Workers’ Compensation:Policy & Market Trends

Dennis J. Powers Jr. AIC, ARM, CPCULamb, Little & Co.

Market Conditions

Hard Market

Soft Market

Market ConditionsHard Market• Focus on Profitability• Premiums Increase• Don’t Like Risk

Market ConditionsSoft Market• Focus on Growth• Premiums Decrease• Underwriters Appetite

Is More Aggressive

Insurance Programs

•Guaranteed Cost•Loss Sensitive

GUARANTEED COST

A classic method of risk transfer:

You pay the carrier

premium to cover your claims.

GUARANTEED COST

Pro: Your cost is fixed, regardless of claims experience.

Con: You flex with the marketplace and the

status of your industry’s loss history.

The Premium Summary

1. Classifications2. Experience

Modification3. Schedule

Credit

Class, Definition & Rate

Exposure/100 x Rate = Manual Premium

10,000 x 5.02= $50,200

Class, Definition & Rate

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Experience Modification Factor

Experience Modification Rating

•NCCI•Set Formula•Historical Picture•Comparison

SECTION A

SECTION B

SECTION B

SECTION B

SECTION B

SECTION CYour

Information

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What Can You Do?

Review Your Claims for Accuracy

Utilize Loss Control

This is where all the companies are going to be different.

The more you bring to the table, the more aggressive you can be.

What Can You Do?

Claims Mgmt: Early Reporting

Accident Investigation

Return to Work

Loss Control: Documented Safety Program

Documented Training Program

Loss Assessment Report

Effective Claims Management:Your Toolkit To Reduce Claims Exposure

George M. Canavan, AICLamb, Little & Co.

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Medical Benefits

Temporary Total

Disability

Permanent Partial

Disability

Penalties

What is the Employer’s Exposure according to the Illinois WC Act?

Early Reporting

73%

38%

16%

4%

0% 20% 40% 60% 80%

60+ Days

31-60 Days

15-30 Days

8-14 Days

Source: Liberty Mutual Data Warehouse

Delay in reporting a claim increases costs

Accident Investigation

Don’t Underestimate Anything

Treat Every Incident The SameFreeze The Facts – People’s

Stories Change

TIME CARD

Accident Investigation Reports

Employee Incident Report

Employee Incident Report-Spanish

Supervisors WC Investigation Report

Witness Form

Report Your Claims!

Delay in Reporting Can Be ExpensiveThreat of LitigationSlows Down Claims Investigation

Return To Work

Provides You Control

Provides Significant Savings

Conveys the Right Message to Workforce

$

Return to Work (Cost/Benefit)

Per NCCI, the median incurred cost of a WC claims exceeding more than 7 days of lost time from work is $31,600.

Claims under 7 days of lost time, the average claim is <$10,000.

Claim Reviews

Why Conduct A Claim Review?

Who Participates In a Claim Review?

When Are Claim Reviews Done?

Claims Handling Assessment

Designated Claim HandlerHow Do Employees Report New Claims?Accident InvestigationSubrogation InvestigationTime SheetInitial Explanation of Claims Process/Benefits to EmlployeeClaim Reporting to Insurance CarrierInitial Medical CareInternal Claims Management ProceduresSupervisor/Management TrainingReturn To Work ProgramsEstablish Special Claim Handling Instructions

Safety & Loss ControlBill Crimmins, CSPTitan Risk Management, LLC

Is Safety First?

Quality

Safety

Money

How Safety Works

1. Safe Behavior2. Technically Proficient3. Compliant

Insurance Company Expectations

Loss Control Representative SurveyRisk Selection

ResearchYour websiteOSHA (OSHA.gov)DOT (safersys.org) BLS Statistics

Report to Underwriter

Keys to SuccessPeriodic Risk Assessments Safety And Health ProgramDocument Inspections / EffortsDocument Employee TrainingEnforce Your ProgramAccountability

Next Steps

What are my areas of concernDo I have the expertise to address itIf not, get help

Use Loss Control & Manage Claims

Reduce Experience Modification Factor

Allows Your Agent To

Present You As Best In Class to Negotiate

Your Schedule Credit

What Can You Do?

Whose Responsibility Is It?Financial

(CFO, Comptroller, Etc.)

Coverage Placement

Human ResourcesClaims

AdministrationReturn To Work

ProductionOSHA, Return to Work, Accident

Investigation

InsuranceBroker

Stewardship Reports

• Create Accountability

• Analyze Incurred Losses for Prevention

• By Location, Season, Cause, etc.

• Incent Departments to Improve Safety.

Stewardship ReportsBy Department, or Location

Assmb. Bakery Deli Driver EngineerFood Prod IT Kitchen

Line Worker Maint. Packer Produce Recv. Sanit. Shipping Unkn Whse

Incurred Loss $156,848 $206,862 $14,893 $226,839 $908 $187,530 $707 $290,541 $97,608 $4,779 $300 $510 $783 $1,976 $390 $1,643 $797

# Claims 2 8 2 5 1 23 1 10 8 4 1 1 1 3 1 3 2

0

5

10

15

20

25

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

Stewardship ReportsBy Time of Year

Stewardship ReportsBy Time of Day

Stewardship ReportsBy Type of Injury

Direct Loss

Indirect Loss

INDIRECT•Loss of Production• Employee Morale• Loss of Quality Employee• Time of Staff to Manage Claims• Damage to Equipment & Property

YOU LOSE $4 FROM YOUR BOTTOM LINE FOR EVERY $1 YOUR INSURANCE CARRIER PAYS IN

WORKERS’ COMPENSATION CLAIMS

INSURANCE

YOU

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Question 1: Is your rating information

accurate?

Question 2: Are you managing your claims to

have an impact on your premium?

Question 3: Are you managing your Loss

Control Service to have an impact on your premium?

Question 4: Are you creating accountability by properly communicating the

results?

Question 5: Are your current vendors a

resource?

Questions?