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Reduce Your Workers’ Comp Exposure. Through Cost Containment. Insomnia: Major Problem Among PEO CEOs. ……and insurers who write them. Do you have a grasp of your exposures?. Do you service your clients as advertised?. Cost Containment: Asleep at the switch?. Unmanaged Growth

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Reduce Your Workers’ Comp Exposure

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Reduce Your Workers’ Comp Exposure

Through Cost Containment

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Insomnia: Major Problem Among PEO CEOs

……and insurers who write them

Do you have a grasp of your exposures?

Do you service your clients as advertised?

Cost Containment: Asleep at the switch?

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Unmanaged Growth

Unstable and/or unbalanced infrastructure

Class Code Misclassification

Misrepresentation of Payrolls

Invalid Loss History

Credit Risk

Poor Cost Containment – Safety/Injury Management

Increased Expenses – Service, Comp Costs, etc…

Challenges to Profitability

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A Cure for Insomnia

  • Know your Insurance Carrier UW Guidelines …and follow them

  • Develop Criteria for Assessing Every Type of Risk

  • Create Risk Assessment Templates for Consistency

  • Utilize Qualified Loss Prevention for Onsite Risk Assessment and Ongoing Loss Control Services

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….A Cure Continued

  • House Industry Veterans that have Witnessed “All of the Tricks”

  • Solid Field Underwriting – Underwriting of Data, Client Commitment and Client Integrity

  • Audits to Track and Manage Growth

  • Monitor/Measure Client Performance

  • Educate Your Distribution System

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Risk Management Delivery/Scope

  • Risk Engineer screening of potential Clients.

  • Program Management service based on the ability to improve loss results of individual client companies

  • Profitability benchmarks based on 3-year developed loss ratios, frequency and severity

  • Pruning process of poor performers

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Program Management will perform onsite Risk Assessments as requested by Underwriting, and will deliver loss prevention services based on classification, frequency and severity


Conceptual Program Management Service Model

U/W Screening Criteria

All potential business

Business to be serviced

Program Management Onsite Risk Assessment

Underwriting Tiers

Rating I

Rating II

Rating III

  • Desired Classes of Business

  • Approved Codes which meet desired loss experience

  • Hazard 3 classes

  • Marginal loss history

  • Pre-Approval Required

  • Marginal Performers or excluded classes

  • Customized service solutions, based on client needs and requests

  • On-site risk assessment required


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Service will be based on ability to improve loss results of individual customer groups as measured by frequency and severity

Conceptual Program Management Service Model

Quadrant III – Medium Service

Quadrant IV – High Service

High Frequency

Employer B

Employer C

Quadrant I – Maintenance

Quadrant II – Low Service

Low Frequency

Employer A

Employer D

Low Severity

High Severity

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High Frequency High Severity Class Codes

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Service will be based on ability to improve loss results of individual customer groups as measured by frequency and severity

Conceptual Program Management Service Model

Quadrant III – Medium Service

Quadrant IV – High Service

High Frequency

  • On-site Risk Assessment

  • 2 visits (Risk Assessment could be combined)

  • Class examples: Auto repair, services and parking; Restaurants

  • On-site Risk Assessment

  • 3 visits (Risk Assessment could be combined)

  • Class examples: Construction; Healthcare; Manufacturing; Transportation; Social Services

Quadrant I – Maintenance

Quadrant II – Low Service

  • On-site Risk Assessment

  • 1 visit (Risk Assessment could be Combined.

  • Class examples: Apparel and accessory stores, Business services; Miscellaneous retail; Printing; Trade

Low Frequency

  • No On-site Risk Assessment required

  • Service by request

  • Phone-support

Low Severity

High Severity

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Performance Results

Frequency Types














Foreign body in eye

Chemical Irritation


Exposure/temperature extreme

Caught Between - Machine or Equipment

Cuts - knife, power tool, sharp object

Slips/Falls - different levels, ladders/scaffold

Motor Vehicle Accidents

Strains - jumping, carrying/lifting, pushing/pulling, overexertion

Struck by objects


Animal/Insect bites


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The Risk Assessment Process

Risk Assessment – A Continuous Process

  • Client Qualification Guidelines

    • Risk Assessment

    • Pricing

  • Key Measures

    • Claims Reviews

    • Underwriting Logs

    • Monthly Performance Reviews

  • Loss Control

    • Site Surveys

    • Risk Mgmt Consultation


  • Claims Management

    • Integrated Case & Claims Management

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Determination of business purging

Is my exposure greater than originally anticipated?

Can the client afford to implement corrective action

Will needed risk engineering erode profitability

Was the risk properly classified.

Will the event cause a price increase

The Business Decision

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  • Ensure your infrastructure is scalable

  • Reduce your expenses by focusing risk management on poor performing risks

  • Know when to cut your losses and purge unprofitable business

  • Show your carrier proven results

    ….get some sleep


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Reduce Your Workers’ Compensation Exposure: Part II

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Reducing the Overall Length of Disability

Show Me The Money!

Presented by:

Teresa A. Long

Vice President Risk Management

Unisource Administrators, Inc.

Sarasota, Florida

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Goal: Reduce Preventable Disability


  • Missed Medical Appointments

  • Transitional Return To Work

    • Identifying Opportunities

    • Creating Job Descriptions

    • Formalize the Process

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Missed Medical Appointments




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Additional two to six weeks

of indemnity benefits paid

for every missed appointment

with a specialist.

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Establish procedures in your Customer Service Agreement:

  • Injured Employee (IE) will call in after every doctor’s appointment to advise of work status and date of next appointment.

  • IE must contact us immediately if the possibility of a missed doctor’s appointments exists.

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Advise the Injured Employee

  • The two responsibilities to the company while out on Workers’ Compensation are:

    • to keep all medical appointments and

    • call you after every appointment

  • Failure to keep scheduled medical visits may jeopardize your entitlement to continued Workers’ Compensation benefits.

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Most Proactive Solution

  • Create Procedures (backed up with language in the CSA) to:

    • Advise the IE of their WC responsibilities

      • Keep all doctor’s appointments

      • Make sure they follow all of the doctor’s instructions

      • Call us within one day after every doctor’s appointment.

    • Diary each doctor’s appointment (for each IE out of work) for one day before the scheduled appointment

    • Call the IE to remind them of appointment

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  • Diary for one day after each doctor’s visit and call the IE if they have not called you.

    It’s as Important as YOU make it!

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  • Weekly compensation rate$300

  • Missed appointment rescheduled for:

    • Two weeks$ 600

    • Four weeks$1,200

    • Six weeks$1,800

  • Times the number of lost time (indemnity) annual claims with missed appointments.

  • What’s at risk for you?

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Return To Work Programs

Does It Really Make a Difference?

  • Basic Benefits

  • Calculating Benefits

  • Take Home vs. Weekly Compensation

  • Disability Syndrome

  • What Can Be Done?

  • Transitional vs. Modified Duty

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Basic Benefits

Indemnity (Lost Time) Benefits

State regulated and defined percent of Average Weekly Wage is used to determine the weekly Compensation Rate for specific state regulated benefits.

Indemnity Benefits

Temporary Total

Temporary Partial

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Temporary Total/Partial

Temporary Total

Benefits paid when the physician indicates the IE is temporarily totally unable to physically perform his job duties.

Benefits typically paid at 2/3% of average wages.

Temporary Partial

Benefits paid when the physician indicates the IE is temporarily only able to perform partial duties.

Benefits paid at state-regulated formula.

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Temporary Total Benefits

Injured Employee works

40 hours a week at $10 per hour

Average Weekly Wage * $421.15

Weekly Compensation Rate (@ 2/3%)$280.78

* includes overtime

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Temporary Partial

Benefits are payable based State defined percentage of the Average Weekly Wages as compared to the post-injury wages.

Florida 80/80 example:


Entitlement Threshold (80% of $400):$336.92

Less Post Injury Wages:$300.00

Difference:$ 36.92

X 80%

TP Payable Benefits:$ 29.54

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Do The Math!

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Pre-Injury Wages

Wages for a single person with two exemptions

$10 per hour for 40 hours per week$400


Social Security24.80

Medicare 5.80

Federal Withholding38.40

Health Ins. (HMO)10.89


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What Difference Does It Make?

Routine Wages

40 Hours per Week

At $10 per Hour



WC Temporary Total

AWW: $421.15




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The Math

Net Take Home Pay:$320.11

WC Temp. Total:$80.78


Gas @ $2 per day$10.00


Lunch @ $5 per day$20.00

$ 9.33

Child Care?????

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Disability Syndrome

How long does it take the injured employee

to realize he can make more money by staying home

on workers’ compensation than he can by working?

About 30 – 60 days!

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You’ve got about 4 – 8 weeks to get them

back to any type of duty to avoid the

Disability Syndrome.

What Can Be Done?

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Transitional vs. Modified Duty

Modified Duty

Same employer - Same job - Modified functions

Transitional Duty

Same employer - Different job – Different functions

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Physician Selection

  • If the treating physician does not support transitional/modified duty programs, it won’t happen!

  • Provide the physician with a letter stating your ability to provide transitional/modified duty as soon as the physician believes it to be medically appropriate.

  • Provide the physician two two job descriptions:

    • Normal Job

    • Transitional Job

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Job Descriptions

  • Do Two! Normal and Transitional position(s)

  • Use ADA guidelines

  • Use Physical Capacity Evaluation when appropriate

  • A picture is still worth a million words

  • Make them legal

  • Communicate, communicate, communicate

    • Physician

    • Supervision

    • Injured Employee

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What Jobs?

  • Simply Ask Them!

  • Get Creative

  • Use your network of experts

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Simply Ask Them!!

  • As a PEO create a contest for the employees to identify one modified and one transitional duty position.

    • Must be reasonable positions

    • Offer ‘incentive’ award for good suggestions

    • Offer bigger award to five best suggestions

  • Provide examples of the expected result.

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  • Create and use a payroll stuffer to notify all employees.

  • Legitimize the results by having a certified vocational expert review the positions and create job descriptions and physical capacity requirements.

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Get Creative

  • Marketing

  • MSDS Catalogue

  • Rental Car driver

  • Inventory

  • Sorter

  • Training

  • Fleet Safety: Tire Pressure/Seat Belt Checker

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Use Your Network

Claim Representative

Claim Supervisor and/or Manager

Risk Managers

RIMS (if member) website

If you don’t have a network, get started on one!

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What Difference Does It Make?

  • Higher Claim Losses

  • Higher Litigation

    • Costs 40% more

  • Experience Modification Factor

    • for three years

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Rewards – Cost Reductions

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Indemnity Cost without Transitional Duty - $54,808

Indemnity Cost with Transitional Duty - $6,324


Experience Modification


































Current Mod

Current Mod












A Difference of 11 Mod Points or $10,425

Impact on Experience Modification Factor

Example Classification – 5645, rate $37.41 per $100 payroll Total Employees - 6

Total Payroll - $250,000 Manual Premium - $94,775

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You have the ability to immediately reduce your indemnity costs

  • Develop procedures to exert more control over medical appointments especially with specialists.

  • Identify transitional and modified positions.

    • Make them ‘legal’

    • Formalize the process

  • Consistent application of procedures

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