Many insurers are great providers, however, it is naïve to think every insurer has your best interests in mind. Sometimes you need to remind them, and be very specific about your needs.

Here are six tips to get the most from your insurer:

1. Get Regular Reports

It is essential for companies to request brief, narrative reports from their insurers for all open claims at regular intervals of 30, 60 or 90 days. The frequency of reporting requirements is, of course, dependent on claims volume and availability of internal company staff.

A company with 1,000 lost-time claims annually may want less frequent or less-detailed reports every 90 days, for example, but, a company with only 100 lost-time claims annually may want full narrative reports every 30 days.

The adjuster should provide sufficient detail in describing “action items” planned for each 30-day period that indicates steps to be taken to resolve the claim.

Many companies requested information solely about reserve practices in the past, however, the focus of reporting requirements should be on claims resolution strategies.

2. Ask About Recovery Potential – Get it in Writing

Additional items often incorporated in your Account Servicing Instructions (ASI) include requirements that “all claims should be evaluated for state second injury fund and subrogation potential.” The company should receive a report identifying recovery potential within 90 days after the claim is received by the carrier. The carrier files liens in all actions brought by its employees against third parties and these liens should not be waived or compromised without the company’s prior written consent.

3. Benefit Checks Should Come to You First

In those states where permissible, benefits checks should be delivered to the company to distribute to employees. In lieu of this, copies of all checks should be forwarded to the company. Direct deposit can be a convenient way to distribute checks, but you will lose the ability to interact with your injured workers come payday.

All claims should be paid “without prejudice” in those states where possible, and the carrier should file for extensions of this status whenever possible.

4. Ask Your Carrier to Reference the CIB

Companies should also request their carriers reference the Central Index Bureau, an insurance industry-maintained database, on all claims to determine if a prior claim was filed.

5. Be Sure your Carrier and Insured Are On the Same Page with Denials

When the company requests a claim be discontinued, the carrier should be flexible enough to agree to take necessary steps to terminate benefits in a timely manner so long as the company’s position is legally supportable. The carrier should take an aggressive posture in denying insupportable claims. Conversely, the insured should be consulted before any claim is denied to avoid human resource and morale problems.

6. Your Insurer Should Notify You In Advance Regarding Hearings

Furthermore, the company should be notified sufficiently in advance of all hearings and conciliations so its representative may attend the hearings. Also, the litigation manager should be consulted before appeals are filed and should retain the right to determine whether an appeal is warranted.

Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

Contact: mstack@reduceyourworkerscomp.com.

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

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Every employer buying workers compensation coverage knows it is an insurance policy for the costs associated with injured employees, but few employers ever read the actual policy. The primary reason most people do not read the insurance policy is because it is written in “insurance speak” or legalese. The following is an effort to translate a generic workers compensation insurance policy into everyday English so more people can understand it.

A workers compensation insurance policy is actually divided into two parts. The first half covers what most employers think of in workers compensation. The second part is the “Employers Liability Insurance.” Part two is designed to cover instances where workers compensation insurance does not apply and an employee brings a lawsuit against the employer. Part one’s coverage and workers compensation statutes are so broad that it is rare for an employee to be able to bring a claim under Part two. For the purposes of this article, we will only be addressing what is typically found in Part one of the policy coverage

Section A – What the Insurance Covers

Workers compensation insurance will pay for injuries caused by accidents, or for illness/disease caused by being exposed to an unfavorable environment. Accidents and illnesses also include death. This section limits the coverage to the policy period. The injuries or illness has to be caused by conditions associated with the employee’s employment. If the work comp claim brought by the employee is for work-related illness, the employee’s last day of exposure to the conditions causing the illness must occur within the policy period.

Section B – What the Insurance Company Pays

The insurance company agrees to pay for all benefits as defined by the workers’ compensation statutes of the state where the employer does business. The insurance company agrees to make timely payment of these benefits.

Section C – The Right to Defend Claims

The insurance company reserves the right to determine which claims it will pay willingly and which claims it will contest. In exchange for the insurance company making this decision, the insurance company agrees to pay the cost of defending the employer from any claim brought against the employer. This allows the insurer to investigate and settle claims as it deems appropriate. It also includes the insurer’s right to not to defend a claim if it is not covered by the policy.

Section D – Additional Things Paid By Insurance

The insurance company agrees to pay the cost associated with the claim in addition to benefits provided by the work comp laws. This includes such things as:

1. Attorney fees and expenses.
2. Surveillance and extraordinary investigative expenses.
3. Medical management expenses (triage, nurse case managers, etc).
4. Court cost.
5. Employer’s expenses incurred at the request of the insurer, excluding loss of earnings.
6. Appeal bonds.
7. Any other expenses incurred by the insurer.

Section E – When There Exists Other Insurance

If the employer has a self-insurance retention or large deductible, the insurer will not pay until the employer has met its financial responsibility under the policy. Also, (this rarely happens), if the employer has other workers compensation insurance that will pay for the employee’s injuries, the insurance company will not pay more than its share of the benefits.

Section F – What the Employer Must Pay

The insurance policy makes the employer responsible for payments when the employer:

1. Intentionally fails to comply with a safety law or regulation.
2. When the employer has serious and/or willful misconduct.
3. When the employer knowingly employs someone in violation of the law.
4. When the employee brings a claim against the employer for discharging, coercing or discriminating against the employee for bringing a work comp claim.

Also, if the insurance company is compelled to make a payment in one of these situations, the employer agrees to reimburse the insurance company for all cost associated with the situation.

Section G – The Right of Recovery

In exchange for the insurer paying the work comp claim, the employer and the employee agree the insurer will have the right to recover the cost of the claim from a third party who is at fault for the injury (think auto accident or equipment malfunction).(WCxKit)

Section H – Legal Stuff

This section includes several miscellaneous conditions including:

1. Most states consider notice to the employer of a work comp claim to be notice to the insurer.
2. An employer’s bankruptcy does not relieve the insurance company from paying the work comp claims.
3. The insurance company agrees it is primarily responsible for any benefits owed under the policy.
4. The legal jurisdiction is the state where the employer is located.
5. The insurance company agrees the policy conforms to the applicable law.
6. The insurance company agrees to pay any special taxes or assessments that arise due to the issuance of the insurance policy.
7. Anything in the policy that conflicts with the state law is modified to comply with the state law.

Not every workers’ compensation policy will follow this generic outline, but the above outline should assist you in understanding your workers’ compensation insurance policy.

Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

Contact: mstack@reduceyourworkerscomp.com.

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

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

An annual premium audit is a great opportunity to review your workers’ comp class codes and included payroll for accuracy.  Employers that understand the process and prepare early should, at the very least, have no surprises from the audit. Unfortunately, far too many organizations view the audit as a necessary evil, don’t take the time to understand it, and are later presented with a bill they did not expect and may not even be able to pay.

The best way to face a premium audit is head on. That means knowing what to expect and preparing ahead of time, along with avoiding the most common errors.

The Audit

Insurance carriers conduct premium audits to verify a company’s payroll for the period during which it provided coverage. It occurs after the policy expires to determine the accuracy of the payrolls for that year to see if the premium must be adjusted. If the payroll exceeds the estimated projected payroll, the carrier will send a bill seeking more money. On the other hand, if the payroll is lower than projected, the employer may get money back.

Insurers conduct audits to ensure the premium paid to them accurately reflects the company’s risk. That includes making sure the business and employees are properly classified. It’s imperative to have the proper documents and information ready for the audit.

Here are common errors employers make — and how to avoid them.

1. Failing to include deductions. Everything in the payroll is not necessarily subject to the workers’ compensation premium. The allowable exclusions vary among states, but several are universal to all jurisdictions, such as

• Overtime (premium portion, or the half part of time and half)
• Double time (premium portion, or the double part of double time)
• Severance pay

Severance pay for someone who has not worked at the organization incurs no risk and, therefore does not need to be included in the workers’ compensation premium calculation. Overtime and double time pay may be excluded — to a certain extent.

For example, if ‘Joe’ makes $10 per hour, but you give him overtime, or time-and-a-half for working weekends, the extra portion of his pay can be excluded. So, if Joe works 8 hours on Saturday at a rate of $15 per hour, the extra $5 per hour, or $40 (8 hours x $5 per hour) can be excluded. The same exclusion applies for double time.

Depending on the jurisdiction, additional deductions may apply.

• Officer excess
• Uniform allowances
• Tips/gratuities
• Employer-provided perks
• Bonuses

2. Neglecting to inform the auditor. You will be charged for your $100,000 in overtime, double time and severance if you do not report them to the auditor!

3. Omitting the necessary paperwork. Once you’ve informed the auditor of the deductions you’ve found, you need to back it up with the proper paperwork. For example, if a portion of your payroll went for severance pay, you will need the proper documentation. Other documents you may need to have at the ready include:

• Payroll records
• Payroll tax returns
• Certificates of insurance
• Invoices for contracts that show a breakdown of labor and materials

4. Forgetting to consider state differences. In addition to the overtime, double time and severance pay exclusions, jurisdictions often have additional deductions. However, they are not the same in every state. A multi-state employer that assumes exclusions in one state apply to another may be sorely mistaken. You can check your state’s Basic Manual, ask your insurance broker, or ask your premium auditor to direct you to the allowable deductions for a particular jurisdiction.

5. Improperly classifying employees. Your business operation determines what your ‘governing class’ will be; i.e., the classification code in which the bulk of your employees will fall. Employees such as clerical workers who incur little risk may fall into a different category, but only if they NEVER do other work. For example, if ‘Sally’ is an administrative assistant but once or twice a year she is involved with inventory control on the manufacturing floor, she cannot be classified in the clerical class.

6. Failing to ask questions. If you’re not sure which classification applies to your company or you don’t know what paperwork is required to back up your deductions, ask. Resources are typically available through state insurance bureaus, NCCI, or your broker or insurer.

Conclusion

Premium audits don’t need to be a gut-wrenching ordeal. Document and prepare for the premium audit on an ongoing basis, so you don’t have to spend hours or days getting ready. Asking the right questions, understanding deductions that apply, and gathering the proper documentation will make the process smooth and painless.

Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

Contact: mstack@reduceyourworkerscomp.com.

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

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

When used properly, transferring risk for workers compensation exposure and losses can be an excellent tool for cost control. One such tool is known as Waiver of Statutory Immunity.

A Waiver of Statutory Immunity is: the abandonment, relinquishment, rejection, renunciation, surrender, release, cancelation, or loss (by implied conduct) of any known statutory or contractual legal right.  There are dozens of legal phrases outlining the various types of waiver and additional definitions.

While most waivers of immunity are in the construction industry, any employer using Sub- Contractors, Professional Employee Contractors, Leased Employee Vendors, Volunteers, Individual Specialists, or Temporary Help Agencies can face similar exposures.  The purpose is these entities take over exposures from the entity using their services.

Governments generally have almost full Statutory Immunity for negligence by either constitutional or legislative act.  Yet, if the loss is egregious enough, has major impact, or is not properly asserted, this immunity can be lost.

Hold Harmless and indemnification contracts (with or without Statutory Waiver) not properly written and designed to meet normal public practices, can held null and void by the courts, and/or workers compensation judicial ruling.

For purposes of this discussion two descriptions will apply.  Indemnitee: is the person or organization wanting to transfer risk.  Indemnitor: is the person or organization assuming or taking the risk.

Example of Exposure:

Company A (the Indemnitee) hires company B (the Indemnitor) to perform some computer adjustments.  The work is done on A’s premises.  A and B entered into contract with a standard hold harmless and indemnification agreement.  B also furnishes insurance endorsements naming A as an also insured.

Company B’s employee is injured and alleges A to have been negligent and cause of the injury.   B’s employee is paid compensation benefits by B’s insurance carrier.

B’s employee then sues A for negligence.

A, relying on the hold harmless clause and endorsements for liability coverage turns the lawsuit over to B for defense and disposition.

A is astounded when B’s liability carrier uses employer immunity as defense since B’s workers’ compensation carrier paid benefits.  Because the hold harmless and indemnity clause did not have a Waiver of Statutory Immunity, A is left without defense or coverage under B’s liability policy.

A may be denied coverage under its insurance policies.  A’s carriers may assert that A made its own assumption of risk.

The situation can be progressively worse depending on the number and type of insurance carriers, and parties involved, but most of these cases are resolved without lengthy litigation.  Records show that Indemnitees generally lose the most in exposure and cost.

There are numerous situations where Statutory Immunity is lost.  A few are:

1. Violation of Public Practice.
2. Late Reporting.
3. Failure to properly assert.
4. Vague or Cross interpretation of contract wording.
5. Missing litigation time tables.
6. Judicial or Administrative Ruling
7. Indemnitor fails to Waive Immunity in proper written format.

Manuscript Policy

Standard insurance policies are seldom written to extend coverage for Waivers of Immunity, and State Insurance Departments may not have premium structures for the coverage.   Few carriers recognize waivers without specific endorsement, therefore, a manuscript policy may be necessary.

A Manuscript Policy is written to conform to tailored needs of the insured, or joint venture.  Policies can grant coverage for almost every legal operation.   Premiums may be negotiable, and shared among the various entities.  The policy generally defines every entity exposures and limits, and will define how the insured is to comply with the policy provisions. The policy is generally written for a single use and will expire or be cancelled when the use is completed.  An extending endorsement may be added to allow for injuries or claims incurred but not reported.

Most agents, brokers, and underwriters are not experienced enough to write a manuscript policy, therefore, a manuscript policy is usually prepared by the home office insurance carrier department. The same will apply to endorsements accepting Waivers of Immunity.

Manuscript policies are seldom offered to smaller organizations as premiums are generally expensive or have high retention limits.  Such retentions may be spread across all participants, therefore, it will be crucial that all participants are fiscally sound enough to absorb their share of retentions.

Summary:

Obtaining a Waiver of Immunity from another is a good way to transfer and protect against workers’ compensation claims and subrogation challenges by non-employees, or independent contractor relationships.  However, they must be prepared by properly experience lawyers, in conjunction with all entities and insurance carriers.

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

©2016 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.