NCPRIMA Presentation Work Comp Advice For Public Risk Managers

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The Full NCPRIMA Presentation With Slides Included 

Last week, I presented at the NCPRIMA Annual Conference.  The slides for the full NCPRIMA presentation can be found here. We received a few requests for a transcript of the presentation.  The rest of this post follows the slides.  The presentation was aimed at public Risk Managers. There are quite a few points that also apply to private industry.

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Analyze Trends Not Paperclips – basically paying attention to one big claim, or variable may not be the best way to analyze Workers Comp risk.

Counting paperclips is an old adage that means to not “sweat the small stuff”.  The easiest method to examine WC risk is by sticking with trends.

Identifying trends that impact cost – Hundreds of analyzable trends exist in WC.   The key is to identifying the trends that are affecting your WC program the most.  The most popular trends in our claims data are:

• Insurance carrier/Third Party Administrator (TPA)

• Adjuster

• Type of claim

• Accident type

• Body part

Two charts of the same data are included in slide 3 and 5.   They are basically the same data.  We had a Virginia public employer ask us to assist with what they thought was over-reserving by an adjuster.

We examined the data and found the adjuster on their files actually had performed well.  If one enlarges the charts,  there is an obvious trend.

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The department 991 had more larger claims.  The conclusion we drew that if the $$$ is ignored and the trend is analyzed, the public entity needed to  focus on the safety of Department 991, not the adjuster.

 

Develop a Mechanism for Tracking and Analyzing Trends

– Turn the chart sideways – as in our prior example, something as simple as rotating a chart is a simple yet very effective way to look at the numbers.

We have had more than one statistical intern – that knew nothing about WC claims – refer to claims as anomalies or outliers.   They considered claims as aberrations or a system failure.  Interns are great for unbiased opinions.

– Excel® is a great choice – The 2013 version has many statistical packages (and it is free to most public employers).

– Most software is free – There are many other free statistical packages that analyze data.  The internet is full of them.

SourceForge.net (caveat) – a great place to find free statistical packages.  The caveat is some of the software may not work.  Most of it has been checked for malware or viruses.

LDFs and E-MODS

LDFs and E-MODS Defined  – click on the links for the definitions

• Individualizes claims experience – one of the basic underpinnings of E-Mods – click here for more info.

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• Should know last three years –  a public risk manager should be able to quote the last three years’  E-Mod or LDF.  These are similar to your personal credit score.  Not knowing them is going to make your job much more difficult

• LDF’s – basis for budgeting – if you have not had an LDF calculated for the self insured part of your program, you should obtain one soon.  LDF’s can make basic budgeting much more easy for the public risk manager.

Large deductibles still reported – much to the surprise of many Risk Managers and company owners, large deductible policies do not remove your organization from the E-Mod system.  Your E-Mod is still reported and calculated in almost all instances.

– Impact of LDFs and E-Mods on Cost – there is a direct relationship between these two numbers and your budgeting. These are basically the scores of your safety and risk programs.

Access = $$$ The Value in Monitoring

Online claims access – Full – this is one of the best ways to control and monitor your WC program with your TPA or carrier.   Having immediate access to your WC claims will save your program $.

– 20% added value – In my humble opinion, having full claims access is worth 20% the value of what your entity pays a TPA or carrier.  When your TPA or carrier quotes your organization for WC, make sure you have reviewed their online claims system.

– Status reports – these are golden for Risk Managers.  They are basically the Executive Summaries for each one of your claims.  These are great time savers if they are provided online.

– Emailing adjuster – calling the adjuster will usually result in he/she saying that they will have to pull the file and get back with you.  This is one the major concerns that adjusters bring up in conversations about their insureds.  Emailing an adjuster allows time for a response and provides written documentation on both ends

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Subrogation – defined follow the link.

– Identifying and Assisting in Recovery – This is where we see the most money being wasted in public or private funds.  Often, recoverable $$ is left on the table.  A simple letter or identification of a third party can recover funds spent in WC.

Opportunities

• First Report of Injury- give the adjuster as much information upfront on everyone involved in a WC accident may flag the system for subrogation from the start.

• Accident investigation forms -these are priceless for informing the adjuster of an accident scenario.  The more info that can be shared the better.

• Communication to adjuster – as the first two bullets in this section have pointed out, communication with the adjuster very important is cases of possible subrogation.

Maintaining a Subrogation Diary – this link will describe a subrogation diary.  As a Risk Manager, it is up to you to keep monitoring any recoverables.

• Outlook® Calendar – easiest one to use

• 60, 180, 365, adjuster change – communicating with the adjuster at these times in the claims can assist in recovering your subrogation funds.

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Adjusters have been trained very well in Workers Compensation,   However, as a former all lines adjuster, recovering subrogation funds switches the file from WC to liability.  Liability adjusting is a different world than WC.

WC claims have many changes such as the adjuster or TPA assigned if assuming tail claims.  The diary enhances the tracking of subrogation $ as the claim progresses through changes.

The blog with much more information is at blogs.cutcompcosts.com – presentation with

links to articles that I referenced

One area that I could not over is the Six Keys To WC Savings.  Go to the blog and type in Six Keys to find that discussion.

• Six Keys To Cutting WC Costs

©J&L Risk Management Inc Copyright Notice

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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