There are some well-established practices employers can perform to effectively manage their workers’ compensation costs.
Some of the more common ones include:
- pre-employment screening;
- investing in loss prevention;
- educating employees;
- prompt reporting of claims;
- comprehensive incident investigations;
- formalized return-to-work programs;
- active employer claim involvement; and
- wellness programs.
The question is, “Is there anything more a company can do to help manage workers’ compensation to keep the costs down?” The answer is, yes. A practice not often used, but one that can have a significant impact on the efficiency and effectiveness of managing claims is building a trusted partnership with their insurance carrier and local medical providers that are taking care of the injured employees. It is much easier to work efficiently and effectively when there is a trusting relationship. When partners don’t trust each other, they are much more likely to hold back potentially useful information from one another.
One of the principal drivers that leads to escalated workers compensation costs is miscommunication. All too often, claim costs increase simply because the employee, employer, claims adjuster and medical provider are not on the same page. Employees aren’t sure of the claim reporting process or their role and responsibilities. Employers lose track of injured employees that are off work. Claims adjusters get minimal information from the employer to determine work-relatedness. Medical providers aren’t aware or don’t understand the employer has a return-to-work program that can keep the employee working in order for them to continue earning their full wages.
Below are a few examples of practices that will help build this trusted partnership with the insurance carrier and medical providers.
- If possible, at the onset of a business relationship with a new insurance carrier, companies should set up a meeting where the individuals on the two teams who will be interacting on a continual basis can meet face-to-face. In-person interactions are the best way to build relationships among people. This experience promotes feelings of trust and empathy, which are essential in any successful business relationship. Studies show that human communication consists of 93 percent body language and paralinguistic cues, while only seven percent consists of words. Body language tends to speak louder than words; one can gain a better understanding of how a person is feeling than they would otherwise be able to through other forms of communication such as a conference call or email.
Attendees for this meeting may include the claims adjuster, risk services specialist and the underwriter for the insurance carrier. Attendees for the company may include the CEO, CFO, payroll representative, human resources representative and safety manager.
- Setting up a face-to-face meeting with local medical providers that treat injured workers is also a good idea. Many medical providers have misguided notions of various industries and don’t understand the opportunities and benefits for the injured employee in regard to return-to-work programs. For example, they may view the construction industry as being entirely labor intensive and not realize there are opportunities for transitional duties where the employee can work with minimal physical stress to an injury. This creates a situation where the medical provider recommends the employee take days away from work to heal, whereas if he had known about the transitional duty opportunities available, the employee could have been allowed to work with restrictions, avoiding indemnity costs. Without this proactive approach to communication and understanding, there may be a propensity to incur indemnity costs when it isn’t necessary. This meeting is also an excellent opportunity for the employer to show the medical provider that it is not an insensitive company that is trying to take advantage of the employee.
- Another practice is inviting the insurance team to see the operations of the business. All too often underwriters’ and claims examiners’ understanding of the risks and operations involved with a specific industry is based off their own previous experience with another company’s loss history and/or industry-specific statistical loss data they read on reports from agencies such as the National Council on Compensation Insurance (NCCI). While this data might be reflective of an industry as a whole, it may not be reflective of a company’s specific loss potential for determining premium. Simply participating in a jobsite tour gives the insurance team a better understanding of the actual risks involved, and better yet, it gives the them a better understanding of the loss control procedures a company has in place to circumvent them. With a better understanding of the risks and loss control measures used, underwriters have more of a tendency to allow for credit adjustments if they saw these things first-hand rather than reading about them in a report.
- Take a proactive approach to involving the insurance carrier’s risk services specialist with helping improve loss control. Inviting the risk services specialist to help with loss control displays transparency and a desire to continuously improve loss control processes. This is also another tremendous opportunity for the insured to display all the positive things the company is doing to mitigate risk and again improve the carrier’s understanding of the business and culture of the company.
- Lastly, schedule a periodic review of open claims with the claims adjuster. The frequency of this claim review would be reliant on the number and severity of claims a company has. The more open claims there are the more frequent the reviews should be until the number of open claims is minimal. It’s also a good idea to keep in touch with the claims examiner for certain claims that need more attention beyond a periodic review. Conducting these reviews ensures the carrier and the insured are on the same page. This can be critical for the reason that claims can spiral out of control in a short period of time if they are not receiving the attention needed.
A company’s relationship with its insurance carrier and potential medical providers should be handled no differently than any other aspect of the business. The more trust and understanding there is, the better chance for success. It is in every company’s best interest to foster these relationships to better manage their workers’ compensation costs.