your needs as an employer is a large, complex task – a task requiring the utmost thought and care. Through a relationship with an agent/broker, everyone should be helping you arrive at the correct decision for what is best for your company. If something does not feel right or if you do not think a carrier has your best interests in mind, you are probably correct – keep searching.
Note: Obviously this is tongue-in-cheek article with a little humor (attempted), intended only to provide an insider's view of industry issues.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com or 860-553-6604.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.
One of the more colorful phrases you will hear in the workers compensation claims office is the term “old dogs”. “Old dogs” is a term referring to the large, old paper files that have been around for years. There are two explanations where the term “old dogs” came from. The first explanation is: As the years went by, the corners of the paper file and some of the papers in the file got the corners bent over, the file became dog-eared. The second explanation is: the claim file is like a dog. During the early start of the claim, it can be very active and things happen quickly like a puppy jumping around. But after a few years, the file, like an old dog, just lays around with nothing happening. (And yes, electronic files can become an 'old dog' too, if they hang around long enough).
The primary reason a claim file becomes an old dog file is a lack of aggressive attention to the file by the work comp adjuster. This is not saying the adjuster did not do a good job on the file. The adjuster may have done a great investigation and made several efforts to move the file forward. What happens is the adjuster gets new claims in on a regular basis that need immediate attention, while the file that is becoming an old dog file has nothing happening at the moment. Therefore the adjuster's attention is on the new claims and not the claim she has for a couple of years or more. (WCxKit)
There is often a reason or even several reasons a claim file becomes an "old dog." Easy to handle files with minor injuries do not become old dog files. The old dog file is going to have either a medical treatment issue, a permanent partial disability issue or both. (While claim files where the employee is receiving permanent total disability payments for years or a widow is receiving life time death benefits are both types of old dog files, we are going to address the old dogs files where something can be done to move the files forward to resolution).
The employee's attorney will often steer the employee to a medical provider the attorney knows will keep the employee off work for as long as the employee wants to be off work or the attorney will take other actions to delay the file from being concluded. There are several things the work comp adjuster can do to stop the flow of disability benefits and excessive medical cost in these situations. This includes:
1. An independent medical examination (IME) by a medical provider who is a specialist in the area of medicine covering the employee's injury. The IME will either concur the employee should remain off work and provide recommendations for getting the employee back to work, or the IME will advise the employee is able to return to work either with restrictions or without restrictions, plus will give a disability rating that can be used to settle the indemnity portion of the claim.
2. If the state is a jurisdiction where the number of IMEs is limited, a peer review of the medical records can be requested from a medical specialist. The peer review doctor can advise the adjuster as to the appropriateness of the medical treatment and the expected time frame (if any) for the medical treatment to be completed.
3. Any claim more than a year old, or older, with on-going medical treatment, that does not have a Nurse Case Manager (NCM) assigned to the claim should have a NCM assigned. The NCM can assist the employee and the medical provider in coordinating the best possible medical care while expediting the medical treatment. [Note – If the employee is known to have a serious injury at the time the claim is reported to the claims office, medical management with a nurse case manager should be started at the time the claim is received. When medical management is started timely, the possibility of the claim every becoming an "old"dog" is significantly reduced].
4. If the issue on the claim becomes the ability of the employee to return to work, a vocational rehabilitation expert should be brought in to the claim as soon as it is mentioned that the employee might not be able to return to the previous job. The voc rehab expert will work with the employer and the medical provider on ways to place the employee with a permanent partial disability back at work. The vocational rehab expert can work out the details of what the employee will be able to do and the details of what the employer needs to do to be in compliance with the Americans with Disabilities Act (ADA).
5. A detailed review of the file by the claims supervisor or the claims manager should be completed to see if there are options available on the claim that the adjuster has missed. [Where this is a routine practice in the claims office, many claims that could become and old dog claim never get to be an old dog.] If the claims supervisor and claims manager are both too busy to give the old dog files this type of attention, an independent claims auditor should be brought in to review the files and make recommendations on how to move the old dog file forward to conclusion.
6. An old fashion round table discussion between the claims adjuster, the claims supervisor or the claims manager, and a couple of senior work comp adjusters is often a good way to identify steps that can be taken to move the old dog file. [The old adage: "Two heads (or more) are better than one."] By bringing other work comp experts into the discussion of the file, the claims adjuster may come up with new ideas to resolve the claim.
7. A source of information that the adjuster often does not think about if the work comp claim is not being contested is the defense attorney that normally handles the contested claims. The defense attorney is often willing to take an assignment to review an old dog claim and to make recommendations on how to bring the claim to a conclusion. (WCxKit)
Old dog claims can be difficult to resolve, but most of them can be concluded if a proactive and aggressive approach to doing so is taken. The individual recommendations above should be combined with as many of the other recommendations as needed to resolve the claim.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and Website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. www.LowerWC.com Contact: RShafer@ReduceYourWorkersComp.com .
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com.
Success Story: A large transportation company thought their claims were not handled aggressively enough and poorly performing adjusters were driving workers up comp costs. The dissatisfaction had grown to such proportions that they put the business out to bid. They did, in fact, change TPAs.
Resolution: One MD and one senior claim analyst reviewed 20 claims in each of three offices (TX, CA and MA) and found there was a problem with the MA office. The adjuster handling their claims in that office was inexperienced and disorganized. There were administrative quality issues such as lack of supervisor oversight, insufficient investigation, untimely 3-point contact, no recorded statements being taken, and claimants were being overpaid because the “average weekly wage” was miscalculated. IME’s were overused and medical causality was not established prior to claim payment. Pre-existing conditions were not recognized by the adjusters or nurses resulting in higher than necessary reserves. Nurse case management was being brought in too late to be effective. The client, however, thought the NCM was "too expensive" but the problem was really that it needed to be brought in earlier.
We set up new triggers so when an employee does not return to work within 2 days a nurse case manager is immediately assigned. The TPA enhanced their training program to ensure nurses were reviewing files for pre-existing conditions and completeness of medical records. The employer retained a part-time medical director to review claims if an employee had not returned to work within two weeks. IME’s were not requested until the medical director reviewed the file, insured complete medical records were obtained and crafted a custom letter requesting specific medical information.
The employer had insufficient staff to monitor or manage the TPA; there were 3,000 claims annually at over 500 locations with only one person, who was not an actual risk manager, assigned to workers compensation. We suggested the company hire a risk manager and select eleven people (one for each region) to serve as WC Managers (WCM) which was quickly done. Onsite training was done for the new WCMs. The TPA participated in the training to meet the WCMs then did a “national rollout” providing new “panel cards” so employees could select network physicians. The TPA met with each location to open communication channels.
We met with the client, TPA and broker on weekly conference calls for the next 52 weeks until all suggestions had been implemented. To keep team members accountable, we sent an “Implementation Action Plan” to each participant following the conference call.
Result: Losses down 25% for past 3 years and continuing.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. Contact: RShafer@ReduceYourWorkersComp.com
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com.
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