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Workers Comp Self Insured Resolutions for 2016

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Workers Comp Self Insured Resolutions

The Workers Comp self insured resolutions were originally written in 2013.   Yesterday, the overall resolutions for WC were updated for 2016.    You may want to follow the link to the old article for reference.  I am often reminded by our self insured clients to include articles that discuss self insurance advice.

 

Graphic Of 2016 Workers Comp Self Insured with Snowflakes at Background
StockUnlimited

Self insureds for WC should:

  1. Not think they are outside of the regular WC system.  Self insureds often say “We do not have to worry about ______ as we are self insured.”  Nothing could be further from the truth.   They may not have a Mod, but a Loss Development Factor should be calculated every year.  The LDF is very similar to a Mod.   The premium-paying companies are not that much different from a large deductible or a self insured program in this area.   Updated for 2016- This has been an area of improvement for self insureds over the last few years.   However, not obtaining or understanding their Loss Development Factors is still an area for improvement. 
  2. Realize there is a closer fiduciary relationship with their TPA than with an insurance carrier.
    Budget Workers Comp Self Insured planning
    Wikimedia Commons – Daniel Latorre

    There is no “buffer” that a Mod and premium supply.   The TPA is spending directly out of one of your budgeted accounts.  Reading over your TPA contract may produce some surprises.  Updated for 2016- Many of our clients and associates have begun to follow their TPA’s spending very closely.  As previously mentioned, reading over the TPA contract is critical at renewal. 

  3. Understand their TPA expenses.  Many self insureds pay attention to only the yearly cost to handle the claims – usually paid per claim.  Has your company considered the bill review, PPO network, rehabilitationnurse, and other TPA costs?  If not, you may want to obtain an analysis of those charges.
  4. Not think they are adjusting the claim.   Many of the self insured employers usually have a  Risk Management Department.  Managing risk and adjusting a WC claim are very different.  The TPA was hired for their claims expertise.  Monitoring the claim is excellent.  Calling every shot on a claim can be very costly.   Updated for 2016 – This is an area that has possibly worsened over the last three years.  There is a very fine line between Risk Management and claims adjusting in WC.   See #6 as a great way to manage the risk and not adjust claims. 

    Graphic of Hand Protect the Workers Comp Self Insured Resolutions
    StockUnlimited
  5. Periodically review their TPA’s performance on a random selection of claims.  This function goes beyond emailing questions to the adjuster.  Medical Only claims should be included in the selection.   Festering Medical Only claims are usually the ones that appear out of nowhere and are the most difficult to control.
  6. Updated for 2016 – This has become a very critical area for self insureds – Have a prescribed level of reserves, settlements, bill payments, that must be approved by the employer.    This level is usually in your TPA contract. If not, you should add it at renewal/bid time.   Making the TPA’s authority level too low can end up hampering your TPA’s ability to close claims.   In other words if the TPA has to check with the employer for everything, they are not adjusting the claim and the risk is not being well managed by the employer.

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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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