Archives for July 2012

Employee Had Accident In State With No Coverage

July 31, 2012 By JL Risk Management Consultants

Conundrum – Accident In State With No Coverage

An employee has an Accident In State with no coverage under the workers comp policy (uh-oh). Yesterday, we had a case of an employer in a non-coverage conundrum due to an employee being injured out-of-state. Would the AZ Workers Comp carrier pay on an accident that occurred in UT? Would the employer have to pay out-of-pocket for this claim? Would the state of UT fine the employer for no coverage?

Sign Of No Coverage Accident In State Graphic

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The one variable that I did not mention last time is the employee was a sub-contractor. He was covered under the policy as his payroll was specifically listed in the policy. A claim was filed against the carrier for UT benefits. Of course, the carrier denied the claim as there was no coverage for the employee in UT.

What about true path coverage? The employee was not in the course and scope (as I advised) due to wandering off the true path to get back home. The alleged shortcut through UT was not any shorter.

The employee finally admitted he had decided to stop by a remote store to pick up a renowned dessert his family liked that was only made by the store.

The employee subsequently withdrew his claim in UT and filed the claim in AZ. Would the AZ carrier deny due to jurisdiction? Would the employee try to sue the employer directly for no coverage?

The WALSH test and the fact the sub-contractor’s payroll was specifically listed on the employer’s AZ payroll was what I thought was strong enough evidence for the carrier to pay the claim.

The adjuster balked at first, but then the tried-and-true WALSH test saved the day. With the Worked,

Picture Man Hitting His Thumb with a Hammer Accident In State No Coverage

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Lived, Salaried and Hired part of the sub-contract being all in AZ, only the Accident part of the WALSH test was in UT.

The final resolution was the claim was paid for by the carrier with AZ-based benefits. The injured employee had to wait two months to receive benefits. He is now back driving for the same employer.

Bottom Line – just because an employee is injured in a certain state does not mean that is the state of jurisdiction. Trucking and transportation companies face this type of situation very often.

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Walsh Test Coverage For Employees Working In Multiple States

July 30, 2012 By JL Risk Management Consultants

Employees Working In Multiple States May Need Multiple State Coverage

Employees that are working in multiple states need to have coverage for more than just one state. Even though the Walsh Test can identify what state has jurisdiction, each state can have peculiarities to their laws. For instance, in the bullet points below had WLSH all in one state. However, the Accident happened in a bordering state. This can become complicated.

Workers Comp coverage can be complicated at best if your company is operating in just one state. The situation becomes more complicated as your company expands into other states. However, you may be operating in states that you never thought possible.

I was trained on using the WALSH test for jurisdictions. You may want to follow the link to see the complete analysis of WALSH. A quick overview:

Clip art of Umbrella and Emoticon Injured Walsh Test

Worked
Accident
Lived
Salaried
Hired

Where the employee worked at the time of an accident is the most important according to this test. The rest of the considerations become less important as you proceed down the list. I had actually seen a Workers Comp court judge use a modified version of this list.

Companies and their workers are becoming even more mobile due to the economy and the expansion of certain companies. I had said the WALSH jurisdictional test was almost foolproof over 10 years ago. I am presently not as sure.

Graphic Businessman Holding Umbrella Multiple States Coverage

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For example, we assisted an insured that had a very complicated scenario:

The employee transported goods/supplies in a small truck and made deliveries in three different states – Arizona, New Mexico, Colorado
The company HQ was in Arizona
The driver lived in Arizona
The driver did not make any deliveries to Utah, but one day decided to take a shortcut on a rural road that ran through the very edge of Utah
The employee ran off the road and was seriously injured in Utah

The WALSH test says:

Worked – All three states mentioned
Accident – UT
Lived – AZ
Salaried – AZ
Hired – AZ

The employer had no coverage for UT. They expected the injured employee to file in AZ. He filed in UT. What does the employer do now? Check back with me tomorrow.

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Self Insured Pools – Are They Really Worth It?

July 26, 2012 By JL Risk Management Consultants

Self Insured Pools Are Really Worth It ?

Self Insured pools for Workers Compensation can be a great risk management technique. An employer that is not large enough to be self insured may find that pooling their premiums and risk with homogenous entities to be a great budget saving technique.

Vector Graphic of Hands With Plant Self Insured Pools Concept

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Self insurance pools have seemed to lose popularity over the last few years. I think some of it is due to bad press. Some of the reasons for the bad press was justifiable. There are a few areas to consider when joining self insurance pools.

Are the groups homogenous or at least somewhat similar. Predicting risk for a pool where the insureds are not related can be difficult. If you are a restaurant , would you want to be in the same pool with an oil transporter?
When do assessments from the pool occur?
If your company leaves the pool or if the pool fails, for how long can your company receive assessments into the future? We have clients that are still being assessed five years later.
Is the law of large numbers in place? How large is the pool? If you only have a few members and one of the companies has a very bad year, your company may have to pay very large assessments while having a great safety program.
How are the Mods or LDF’s calculated? How does the pool differentiate the risk among members?
Who is going to handle the claims? Some TPA’s are better than others.
Why did the prior members leave the pool?
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Are all the legal requirements met for each state? What happens if your company expands into another state or states?
As a member, what are your company’s voting powers? What voting powers does the administrator have in meetings? The administrator may have more votes than each individual member
What happens if the pool fails or is deemed insolvent by the state?
What happens to the claims if the pool fails? Does the pool pay into some type of state insolvency fund? This is very important as a way to avoid being stuck to handle your claims after already paying into the pool.
What percentage of the total operations budget is held back to pay claims? Most states consider any type of insurer or pool insolvent at less than 15%.
Who is the reinsurer? Can you obtain a copy of the reinsurance contract?

There are many other considerations. I wanted to list a few of them. The questions come from files that have been shipped to us to handle after a pool fails and there was no backup. I basically reversed engineered the questions.

Picture Hand Holding Credit Card Self Insured Pools Close Up

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Bottom Line – pools are great for self insurance if properly investigated and all angles have been examined before joining the pool. I may be a little jaded to them as we have had to handle many claims where:

The pool failed.
There was no state backup to handle the claims.
The reinsurance contract gave the reinsurer an out.
The claims had not been adjusted for over 90 days.

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Modified Self Insurance – Caveat On Risk

July 25, 2012 By JL Risk Management Consultants

The Modified Self Insurance

Captives, large deductibles, and other types of workers comp modified self insurance are now gaining great importance due to the present economy. All companies are now searching for a way to insure for Workers Comp accidents at a reduced rate. One of J&L’s specialties is providing alternatives to traditional insurance programs.

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Basic self Insurance, captives, large deductibles, self insurance pools, and other types of self insurance have their pros and cons. Regardless of the type of self insurance, your company is directly “on the hook” for the losses.

Reinsurance may be a great stop-loss measure for a single large claim or a string of unanticipated accidents when compared to a loss history. Until the aggregate (large number of claims) is reached or a single accident payout reaches a certain level, your company is on its own when having to pay Workers Comp benefits.

There is a large amount of interest in captives from almost all of our medium to large sized employer clients. I wanted to cover an important point about captives. Captives are the “cutting edge” of self insurance presently. There are many new terms with captives such as:

Fronting company
Protected cell
Parent company
Domicile

I wanted to clear up any confusion about who funds the captives. Captives (as with self insurance) are funded somewhat indirectly out-of-pocket by the employer. If your company’s risk tolerance is not to the level of being self insured, a captive may not be for you. There are also upfront costs that can be substantial when establishing a captive or even a rent-a-captive.

I do not want to discourage any company from seeking any type of insurance program that may save funds that can be used elsewhere in a budget. However, it is a giant task to commence a self insured or modified self insured program and then decide that is not the desired type of program.

I will cover some of the other modified self insurance programs next time.

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LIBOR Scandal And Hard Markets

July 24, 2012 By JL Risk Management Consultants

Hard Markets And LIBOR Scandal

Wikimedia Commons – Fletcher6

I was reading a great article on the LIBOR scandal that will likely make Madoff and the Wall Street scandals seem small at best. One of the main concerns that I hear floating around in conferences and among clients is the soft vs. hard market for Workers Compensation.

I do not want to just redo the article in the above link. One of the great quotes from the article is:

If LIBOR was manipulated, the results could be far-reaching. Since LIBOR is the benchmark for many other rates, an inaccurate LIBOR means millions of people all over the globe might have paid more or less interest than they should have. If rates were artificially low, borrowers for things like adjustable-rate mortgages and student loans would have benefited. But investors like cities, mutual funds, and pension plans may have earned less than they should have.

The extent and impact of LIBOR manipulations is still unknown. The effect on the average consumer is probably small, but as the professor in the video above opined, it could be measurable to people with large loans tied to LIBOR, like those with adjustable-rate mortgages.

As you can see, the insurance markets will likely be heavily affected overall. There are insurance investments that were tied to the LIBOR. The overseas investments of the very large carriers and brokerage houses will be affected directly.

Wikimedia Commons – Fructibus

In my opinion, the adjustments and corrections to the LIBOR will be felt worldwide. The major overseas index was manipulated so that banks/investment companies such as Barclays could make even more money.

If you notice from the above passage that any large organizations that would have benefited from higher rates received an artificially lower rate of return. The other side of the coin is to say that markets will stay soft now that the correction of the LIBOR is in place.

The overseas investments markets are now very volatile. The volatility of investment markets will make the market more susceptible to a market hardening. Insurance carriers need to have a stable market to properly set rates. One of the major considerations for setting rates is ROI (return on investment). If the markets are not stable, the carriers must look to their policyholders as being the stable element in their portfolio.

Bottom Line – I am not inferring a hard market is coming soon. Carriers may look to underwrite the safer companies, and with the changing of the E-Mod formula, a hard market acceleration could occur very rapidly. The best advice is to be prepared at renewal.

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Workers Compensation Audits For Public Employers Hits High Point

July 23, 2012 By JL Risk Management Consultants

Audits For Public Employers Upcoming

Premium audits for public employers are about to increase dramatically.

Vector Of Public Employers World Map Background

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Most public employers have a renewal date of July 1. Your auditor should be contacting you, if they have not already done so recently. The highest number of policies for private employers renew on January 1.

The time cycle for audits is usually 30 – 45 days after your policy expiration date. I always recommend, especially with larger employers, that any mail from the carrier be handled by one person. I have seen large public and private employers receive a non-compliance audit because the letters from the carrier had either been destroyed as junk mail or routed to the wrong department.

If there is no premium audit appointment set after a few letters and time passes, the auditor can actually increase the estimated premium audit up to 300% of the estimate. The premium auditor would have called by then, but if the letters advising of an upcoming audit go unanswered, then the auditor’s phone calls are likely not being routed to the right person either. I have seen this happen more than a few times.

There are a few dubious companies that have written books or have a website that will guarantee they can prepare you for a premium audit weeks before the auditor arrives at your workplace. As with the case a few years ago in South Carolina, that is not a good choice. There is nothing wrong with having someone assist your organization at the time of the audit. There are a few reputable companies that may help your company before the audit. It pays to be very careful.

Vector Graphic of Public Employers Of Premium Audit

As always, the best advice is to have everything organized. Getting together a ton of paper for the auditor to review is not always the best tact. If you review the premium auditor’s letter, they will usually ask to have certain documents prepared for their visit.

Organizing those documents with a spreadsheet cover will help the premium auditor and your company finish the audit quickly and accurately.

One of the questions I receive – sometimes right in the middle of a premium audit – concerns allowing the auditor to take records offsite. There is nothing in the rules that say you must comply with this request. I do not recommend it.

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North Carolina Industrial Commission To Hold Public Hearing

July 19, 2012 By JL Risk Management Consultants

North Carolina Industrial Commission Holds Upcoming Public Hearing

The North Carolina Industrial Commission will hold a public hearing on on all the upcoming recommended changes. Workers Compensation rules changes are coming to North Carolina in a big way. If you follow the link in the last paragraph, you can see all of the proposed upcoming changes to the North Carolina Workers Compensation rules. There are many upcoming changes.

Public North Carolina Industrial Commission hearing

Wikimedia Commons – Voice of America

The changes will affect:

There are many types of stakeholders in Workers Compensation for North Carolina that may be heavily affected such as:

Adjusters
Underwriters
Rehabilitation nurses
Bill processors
Attorneys
Medical providers
Consultants
Agents.
Medical network providers

If you are unsure whether this affects you directly or not, follow the link and read through the sections or print them out and read them closely. These are sweeping changes on how Workers Comp is handled in North Carolina. I wish I could have included this in the blog earlier. I just received the information last night.

In compliance with the Administrative Procedure Act, the North Carolina Industrial Commission has published proposed changes to its rules. The Notice of Rulemaking, the text of the proposed rules, and the fiscal impact analysis can be found here..

A public hearing on the rules changes will be held on August 6, 2012, beginning at 9:00 am in Room 2173 of the Dobbs Building located at 430 North Salisbury Street, Raleigh, North Carolina 27603.

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Safety And Risk Management Departments – Are They Really Worth It?

July 18, 2012 By JL Risk Management Consultants

Safety And Risk Management Departments – Worth The Expense?

During workers comp premium and review audits, I have pleaded with companies to keep their risk management and safety departments as fully staffed as possible. Workers Compensation safety and risk management departments have been pared to the core during the great recession.

Picture of Safety and Risk Management Department Ways

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One of the reasons is there are no tangible effects that can be easily measured. Workers Comp is a lagging system meaning that results for a great safety and/or risk management program usually show little effect for at least 18 months. The full effects will not be known for up to 54 months.

The bell is now going to toll for companies that greatly reduced or eliminated their risk management and safety programs. The NCCI has changed the rules of how Workers Comp E-Mods (Mods) are calculated for each insured.

The primary loss portion of the claims is going to increase from:

Rope Risk Management With Knot In The Middle

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I pulled data from one of our clients and simulated what their E-Mod would look like under those circumstances. There are three articles on what their new E-Mod with the changes. It was not pretty. Click on each bullet point numbers to see the effects of the upcoming NCCI changes

Basically, the NCCI has sent a message to unsafe higher E-Mod employers that they are going to have a much increased E-Mod and will be paying higher Workers Comp premiums.

The easiest way to avoid being thrown into the coming E-Mod hurricane is by not having any accidents – plain and simple. The E-Mod systems are designed to not punish employers that have one bad accident. However, accident repetition is going to cause any employer to write massive premium checks in the future.

Any employer that reduced their claims or risk management staff should reconsider that tact. I do realize these are hard times. Safety and risk management departments are golden to employers for the next four years.

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FIO – Federal Insurance Office – Workers Comp Federalization

July 17, 2012 By JL Risk Management Consultants

FIO – Federal Insurance Office – Shocker

I read an article in a few of the major news outlets that somewhat shocked me. The shock was not too significant as I had predicted months ago that the Federal Insurance Office or FIO just being involved in international insurance matters was somewhat of a farce.

The department Of The Treasury Badge Federal Insurance Office Workers Compensation

Wikimedia – Francis Hopkinson

We all love it when we are proved accurate. I had warned many times the FIO was going to grab power to the point of Federalizing Workers Comp. A blatant start to the FIO covering more turf hit the insurance airwaves within the last few days.

Congressman Edward Royce from California has asked the FIO to look into exactly what status the National Association of Insurance Commissioners (NAIC) holds in its basic operations. He is concerned the NAIC is actually promulgating interstate regulation of the insurance industry. The NAIC is actually not important to me in the issue.

Woman Holding Umbrella Federal Insurance Office On The Beach

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Where does the FIO actually possess this authority as their Director is now investigating the NAIC? The FIO was created to oversee any federal systemic risk . The FIO now may look to regulate any insurance carrier that would cause a systemic risk. The systemic risk idea came from the AIG bailout fallout.

As a side note, the Congressman introduced (drum roll, please) legislation initiating federal regulation of the insurance industry. Are you ready for another shock? The FIO reports to the Center for Medicaid/Medicare Services. (CMS)

I wrote quite a few articles on the Death of Workers Comp as we know it. This may not be the start of the process, but where there is smoke – there is fire. As a caveat, RIMS backs the federalization of insurance as a way to save money.

I have often said if you are a WC adjuster, underwriter, agent, etc. you will need to be very flexible over the next few years as to how your job will morph over time.

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Are California’s WCIRB XMods Changing Like NCCI’s EMod System?

July 16, 2012 By JL Risk Management Consultants

California’s WCIRB XMods Resemble NCCI E-Mods Now

Are California’s WCIRB XMods changing to be more like NCCI‘s EMod system ? Will X-mods from CA’s WCIRB have a split-point increase similar to the NCCI’s E-mods? I received this question in my email over the weekend.

Graph And Blue Arrow Increase California's WCIRB XMods Like NCCI's EMod System

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The changes to the EMod system are basically going to increase the primary loss part of the claim reserves in 2013 from $5,000 to $10,000. The split point will then increase to $13,000 in 2014 and then to $15,000 + some unknown inflation factor in 2015. Almost all the states have accepted the new primary loss (split point) increases.

There has been much debate whether or not there will be a negative impact on the overall NCCI ratings. NCCI has basically said no. In my opinion, we will know in 2016 after the overall effect of the primary loss (split point) increases. The split point analysis will definitely have a look-back characteristic.

CA’s rating bureau – the WCIRB has said up until today there is no such split point increase on the near horizon. A few years ago, I wrote this article on how the WCIRB is becoming more similar to the NCCI each year. Does this mean the WCIRB will follow suit?

Split Point Arrow California's WCIRB XMods Vector

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I read over the WCIRB’s main website. I saw no articles on their main page that would indicate the split point is increasing. The WCIRB currently differs with the NCCI on the split points. The NCCI is at 5,000. The WCIRB’s maximum primary loss (split point) is currently $7,000.

The WCIRB will likely have to change the split points eventually. A reporter that I spoke with last week from CA seemed to have a wait and see attitude on any upcoming WCIRB changes.

The bottom line is whether you are in CA or in any state, your company’s safety and risk management are going to be very worthwhile investments. The WC accident that never happened is the best company budgeting technique. This technique will become even more prevalent as the rating bureaus change the rules.

©J&L Risk Management Inc Copyright Notice

Workers Comp Savings With Two Hours Of Your Time

July 12, 2012 By JL Risk Management Consultants

Workers Comp Savings in 120 Minutes – One For Company Piggy Bank

A Workers Comp savings plan should not cost hours of your time. One of the first premium reduction questions that we often receive in inquiries is how can we cut our Workers Comp costs and not spend days/hours/weeks on it.

Picture of Employee Sitting on Big Piggy Bank Workers Comp Savings Two Hours Of Your Time

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There are no quick fixes in reducing WC premiums. In our experience, we have found four ways to efficiently and effectively cut an employer’s insurance program costs.

Explore all your insurance options. Obtain quotes from several different sources. We recommend that you have more than one agent explore the market for all lines of insurance, not just WC. A certain independent agent may not be able to write with all the insurance carriers. An agent that works with one carrier, of course, cannot explore coverages outside of their employer.
Make sure your agent, insurer, or state fund completely and accurately understand your business and its operations. We have seen so many employers being overcharged as their agent and/or insurer just placed the companies into certain categories and left them there year after year, even as the employers’ businesses evolved. What your business did 10 years ago may not necessarily reflect your current company.
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Check with others in your line of work. A company that produces the same product or service as your company may be receiving a better deal on their insurance coverages. An association is a great avenue for this recommendation.
Join an association. The statistics that we have generated show employers that have joined an association with similar companies tend to have lower Experience Modification Factors (E-mods) than their counterparts that were not a part of an association. The basis for this finding is still unclear, but the employer/association trend is very strong in favor of being in an association.

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Workers Comp PPO Networks – Are They Worth It?

July 11, 2012 By JL Risk Management Consultants

Workers Comp PPO Networks vs PPO Reduction Stacking

Are the Worker Comp PPO Networks worth the trouble? Workers Comp medical treatment networks have become a very diverse network. It was too long ago that there were only physician and hospital networks serving the WC community. That time has long since passed.

Picture of Doctor PPO Networks Are They Worth It

There is a network for almost any type of medical service. There are now networks that administer to other networks. The subject covered today is actually not the specialty networks. I am referring to the doctor and hospital networks only. I will cover specialized networks in the future.

Most medical treatment networks are associated with the medical bill processing and review company that carriers or TPA’s provide when an employer utilizes their services. The cost is sometimes bundled in the claims cost or unbundled as a separate service.

Most Preferred Provider organization (PPO) networks will reduce the bill 15% in addition to and after the fee schedule reduction. That is the norm and may not apply to each state or situation. One of my concerns is that too much emphasis is placed on getting the 15% while the medical costs of using a network provider may end up costing over 1000% more than the 15% reduction.

If a physician in the network writes the employee out of work for 6 months, when there was a modified duty job available, the aforementioned 15% becomes an insignificant and unjustifiable savings.

PPO reduction stacking now causes great concern amongst the providers. In other words, how many 15% reductions can be stacked against a provider?

My recommendation is to use a network that already has the industrial minded facilities that you are working with on a daily basis. You will have a win-win-win-win-win situation which is very rare in Workers Comp.

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The wins are:

Employees receiving proper trusted medical treatment
Fee schedule is applied
PPO discount is applied
More rapid return to work
Excessive medical treatment costs are reduced
Communications between carrier/TPA, employer, employee and medical providers are easily facilitated

I am not inferring that only familiar providers in a network are to be used overall. The files that we have reviewed seem to have reduced costs for medical treatment when the industrial-minded provider is in the PPO network.

If one of these familiar providers is not in your network, you can always nominate them with the network. The network will very likely reach out to them to see if they want to join the PPO network.

There are EPO (Extra Preferred Provider) networks that can save even more on the medical treatment. They are becoming more popular each year. These companies carve out a medical treatment network out of your existing PPO network.

The bottom line is Workers Comp PPO networks can be a great cost saver when used judiciously.

Workers Comp Reserving Is Art – Not Science

July 10, 2012 By JL Risk Management Consultants

Workers Comp Reserving Is An Art

Should Workers Comp reserving be compared to a Picasso? One of the most difficult tasks that Workers Comp adjusters face (especially inexperienced ones) is setting the reserves on a file. A large number of people seem to think the reserves are just automatically calculated and this is the way that reserves are set on a claim.

The first time I had come across this was examining a loss run from one of the state funds quite a few years ago. The adjuster had responded to an email saying they did not necessarily agree with the reserves, but they did not want to change them as the unnamed system had set the reserves.

The file, at the time, was horribly over-reserved as the medical circumstances had changed dramatically. The file was going to really affect the insureds E-Mod/X-Mod. I had to actually talk to a VP-level employee of the fund to have the reserves reduced even though the file was obviously top-heavy on reserves.

I should take a step back. The reserves in the file are Total Incurred = Paid + Reserves. The total incurred figure is what the insurance carrier will report to the rating bureau or NCCI. That is why reserves are so important. Reserves are the outstanding funds that are charged to the employer’s E-Mod/X-Mod beyond what has been paid.

Graphic of Person On Puzzles Workers Comp Reserving Is An Art

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In the previous example, the Workers Comp system sat the reserves with little input from the adjuster. This can cause great complications as each injured worker will heal differently. Each employer will have a different set of return to work values – not all employers have light duty programs.

As any experienced Workers Comp adjuster will attest, the numbers of years of experience adjusting in a certain territory, state, or with certain employers will result in the most accurate reserves. There is no substitute for experience in this area, no matter how great of a WC computer system is in place.

Adjusters have a great balancing act that is performed with reserves on a daily basis. If the reserves are too high, the employer could be overcharged for funds that were never actually used to pay benefits. If the reserves are too low, the carrier, and in turn the employer has to adjust for large unexpected reserve increases.

Hand Illustrating Dollar And Man Workers Comp Reserving Balancing

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That is exactly why reserving is an art, not a science. Applying some multi-variable statistical function to a claim is never going to result in the claim having the proper reserves. The statistical generator may be good in the short term, but usually is not that accurate in the long term.

An experienced WC adjuster should be able to override any reserve that is within their authority levels. Let the artist paint on their canvas. If there is a stat package that is calculating the reserve, then an adjuster should be able to make the reserves fit the file.

Why did I write this article? We just received in a loss run from a statistical generator-type reserving system. The reserves are not even in the ballpark.

Large Deductible Program X-Mod (EMod) Surprise For Employers

July 9, 2012 By JL Risk Management Consultants

Employer With Large Deductible In For A Possible Surprise

I received a phone call over the recent holiday from a previous client. The company had switched to a large deductible Workers Comp program a few years ago. I did not recommend the program. I had previously thought there were more viable alternatives.

Picture Graphic Of Diagram With Calculator and Pen Large Deductible Surprise For Employer

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The reason for the call was they were considering leaving the large deductible environment due to downsizing in the present economy. They were under the impression they would start over with a new 1.0 X-Mod (E-Mod). Their current XMod is 1.32.

They were somewhat shocked to find out their carrier had been reporting an X-Mod to the WCIRB (California’s rating bureau) the whole time they were under the large deductible program. I had actually posted on Large Deductibles and Mods in April, 2010. I wanted to bring up the issue again.

If your company is in a large-deductible or any type of deductible program for your WC coverage, your company is not outside of the Workers Comp system. Your company is still in the same process, only you are charged differently for your claims handling.

As long as your company is paying a premium for coverage and satisfies the minimum standards to receive an Experience Rating, there is an X-Mod for each year your company has been in business. You can check your rating bureau for your Mod or email or use the Contact Us page and we will secure a copy of your current and past Experience Mod Sheets for you.

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The Mod calculations are just not for California. The same applies for all states. I am not deriding large deductible programs. I am a little concerned no one explained to them that they will still have an X-mod calculated each year.

I suggest setting up a diary entry to review your company’s E-Mod/X-Mods unless you are self-insured or not large enough to have an E-Mod (X-Mod) tabulated each year.

North Carolina’s Governor Perdue Signs HB 237 Amendments

July 5, 2012 By JL Risk Management Consultants

North Carolina’s Governor Perdue Signs Important Inter-agency Disclosure Law

North Carolina now has a measure on the books that will enable a heavier enforcement of the requirements to purchase Workers Comp insurance. Governor Perdue signed the bill into law with very little fanfare. The budget and fracking bills received much more press as she vetoed those bills.

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HB 237 and the new amendments now make it easier for the Industrial Commission, Department of Insurance, and the North Carolina Rate Bureau to exchange information on which companies are uninsured for Workers Comp coverage. Workers Compensation coverage is not required for companies smaller than 4 workers.

The one main area of concern was the press. Many newspapers had expressed their disappointment with the inclusion of a clause that makes all the information private. This was irony in its true sense.

A newspaper reporter (not any governmental agency or rating bureau) performed with great investigative skills by comparing two different databases to discover there were/are 30,000 companies without Workers Comp coverage.

Could this investigation be done again in the future? The answer is a definite no. The databases are now private – so much for a transparent government. I assume a news outlet could take the North Carolina Rate Bureau and the NC Department of Insurance to court to look at the same documents.

Who or what agency is now going to monitor and enforce the compulsory WC insurance requirements? I am assuming it is not the NC Industrial Commission. The allegedly transparent government of NC became a little more opaque today.

Class Code 8810 – Magical Mystery Code

July 3, 2012 By JL Risk Management Consultants

Workers Comp Code 8810 aka Class Code 8810

Class Code 8810 also known as workers comp code 8810 is one of the most misunderstood classification codes in Workers Comp. We receive a very large number of emails and phone calls on this subject usually just after an employer’s yearly premium/payroll audit.

Graphic Of Class Code 8810 Large Numbers

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The premium auditor has switched some of the employees to include more expensive classification codes. This has resulted in a much higher than anticipated final premium bill. We will usually hear that the switched employees had been classified as 8810 employees for many years. Why did the insurance auditor switch them from 8810 clerical?

I have posted on this business subject often. You may want to perform a search on the blog and input 8810. The search box is down the screen on the right side. I will link to some of the posts in this article.

Class Code 8810 is a standard exception code along with class code 8742 in most states. The quick definition of the code is a clerical office employee. These employees are considered to be in the safest work environment in most companies. The risk is very low for injury. The result is a very low rate for these employees.

Hand Presenting Class Code 8810 With Magnifying Glass

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If your company is in a risk pool or assigned risk, the difference can be astounding between 8810 and other classification codes as assigned risk rates are usually very high.

If you receive a premium audit report where any or a large number of employees have been switched to other codes, the premium auditor must explain in full detail why the class codes were changed during their audit.

You can sometimes find them in the audit workpapers that the auditor produces during the audit. If you did not receive a copy of those papers or electronic file (often a spreadsheet), you may want to request a review copy.

Even if the audit was completely performed using software, the auditor will input explanations. You may find those in the miscellaneous notes section. If you find that the employees should have been classified as 8810, you may want to initiate an audit dispute.

If you feel like you may need advice on whether the move from 8810 was correct or mistaken, call in a premium expert to help your company. You only have one shot to make the correct dispute with your carrier.

Obamacare And Its Effect On Workers Compensation

July 2, 2012 By JL Risk Management Consultants

Obamacare And Its Effect On WC

The Obamacare And Its Effect on WC. Obamacare has hit the airwaves very heavily due to the SCOTUS’s decision last week. Can Obamacare’s influence even reach into the Workers Comp world? I stepped into the fray in 2009 by coining the term from the result of Workers Comp interfacing with Obamacare as Obamacomp. I wrote this article on Obamacomp almost three years ago.

One of the most read articles in this blog is on The Death of Workers Compensation that I wrote over two years ago. I received very angry emails from the article. I meant the article as a wake-up call to Workers Comp insurance personnel to be flexible and to attain as much education as possible.

I recommend WC begin looking over health and long-term disability information. This would provide a background into the health area in case Workers Compensation is federalized into Obamacomp.

If Obamacare survives through the next voting cycle, the idea of Workers Comp being provided on a 24-hour health policy with an add-in of disability payments could be a viable alternative when examined by the Federal Insurance Office. The FIO has really s

tayed away from interstate insurance transactions. I think they will expand into the area in the next 5 – 7 years.

Wikipedia – Pete Souza

The AFLAC model is a very easy way to look at how the payments and healthcare would be administered if more of Workers Comp was federalized. AF

LAC does provi de medical and disability payments to persons that have enrolled in one of their policies.

I have read in some of the LinkedIn posts and in a few articles that medical payments for Workers Compensation would lessen as with Romneycare in Massachusetts. I would have to disagree as there were heavy WC reforms enacted in Mass in the same time period as Romneycare.

The other difference is the scale of just one state as compared to a nationwide change. If WC medical payments do decrease, it will be a much needed break for employers.