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North Carolina Industrial Commission Invalidates Basic Adjusting

September 20, 2017 By JL Risk Management Consultants Leave a Comment

North Carolina Industrial Commission Returns Form 24’s To Adjusters

Is The North Carolina Industrial Commission taking the first step in making policy determination a legal matter in the Tarheel State?

Recently, I came across a few articles on how filing a Form 24 seems to be similar to practicing law. The North Carolina Industrial Commission has decided , without a chance for industry or public involvement, to equate filing an Industrial Commission form with bringing suit against the employee.

An adjuster in one of the articles went through the process of how an adjuster would have to hire an attorney then immediately remove the attorney from the file after the Form 24 hearing. The Form 24 is basically the adjuster requesting that an employee be removed from benefits, no more, no less.

If any of my readers were around in the adjusting world in the 1990’s, there was a decision by the North Carolina Supreme Court that opened all closed medical only claims for lifetime benefits. The big carriers started pulling out of the state rather quickly as one of the assumptions of the Experience Modification system is that these claims once closed usually stayed closed after a two year window.

Why I am bringing this point up is that the Experience Modification system in North Carolina – as in the 1990’s – did not take into account the litigious environment that will now exist in the state. I am not saying this is a bad turn of events to have to use defense attorney much more, but rather an unexpected one. Will this cost employers a large amount of funds?

One would have to say partially no, as this part of the Experience Modification system – better known as Allocated Expenses – ALAE – are not usually counted in promulgating an E-Mod. However, there are many more expense such as extending the Temporary Total Disability period and increased medical costs that would cost employers more in the long run.

Raleigh is our HQ so this hits very close to home. The North Carolina Industrial Commission has always been great concerning fixing these situations on an amicable basis with the help of the North Carolina Legislature.

Then again, I may be concerned about something that will never come to a full fruition. However, I wanted to point it out.

Filed Under: North Carolina Industrial Commission Tagged With: ALAE, Allocated Expense, Expereince Modification, Raleigh

Workers Comp Article Publishing Top 10 Concerns

September 13, 2017 By JL Risk Management Consultants Leave a Comment

How To Start Your First Workers Comp Article

Your first Workers Comp article may seem like such a laborious task. After you write your first article, you will find the next is much easier and the third workers comp article flows to the screen almost like magic.

The Top 10 Concerns are listed below with the answers to these questions or concerns later in the article.

The usual concerns over posting your first article are:

I am not an expert in insurance or workers comp
There are experts more knowledgeable about this subject
I do not have a subject
Where will I publish it?
Will anyone ever read it?
Will the search engines rank it highly?
What publishing software should I use and why?
Blogging will use up too much of my time
How do I make money at publishing articles?
What if I make a mistake on a certain Workers Comp subject?

After publishing over 2,000 articles over 10 years, these are my assessments of the difficulties of writing your first article. (See above)

One does not have to necessarily be an expert in Workers Compensation to publish an article. If you research your subject and use backlinks to refer to the articles that you researched, you do not have to be an expert. Hundreds of workers comp articles are published weekly by non-experts.
Take one small aspect of Workers Comp and write an article covering the subject. I guarantee you there exists no expert that understands all the facets of Work Comp. Many blogs including some in workers comp are ghost written by other authors.
Read three of four articles or at least their first few paragraphs. This will furnish you with a few ideas. The more articles you read, the more likely you will publish a great article. Feel free to search this blog for any subject. Just use the search box at the top right of any blog page.
Publishing your article is one of the easy ones. If you go to wordpress.org and download the free WordPress software, you are on your way. Thousands of apps exist in WordPress to help you in your quest. My favorite is wpbeginner.com. They do a nice job of helping blog publishers get their website off the group. You can purchase a website address such as yourname.com if it is available. Websites are ridiculously cheap.
Your articles may not be read at the very first. You may have to publish a few before you will have them read. One great thing about publishing articles is that if one article is well-read, then your website visitors will look at the other articles you have published in the past.
The search engines are unto themselves. The idea is to at a minimum be noticed by the search engines. Also, remember that websites such as Twitter, Facebook, and LinkedIn can be looked at as search engines.
See #4 above for the answer to this one. WordPress seems to be the hot publisher right now and Google mentions them often as a great way to publish articles.
You may use quite a bit of time when you first write blog articles. Keeping the number of words at 300 -500 should not demand too much of your time.
Making money at blog publishing is the only one out of this Top 10 Concerns for which I cannot provide a good answer. I have always provided the articles for free. The effort has paid off for me as it will you if you do not look for dollar signs as a reason to publish a few articles a month.
All bloggers make mistakes. Keeping your articles in your area of knowledge or researching the subject fully with footnotes/backlinks will usually avoid this situation.

The main accomplishment of any blogger is that first well-written article posting to your own blog inside of your own website. Once that occurs, you are off and running on publishing articles.

My last thought on this subject suggests that one be kind with what they publish in any workers comp article. The subject can be one of many controversies – your blog should not be one of them.

Filed Under: Article Publishing Tagged With: WordPress, workers comp expert witness

Statistical Proportions – Quick And Dirty Number Powerhouse

September 6, 2017 By JL Risk Management Consultants Leave a Comment

Statistical Proportions – A Guide To the Quick and Dirty Estimator

dogs head statistical proportions sketch

Wikimedia Commons License – Floriunux

I use statistical proportions as a very fast way to make predictions when you have three numbers and need to calculate the fourth one. My algebra teacher in Junior High School taught me how to apply them to many situations. Statistical proportions – often referred to as just proportions – can be a lifesaver if you need a number quickly.

Below is an example of how it works:

Current Workers Comp Policy = 136,000 in premiums

The Experience Modification Factor is .92. What would be the premium if the E-Mod moves to .99?

Proportions have been referred to as cross-multiplication and here is why –

.92/136,000 = .99/x

.92x = .99 * 136,000

x = 146,347

Now, many variables go into an X-Mod or E-Mod. At least you have a fast way to estimate a number for budgeting purposes, etc.

That was a very raw example for Workers Comp but it does work to a degree. Many actuaries will argue with me that I cannot shortcut the full E-Mod calculation. However, the numbers do come out as I have compared the prediction to the outcome that actually happened with the premium.

The further you go away from .92, for instance 1.35, the more inaccuracy that may be built in, but not necessarily.

No, I do not use this calculation to make predictions or comparisons all the time – however – it is not a bad way to figure any type of what if situaion when you know three numbers and need to predict the fourth.

A great example is the dog’s head drawing as to how statistical proportions work. The webpage has many different ways to work with proportions.

This may seem too simple, but when you only have a minute to calculate an unknown number for comparison, this is a powerhouse. I have used them since the 8th grade – thank you Mr. Epperson.

Filed Under: Statistical Proportions Tagged With: actuary, E-Mod, Ex-Mod, experience modification factor, X-Mod

Accident Curve And Natural Disasters – Spike in Workers Comp Claims

August 31, 2017 By JL Risk Management Consultants

The accident curve measures the accident rate lessening per unit of work time. The concept has been debated over time. A search far and wide located a 1916 text that actually addressed this issue very well. Please see the last two sets of bullet points below. The picture is of Hurricane Isabel.

Hurricane Isabel Accident Curve from space

Wikimedia Commons License

The learning curve measures how long it takes for a person to learn a new task. The accident curve measures how many accidents happen in the first few hours someone works with a new machine or performs a new task.

I performed an informal study on the accident rates of claims that I was handling post-Hurricane Hugo. After two months, the claim numbers spiked and then returned to normal. Most of the injured workers were new to the construction industry. They were involved with the hurricane recovery efforts for many months.

We have all heard the expression “90% of the accidents occur the first time someone uses a tool/machine” or the first time a person performs a completely new task. Hendersons law is:

C_{n}=C_{1}n^{{-a}} Accident Curve

where:

C₁ is the cost of the first unit of production
C_n is the cost of the n-th unit of production
n is the cumulative volume of production
a is the elasticity of cost with regard to output

A few classes I attended to complete my actuarial degree covered the learning curve heavily. The application centered around production. Safety did not seem to be an issue. However, the learning curve is a the crux of a safe workplace. Hands-on training reduces workers comp accidents or their severity by exposing the workers to a learning curve with a person or persons that have long since handled the type of new task.

The actual formula uses logarithms to estimated the time it will take someone to complete the task. A very astute scientist derived an accident curve from the formula. However, they derived the accident curve from actual hands-on measurement in manufacturing plants. You will need to refer to the bottom page 127 of this old but still relevant text. The text is included below justifying the accident curve consideration. The studies were conducted on very heavy labor iron and steel plants.

ACCIDENTS AND INEXPERIENCE THE HIGH RISK OF BEGINNERS

It is generally recognized that inexperience is one of the most important elements in the causation of industrial accidents. What has not been sufficiently realized is the close parallelism of the rates of accidents and of inexperience. The industrial risks of beginners have been shown to be high Interesting testimony on this subject is given in the iron and steel report already quoted.

A table giving the incidence of accidents to press hands beginning work on the machine shows that on the first day of employment:

More than 5 times as many were injured as during all the rest of the first week
26 times as many as from the second week to the end of the first month
100 times as many as from the second through the sixth month

One can presume the figures indicate a six-month employee is 100 times less likely to have an accident as the first day employee.

Another table covering longer periods of employment shows the accident frequency rates per 1,000 workers at a steel plant falling from the exceedingly high rate of

111.3 per 1,000 in the first six months through
increasing lengths of service to 19.7 for from 5 to 10 years and to
zero after 15 years.

The book did not mention the level of training in these cases. One would have to guess that it was strictly on-the-job-training. I was going to construct a few graphs but the numbers speak for themselves.

I would love to dig into this further, but I have to get this article proofread, published and then publish a weekly newsletter.

Filed Under: accident curve, accident rate Tagged With: actuarial degree, actuary, Hurricane Sandy, Huuricane Hugo, learning curve

Kentucky HB 1 Shows Positive Results – Controls Opioids – WCRI Study

August 30, 2017 By JL Risk Management Consultants

Successful Results for Kentucky HB 1 According to WCRI

Kentucky HB 1 (House Bill 1) immediately shows that smart governmental regulation results in a win-win situation in the Bluegrass State. WCRI’s (Workers Comp Research Institute) recently published study results sparked my interest when the research organization released the initial results at their 2017 Annual March Conference.

Harbin – Wikimedia-Hydrocodone

I live blogged the conference much to the dismay of my fingers and wrist tendonitis. My side notes indicated I needed to check back within a year to see if any studies were released on Kentucky HB 1. WCRI released Impact of Kentucky Opioid Reforms this week. If you deal with Workers Comp in any manner, the study may be worth the cost. WCRI stays very conservative on their pricing of study results.

According to WCRI’s press release:

“The study examined the impact of Kentucky’s HB 1 on opioid dispensing to newly injured worker in the first 12 months after the injury. The legislation, which went into effect on July 1, 2012, regulated pain clinics and established standards for dispensing and prescribing of opioids, including mandating prescribers to query the state prescription drug monitoring program prior to prescribing opioids.”

The four important aspects of Kentucky HB 1 are:

Effective 2012, so the study covers quite a bit of time
Regulated pain clinics
Established standards for dispensing and prescribing
Very important – prescribers had to query a drug monitoring program

Opioids were not on my radar screen until I was handling a runoff of claims for a defunct offshore insurance company. I was able to count 500 Vicodin at one time in possession of an injured worker due to seeing multiple doctors and multiple pharmacies at the same time. The above bolded bullet point eliminates that situation quickly.

Dr John Ruser, WCRI President and CEO commented the application of Kentucky HB 1 could apply to other jurisdictions as they try to combat their own opioid epidemics. That was a wise assessment.

The following are among the study’s major findings:

There was a 20.3 decrease in the number of Kentucky workers with pain medications who received opioids in the first 12 months after injury. Neighboring states saw no decreases.
The largest impact concerned seen among those who did not have a major surgery – the number of opioid prescriptions dropped 27%.

Study description

The findings are based on data comprising over 21,000 Kentucky workers’ compensation claims with injuries from January 1, 2011, to December 31, 2013, and nearly 91,000 prescriptions associated with those claims. The prescription utilization of each worker was observed for 12 months following the date of injury. Injury year 2011 represents the experience of injured workers prior to the effective date of HB 1, and 2013 represents the experience immediately after the implementation of the reforms. 2012 is partially post-reform. The data included represent 44 percent of workers’ compensation claims in Kentucky.

Hopefully, we will see more states enact opioid regulation with the success of Kentucky HB 1.

Filed Under: Kentucky, Opioid, WCRI Tagged With: Boston, Dr. John Ruser, wcri conference

Workers Comp Writers Block – Writing Into A Funnel

August 29, 2017 By JL Risk Management Consultants

Workers Comp Writers Block Not A Fun Time

Having Workers Comp writers block for the first time in 11 years ended with this article. The last three weeks contained the longest workers comp writers block for me.

man typing workers comp writers block head

Wikimedia Commons – Drew Coffman

The comment on writing into a funnel means that if I covered a subject in 2008 and now write about it again, the Google search algorithm penalizes duplication.

Matt Cutts, the Google spam guru rep says Google does not penalize duplication. However, if you write two articles on the same subject, each are partially devalued as Google makes a choice on which article gets the juice and ranking.

Of course Google is trying to remove spammers from their rankings. No blame goes to Google.

The last article on the .85 Combined Ratio announced at the NCCI Virginia Conference created quite a bit of buzz. In a roundabout way, Workers Comp carriers consider the market to be potentially profitable.

I began the blog to publish articles on workers comp premium audit and reserves. The writing funnel discourages me from continuing to write on those two subjects.

Many workers comp authors began damning the system a few years ago to get attention. It seems they are still at it today. We decided a few years ago to stop publishing articles that bash one facet or group of people in the Workers Comp business. I just finished reading an article of that sort.

Is it me or has there been way too many articles on opioids (not counting research WCRI, NCCI, etc.)?

One very positive note entails the updating and improvement of all 1,672 articles. Our web consultant contractor works tirelessly to improve the look (graphics, text spacing, and Google ranking) of the blog and website. I have spent 30 – 40 hours in the last two months reviewing and upgrading some of the text.

I begrudgingly removed 30 -40 articles which provided no knowledge advancement in the area of Workers Compensation.

1,672 articles now exist in this blog. Feel free to search them at the box on the top right of the screen.

PS I cannot call it writer’s or writers’ block as the apostrophes in Titles make the HTML go crazy.

I am now over the Workers Comp writers block.

Filed Under: Cutcompcosts Tagged With: algorithm, google, NCCI, opioids, Virginia

Workers Comp Statistic Combined Ratio Best In 50 Years – NCCI

August 8, 2017 By JL Risk Management Consultants

NCCI Workers Comp Statistic

One workers comp statistic stood out the August 3rd NCCI Virginia State Advisory Forum. Actually, it exceeded even my positive outlook for the Workers Compensation market health.

The Combined Ratio performed even better than last year in the overall market. Last year the ratio pegged at 94%. What does this mean? The formula consists of three main variables:

Losses + Expenses / Earned Premium

The current workers comp statistic – Combined Ratio came in at 85% this year. The Combined Ratio measures a market’s total efficiency. Investment income by carriers is not counted in the Combined Ratio.

According to NCCI,, this was the best Combined Ratio in 50 years. Does this mean that carriers are making a 15% profit off all written premium – not exactly, but the more the number decreases, the healthier the market becomes overall.

I marked a few more pages in the presentation. (You may want to download the PDF from the first link in this article.) They were:

Slide 20 – Changes in Medical Lost-Time – Claim Severity by Component. The utilization number has decreased to an almost no growth figure compared to 20 years ago.
Slide 32 – All states are reducing Loss Costs except Virginia Hawaii and South Carolina
Slide 33 – North Carolina North Carolina reduced Loss Cost on 4/1/17 by –14.4% which was the largest reduction in the US.

The slides are great for a quick review. The national information provided by NCCI provides a good bit of insight beyond the Virginia data.

Filed Under: combined ratio, NCCI Tagged With: Hawaii, North Carolina, South Carolina, State Advisory Forum, Virginia

Insurance Industry Employment Alarming Numbers – Shocker

August 2, 2017 By JL Risk Management Consultants

Insurance Industry Employment Figures Should Be A Wake Up Call

These insurance industry employment trends should sound off a few alarms. Recently, I was reading the July issue of AM Best’s Monthly Magazine.

The July Issue covers the Millennial paradox among other concerns. One of the article covers a very salient point. The industry employment threats abound now with the attrition and aging of the workforce versus the slow pace of the new hires.

One table on page 3 of the article stopped the show. The numbers from the Baby Boomer’s Exit table*:

74% increase in the number of employees aged 55 and older in the last decade (ouch!)
25% of the insurance industry workforce consist of employees aged 35 or less.
50% of the industry workforce will be retired by 2030.
20% of experienced underwriters will retire in the next few years
And the grande finale —are you ready for this one–-70% of insurance adjusters age > 40!

Let us cover those fascinating insurance industry employment numbers one more time.

The 74% number alone rings an alarm bell with me. I have just joined that group over the last year. Attending a safety and risk management conference a few years ago opened my eyes. No one under 40 showed up for the conference. Everyone was the same people I talked with and had seen over the last 20 years. There were no new faces.

The second bullet point aligns with the first one. I have experienced this at many conferences lately. Where was the younger crowd? I was told possibly that companies send only Senior level people to the conferences. I find that hard to believe. Why? When I attend conferences outside of the insurance industry, the 35 and younger attendees are out in force.

The third bullet point could be allayed with the fact that technology may replace some of the workforce. However, 50% coverage is an illusion.

The fourth bullet point shows the insurance underwriting industry losing 20% of the workforce. Once again, I have been told technology will replace much of this function. Twenty years from now this could possibly happen, but not in the next few years.

The fifth bullet point, which made me write this article, shows a real crisis in one area the insurance industry must heed – only 30% of the adjusters are under age 40. (Double ouch). I was informed once again that this shortfall can be withstood by the increase in technology. However, the insurance industry cannot make this ground as insurance seems to be far behind in technology. I have written many articles on the lack of the technology in Workers’ Compensation.

One wonders what the solution will be ten years from now.

*Credits should be given to McKinsey and Co., Insurance Careers movement, Bureau of Labor Statistics, The Jacobson Group, Deloitte, and The Institutes for the table as AM Best used them to create the table.

Filed Under: AM Best, employment Tagged With: Baby Boomer, millennial

Free WCRI Webinar On Study Of Workers Post Accident August 9th

August 1, 2017 By JL Risk Management Consultants

Free WCRI Webinar Explores Injured Workers Post Accident – 08/09/17

The free WCRI Webinar on August 9th should be an interesting one. The WCRI hails from Boston – Workers Comp Research Institute. I learned about this study while live blogging the 2015 WCRI Annual Conference in Boston.

If you have anything to do with Workers Comp, this should be well worth your time. Knowing what employees think of the claims process should be very insightful.

Dr. Bogdan Savych’s research is groundbreaking. No organization had really ever followed the outcomes of employees after their recovery period and the Workers Comp file closes. One had to wonder what happened to injured employees after the claims was over or was far along in its development.

The 45-minute webinar on the latest worker outcomes research on Wednesday, August 9, 2017, at 2pm ET (1pm CT; 12pm MT; 11am PT).

The outcomes examined include

Recovery of physical health and functioning,
Return to work,
Earnings recovery,
Access to medical care, and
Satisfaction with medical care.

The research, Comparing Outcomes for Injured Workers, 2016 Interviews, is a product of an ongoing, multiyear effort by WCRI to collect and examine data on the outcomes achieved by injured workers in a growing number of states. Interviews were conducted in six of the states (Indiana, Massachusetts, Michigan, North Carolina, Virginia, and Wisconsin) in 2016. Interviews for all other states (Arkansas, Connecticut, Florida, Georgia, Iowa, Kentucky, Minnesota, Pennsylvania, and Tennessee) were conducted from 2013 to 2015.

Questions addressed:

In what states did injured workers report higher rates of return to work?
How did recovery of physical health and functioning vary across study states?
In what states did injured workers report higher rates of experiencing “big problems” getting desired medical care?
What percentage of injured workers across the 15 states was satisfied with their overall medical care?

The medical care satisfaction analysis varied among the states on the last survey.

Filed Under: WCRI Tagged With: Arkansas, connecticut, Florida, Georgia, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, North Carolina, pennsylvania, Tennessee, Virginia, Wisconsin

Independent Contractor Employee Checklist For Employers and Contractors

July 27, 2017 By JL Risk Management Consultants

Independent Contractor Employee Checklist

The independent contractor employee checklist answers quite a few of the question we receive when I write an article on independent contractors. Yesterday, I wrote an article that included all the IRS independent contractor information. I came across this info at the Hawaii Work Center website. They have distilled the ACE (see bottom of article) version of the independent contractor employee checklist.

I have used this in my own business when dealing with subcontractors. The Ladder of Insurance(c) serves as a caveat when hiring contractors that have their own employees.

How can I tell if I a worker is an independent contractor or employee?

Independent contractor or employee? Below are examples of the questions the courts may review in making a determination.

The most important consideration is that of control: Does the employer have the right to control or direct only the result of the work, and not the means and methods of accomplishing the result? If so, it is more likely that the worker will be considered an independent contractor.

Thus, the following factors may be considered in determining whether the employer has sufficient control over the worker to result in employment status. Note that there are factors that are common to both“independent contractor” and “employee”; therefore, it is best to look at the relationship as a whole rather than focusing on one or two factors.

The bottom line: The more the relationship looks like an employer/employee relationship, where the employer has the right to control the means and methods of accomplishing the desired results, the more likely it is that the courts will view it as such.

• Is the worker required to follow specific instructions as to the means and manner of performing the work? (Yes=Employee; No=Independent Contractor)

• Is there a set amount of hours and days that the person must work each week? (Yes=Employee; No=Independent Contractor)

• Does the employer supply the office, equipment, and tools needed to accomplish the work? (Yes=Employee; No=Independent Contractor)

• Must the work be performed on the employer’s premises? (Typically, a “yes” answer would indicate the person is an employee; however, there are instances where an independent contractor would be required to perform on the premises. You would need to consider your answer to this question in relation to everything else.)

• Is the worker trained by the employer to perform the assignments? (Yes=Employee; No=Independent Contractor)

• Is the assigned work a part of the regular business of the employer? (Yes=Employee; No=Independent Contractor)

• How long does the relationship continue? (In general, the longer the relationship continues, the more the worker looks like an employee.)

• Can the employer assign additional projects to the worker? (Yes=Employee; No=Independent Contractor)

• Is the person paid in the same manner as employees, e.g., biweekly? (Again, typically a “yes” indicates the person is an employee, but there may be instances where the independent contractor is paid in the same or similar manner. Here
again you will need to consider this factor in relation to all other factors.)

• Can the worker hire assistants? (Yes=Independent Contractor; No=Employee)

• Does the worker provide services to more than one firm? (Yes=Independent Contractor; No=Employee)

• Does the worker make his or her service available to the general public? (Yes=Independent Contractor; No=Employee)

• Is there a written contract between the parties delineating their rights and responsibilities? (Yes=Independent Contractor; No=Employee)

• Can either the worker or the employer terminate the relationship at will? (Yes=Employee; No=Independent Contractor)

• Is the worker making any investment into facilities or equipment, and will the person realize a profit or risk of loss? (Yes=Independent Contractor; No=Employee)

The article was adapted by, the National Association of Colleges and Employment (NACE) . Thanks to them for providing the independent contractor employee checklist.

Filed Under: Independent Contractor Analysis Tagged With: IRS, Ladder of, NACE