Workers’ compensation coverage is required in all jurisdictions, but the methods to provide the coverage vary from self-insurance to workmans’ compensation insurance companies to state assigned risk pools to monopolistic states. Companies who do not have operations in a monopolistic state may wonder how does workers' compensation operate in a monopolistic state.
In a true monopolistic state, the state government insures all employers through a compulsory state fund and is the exclusive provider of coverage. Instead of purchasing the workers' compensation insurance coverage from an insurance company, the workers' compensation coverage is provided by the state government. Open markets with competition from private workers' compensation insurance companies is not permitted.
Over the last several decades the number of states classified as monopolistic states has dwindled from about twenty states 50 years ago to now just 4 states and two territories. The remaining jurisdictions in the monopolistic category are North Dakota, Ohio, Washington state, Wyoming, Puerto Rico and the Virgin Islands. In the last ten years three monopolistic jurisdictions, Nevada, West Virginia and Guam have switched from a monopolistic state program to a free market system of workers compensation insurance.
The states of Ohio and Washington have loosen their monopolistic state grip on the workers' compensation market in their states. While they do not permit workers' compensation insurance companies to compete in their states, they do permit employers to set-up a self insurance program to handle their own work comp claims. However, the restrictions and strict requirements for self-insurance bar all companies except the financially strong large companies.
Wyoming is a monopolistic jurisdiction for hazardous operations and for other specific categories and for defined operations. If the employer does not fit into one of categories requiring the purchasing of workers compensation coverage from the state, then the employer has the option of using the state fund or purchasing coverage from a workers’ compensation insurance company.
North Dakota is the only state that meets the pure definition of a monopolistic state for workers compensation. There are no options for self insurance or to purchase workers compensation coverage from the private market. While there are a limited number of employers excluded (real estate agents, independent contractors, farm and ranch workers, domestic employees, newspaper delivery employees) from the workers' compensation requirement, all other employers are required to have workers' compensation insurance and are required to buy it from the State of North Dakota.
Ohio is the largest of the monopolistic jurisdictions. In 2009 the Ohio state fund had 132,549 work comp claims filed (down sharply from 159,611 in 2008 and 171,692 in 2007). Of the 132,549 claims filed, it approved 118,955 claims. Ohio had 257,012 employers covered by the state fund and 1,188 employers who were self-insured. The ratio of employers in the state fund to the employers who are self-insured is 216 to 1, reflective of the restrictions and requirements for a company to self-insured in Ohio.
Monopolistic jurisdictions provide risk managers or workers' compensation managers of multi-state companies with challenges that are not faced in the other states and territories including:
1. Making a separate purchase of coverage to provide workers' compensation in each of the monopolistic jurisdictions where they have employees.
2. Conflict of interest between the state work comp agency that handles the work comp claims and the state board or agency that handle claim dispute resolution.
3. Providing work comp coverage for employees of a monopolistic state who perform work in other states.
4. Providing work comp coverage for employees from other states who perform work in a monopolistic state.
5. The monopolistic state agency does not provide employers' liability coverage.
6. Employee classification for premium rating is unique to each monopolistic state.
Basically, the risk manager or work comp manager has to learn a completely different system when they have work comp exposure in a monopolistic state.
The monopolistic jurisdictions due to their structure and the way the operate have their own issues to deal with. Some of the problems include:
1. Political interest in the setting of work comp premium rates. The state agency is not in business to make a profit like a workers’ compensation insurance company. Hence, if the premiums are set too low, the state (make that the taxpayers of the state) get to subsidize the premium deficiency.
2. With no competition, the quality of customer service and the quality of claim service can be lacking.
3. The state agency is required to take all employers who apply. They cannot deny a policy to a poor risk like a workers' compensation insurance company would do.
4. Claim fraud is prevalent. Depending on whose stats you are looking at, work comp claim fraud is involved in an estimated 5% to 10% of all work comp claims. Remember the 118,855 approved work comp claims in Ohio in 2009? Ohio prosecuted only 222 cases of work comp fraud or less than two-tenths of one% of the claims filed. (workersxzcompxzkit)
How long the remaining monopolistic jurisdictions will continue is unknown. Politics in each of the monopolistic jurisdictions will determine whether or not the employers within their states will continue to purchase coverage from the state or if the market will be opened up to competition. The free-market system of insurance companies competing for business has shown itself to be the better approach by creating better customer service and less red-tape for the employers.
Author Rebecca Shafer, J.D. Consultant, President, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. She can be contacted at: RShafer@ReduceYourWorkersComp.com or 860-553-6604.
Podcast/Webcast: Occupational Health Strategies
Click Here:
WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php
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.
© 2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.
The Santa Barbara (California) County Board of Supervisors approved a new workers’ compensation program reported to save the county more than $3 million over three years.
The decreased premium is expected to take care of expenses for all the county’s industrial injuries and illnesses incurred from July 1, 2010, to June 30, 2011.
According to the Lompoc Record, the board decided to take advantage of a new program offered by the California State Association of Counties (CSAC), providing better service at a lesser risk to the county, county staff said.
The board members backed the change because the fire and sheriff’s departments would experience a combined $681,000 in savings. These two departments pay more than 50% of the county’s workers’ comp premiums.
For over three decades, the county has been a member of the CSAC Excess Insurance Authority, “a member-directed risk sharing pool of counties and public entities,” according to county staff.
The county was enrolled in one of its compensation programs and the county was mandated to absorb the risk for each claim up to $500,000 and manage all the necessary administrative work.(workersxzcompxzkit)
The recently approved CSAC program, known as Primary Workers’ Compensation, transfers and moves all of the county’s risk around to a bigger pool, thus lowering the county’s costs.
Podcast/Webcast: Occupational Health Strategies
Click Here:
WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php
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.
© 2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.
What is an Alternative Market?
Alternative Markets refers to insuring for risk without using the conventional insurance company approach. There are several methods making up the alternative markets including pure captives, group captives, rent-a-captives, public entity pools, self-insurance plans, large deductible programs, risk retention groups and purchasing groups. The following is a brief explanation of each method.
Pure Captives:
A pure captive insurance company has a single parent company and insures only the risk of the parent company. The pure captive insurance company will have an insurance charter to operate as an insurance company. The parent company will invest the money to set up and start the captive insurance company. The parent company controls the decisions in regards to underwriting, investments and claim operations. The pure captive insurance company will normally have an excess insurance carrier or a re-insurer to cover the cost of claims if they exceed a predetermined limit.
Group Captives:
A group captive insurance company is jointly owned by a group of companies having a homogeneous interest and similar exposures to loss. It is a closely held insurance company with the insurance business being supplied and controlled by its owners. A group captive will operate the same as the pure captive and differs only in having multiple owners as opposed to a single owner.
Rent-A-Captive:
A rent-a-captive (also known as a sponsored captive) is a company providing captive insurance company services and facilities to others for a fee. The rent-a-captive is normally run by a fronting insurance carrier, but can be operated by a broker or a re-insurer. The fees to obtain membership in the rent-a-captive are much lower than what would be necessary monetarily to start a pure captive. The rent-a-captive usually provides services to mid-size companies without the resources to start their own captive. The rent-a-captive differs from the pure captive or group captive in that the member is not an owner and does not have voting control of the captive. The rent-a-captive is normally divided into “cells” in which each member is legally separated from the rest of the members and separated from the liabilities of the other members and the rent-a-captive itself.
Public Entity Pools:
Public entity pools or government pools are a form of risk management where small or mid-size local governments within a single state—towns, small cities, counties, water districts, parks & recreation, public bus lines, etc.,—join together to form a non-profit association to share the risk of loss. The members of the pool collectively self-insure their insurance exposures through a participation agreement. The pool will have a joint underwriting operation in which the participants in the pool assume a predetermined and fixed exposure in all business written.
Self-insurance Plans:
A self-insurance plan describes a company setting aside a pre-determined amount of money to pay for future claims. Using available underwriting information and the laws of large numbers, the amount of money needed to pay future claims is actuarially calculated. This amount of money is placed in reserve to pay the losses as they occur. Like a captive insurance company, the self-insurance plan will normally have an excess insurance carrier or a re-insurer to cover the cost of claims if they exceed a predetermined limit.
Workers’ compensation coverage has relatively predictable amounts of risk and is measurable enough to make it appropriate for self-insurance. Most of the jurisdictions allow companies to self-insure for work comp. Self-insurance plans are the alternative market approach most used in the work comp field.
Large Deductible Programs:
In a large deductible program the insured purchases a policy of insurance from an insurance company. The insured is responsible for reimbursing the insurance company for each claim in the policy period up to a dollar limit. The insured will also have a maximum amount of exposure. To illustrate, the insured would reimburse the insurance company the total amount paid on each claim under $250,000 (the large deductible amount), but when the insured has paid a total of $1,000,000 (a stop loss limit) on all claims, the insurance company will take over and pay all further claim cost during the policy period. The allocated loss adjustment expense (the cost of handling the claim) is often included in the claim cost in the large deductible program.
Risk Retention Group:
A risk retention group is an insurance company owned by the policyholders. Membership in the group is limited to companies in the same type of business. The risk of loss is spread across the group members. Risk retention groups are normally used for medical malpractice, professional liability and products liability. Risk retention groups are normally not used for workers’ compensation. (workersxzcompxzkit)
Purchasing Group:
In Texas, the state statutes allow companies in similar industries to join together in a purchasing group to buy their workers compensation coverage. The companies in the group receive a discount from the workers' compensation carrier. If the insurance company is set up as a mutual company, the members may also receive a group dividend if the insurance company has a profitable year. The purchasing group may also join together to purchase health insurance to receive a group discount.
Author Rebecca Shafer, J.D., President, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. She can be contacted at: RShafer@ReduceYourWorkersComp.com or 860-553-6604.
Podcast/Webcast: Occupational Health Strategies
Click Here:
WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php
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.
© 2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.
What Is It and When to Use It – sometimes we need to review what seems obvious to some risk managers. We understand that not everyone has tons of experience in this field – some are literally thrown into the field without any experience whatsoever…
As the risk manager of your mid-size company, you want to consider self-insurance in the jurisdictions where you are allowed to do so. But your company is mid-size, not a Fortune 500 company. While you have the resources to handle most workers' compensation claims, you are concerned a catastrophic work comp claim could do serious damage to your company's current and long term financial outlook. The solution is the excess workers' compensation insurance carrier.
What is Excess Workers' Compensation Insurance?
A workers' compensation excess insurance policy is written to indemnify the self insured employer for workers' compensation claims (and Employers' Liability claims) exceeding a designated dollar amount. The excess work comp insurance covers all work comp losses up to a specified cap, or it can be unlimited.
For example, you decide your company can afford the cost of paying almost all work comp claims, but do not want to be on the hook to pay claims where the total cost exceeds the company’s set $500,000 limit. The way to handle the rare catastrophic work comp claim is to buy excess workers' compensation insurance. The excess workers' compensation insurer indemnifies your company only on those claims exceeding $500,000 in total cost.
The excess workers’ compensation insurance carrier may be willing to insure some risk but does not want to have unlimited medical exposure on your work comp claims. They may put a cap on their exposure, for example $1,000,000 is the most they are willing to pay over and above the $500,000 your company pays on a catastrophic injury claim. You will then need another excess policy over and above the “second layer of coverage” (the self insurance being the first layer of coverage). The second excess workers' comp carrier only reimburses your company for claims exceeding $1,500,000 (and is the third layer of coverage).
The first excess workers' comp insurance carrier may be willing to write all your coverage over and above your cap. If they do agree to take on the unlimited medical exposure on your catastrophic injury claims, the excess workers' compensation insurer will in turn most likely have a policy of reinsurance in with another insurance company.
That is, they will buy another insurance policy from another insurer to cover all their losses over and above a set dollar limit, say $1,500,000 per claim. Or they may cede the other insurance company, i.e., give the other insurance company part of your premium in exchange for the other insurance company's promise to pay any claims over and above the agreed upon dollar amount.
Benefits of Excess Workers' Compensation Insurance
Besides the obvious benefit of being reimbursed for catastrophic work comp claims exceeding your self-insurance cap, excess workers' compensation insurance provides additional benefits to your company.
Most self insurers are not able to be self insured without the excess workers' compensation policy. Self insurance allows the risk manager more control over the cost of the insurance program, more control over the claims handling, and improves the cash flow by lowering the cost of work comp insurance (by eliminating the profit portion of the premium paid to a first dollar insurance carrier).
Often the excess workers' compensation insurer offers the self-insured employer additional services and works as a partner with the self insured. Some of the services offered by the excess work comp insurer may include:
1. Underwriting guidance
2. Guidance in meeting the regulatory requirements
3. Industry specific loss control services to assist in managing workplace hazards
4. On site safety assessments
5. Best practices for managing work comp claims
6. Emergency planning and preparation
7. Catastrophic claim management
What to Look For in Selecting an Excess Workers' Compensation Insurer
In addition to the services noted above, look for an excess insurer who includes the allocated loss adjustment expenses (the cost of handling the claims) in the definition of loss per claim, not just what is paid to the employee in benefits.
Also, if your company is exposed to longshore and harbor workers claims, Jones Act claims, railroad work comp, coal mine, or migrant and seasonal workers, be sure your excess workers' comp insurer covers these types of claims. (Some excess policies exclude some or all of them).
You want an excess workers' comp carrier whose is flexible in their underwriting, that is they will allow your company to set your own self-insurance retention cap, and are willing to endorse their policy to eliminate exclusions that might affect your coverage. (workersxzcompxzkit)
Correctly managed, a self insurance program in conjunction with an excess workers' comp insurance policy can provide your company with the work comp coverage you need while saving your company part of the cost of workers' compensation.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.
Podcast/Webcast: Claim Handling Strategies
Click Here:
http://www.workerscompkit.com/gallagher/podcast/ Claim_Handling_Strategies/index.php
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.
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.
For failing to carry compulsory Employers’ Liability Insurance (workers’ compensation insurance) a shop owner was fined £2,100 ($3,147.00) and ordered to pay £1,850.80 ($2,773.00) in costs following an investigation by the Health and Safety Executive. HSE’s investigation found the employers violated the insurance requirement four times.
While public liability insurance is generally voluntary, employers' liability insurance is compulsory and enables an employer to meet any costs relating to employees' injuries or illness whether caused on or off site.
HSE Inspector Andrea Robbins, said there is no excuse for not having the insurance. "Employers' Liability insurance is a legal requirement for all employers in Great Britain," Robbins commented. "As well as being a legal requirement, the insurance offers important protection for employers if an employee is injured or suffers from disease as a result of their work. (workersxzcompxzkit)
"The failure of employers to insure is seen as a serious matter and HSE will continue to refer appropriate cases to the magistrates for their consideration."
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.
Podcast/Webcast: Claim Handling Strategies
Click Here:
http://www.workerscompkit.com/gallagher/podcast/ Claim_Handling_Strategies/index.php
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.
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.
A plan to sell Oklahoma's workers' compensation insurance agency is opposed Attorney General Drew Edmondson because businesses may then be required to pay higher rates. Edmonson said pending legislation would lead to privatization of CompSource Oklahoma, bad news for businesses and consumers.
CompSource was formed in 1933 to keep workers' comp prices affordable and competitive. It serves as a last resort for high-risk employers who are unable to afford private insurance.According to Edmondson, if CompSource Oklahoma is acquired by another insurer, prices could increase and new and beginner companies may not be able to afford workers' comp insurance.(workersxzcompxzkit)
CompSource reportedly writes approximately 35% the state’s workers' comp policies.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.
Podcast/Webcast: Claim Handling Strategies
Click Here:
http://www.workerscompkit.com/gallagher/podcast/ Claim_Handling_Strategies/index.php
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.
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.
What are Government Pools?
Government pools are a form of risk management where small local governments within a single state—towns, small cities, counties, water districts, parks & recreation, public bus lines, etc.,—join together to form a non-profit association to share the risk of loss. The members of the pool collectively self-insure their insurance exposures through a participation agreement. For more Information: www.reduceyourworkerscomp.com
Most government pools operate along the same principles as an insurance company, but the membership is limited to the governmental units within their state. The members of the government pool elect a Board of Trustees from their members, The Trustees are responsible for the strategic direction of the pool. The Trustees can operate the pool or they can select a management team to oversee the management duties of the pool.
Why are They Formed?
During the times of hard insurance markets (when underwriting standards become more rigid and insurance premiums increase due to higher than expected insurance claim cost), it often becomes very difficult or impossible for local governments to buy certain types of insurance coverage from insurance carriers. Insurance companies often look at governmental entities as a higher risk, resulting in escalating premiums if they provide insurance coverage at all.
Government pools are normally created to provide both a consistent and affordable means of insurance coverage. The pools are not designed to create an underwriting profit, but to provide the insurance coverage needed. Therefore, the rates paid by pool members do not include an element of profit, making the overall rates paid by pool members more affordable.
What are Their Objectives?
The primary objective of government pools is to meet the insurance needs of the municipal governments and governmental entities that are members of the pool. By joining together, the members of the pool can jointly manage risk and prevent changes in the insurance market from creating financial difficulties for their members’ budgets. The government pool provides the members an effective way to control the cost of insurance.
What do They Do?
Most government pools are multi-line providers of health insurance, liability insurance, workers' compensation insurance and property insurance to their members. The government pools not only provide the insurance coverage, they also manage the member's claims either through their own staff of adjusters or by providing oversight of a Third Party Administrator hired to handle the insurance claims.
In addition to providing insurance coverage, the government pools usually provide loss control services to the members. They encourage members to educate themselves on how to prevent or minimize their losses.
What is the Member's Contribution?
The members' contribution is calculated along the same lines principles as they would be with an insurance company. For workers' compensation the contributions are based on each member's payroll with rates established by the Board of Trustees for the government pool. Based upon the pool's reserves and assets, the rates charged to the members may be reduced upfront by the pool's management.
Pool members are given the option to lower their insurance cost even further. If the member can afford to carry a high deductible, they can elect to do so. The pool's claims adjusting office will handle the claim to a conclusion and then have the member reimburse the amount of their deductible to the pool.
What are Their Benefits?
In addition to providing a lower cost for insurance coverage, government pools often provide most or all of the benefits of a large insurance company, including:
1. Payroll audits are usually conducted annually at no cost to the members
2. The pool will have on staff or under retainer legal counsel to assist the members in local government specific issues
3. Loss control programs
4. Safety programs
5. Guidance is provided to members on risk management issues and insurance issues
6. Claim handling services are provided
- Electronic claim reporting or toll free claim reporting
- PPO network
- Medical bill review
- Pharmacy program
- Nurse case managers
- Vocational case managers
- Litigation management
Summary:
Government entities can lower their overall cost of insurance by participating in a risk-sharing governmental pool. (workersxzcompxzkit) The non-profit pools, owned and operated by the members, save the local taxpayers money by reducing the operating cost of the local governmental entity.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.
Podcast/Webcast: Claim Handling Strategies
Click Here:
http://www.workerscompkit.com/gallagher/podcast/ Claim_Handling_Strategies/index.php
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.
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.
Can you answer this?
Question: What are the three sources driving your workers’ comp costs UP or down?
Answer: State Rates, Experience Mods and, YOU, the employer.
Are you surprised to learn you are one of them? True, your state and your insurer are the primary cost drivers and the rates and premiums may be etched in stone, but the employer (or the broker) can do many things to wrangle a bigger, better deal for yourself and your company. It’s no secret. The 2009 RIMS Benchmark Survey WC Best Practices indicated that companies with brokers (both commercially insured and self-insured) have better best practice rankings than those without brokers.
1. State Rates
Each state determines rates by classifications for job functions. Obviously, roofers are rated higher rate than computer analysts because the risk is greater. Roofers who stand back to admire their work have a much higher probability of falling off the roof than computer analysts have of falling off their chairs.
Obtain the state classifications from the National Council on Compensation Insurance (NCCI), your state workers’ comp commission or department and make sure your employees’ job functions are classified correctly. http //reduceyourworkerscomp.com/resources.php
2. The Experience Mods and the insurance company
The experience mod is a powerful number and you must pay attention to it. Experience mods are factored in by insurers after determining where you stand with respect to frequency and severity of work related injuries. Employers with a history of frequent and severe work related injuries factor in at a much higher experience mod than those with less eventful histories. A mod of 1.0 or less – GOOD; more than 1.0 — BAD.
1. Be sure your insurer has the latest, correct employee classifications.
2. Ask about preferred policy holder insurance packages.
3. Ask about dividends or other financial incentives to get a break on your premium.
4. If you don’t like what you’re hearing from your insurer, shop around for a better deal, or shop around for a broker who has more marketplace clout to get your a better deal. Just a thought…
If you cannot obtain coverage, contact you state for coverage. The state may be obligated to provide coverage for those companies unable to obtain coverage otherwise.
3. Your Safety and Workers’ Comp Management Track Record
You, the employer, are the third workers’ compensation cost driver. This means, even though the state and insurers have the final say in what you pay, you can influence your premium rates.
1. Establish and vigilantly maintain aggressive safety and workers’ compensation management programs at work.
2. In-service employees regularly on safety precautions to prevent work related injuries.
3. If and when work related injuries do occur, aggressively pursue a workers’ comp management strategy, keeping employees engaged and focused on returning to work in a modified duty job at the earliest possible date. (workersxzcompxzkit)
When your insurer sees evidence of safety and workers’ comp management, i.e., a reduction in frequency and severity of work-related incidents, a reduction in convalescence time, an increase in return to work events – you are then in a position to bargain for more favorable premium rates.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.
Podcast/Webcast: Claim Handling Strategies
Click Here:
http://www.workerscompkit.com/gallagher/podcast/ Claim_Handling_Strategies/index.php
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.
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.
Employers rejoice over lower workers’ compensation rates and then slack off on the vigilance required to keep safety and workers’ comp management up and running. Workers’ compensation is NOT an expense of doing business. Unlike the rent, fixed for the month, WC costs rise and fall based on the number and cost of workplace injuries. Do not confuse lower workers’ compensation rates with lower costs.
Rather, lowering and keeping low the cost of workers’ compensation is a basic business practice. Employers must ALWAYS be looking at safety and workers’ compensation management programs and be prepared to re-tool as necessary. If you have managed to avail yourself of lower workers’ compensation rates because of past good behavior don’t sit on your laurels.
It’s not enough to pay lip service to safety and workers’ comp management, you must DEMONSTRATE to your insurers there are fewer claims with shorter life spans. At insurance time, you want to show you are a “preferred policy holder,” eligible for any and all “perks” your insurer and state may offer.
Achieving “Preferred Policy Holder” Status
1. Document your safety track record. Include ergonomic best fits for sedentary computer workers, floor coverings, warehouse shelving, training in lifting, climbing, moving, and warehouse safety, removing tripping hazards, safety signage.
2. Show more employees are returning to work more quickly with a goal of 95% injured employees returning to work within 1-4 days. (do not count med-only claims in the calculation)
3. Develop job descriptions for every position and create modified duty job descriptions in order to return injured employees back to work at the earliest possible opportunity.
4. Communicate from Day One with injured employees to show your good faith and demonstrate you are an ally in his/her recovery. Send a card or flowers, and talk to injured employers every week to document their recovery. Keep a Communication Diary to show when and where you communicated and what was discussed as well as the outcome.
5. Training, training and more training. Employees must be in-serviced in safety procedures, and workers’ comp management expectations. Employees should receive training in safety and post injury response procedures, as well as business protocol for convalescence, such as return to work programs, modified duty, weekly communication, etc.
6. Employees must know they are expected to take a Work Ability Form with them to the treating physician, and have it completed and faxed back to the employer with a diagnosis and a list of work restrictions so a modified duty job can be adapted to fit those restrictions. Employees must sign off when they receive training so you can demonstrate to insurers the employee(s) has, in fact, received training.
7. Work Ability Forms must be filed to demonstrate you were on top of each doctor’s visit and were ready to address each restriction with a modified duty job when applicable.
8. Establish and maintain contact with treating professionals where possible. The Work Ability Form is pivotal in accomplishing this because it contains contact information. (workersxzcompxzkit)
If you can demonstrate you have engaged in activities such as these, and have lowered the incidence of work related injuries, you may become eligible for the state mandated credit programs, the insurer dividends and preferred policy holder status making workers’ comp costs not such much an expense as a way of doing business.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.
Podcast/Webcast: Claim Handling Strategies
Click Here:
http://www.workerscompkit.com/gallagher/podcast/ Claim_Handling_Strategies/index.php
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.
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.com
1-Your Experience Mod Creeps Over 1.0
You may not always understand what the experience mod is but you know when it creeps up, so does your blood pressure. Less is better. The higher your experience mod, the more you pay in premiums. The good news — there is something you can do to decrease experience mod. I spoke with a broker whos client was 1.65 recently. There's no reason for such a high mod — so get started NOW and bring it down! Inaction is not an option, start your workers' comp management program with an assessment from Workers' Comp Kit which is fast and easy, and provides recommendations immediately after the assessment is complete.
Your experience mod number is calculated on the kinds of jobs your employees perform, how many times injuries occur at your work place, multiplied by each one hundred dollars ($100) of your payroll.
The state rate is a key factor in driving your experience mod. So, if employees at your company perform more hazardous jobs, your state rate is higher. If your employees are injured more than employees doing similar jobs at other companies, your state rate is higher. If your state class rate is higher, so is your experience mod.
The higher your experience mod is, the higher your premiums. And, we’re not even talking about indemnity payments. If you have a bad year with several work related injuries, you experience mod is effected for the next three years.
For the short-turn, recalculate your loss runs to ensure they are correct. Separate medical claims from indemnities. Document early claim closures and ensure this is reflected in your loss runs. These steps have a direct impact on your experience mod number!
For the long term, re-emphasize your safety program, but also establish a separate workers’ compensation management program to get injured employees back to work in a modified duty capacity as quickly as possible. Establish a workers’ comp management communication triangle between you, the injured employee, the treating physician and the insurance company.
2-The Safety Person is in Charge of Workers’ Comp Management
Workers’ compensation is the flip side of safety. Safety kicks in BEFORE an accident occurs. But if a work related accident occurs, then a workers’ compensation management plan containing a post-injury response system and a return-to-work program must also kick in to contain costs.
If your safety person is also responsible for implementing workers' compensation management, you should make sure a formal workers' compensation management program is established and implemented. This begins with a thorough breakdown in assessment and benchmarking to determine where your company stands relative to similar companies. There are ten cost drivers in workers’ comp, you should know them and identify your strengths and weaknesses in terms of those cost drivers.
Once you have your data together, you should publish your intentions via a workers' comp policy statement, and a program including return-to-work policies and transitional duty. Include a formal communications component to bring employees on board from every work site.
Update your benchmarking via a transitional duty or return to work ratio every month, to see how you’re progressing. Workers’ comp management is an art form unto itself, and merits attention in its own right. You will soon see rewards enough in terms of lower premiums and indemnity payments and higher profit margins.
3-You Hear Management Say, “Data Processing” Will Handle Your Communications Program
Communications is more than typing up brochures and wallet cards. Communications is a well-thought out strategy for bringing your employee audience into the workers’ comp management loop. You must know the state laws for every state you do business in and your communications varies accordingly. You must know the primary languages and reading levels of your target audiences and vary your communications accordingly. You must take very complicated concepts and make them simple so everyone gets the message. Also, you must vary your communication program so your audience can see, hear and read the messages. You must know how to write a policy, dovetail it to program procedures and the take-aways audience members can carry with them after the meetings. All the while making it very, very interesting.
If data processing can do all this, so much the better. But while management is lamenting over their increasing experience mods, premiums, and indemnity payments, they would do well to rethink their attack strategy for implementing a workers’ comp management program able to effectively lower those costs in as little as 90 days.
4-You Have Claims Reports Going to Defunct Work Sites
How well you know your insurer? Do you keep your insurer abreast of developments in your company? How responsive is your insurer? Communication is a two way street. If you are opening and closing work sites and these are not reflected on your insurance statements after you have informed your insurer, you must establish a formal communication path.
Get a contact person, and while you’re at it, get the supervisor’s name. Visit the insurer’s office to see the lay of the land. If you see the office is disorganized, then this is a red flag. If you see files lying on the floor, or the adjusters are on different floors or geographically separated by cube walls this sends a message of disorganization.
Review your statements (loss runs) carefully every month to make sure defunct sites are not listed.
5-You Have Employees Out on Comp for Years and You Truly Don’t Know Where They are or What They’re Doing
Unbelievable, right? Unfortunately it’s actually the case in many long-term indemnity claims. Companies hire private investigators who videotape injured employees at the car races, water skiing, para-sailing and what not. Injured employees must never be allowed to languish incommunicado while on the company payroll. It’s simply not acceptable. Spend enough on investigations — this is not an area to cut back for the long long employee. Spend enough so you can view activities over a sufficent time so they can't say they had a "good day." This is called "good day, bad day syndrome." I investigated one employee for over a year. Of course, you'll have to observe the laws and if your state limits doing an investigation on employees on workers' comp then you'll need to reconsider this option in favor of other things. (workersxzcompxzkit)
Communicate with your injured employee from day one. Insist a copy of the work ability form, completed by the treating physician, be faxed to you. Send flowers and a get-well card to the employee. Call every week for an informal telephone meeting, until the employee can come on site for meetings. Create a company-wide expectation stating work related injuries are a temporary setback and employees return to work in a modified duty capacity, while they work toward full duty employment.
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.
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