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…
- 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.
- 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.
- 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.
- 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. - 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.
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.
