Workers’ Comp Costs: Insurers’ Secrets for Keeping Them Low

Yesterday’s Advisor started a discussion of workers’ comp insurance expense.

With rates declining, due to a combination of state reform action and lower accident rates, experts feel many organizations are losing focus on the cost issues involved and have started to treat workers’ comp as just another cost of doing business.

However, even workers’ comp insurers themselves feel there are relatively simple ways organizations can lower their costs even more, even in a declining rate market, and just as important, keep their costs from rising even though the market has gone down.

The solution lies in improving the insured organization’s experience modifier, or “mod,” a metric of how good an organization’s record is against others in its industry or business sector. Here are some suggestions from The Hartford Insurance Company, among others, to keep your mod strong and healthy:

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It’s a fact: You can’t control your workers’ comp costs unless you also control open claims. Learn how in BLR’s special April 10 audio conference on the subject. Can’t attend? Preorder the CD. Click for info.

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Report all accidents/illnesses immediately! The sooner the report, the sooner treatment can start, leading to an earlier return to work. The Hartford suggests making sure your insurer has toll-free or online reporting (which, of course, they have).

Establish a formal return-to-work program. This includes providing part-time, light-duty, or transitional jobs. The recommendation is based on data showing that the longer a worker stays out, the more likely he or she will not return at all, incurring turnover costs in addition to maximized workers’ comp expense.

Protect employees. This category includes basic safety steps, such as including ergonomic concerns in selection of workplace fixtures, monitoring air quality, controlling exposure to toxic substances, and using machine guarding wherever possible. Even simpler measures, such as teaching proper material-handling techniques and avoiding slip, trip, and fall hazards, also fall into this category.

Hire Safe, Spot Fraud

Zurich North America, for its part, advises making thorough background checks on prospective employees, looking for factors that could indicate careless or unsafe attitudes. Your checks should include motor vehicle reports, credit balances, and criminal record databases. Preemployment drug screening is also highly recommended.

A number of insurers also offer advice on how to spot fraudulent claims. Watch out, they say, for:

Reported accidents that are not witnessed or that were said to occur in areas where the worker does not belong. Such reports are often vague as well as unwitnessed.

Injuries inconsistent with the accident reported.

Reports on Monday of an accident said to have happened on Friday.

Rumors of the reporting worker having financial difficulty at home.

Missed medical appointments and unanswered phone calls to the home.

Reports made by an angry employee or one facing discipline.

An injury story that changes each time it’s told.

Learn to monitor open claims

Finally, many experts recommend paying special attention to I, which can rapidly get out of hand, as the insurer mechanically processes all manner of unnecessary tests and treatments, and then just passes the costs on to you in an increased modifier.

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Make sure your insurance carrier protects your interests on open claims. See how in BLR’s April 10 audio conference. Satisfaction assured. Click for info.

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For information on how to handle this aspect, we strongly recommend attendance at BLR’s April 10 audio conference, Workers’ Compensation Claims Review: Why Regular Reviews Save Money and Prevent Litigation—Steps You Can Take Now.

The two experts presenting will explain why you can’t depend on the system to protect you, why it’s absolutely necessary to maintain a constant back and forth with the carrier on open claims, and what to ask when you do. As always, the 90-minute conference will be followed by an extensive Q&A to answer your specific phoned-in or e-mailed questions. One fee trains your entire staff, and your satisfaction is assured or we issue a full refund. Can’t attend? Preorder the conference CD. Click here for more information, to register, or to preorder the CD.