JANUARY/FEBRUARY 2007

Insurance

Two Ways to Lower Your Workers’ Comp costs

The best way by far to lower your company’s workers’ compensation premium is to reduce your losses. You end up with safer, healthier, and happier employees; your experience modifier goes down; and that lowers your premium, so you save money, too.
   I hope your firm is undertaking many (if not all) of the practices designed to prevent losses, such as employee orientation and training, regular safety meetings, and lock-out/tag-out programs. A variety of resources are available to help you in these efforts, such as ISRI’s many safety publications and products and assistance from your insurance company’s loss-control staff.
   If, despite your best efforts, a loss does occur, the Wisconsin-based insurance company Wausau—our partner in RecycleGuardsm—shared a few best practices that might help you lower the ultimate cost of that claim.

Prompt reporting
One of the easiest and most effective ways to reduce the cost of a claim is
to report it promptly. For many people, their instinct often is to wait, either
because they don’t know all the details of the injury or because they don’t want to deal with the paperwork.
   That’s a bad idea, though. Reporting a claim doesn’t need to be complicated—just pick up the phone, send a fax, or go online any time of day or night. By whatever method, it’s important to get the insurance carrier involved immediately to ensure a proper investigation. Even if you don’t have all the details, just report what you know.
   Industry studies show that the average cost of a workers’ compensation claim increases 3 percent each day between the injury date and the date it’s reported. That equals a 1,000-percent annualized rate—just imagine if you were paying that on your credit card!
   Consider an example of a $5,000 back injury. A one-week delay in reporting it would, on average, increase the cost to $6,000; a two-week delay, to $7,000. When your experience modifier is calculated, that additional cost goes right to the bottom line. So as the clock ticks, remember that it’s probably costing you money on this claim and on your later premiums.
Prompt reporting reduces the claim’s medical costs by ensuring that the injured worker receives prompt and accurate treatment, and it reduces the legal costs because workers are less likely to feel their rights have been violated, which can cause them to seek legal counsel. So be sure to communicate to supervisors and employees the importance of prompt reporting.
   Unfortunately, the firms insured under the RecycleGuard/Wausau program have room for improvement in filing claims promptly. Only 53.6 percent of claims were reported within three days of the injury. Every participating company should consider how it can improve its reporting record. Doing so will benefit both the company and the entire group because it could affect the potential dividend.

Medical management and return-to-work programs
Another strategy that can reduce claims costs is to choose an insurance carrier that has an extensive medical provider network, such as a preferred-provider organization, and case managers that are intimately involved in claims. The case managers work with the employer and the medical network to make sure the doctors know what light-duty jobs you offer at your facility. They can partner with you to get employees back to work as quickly as possible while still meeting your needs. By working with your insurance carrier, you can write and implement a return-to-work program with transitional work tasks that help your employees stay productive.   Generally, an injured worker who returns to work has an improved recovery rate, increased productivity, and improved morale.
   Also look for insurance carriers that have medical-review programs that ensure appropriate payments are made for only necessary and related care. Such programs review bills via both automated systems and clinical review specialists. In the past four years, RecycleGuard/Wausau program participants have benefited from medical savings of more than 50 percent through the elimination of duplicate billings and the use of preferred provider networks.
   An insurer that offers a medical network and a medical review program that can work closely with the claims adjuster can have a significant positive impact on the ease of claim processing and on the ultimate cost of risk.

—Monica McNally, senior vice president, RecycleGuard/Willis of New Hampshire Inc. (Portsmouth, N.H.)
Willis RecycleGuard has prepared this article for informational purposes only. It is not intended to provide legal advice. Readers should not rely on this document or act upon any of the information it contains without first consulting competent legal counsel.