Most employers are distant from their workers’ compensation claims and thus leave money on the table when it comes to premium savings.
Good claims management starts at the beginning. As a claim progresses, there will be fewer opportunities to positively affect the outcome. It has to be an ongoing process, says Kimaili “Ken” Davis, ARM, assistant vice president at Momentous Insurance Brokerage, Inc. Employers need to be sure that the adjuster is aware of the mechanics of the injury and affected body parts. There are milestones that can change the path of a claim. Be sure that a claim goes in the right direction.
“Employers may think someone else will take care of it, whether it be the adjuster and/or insurance broker,” he says. “Yes, a good broker is going to have a knowledgeable claim professional monitoring the claims, but it’s best to take a team approach, where the adjuster, employer and broker are working together.”
Smart Business spoke with Davis about creating a culture of safety and attention to claims to give you a competitive advantage.
How does California’s workers’ compensation compare to nearby states?
California laws tend to (unfairly) favor employees when it comes to claims, so it’s important for employers to stay involved. In California, an employee can fail to follow the rules and still receive a positive outcome. In other states, the rules are enforced equally, meaning that both the employee and employer must play by the rules. I’ve seen cases before the appeals board where an employee has missed more than one hearing without good reason and has not been penalized. In other states, this conduct would negatively impact their claim.
What’s the best way to manage individual claims to decrease costs?
Employers need to manage their employees. If you create an environment where people want to come to work, claims will be resolved quicker and for less money.
After an accident or incident, don’t just investigate what happened, look at what caused the injury and ways to prevent future injuries. Also, have human resources and/or the supervisor keep in contact with the injured employee on a regular basis. Ideally, you want an injured employee to feel like part of the team, and have a desire to get back to work and resolve the claim promptly.
An important concern is getting employees back to work as soon as possible. If employees cannot work full duties, see if they can return to modified or alternate work. It will be up to the treating doctor to release them to light duties. Communicate with employees and the treating doctor on a regular basis. The sooner employees are back to work, the less claims dollars will be paid. The result can be a lower premium over time. Further, studies have shown when injured employees return to work within 30 days of the date of injury, there’s a better chance for a full recovery.
Are there certain claims employers should monitor more closely?
Litigated cases are important to monitor, as well as those claims where medical conditions complicate recovery, such as diabetes or obesity. The California Workers’ Compensation Institute found that in claims where obesity exists, a claim averages 81.3 percent more paid losses and experienced 80 percent more lost time. The American Medical Association recently reclassified obesity as a treatable disease, which may increase claim costs.
In addition, closely watch cases where doctors prescribe prescription drugs such as opioids. If an employee becomes addicted, you will likely incur the costs of a detox program.
What’s important to know about your experience modification (ex mod) factor?
An employer’s ex mod factor is determined by a formula that compares claims dollars to audited payroll on a rolling three-year policy basis. When actual losses are less than expected losses, the employer has a lower ex mod and thus lower premiums. Ex mods are calculated based on data valued as of six months following policy expiration. The best thing you can do for your ex mod is to not have claims. Create a culture of safety.
Ultimately, workers’ compensation claims are about people. You can best manage costs by going beyond monitoring the claims process to understanding employee concerns. ●
Insights Business Insurance is brought to you by Momentous Insurance Brokerage, Inc.