Who’s Really Running Your Claims?

When employers think about workers’ comp insurance, they often focus on premium. But behind the scenes, the claims handling model—bundled vs. unbundled—can be just as influential in shaping cost, control, and outcomes.

Bundled claims handling is the “default setting” for most guaranteed cost policies. The carrier provides coverage and manages claims start to finish. Unbundled handling, on the other hand, gives employers more freedom to select their own claims administrators, nurse case managers, attorneys, and other vendors.

Neither approach is inherently “right” or “wrong.” The better model depends on your risk tolerance, program maturity, and appetite for control.

What Does Bundled Mean?

In a bundled program, the insurance carrier handles nearly everything. They collect your premium, manage adjusters, decide which nurse case management firm to use, and hire defense counsel when litigation arises.

Advantages:

• Simplicity: One contract, one partner, one bill.

• Predictability: Administrative processes are standardized across claims.

• Less oversight required: The carrier carries the load, freeing your team from vendor selection and oversight.

Challenges:

• Less transparency: Carriers often charge flat administrative fees or allocate costs internally, making it hard to see where dollars are going.

• Limited vendor choice: Want to use a specific doctor, attorney, or case manager? In bundled programs, the carrier decides.

• Misaligned incentives: The carrier’s goal is to manage aggregate profitability, not maximize ROI for your specific account.

Bundled works well for employers who value convenience and predictability and may not have the infrastructure to oversee vendors directly.

What Does Unbundled Mean?

In an unbundled program, the employer (or captive/TPA on their behalf) chooses the service providers. You may still transfer risk to an insurer, but claims administration is carved out.

Advantages:

• Control: You pick the claims administrator, legal counsel, nurse case managers, and even independent medical providers.

• Transparency: Fees are clearer and often itemized—you see what’s spent and why.

• Customization: You can align vendor selection with your program philosophy (e.g., aggressive RTW, proactive litigation management).

Challenges:

• More responsibility: Someone on your team must manage vendors, monitor performance, and ensure integration.

• Potentially higher upfront costs: Separate contracts and service fees can look more expensive than “all-in” bundled premiums.

• Not always available: Many carriers won’t allow unbundling unless the employer has significant premium or retention.

Unbundled handling is best for employers with higher risk tolerance, stronger internal oversight, and a desire to leverage claims handling as a cost-control lever.

Why the Structure Matters

Claims handling isn’t just paperwork—it’s where real dollars move. Here’s why the bundled vs. unbundled choice matters:

1. Early Claim Direction: In bundled programs, carriers often route injured workers to their preferred networks. In unbundled models, you can establish your own medical direction to ensure early, appropriate care.

2. Litigation Management: Carriers assign panel counsel in bundled programs. In unbundled, you can choose attorneys aligned with your philosophy—whether that’s aggressive defense or collaborative resolution.

3. Return-to-Work Integration: Bundled carriers may not prioritize your RTW program specifics. Unbundled models let you select a TPA or nurse case management team that enforces your transitional duty philosophy.

4. Cost Transparency: With bundled, you rarely see the breakdown of adjuster salaries, nurse case management, or IME fees. Unbundled programs itemize, so you know exactly what each service costs—and can challenge inefficiencies.

Which Employers Should Stay Bundled?

Bundled is often a good fit if:

• Your workers’ comp premium is relatively small (<$300k).

• Leadership values predictability over customization.

• You don’t have dedicated staff to oversee vendors.

• Losses are stable and modest, making administrative fine-tuning less impactful.

Think of bundled as “all-inclusive.” You pay one price and trust the carrier to deliver.

Which Employers Should Consider Unbundling?

Unbundling makes sense if:

• Premium or retention is high enough (often $750k+ or large deductible/self-insured).

• Your CFO or risk manager wants line-item transparency on claims costs.

• You have proven internal systems—return-to-work, medical direction, litigation management—that deserve a supportive claims partner.

• You’re frustrated by carrier vendor choices or lack of responsiveness.

Think of unbundled as “build-your-own.” It’s more work, but you get a solution tailored to your program.

A Blended Approach

Some employers experiment with a hybrid model. For example:

• Keep bundled for standard indemnity claims, but carve out catastrophic cases to a specialty TPA.

• Retain carrier’s adjusting staff, but unbundle nurse case management to gain more control over return-to-work.

• Use bundled for smaller states/locations but unbundle in high-volume or high-cost jurisdictions.

This flexibility allows employers to step gradually into unbundling without overwhelming internal staff.

The Bottom Line

Bundled and unbundled claims handling represent more than just an administrative choice—they reflect your company’s risk tolerance, culture, and appetite for control.

• If you value simplicity and budget certainty, bundled makes sense.

• If you’re ready to leverage claims handling as a competitive advantage, unbundling puts you in the driver’s seat.

The key is not to assume the carrier’s default is best. Instead, ask: Where do we want control, how much transparency do we need, and do we have the infrastructure to manage it?

Answer those questions, and you’ll know whether bundled convenience or unbundled customization is the right fit for your workers’ comp program.

Michael Stack, CEO of Amaxx LLC, is an expert in workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employers and ties results to a Critical Metrics Dashboard.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Injury Management Results (IMR) Software: https://imrsoftware.com/

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