In meetings with employers who have a history of high workers’ compensation claims costs and related expenses, we hear a common story: “The insurance adviser does not to take an active role on the problem. The adviser provides little or no supervision of the claims process. Nor are the true costs of each claim incident evident to the employer.”
These employers tell us that they rely solely on the insurance company claims adjuster’s process and the recommended insurance carrier medical clinic treatment protocol. There seems to be no one enhancing communications with the injured employee.
This communication void can lead to misunderstandings and a lack of trust and cause injured employees to seek legal representation. The result can be higher claims costs and delays in closing claims.
In most of these situations, the insurance adviser goes through an annual exercise to obtain rate quotations in an attempt to “control employer costs.” But the quoting process fails to help the employer understand the costs of each claim. Nor does the process inform employers how to lower costs.
Some time ago, Dave Smith, a safety consultant in Lafayette, Calif., shared a comprehensive list of items and costs that affect employers when a work-related injury or illness occurs. I've attached a copy of Dave’s creation that I share with employers.
In our experience, this guide helps employers rethink the claims management process and their experience with their insurance adviser. The guide helps employers come to the conclusion that they must make some changes to achieve better financial outcomes.
Cost transparency helps an employer to understand where the costs are coming from. Employers will also be better able to see if they truly have a valuable insurance adviser or if the adviser's process is just too costly.
Many employers seem to forget that it is their money at work in workers' comp claims and that they must be involved in all aspects of their workers’ comp insurance and risk management program.
Remember that the expenses listed in this chart are all in addition to the increase in future workers' comp premiums that come because of the change in the employer’s experience modification factor.