Archives for May 2012

California Rate Increases Not Due To Current Conditions

May 31, 2012 By JL Risk Management Consultants

California Rate Increases Not Due

California’s Workers Comp conundrum was not due to the current medical price increases. The California rate increases were due to not incrementally increasing the rates as medical and other expenses had risen over time. The pundits on California’s Workers Compensation current environment have indicated a rate increase from 10% to 45%.

Graphics of Rate Increases Color Red Arrow and Black Percent

The bell is now tolling for employers in CA as the prior Insurance Commissioners and Governors would not increase the recommended rates for years even though the WCIRB (California’s Workers Comp Rating Bureau) had recommended huge increases for over five years.

I had written about the WCIRB’s recommendations being rejected by the Insurance Commissioner several times. Feel free to use the search box on the right side of the screen and search California or Insurance Commissioner. The following is a list of the articles on CA’s inaction and the change in the environment:

California Workers Comp Costs Growing Quickly – Workers Comp medical cost warning
California And The 0% Rate Increase – the WCIRB had recommended a 27.7% rate increase
Is A 5% Increase Enough for California’s Workers Comp System? – the WCIRB had recommended a 16% rate increase. This article was written in 2008.

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California is the only state that I can recall where the Insurance Commissioner or Governor totally turned away a rate increase recommendation by their rating bureau. In fact, one of the responses from the Commissioner was a 27 point recommendation on how to reduce Workers Comp costs. I, as many in the Workers Comp community, was not surprised with the new and upcoming increases in rates.

In any state, the Insurance Commissioner should take heed of their rating bureau’s recommendations. The NCCI, WCIRB, and other Workers Comp rating bureaus are not just pulling numbers out of a hat. They have direct access to the statistics. The rating bureaus may not be perfect, but they are very accurate in most cases over a period of time.

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California – Medical Utilization In Workers Comp Rears Its Ugly Head

May 31, 2012 By JL Risk Management Consultants

Medical Utilization In Workers Comp – California

California Medical Utilization for Workers Comp hit the radar screen this week. I often post concerning the Workers Compensation situation in California. I do this to specifically point out what the future will look like for your company’s jurisdictions. California seems to be the bellwether for upcoming Workers Comp trends. What happens there will be coming to a jurisdiction near you very soon.

Picture Of Doctor Medical Utilization Talking To Patient

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Approximately five years ago, I consulted with an investment company to perform a study on Workers Comp costs associated with physical therapy in various states. The one astounding statistic that I discovered was that the reduction in any state’s fee schedule for unit costs (costs per visit) was offset by an almost directly proportional increase in visits.

In other words, if the fee schedule for each visit by an injured employee was decreased by 25%, the number of treatment visits increased by 25%. I am not inferring that any medical provider was overcharging for their services. I have performed similar studies since then for various companies that basically drew the same conclusion.

California’s insurance commissioner basically said the same thing in a memo approving an increase in Workers Comp rates of almost 9%. His exact quote was:

Wikimedia Commons – Bill Branson

The primary increase in California’s Workers Compensation costs is with medical costs. Here, it is important to explain that medical costs are not only per unit medical costs, but medical utilization and cost containment. Per unit medical costs do not seem to be increasing much, but medical utilization appears to be the main cost driver of overall costs increases.

Commissioner Jones then goes on to say the WCIRB will be looking into the overall cost drivers. I think they already know the reason for the spiraling medical costs.

There may also be other reasons for the rate increases in CA. I will cover those in the next post.

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Your Premium Bill And Advisory Loss Costs May Not Look The Same

May 30, 2012 By JL Risk Management Consultants

Advisory Loss Costs And Premium Bill Confusion

Our company was able to access the advisory loss costs figures for California. Why is the final premium bill so different than these rates? I received this question last week.

Vector Graphic of Big Scissor Cutting Budget Advisory Loss Costs Premium Bill

The advisory loss costs are published for each state by your state’s rating bureau. California’s is published by the WCIRB (Workers Compensation Insurance Rating Bureau).

The advisory loss costs are just that – rates for each classification code used as a standard. Each insurance carrier may deviate on certain classification codes or just publish a flat overall deviation.

The deviations are usually more than the loss costs codes. California’s WCIRB has published a great explanation of why insurance carriers add in a cost factor known as loss cost multipliers.

The pure premium rates issued by the WCIRB are meant to cover:

Loss Adjustment Expenses
Claims Costs

Money Hanging Advisory Loss Costs Out To Dry

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The carrier’s premium rates are designed to cover:

Profits
Dividends
Taxes
General Expenses
Acquisitions Expenses
Commissions
Loss Adjustment Expense
Claims/Losses

I do realize CA’s WCIRB is a standalone rating bureau. However, the same components are used in other states such as those covered by NCCI or other independent state rating bureaus.

The main reason I wanted to point these rates out was that some of the deviations are up to 211% of the advisory lost costs. The insurers of last resort or state insurance funds usually have much higher deviations as they do not turn away any applicants including the high risk employers.

I have rarely ever seen an insurance carrier file a deviation that was lower than the advisory loss costs. As you can see from the above list, there are too many costs and overhead the carriers must cover to break even or make a profit.

We have received many requests from employers over the years to furnish the advisory loss costs for their classification codes. The advisory loss costs are not really the main figures to examine for reducing Workers Comp costs. The carrier’s final premium figures are the ones that are the most important.

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I Take It All Back on NC Industrial Commission

May 24, 2012 By JL Risk Management Consultants

NC Industrial Commission Gives Extensions To Deadbeat Employers

Badge of NC Industrial Commission Workers Comp costs

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The NC Industrial Commission caused me to take back my kudos. We have been in the business of cutting Workers Comp costs for employers and governmental organizations since 1996. However, we have not and will not aid any employers in illegal practices with their Workers Compensation, especially in not providing coverage to their injured workers.

Last month and earlier this week, I posted on the upcoming North Carolina Industrial Commission’s hearings on employers that did not have Workers Comp Insurance in effect when employees were injured on the job. For some reason, I had thought the Industrial Commission was dropping the hammer.

Today, I read an article from the Charlotte Observer that indicated the employers were given extensions to pay their fines and claims. I am not sure whether to be appalled or just plain surprised at these decisions. If the employers were not going to pay their fines at the hearings, they will likely not pay any claims or fines in the future.

If the Industrial Commission is not going to enforce the rules, what type of effect will it have on other employers in the state? If Company A is getting away with not paying Workers Comp insurance, Company B will never be motivated to pay their premiums.

Man Holding Pile Of Cash NC Industrial Commission And Question Mark

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I then read in the same article where State Congressman Doug Berger introduced a bill that would move the jurisdiction of Workers Comp fraud from the Industrial Commission to the Department of Insurance.

Congressman Berger is the Congressman from my district. I do not necessarily agree with him in some areas. This would be a prudent move in my opinion as you can see from my last article on this situation that there is a very large amount of premium $ that NC is not providing to the Workers Comp system.

The enforcement would likely stabilize the NC Workers Comp even if it would have to add the employers that previously had no coverage to the Risk Pool.

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North Carolina Industrial Commission Prosecutes 70 Employers

May 23, 2012 By JL Risk Management Consultants

North Carolina Industrial Commission Prosecutes 70 Employers

The NC Industrial Commission starts with prosecuting just 70 employers out of thousands. Governor Bev Perdue had issued an edict that all 30,000 North Carolina employers uninsured for Workers Compensation should be investigated immediately. The Industrial Commission’s response was to start prosecuting the employers that had employees with pending claims, but no Workers Comp insurance.

Graphic of lady justice 70 Employers NC Industrial Commission

Seventy employers are now being prosecuted with the threat of jail. Judging by this article on Workers Comp prosecutions, some of the employers had said this would be an unfair increase to their cost of doing business. Are you kidding me? Remember, these are the ones with injured employees that had no place to file a claim.

What should North Carolina do about the other 29,930 employers that are “going bare” on Workers Comp? Maryland and West Virginia both cross-referenced other databases to easily found out employers that have no Workers Comp insurance.

In the article (see first link in the article), the NC Rate Bureau reports to the Department of Insurance any employers that did not replace or renew their expiring policies. One has to wonder what happens to this info.

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In North Carolina, if an employer has 3 or more employees, Workers Comp coverage must be purchased and kept in force. Most states require a policy for any company that is not out of business or has an alternative insurance arrangement such as self-insurance.

D&B Services carries a huge database of employers with the number of employees. Could this not be cross-referenced to the NC employers to see which companies with more than three employees do not have insurance?

If one calculates the amount of potential premiums:

29,930 * $15,000 = $448,950,000

The $15,000 was an estimation. I will check with a few info sources about the accuracy of the number. Regardless, this is a huge amount of $$ that is not in the NC Workers Comp system. Could other employers actually be subsidizing the non-payers?

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Workers Comp Dates Upcoming Important Ones For Your Calendar

May 21, 2012 By JL Risk Management Consultants

Very Important Workers Comp Dates

One of the most important Workers Comp dates is upcoming. Timing is everything with reducing your Workers Comp claims and premiums. There are a few upcoming dates that are very important for Workers Comp polices in the regular market.

Picture of Pen On The Top Of Calendar Workers Comp Dates Very Important

If your company has a January 1 renewal date, your Workers Comp reserves will soon tabulate on June 30th for your 2013 policy. If you have not started your Workers Comp reserve reduction program, the time is running very short.

Insurance carriers are not known for quickly reducing reserves on files. One of the main reasons is a larger file may have to navigate its way through the insurance hierarchy to have any changes to the reserves. A file reserve of $250,000 may have to cross at least six desks and be reported to the reinsurer before the reserves are added into the file. At 4 days each desk, the total time to have the reserves decreased to a more proper level may take up to one month after the adjuster makes their reserve reductions. Many meetings take place between the adjuster, their senior adjuster, supervisor, manager, VP, examiner to have file reserves decreased.

The Workers Comp claim formula is Total Incurred = Paid + Reserves. You can do little to change what has been paid. I have come across two companies that will actually review the medical bills post-payment. This may be an area that will gain in popularity over the next few months.

The reserve part of the formula is negotiable. If you renew on January 1, you should be in the last phase of reserve negotiation, not the very first. One area that you can help your carrier’s Workers Comp adjusting staff is to not call them out of the blue requesting a claims review.

The girl Workers Comp Dates was accident

Wikimedia commons – Alexisrael

This can be a recipe for disaster as you may cause increases in files that you are actually trying to have reduced by the deadline date. Your company knows what is occurring with each employee much better than the adjusters. Updating them with timely information is important. You, as the employer, are basically their eyes and ears.

The updates will help your company establish a working relationship with your carrier’s Workers Comp claims department. This will let them know about your company’s:

Medical treatment network
Return to work program
Timely first report of injury filing
How your company treats injured employees

An insured’s reputation is very important as the adjusting staff will know your reputation for handling your Workers Comp claims. This can save you a large amount of premium in the long run.

If you wish to have your reserves analyzed for your upcoming policy, you would need to likely bring in an expert ASAP. If your company does not renew January 1, please email ([email protected]) or call us, and we will provide you with the date that your reserves will apply to your next policy.

If your carrier wishes to have a claims review with you just before your renewal date, that is a grand waste of time if you are aiming to reduce your reserves for your next policy.

Self Insureds

For most self-insureds (especially governmental entities), the renewal date for your TPA contracts is July 1st. Some governmental entities have converted the contracts to January 1 renewal dates.

There is much debate concerning the extensions of TPA contracts in place. Should a self-insured employer:

Just renew the contract with the same TPA by an extension every year
Place the TPA contract out for bidding on a yearly basis
Place the contract out for bidding every three years?

The first two are great ways to lose the TPA’s adjusters that are working on your files. If you company or entity is large enough to have a Workers Comp adjuster working solely on your claims 1/3 time, they will very likely want some stability in their job.

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The first two options will likely cause the TPA’s adjuster to not really be sure if they will have a job from year to year. This instability is why we recommend to bid out the claims services every three years with no extensions.

If your company or organization just keeps renewing your WC claims handling with the same company year after year, you could easily be overpaying for services or not receiving the proper level of service.

If a TPA thinks they will have your business year after year, you may want to shake things up a bit by placing your TPA work out for bid. The bid process becomes a learning experience that is well worth the time spent in the process of possibly finding a more economical and better-fitting TPA among the hundreds in the marketplace.

Voluntary Market (Non self insured)

If your policy renews in June or July, you may want to start organizing your financials for the premium auditor. If you close out your year on July 1, I recommend examining your premium auditor’s letter from last year and gather the same information for this year. This article covers preparing for your Workers Comp premium audit.

As you go through your records for closing out your fiscal year, you will have your hands on the exact data the premium auditor will request.

Making a copy of all the records (paper or electronic) as you come across them will save you double work and will cut down on the stress of closing your year out and the premium audit process.

©J&L Risk Management Inc Copyright Notice

How Obamacare Could Ruin Your Workers Comp Program

May 17, 2012 By JL Risk Management Consultants

Your Workers Comp Program Can Be Ruined Very Easily

Does your Workers Comp program seem to be in ruins? Obamacare could ruin your program if you are not careful.

One of the most obvious trends in the Workers Comp environment is that health insurance is trumping the attention paid to employers’ budgets. Who can really blame employers for hinging their decisions on the upcoming Supreme Court result?

Drawing Of HealthCare With Dollar Sign And Arrow Workers Comp Program Obamacare

The one under-the-radar concern that I have is Workers Comp has taken a back seat (or possibly in the trunk) to the health insurance discussions. With the changes occurring with Workers Comp E-Mods for 2013, 2014, 2015 and beyond, Workers Comp should very likely not be a forgotten matter.

Safe workplaces are going to reap the harvest in the next few years. Unsafe employers are basically going to pay the price over the next few years. In a way, they will be subsidizing the safe employers when compared to the present Workers Comp system.

For instance, one of our larger current clients is having a 300% increase due to a change in one of their classification codes by their current carrier. If there was too much attention paid to other areas (and we were not a consultant for them), this increase may have slid through unnoticed. The client was able to change most of their employees back to the original class code. They were very happy with the result.

There are many posts involving saving on your Workers Comp program in this blog. Feel free to use the search box on the right side of the page or look in the archives for articles.

Obamacare could ruin your Workers’ Comp program, but not if you pay attention to the changes in health and workers comp insurance.

©J&L Risk Management Inc Copyright Notice

What Ever Happened to Workmans or Workmens Comp?

May 17, 2012 By JL Risk Management Consultants

Workmans or Workmens Comp

Workers Comp used to be termed Workmans or Workmens Comp in the old days – right? Actually, that is an inaccurate statement. According to the Google Adwords Keyword tool, Workmens Comp was searched for 90,500 times last month worldwide.

Wikipedia – The Pancake of Heaven

I think Workmans Comp is not such an archaic search term. I also tried the same Google Adwords search for Workmans Comp. The results showed a surprising 165,000 searches worldwide for the term. If you combine Workmans and Workmens Comp together, that is 255,500 searches for those two so-called archaic terms in the last month.

Why would there be so many Google searches (not counting Yahoo or Bing) for such chauvinistic or misogynistic terms? I think most of the searches for these terms could be attributed to people unfamiliar with Workers Compensation insurance.

One of the most astounding results is the Google search itself. Due to onsite and offsite website engineering the first two pages of search terms for either term does not even appear until the second page. Yes, I am one of those people that actually look at the second pages of the terms.

Picture Workmans or Workmens Comp Office Portrait

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As we all know, Google search results can vary. I just checked again and Workmans Comp appeared twice on the first page. Workmens had the same results.

The one astounding metric is when you search the two terms, Google will correct your search term and show the results for Workers Compensation. The result would agree with the changing of the terms to Workers Compensation sometime in the 1960’s or 1970’s.

I could add in the apostrophes (Workmen’s Workman’s) and search again to see the terms. The results are different from the non-possessive terms. Finally, there is the term Work Comp that results in a different set of Google search results.

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Preparing For Workers Comp Audits – Seven Suggestions

May 15, 2012 By JL Risk Management Consultants

Seven Suggestions – Preparing For Workers Comp Audit

I wrote seven suggestions on preparing for Workers Comp Audits.

I have read many guides, manuals, and blogs on how to prepare for a Workers Compensation premium audit. Some of the suggestions were borderline, if not completely illegal. As this story on fraud points out, trying to manipulate the premium audit will only end up costing your company.

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My main recommendations are:

Have everything organized with spreadsheets. Premium auditors are under time pressures. The easier you can make their audit process, the better the results. Handing the auditor a pile of unorganized papers or computer files is never a good idea.
Follow the audit letter to the nth degree. The premium auditor will send a letter a few weeks before the audit spelling out everything needed for the audit.
Having someone that is very familiar with your company assist the auditor is advisable. Assign this person to answer ALL of the auditor’s questions and to obtain additional information requested by the auditor. Nothing good has ever come of having many different people meet with the auditor.
This is a debatable point – there is no requirement that the auditor can leave the premises with copies of any records.
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Ask the auditor to leave a copy of his/her workpapers and background info on the audit. This material is very important if you have questions when the premium audit report and bill is provided by the carrier. Ask for them at the premium audit meeting before the auditor audits your payroll and policy.
As with any audit, it is best not to argue with the auditor. There is a dispute process if you disagree with the final results.
Read your Workers Comp policy. This will often answer many questions and clear up any confusion about the audit results.

The subject of preparing for workers comp audits should not be a stressful experience.

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Self Insurers Can Ruin Their Programs – 12 Hidden Ways

May 8, 2012 By JL Risk Management Consultants

Self Insurers Can Ruin Their Programs Without Realizing It

The first 12 ways self insurers ruin their Workers Comp programs are below. Workers Compensation self insurance can be more complicated than paying for a regular policy. I have received many emails asking me to comment on how self insureds can save on their Workers Comp payouts.

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I often hear that being self insured has removed an employer or public entity from the E-Mod system. Nothing could be further from the truth. The following are 12 ways Workers Comp self insureds can harm their programs.

Ignore your reserve figures. Your Third Party Administrator (TPA) analyzes the claim and tallies the total lifetime cost of the file. I often see the reserve figures not taken into account fully when a self insured is budgeting for their WC expenditures. Online loss run access is critical in following your reserves.
Consider a large deductible as being self insured. There are a number of differences between a large deductible and a self-insured. For example, large deductibles still have an E-Mod calculated every year and it is posted to the rating bureaus.
Not having a Loss Development Factor (LDF) calculated every year. See the intro paragraphs – your organization needs to have a figure that reflects your safety measures. The LDF, in my opinion, is superior to an E-Mod. The LDF examines many more years than the E-Mod.
Forgetting the close fiduciary relationship with your TPA. TPA’s are spending directly out of your bank accounts. There is no buffer as there is with an E-Mod system.
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Not reviewing your TPA’s claims performance. Most (but not all) TPA’s perform at an acceptable or better level. Your claims are only as good as the Workers Comp claims staff working on your files. Adjuster turnover should be a large concern.
Not sending out RFP’s often enough. Sending out RFP’s is an arduous task. From what I have seen, it is very well worth it. I often see companies/entities extend an RFP contract for very long periods. If that is occurring, see #5.

7. Leaving the ancillary services to the TPA’s discretion. Services such as bill review, rehabilitation nurses, and PPO network fees can easily cost more than the TPA processing fee. These fees should not be bundled into a TPA contract without a cost itemization.

8. Not Monitoring Large Medical Only Claims. This is a major cost factor that flies under the radar. You will usually know more about the current medical condition of an employee. I wrote this post on Medical Only claims last year. If their medical only claim continues for a long period of time and increases in cost, you could have a very costly claim on your hands.

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9. Not requiring the TPA to call you before putting up a large reserve. I usually recommend this not be done by email. If you are setting a July 1 Workers Comp budget and the adjuster increases a reserve by $100,000, where does that fit into your budget?

10. Not following the Five Keys to Cutting Your WC Costs, click on the title for coverage of the keys.

11. Not pursuing the recoverables. Subrogation, bill overpayments, etc. are the small things that add up to a large total. This is pure $$ left on the table. The amount of effort to collect on these is often minimal.

12. Fighting claims that should be settled. If emotions rule the day, you may as well get out the checkbook. If the TPA claims staff or defense attorney can justifiably recommend a settlement, then keeping it out of court may be the best decision. The % of claims won by the defense is very small.

I could have listed more as there are so many areas where self insureds can inadvertently harm their program. Reading this article is the first step. Putting it into action is the next one for self insurers.

E-Mod Changes for 2015 – NCCI Changes The Formula

May 7, 2012 By JL Risk Management Consultants

2015 E-Mod Changes Makes Safety So Important

In 2015 more E-Mod Changes were produced by the NCCI. A few weeks ago, I discussed the upcoming changes to the E-Mod calculation and gave an example. I then blogged on what will happen to the E-Mod calculation in 2014. Believe it or not, there will also be an increase to the E-Mods for unsafe employers for 2015.

Picture of Calculating E-Mod Changes NCCI

For example, if a state publishes its ratings on 4/1/2015, then any polices starting AFTER 4/1/2015 will be affected due to the changes. I had planned on commenting on the 2015 changes later in the year. Due to the number of questions that I received, I will do it now.

On January 1, 2015, the Primary Loss split point (ceiling) increases to 15,000. As I mentioned, in the prior three articles on the E-mod changes, I want to keep everything very basic. The basic E-Mod Formula is Actual Losses / Expected Losses.

Adding in the Primary and Excess Loss variables –

(Actual Primary Losses + Actual Excess Losses) / Expected Losses

If we break that down further the formula would be

E-Mod = (Total Actual Primary Losses + (Total Actual Excess Losses * Discount Factor))/Total Expected Losses

This is the example table for pre-2013 polices. As in the last example, we are going to use a .3 discount factor for the excess losses. The Expected Losses are 57,750. The Expected Loss figure basically is calculated from payroll per classification code.

Claim No	Loss	Primary	Excess
A101	15,500	5,000	10,500
A102	12,430	5,000	7,430
A103	9,350	5,000	4,350
A104	8,200	5,000	3,200
A105	7,300	5,000	2,300
A106	65,000	5,000	60,000
A107	2,350	2,350	0
A108	2,800	2,800	0
Total	122,930	35,150	87,780

The E-Mod is calculated as:

(35,150 + (87,780 *.3))/57,750 = 1.06

Graphic of E-Mod Changes Rating UP Color Green Check

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After 2014 the numbers would change dramatically

Claim No	Loss	Primary	Excess
A101	15,500	15,000	500
A102	12,430	12,430	0
A103	9,350	9,350	0
A104	8,200	8,200	0
A105	7,300	7,300	0
A106	65,000	15,000	50,000
A107	2,350	2,350	0
A108	2,800	2,800	0
Total	122,930	72,430	50,500

The E-Mod is calculated as:

(72,430 + (50,500 *.3))/57,750 = 1.52

This results in an E-Mod of:

2012 – 1.06
2013 – 1.41
2014 – 1.48
2015 – 1.52

The increase (3%) is not that large from 2013 to 2014. However there was a three year increase of 31%. This type of E-Mod increase can affect your company in two significant ways:

If your company is bidding on contracts, the main contracting company will usually only accept bids from a 1.0 E-Mod sub-contractor. The other side of the coin is that it will be much tougher to slow down an increasing E-Mod.
The increase can push a company into the risk pool where Workers Comp becomes prohibitively expensive in an already bad economy. The voluntary market is very rarely going to write a company with an E-Mod above 1.5.
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As mentioned in one of the previous articles, this example was taken from an actual policy and rating bureau/NCCI Experience Rating Sheets. I do realize there are scheduled debit/credits etc. that would figure into the final premium paid.

All of the examples I gave were for comparison purposes only. Employers with many accidents are going to see their E-Mod jump significantly even with no additional claims or reserve increases.

There are many techniques to reducing your company’s E-Mod. This blog has many recommendations on how to decrease your Mod for any company. The main concept to remember is the E-Mod (X-Mod in California) system is a delayed system. A company cannot wait a few months to start an E-Mod reduction program. The time is today, not tomorrow or next week.

Hiring an Insurance Consultant Or Any Advisor – 23 Keys

May 3, 2012 By JL Risk Management Consultants

23 keys – Hiring an Insurance Consultant

The 23 keys for Hiring an Insurance Consultant are great common sense tools. . I had written a similar article here on hiring insurance consultants. The consultants I am referring to are non-agent consultants. This excludes any type of consultant that may be selling insurance products of any type. You want an unbiased opinion.

Picture of Key On Door Knob Hiring an Insurance Consultant Or Any Advisor

This list is not in any order of importance. The list was generated from real-world examples. We often have to clean up the mess the last consultant left behind.

Make sure that you really need one. Can you do it yourself? You may not even need to hire an insurance consultant. #2 in the list will likely aide you in your decision
Have you defined what you want? An outline of the goals that you wish to accomplish is necessary to proceed further into the consultant search. A short Request For Proposal (RFP) may be very helpful.
Know the consultant’s background – the exact one that will be working on your project? Many times a potential consultant company will list down their “big gun” consultants only to give your project to a trainee later in the process. I have seen this happen very often.
Know the company that made the website. Any company can put up a website calling themselves consultants. A search of the state corporation database is very helpful.
Cheap is not the best, but most expensive is not either. Early in my consultant career, I was often told that I was eliminated from contention on bids as I was “too cheap” on the amount that I was proposing to charge the client. Bringing in the most expensive consultant does not mean better quality. See #3 above.
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References are a must. Email each one that is provided with a few questions.
Outlandish claims of cost savings are just that. In the premium audit business, I now see claims that 70%, 80%, or even recently 90% of all Workers Comp insurance policies are incorrect. That is just not true and has no statistical validation.
Explore the initials at the end of their names. Some of the initials such as the ones I have – ChFC, ARM, MBA, AIC should all be researched. It may look good, but not apply to your project.
If it is a large enough project, check out a D&B Report. If the potential consultant company does not have a D&B number, that should be a red flag.
The first phone call is critical, emails – not so much. As with first impressions, the first phone call you make to the consultant company will usually have the consultant unprepared and not in the “canned phone speech” mode.
How long has the company been in existence? With so many people being unemployed, will the consultant company be around when the job market recovers in the future?
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Check databases such as Department of Insurance for licenses, suspensions, and especially license expiration.
Does everything look too flashy in the website? The flashy websites seem to come and go every few months along with the associated companies. Insurance-based websites are not usually known for flashiness. What is the company trying to make up for or trying to hide?
LinkedIn Profile – If the consultant does not have a FULL LinkedIn profile, that should raise many red flags. The service is free to add in a profile. There is no reason to not have one – none.
Are they really writing their own blog? I have been offered $$ to write in other company’s blogs or to borrow articles from here. I also know of six people writing blogs for other people. Why cannot the consultant write their own blog? This is a big red flag.
Do they have experience in the area for which you are searching for help? There are hundreds of lines of insurance. Calling in a plumber to fix the lighting is not a good idea.
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What organizations do they participate in and are they officers or on the BOD?
Are clients all in one state? If they only have clients in Wisconsin and you are in Oregon, the rules and laws are so very different.
Are there any states they will not operate in? Why? Some of our competitors will not operate in CA. We operate there with no problem.
Do they have a blog/newsletter – How often updated? I sometimes get a little behind in the articles. There are actually award-winning blogs that have not been updated in 9 years.
Are they listed with the BBB, Best’s, etc.? Best’s should be a minimum qualification.
Are they brick and mortar? This was becoming less of a concern recently. However, the long-term companies are usually office-based. This is not for all types, especially CAT adjusters.
Check out whois.net to see who actually owns the website. As J&L grew in size, we had to mask the contact info as we were getting over 100,000 junk emails a day per employee. Check the address after [email protected] in the email address such as [email protected]companyname.com. You may be in for a real shock.

This is not an all-inclusive list. It is a great starting point for hiring an insurance consultant. Your gut feeling should rule the day.

Oklahoma Does Not Want To Be Texas After All

May 2, 2012 By JL Risk Management Consultants

Oklahoma And Texas Opt-Out

Oklahoma appeared on the Workers Compensation radar screen over the last few weeks. Texas has the opt-out or non-subscriber choice in Workers Comp. I had consulted with a few Texas clients that were using the opt-out services. I had previously written an article on the Oklahoma Opt-out here.

Wikimedia Commons – Jenna Greenbaum

The Oklahoma House voted down the opt-out amendment. There were so many discussions in the insurance blogosphere on Oklahoma’s push for non-subscriber services. I had thought the legislation would easily pass and be signed by Governor Fallin. There was no veto expected.

The main reason for the bill to not be passed in the House was the concern that the employees would not be treated fairly. The other reason might have been that the plaintiff bar worried that it was going to not treat their bank accounts fairly.

The reason for not passing the bill was that the injured workers may not receive the proper benefits as they would have under the current Workers Comp system.

I read a few articles earlier this week that indicted the proponents of the legislation would likely marshal their forces again. These groups of opt-out advocates were going to try to get some type of opt-out bill approved over the next few weeks.

Vector Graphic Of Running Businessman Oklahoma With Big Dept Ball

StockUnlimited

I grew up in Oklahoma. One of the main themes was whatever Texas does, we will do it and it better. I am actually glad to see the bill did not pass the House. The main reason is the writers of the bill did not take into account, the Law of Large Numbers. For any type of insurance program to work, there has to be enough willing participants. Oklahoma has always suffered from the “Texas Fever”.

The Texas system for opt-outs has been in place for quite some time. In my humble opinion, Oklahoma did not understand what they were getting into when they just had to be like Texas. There are some changes desperately needed in the Workers Comp system.

On a side note, the two main clients that I had with non-subscriber services in Texas both went bankrupt. I do not think it was due to their Workers Comp opt-out program. However, they both had called us in to help them with a string of very serious accidents which they could not even afford to furnish benefits. Oklahoma may have been very wise to not to have the “Texas Fever” again.