Archives for October 2017

Independent Contractor Employee Checklist Employers Contractors

October 31, 2017 By JL Risk Management Consultants

Progressive Insurance Workers Comp Commercial Mentions Replacing Injured Worker

Progressive Insurance Workers Comp comment caught me a little off-guard with one of Flo’s(r) comments. The comment is not in print on their Workers Comp or Commercial Insurance webpages.

Leather Apron Progressive Insurance Workers Comp Pic

Wikimedia Public License

Binging on a Saturday of college football and finding information for an article was a win-win-win this weekend including our article and newsletter readers.

The Magic Apron (r) commercial was found on YouTube. YouTube never fails for anything video.

I would have pointed you right to the comment but doing that can crash certain browsers, especially one using multiple firewalls.

Flo actually says that Workers Compensation can help you replace the injured employee. The comment is 19 seconds after the beginning of the commercial. I found that comment interesting.

Workers Comp has always been centered on providing the injured employee that has a rightful claim with timely benefits and return them to work as soon as practical. Yes, thousands of different interpretations of what workers compensation provides are in print and all over the web along with the blogosphere.

Flo pulls out a new worker out of her apron to replace the injured worker and comments that

Woman Wrapping Man Hand Progressive Insurance Workers Comp Injured

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“Workers Comp can help pay for you to replace the injured worker…..” <<<or something similar

I am not disagreeing with the comment. It does seem to go against the basis of Workers Comp. I am sure that each comment made in their commercials is researched, evaluated, and market-tested as advertising on college football cannot be done at a discount.

Noticing this comment is like Trekkies(c) pulling a sentence from Star Trek(r) and then commenting on it in a blog or article. However, this is a blog on Workers Comp, so I thought I owed it to the readers to mention the Progressive Insurance Workers Comp info.

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NCCI Workers Comp Medical Cost Discovery – PHC Best Measurement

October 18, 2017 By JL Risk Management Consultants

New NCCI Workers Comp Medical Cost Discovery – One To Definitely Download and Read

A new NCCI Workers Comp medical cost discovery was met with a suspicious eye by me. Then again, the study, summary, and whitepaper came from the venerable organization. NCCI (National Compensation Council Inc) is headquartered in Boca Raton Florida. The NCCI rates approximately 40 states in one form or another.

Hand Holding NCCI Workers Comp Medical Cost Wallet Full Of Money

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The article on the medical cost inflation comparisons can be found here. The full whitepaper is located here. You can download the whitepaper from that link – PDF file.

The three medical cost inflation measures are:

CPI – Consumer Price Index
PPI- Producer Price Index
PHC – Personal Health Care

Medical costs have long been a thorn in the side of many workers compensation programs. In the old days, the Indemnity Benefits dominated the payouts on workers comp claims. That day, however, has long since passed – sometime in the late 1990’s. Medical costs dominate the benefit payments. I see no end to this trend.

The measurement from the Bureau of Labor Statistics (BLS) and graphed by NCCI shadows Workers Comp costs very closely.

BLS NCCI Workers Comp Medical Cost Chart

If one compares the two columns on the right, the similarities are very stark. From the summary and the whitepaper, I gathered that the main reasons for the similarities are:

Utilization is measured more accurately
Year over year estimates more accurately represent the changes in treatment and utilization
The PHC consists of variables that come very close to Workers Comp

I may have over-generalized the comparisons. You may want to download the whitepaper provided by NCCI. Please see the above links.

According to NCCI , the stakeholders in the Workers Comp can benefit from using this new measurement –

Carriers, TPA’s, Self Insured employers – can use to set reserves and to negotiate with medical providers
Regulators – able to keep tabs on medical costs , better method of monitoring why medical costs need to change over time
Employers – to see why loss costs change over time
Employees – assist with providing proper access to WC medical care

If the NCCI workers comp medical cost measurements change in the near future, I will repost on the subject.

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Experience Mod Calculation Shortcut With 10 Ways To Reduce

October 5, 2017 By JL Risk Management Consultants

The Experience Mod Calculation Shortcut – Back To Basics

Lately, Experience Mod calculation questions have come into our offices at a very high rate compared to other subjects. The Experience Mod is also known as

E-Mod, X-Mod, EMR, etc. Many factors exist that can change your Workers Comp premium. The Experience Mod calculation seems to receive the most attention.

Simultaneous Experience Mod Calculation Formulas

Public Domain Graph

The formula can be simplified into:

What happened in our Experience Period / What The Rating Bureau Expects To Happen or even more simply:

Reality / Expectations

One big time caveat exists with the Expectations part of the formula – Expectations come from how other similar companies to yours have performed over the past few years.

If say, you are a construction company and construction companies have become much more safe in the state(s) that you operate and your company does not become safer, then you may have a higher Mod. Why? The Rating Bureaus have recorded much lower claims in the Classification Codes that represent your company operations.

Their expectation of claims (Total Incurred) has lowered.

Insurance Concept Experience Mod calculation Vector

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A low E-Mod does not guarantee insurance. Market forces sometimes will cause a company with a low X-Mod to not find coverage in the conventional Workers Comp marketplace. Many companies experienced this conundrum over the last 20 years.

How does one avoid being hit with a large E-Mod? Safety always counts. The complete E-mod system is predicated on rewarding safe companies and penalizing the unsafe ones.

I have attended Rating Bureau seminars, webinars, conferences, etc. where the presenters remarked – so that the safe companies are not subsidizing the unsafe ones. The NCCI changed their formula a few years ago to more heavily penalize unsafe companies.

The WCIRB has totally redone their X-Mod formula – actually twice for smaller companies. This formula looks to also penalize unsafe companies.

What to d0? 10 Ways To Possibly Reduce Your Experience Mod

Safety remains the key. We have seen companies cutting or eliminating their safety and risk management staff – rolling the workers comp dice. Higher penalties may now justify safety expenditures.
Make sure you are classified properly. Do the Class Codes represent what you do?
Review your policy, audits, and any other material you receive such as Policy Endorsements.
Reach out for assistance. No company is an island.
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Start talking to your broker/agent more than just at renewal
Review your loss runs all the time. If you have online access, get to it.
Always make sure you follow the Six Keys To Workers Comp Savings – written in the 1980’s by me.
Search the articles here (box at top right of page) for any questions you may have on Workers Comp.
Understand that Workers Comp takes many years to correct. Safety today = workers comp savings in the future. This is the wrong place for immediate gratification.
Look at your Schedule Rating Factor
Bonus – Join Associations and Safety Groups – we have noticed that companies that join associations and/or safety groups seem to perform better with their Mods – not sure why. #12 may explain this one.
Pay attention – companies that turn their attention to Workers Comp always save $$ in the long run. Weed the garden.

WCAN WCIRB California Workers Compensation – 2017

October 4, 2017 By JL Risk Management Consultants

WCAN WCIRB California Workers Comp Full Analysis (Great Charts)

The WCAN WCIRB California Analysis of Workers Comp consisted of many great charts. The WCAN (Workers Comp Action Network) provided a great link to a very thorough breakdown of everything you want to know about California Workers Compensation in 2017.

corona wcan wcirb california city picture

Corona CA Public Domain

The WCAN always provides a great summary. However, the California study at the WCIRB (Workers Compensation Insurance Rating Bureau) website contained a massive amount of information which no summary would do justice.

Please note the document is a rather large PDF file that may take some time to download. The WCAN summary is a one page document. WCAN appears often in articles on this website.

Even if you do not have California interests in Workers Comp, I heavily recommend downloading the WCIRB document. If you do not want to go over every chart, the last few pages of the study include a summary of each chart. These charts are priceless for a California Workers Comp presentation. The underlying data in Excel format can be found on page 3 in the link (page 1 of the body of the study).

A few of the highlights from the analysis are:

Business People WCAN WCIRB California Looking At Chart In White Board

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Chart 26 – Virginia, Louisiana, Alaska, and Delaware are more expensive for medical costs in indemnity claims.
Chart 29 – Opioid costs per 100 claims reduced by 2/3. Would any of the cost be due to cheaper/generic opioids/
Chart 31 – California has a very high ratio of unreported claims at the 12 month mark (cumulative trauma?)
Chart 36 – $1 of benefits cost 53 cents for delivery of that benefit (Wow!)
Chart 44 – The quick and dirty summary for California

Many charts cover other areas well. You may want to check out the other charts provided by the WCIRB.

I am often asked why do I cover California so extensively. California is one of the more complicated and expensive states for Workers Comp in the nation. The other main reason points to the Golden State often enacts laws and rules which other states consider using in their Workers Comp regulations.

The WCAN WCIRB California analysis should be updated in the coming months.