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.”
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“How to Calculate Your Minimum Experience Mod, Controllable Premium & the Revenue Impact”
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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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 because 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 personnel, such as cost containment experts you can work with.
FREE DOWNLOAD: “How to Calculate Your Minimum Experience Mod, Controllable Premium & the Revenue Impact”
- 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 - Financial cost control:
– Flexible payment programs
– Pay-as-you-go programs - Administrative issues:
– Loss reporting
– On-line policy information
– Claim assistance
– State reports
– Loss runs
- Claim cost reduction:
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- 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.
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.
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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