Society Insurance Offers Six Tips for Workers' Compensation

Workers' compensation coverage has it's own unique set of qualities and characteristics that set it apart from other lines of insurance coverage.  Many carriers have been formed to specifically address only that line of coverage.  Society Insurance is one of those carriers, though they have now expanded into many other lines of insurance.

Their VP of Workers' Compensation Claims wrote a nice article on how to improve your experience with this line of coverage.  Even though insurance is purchased, employers should be taking steps to reduce accident frequency and severity.  This article gives some good advice for employers to consider.

Three of these tips are preventative measures designed to minimize accidents or reduce the severity.  Two of the tips involve post accident steps.  The last tip, light duty, is both.  It requires some pre planning but is then instituted on a case by case basis after the accident.

When I think about these steps, and why a company would want to help reduce accidents that the insurance company is going to pay for, it takes me back to my basic risk management strategies.  After we identify risks, we then decide how we treat each risk.

Our options include

1. Risk Aceptance
2. Risk Control
3. Risk Transfer
4. Risk Avoidance

With workers' compensation there is no avoidance.  If we have employees we have the risk.  Accepting risk means being okay with the potential loss happening and paying the cost of it.  We can only accept the risk if we qualify for self funding, or maybe use a deductible on a traditional policy.  Risk Transfer is obtained through the purchase of insurance, but the cost of that will be dependent on your risk control efforts.

Most employers know full well their loss experience directly impacts their experience modification and therefore their premium.  It is important to stress that there are efforts that can be made, and they take planning, in order to help control those losses.

Above we addressed workers' compensation as a whole.  The next step in the risk management strategy would be to identify specific causes of injury to employees, and apply the same four treatment options.  There are certainly risk behaviors that can be avoided by employees and those should be identified and prohibited.  From there, you continue to make decisions for your business about how to address each situation that could lead to injury.

Medical Costs Rise In Indiana

I found this twitter post and it reminded me of the good old days.  In the good old days, Indiana battled Virginia for the title of lowest cost of workers' compensation.  I started my career in Indiana and thought we had a pretty good system.

In recent years I have talked with carriers about bringing their program into Indiana.  In all cases I was met with resistance based on the low rates.  I countered that we had a low benefit system.  The Work Comp Wire article shows exactly the reasons they didn't want to come into the state.

With 8% growth per year, for five years, it is no wonder they were hesitant. Thankfully, the medical cost reforms of HEA 1320 will go into effect July 1st.  It would be nice to get back to the good old days, where Indiana can offer low rates to employers, and carriers can make money at those rates.

As an individual employer, you can help in controlling medical costs by identifying a company doctor. In Indiana the employer has the choice of sending the injured employee to any doctor they want.  The employee must pay their own costs to see their personal physician.

Healthcare and the costs associated continue to change and evolve.  Our workers' compensation system and practices need to do the same unless we are comfortable with increasing rates.

Leave The Chainsaw In His Neck

Did you see the CNN story about a man with a chainsaw in his neck?  While a lot of luck was involved in his good fortune, his fellow employees get some credit.  They removed the motor and left the blade in his neck, which kept the bleeding to a minimum until he was transported to the hospital.

I know a company here in Indiana that had a traumatic injury where the employee had his arm caught in a machine.  In that case, the other employees left him trapped until the EMT arrived.  The machine acted like a tourniquet on the trapped arm preventing blood loss while waiting for the medical professionals to arrive.

In both of these cases the decision of the fellow employees played a vital role in the immediate medical care of the injured employee.  Would that be the case at your workplace?  In a recent post we talked about the hidden costs of injury, specifically the distraction of fellow employees.  In the immediate aftermath of an injury, we need that distraction in the form of first aid.

Every company, including an office (read my office injury post) needs to have employees trained as first responders.  I have been through CPR training, and while it is a good course and important training to have, it doesn't completely prepare me to respond.  A committee should be formed to review possible injuries and how immediate responders should react.

Unfortunately, some of the more severe claims need to be considered.  While they are less likely, the impact on both cost and the severity of the health impact to the employee make it worth the time to review the "what ifs" of those claims.

If your safety committee is only looking at past accidents and asking how to prevent them, shift their focus to possible accidents and preparing for the unfortunate day they do happen.

Trends In Workers' Compensation Underwriting

I recently attended the annual sales meeting for Accident Fund here in Indiana.  I was pleased that they take the time to share not only their statistical results for the year, but some of the causes for those trends.  The information they shared is helpful for consumers who want to understand some of the ways they can continue to try and control workers' compensation costs.

The first piece of information to share is that premiums shall continue to rise.  Of all lines of insurance, workers' compensation is seeing the most increase in premiums. All lines of commercial insurance are increasing, but workers' compensation is leading the way for the second year in a row.

Medical cost inflation seems to be the main driver in the poor underwriting experience carriers have suffered through.  That seems to have stabilized with some of the underwriting corrections over the past few years.

Yet, while carriers are trying to maximize efficiency, and underwrite more profitably, the reduction in investment income continues to impact results.  A carrier with a 95% combined ratio will make less money than they would have with a 100% combined ratio in 2003. This trend will only get worse as long term investments with locked in rates of return begin to mature and are rolled over to current investments with lower returns.  The message is clear, premiums will increase if losses warrant it on any particular account.

The second part of the message is that insurance companies are becoming very good at mining their data.  For years insurance companies have had mountains of data within their systems, but the systems weren't designed to spit it back out.  Now we are seeing an increase in analytics, being used everywhere from underwriting to claims.

The trend in underwriting has a negative reputation because it can be relied on too heavily, and an otherwise good risk get a large increase due simply to some underlying statistical data.  When used correctly, I see this being a positive trend.  Carriers are beginning to isolate risks by size, industry, and even geography.  With all these factors affecting profitability, each account can be more closely reviewed and accurately priced.  While a traditionally bad risk may not like this, any good account should be happy to have their price dictated by more of their own characteristics.

On the other end of the spectrum Accident Fund has taken this predictive analytics trend to claims.  Many sources will tell you frequency of accidents is down, but medical severity is up.  Yet, how many carriers are doing something about it?  If frequency is down, then our risk management efforts can shift focus from prevention to management.  What is the most largest area for management?  Doctor bills!

By mining their data, Accident Fund has been able to reduce claims costs by 22% through use of providers who are sensitive to and understand work related injuries.  In addition, monitoring of narcotics has been shown to greatly improve claims results.  If clients are to be underwritten to a higher standard, we need a claims advocate who is helping us meet that higher standard.  Sure seems Accident Fund is doing that.

Accident Fund isn't the only carrier using predictive analytics.  They aren't the only company reviewing claims statistics. It is imperative as insurance buyers, that you are on top of your trends within your workplace.  It is also imperative that you don't turn claims over to the carrier and hope for the best.  You should be an active partner with a carrier who is concerned with helping you mitigate long term costs.  If you don't feel that you are, it is time to shop.  In the end you will end up feeling the impact of predictive modeling.  The sooner you bite the bullet (read, the premium might not be the lowest bid) the sooner you can reap long term rewards.  Moving now to a carrier who is a true partner gets you on the road to fewer claims, better managed claims, and a prettier profile for the data geeks.

Hidden Costs of Claims

In our last post, we talked about the most common office claims.  Offices rarely see a lot of injuries, so the phenomena we are discussing today is worse in that environment, but exists in all industries.

You know how traffic slows down on the interstate, even though the accident is on the opposite side?  That same slowdown will happen in the workplace when an accident happens.

An injury with any amount of severity is going to have hidden costs that are not covered by workers' compensation.  When an employee is injured, he or she isn't typically by themselves, and typically will be tended to by another employee.  Right off the bat we are losing productivity of the injured worker and those in the immediate vicinity who are either attending to the worker, or just stopped in traffice like the drivers on the interstate behind the accident.

Once the injured employee has left the workplace, work can resume for the remaining employees.  However, just like the traffic, it will take a while to get back up to speed.  Some employees will be slower and more deliberate for fear of injuring themselves.  Others will be distracted by their thoughts recalling the injury.  Lastly, you will probably have some conversation among employees about the accident contributing to the slower pace.

The entire time the employee is off work, we have lost their productivity, or shifted productivity from another area to cover the missing employee.  There will be follow up paperwork and reports as a result, taking time from an employee or manager to do so.

As happy as we are to have the employee back to work, that will be another day in the slow lane.  Employees will take time to welcome their friend back, recount their stories of the injury, and hear about his recovery efforts.

None of this contemplates an injury that also caused damaged equipment, or required clean up of the workplace.  Prevention of injuries is important as we value the health and safety of employees.  We need to maintain that focus and realize there are costs associated with the injury, and the cost of prevention would be well spent to avoid the post claims costs.

Most Common Office (or non office) Injuries

SECURA did a nice blog post about the most common office injuries.  If we look at the major headings for the three areas, Trips & Fall, Overexertion, and Struck By Object, I would think it is safe to say that those categories apply to all industries.

I have been in insurance for 20 years, with most of that time having a focus on workers' compensation.  I have reviewed thousands of loss runs, and would tell you that the scariest occupations and most dangerous situations don't result in the majority of injuries.

I think there is some rationale as to why that is true.  If I am doing something I deem to be dangerous, I have a heightened sense of awareness.  The fight or flight instinct tells us that if we are working around a moving saw, or working at heights, or near extreme heat, we need to be careful.  As soon as we relax and walk away our brain goes into a rest mode, and we trip over something.

When the truly risk exposures do end up causing injury, it is when the worker has become accustomed to the risk, and let's their guard down.  As much as we worry about inexperienced operators, more often it is the worker who has been doing the job longer who gets careless.  Again, the instincts in the newer worker are helping him even though he has less experience with the task.

So how do we keep employees safe?  How can we keep them at a heightened sense of awareness?  As silly as it seems, safety posters could do a lot to promote vigilance.  If you meet with your staff every day, add a line to the agenda talking about stretching before lifting, or encouraging taking time to clean their work area to avoid accidents.  The injuries aren't caused by big things, and it won't take a big effort to raise awareness.

Specifically on lifting, nursing homes aren't the only place that need a formal lifting program.  If you haven't already done so, a document should be prepared, distributed, and posted with a formal plan.  The plan should identify what items specifically, or by weight, can be lifted alone, in tandem, or only with mechanical assistance.

Take some time to rethink employee safety, and find easy ways to emphasize that their safety is important.  Hopefully that will help avoid injuries that are costly, but preventable.

Workers' Compensation & Pro Sports

I recently read an LA Times article entitled NFL workers' comp victory comes at a price.  My first thought was using this as a platform to address some workers' compensation issues that apply to more everyday employers, not the professional sports franchises of the NFL, MLB, NBA, etc.  

My background puts me firmly in the camp that says you don't go file your claim in the jurisdiction most likely to pay.  That means I am in favor of the legislation, and opposed to the attorneys filing on behalf of any player who ever set foot in the state of California.  

An excerpt from the original article states "In anticipation of that deadline, workers' compensation attorneys scrambled to find players and file on their behalf.  San Diego lawyer Ron Mix squeezed in almost 300 athlete cases in the final month, according to state data. To get through the mountain of paperwork, he said he paid his staff triple overtime and hired numerous temp workers."

I don't know Ron Mix, and hopefully he is doing real good work for truly injured people being taken advantage of by their employers and insurance companies.  But my guess is he won't foot the bill for the triple overtime himself.  It will come out of the claims settlements for the "injured" players he filed on behalf of.

Pro sports, football especially, is a dangerous business.  The participants know this going in, and accept the risk associated.  I truly believe we are learning more every day about the long term effects, and so there is an argument to be made that all the risks are not known before hand.  Laws may need to be evaluated and rewritten to accommodate a late onset disease that has it's roots in the athlete's employment.

However, I don't think the solution is to run to another jurisdiction to file.  That sets a precedent for truck drivers, traveling salesman, and various other employees to pick their filing jurisdiction based on the highest payout.  It also does nothing to remedy the underlying problem with local legislation for those who don't travel out of state.

For example, the plumber who constantly bent over and stood up and has chronic knee problems as a result.  If he never left the state he is left without recourse.  Don't we owe him the same benefit for chronic, long term injury as these pro athletes are seeking?  Wouldn't the efforts of attorneys be better used lobbying for local legislation change than chasing the high profile cases en masse?

Our understanding of health and work related issues continues to change, and our worker's compensation system has to change with it.  In Indiana we made some real headway in capping medical costs, without limiting treatment of the worker.  Continued adjustment and enhancement is needed as we learn more about the long term effects cumulative work exposure.  But is has to be done in a way where the carriers and employers can plan for and pay for the care when needed.