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Workers Comp Liability Subrogation – Vehicle Accident Steps

December 3, 2020 By JL Risk Management Consultants

Workers Comp Liability Subrogation – Seven Steps For Vehicles

What Is Workers Comp Liability Subrogation for auto accidents?  Let us take an example I have on my screen in front of me. The insured employers and adjusters working on this together allow for quicker recoveries from any third party in case of an automobile accident that results in a Workers Comp claim. 

Truck workers comp liability subrogation pic

Wikimedia Commons – Celica21gtfour

A great subrogation example and definition can be found here. 

This article points to use by adjusters.   Insured employers and others can help the claims staff do their investigation by assisting the adjuster.  Any time anyone can help the adjuster do their 13 job duties, the claims Total Incurred will be lower which will result in lower premiums. 

Self-insureds, you should pay attention as this article can assist you to return cash to your budget.  

One of my huge concerns right now in the insurance industry adjusters used to be trained in all lines of coverages such as:

  • Automobile  – we are talking about this one today
  • Premises Liability
  • Product Liability 
  • Contractor/Subcontractor Liability 
  • Miscellaneous  lines of insurance

The Seven Steps  For Automobile Accidents

  Improving your Workers Comp Liability Subrogation Investigation

Let’s go over the seven steps together – easy peezy.  One extra step is that if you feel you are in over your head then review it with your claims supervisor or manager and possibly local legal counsel or your staff legal counsel.  

Consult your claims manual in case it differs from my suggestions (not legal advice).  You can do this without having to use a service to do it for you. 

  1. Do not dismiss the workers comp liability subrogation accident.  Just because it does not look like a third party is not possibly responsible, do not just check the No box.    I have a claim right here in front of me where the adjuster did just that.   What the adjuster missed was the next step.  I am not being picky. 
  2. Obtain the police report.  This used to be a huge task.  With the advent of the internet, this step became easier.   Read the police report.  The address of the possible responsible third party shows up somewhere in the police report – very important.  Review who was ticketed.  If you cannot tell who is the third party’s insurer from the police report, use the Index Bureau (should be in your system.) 
  3. Take Statements – preferably recorded, or have the person write down what happened, sign, and mail it to you.  A file note that you talked to someone is not sufficient.   People tend to forget the specifics of the accident months or years later.  Caveat – if you take a recorded statement – offer to send a copy to the person giving the statement.
  4. Do everything in writing, not by email.  You may need to explain the actions you took on the file to a court or your attorney.   Priority Mail automatically tracks your letter or use Certified Mail.   Once you discover what insurer the possibly responsible party has for coverage, write them immediately, time is of the essence.
  5. Very important – once a third party has accepted liability, then adjust your reserves accordingly.  Do not leave unnecessary reserves on the table.  The rating bureaus, agents, actuaries, data reporters, and the insured employer will thank you later for keeping the appropriate numbers. 
  6. Make sure any funds recovered are posted to the file – should you leave the file open for the recovery?  Consult your claims manual or supervisor.   Reopening the file and forgetting to close a file that had a huge reserve can be very harmful to the insured – see my next article on that situation. 
  7. Big secret one that may save the subrogation – Call the Assistant District Attorney in the local county where the accident happened if the third party was ticketed.  Tell them who you are and that you have a subrogation lien on the file before the date of the hearing.  Why?  Because if the Assistant DA dismisses the ticket then your subrogation lien just faded away.   This suggestion should be reviewed by your supervisor and staff attorney before you make the call.  Do not run afoul of the local law in that jurisdiction or your own jurisdiction.  

These seven steps will help any adjuster with the Workers Comp liability subrogation of automobile accidents.   Insured employers may want to keep a diary of the file – see this article to accomplish that task. 

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: subrogation Tagged With: easy peezy, Index Bureau, jurisdiction, Mail automatically, Premises Liability

Workers Compensation Online Access Nets Insured $85,000 Subrogation

November 18, 2019 By JL Risk Management Consultants

Workers Compensation Online Access – Subrogation Claim Discovered

Having Workers’ Compensation online access creates $85,000 subrogation claims missed earlier by the insured.  How did this occur? 

burning fake workers compensation online access fake money

Wikimedia License – Clemensmarabu

I review claims for many companies as part of J&L’s services.   Recently, a new agency account asked me to review their claims and make E-Mod predictions for their client’s budgets.  

The insurance agency had the tough task of asking each carrier for online access.  I usually require online access so that I do not miss anything.  The following example stands out why online access = premium $$$ saved for employers.  

I accidentally came across a closed claim where no attempted subrogation recoveries were attempted by the adjuster.  The file reflected 100% liability by the driver of another vehicle involved in an auto accident.   Why was the file closed without pursuing subrogation?   

The adjuster notes subrogation possibilities on the file.  The file settled for approximately $85,000 in total payouts.   Would the Workers Comp file receive all of the $85,000  paid on the claim? 

Receiving all $85,000 back as part of an auto liability claim rarely, if ever, happens in Workers’ Compensation.   As the old saying goes, “It never hurts to ask.”   Subrogation funds left to sit on a file means one of three things – the adjuster  was:

  1. Overloaded and closed the file without pursuing the funds.   
  2. Never trained in subrogation and how to pursue a third party 
  3. Switched mid-file to another adjuster who performed a quick review when they received the file. 

Please note – I am, and no one should place blame on the claims adjuster.  The supervisor or manager should have caught this as the file authority levels reached beyond the adjuster’s reserve authority.  In other words, the file had to pass across a few more desks than just the adjuster’s review. 

The claim occurred in Rhode Island – The Ocean State.   Some states eliminate or severely limit a workers’ comp insurer from pursuing any possible responsible third parties.   Rhode Island has a case on the books where there was an anti-subrogation angle.  The case does not likely apply to this situation. 

If an employer or anyone has workers compensation online access to the files, the answer usually appears in the file very early during the initial investigation.  Claims staffs discover subrogation at the outset of the claim.   

The first report of injury usually has the subrogation information included.  Always ask for a copy of the police report on any auto accidents.  

Adjuster’s Action Plan 

Check out my recent article on what the claim adjuster’s action plan reveals concerning a claim.   The usual claims action plan covers:

  • What has occurred on the claim
  • The adjuster’s actions due to the past claim occurrences 
  • Upcoming expected occurrences 
  • Adjuster’s plan for the upcoming claim occurrences 
  • Reserve levels 
  • Closing plan

The list above covers the overall plan.  My recent article covers many questions that an action plan answers very quickly.   Still yet, Workers Compensation online access allows the employer to team with the claims staff on the claim.  Online access also cuts down on calls and emails on the status of a claim.  

The claims adjuster will often cut and paste their action plan and status and email to the employer.  Why waste the adjuster’s time when they could be working on your files?  

As I have said often, a claims adjuster works on a file for a limited amount of time.  Why have them spending time cutting, pasting, and emailing what shows in the file login screens if you have workers’ compensation online access? 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Online Claims Access Tagged With: E-Mod, subrogation possibilities

Waiver of Subrogation Endorsement – Excellent Analysis Chart

October 11, 2019 By JL Risk Management Consultants

Misunderstood Waiver of Subrogation Endorsement – Why You Should Read Your Workers Comp Policy 

The Waiver of Subrogation Endorsement appears in almost all workers’ comp policies.   Almost all workers’ comp personnel and insureds do not ever read any policies.  Who wants to read 40 pages of droning on when the Dec Page covers everything one needs to know concerning a policy?   Please think again on that point.   Endorsements can change the face of a policy dramatically. 

picture waiver of subrogation insurance office

Wikimedia – François GOGLINS

Many articles appear in this blog on Subrogation.   The search for those articles can be found here. 

If you check out a few articles written on endorsements, the need to be aware increases for any Endorsements which insurers add at the time of policy inception (start) or during the policy period.  Check out this article on the parts of a policy and this one on Endorsement. 

The Waiver of Subrogation Endorsement always meant (in my opinion) the carrier desires to retain the right to bring a lawsuit against any third parties.  The insured employer signs over those rights at the time the beginning of and during the policy. 

The insurer wants an unfettered ability to recover any claims monies spent out with adjusting a claim.  Of course.  the insured would receive a credit for any recovered subrogation funds.  The carrier is Supposed To file correction reports with the rating bureaus (NCCI, WCIRB, etc.) that may result in a lower E-Mod for the employer.  

Each employer willing to waive their right to recover from or litigate receives a credit.  Pull out your current policy or an old premium audit bill or statement.  The credit appears in both,  along with a nominal refund of sorts.  

Understanding and applying the waivers may be of great benefit to employers.  Some states do not allow the carrier to bring suit against a responsible third party directly.   The carrier must ride on the coattails of the injured employee instead of moving the employee out of the way and litigating the responsible third party directly. 

A great multi-state law office  MWL and Counsel Gary Wikert,  combined all the Workers’ Comp Waiver of Subrogation considerations in all 50 states.  Adjusters and their supervisory staff should keep a copy of the Waivers of Subrogation at their fingertips.   Insured employers should understand their rights under a Waiver of Subrogation.  Download that PDF file here.  

Their introductory paragraph reads as:

Most state workers’ compensation laws, or cases construing them, allow the employer and its carrier to waive its right to subrogate against a third party that caused or contributed to an employee’s injury. The purpose of a subrogation waiver is not well understood and is a subject of some confusion in the marketplace. Most frequently, contracting parties agree to contractually require the inclusion of a waiver of subrogation endorsement in a workers’ compensation policy simply because the requirement is contained in the form contract, and has been for many years.

A recent NCCI Symposium in Virginia covered  Workers Comp mega-claims.  The number one mega-claims by far were automobile accidents.  Auto accidents remain the easiest claims for a work comp claims adjuster to subrogate the funds paid on a claim.   

Sending a letter to the auto adjuster to retain the carrier’s lien is very easy.  Monitoring the status of the subrogation lien becomes critical.    I have reviewed more than a few files where the workers’ comp adjuster notifies of the lien and then lets it go at that point.  The injured employee’s liability claim attorney may not  pay one-third of the funds because of one letter.  

Many WC adjusters tend to just specialize in one line of claims.   The specialization is fine except when subrogation potential appears in a claim.  When I started my insurance career in the 1980s, adjusters were almost exclusively multi-line.  In other words, the adjuster knew just exactly how to pursue a third-party Workers’ Comp matter as he/she had adjusted claims outside the Workers’ Compensation arena.   

Download the above PDF.  You can thank me later. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: subrogation Tagged With: aware increases, NCCI, policy dramatically

Subrogation Letter Is Just First Step in Recovering Workers Comp Funds

July 24, 2018 By JL Risk Management Consultants

The Subrogation Letter Should Not Be Solely Relied Upon To Recover Workers Comp Payouts

A quick subrogation letter remains one of the stalwarts in recovering workers compensation funds back to a file whenever there is a responsible 3rd party involved in a Workers Comp accident. 

carrier pigeons carrying worker comp subrogation letter

Wikimedia Public Use License – Carrier Pigeons

The best example is an auto accident with another driver at fault.  One has to watch saying “at fault”  as that has to be left up to the traffic court.   However, if the other party is ticketed for a violation, then they should at least be considered a responsible party. 

I have recommended the Subrogation letter to the responsible 3rd party’s insurer as soon as possible with a certified return receipt letter.  One rather disturbing trend that we have seen in files over the last few years is the workers comp carrier is ignored when pursuing a reimbursement. 

Was the workers compensation adjuster ignored on purpose?   

A recommendation is now made that the adjuster email or call the 3rd party’s insurance claims adjuster every month to inquire on the file status and to make sure that the current adjuster knows there is a legitimate lien on any file disbursements to the injured worker by the 3rd party carrier. 

Man reading subrogation letter on his computer

by StockUnlimited

Why?   Adjuster switch files often – it is the nature of the beast in the insurance industry.   Usually in an auto liability carrier’s online file, there is a blank or two about any liens on the file.  

The workers compensation adjuster has to make the auto liability carrier’s “lien blanks’ are completed with the workers compensation insurer’s information.   The workers compensation adjusters often change,  also.  Tracking a reimbursement can become complicated as the online systems need to be relied upon very heavily.  

Having a 30 day diary item to contact the auto liability adjuster (recommended by email) will enable the workers compensation insurer or TPA to keep up with who is on the file on both ends.   

Over the years, I have had to provide general liability and auto liability adjusters with copies of the timely subrogation letter with the certified return receipt as a reminder of the lien on the file.  

Of course, I started with an insurance all lines training and license, so I was not just a Workers Comp adjuster.  This training enabled me to track and follow the liability lien portion of the file.  

When I first started adjusting all lines files, I was sent to what amounted to a subrogation camp.   The hotel fire alarm went off at 1:30 am until 5 am, so my absorption was a little slow and subrogation was what I thought at the time was an “outlier subject.” 

As I have said often, most Workers Comp adjusters are now trained in just Work Comp adjusting.   That is OK, except when one has to put on their liability adjuster hat.    

Employers should take on some of the responsibility and track the subrogation claim through their own Workers Comp subro diary on a claim.   

Even if the Workers Comp carrier of TPA has a subrogation unit, a subrogation diary by the Workers Compensation adjuster and employer  is also recommended.

For more subrogation topics, click here for a full Google website search on subrogation.   

The whole process starts but does not end with the subrogation letter. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: subrogation Tagged With: auto liability, certified mail, Lien

North Carolina Work Comp Subrogation Takes Weird Turn

August 18, 2016 By JL Risk Management Consultants

North Carolina Work Comp Subrogation Re-re-reverses Course

The subject of North Carolina Work Comp subrogation has frustrated carrier and Third Party Administrator claims staffs over the years.   This case could be a model for changing subrogation laws in other states – possibly.

Stamp Of North Carolina Work Comp Subrogation Badge

StockUnlimited

One of my concerns is that Workers Comp adjusters have not been trained that well in liability claims.  This is understandable but sometimes funds can be left on the table, so to speak.   Subrogation is one of the areas of concerns that pops up in our claims reviews.

This case has virtually nothing to do with an adjuster mistake of any kind.   I try to inform the WC community on a case that may make a difference or be used in future ligation.

97-10.2 is the North Carolina Statute for subrogation.

The case  is Dion v. Batten, No. COA16-63.  The North Carolina Court of Appeals published the case on 08/02/2016.  The case can be found at this link.  It is a PDF file 2016-16-63

Law Scale On Hand North Carolina Work Comp Subrogation Clock And Dollar Sign on weighing on scale

StockUnlimited

As I am not an attorney, I do not ever try to comment on legal matters.  Below are a few excerpts from the NC Appeals Court decision.   It may be a great idea to download the case from the link above and read the complete decision.

The file was an accepted file involving a traffic accident with heavy subrogation potential.

“Plaintiff was employed by Neuwirth as a servicing agent.  In the course and scope of his employment with Neuwirth, Plaintiff was driving on Oriole Drive in Wilmington, North Carolina on 20 March 2008, when the vehicle he was driving was struck by a vehicle driven by Defendant, who had failed to stop at a red light.  As a result of the crash, Plaintiff sustained multiple injuries.  Because the crash occurred during the course and scope of Plaintiff’s employment with Neuwirth, Plaintiff was entitled to, and filed a claim for, workers’ compensation benefits pursuant to Chapter 97 of the North Carolina General Statutes.”  

The trial court performed a series of very interesting calculations.

The trial court further concluded that although Neuwirth and Brentwood paid workers’ compensation benefits to Plaintiff totaling $528,665.61, “their workers[’] compensation subrogation lien [could not] exceed $285,000.00, that being the total amount of the [j]udgment obtained by [Plaintiff] in this lawsuit in compensation for his injuries.”  Accordingly, the trial court found the amount of the workers’ compensation subrogation lien to be “$190,000.000, which is calculated by subtracting attorney’s fees ($95,000.00), interest ($74,291.50) and court costs ($160.00) from the judgment amount obtained by Plaintiff [] by [j]udgment in this lawsuit ($359,451.50).”  Plaintiff, Brentwood, and Neuwirth appeal. 

Court Room North Carolina Work Comp Subrogation Gavel

StockUnlimited

There was a standing case on subrogation that reversed the prior case law.

An examination of Easter-Rozelle reveals that the quote Appellant’s urge us to follow is obiter dictum.

The NC Court of Appeals agreed with the trial court.

Appellants contend that N.C.G.S. § 97-10.2(j) mandates a finding by the trial court regarding the “amount of costs of the third party litigation to be shared between the employee and employer” (the “cost sharing consideration”), and that, in the present case, the trial court’s order is incomplete for failing to make any findings of fact regarding the cost sharing consideration.  While we agree with Appellants that, under our precedents, an order must contain a finding of fact regarding the cost of the third party litigation to be shared between the employee and employer, we conclude that the trial court’s order in the present case adequately addressed this required consideration.

As mentioned previously, this is a case to print out and read if you as an adjuster have any North Carolina  Work Comp subrogation files that you are handling, or as an employer involved with a subrogation case.  You may hear of this case again in the near future.

©J&L Risk Management Inc Copyright Notice

Filed Under: North Carolina, subrogation Tagged With: Brentwood, dion v batten, easter-rozelle, future ligation, Neuwirth, obiter dictum

Workers Comp Reserve Reviews And Subrogation – Three Concerns

March 10, 2013 By JL Risk Management Consultants

Workers Comp Reserve Reviews And Subrogation

Our Workers Comp Reserve reviews uncover many concerns on claims handling.  Subrogation refers to an insurance company seeking reimbursement from the person or entity legally responsible for an accident after the insurer has paid out money on behalf of its insured. In Workers Compensation, we often see three different areas of subrogation that should be of concern to employers.

Picture Of Hand Workers Comp Reserve Reviews Holding Seedling Plant

StockUnlimited

First, we sometimes find in our file reviews for employers that there was likely a third party that was or at least was partially responsible for the Workers Comp accident.

As the file adjusting for Workers Comp claims has become more specialized, insurance carriers and TPA’s have sometimes not trained their claims adjusting staff in the steps to pursuing subrogation.

We do often see that the adjusters have pursued subrogation properly if there was an auto accident involved with the claim.

The second area of concern is that when subrogation funds have been received by an insurance carrier or TPA, there is sometimes no procedure on how to handle these funds inside of the Workers Compensation file. This is an area that may not exist in most claims manuals.

The third area of concern is when subrogation funds have been received and credited to the file. We do see in premium audits for employers that the adjustment of the total incurred was never reported back to the NCCI or State Rating Bureau. This can have a great effect on an employer’s E-Mod/X-Mod if the subrogation recovery was significant. As up to 45 months of data go into the E-Mod, a subrogation recovery must be credited on the day of receipt to the file and the correction reported to the NCCI or State Rating Bureau immediately.

Money Bags And Coins Workers Comp Reserve Reviews Vector

StockUnlimited

I am not saying that this situation exists in all the files that we see. However, it is of a large enough concern that all employers should monitor if the recovered funds did make it to their E-Mod or X-Mod.

Further note – The X-Mod is the same as the E-Mod. The Experience Modification Factor is called the X-Mod in California.

©J&L Risk Management Inc Copyright Notice

Filed Under: Subrogation Concerns, Workers Comp Reserving Tagged With: legally responsible, TPA

NCCI Report On Auto Accidents Has Interesting Subrogation Numbers

December 19, 2012 By JL Risk Management Consultants

Auto Accidents Report Has Interesting Side Statistics

The NCCI report on Auto accidents. NCCI (National Council on Compensation Insurance) is the largest rating bureau in the nation.  Their statistics cover 21 or more states.   One of most dangerous places to work is in your automobile according to their report.

Graphic Of Shield Auto Accidents Logo Inside

StockUnlimited

Surprisingly, the number of auto accidents that result in injury has been reduced by 37% since 1966 while the number of miles driven has tripled.  This was likely due to safety enhancements over the past 35 years.

One interesting area of the report is subrogation. Subrogation is basically pursuing a third party that may be responsible for all or part of an accident.

According to NCCI,  at 60 months after date of injury, about 1% of all claims involve subrogation. For motor vehicle claims, the percentage involving subrogation is almost 25%.  The 25% figure is not an unexpected amount.  Unless the accident involved a single car,  there would be an element of subrogation to the accident.

The astounding figure is the average amount of subrogation is over 20% lower for motor vehicle claims than for all claims at 60 months ($8,570 for motor vehicle claims vs. $10,871 for all claims).   There was no direct explanation as to why auto accidents are not more expensive.

One reason is that if a claim is subrogated for other than an auto accident,  the injuries sustained must have been more severe.  Another reason could be auto insurers are much more aggressive and knowledgeable on pursuing third parties than Workers Comp insurers.

If the auto adjuster pursues another party for an injury, Workers Comp insurers can subrogate their claim and “go along for the ride.”

This indirectly proves Workers Comp claims adjusters are rarely, if ever, trained in spotting third parties that may be responsible for an injury.  For instance, if a machine in a lumber yard malfunctions and causes an injury, subrogation opportunities are being passed over quite often.

Picture of Auto Accidents man holding Car

123RF

The basis of the subrogation claim should always be the recorded statement taken by the Workers Comp adjuster.   The adjusters gloss over the malfunctioning machine in the example. This can leave big Workers Comp $$ behind.

Many years ago, I was trained on subrogation very heavily.  However, I was an all-lines adjuster.  I was not specifically a Workers comp adjuster.

Should more than 1% of all non-auto claims be subrogated against another party?  I  would have to say definitely yes.

©J&L Risk Management Inc Copyright Notice

Filed Under: claims adjuster, NCCI, subrogation Tagged With: auto accidents, enhancement, go along for the ride

Transfer Of Right Of Recovery Usually Means Waiver of Subrogation

December 20, 2010 By JL Risk Management Consultants

Transfer Of Right Of Recovery = Waiver 

A transfer of right of recovery for Workers Comp usually involves a very specific type of waiver. The act of giving up the right by an insurer of collecting from another entity for payment on behalf of the insured. In current standard policies, this is also known as Waiver of Subrogation. Under either name this is another Risk Management Technique.

Picture Of Businessman On Floor Transfer Of Right Collecting Money

StockUnlimited

©J&L Risk Management Inc Copyright Notice

Filed Under: Definition Tagged With: entity, technique

Waiver Of Subrogation – Very Popular Term in Workers Compensation

December 9, 2010 By JL Risk Management Consultants

Term Of the Day – Waiver Of Subrogation

The WC term of the day waiver of subrogation clause is very popular in insurance policies and rental agreements. This type of waiver is when one party gives up the right to pursue another third party for paid damages if the third party was at fault. Often an insurance carrier will put themselves in place of their insured to pursue the third party for monies paid on a claim. The subrogation waiver will not allow the carrier to pursue the third party.

Picture of Two Contractor Doing Waiver Of Subrogation Agreement

123RF

©J&L Risk Management Inc Copyright Notice

Filed Under: subrogation Tagged With: rental, third party

Subrogation – Where Did The Money Go – Can You Still Get It Back?

November 23, 2010 By JL Risk Management Consultants

Where Did The Money Go – Subrogation Bleeds Work Comp Funds

Where did the money go with your subrogation?  I have posted on this subject often such as this article. Workers Comp subrogation seems to be one of those subjects that is passed over often. Self insureds need to be vigilant in this area as this is $$$ that can be directly assessed back to a file or files. There are two areas of even greater concern for Workers Comp policyholders.

Graphic Of Money Go Flying

StockUnlimited

They are:

  • Were the funds recovered actually credited back to the individual file?
  • Once credited, was the file correction reported to the Rating Bureaus (State Rating Bureau or NCCI) timely?

We have seen in our premium audits for employers or file reviews that there sometimes may not be a solid mechanism to have the funds credited back to the individual file timely. All Workers Comp insurance carriers do have your company’s best interest at heart when crediting the Workers Comp file with subrogation funds recovered. We sometimes find the funds credited back to the employer in general, not to the individual file. It is critical that the subrogation funds are credited to the individual file.

The file reserves must be reported back to the Rating Bureau immediately, not at the next Unit Stat date. See this article for the Unit Stat Date explanation. Why is this so important? Workers Comp E-Mods and X-Mods are calculated after your policy inception date for the next policy period. In other words, everything is on a time clock. Sometimes even a few days of not reporting the subrogation recovery to the rating bureaus can cost your company dearly.

Graphic Of Money Go In Green Background

StockUnlimited

If your company wishes, you may want to contact the Rating Bureau a few days after your carrier recovers the funds to make sure the corrected amount was reported. This seems to be where the breakdown occurs in getting the recovered funds back into your E-Mod. Each state has their own rules on reporting any changes to a Workers Comp file that has already been reported to the Rating Bureau.

Remember – subrogation never really existed unless the Rating Bureau knows about it.

Subrogation funds may not be.  I posted on this subject last week. I received a few emailed questions. I thought that I would address them today.

Why as a self-insured or first dollar insured employer be so concerned with  subrogation? Is that not the job of the Workers Comp adjuster? Workers Comp adjusters are very overloaded, especially with the cutbacks in claims staff over the last few months. Adding to that is the fact that most insurance carriers do not train their Workers Compensation adjusters in liability adjusting. Subro is basically liability adjusting. In our file reviews, we often see a subrogation letter was sent to the liability carrier of the responsible party. The follow up is often lacking. The negotiations over what is owed can be foreign territory for Workers Compensation adjusters.

How do I track any subrogation on the claims? You will need to use a diary. Check out this article.

Business Friends Subrogation Toasting At Bar

StockUnlimited

Our company is self insured for Workers Compensation. Why should I worry about subrogation? Your Workers Comp is being spent directly from your company budget. Subrogation is money that is in other companies’ bank accounts that should be in your company’s operating budget. It should be looked at as an uncollected receivable and given that status in your accounting procedures.

Will the responsible party pay us subrogation funds directly? They will pay your Third Party Administrator if you are self insured. The monies should be funded back through the claim to your Workers Compensation account. The insurance carrier – if you have first dollar insurance – will refund the monies to your Workers Comp file. The correction should be immediately reported to the State Rating Bureau or NCCI. The recovered funds will likely lower your company’s E-Mod. Depending on the situation, you may be owed a refund from the carrier.

Do we need to hire an attorney? No, the carrier or TPA will usually be able to negotiate with the insurance carrier of the third party. If needed, they have their attorneys that they will consult with on the claims. We never discourage anyone asking for legal advice.

Hand Presenting Subrogation Monitoring

StockUnlimited

What is my first step in monitoring my company’s subrogation on Workers Compensation? You will need to do a loss run and first report of injury review.

This seems like adding a ton of responsibilities to my job duties. If you are responsible for your company’s insurance budget, then it is found money and should be a critical area. There are quite a few articles in this blog that you can use by using the search box and typing in subrogation.

How do I know which accidents have potential to be subrogated?

Subrogation takes years of training to be able to analyze the claims to see if there are hidden possible subrogation claims. It took me a few years to understand the complexities.  

My first carrier employer sent me to a conference my first month of adjusting work on subrogation.   My head was spinning as I had no idea what the topic meant for claims – other than auto.  

Irregardless – Workers Compensation adjuster receive scan if any training on the process of investigation and pursuing subrogation.

As always, you can email me at [email protected] or call me at 800-813-1386 if you have any questions.

©J&L Risk Management Inc Copyright Notice

Filed Under: subrogation Tagged With: individual file, NCCI, Unit Stat Date

Does Workers Comp Subrogation Exist- Is it Worth Pursuing?

October 27, 2010 By JL Risk Management Consultants

 Workers Comp Subrogation Can Be Money Left On The Table

Does Workers Comp subrogation exist in Workers Comp claim department?  Subrogation is one of those under- the-radar terms in Workers Compensation.  

Picture Of Hand With Wallet Subrogation Exist Showing Money

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It is the  act of recovering the amount paid for a loss by an insurer from the entity that is legally responsible. Subrogation is either granted by the terms of the policy itself or by law.

Also abbreviated to subro, it allows carriers to recover losses in the case of a second party’s liability in the claim. Subrogation reduces the amount of the loss for the carrier and the insured and can therefore reduce the insured’s insurance liability.

Update  – I have been reviewing a large number of claims files over the last few months.   The main weakness I have found is the investigation and notifying the responsible third party of a pending Workers Compensation claim and the payouts. 

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Filed Under: subrogation Tagged With: insurance liability, payouts

Workers Comp Subrogation – Risk Management Diary Recommendation

April 13, 2010 By JL Risk Management Consultants

Risk Management Diary For Workers Comp Subrogation

The Workers Comp Subrogation  handlers should have a risk management diary.   A few posts ago I analyzed the Workers Compensation adjuster situation in handling third party liability claims. In defense of the Workers Comp adjuster, a requirement for the job is NOT a background in liability claims. That is an understood fact.

Graphic Of Risk Management Workers Comp Subrogation Infographic

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What can a Risk Manager or company officer do to possibly track the outcomes of an accident where a third party may be liable for a reimbursement for all or part of a Workers Comp claim? I would suggest setting up a subrogation diary to track the outcomes of a liability claim against the third party. As I said in the last post, we have noticed in our file performance reviews that subrogation or subro is/has not been properly handled in the claims.

The subro diary can be easily interfaced with any of the diary programs such as Microsoft Outlook(r). The main thing is to track if and when the subrogation claim is being pursued and how the funds have been handled along with how the insurance carrier has reported the reimbursement to the rating bureaus.

Some of the areas to track are:

  1. When did the adjuster send the original notification letter to the responsible party’s insurance carrier? Make sure that letter went out to all responsible parties’ insurance companies.  
  2. Did the adjuster for the responsible party acknowledge and respond to the notification letter?
  3. Negotiation status on settling the workers’ compensation lien
  4. Important – Legal proceedings – if lawsuit filed
  5. Was a subrogation check received by the Workers’ Comp adjuster.  If so, were the funds credited back to the file?
  6. Did the insurance carrier (if not self-insured) report the reserve reduction to the rating bureau?

I recommend not contacting the adjuster for the third party directly.   Let the Workers’ Compensation adjuster do their job.   

I try not to do very long posts. I will stop there. If you have any more questions on a subro diary, please  use the Contact Us page to reach us.

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Filed Under: subrogation Tagged With: background, defense, lawsuit filed

Subrogation – Workers Comp Money Left On Table

April 7, 2010 By JL Risk Management Consultants

Workers Comp Money – Subrogation Concerns

Sometimes Subrogation turns into the Workers Comp money left on the table. I have covered subrogation a few times in prior posts. I am bringing it up again due to our recent Workers Comp file reviews. One area that we have noticed a lack of training or knowledge in Workers Comp files is subrogation.

Money Subrogation on table

Wikimedia Commons – DEA Emploee

One of our trucking clients had left $240,000 on the table due to the TPA not pursuing subrogation before the statutes tolled. Many of my readers will likely know the definition of subrogation. I will not use the classic definitions as they are confusing.

An example of subrogation is when a delivery driver is rear-ended in an auto accident while making his/her deliveries. He/she suffers injuries and files a Workers Comp claim for benefits. The driver of the other car is responsible for reimbursement of the benefits to the Workers Comp carrier. The Workers Comp carrier has the responsibility to protect their client’s interests and to pursue subrogation. This is an easy example.

There are many instances that we find in files where the situation is more complicated, or the initial notice letter to the responsible party is sent, but then there is no follow-up. We also see where the subro check is received by the carrier, but is not properly credited to the file. This can cost an insured many times over as their E-Mod would be affected.

Picture Worried Businessman at Table with Wad of Cash in Mouse Trap Subrogation Concerns

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Why does this happen? I think it is that Workers Comp adjusters have such a hybrid job to do from a regular liability adjuster. How often does a liability adjuster have to make sure that an injured employee’s weekly check made it to them? The volume of communications or mail is huge for a Workers Comp adjuster.

The bottom line is that they are so busy,  it is just part of the file that cannot be tended to in their normal job duties. I have also noticed that liability adjusters receive a large amount of training in subrogation while the Workers Comp adjuster does not receive that much training in third party liability.

I think that I may have come upon a solution. Check back with me on the next post. I try not write posts that are too long as insurance is not the most exciting subject.

©J&L Risk Management Inc Copyright Notice

Filed Under: Subrogation Concerns Tagged With: money, reimbursement, training

Subrogation – Mystery Workers Comp Premium Refund

February 7, 2009 By JL Risk Management Consultants

Subrogation – The Silent Workers Comp Premium Refund

A Workers Comp premium refund that no one talks about is subrogation.  I have posted on subrogation in the past.  I would re-post the standard definition for subrogation, but it is one of the most confusing definitions in all of Workers Compensation.

Gold Coins Premium Refund Picture

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My definition of subrogation is when there is another party besides the employer that was partially or fully responsible for the incident occurring to the employee.  Workers Comp adjusters sometimes overlook the possibilities for recovering part of the claim payouts using subrogation.

Why would this occur?  A Workers Compensation adjuster is not a liability adjuster and may only be trained to handle Workers Compensation.  General or auto liability is a totally different segment of the insurance world and the Workers Comp adjuster may not be trained in the intricacies of liability other than Workers Compensation.

If the subrogation recoveries occur within six years after the accident, the money should be credited back against the file.  The correction should require recalculation of the E-Mod and a refund of premiums.  Sometimes, the money will be recovered by the insurance carrier and credited against the file.  However, there a few steps that are required to result in a premium refund.  This is a somewhat complicated set of steps that will likely recover some of the overpaid premiums on that specific file.

Vector Graphic Of Hand Premium Refund With Dollar Sign

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What should your company do if there is a possibility of recovering some of the funds paid out on one or many Workers Comp files?  Your company should inform the adjuster when the claim is reported.  Some type of diary system should be instituted to track the subrogation claim.  One of the main things to look for at the start of the process is a letter from the adjuster to the third party putting them on notice.  Without this letter, your subrogation claim will be deemed worthless.

Subrogation takes a large amount of patience.  Your company’s  efforts will pay off in the long run. If you feel that the subrogation claim is becoming too complicated or the carrier is not pursuing the third party enough to recover funds, it may be in your company’s best interests to bring in a consultant to help with the subrogation claim.

©J&L Risk Management Inc Copyright Notice

Filed Under: subrogation Tagged With: intricacies, pursuing

Subrogation – Under The Radar in Workers Comp Claim Reviews

March 29, 2008 By JL Risk Management Consultants

Subrogation Not On Radar Screens In Work Comp Files

The topic of subrogation is one of the most misunderstood areas in insurance, and especially Workers Compensation, that we see costing insureds millions of dollars a year.

picture of subrogation coins and money bag

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Subrogation: Prevents the insured from collecting loss payments from his or her own insurer and from the responsible third party for the same loss. Once the insurer pays a loss caused by a third party, the insurer takes over, or is subrogated to the insured’s common-law right of action against the negligent third party.

What does this mean to the employers? If there are any accidents where another party is responsible (critical – or even partially responsible) for an on-the-job-injury, your Workers’ Comp carrier should be pursuing funds from the third party’s insurance carrier. This is one area where we see so much of the employer’s money go down the drain.

Unfortunately, with the specialization of the various lines of insurance adjusting, many WC adjusters do not have the specialized liability training to spot and pursue any type of subrogatable funds.

We have always recommended that independent adjusting agencies, TPA’s, and insurance carriers train their adjusters in other lines besides WC.   The Associate in Claims (AIC) is perfect for training in other lines of claims.   

Two Questions to Ask your Workers Comp Adjuster

Yellow Emoticons with Question Mark Subrogation Question On Head

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There are two questions that you will need to ask the Workers Comp adjuster who is adjusting the file.

They are:

  1. Have you sent a notice letter to the carrier of the negligent third party, and may I have a copy of that letter?
  2. What is the status of the subrogation lien?

There is a much longer list of questions, but these are the two basic ones that a Workers Comp employer should be asking often if there is a possible lien on the file.

Picture Woman Holding Blackboard Subrogation Question Marks

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There are time limits for giving a third party insurance carrier notice. The Workers Comp adjuster may be absorbed into the Workers Compensation file and may have overlooked putting the third party carrier on notice. Any amounts recovered by your Workers Compensation carrier must be immediately entered into the file. Almost all Workers Comp adjusters do not have a background in Auto, Premises, General, or other type of liability coverages.

There are quite a few tricks and traps in Subrogation. Remember, when the Workers Comp Adjuster’s lien is negotiated down, that is your money that is being lost. Not following the subrogation of your Workers Comp lien can ruin a great avenue to recover funds that will bring down your E-Mod.

Subrogation is one area where I recommend that you use an adjusting expert. Subrogation can be very complicated and confusing even to the adjuster that is on the file. We have had to assist the Workers Comp adjuster on quite a few claims in recovering the funds from a third party liability carrier. The largest one we have had so far is over $1 million.

Next Up – Another definition from www.cutcompcosts.com/definitions.html A list of free definitions that you can download.

©J&L Risk Management Inc Copyright Notice

Filed Under: subrogation Tagged With: liability coverages, loss payments, negligent third party, Workers Comp lien

Work Comp Subrogation – Third Concern When Ignored By Adjusting Staff

September 19, 2007 By JL Risk Management Consultants

Work Comp Subrogation Additional Concern

Work Comp subrogation has a kind of quirky standard definition.

Vector Graph of Man Work With Helmet work comp subrogation without Helmet

123RF

To me, it is the possibility of another party having to share the monetary responsibility of an insured incident or accident.

I give the example in my manual of a company salesperson on sales calls being hit by another car in the back bumper and sustaining Workers Compensation injuries.

The driver of the other car should pay for the damages sustained and reimburse the Workers Comp carrier.

We usually see two errors being made during our file reviews:

  • We often see the subrogation funds being added back into the file after the file has been closed. However, the amounts reported to NCCI may not change. The funds could greatly affect a company’s Workers Compensation E-Mod.
  • The Workers Comp adjuster may not have enough time to pursue subrogation or may take a small % of the liability settlement.

Both instances are E-Mod killers. As I pointed out in my manual, there are 13 basic functions of a claims adjuster.  This area is one of the lower priority tasks.

In the 1980s, adjusters became much more specialized.  I was lucky enough to have experience as an all lines claims adjuster.  

Workers’ Comp adjusting evolved to become a very specialized type of adjusting in the 1990s.  Each state has its own set of laws and regulations on handling WC claims.   Some similarities exist between the states.  

Insurance carriers and TPAs rarely have an auto or premises liability adjuster cover workers’ compensation claims.  Over time, their employer rarely trained a  workers’ comp adjuster in liability adjusting.   

The ability was seen as unneeded and a time-waster.   Bottom line – workers’ comp adjusters need more training in subrogation liability.   Without it, large amounts of money will be left on the table that could be refunded back to an employer’s file and eventually their E-Mod or LDF.

The employer will likely have to monitor the subrogation follow up in most situations.   There are many articles on how to track work comp subrogation in this blog. 

©J&L Risk Management Inc Copyright Notice

Filed Under: subrogation Tagged With: insured accident, insured incident

2021 Self Insured Workers Comp Resolutions – The COVID Effect

January 7, 2021 By JL Risk Management Consultants

2021 Self Insured Workers Comp Resolutions COVID Caused A Few Changes

Most New Year’s Resolutions come from altering the resolutions from last year.   The 2021 Self Insured Workers Comp resolutions will be no different.   Keeping the resolutions from last year and adding a few changes for COVID should suffice for 2021.  

new years 2021 workers comp self insured resolutions

Public Use License – Vyacheslav Argenberg

 

I usually write the resolutions for the next year in December.  With so many rules changes and changes in the political environment, waiting until after all the elections seemed the best way to handle the 2021 self-insured workers comp resolutions. 

The 2020 Self Insured Workers Comp Resolutions center around sustaining success in your program and fixing a few issues that may be costing you dearly.   Some of these resolutions come from old resolutions. 

Search self-insured resolutions for suggestions from the past.  Any changes to the 2020 resolutions are in italics.  

  1. You are paying directly from your budget.   With the advent of COVID – reviewing your loss runs online, not on paper at monthly or quarterly intervals is beyond critical now.   Following the payment patterns become critical if you have incurred several claims.  Monitoring the outflows of claims payments cannot be just an exercise in reviewing a loss run.  You must dig deeper to the granular level of individual payments.   Remember, the adjusters are spending directly from your accounts.   If you have many employees working from home, the learning curve accident will come into play as they return to their regular jobs. 
  2. Those festering medical-only claims usually turn out to be your worst nightmares.  Watch the claims closely that have no Indemnity paid but have a large amount of medical paid quickly or a building medical reserve with no closure.   Claims festering becomes a ticking time bomb if these claims are not monitored. 
  3. Is your company still large enough in a state to justify self-insurance?  Companies change locations quickly.  Many states require a minimum of liquid assets and bonds per state, not per company.  Watch the minimums in each state.  If your company has had to cut back its workforce, self-insurance may not be the correct option.   The fixed costs per state may not justify being self-insured in states where you were self-insured in the past.  
  4. Having a working relationship with your claims adjusters becomes a must from day one.  See #1 above.  The adjusters in your TPA become quasi-employees as they are spending directly out of your budget.  One of the first tasks we often perform in a self-insured review involves establishing which adjusters are working on what claims.   Most claim adjusters welcome emailed questions if they are not vague or argumentative. 
  5.  Obtaining and understanding your LDF (Loss Development Factor).   Yes, your company may have gotten away from the E-Mod system.  LDFs become your claims and risk management GPS.  Many software packages will produce LDFs.   The inputs into the equations sometimes cause confusion and skewed numbers.  If you do not feel comfortable calculating your LDFs, seek out assistance.   The LDFs may become more inaccurate if they are backloaded with full claims payment data even though your present and future workforce may have shrunk.  Review the number you submit to any actuary very closely.  
  6. Becoming self-insured is not a fashion statement.   I have analyzed and advised many self-insureds to stay where they are in the insurance process.  Just because you are now large enough to be self-insured does not mean you should take steps to leave the E-Mod system behind.   See #3 above, is your company still large enough or going to be large enough in a certain state to justify self-insurance?  Every company wants to be self-insured, but should you stay with self-insurance – hard one to call. 
  7. Setting your level of reinsurance can be tricky.   Most potential self-insureds think that $250,000 is the only level.   Many active reinsurers reinsure worker’s comp self-insureds from $100,000 per claim.  Yes, the insurance is more expensive than $250,000 per claim.  One has to stop and think if they would have any claims that would split between $100,000 to $250,000.  
  8. Asking the State for assistance. States have become much more helpful to self-insureds.  Each state’s Department of Insurance does not want to have a bucketful of failed self-insureds on their lists.  Assistance with self-insurance applications seems to have increased over the last 10 t0 15 years.   Not too long ago, the process was almost a guessing game.  
  9. Looking at other insurance markets.  The alternatives to self-insurance have become a cottage industry of sorts.  Many consultant companies, agencies, and captive managers aligned their services as alternatives to self-insurance without incurring the full risk.  These companies have quietly placed themselves in certain markets and performed well.  PEOs have become a very viable option since the start of 2020.  Yes, PEOs consist of returning to more of a premium structure than resembling self-insurance.  
  10. Intensify the use of My Six Keys.  The keys have helped self-insureds very often over the last 20 years.  See this page for the Six Keys. You probably already know them.   The keys have not changed since the 1980s.   Return to work will take on a new connotation this year with at-home workers return to work.  The return to work for injured employees may have been delayed due to COVID-19.   We have seen many office visits and surgeries postponed or canceled since March of 2020.  Having patience with medical treatment delays seem to have worked out for most employers.  Office visits and some surgeries have begun again in some states.  Each state has its own protocols on medical treatment.  #11 below became very important in 2020. 
  11. Medical networks become more critical to self-insureds success over the years.   Having an industrial minded physician with a good bedside manner makes claims costs go down.   Remember, you are spending directly out of a budgeted account.  Return to work becomes tantamount to your program’s success.  As with the recommendations for non-self-insureds, COVID-19 may have made your workforce become very distributed across a larger area.  If someone is injured while working at home, where do you send them for treatment if they have a home worker injury?  Yes, they do happen.  Workers Comp Boards do not appreciate requiring an injured employee to drive 1.5 hours for workers comp treatment. 
  12. Your program will likely take hits over the years.  Not every year can be chalked up to a banner year.  Risk is a risk.  Expect the best but prepare for the worst (reinsurance, medical networks, return to work program, etc.).   
  13. Keep your C-Level Executive or company owners updated on how the program progresses over time.   Many times, I, as a consultant, informed the Executives what was going on in their programs.  A truncated loss run with a mini claims status works most of the time.  Do not operate on an island.   With many employees being spread out over a larger area including your injured employees, C-Level Executives need to know very current information on the company’s workers compensation program.  A loss run analysis report works well.  Keep it concise. 
  14. Watch the budget for expenses (ALAE) that are not related directly to claims payments.   Private investigators, defense attorneys, rehabilitation nurses (well worth it), and other ALAE are now being paid directly out of your budget.   In some states, the costs to handle and facilitate claims totaled more than the claim payouts (Ouch!) 
  15. Look at the E-Mod system for a few pointers.    Even though your company pays all the workers’ compensation costs, step back from payments, and analyze the risks.   The number of accidents you may have in a year may look small in total.   However, the E-Mod system looks at the number of claims per year being riskier than just one disastrous claim.   Any one or more of the smaller claims can turn into a huge claim.  A claim is a bundle of risk.   Many claims equal a snowball of risk going down the hill.   Rating bureaus have adjusted their formulas to reflect an increased risk with a group of claims vs. one bad claim.   Why did they adjust the numbers?  They have databases that show repetitive accidents cause a higher risk for a certain employer.  With all of the COVID-19 changes voluntary insurance and the E-Mod system, self-insurance and the E-Mod system have gone on divergent paths when considering risk.  I cannot say as of now if the E-Mod system can aid a self-insured in analyzing risk.  

I could post many more resolutions for self-insureds.  Many times,  I write articles pointed towards non-self-insureds.   This article was purely for the 2021 Self Insured Workers Comp resolutions.    Good luck in 2021 and thankfully goodbye 2020. 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp Resolutions Tagged With: claims festering, E-mod system, Loss Development Factor, loss runs

2021 Workers Comp Resolutions – Few COVID-19 Changes

January 6, 2021 By JL Risk Management Consultants

2021 Workers Comp Resolutions – Huge Change From 2020?

The 2021 Workers Comp resolutions began with waiting until all the election cycles had been completed from 2020.  I usually crank out the resolutions in December of the prior year.  With so much occurring in forgettable 2020, these resolutions were the toughest ones to produce in well over a decade.  

2021 Workers Comp resolutions new year fireworks

Wikimedia Commons License – Robert Miguel

Looking Back At The 2020 Resolutions – Starting Point

Workers Compensation has not really changed that much over the last 30 years.   Yes, the laws/rules have changed.  The basics have stayed the same and will likely not change that much unless, in my opinion, Workers Comp Federalization occurs in the future. 

The Affordable Care Act was a step towards federalization.  A few very small steps in legislation could have created a Workers Compensation National Fund similar to one of the non-monopolistic State Funds. 

Building 2021 Workers Comp Resolutions – Using 2020 Resolutions

 Let us go over the last years’ resolutions and either eliminate, improve, or replace each resolution.  My comments are in italics for each one.   Many of the resolutions are still valid as written in 2020.  I left those alone.  

  1. Check the resolutions that I wrote each year for the last 11 years for ideas.   You can type resolutions in the search box.  The resolutions should come up in date order – newest to oldest.   If you wish to delve into workers comp cost savings, some of the old resolutions that I removed from the list might benefit your company.  Believe me, your time spent will be well worth it.  
  2. Were there any surprises in your Workers Comp program?  If so, find out why they occurred so they will not become worse in 2020 and beyond.  The COVID-19 changes your company experienced fits well into the surprise category.  See resolutions #5 and #6 for changes that may need to be made quickly in your workers’ comp program.   
  3. Read your current Workers Comp policies, including the endorsements.  If you have questions, email your agent.  This has not changed since the first article on resolutions.  We always receive questions when the premium audit has finished,  and the premium audit bill has been produced.  Catch any policy changes (endorsements) when they are endorsed, not after the fact when a bill arrives from the carrier. 
  4. Read your current Workers Comp loss runs for ALL claims over the last 10 years.   The new analytics packages examine much longer time spans than just what your E-Mod covers.  If you have any questions, email your adjuster. 
  5.  Dust off your claims reporting guidelines.  With the smartphone society we live in – the speed of information becomes very critical at the beginning of a claim.   This resolution has become quite a problem over the last few months with COVID-19 causing an increase in employees working from home.  Have you adjusted your claims reporting guideline since February 2020? J&L now has a stack of claims we are reviewing that started with in-home accidents turning into large claims as no medical control was used and the claims were reported very late by the injured employee. 
  6. Update and clarify your medical treatment network.  Medical providers change over time.  Are you using your carrier’s medical networks for additional savings?  Do you know where to send injured employees with certain injuries?  Does your original treating physician know where to refer your injured employees?  This one has changed so much with employees working from home.   Your medical treatment network may need to expand for the initial treating physician if your employees live far away from their previous workplace.  Workers Comp Judges do not like to see employees have to drive a long route to see a physician the employer asked them to see for their injuries.   Adding on new medical treatment facilities may take some time to develop.  If a remote worker has an in-home on the job injury, the time will be well-spent. 
  7. Create a job bank.  Do your treating physicians know what jobs you offer and what light duty positions are in place if an injured employee returns to work.  The post-COVID job bank can be complicated at best.  Whenever the lockdowns are lifted, valid job banks will be needed to cut workers’ comp costs.  Updating or creating them now may be a great project for someone working from home.   
  8. Review your return to work program.  Accommodating injured employees with light-duty jobs can save an employer thousands on just one claim.  The days of an employer only allowing a full-duty return to work is coming to an end.  
  9. Trust of the employer before an accident causes a quicker return to work and better claims outcomes – multiple WCRI studies verified this fact over the last 5 years.  With many employees being remote, employee trust of the employer becomes even more critical.  Many of the employees injured working at home felt the need to treat under health and not report the claim to their employer. 
  10. Explore alternative coverages such as PEO’s, self-insurance, captives, etc. if you must have a Mod below 1.0.   Many contractors, including governmental, require their subcontractors have an E-Mod of 1.0 or below.   Having an E-Mod of 1.2 when your company needs a 1.0 can wipe out 80% of an employer’s business overnight.  Unfortunately, NCCI and the other rating bureaus have become a de facto credit bureau.  Is it fair?
  11. Analyze your premium audits very closely.  Does it look right?  Many independent contractors are now being added into the audits.  Certificates of insurance are golden in this situation. 
  12. Join and become active with an association of similar companies.  For some reason, I have found over the last 25+ years that companies that join and participate in their related associations have lower Workers’ Comp costs.  I have never pinpointed the exact reason.   With the advent of online conferences, the attendance of these online webinars makes joining and attending association meetings much easier.  Many associations have free or greatly reduced conference costs due to overhead expense reductions. 
  13. If your company expands into other states, those states’ Workers’ Compensation rules and laws may be totally different.  Local defense attorneys usually have summary cheat sheets that cover the state’s WC rules in a few pages. 
  14. Monitor any of your subrogation files using a diary system.  Do not leave claims money on the table and walk away.   We see this often in WC files.   Make sure the adjuster writes the initial claim letter against a third party timely.  
  15. Get online access.  I can tell you after reviewing claim files since the 1980s, online access to your claims saves time, aggravation, and premium dollars.  A loss run lets you know what has occurred in a claim.  Online access lets you know what is occurring now on your claims.  
  16. I added this one in as many workers will return to their jobs in 2021 having not worked in the job for over a year.  The learning curve (accident curve) shows when employees first return to their jobs their risk of injury is similar to a new employee.  

The 2021 Workers Comp resolutions for self-insureds are coming out tomorrow.   They, too, became very complicated to complete as did the above resolutions. 

 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp Resolutions Tagged With: Certificates of insurance, endorsements, federalization, medical networks

Self Insured Claims Data – Your TPA Has Many Helpful Options Online

October 8, 2020 By JL Risk Management Consultants

Self Insured Claims Data – Going Beyond A Loss Run 

J&L examines loads of self insured claims data every month.  Some TPAs offer loads of information that go beyond just reviewing a loss run.  

picture examining self insured claims data report

Wikimedia Commons – Aw58

Much of the self insured claims data can be reviewed using notifications as bells and whistles.   The ones I like that seem to work well can be set up as emails or notifications on the home or main screen.  

If you do not have online access and are self insured, you need to obtain it to set up your own system.   

Let us cover a few of the notifications.   Remember – you need to make the settings at a level you feel comfortable with without becoming the adjuster on the file. 

Payments Over X$

One notification that you should have set up is a basic one for self insured claims data analysis.   When a payment is made over for instance $10,000, you should receive an email immediately.   

Most systems have that in place.  If not an email, then at least have the payments over $10,000 or the largest 10 payments made over the last 60 days right on the home screen.   

Remember, self insureds – the TPA is spending directly out of your bank account, so a large payment should be a notification to you to at least see what the payment entailed and on what file. 

Risk managers – you do not want to justify to a C-level manager why you did not review a large subtraction out of your budget.  

Reserves Over Y$

Rubber band with money self insured claims data and Card

Wikimedia Commons – Drew Friestedt

As with the payments, you need to know when the reserves have increased significantly on a certain file.  This is another one that when a certain amount is added to a file – for instance, and increase $25k in total, an email is sent to you immediately.  

This is an important aspect of self insureds claims data.  Why?  Usually, reserves are fed into your Loss Development Factor and the reserves are being increased to make some type of large payment.  

Litigation, Denial, Subrogation, Fines, Settlement, Hearings, Closing –  Flags

Any major development on the file should have a flag notification sent out or have it on your TPA’s home screen when you logon to see your self insureds claims data.   

The subrogation flag is one of the more interesting ones.  You can know if the TPAs claims adjuster is looking into the subrogation on the file that has third party involvement.  

The list of flags can be enormous.  The states a self insured operates in may dictate which one of these flags are more useful than others. 

Vendor Assignment 

This unique flag lets you know what vendor is being assigned by the TPA.  This cost-saving flag becomes very important when the TPA is using an internal company vendor such as a PBM or Rehab Nurses. 

Do Not Adjust The Files – Risk Manage Them

Computer Screen of self insured claims data Spreadsheet

Wikimedia Commons – Texas State Library and Archives Commission

Having too many flags set or having the reserve or paid values too low turns a Risk Manager into an adjuster.  You are paying your TPA to adjust the files – let them do their job. 

Manage the risk by going beyond your loss run – adjusting the claims can be an exercise in frustration. 

TPA Fees – All Should Be On A Self Insured Claims Data Cost Spreadsheet  

Make sure you know every penny your TPA is charging you for their services including the internal vendor assignment flag from the above heading.   

One can usually request a screen to be set up to show these or downloaded as an Excel (not CSV) Spreadsheet.  You need to know where the internal charges originate.  The TPA fees can be surprising yet informative self insured claims data. 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: self insurance Tagged With: loss run, Rehab Nurses, spending directly out, subrogation flag

Workers Comp Reserve Reduction Strategy – Critical Last Step

September 30, 2020 By JL Risk Management Consultants

Workers Comp Reserve Reduction Strategy – Do This Last Critical Step 

Many articles in this blog center around formulating and enacting your workers comp reserve reduction strategy.   We have heard from many article/blog readers -where the anticipated reserve reductions did not tabulate properly.   

picture steps to workers comp reserve reduction

Public Use License – Wikimedia – DanielZanetti

We heard from an agent today with the question – what happened – there was no movement in the workers comp reserves.   The time this hits the fan is when the Experience Modification Factor was published by the insureds respective rating bureau. 

The insured or their agent then contacts us about what happened after the reserves were negotiated down but the Total Incurred (Paid + Reserves) did not reduce one penny. 

Adjuster Relationship = Timely Workers Comp Reserve Reduction

My first out-of-the-box questions cover the article from last week on reserve reductions – click here.   The one question that I always add is – did you pull your Workers Comp reserves just before the UNISTAT Date?    

Workers Comp adjusters are overloaded at the end of a month.  DO NOT expect them to drop everything if you request a reserve reduction two days before the UNIT STAT Date.  

The working relationship with the adjuster becomes very important when you request a reserve reduction on a certain file or group of files.  

Your Reduction Request is Ranked 13 out of 13 – OMG!

Blue Puzzle Workers Comp reserve reduction on the floor

Wikimedia Commons – Jared Tarbell

The reduction will not occur- trust me.  If you want to know what claims adjuster is doing – check out the 13 duties of a workers comp adjuster that I originally wrote in 1994.   

Most TPAs and carriers want all the 15-and-60-day reserve increases cleared out by end of the month.   

Your reserve reduction or closing request is ranked 13th out of 13.  It is similar to ESPN’s Bottom  10 College Football Poll. 

So – if you are reading this, go back to the reserve reduction article last week, and then follow all the links from there on getting your reserve reductions through and reported to the rating bureau.  

For more info, please use the Search Box at the top right of any webpage – totally worth using it.

Self-Insureds – You Are In On This Too (A Little Secret)

Yes, you are not out of the Mod system, except you have a Loss Development Factor to contend with at comparably the same time as the UNITSTAT Date. 

Most of the LDF’s use the same timing as the Rating Bureaus and the UNISTAT Date.  You are obtaining an independent LDF – right? (Hope so -if not Use The Contact Us page on the website). 

Last Step to Your Workers Comp Reserve Reduction Strategy Is..

You must pull the Workers Comp Loss Run one more time to make sure the reductions you are anticipating are on the books before the UNIT STAT date kicks in.  Yes, self-insureds are included – obtain your TPAs loss run.   

The reserve increases or decreases must work their way across many desks (now virtual).  If you are dealing with large reserves, the request may have hung up somewhere in the process.   

As I have said repeatedly, online access to downloading your own loss runs is beyond important at this time in your Workers Comp reserve cycle.   Printing our on-demand loss runs helps insureds and self-insureds avoid having to request one and waiting for a response. 

The last step should be done approximately a week before the UNISTAT Date.   

Red Alert if.. (Star Trek reference)

Big Red Workers Comp reserve reduction Button

Wikimedia Commons – włodi

If the reserves are still at the same levels or the files did not close, you must drop everything and take care of the situation.   You have followed the reserves all year – push it over the finish line.   Email the adjuster with a follow-up call to see why no anticipated reserve reductions occurred on the files.  

Remember that you are dealing with #13 out of 13 adjuster duties – and if it is the end of the month, adjusters are totally overloaded. 

Do not wait until the last day of the month or the last day before the UNISTAT date.  You are going to be disappointed with the results.  Your Workers Comp reserve reduction strategy will be all for naught. 

 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Reserve Reduction Program Tagged With: tabulate properly

Workers Comp Recorded Statements – Now A Lost Art?

August 27, 2020 By JL Risk Management Consultants

Whatever Happened to Workers Comp Recorded Statements?

Not too long ago, workers comp recorded statements appeared in every file where the injured worker received any type of weekly comp benefits – a mailed check. 

picture of workers comp recorded statement reel to reel

Wikimedia Commons – Amanda Vincent-Rous

Workers Comp Recorded Statement Requirements

Some of the requirements were: 

  • a recorded statement of the injured employee within 24 hours (even weekends) of receiving the First Report of Injury – unless they were represented by an attorney.  I even took them with the attorney on the phone or in-person
  • preferably in-person if you were a local on-the-road adjuster 
  • a recorded or written statement by any witnesses of the accident as soon as possible (72 hours maximum) 
  • the adjuster used a guide provided by the TPA or insurance carrier.  I still have a flipbook guide somewhere.  I took statements for any type of claim, not just WC. 
  • do not make them confrontational or accusatory 
  • a more involved statement if there was any subrogation potential such as an auto accident 
  • not for medical only claims in most cases 

Written statements were also allowed but they usually ended up being so time-consuming.   When the accident occurred in another state, you could assign an outside firm’s adjuster to take the statement for you if an in-person statement was required.   In-person statements turned out to be much better than over the phone.  

Recorded Statements Faded – 1990s

Black Old workers comp recorded statements tape

Wikimedia Commons – Stilfehler

Workers comp recorded statements reduced quickly in the 1990’s – as did most other lines of insurance.   The last time I remember recorded states being taken was when I consulted for a health and workers comp insurer.   The statements, though, were too accusatory – a written guide and standards were needed at the time.   This was 1996 – yes, 24 years ago. 

Some forward-thinking employers and governmental organizations heavily investigate any type of accident or insurance claim.   I have seen a few written statements taken by these groups.   

Now that I consult on files, I never see recorded statements taken by the adjusters.  Yes, the good adjusters still verify the accident with the employer, employee, and medical treatment facility.   Their three-point contact is performed ASAP.   After all, a claim is basically over in 48 hours – check the link. 

Legality of Recorded Statements

Many times, when I bring this up at conferences or a presentation with claims or risk management department personnel, some of them have responded with recorded statements being frowned up or illegal in their respective adjusting states.   

I usually respond back – then why is a guide for taking written or recorded statements still in your claims adjusting manual provided to adjusters the first day on the job? 

If any carriers or TPA’s are still taking workers comp recorded statements, please let me know in the comments section or let me know at the contact us page.   Thanks.

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp Claims Guide Tagged With: First Report of Injury, subrogation, three-point

Workers Comp Mega Claims – My Different Definition

August 27, 2020 By JL Risk Management Consultants

Workers Comp Mega Claims From A Claims Standpoint 

A meeting notice caused me to write this article on Workers Comp mega claims.  If you have not signed up for the webinar and you have anything to do with workers’ compensation, please go here and sign up.  Yes, I registered earlier this week. 

workers comp mega claims 250000 banknote

Public Domain

Attending the webinar will be worth your time (trust me).  Multiple workers comp rating bureaus rarely work on the same statistical study.   The 39-page report can be found here. (PDF file).   The conclusions can be found on Page 23.   You can tell the actuaries have been busy when the Appendices cover 16 pages. 

The rating bureaus that contributed to the report and webinar are:

  • California’s WCIRB
  • Indiana Compensation Rating Bureau
  • Minnesota Workers Comp Insurance Association
  • New Jersey Compensation Rating and Inspection Bureau
  • North Carolina Rate Bureau
  • Delaware Compensation or Rating Bureau
  • Compensation Advisory Organization of Michigan
  • NCCI
  • New York Compensation Insurance Rating Bureau
  • Pennsylvania Compensation Rating Bureau

Differing Definitions of Workers Comp Mega Claims

Magyar Visla Male dog workers comp mega claims in the forest

Wikimedia Commons – Markgraf1508

In my little corner of the workers’ compensation world, any claim that has over a $250,000 Total Incurred represents a mega claim.  According to the above report, a claim that reaches $3,000,000 in incurred benefits becomes a mega claim.   The rating bureaus Total Incurred,  and your loss runs Total Incurred usually represent two different figures.   Check here for the difference.  

Most of the claim departments refer to these claims as “old dogs.”  A claim value does not reach $3,000,000 that quickly.  This sounds like quite a definition discrepancy.  That assumption would be correct.   

Why Only $250,000 For A Mega Claim? 

The $250,000 incurred level usually causes certain requirements from the claims adjusting staff.   Some of them are:

  • The reserves have now reached the Vice President level – more reporting required than just internal file notes and documentation. 
  • The reinsurance or excess insurance companies now need reports – usually on a prescribed form and some of the claims department internal documentation.  Their funds are now at risk. 
  •  The claim or set of claims are now subject to a possible audit by the reinsurer. 
  • Some states require reports after a claim reaches a certain incurred level 
  • The insured employer or TPA client now needs more formal reports 
  • The agent and underwriting department may require reports 
  • The claims diary system may be shortened -more supervisory and managerial reviews 
  • Subrogation must be followed – if you look at the above PDF report,  a large % of workers comp mega claims are vehicular accidents
  • Litigation reports must be generated as most of the mega claim claimants are represented by an attorney. 

All the above bullet points generate diary items for the life of the claim.  The requirements are not “one-off” reports – usually due every 90 days. 

What Causes Mega Claims?

Venice beach workers comp mega claims hit and run

Wikimedia Commons – WiLPrZ

I reviewed a claim this week that involved a hit-and-run auto accident where the Total Incurred sits at almost $1 million.  The claim is five years old.   The largest claims I have seen are:

  • Auto accidents 
  • Falls 
  • Severe burns 
  • Occupational disease such as mesothelioma 

The injured workers often required multiple surgeries which drove the medical costs to much higher incurred levels very quickly.   

The likely minimum amount for a workers comp mega claim should be adjusted up in the near future.  The $250,000 level has been in place for many years.    

 

©J&L Risk Management Inc Copyright Notice

Filed Under: workers comp claim

Workers Comp Ladder of Insurance Very Important Term in 2020

August 20, 2020 By JL Risk Management Consultants

Workers Comp Ladder of Insurance – Subs of Subs Become Employees 

Early in my career, my insurance company employer sent me to what was a whirlwind of legal terms and concepts known as subrogation.   I took notes until my arm cramped with pain as I know this was important information.  The notebook full of notes became two terms that I coined and copyrighted the Ladder of Insurance (c) and Workers Comp Ladder of Insurance (c).  

picture workers comp ladder of insurance

Wikimedia Commons – Armando

The two terms seem similar.  They are very similar in some respects but differ in others.    I had originally coined the Decision Tree of Insurance Liabilities (c).  That term sounded too convoluted.   Let us look at the Work Comp term now.

Ghost Policies Become Lessons for Micro Companies 

A phone call came in two days ago.  Many times,  J&L is mistaken for an insurance agency.  We are not agents.   We receive these calls more often now that entrepreneurs.  The caller – a painting company – requested a policy where the owner is the only person insured under the policy and then he would be excepted out as owner.   

These are called ghost policies.  Some states have outlawed their use.   We receive at least 30 calls a year from company owners that have these types of policies.  One of two incidents have occurred – either (or both):

  1. An uninsured subcontractor was injured 
  2. The insurance carrier performed an audit and wants premium for the uninsured subcontractors. 

Let us center in on #1 of the two.   By the way, how prevalent is this situation?  Check out this older article that pointed out 30,000+ companies with no workers comp insurance operating in North Carolina 10 years ago.  (Yes, 30,000)

Workers Comp Ladder of Insurance and The Court Systems

The ladder workers comp ladder of insurance of life

Wikimedia Commons – Mykl Roventine

The Workers Comp Ladder of Insurance or Ladder of Insurance points to one opinion that should be considered a fact.  A Workers Comp  Judge, (Commissioner) or Court of Appeals usually will go up the Ladder of Insurance to see if there are any insurance coverages available to an injured contractor or employee.  

Self-insured should take notice of this concept – self-insurance counts as a policy of insurance.   

This is Risk Management – not legal advice.  The risk of a subcontractor of a subcontractor or a subcontractor being an employee becomes a real risk – even if you thought or were told that the subcontractor was insured. 

Certs Become Critical – Yet May Be Worthless 

FEMA contractor workers comp ladder of insurance to install a water

Wikimedia Commons – Amanda Bicknell

 Certs or Certificates of Insurance show who is insured by which insurance carrier.   We had a client where this situation occurred – the main contractor was given a cert by the subcontractor that was canceled after the contractor/subcontractor contract was signed.  

The subcontractor even supplied a valid subcontract attached to the contract.   An injury had occurred, and the injured subcontractor’s subcontractor filed a claim with the client’s carrier.   

The carrier denied the claim originally – the Workers Comp Commission ruled the client’s carrier owed benefits, so now the carrier requested premium to cover all the client’s subcontractors – even for the ones with valid certificates of insurance.  

The easiest way to avoid this situation can be found at the previous Certificates of Insurance link above.  

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Ladder of Insurance Tagged With: court of appeals, entrepreneurs, Insurance Liabilities

How To Ruin A Workers Comp Claim in Five Seconds, Claim Number?

June 17, 2020 By JL Risk Management Consultants

Asking For Claim Numbers Can Wreck Any Workers Comp Relationship – J&L 

Yesterday, I was trying to locate a claim for a long-term client.  I was following the subrogation status on a claim for them.   I was told that I had left out one number in a 22-character claim number. 

pay phone booth workers comp claim number

Wikimedia Commons-Chriistina Helmsman

The claim was not showing up on a loss run the client ran for me to review.  This situation harkens me back to what I have not done in Workers Compensation for 30+ years.  

Why I Never Ask For Or Reference Claim Number – A Little Secret 

When an injured employee calls in, asking for a claim number does one thing – it reminds the caller or emailer that they are a number, not an individual.   In 30 years, I have not looked up any injured employee by a claim number – never, ever.  

Injured employees with resolved claims were interviewed by WCRI for a study they were conducting.  Dr. Savych produced a landmark study on what happens to injured employees post-claim. 

One word came up that determined whether an employee felt the claims process went well.  That word was “trust.”  If the employee trusted their employer before the accident, claims usually resolved more quickly. 

Asking for a workers’ comp claims number may be a great way to pull up a claim.  I have always looked up the injured employee by:

  • Name
  • Date of birth
  • Employer
  • Accident Date. 

I never used the claim number.  I thought that it impersonalized a somewhat personal transaction. 

An Example of Claim Number Alienation 

Man driving Claim Number rainy road

Wikimedia Commons – Oregon Department of Transportation

Approximately eight years ago, I, unfortunately, ran into a deer while traveling at 65 miles per hour.  Calling in a claim to my auto insurer at midnight from a hotel room was beyond stressful. 

After going through the usual phoned-in claims reporting question, the adjuster gave me a long claim number that I did not write down accurately.   

The next morning,  I called back in to see about obtaining a rental car.  My auto insurance carrier phone rep asked for the claim number.  I, due to stress, and sleeplessness misplaced the claim number. 

The phone rep kept asking for it.  I said that I have my policy number on my proof of insurance. or could he/she not look it up by my name and date of the accident?  After 15 minutes of waiting, they came back on the phone with my 20+ digit and letter claim number.   I was told it was critical to use that number when calling in after then.  

I never called the company again and switched auto carriers at the next renewal.

Bottom Line – I felt like just another number – not really a personal interaction. 

Best Way To Find a Person’s Claim

Injured Army Claim Number on knee

Wikimedia Commons – U.S. Army Europe Images

Pulling up the claim by the injured employee’s name and the employer was always the best way for me.   I did not ask them for something that the carrier or TPA had given them to remember and reference.  I always asked for info that existed before the claim, not after. 

The great adjusters and claim reps seem to always develop some time of personal relationship with the injured employee unless of course if they were represented by an attorney.

Did you ever notice when you deal with a doctor’s office, they do not ask you for a patient number?  I wonder why? 

Bottom Line – This advice may seem a little picky.  Try it and you will see how it changes your relationships with your injured employees.   Avoid asking for claim numbers.

 

©J&L Risk Management Inc Copyright Notice

Filed Under: claims department Tagged With: adjuster, Alienation, insurance carrier, landmark

2020 Self Insured Workers’ Comp Resolutions – Staying the Course

December 17, 2019 By JL Risk Management Consultants

2020 Self Insured Workers Comp Resolutions – Not Changing Success 

The 2020 Self Insured Workers Comp Resolution centers around sustaining success in your program and fixing a few issues that may be costing you dearly.   Some of these resolutions come from the old resolutions. 

2020 workers comp resolutions road sign

Wikimedia Public Use – Mr. Matté

Search self-insured resolutions for suggestions from the past. 

  1. You are paying directly from your budget.  Following payment patterns become critical if you have incurred several claims.  Monitoring the outflows of claims payments cannot be just an exercise in reviewing a loss run.  You have to dig deeper to the granular level of individual payments.   Remember, the adjusters are spending directly from your accounts.  
  2. Those festering medical-only claims usually turn out to be your worst nightmares.  Watch the claims closely that have no Indemnity paid but have a large amount of medical paid quickly or a building medical reserve with no closure.   Claims festering becomes a ticking time bomb if these claims are not monitored. 
  3. Is your company still large enough in a state to justify self-insurance?  Companies change locations quickly.  Many states require a minimum of liquid assets and bonds per state, not per company.  Watch the minimums in each state.  
  4. Having a working relationship with your claims adjusters becomes a must from day one.  See #1 above.  The adjusters in your TPA become quasi-employees as they are spending directly out of your budget.  One of the first tasks we often perform in a self-insured review involves establishing which adjusters are working on what claims.   Most claim adjusters welcome emailed questions if they are not vague or argumentative. 
  5.  Obtaining and understanding your LDF (Loss Development Factor).   Yes, your company may have gotten away from the E-Mod system.  LDFs become your claims and risk management GPS.  Many software packages will produce LDFs.   The inputs into the equations sometimes cause confusion and skewed numbers.  If you do not feel comfortable calculating your LDFs, seek out assistance. 
  6. Becoming self-insured is not a fashion statement.   I have analyzed and advised many self-insureds to stay where they are in the insurance process.  Just because you are now large enough to be self-insured does not mean you should take steps to leave the E-Mod system behind.
  7. Setting your level of reinsurance can be tricky.   Most potential self-insureds think that $250,000 is the only level.   Many active reinsurers reinsure worker’s comp self-insureds from $100,000 per claim.  Yes, the insurance is more expensive than $250,000 per claim.  One has to stop and think if they would have any claims that would split between $100,000 to $250,000.  
  8. Asking the State for assistance. States have become much more helpful to self-insureds.  Each state’s Department of Insurance does not want to have a bucketful of failed self-insureds on their lists.  Assistance with self-insurance applications seems to have increased over the last 10 t0 15 years.   Not too long ago, the process was almost a guessing game.  
  9. Looking at other insurance markets.  The alternatives to self-insurance have become a cottage industry of sorts.  Many consultant companies, agencies, and captive managers aligned their services as alternatives to self-insurance without incurring the full risk.  These companies have quietly placed themselves in certain markets and performed well. 
  10. Intensify the use of My Six Keys.  The keys have helped self-insureds very often over the last 20 years.  See this page for the Six Keys. You probably already know them.   The keys have not changed since the 1980s. 
  11. Medical networks become more critical to self-insureds success over the years.   Having an industrial minded physician with a good bedside manner makes claims costs go down.   Remember, you are spending directly out of a budgeted account.  Return to work becomes tantamount to your program’s success. 
  12. Your program will likely take hits over the years.  Not every year can be chalked up to a banner year.  Risk is risk.  Expect the best but prepare for the worst (reinsurance, medical networks, return to work program, etc.).   
  13. Keep your C-Level Executive or company owners updated on how the program progresses over time.   Many times, I, as a consultant, informed the Execs what was going on in their programs.  A truncated loss run with a mini claims status works most of the time.  Do not operate on an island. 
  14. Watch the budget for expenses (ALAE) that are not related directly to claims payments.   Private investigators, defense attorneys, rehabilitation nurses (well worth it), and other ALAE are now being paid directly out of your budget.   In some states, the costs to handle and facilitate claims totaled more than the claim payouts (Ouch!) 
  15. Look at the E-Mod system for a few pointers.    Even though your company pays all the workers’ compensation costs, step back from payments, and analyze the risks.   The number of accidents you may have in a year may look small in total.   However, the E-Mod system looks at the number of claims per year being riskier than just one disastrous claim.   Any one or more of the smaller claims can turn into a huge claim.  A claim is a bundle of risk.   Many claims equal a snowball of risk going down the hill.   Rating bureaus have adjusted their formulas to reflect an increased risk with a group of claims vs. one bad claim.   Why did they adjust the numbers?  They have databases that show repetitive accidents cause a higher risk for a certain employer. 

I could post many more resolutions for self-insureds.  Many times I write articles pointed towards non-self-insureds.   This article was purely for the 2020 Self Insured Workers Comp resolutions.    Good luck in 2020. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp Resolutions Tagged With: cottage industry

2020 Workers Comp Resolutions – Make Your List Now And Check It Twice

December 13, 2019 By JL Risk Management Consultants

2020 Workers Comp Resolutions – Starting With A Clean Slate 

Your 2020 Workers Comp resolutions begin with the obvious – start the list now in late 2019.   I usually build off the previous years’ lists. 

blackboard 2020 workers comp resolutions blank

Public Use License -Andrzej 22

Next week, I will publish a list for self-insureds. 

This year let us start with a clean slate for our 2020 Workers’ Comp resolutions and go from there. 

  1. Check the resolutions that I wrote each year for the last 10 years for ideas.   You can type resolutions in the search box.  The resolutions should come up in date order – newest to oldest.  
  2. Were there any surprises in your Workers Comp program?  If so, find out why they occurred so they will not become worse in 2020 and beyond.
  3. Read your current Workers Comp policies, including the endorsements.  If you have questions, email your agent.  
  4. Read your current Workers Comp loss runs for ALL claims over the last 10 years.   The new analytics packages examine much longer time spans than just what your E-Mod covers.  If you have any questions, email your adjuster. 
  5.  Dust off your claims reporting guidelines.  With the smartphone society we live in – speed of information becomes very critical at the beginning of a claim.   
  6. Update and clarify your medical treatment network.  Medical providers change over time.  Are you using your carrier’s medical networks for additional savings?  Do you know where to send injured employees with certain injuries?  Does your original treating physician know where to refer your injured employees?
  7. Create a job bank.  Do your treating physicians know what jobs you offer and what light duty positions are in place if an injured employee returns to work.
  8. Review your return to work program.  Accommodating injured employees with light-duty jobs can save an employer thousands on just one claim.  The days of an employer only allowing a full-duty return to work are coming to an end. 
  9. Trust of the employer before an accident causes a quicker return to work and better claims outcomes – multiple WCRI studies verified this fact over the last 5 years. 
  10. Explore alternative coverages such as PEO’s, self-insurance, captives, etc. if you must have a Mod below 1.0.   Many contractors, including governmental,  require that their subcontractors have an E-Mod of 1.0 or below.   Having an E-Mod of 1.2 when your company needs a 1.0 can wipe out 80% of an employer’s business overnight.  Unfortunately, NCCI and the other rating bureaus have become a de facto credit bureau.  Is it fair?
  11. Analyze your premium audits very closely.  Does it look right?  Many independent contractors are now being added into the audits.  Certificates of insurance are golden in this situation. 
  12. Join and become active with an association of similar companies.  For some reason, I have found over the last 25+ years that companies that join and participate in their related associations have lower  Workers’ Comp costs.  I have never pinpointed the exact reason. 
  13. If your company expands into other states, those states’ Workers’ Compensation rules and laws may be totally different.  Local defense attorneys usually have summary cheat sheets that cover the state’s WC rules in a few pages. 
  14. Monitor any of your subrogation files using a diary system.  Do not leave claims money on the table and walk away.   We see this often in WC files.   Make sure the adjuster writes the initial claim letter against a third party timely.  
  15. Get online access.  I can tell you after reviewing claim files since the 1980s, online access to your claims saves time, aggravation, and premium dollars.  A loss run lets you know what has occurred in a claim.  Online access lets you know what is occurring now on your claims.  

Many resolutions are employer-specific in Workers’ Comp.   Feel free to add your own to the list.   What are your additional 2020 Workers Comp resolutions? 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp Resolutions Tagged With: E-Mod, packages examine, smartphone society

Workers Comp Claim Action Plan- Online Access Answers 100+ Questions

October 31, 2019 By JL Risk Management Consultants

Workers Comp Claim Action Plan – Online Access Answers 90% of Questions

Most Workers Comp Claim Action Plans cause the adjusters to have to do a ton of work.   Long ago, when I was a full-time adjuster, I looked forward to closing out a file so that I did not have to do any more claim action plans.                                 

graphic of workers comp claim action plan global

Public Domain – Wikimedia

Workers Comp claim action plans still result in a large amount of work for the adjusting staff, even with the advances in technology.

Any outside parties to the claim (agent, consultant, employer, reinsurer, etc.) should relish the plan of action.  Why? 

Any of the persons in the above parentheses can avoid calling an adjuster by simply getting online and look for the workers comp action plan to find answers to their questions.    

I did not want to copy a recent workers comp claim action plan as too much data had to be redacted due to privacy concerns.    Below is a list of questions you can answer from a POA (Plan of Action).  Most Workers Comp Action Plans originate with a template. 

  1. Injured Worker Name
  2. Adjuster Name and Contact Info
  3. Date and Time of Action Plan
  4. Diary Review
  5. POA 
  6. Indemnity Benefits
  7. Medical Benefits
  8. Maximum Medical Improvement Date
  9. Anticipated Return to Work Date
  10. Released from Medical Care Date
  11. File Closure Target Date
  12.  Any outstanding forms that need to be filed with the State
  13. Any outstanding issues that may affect any target dates 
  14. Current Status – very important to avoid phone calls 
  15. Payment of benefits
  16. Addressing Modified Work availability
  17. Injured employee contact information – usually an email address
  18. Supervisory Review – great to see in files, not always there – usually a re-review of the adjuster’s workers comp action plan
  19. Communication between supervisor and adjuster on diary dates
  20. The adjuster’s description of accident in their own words – important 
  21. Compensability – another very important question answered
  22.  Reserves – Why are the amounts on the file (Total Incurred) 
  23. Amounts of Indemnity Total Incurred and Reserves on the file.
  24. Amounts of Medical Total Incurred and Reserves on the file.
  25. Amounts of Expense Total Incurred and Reserves on the file.
  26.  Amount of Rehabilitation that may be spent on the file – think Rehab Nurses
  27. Are Medical Networks being used properly?
  28.  Was the coding of the claim variables input properly?
  29. Full Medical Update including recent physician visit and the physician’s note
  30.  How and if Medical notes address light-duty ad full Return to Work
  31.  Work/Employment Status – this is covered often in most files 
  32.  How Average Weekly Wage was calculated and Anticipated Temporary Total Disability TPD,  and PPD payments 
  33.  Alert to all parties – Analytics data such as background of employee, such as the personality of the injured employee, drug or alcohol use, etc.
  34.  Current litigation status
  35.  Settlement Value – if applicable 
  36.  Social Security considerations/Medicare
  37. Results of the Index Report – usually do not see this in a Workers Comp Action Plan
  38. Subrogation – one of my big concerns in Workers’ Comp claims
  39. Coverage – the correct policy applied?
  40. Any special reporting requirements for the employer/client insured?
  41. Settlement reserve authority 
  42. All information collected on employee including address and contact information (a large amount of background data from claim inputs)

I have combined many of the answers to the questions that anyone may have about the workers’ compensation claim.   Now, I think we can see the value of online access.  The above Workers’ Comp Action Plan covered six pages for an injured worker that was out of work for four weeks and will have no permanent disability.   

Calling the adjuster vs. online access to the Workers Comp Action Plan = Six Hours of Worked saved. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Online Claims Access Tagged With: Anticipated Temporary, POA, TPD

$250,000 Claim Reserve Level – Why Is that Number So Important?

June 15, 2018 By JL Risk Management Consultants

$250,000 Claim Reserve Level Creates Many Critical Responsibilities 

The $250,000 claim reserve level causes many necessary actions.  Some of them are obvious.   The other not-so-obvious actions are just as important. 

Please note that the Reinsurer and Excess Insurer are the same for this article.   

Picture of Turkish Money $250,000 claim reserve level

Public Use License with permission

Usually,  a claim that reaches this level involves Vice President or Examiner approval to input the reserve into the system.    The checklist action plan can be enormous at this level to the claims adjuster. 

Some of those tasks are:

Reinsurance reporting – This area can slip by if one is not careful.   The $250,000 claim reserve level will likely cause some type of  flag to the reinsurer.    It never looks good if the reinsurer has to ask the claims staff for the report.   The reinsurer should have some prescribed report they wish to receive at the $250,000 and higher claim reserve levels.    Each reinsurer may require a totally different type of report.   

Employer reporting – Completion of this task needs to occur before they reserves are entered into the system.   Apprising an employer  of this reserve level will save many headaches in the future.  Many times we receive loss runs where a large reserve exists on the file with no explanation.   

Money $250,000 claim reserve level in money clip

by StockUnlimited

Assigning to Field Case Manager or Rehabilitation Nurse –   When a file hits the reserve level, better late than never to assign out a rehabilitation nurse Is there any reason to not assign it out to one?  Medical control is mission critical along with a strong return to work plan.  The rehab nurses are one of my favorite risk management techniques.  

Subrogation Liens Must Be Covered – An interesting fact from a report by Mark Walls of Safety National is 24% of all huge claims in their inventory result from automobile accidents.  Obtaining a police report is an easy task.  Do not be the adjuster that forgets to cover their subrogation.  We see no effort to pursue subrogation in files quite often.   Writing  a subrogation lien letter takes such a short amount of time. 

Employer Involvement – Claims that reach this level must be followed closely by the employer.  Did you send the employee to your carrier or TPA’s recommended industrial-minded physician?  Do you have a modified duty job available?  Are you in contact with the injured employee and keeping up with their medical treatment?  What restrictions does the injured employee have at this point?  An active employer usually reduces the cost of the claim while providing their injured employee with the best care.  

These are a few things to cover when a claim is initially set or increases to a $250,000 claims reserve level. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Reserves Tagged With: rehabilitation nurses, reinsurers

Workers Compensation Reserves – How Does Adjuster Set Them?

April 26, 2018 By JL Risk Management Consultants

Workers Compensation Reserves – The Illusive Moving Target

All Workers Compensation reserves have a common element.   Very few, if any, employers, actuaries, underwriters, agents, and any other players in this hybrid insurance understand how reserves are set – other than the adjusters themselves.   

einstein workers compensation reserves theory

Public Use License Wikimedia

By the way, that is a graphical representation of E=MC(2) Some workers compensation adjusters do document their reserving well.  With the sterileness of algorithms, workers compensation reserves machined out by a chip are becoming more common.  In fact, sometimes the adjuster CANNOT even override them without supervisory or managerial approval? 

What is the basic minimum for an adjuster to have the knowledge to set proper reserves?  The mark rests at 5 – 7 years of experience.   Why?   The adjusters by then have seen enough instances of each type of claim to have a solid background in being able to set the reserves. 

Most claims staffs have a spreadsheet type reserving system which allows the adjuster to input the indemnity, medical, and allocated expense reserves that post to the file.  Even if the claims staff uses advanced software, a spreadsheet still produces the workers compensation reserves . 

One of the conundrums is the reserves for the lifetime of the file are usually set at a 60 day interval – with no adjustment to those for many months or years, or until the file closes. 

If you are reading this article and are not the claims adjuster on a file or a certain set of files, you may want to set up a diary that enables you to analyze the reserves every 60 – 90 days.   A precious commodity that allows you to access the reserves in real-time (over-used word) becomes critical to following the reserves of the file. 

You do not have to email the adjuster every time your diary date comes up.  Analyzing the reserves should be the key.   If the claims staff does not know who you are, then you should email your adjusters just to establish communications.   Many large organizations have such a manual requiring the adjusters to contact the respective insureds.   

Medical Doctor Doing Report Workers Compensation Reserves From Injured Woman

Public Domain By Paul D. Honnick

Notice how I bolded establish communications.  One of the keys to proper reserves is a line of communication between the insured and their adjuster(s).   

If you need to pull the loss runs (without real-time access to reserves or claims then that cycle becomes a delayed system.  As I noted over 10 years ago, online access may be worth 20% more on paying premiums or paying a TPA to process the claims.  That number remains accurate today.  

So, now we know the 60 day time for the claims staff to set reserves.   Your claims diary should be clocked at 50 days to contact the adjuster or claims staff to give them any critical updates such as:

  • Return to work status
  • Medical notes you may have received 
  • Your contact with the injured employee 
  • Subrogation – Were there any other parties involved in the accident  – police reports for auto accidents, etc. 
  • Any complaints or concerns from the injured employee about the claim – a big claim can result from the most minute concerns 

The adjuster will usually have 50 – 100 different blanks to fill in on the proverbial reserving spreadsheet.  If many positive and communicated developments occur early in the claim, your workers compensation reserves may be lower than a company or organization that does not communicate with their adjusters <<by email. 

Workers compensation reserves and adjusting remain a team effort for successful companies. 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp Reserving Tagged With: algorithm, claims staff, indemnity reserves, reserve diary, spreadsheet

Certified Return Receipt Mail – Old School Workers Comp Life Saver

December 7, 2017 By JL Risk Management Consultants

Certified Return Receipt Mail – Workers Comp CYA

The use of Certified Return Receipt Mail may seem out-of-date in the age of Facebook, Twitter,  etc.   However, when the chips are down, having that little green card in your Worker Comp file is like a stroll on the beach – very comforting. 

Picture of Certified Return Receipt Mail Forms

Self Use License

This article began as one on subrogation and ended up covering more ground.  I have often heard recently that emailing a Workers Comp form or letter is the same thing as mailing it.   You may want to check that statement as having the recipient’s signature verifying receipt of a letter you mailed to them can be very helpful. 

I decided to take a live picture of what one looks like and then send you with a link to the Postal Service on how to fill them out properly.   The mistake most often made with Certified Return Receipt mail is not including your return address on the green postcard.  

You may wish to read the US Postal Service’s pages on Certified Mail.  The file is a PDF worth downloading and reading.

This information may sound juvenile.  However, our file reviews show that very important documents are sent by claim staffs with no way to prove the addressee received it.    My local Postmistress said that Certified Return Receipt mail does not go through the system slower than any other First Class mail.  Obtaining the receiver’s signature may take extra time.  The green signature card is returned to the  sender by First Class Mail.

Make sure that your claims processing manual or supervisor is OK with paying the $6+ in postage. 

USPS Tracking Number Certified Return Receipt Mail First Class Mail

Public Domain By Rick Stambaugh

If the recipient refuses to sign the green return card, that is also noted by the Postal Service.   The many uses for Workers Comp adjusting are (in my order of importance):

  1. Subrogation letters to another carrier or third party.  Using Certified Mail can save you many headaches later if someone says,  “I never received that letter.”  The green signature card may be all you have to save the day later in a subrogation claim.  This has saved me often. 
  2. Workers comp forms – state mandated claim closure forms that do not require the recipients signature may be a good idea.
  3.  A payment with a deadline – many adjusters have at one time had to pay a penalty and explain to their supervisor/manager and even worse- the insured or TPA client why there is a penalty assessed on the file for late payment (bad scene).    Most states have increased the penalties for late settlement payments.  Remember, the date they received it is critical, not when you made the payment.
  4. When a PO Box is involved – UPS and FedEx as a general rule do not deliver to PO Boxes.   I made the mistake many years ago overnighting a check to a PO Box.   I had a lot of explaining to do – see bad scene in #3.
  5. If another party involved says they did not receive something, you may want to send it Certified Return Receipt mail the second time.  Unless you have a bad address, this quickly takes care of the situation.
  6. If someone has bad mail service – there are instances where someone may just not have good mail service to their address.   We sometimes receive mail 15 – 21 days after it was mailed First Class in a neighboring state.   The cheapest tracer is Certified Return Receipt Mail.

If you have sent Certified Mail, you can track the receipt number at the USPS website to see where it is in the mail system.   The one negative on time management is the receipt must be stamped by a Postal Employee to be valid.  

The Postal Service website is a little slow right now with the holiday mail. 

Certified Return Receipt and First Class Mail are registered trademarks of the US Postal System, all rights reserved.

©J&L Risk Management Inc Copyright Notice

Filed Under: Certified Mail Service Tagged With: FedEx, first class mail, green postcard, PO Box, Postmistress, UPS, US Postal Service, USPS

Associate In Claims (AIC) – Never Looked Better For Work Comp Adjusters

January 18, 2017 By JL Risk Management Consultants

Associate In Claims (AIC) Designation Recommended For Work Comp Adjusters 

The Associate in Claims Designation (AIC) is highly recommended for quite a few old and new reasons.  One of the areas to consider is advances in technology.  

Technological Advancement

Picture of workers people associate in claims insurance

123RF

The level of technology in claims adjusting will likely advance very quickly over the next few years.   Work Comp adjusters may possibly be replaced by new technology that would set reserves, process medical bills, etc.   The word analytics shows up every day in the WC press.   If your competitor is a software program, the analytics cannot replace an experienced adjuster who has been exposed to more Property and Casualty lines than just Workers Compensation.   

ThE AIC designation teaches much more than just WC.  Subrogation is one of the key areas where adjusters who are very specialized need to understand the claim processes beyond processing a WC claim.

Job Market Tightening 

  Even though the outlook is fair to good for adjusters,  the insurance process lags behind approximately two to three years.  The new administration may spike job growth.  However, the employers have to first hire and then train employees.  The job market for WC adjusters will likely become worse before it improves in 3 – 5 years. 

Basic Competitive Forces

Man Associate In Claims Signing

StockUnlimited

If an adjuster is up for an advancement to a Senior Adjuster or Supervisory position, there will likely be a high level of competition.  If you have an Associate in Claims designation, it shows that you are dedicated to the profession and wish to stay in the insurance arena, if not in claims, for the future.   Anything that will put you ahead of the competition is great.   

Insurance companies will very likely look to the general job market.  There are no guarantees of internal promotions.  Promotions may come from outside the carrier or TPA.  

Subrogation 

This area should be covered again even though it was mentioned earlier.  Subrogation can be a tough area for a Workers Comp specialist.  Even a one day training class may not make an adjuster proficient in subrogation.  One adjuster recently remarked that his company had a subrogation unit so he did not worry about the subject.  

Hand Presenting Associate In Claims Funds

StockUnlimited

My response was – How do you know what files to send to the subro unit?   

The AIC lends itself to giving the adjuster enough exposure to at least keeping an eye on any type of claims where a third party is responsible.  If you, as an adjuster, can recover subrogation funds, then you have become indispensable to your organization. 

Subrogation funds can be left on the table, so to speak, if you are not pursuing a third party that is at least partially responsible for the occurrence of an incident.  

Final Word

There are no final words with me (inside joke).   The highlights of an AIC will be covered tomorrow – even how to make it much easier and less time consuming to obtain your Associate in Claims. 

©J&L Risk Management Inc Copyright Notice

Filed Under: AIC, Associate in Claims Tagged With: internal promotions, old and new reasons, property and casualty, spike job growth, training class

Top 10 Risk Management Techniques For Workers Comp

October 18, 2016 By JL Risk Management Consultants

Top 10 Risk Management Techniques

The Risk Management Techniques for Workers Comp can vary by state. One technique may not work in a certain state.

Hand Hold Marker Pen Risk Management Techniques Concept

(c) StockUnlimited

The following is a list of great risk management techniques for Workers Comp.  The list is generic.  Most should work in every state.   These are not just beneficial to cost-savings for employers.   The techniques are also benefit the injured employee in the long run.

  1.   Rehabilitation nurses – For many years, I have recommended rehab nurses on workers compensation files.   The nurses can provide such info/services as:
    • Initial Intake – one of the most important parts of the initial interview is the surroundings in the home.   A good rehab nurse can identify an concerns that he/she sees in the home or family life.   As most workers comp adjusters will tell you, the home life makes a huge difference on the return to work.
    • Obtaining medical information – accompanying the injured employee to the provider appointment can save many headaches later in the file.
    • Return to work – rehab nurses are invaluable in assisting with a return to work situation.   They can often become the communication hub between the employer, physician, and employee.
  2. Medical networks –  Having a documented medical network can be priceless to a WC claim.   Keeping control of the claim is one of the most important considerations.  Employers usually request no sacrifice in the care of the injured employee.  The flow of information to the adjuster is very important.   The 15% network reductions are somewhat important but not as important as a high level of care.
  3. .Wikimedia Commons – Indian NavyJob banks – this is one of the “golden oldies”  of risk management techniques.   Employers and organizations that have full job banks can make an adjuster’s initial investigation much easier.   The treating physicians and medical providers can easily see what the job entails with a full description and/or a video.  The return to work release -especially with modified duty – can be more easily obtained from the physician.
  4. Ergonomicist visit –  This may seem like a very expensive technique.   However, a visit to a worksite by an ergonomicist can enhance small tweaks in employees’ duties that will result in lower injury rates.   Ergonomics was partially responsible for the 50% reduction in Carpal Tunnel Syndrome over the last 10 years -amazing.
  5. Hiring –  One of the best ways to avoid injuries is before the employee is hired.  Happy, well adjusted employees are more rarely injured and return back to work much more quickly after an injury.    One plant nurse used to keep track of new hires by giving them a 1 star to 5 star for a great potential employee.   90% of the employees injured were 1 star hires.   There are stacks of legal ramifications in the hiring process.   This suggestion may be more state-specific.
  6. Know your adjuster’s name and email address – One of the easiest ways to reduce your Workers Comp costs is to be in contact with your adjuster and vice-versa.   Always inform the adjuster of any file developments, good or bad.   Facilitating the adjuster’s job will always reap cost savings.
    Picture of Man Hand Stop Workers Comp Risk Management Wood Domino

    123RF

    7.   Plant or facility nurses – This is an expensive option unless you have centralized employee facilities.  Plant nurses are one of the best cost-cutters as many minor claims can be handled in-house.    Spending $400 on a deep splinter may not be the best use of funds.   Plant nurses can also cover a few facilities if they are centrally located.

    8.   Walk-in or industrial clinics  – This is comparable to one of the Six Keys To Workers Compensation – Medical Networks.    If you have an industrial medicine clinic near your facilities and are not using them, most industrial clinics will greet you with open arms.   The clinics usually have a marketing person that would love to give you a tour of the facilities.  Walk-in clinics are the same if they handle WC files.    I recently discussed this technique with a group of safety officers.   They were in a remote area and had no walk-in clinics.   A local family Doctor may suffice as long as they know you have a return to work program.

    9.  Second level physicians – The physicians in this group consist of orthopedic surgeons, neurosurgeons, and the more specialized medical facilities.  The first level physicians (see #8) need to know your preference for physicians in this level.   Directing medical care is possibly the largest cost saver as the medical treatment costs are kept in check.   The indemnity cost reductions follow the medical treatment recommendations.   I always recommend that the employees receive the best care possible while these cost-cutting measures are put into place.

    Physical health Risk Management Techniques Assessment

    Wikimedia Commons – Andrew Skipworth

    10.  Safety continues after accident. –  I have been told by safety consultants and safety personnel in companies that their job stops at the time of the accident.    Nothing could be further from the truth.   Loss reduction continues after the accident.  Making sure the adjuster gets the 1st report of injury and quick medical treatment should still be tracked or facilitated by the safety department.   Your job performance is based on injury severity and repetition.    The E-Mod is the safety score (of sorts).

    There are many more recommendations than just these 10 Workers Comp Risk Management Techniques.    Feel free to use the search box above in the top right corner.

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Risk Management Tagged With: ergonomics, golden oldies, Indian Navy, job banks, severity and repetition, stacks of legal ramifications

Work Comp Predictive Models vs Gut Feelings – The Winner Is(?)

May 2, 2016 By JL Risk Management Consultants

Work Comp Predictive Models

There are so many articles on Work Comp predictive models out in the blogosphere.   Many taut their ability to see into the future.   I am not a big fan of predictive models as I have yet to see and am still waiting on one that is consistent in nature.

Graph Work Comp Predictive Models Concept

Wikimedia – Khadra A

One of the larger carriers in the nation had a predictive algorithm for setting claim reserves.   The reserves were off approximately 60% when I attempted a loss run review.   The carrier has since quit using the algorithm.

Some types of insurance can be held up to a predictive model such as automobile or property loss.   Workers comp predictive models attempt to predict how the human body heals as part of its forecasting.

The healing of the human body is such a random event.  In that same light, I came across an article that seemed to say gut feelings is actually a learned predictive algorithm learned since birth.  The article published in Inc magazine was an interesting take on how we all carry around a built in algorithm. 

A great passage from the article – “the more we experience- the more accurate our gut instincts become.”

The great Cris Carter- (former Vikings receiver) said the players that practice more seem to have more luck.

Medical Algorithms Work Comp Predictive Models Chart

Wikimedia – National Heart

If you follow the link to the article, there is a great example of how Gary Player the golfer used gut instinct as part of his luck.

Workers comp adjusters develop this “gut instinct” after 5 – 7 years of experience on which claims to question; how much medical reserves to place on a file; which claims need another medical opinion; etc.

As I have often mentioned, if I happen to come across any Work Comp predictive models or algorithms that work, I will laud it heavily- but then again I am still waiting.

I will publish a similar article on how this all fits in with a business owner next time.

©J&L Risk Management Inc Copyright Notice

Filed Under: predictive analytics Tagged With: algorithm, Gary Player, gut instinct

Workers Comp Articles – Outside of US

February 5, 2016 By JL Risk Management Consultants

Workers Comp Articles

The 1,530+ workers comp articles on Cutcompcosts cover some of the topics outside the US.  I will try to cover more of those in the upcoming weeks.

Globe Workers Comp Articles Graphic

StockUnlimited

The last workers comp questions and answers were very popular.  Below are questions that pertain to WC outside of the US, so to speak.   The links are provided to links in the blog and to external sources.

  1. Does China have a WC system?   Are the benefits similar to the US? Would it be considered a monopolistic system?
  2. What is the WC coverage called if you are on navigable waters outside of or in the US?  Is there a different set of rules for this coverage?   Does each state have their own rules for this type of coverage?
  3. What is the Jones Act?  What type of injuries/locations does it cover? Why is it so important for adjusters and agents to understand this Act?
  4. Is there a set of WC laws/rules for men/women in the Armed Forces while on base? What is it called?  What is the main difference between regular WC and this coverage?
  5. If you have employees who travel internationally, do you have to buy international WC?
  6. Did WC actually start in the US? If not, then where and when?

    Woman Using Laptop Workers Comp Articles On Table

    Wikimedia Commons – Brian Kerrigan

  7. Does NCCI, WCIRB, and the other rate bureaus have special rates for foreign workers or countries?
  8. Do any countries provide 24-hour healthcare including WC for their citizens?

The answers are going to be entered into the next article on Monday or Tuesday of next week.   Most of the answers are in the Workers comp articles on this blog.   The last two will be more difficult as there are no links supplied to the answers.

Please think of the test as having 16 questions  instead of eight.   Good luck and remember to use Google searches if you cannot find the answers on this blog.

Hint:   Question #6  was answered in the Q&A from earlier this week.

©J&L Risk Management Inc Copyright Notice

Filed Under: Defense Base Act, USL&H Tagged With: Armed Forces, DBA, navigable waters, no links supplied

Exclusive Remedy Affirmed by North Carolina Appeals Court

February 19, 2015 By JL Risk Management Consultants

Exclusive Remedy – North Carolina Affirms

The North Carolina Court of Appeals has ruled the doctrine of exclusive remedy is still intact.  The legal environment of today has begun to erode exclusive remedy.

North Carolina Exclusive Remedy Court of Appeals

Wikimedia Commons – NC Court of Appeals

Workers Compensation was originally structured to be the only remedy for injuries suffered on the job.   Employees cannot bring suit against their employers as general liability claims.   Employers are not able to deny the claim due to the employee’s negligence.  This balance was the underpinning of  WC for many years.

There are states that have been eroding exclusive remedy over time such as California.  Recently, I came across a North Carolina Court of Appeals case that concerned exclusive remedy.

The first case was taken from the  2015 North Carolina Court of Appeals  opinions.   If you want to view the complete decision, please follow the link.

Plaintiff Jeffrey Bowden was injured at work. While his workers’ compensation claim was pending, he sued First Liberty Insurance Corporation, the insurer handling the claim, for intentional infliction of emotional distress and bad faith. Bowden alleged that First Liberty engaged in a host of intentionally wrongful conduct while handling his claim and that he suffered various emotional injuries as a result.

Graphic North Carolina Exclusive Remedy Map

(c) 123rf

First Liberty moved to dismiss the claims on the ground that the Industrial
Commission had exclusive jurisdiction. The trial court denied the motion and First
Liberty appealed.
We reverse. This case is controlled by Johnson v. First Union Corp., 131 N.C. App. 142, 143-44, 504 S.E.2d 808, 809 (1998) and Deem v. Treadaway & Sons Painting & Wallcovering, Inc., 142 N.C. App. 472, 477-78, 543 S.E.2d 209, 212 (2001). In Johnson and Deem, this Court held that claims arising from an employer’s or insurer’s processing and handling of a workers’ compensation claim—even intentional torts—fall within the exclusive jurisdiction of the Industrial Commission.

We agree with First Liberty that the claims asserted in this case are indistinguishable from those we previously held to be within the exclusive jurisdiction of the Industrial Commission in Johnson and Deem. Accordingly, we reverse the trial court and remand for dismissal of the claims against First Liberty  for lack of subject matter jurisdiction.
____

The Woodson v Rowland case from 1991 did allow for an intentional tort to have jurisdiction outside of the North Carolina Industrial Commission.

©J&L Risk Management Inc Copyright Notice

Filed Under: Exclusive Remedy, North Carolina Tagged With: Bowden, First Liberty, indistinguishable, infliction

Six Ways To Excel In Comp Arena Without A College Degree

February 12, 2015 By JL Risk Management Consultants

Six Ways To Excel In the Comp Arena With No College Degree

The Comp arena has more than six ways to excel without a college degree.   Below is a list of the Top Six, in my humble opinion.

Is there a way to excel in the WC industry without a college degree?   This was a question posed to me last month when I was attending the NCCI Data Reporting conference in Palm Beach.

Picture Of Hands Comp Arena College

StockUnlimited

A college degree used to be the minimum requirement in the ’70s to the ’90s for most carriers.   However, the tide changed in the mid to late nineties.   There are substitutes that will help depending on your track in the WC industry.

The best to ways excel in WC without a college degree are:

  1. Working your way up from the bottom.  This involves having the patience of a great fisherman/woman and waiting for your turn in line.   Many great adjusters, agents, loss prevention reps, etc. have started at an admin assistant position and worked their way up the ladder.   It is not the easiest method.
  2. Obtaining designations from the AICPCU institute.   The classes do require some dedication to studying a certain course.  Having designations will always help if you are attempting #1 on this list.   Jack Keir For Success has helped me with my designations.   Some designations require as little as three courses.
  3. Finding a mentor.  One will be shocked by how much help can be obtained in the WC industry by asking.   Most WC-industry workers will bend over backward to help.  You can have many mentors that are experts in just one aspect of WC.   However, you will need an overall mentor.   I did excel in the jobs where I had a mentor.
  4. Having insurance industry expertise in another line of insurance.  For instance, subrogation is a tricky subject as there is so little training on liability insurance.  Having a former auto, GL, or other types of liability adjuster in the WC claims area- priceless.
  5. Obtaining your license immediately.  Adjusters and agents have to be licensed in almost every state.   Being licensed shows dedication and the WC insurer or TPA does not have to go through the licensure training.
  6. Having a good work personality.  
    Example of Comp Arena student

    Wikimedia Commons – David Shankbone

    This is the real secret out of the six ways to excel.  People that play well with others are the ones that are sought out when a position is open.  The person making the recommendation to hire someone may end up working with that person on a daily basis.

  7. Bonus – Being a professional.  This shines above all else and works with #6.  When you walk in the door in the morning and until you leave the office in the evening, professionalism is the key.   Workers Comp can be a very high-stress job at times.  Keep being professional.

Check out The Two Most Powerful Phrases In The Insurance Industry for more on this subject.

 

©J&L Risk Management Inc Copyright Notice

Filed Under: AIC, CPCU Tagged With: college degree, licensure training, NCCI data, Palm Beach, professionalism

NCPRIMA Presentation Work Comp Advice For Public Risk Managers

September 18, 2014 By JL Risk Management Consultants

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.

Vector Graphic Woman NCPRIMA Presentation With Slide

StockUnlimited

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.

Graphic Of Analysis NCPRIMA Presentation Chart

StockUnlimited

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.

Man Holding Calculator NCPRIMA Presentation Risk Management

StockUnlimited

• 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

Filed Under: NCPRIMA Tagged With: aberrations, anomalies, Caveat, executive, Mechanism, scenario, transcript

Liability Adjusting Is Part of Workers Compensation Claims

December 31, 2013 By JL Risk Management Consultants

Liability Adjusting Enables Great Workers Comp Adjusting

One of the more complex liability adjusting components of  Workers Comp claims is subrogation.

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Subrogation rears its ugly head (or the lack thereof) on a large percentage of Workers Compensation files.  The percentage referred to is the lack of knowledge by WC adjusters on identifying and pursuing subrogation.  Subrogation is basically placing the liability of the risk on a third party.

There are many subrogation articles in this blog.  The reason is that many carriers and TPA’s just do not fully train their adjusters on the nuances of liability adjusting other than WC.  Carriers and especially TPA’s can become very single-minded in the handling of WC claims.   This is not an indictment of any single carrier of TPA.  The problem is more systemic in nature.

A very good subrogation attorney published an article recently in the Insurance Journal.  One of the internal links provided a great summary of subrogation laws.  When one steps outside the comfort of WC liability, the process can become much more complicated.

One of the better subrogation websites included a  national map of the various subrogation laws in every state dealing with whether the state is a:

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  • Contributory negligence state (bars recovery with only 1% of fault by the plaintiff) or
  • Comparative negligence state (recovery by plaintiff is reduced or prohibited based on the percentage of fault attributed to the plaintiff), and
  • Pure comparative or modified comparative state.

Kudos to the author Attorney Gary Wickert as it is one of those articles you should keep handy.  An accident may occur in other states than just the one where the WC file will be handled.   The list is not exhaustive, but well worth the read.

The reason for this article is sometimes the WC adjuster can write one letter and receive a subrogation recovery.  The key is to make sure the adjuster handling the liability file (auto, premises, general liability, etc.) is put on timely notice.  A letter by certified return receipt mail has been used as legal proof of a timely subrogation notice.  It is the best $5 an adjuster can spend to preserve the right to recover.

Liability adjusting on WC files is a training issue that needs to be addressed to recover funds that carriers and TPAs sometimes leave on the table.

©J&L Risk Management Inc Copyright Notice

Filed Under: subrogation Tagged With: comparative, contributory negligence, indictment, liability adjusting, systemic in nature

Workers Comp Cost Reduction Consultants

A Word About Workers Comp

Whether you call it Workman’s Compensation, Workmen’s Compensation, Workers’ Compensation, Work Comp, or Workers Comp, it is still the same, silent budget killer. Workers’ Compensation is one of the most complex and confusing components of your insurance budget.  

 

Premium audits, experience modification factors, classification codes, reserve reviews, and state regulations & statutes all add to the chaos. The question as to whether your company is being overcharged is not an easy one to answer. 

 

Only by working closely with your carrier, third party administrator (TPA)  or your insurance agent can the answer be found. Errors and overcharges occur in over 50% of all policies. 

 

Premium Audits

Workers Compensation premium audits occur yearly within 60 days after policy expiry.  The premium auditor will usually contact your company within 30 days after policy expiry to set up a premium audit appointment.   The premium audit letter you receive will have listed the specific items to be reviewed by the auditor.  

 

The premium audit is not the same as a tax audit but should be treated as such.  Organization is the key to any successful audit.  If your records are disorganized, this will reflect on your company overall.   After your premium audit is complete, you will receive a premium audit results along with a premium audit billing.  

 

If you do not understand or have questions on the audit results and the billing, you have the right to have all of your questions answered and to even to initiate a premium audit dispute if you do not agree with the results.

 

All of the procedures and rules for a premium audit or premium audit dispute are spelled out in your policy.  Time is of the essence in forwarding your dispute to the insurance carrier.  If you do not agree with your premium audit bill,  the worst mistake is to set on the bill and do nothing.  

 

Claim and Reserve Reviews

Many insureds have questions about how their claims were handled by the adjuster.  Often times, the adjuster has performed well.  However, there are instances where the claims adjuster did not do their job.  

 

One of the most common errors is to over-reserve the files.  An adjuster usually has to set an initial reserve at 14 days with a final reserve at 60 days after the claim was received by the carrier or Third Party Administrator.  The 14-day reserve usually occurs after benefits are paid or denied on the file. 

 

File performance audits and reserve reviews are part of our Workers Comp Risk Management services.  We provide a holistic view of the process from the time the claim is received until the last premium audit billing is published for that file.  We do not just do premium audits or reserve/performance audits.  

 

Our list of services covers what we do on a daily basis for employers. 

 

J&L Risk Management Consultants, Inc. has the experience and expertise to wade through all of the confusion and help your company reduce its insurance budget.  

 

We have had great success in the past auditing premiums, verifying e-mods & class codes, double checking rates, and helping employers resolve disputes with their carriers. Your money could be in the hands of your insurance carrier. Get workers comp advice now and get that cash back where it belongs.

 

Our Award-Winning Workers Comp Blog

One of the most useful aspects of our website is an informative blog. We have provided over 2,000 articles to our readers free of charge.  

 

J&L’s blog contains no advertising.  All the articles were written by our founder James J Moore, AIC, MBA, ChFC, ARM.  James’s articles appear in many worker’s compensation websites.  Over the years, many websites republished his articles.  

 

Publications such as WorkersCompensation.com, Work Comp Central, Work Comp Analysis, Bloomberg News, and Entrepreneur Magazine included various articles from the blog.  

 

James wrote all the articles except for a few who were added by our OSHA Consultant Glen.  A few guest authors provided very interesting posts.   Some of the other competing websites use paid ghostwriters to supply articles for their blog.  

 

The best way to find what you need is by using the search box on any page of the blog, except this landing page.  

 

The blog and website won many awards for being updated frequently and for the material presented to the readers. If you like an article, click on the category at the bottom of the article.  The category search provides many associated articles.  We revamped our article structure in early 2019.  

 

We currently are working on providing more accurate information on our metadescriptions.  Inaccurate metadescriptions have been the bane of many Google, Bing, and other search engine users.

 

Expert Witness Work

Our founder James J Moore remains of the pre-eminent workers’ compensation consultants on a national basis. 

 

Many attorneys, carriers, and employers have sought him out to provide expert witness reports; He has provided testimony for cases involving premium audit, ratings, workers compensation Experience Modification Factors, and claims handling.  

 

James recently presented at the AAIMCO annual conference on the subject of finding sources to use in an expert witness practice.  

 

James proffered his opinion in one of the largest class-action lawsuits in the southeastern US in 2013.  

 

Being an expert witness is a hard row to hoe.  Worker’s Comp remains one of the most individualized areas on which to provide an opinion.  Each state supplies its own rules.  

 

The National Council on Compensation Insurance (NCCI) and California’s Worker’s Compensation Insurance Rating Bureau (WCIRB) possess very different rules and regulations on how a company is to be rated.  Keeping up with all of these has proved a difficult but rewarding task.

 

Self Insurance

Self Insurance covers approximately 15% of the market for worker’s comp.  Self-insureds need to follow their claims much more closely than other types of insurance arrangements.  The claims adjusters spend directly from a self-insured employer’s budget.  

 

A self-insured employer needs to think of their carrier’s claim adjusters as an extension of the employer’s office.  Working directly with the claims staff usually results in the employer having a greater control over their finances.

 

Self-insureds do not have the buffer that the voluntary market insureds possess in their risk portfolios.   The Experience Modification System provides a buffer of sorts when voluntary market employers have a mega-claim.   The self-insured employer will face the mega-claim with only reinsurance as a backstop for their risk.
 

Voluntary market insureds benefit from a buffer if a spate of claims occurs during their policy year.  Self-insureds do not benefit from this insuring arrangement.  

 

Self-insureds face the brunt of their claims expenditures with purely an insurance budget.  Reinsurance removes some of the risk for a claim or a group of claims.  The group of claims reinsurance is called the aggregate limit.  Aggregate limits vary by each self-insured.  

 

Once the claims for a certain period reach this limit, the reinsurer steps in pays the claims from that point.  The usual single claim reinsurance level sits at $250,000.

 

Six Keys To Cutting Workers Comp Costs

Our founder James Moore speaks to many different groups on the Six Keys.  The keys have varied very little since the 1980s.  The first four keys originated in the late 1980s when James worked as a multi-state workers compensation adjuster.  

 

James added two additional keys in the last 20 years.  The last key – Adoption of the Keys by Management could have been included with the original four keys.  James realized that only a small percentage of employers used the keys to reduce their workers’ compensation expenditures.

 

James added the Sixth Key to round out what he noticed as the proper way to reduce workers compensation budgets and premium.  Without management’s involvement, the keys end up as dusty manuals on a shelf or an old computer file which had not been accessed for months or years.  

 

The Keys appeared first in one of two manuals that James offered for sale before the Internet and blogging became so popular.  Most of the Keys have been added into the blog over time.  If there was one task that employers needed to accomplish to cut comp costs, James added that key to the list.  

 

According to James, “The main overall key to saving on workers’ comp expenditures is just paying attention to the silent budget killer.”  James added that any employer that turns their attention to payments if self-insured and premiums for voluntary market insureds naturally sees their workers’ compensation budgets shrink over time. 

 

Claims Review

We recommend claims reviews every month using the loss runs.  Online access enhances any claim review.  The employer can review their claims without a formal claims meeting.  

 

Online access allows an insured employer to review their claims whenever they wish to assess their claims.  

 

One caveat from performing a claims review amounts to knowing which claims to pick and which ones to leave alone.  Calling attention to certain claims can hurt reserves.  

 

Setting reserves levels can be more of an art form than a routine task.   We reviewed many analytics software programs over the years.  Not one can accurately assess the level of reserves.  

 

Too many variables exist in a Workers; Compensation claim for analytics to work properly.  

 

Medical healing periods vary by each person.  No two injured workers heal the same way.  The healing time assessment requires the keen eye of an experienced adjuster.  

 

Adjusters by the nature of their job are very overloaded.  Adjusters maintain 13 tasks in their jobs.  Any assistance that an employer gives to an adjuster usually results in a lower claims reserve level.  

 

Claims reviews are not easy tasks to perform.  One of the keys to lower worker’s comp costs occurs when the employer takes the time to become interested in their claims.  

 

Subrogation

Subrogation remains one of the areas that confounds many Workers’ Compensation insurance adjusters.   A few decades ago, insurance adjusters covered many lines of insurance, including crop and life.  The insurance industry split the lines of insurance adjusting. Workers’ Comp became a specialized line of insurance.  

 

One of the areas for the change came about as insurance lines became much more specialized over time.   Many companies decided to self-insure their losses instead of paying premiums.  The change led to the Third Party Administrator (TPA) specialization.  

 

Subrogation can be defined as ;  the substitution of one person or group by another in respect of a debt or insurance claim, accompanied by the transfer of any associated rights and duties.

 

Waivers of subrogation appear in almost all policies.   These waivers allow the carrier or self-insured to pursue any responsible third parties for any indemnity or medical expense on a WC claim.  These waivers put the responsibility directly on the claims adjuster’s shoulders to pursue the claim for benefits incurred by the insured or self-insured.  

 

Some collateral damage occurred when the lines of insurance became very specialized.  Our claim reviews show that pursuing the probable responsible third party created a lack of recovery on many files.   Adjusters sent letters sometimes, advising the third party insurance carrier of a possible lien.  

 

Often, the adjuster’s pursuit stopped at that point.  Monitoring the claims that had third party implications requires a diary of its own, and not in the regular claims diary.   

 

Tracking the issuance of the subrogation letter to having the funds (important) credited back to the file caused the need for the insured to create a subrogation diary.   Do not leave “money on the table.”  

 

Insurance carriers and TPAs credit the subrogation monies back to the file in different ways.   For self-insureds, the funds are true cash money.   Make any subrogation files part of your regular work diary if you are self-insured.   Having online access (which I have said is golden) allows an employer to see how the adjuster and possibly claims supervisor treat the subrogation claim.  

 

A regular voluntary market policy (usual coverage) also has an element that makes the tracking of any subrogation claims very important. 

 

 If your company has an E-Mod (sometimes call EMR, X-Mod), the recovered funds can be credited back to your Mod in most cases – except for the extra step of making sure your Workers’ Comp carrier credited the subrogation amounts back to the file which usually will lower your X-Mod.  

 

The reduction can be a significant saving or recovery for the next three to four years as the subrogation recovery works through the Mod system.  

 

Work Comp Consultants

J&L”s Risk Management Workers Comp Consultants

As Workers Comp Consultants, there are many areas of consulting in which we specialize for our clients.   Our premium reduction services center on specialized premium analysis. 

Premium Analysis Service 

We statistically analyze your premiums and NCCI / state bureau Experience Mod calculations for errors. We also thoroughly review the premium auditor’s computations to verify the accuracy of the yearly premium audit.

Reserve Analysis and Review

J&L’s workers comp consultants will examine your claims reserves to make sure they are in line with industry standards and that files are closed promptly.  

Experience Mod Projections

We often forecast employers’ Experience Mod for up to five years in the future.  We use the time-tested regression analysis methods instead of the usual actuarial projects that are in our opinion not as accurate as possible. 

Physical or Online File Reviews

We can easily review the claims adjuster’s work to ensure proper claims handling, reserving, and subrogation.  We usually score the adjuster’s work using a 100 point scale.  Our claims analyses covers 33 different areas of claims adjusting to thoroughly assess the health of the files. 

Presentation and Employer Training Services

We can provide an award winning workshop from one to four hours in length that is applicable to all states.   The workshops can be altered to the needs of a specific employer or group of employers.  

Self Insurance Services

We analyze your company’s current Workers’ Compensation insurance situation to see if self-insurance is a viable option.  We can help you design or modify your self-insurance program for maximum cost savings.  There are approximately 8 – 10 requirements of employers that wish to be self insured.  We have long term experience in assisting employers that wish to covert to self insurance.  

Self-Insurance Loss Development Factors

J&L will forecast your required spending levels for up to 10 years in the future using current and past data.  We have promulgated Loss Development Factors as part of our services since 1996.  Our company founder James J Moore has a large background in actuarial science.  He possesses a Bachelor’s Degree in Actuarial Science. 

Employer Support Services

We provide various employer ancillary services such as

  • Accident Disaster Plans
  • Medical Treatment Networks – this is a real cost saver that involves little monetary input 
  • Return-to-Work Programs – to keep the files from becoming permanent total by successfully returning the injured worker to gainful employment 
  • First Injury Reporting – a critical part of Workers Compensation savings is reporting an accident as soon as possible.  We will train the employer to how to properly and timely file a first report of injury.  

Expert Witness Services

Our founder has reviewed hundreds of files for employers, Third Party Administrators and carriers.  James has testified on numerous files that involve premium audits, premium billings, and adjuster file management.  He wrote a landmark report on a recent large class action matter which enabled the file to settle readily.  The class action employer members were able to recover overcharged premiums.  

James has a background that covers actuarial science, IT, claims, premium charges, and proper policy applications.   His background enables him to testify in various Workers Compensation matters.    

Manuals Are Now Free – Just Email or Call Us For Your Free Copy

manual_cover

TABLE OF CONTENTS

 

FOREWORD
JUMP-STARTING YOUR INSURANCE PROGRAM
OVERCHARGES
CLASSIFICATIONS
SUBCONTRACTORS
TEMPORARY EMPLOYEES
ALTERNATIVES TO TRADITIONAL INSURANCE PROGRAMS
PROPOSALS
THE WC INSURANCE SYSTEM
THE CLAIMS ADJUSTER
SUBROGATION
SECOND INJURY FUND
DENIED CLAIMS 
INELIGIBLE CLAIM RULE 
FIVE SECRET SIGNS OF AN OVERLOADED WC ADJUSTER
CLAIM RESERVES 
RED FLAG 
RESERVE REVIEW TIMING 
METHODS OF REVIEWING CLAIMS
WC SUPPLEMENTS 
THE FOUR SECRETS OF SAVING WC $
FRAUD??? 
REHABILITATION AND BILL REVIEW CHARGES
IN-HOUSE INVESTIGATIONS AND/OR TIME & EXPENSE BILLINGS
FINES AND PENALTIES 
WHY?
WC INSURANCE DEFINITIONS
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9
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Start saving on Workers Comp today

If you would like to order your copy please call (800) 813-1386 
or email us at [email protected]

 

Definitions

These definitions are designed for use when dealing with any WC insurance personnel, especially when renewing your WC policies. 

A–B–C–D–E–F–G–H–I–J–K–L–M–N–O–P–Q–R–S–T–U–V–W–X–Y–Z
A

Administrative Law Judge (ALJ): The legal representative employed by the Workers’ Compensation Board who reviews appealed administrative orders, holds impartial hearings, and issues legal opinions. Formerly called a hearings referee.

Affirmative Warranty:  A policy condition that is required to exist on the date the statement is made.  For example, the auto policy requires a statement that the insured has not had auto coverage canceled in the past three years.

Aggravation: A claim for aggravation is a worker’s request for additional disability compensation stemming from a worsening of previously accepted conditions.

Aggregate Excess Policy (stop-loss excess policy):  A type of policy that begins to pay losses, subject to its limit, when the insured’s total losses under the self-insured retention have exceeded a certain limit.  The aggregate excess will pay losses from the first dollar after this limit has been reached.  The self-insured retention applies to losses during a specific period of time, usually one year.

Aggregate Limit:  A maximum amount that the insurer will pay for all losses covered under a policy during the policy period.

Allocated loss adjustment expenses (ALAE):  Specific expenses incurred in the adjustment of claims and require a reserve on pending and IBNR claims.

A.L.E.: Allocated Loss Expenses, which are insurance company costs for adjusting and settling claims which can be identified with a specific claim. The A.L.E. are often included in the claims costs used to adjust premium in some loss-sensitive premiums adjustment types of WC policies, such as sliding scale dividend plans, or some Retro or Retention plans.

Alphabet House Organization:  A large intermediary firm with offices world wide:  due to its size, it can offer specialized departments, such as marine or aviation.

American Medical Association Guides: The most widely used methods of rating functional impairment. They are a system of rating anatomical impairments for injured workers.

Americans with Disabilities Act (ADA): The ADA is a federal civil rights law enacted in 1990 to protect individuals with disabilities from all types of discrimination, including that which is related to employment: recruiting, the hiring process, terms and conditions of employment, promotions, and training procedures.

Ancillary Care: Care such as physical or occupational therapy provided by a medical service provider other than the attending physician.

Annuity: A contract to make periodic payments to a person for a fixed period or for life.  A person usually purchases an annuity from a life insurance company by paying a premium.

ARAP: Assigned Risk Adjustment Program–An additional adjustment to the Experience Modification Factor, used in some states to adjust premium for Assigned Risk policies. Although NCCI includes this adjustment on all their Mod worksheets, not all states use the ARAP program. Illinois, for instance, charges higher rates for Assigned Risk policies, and thus does not use the ARAP adjustment to the Experience Mod.

Arbitration:  The process in which two or more parties agree to have an impartial person resolve a dispute.  This impartial person is called an arbitrator.  Arbitrators listen to the evidence in a case and decide the dispute on the merits of the evidence presented.

Assigned Risk Plan: Sometimes called the Pool, this is a mechanism established by individual states to make sure that employers can obtain WC insurance even if insurance companies are not willing to write such insurance on a voluntary basis. Assigned Risk plans in many states carry higher rates than the voluntary market.

Association Captive:  A form of group captive. A group captive insures the exposure of multiple parents that are usually from the same industry.   An association captive is sponsored by an association.

Association Cooperatives:  Groups of independent agents and brokers that have combined their talents and resources to compete more effectively against large brokerage firms in selling insurance.

Audited Premium: The final premium for the policy term, produced by auditing actual payroll exposures.

Audit Workpapers: Worksheet prepared by the premium auditor, can be either hand-written or computerized, showing how the auditor arrived at the payroll numbers that are used to determine the audited premium.

Average Value Method:  Requires estimates for loss reserves to be made on an aggregate basis for a group or category of claims.  This method is usually used to set a tempory average value for claims until more details can be obtained to make an individual case estimate.

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B

Bailee’s Customer Insurance:  A form of inland marine insurance.  It provides coverage for loss of a customer’s goods in the custody of a bailee, and is applied regardless of fault.

Basic Premium:  A charge to cover the insurer’s acquisition expenses, administrative costs, profit, and the insurance transfer charge.

Basis Risk:  The risk that the amount an organization might receive to offset its losses might be greater or less than the amount of actual losses.

Basket Aggregate Retention:  An aggregate retention covering several types of risk exposures.

Board Certified: This is different than being licensed. In addition to licensing, some physicians may be board certified in their specialty after typically completing a period of training (“residency”) in a particular specialty and passing an examination given by the board of that specialty.

Book Value:  (of depreciable asset)  An asset’s historical value/cost, less accumulated depreciation.

Brother – Sister Relationship:  Relationship between one subsidiary and another of the same parent.

Business Risk:  The potential variation in revenues that can result from the nature of the product or service an organization provides.  For example, an increase in demand for a product will result in higher profits.

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C

Captive Insurance Company:  A hybrid form of risk financing where a subsidiary is created to insure the risks of its parent and affiliated companies.

Case Reserves:  The estimated amounts that may be paid on losses that have been reported.

Catastrophe Bond:  Type of insurance linked security specifically designed to transfer insurable catastrophe risk to noninsurance investors.

Catastrophe Call Option Spread:  A call option spread based on the value of catastrophe losses.

Catastrophe Equity Put Option:  A right to sell stock at a predetermined price in the event of a catastrophe loss occurring to the organization.

Catastrophe Reinsurance:  A specialized form of excess of loss reinsurance, providing protection to an insurer for losses from a single catastrophic event that exceed a specific amount in total.

Catastrophic Case Management:  Identifies and monitors claims that are potentially long-term to prevent wasteful and unnecessary procedures.

Cede:  Transfer payments and losses to a reinsurer.

Ceding Commission:  Credited to the reinsured against the reinsurance premiums to reimburse the reinsured for its underwriting and issuing expenses.  The reinsurer does not have these initial expenses.

Ceding Company:   Purchases reinsurance and is an insurance company that transfers premiums and losses to the reinsurer.

Chronic Pain Syndrome: A subconscious psychological stress state prolonging pain through operate conditioning and pain behavior.

Claim: A written request for compensation from a subject worker, someone on the worker’s behalf, or any compensable injury of which a subject employer has notice or knowledge.

Claims Adjuster: Insurer representative who processes a claim filed by an injured worker. Also referred to as a claims examiner.

Claim Experience Report:  A report which reflects claim payments and receipts for claims closed or pending during a specific period.

Claims Made Basis (for allocating loss costs):  A measure of the value of allocable losses obtained by calculating the actual payments and additions to reserves for claims made during an accounting period.

Claims Paid Basis (for allocating loss costs): Estimates amounts paid on losses during the specific accounting period and ignores when loss occurred.

Closed Bidding:  When a few, well qualified and carefully selected insurers or their representatives are asked to submit competitive bids for an organization’s whole risk exposure program.

Closure:  That point in the claims negotiation where the parties have resolved their differences, but not yet formally expressed agreement.

Combination Excess Policy:  A form of excess coverage that uses elements of both the following-form and self-contained types of coverage.

Commutation:  An agreement to extinguish all liabilities between parties to the agreement.

Compensable Injury: An accidental injury, or accidental injury to prosthetic appliances, arising out of and in the course of employment requiring medical services or resulting in disability or death. An injury is accidental if the result is an accident, whether or not due to accidental means, if it is established by medical evidence supported by objective findings.

Compensation: All benefits, including medical services, provided for a compensable injury to a subject worker or the worker’s beneficiaries by an insurer or self-insured employer pursuant to this chapter.

Concealment: Failure to reveal material facts.

Concurrent Review:  Monitoring the appropriateness of hospital treatment while it is being provided.

Conditions: Policy Provisions that place qualifications on the promises of the insurer.

Conditional Contract:  An agreement that will only be performed upon the occurrence of a specified condition.  An insurer only performs its obligations when a loss occurs that is covered by the policy.

Contingent Capital Arrangement:  A pre-loss arrangement facilitating an organization’s ability to  raise cash by selling stock or issuing debt at prearranged terms in the event of a loss exceeding a certain amount.

Contingent Liability (for an annuity):  The responsibility of the indemnitor to make the annuity payments to a claimant in the event that the insurance company becomes insolvent.  The indemnitor buys the annuity in a structured settlement, is the owner of the annuity, and remains responsible for payments.

Contingent Surplus Note (CSN):  An agreement permitting an insurer to immediately issue surplus notes and raise funds at its own option.

Contingent Surplus Note (CSN) Trust:   A trust created for the sole purpose of purchasing surplus notes from an issuing insurer, at the insured’s option and at prearranged terms.

Contract of Adhesion:  An agreement that one party prepares, while the other party is only given the option of accepting it without changes, or rejecting it.  For example, a standard homeowners’ policy is prepared by the insurer, and the insured cannot make changes.

Contract of Indemnity:  Provides for payment of a loss only to the extent of the actual financial loss suffered.  Insurance policies are contracts of indemnity because the insured does not benefit from a loss; the payment is only to reimburse for actual financial loss.

Contractual Subrogation:  The insurer’s right under the insurance contract to recover from a third party who has caused a loss, after the insurer has paid its insured for the loss.

Converted Losses:  The retained incurred loss time, an applicable loss conversion factor, or the factor representing the unallocated portion of loss adjustment expenses.

Cost Allocation:  Distributing risk management costs among the component parts of an organization, i.e., departments, profit centers, or geographic locations.

Cost of Risk:  A measure of the cost of managing an organization’s risk, developed in 1962 by the Risk and Insurance Management Society (RIMS).  It includes administrative expense, risk control expense, retained loss, and the cost of risk transfer.

Cost Shifting:  When higher fees are charged to payment sources that impose fewer controls on costs.

Credit Risk: The possibility of loss for an organization that extends credit to others in the course of its activities, such as a bank.  The risk is that the borrower may default on its contractual obligation to repay the funds.

Cumulative Trauma: The concept that repeated minor stresses either of a small or inconsequential nature over a period of time result in an injury or disability.

Cut-through Endorsement, or Assumption Certificate:  Extends a reinsurer’s obligations directly to the ceding company’s policyholders, so policyholders are protected in the event the cedent becomes insolvent.

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D

Declarations Page: The section of a property-liability policy that is found at the front of the policy.  This section contains information concerning the insured exposure that is “declared” by both the insured and the insurer.

Depreciation:  A financial and tax accounting term for an expense which recognizes the gradual loss of usefulness of an asset with a life of more that one year.  An annual allowance for depreciation permits the matching of revenues during an accounting period with the expense associated with the loss of usefulness of assets used to generate the revenue.

Depressed Pay-in:  An arrangement under which the insured pays the standard premium over a period longer than the policy period.

Diagnostic Related Groups (DRG): Organizations that contract with health care providers to pay a fixed fee for a particular diagnosis, regardless of the actual cost of treatment.  The health care provider has an incentive to contain costs.

Derivative:  A financial instrument whose value is based on another asset, called an underlying asset.

Direct Writer: A captive that issues policies directly to its parents and affiliates without the use of a fronting carrier.

Disability: Sometimes confused with impairment. Disability represents how an impairment combined with the person’s age, educational background, vocational background and other factors affect an injured workers’ ability to return to work. Impairment is one part of assigning an overall disability.

Discount Rate:  The rate used to discount future cash flows in present value analysis.

Direct Writer: An insurance company that does not work through independent insurance agents. The largest direct writer of WC insurance is Liberty Mutual. Agents for direct writers are employees of the insurance company.

Direct Writing Reinsurer:  A reinsurer that often does not use intermediaries, or one that deals directly with insurers.

Dividend: A return of premium calculated after policy expiration, based on the overall performance of the insurance company or of a group of insureds. Dividends cannot be guaranteed in advance, although they are often shown on proposals for insurance.

Drop-down Coverage:  Two of the functions of umbrella coverage.  The coverage drops down and takes the place of primary coverage when those limits are exhausted.  The umbrella coverage is not included in the primary policies.

Dual Trigger Cover:  An integrated risk plan that has a provision tying the retention and limit to two different types of risk.  A loss over a specified amount arising from each of the risks must occur during the policy period for the coverage to be triggered.

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E

Economic Performance Test:  Enacted in 1987 to replace the all-events test.  This law generally provides that all events establishing the fact of a liability have not occurred until there is economic performance.  When goods or services are being provided to the taxpayer, the economic performance occurs as the property or services are provided.  For tort liabilities, economic performance occurs as payments are made to satisfy the liability.

Efficient Frontier (of risk portfolios):  The group of portfolios that maximize return for each level of risk.  A portfolio that does not generate the maximum return for its level of risk is said to be below the efficient frontier.

EITF 93-6 and EITF 93-14:  Advisory pronouncements issued by the Financial Accounting Standard Board suggesting the recommended treatment of certain reinsurance and finite risk insurance transactions.

Employers’ Liability:  Section B of the standard WC insurance policy, this is the part of the policy that has a dollar limit shown for the coverage. This section insures employers for liability towards employees that is not covered by the statutory WC provisions of the state (which are insured in Section A and have no set dollar limit on the policy).

Enterprise Risk Management:  A comprehensive approach to managing all of the risks of an organization together rather than managing the risks separately.

Estoppel:  The legal concept that courts will not permit a person to assert a right after acting in a way that was inconsistent with such right.  Estoppel is usually indistinguishable from a waiver.

Equitable Subrogation:  The insurer’s legal right at common law to recover from a third party who has caused a loss after the insurer has paid its insured for the loss.

Exacerbation: A temporary flare up of something related to a pre-existing condition, usually after an injury, but recedes to its former level within a reasonable period of time.

Excess Insurance:  A type of insurance that provides coverage for losses that exceed the underlying policy limit or the self-insured retention.  Excess insurance attaches above the underlying policy or self-insured retention.

Excess Losses: In the Experience Modification Factor, the amount of any single claim that exceeds $5,000.

Excess Loss Premium:  The premium charges for limiting an individual loss in a retrospective rating plan.

Excess of Loss Reinsurance Agreement: The reinsurer will pay the ceding insurer’s losses from a line of insurance if losses exceed a certain amount.  The reinsured cedes only losses, and premiums are usually a percentage of the cedent’s premium income from the lines of insurance covered by the reinsurance agreement.

Experience Based System:  A measure of the frequency and severity of claims and is used to project future costs for allocation.

Experience Fund (for a finite risk plan):  A fund into which premiums are paid and investment income is accumulated and from which the margin and losses are paid, with any closing balance returned to the insured.

Experience Modification Factor: An adjustment to Manual Premium, calculated by an advisory organization (also known as rating bureaus) such as NCCI, based on historic loss and payroll data of a particular insured.

Experience Rating:  A rating technique that adjusts the industry standard premium upward or downward based on the organization’s own loss experience.

Experience Period: The window of time from which loss and payroll data is used to calculate an experience modification factor for an employer.  Normally this window is a three-year period, starting four years prior to the effective date of the experience modifier.  However, rating bureaus do not wait until three full years of data are in the experience period before producing an experience rating for an employer.  If an employer reaches a certain, relatively low threshold of WC insurance premiums in any one of the three years in the experience period “window”, this will make that employer eligible for experience rating.

Exposure:  A possibility of a loss. Exposure data is a way of measuring this possibility of loss by using facts that reflect the likely amount of loss.

Exposure Based System:  A measure of the risk faced by an organization and can be approached on the basis of size, nature of operations, and territory.

Externality:  A positive externality occurs when an entity receives a benefit without incurring its share of the costs, a positive externality.  A negative externality occurs when another entity bears some of the costs without receiving a corresponding benefit.

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F

Faculative Reinsurance:   Separate negotiations concerning exposures and premiums for each individual contract of reinsurance submitted to a reinsurer.  Each risk is a separate transaction, and the reinsurer is not committed in advance to accepting the ceding company’s request for reinsurance.

FAS 113:  A binding statement or opinion by the Financial Accounting Standard Board defining what type of transactions are reinsurance or finite risk insurance, and how those transactions must be treated for financial accounting purposes.

Fee Audit:  Examination of bills from health care providers to check that items of service are properly billed and the services appropriate.

Field Claim Representative: An insurance company employee who processes claims by interviewing witnesses, claimants, and insureds, and by arranging, through appropriate medical and repair personnel, for restoration of losses.

Financial/Market Risk:  The exposure to gain or loss in the value of financial instruments as a result of changes in market prices for the organization’s products, or as a result of changes in market rates of interest.  Financial/market risk includes interest rate risk, foreign exchange rate risk, and commodity price risk.

Financial risk:  The possibility that an organization will fail to meet its fixed financial obligations.   An example of a fixed financial obligation would be principal and interest payments on an existing debt.

Finite/Integrated Risk Plan: An integrated risk plan written on a finite risk basis.

Finite Risk Insurance Plan:  A hybrid type of risk financing plan. It transfers a limited amount of risk to an insurer.  These plans usually include some type of profit-sharing agreement between the insured and the insurer.  The risk that is transferred to the insurer is the risk that covered losses and expenses will be greater than the premium plus investment income earned by the insurer.

Finite Risk Reinsurance: A nontraditional type of reinsurance.  The insurance company cedes a limited amount of risk, shares the profit with the reinsurer, and receives credit for investment income earned by the reinsurer.

Following-Form Excess Policy: Provides the same coverage as that provided by the primary policy.  A loss above the primary policy limit is covered by the excess policy only if it is a type of loss covered by the primary policy.

Frequency (of losses):  The measure of the number of occurrences of a loss for a specific time period such as a year.

Frequency Sensitive Allocation System:  A risk management cost allocation system that responds to the number of claims rather than their severity.

Frequency Probability Distribution: This is a chart which shows the number of chance events or claims over a specified time period, generally a number of years.  The probability of the specified event or claim happening in each year is computed by dividing the number of events or claims for each year by the total number of events for the time period.  As a simple example, if 1 event occurs in Year 1, 3 events in Year 2, and 1 event in year 3, the frequency probability distribution would look like this:
# of Events
Year                                   (Frequency)                          Probability
1                                               1                                   1/5, or 20%
2                                               3                                   3/5, or  60%
3                                               1                                   1/5, or  20%
5                                   5/5, or 100%
Fronting:  An arrangement between two insurance companies to produce an insurance policy (usually WC) for a third party, wherein one insurance company produces the official policy (for a fee), but cedes all losses from that policy to the other insurer.  This kind of arrangement is used in situations where the insurer writing the risk is not an admitted company in a particular state, and the coverage needs to be written by an admitted carrier.  In order to meet the statutory requirements, the first insurer pays a second (admitted) insurer to “front” the policy, even though the first insurer remains responsible for paying all losses arising under the policy.  Captive insurers often use this kind of arrangement when they are not admitted carriers in a particular state.

Fronting Company:  Often used in captive insurance plans.  A fronting company agrees to issue insurance policies for the parent and affiliates of the captive in return for a fee.  Then, the fronting company reinsures the loss exposure with the captive.

Functional Capacity Evaluation: Testing of a person’s specific physical activities such as lifting, bending, pushing, pulling, etc., and the relationship to the ability to perform the demands of various jobs.

Funded Loss Retention Plan:  Method of risk financing where an organization uses specific assets that it has set aside to pay for retained losses.

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G

Governing Classification: The classification code on an employer’s WC insurance policy that generates the most payroll aside from standard exception classifications such as clerical or outside sales (unless there is no other workplace classification applicable other than a standard exception).

Group Captive:  A captive insurer owned by multiple parent companies that are from the same industry.  The function of the group captive is to insure the loss experience of its parent companies.

Group Self-Insurance Plan:  One in which organizations group together to self-insure their combined exposures, generally workers compensation.

Guaranteed Cost: A WC insurance policy that is not subject to adjustment due to losses that occur during the policy term. In a Guaranteed Cost policy, the only variable affecting premium that should change between policy inception and audit is payroll. This is in contrast to the various kinds of Loss Sensitive plans, such as Retrospective Rating, Retention Plans, or Sliding Scale Dividend Plans, where there is a premium adjustment made based on losses incurred during the policy term.

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H

Hazard (accidental) Risk:  The traditional loss exposure associated with property, liability, net income, and human resources.

Holistic Risk Management:  A comprehensive approach to managing all of the risks of an organization together, rather than managing the risks separately.

Hybrid Plans:  Risk financing plans that combine elements of loss transfer with some degree of retained losses.

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I

IBNR:  Incurred But Not Reported loss reserves are estimates of the amounts to be paid on losses that have already occurred, but are not yet known by the organization.

Impairment: A medical term which is sometimes confused with disability. Impairment is what is anatomically or physically wrong with an individual and is a means where the medical care provider assigns a numerical rating for whatever type of bodily function has been lost.

Impairment Findings/Rating: A permanent loss of use or function of a body part or system as measured by a physician.

Increased Limits Factor: A number developed by the Insurance Service Office or by insurance companies to show the relationship between the amounts of losses falling within different layers of losses.  They permit comparisons of total losses at different levels of retention.  If one knows the increased limit factor, one can estimate losses from increasing a loss limit.  Thus, if the increased limit factor is 2.20 for increasing the loss limit from $100,000 to $500,000, then the forecast of losses limited to  $100,000 are multiplied by 2.20 to obtain a forecast of losses limited to $220.000.

Incurred losses:  Are Equal to paid losses plus loss reserves for losses that have already occurred.

Incurred Loss Basis (for allocating loss costs):  A measure of value of allocable losses, obtained by estimating the total ultimate value of losses that will be incurred during an accounting period.  The estimate will include amounts paid, additions to reserves, and unreported losses.

Incurred but Unpaid Liabilities:  Losses that have occurred and may or may not have been reported, but have not yet been paid.  These liabilities should appear on an organization’s financial statement.

Incurred Loss Retrospective Rating Plan:  Classified as a hybrid risk financing plan, it is an insurance plan that adjusts the insured’s premium upwards or downwards, subject to minimum and maximum premiums, based on the insured’s actual loss experience.  This plan requires that the insured pay a deposit premium at the beginning of the policy period.  The deposit premium is calculated at the end of the period based on the actual incurred losses of the insured.

Independent Agents and Brokers:  Generally limit their activities to a small geographical area, such as one city.  They try to provide a high level of personalized service to clients.

Independent Medical Exam (IME): An examination of an injured worker by a physician other than the worker’s attending physician upon the request of the insurer or claimant.

Individual Case Estimate Method or Case Based Reserve:  Requires estimates for loss reserves to be made separately for each individual claim.

Informal Retention:  A risk financing plan where the organization pays for losses as they occur out of the organization’s cash flow and/or its current assets.  This type of retention requires very little planning, and no records are kept of losses.  Instead, losses are treated as an expense.

Insurable Interest:  A financial stake that will be jeopardized or lost if a covered loss occurs.  A person who insures a building that he does not own has no insurable interest because the person has no financial loss when the building burns down.

Insurance Charge:  A premium for limiting total losses in a retrospective rating plan.

Insurance Derivative: A specialized financial contract whose value is tied to the level of insurable losses occurring during a specified length of time.  The value of the insurance derivative is thus based on the level of insurable losses that occur during the specific period.

Insurance Linked Securities:  Financial investments with imbedded insurable risk, i.e., bonds.

Insurance Option: A derivative whose value is based on insurable losses.  These losses may be specific to an organization’s actual insurable losses or to an index of losses covered by a group of insurers.

Insurance Securitization:   Creates Marketable insurance-linked securities whose values are based on the cash flow obtained from the transfer of insurable risks.  An example is a catastrophe bond that transfers to investors insurable catastrophe risk.

Insuring Agreement:  The policy provision(s) that contain the promise of the insurer to provide a payment or to perform a service under circumstances described in the policy.

Integrated Risk Plan:  An insurance plan providing a single block of risk transfer capacity over several types of risk exposures, including certain speculative risks.

Interest Rate Risk:  The possibility of gain or loss resulting from changes in the market rates of interest.

Interest Rate Risk (finite risk insurance plans): The risk that interest rates will be above or below the expected rate over the term of the policy.

Intermediary: An agent, broker or other third party to market for an organization.  Intermediaries usually are paid on a commission basis.

Internal Fund:  Fund used to pay for retained losses. Consists of current assets that are specifically dedicated to that purpose.

Interstate Rating:  An experience modification factor that applies across more than one state.  Interstate ratings are calculated by NCCI for employers whose past workers compensation insurance policies show payroll in more than one state.  Most, but not all states, participate in the interstate rating system.  A few states, such as Michigan, Pennsylvania, and Delaware, do not participate in interstate rating, but instead continue to calculate separate experience ratings for employers who operate in their jurisdictions, even if those employers also qualify for interstate rating.  Those employers thus have one experience modifier applying to their operations in most states but a separate modifier calculated by the stand-alone state rating bureau.  The separate stand-alone mod would apply only to workers compensation insurance premiums developed for the employer’s operations in that stand-alone state.

Investment Risk (under an insurance contract): The risk that the insurer’s investment income will be greater or less than management’s expectations over the policy period.

Involuntary Conversion: An accidental property loss for tax purposes, but it includes theft, condemnation, requisition, and seizure, as well as damage or destruction of tangible and intangible property.

Involuntary Conversion Option:  To purchase replacement property like the property destroyed within 2 years of the loss.  Under the rules for involuntary conversion, the owner’s adjusted basis in the replacement property will be reduced to the extent the insurance proceeds exceeded the reduction in property value from the loss.

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J

Joint Tortfeasors:  Two or more persons or corporations that are responsible together for causing harm to another.  The persons or corporations may have acted together or separately in causing a single harm.  A joint tortfeasor release is a special release drafted to release one tortfeasor without releasing other joint tortfeasors.  A joint tortfeasor release allows one of several joint tortfeasors to reach a settlement with the claimant without jeopardizing the claimant’s right to recover additional compensation for the non-settling tortfeasors.

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K

 

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L

Large Deductible Insurance Plan:  An insurance plan for liability lines of insurance (workers’ compensation, general liability, automobile liability) that includes a per accident/per occurrence deductible that is greater than $100,000.

Large Line Capacity:  An insurer’s ability to assume a large exposure under a single primary or excess policy of insurance.

Law of Large Numbers:  The larger the number of exposure units, the closer the actual loss experience will come to the expected loss experience, making loss outcomes more predictable in the aggregate.

Layer:   Comprised of the portion of individual losses that fall within a particular range of losses.

Liquid Asset:  An asset such as cash or marketable securities that are easily converted to cash without a reduction in value.

Limit:  The maximum amount that an insurer will pay under the policy.

Litigation Management:  The process of controlling the cost of legal expenses for claims in litigation.

Long-term Asset:  An asset which has a useful life of more than one year.

Loss:  An outcome that reduces the financial value of an organization.

Loss Conversion Factor:  A factor applied to incurred losses to account for unallocated loss adjustment expenses.

Loss Development:  The tendency for incurred losses to increase over time as a result of late reporting of unanticipated losses and because of the upward revision of case reserves.

Loss Development Factors:  Numbers developed from historical dates which, when multiplied by the dollar amount of losses, will show the expected increase in aggregate losses that will eventually be paid for each historical year.  Loss development factors may be obtained from insurance service and trade organizations, or from an insurer’s own historical loss data.  These factors are used primarily for forecasting liability losses, and not for property loss forecasting.

Loss Exposure: Anything that presents the possibility of a loss.

Loss Limit:  The maximum loss amount payable for each individual accident or occurrence that is used in calculating the retrospectively rated premium.

Loss of Income Coverage, or Business Income Coverage:  Coverage in the event an organization suffers a loss of net profit, plus expenses that continue for the period that the organization is shut down as the result of a covered loss to property.

Loss Payout Pattern (of present value analysis):  Measures the timing of cash payments for losses and loss adjustment expenses.  The pattern allows an organization to determine the amount of money that needs to be set aside today to make future payments for losses.

Loss Portfolio Transfer:  A retrospective arrangement applying to an entire book or portfolio of losses.

Loss Ratio Method or Formula Reserve Method:  Requires estimates for loss reserves to be computed using a ration of losses and loss adjustment expenses to premiums.

Loss Reserves:   Estimates of amounts that will be paid on losses that have been reported to the organization.

Loss Triangles:  Tables of dollar amounts for losses, and from these tables, loss development factors can be calculated.  The dollar amounts appear along the hypotenuse of a triangle.

Lost wages: Consists of temporary payments made when injuries are severe enough to prevent the injured from working. The terms “temporary total disability”, “lost wages”, and “workers’ comp payments” generally mean the same thing. Most systems provide for payment of two-thirds of the workers gross wages up to a pre-determined limit. These benefits are generally paid every two weeks, and are not taxable.

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M

Managed Care:  A fee arrangement with health care providers that provides incentives for them to limit use of medical procedures and equipment.  Managed care includes preferred provider organizations, health maintenance organizations, and diagnostic related groups.

Managed Care Organization (MCO): An organization with which an insurer may contract to provide medical services.

Management Fee:  A system of compensation that provides for the intermediary to receive a minimum annual fee from a client, and commissions paid to the intermediary by insurers are credited against the amount of the fee.

Manual Premium: WC premium calculated by multiplying payrolls by appropriate rates, before application of Experience Modifier, Schedule Credit, or Premium Discount.

Manuscript Policy: Individually negotiated by the insured and the insurer.  The terms and conditions of this of policy are drafted specifically for this contract and for this insured.

Margin in a Finite Risk Plan:  The amount charged for the insurer’s underwriting risk, investment risk, credit risk, and administrative expenses.

Maximum Premium: The largest amount of premium owed under a retrospective rating plan, regardless of the amount of losses.

Mean (of a Probability Distribution): Frequency of claims is the average frequency.  The mean is calculated by multiplying the outcome (frequency) by its probability and summing the results.

Mediation:  Intercession by a disinterested third party to seek an acceptable agreement for resolution of a dispute.  Mediation suggests an attempt at compromise through discussion, goodwill and persuasion.

Medically Stationary: No further material improvement would reasonably be expected from medical treatment, or the passage of time.

Medical Mileage: Payment to the injured worker for mileage to and from the doctors office exists in most workers’ compensation systems. “Medical mileage” is generally considered to be a medical benefit.

Medical-Only Claims: Claims for which the only cost is medical care, without any lost-time benefits being paid.

Minimum Premium:  The lowest amount of premium owed under a retrospective rating plan, regardless of the amount of losses.

Misrepresentation:  A false statement of material fact.  Insurers can deny a claim for innocent as well as intentional misrepresentation.

Modified Work: When the physical or durational demands of employment duties must be altered to accommodate a patient’s impairment, that worker is said to require “modified work.”

Modified Premium: WC premium calculated after application of Experience Modification Factor. Similar to Standard Premium, but does not reflect any Schedule Credits or Debits.

Moral Hazards:  A form of peril that exists when an insured or some other persons intentionally causes a loss.

Morale Hazard, or Attitudinal Hazard:  Form of peril when insureds are careless or less careful than they should be.  Insureds may be poor housekeepers due to the fact that they know the insurer will pay in the event of a covered loss.

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N

NCCI: The National Council on Compensation Insurance–the organization responsible in many states for determining proper WC classifications, Experience Modification Factors, and collecting data used for ratemaking. NCCI also writes the manuals used in many states to calculate WC premiums, and also administers the Assigned Risk Plan in many jurisdictions. NCCI is a private organization, not connected with government, although it is often mistakenly thought to be a governmental agency.

No-Release Settlement: An immediate payment for a minor complaint or claim to maintain goodwill or to forestall litigation, and the organization does not request a release in exchange for the payment.

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O

Objective Trigger:  A measurement determining the value of an insurance capital market product based upon something outside the control of the risk-transferring organization, such as an industry loss index.

Obligee: One of the parties of a surety contract.  The obligee is the party to whom the principal owes an obligation to perform.

Off Balance Sheet Fund: An organization’s funds that are held by a third party such as an insurance company.  These funds do not show up on the firm’s balance sheet, but they are available to pay the retained losses of the organization.

Open Bidding:  Seeking competitive bids by advertising for bids from all qualified intermediaries who want to bid on the coverage.

Operational Risk:  The risk that is inherent in the operation of a business.  This risk differs for different businesses, but it includes business risk, financial risk, operating risk, credit risk, hazard risk, and brand name or reputation risk.

Operating Risk:  The possibility of loss resulting from a failure or breakdown of an organization’s functioning systems.  Such a failure or breakdown would cause an increase in expenses and a reduction of revenues for an organization.

Option: A contract giving the holder the right to buy or sell an asset at the strike price during the contract term.

Other Insurance Provision:  An insurance policy provision which deals with overlapping or duplicate coverages.  Such provisions prevent an insured from recovering more that the amount of his or her loss, and they determine what portion of the loss each insurer will pay.

Over-reserving:  Setting aside more than the present value of future loss payments for a claim.

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P

PCS Options:  Call option spreads whose value is based on national, regional, and stated catastrophic loss indices compiled by the Property Claims Service (PCS) of the Insurance Services Office (ISO),

Paid Losses:  The amounts already paid for losses that have occurred.

Paid Loss Retrospective Rating Plan:   Classified as a hybrid risk financing plan, it is an unfunded plan for the retained portion of losses.  The insured pays a small deposit premium at the beginning of the policy period.  The insured must then reimburse the insurer for losses as the insurer pays them, subject to minimum and maximum amounts.

Palliative Care: Medical service rendered to reduce or moderate temporarily the intensity of an otherwise stable medical condition, but does not include those medical services rendered to diagnose, heal, or permanently alleviate or eliminate a medical condition.

Parol Evidence Rule:  Provides that a court will not admit evidence of the parties’ negotiations for the purpose of varying the terms of a written agreement that is complete on its face.  The court will consider the written agreement to be the final agreement reached by the parties, and any prior negotiations or agreements are presumed to be part of that agreement.

Peer Review:  Examination of health care of panels of medical professionals to determine whether treatment followed acceptable guidelines.

Perils:  Causes of loss that lead to damage or destruction of property.  Examples of perils include fire, lightning, windstorm, and hail.

Period to Period Factors:  Reflect the year-to-year increase or decrease in the development of loss costs.  They can be used to compute loss development factors.

Permanent Disability:  If the injured worker suffers permanent disability as a result of his or her injury, he or she will often be able to recover a permanent disability payment. Generally, a determination of “permanent” disability will not be made until the injured worker is considered to be “medically stationary” or “medically stable”. Depending on the nature of the injury, a permanent disability award will either be “scheduled” or “unscheduled”.

Permanent Partial Disability (PPD): Generally means that the injured worker cannot return to the same type of work that he was doing before his injury and that he/she has a permanent impairment that limits his ability to do the same type of work as before the accident.

Personal Contract:  Requires the person entering into the agreement to perform it because the agreement was based on the skill, knowledge, or other qualities of that particular person.  A homeowners policy will only insure the named insured’s home, and cannot be assigned to a new owner who buys the home.

Planned Loss Retention:  Method of risk financing where a firm has evaluated its exposures to loss and has decided on a specific retention plan.

Policy Acquisition Costs:  Costs initially incurred by the insurance company at the time the policy is issued.  They include premium taxes and agent’s commissions, as well as other underwriting expenses.

Policy Provisions:  Parts of an insurance policy that constitute the various agreements that make up the contract.

Pool:  A group of insureds who come together for the purpose of insuring each other’s risk of loss.  Each member contributes a premium based on its loss exposures, from which losses of the pool members are paid.

Portfolio Reinsurance: Assuming the obligations of a primary insurer in an entire class, territory, or book of policies.  The reinsurer moves into the shoes of the primary insurer, and is not just reinsuring a portion of the exposures.

Pre-Admission Certification:  Approval for hospital admission or surgery before the treatment is provided.  This process is one of the procedures used in utilization review.

Premium Capacity:  Refers to the aggregate premium volume an insurance company can write during a year.

Preferred Provider Organization (PPO): A provider or group of medical providers who provide discounted service fees in return for a high volume of referrals.

Present Value:  The amount to be paid out in one year that, if invested today at the discount rate, will increase to equal the amount that will be needed in one year.

Present Value Factors: It is the factor that is multiplied by future dollar amounts to determine the present value of those amounts.

Primary Insurance (underlying insurance):  The layer of insurance that sits below the excess or umbrella layer of coverage.

Principal (Obligor):  One of the parties to a surety contract.  The principal (obligor) is the party that has an obligation to perform for the benefit of the obligee.

Principle of Disclosure:  Requires the parties to an insurance contract to disclose important information.  Insurance contracts require the parties to act with the utmost good faith, so applicants must give insurance companies all information that could reasonably affect the underwriting.

Principle of Equity:  Requires parties to conduct their dealings fairly.

Principle of Indemnity:  Limits a recovery so the insured is compensated for a loss but receives no more than what is required to make the insured whole.  The insured cannot profit from a covered event.

Probability Interval (of a total loss probability distribution):  Shows the likelihood of outcomes falling within certain ranges around an expected value of losses, and is determined by an area under a probability distribution curve.

Projected Ultimate Losses:  The estimates of total payouts that will finally be made on particular claims.

Promissory Warranty:  A policy condition that must exist through part or all of the policy period.  For example, the commercial property policy may contain a promise that a burglar alarm will be maintained throughout the policy period.

Pro Rata Reinsurance Agreement, or Proportional Reinsurance Agreement:  A reinsurance agreement in which the insurer shares premiums in the same proportion as losses.

Prospective Plan:  An insurance plan designed to cover losses arising out of future events.

Protected Cell Company:  A type of captive in which each member’s capital and surplus is segregated and protected from other members.  Also, third parties cannot access the assets.

Psychiatric and Substance Abuse Review:  Evaluates psychiatric and drug cases to prevent unnecessary hospitalization and to recommend alternative treatments.

Public Adjuster:  Represents insureds in processing claims and helps insureds to perfect their rights to insurance proceeds.  Public adjusters are paid as a percentage of the adjusted loss, hourly, or on a per case basis.

Put Option:  A contract giving the holder the right to sell an asset at a predetermined price.

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R

Rating Bureau: See NCCI. Some states maintain their own separate rating bureau, although these often follow NCCI rules and use NCCI manuals. Currently, the states of California, Delaware, Hawaii, Indiana, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Pennsylvania, Texas, and Wyoming operate their own non-NCCI rating bureaus. Many of these largely follow NCCI rules for computing premiums and classifications, but California, Delaware, Texas, and Pennsylvania are notably different than NCCI in some aspects of classification and premium computation.

Reasonable Expectations:  The principle under which an insurance company is required to provide the uninsured with the benefits a person would reasonably expect to obtain by buying insurance, even if the language of the policy does not provide them.

Regional Brokerage Firm:  An insurance intermediary that focuses its operation in one particular geographic area.

Regular Work: The job the worker held at the time of injury, or a substantially similar job.

Reinsurance:  The process by which one insurance company pays a fee to transfer its insured loss exposures to another company (the re-insurer).  Reinsurance is purchased by the insurer to increase its insurance capacity or to stabilize its underwriting results.

Reinsurance Intermediary, or Reinsurance Broker:  An independent firm that provides services to insurers and reinsurers in the reinsurance transaction.

Release: Giving up a right or claim by the person untitled to enforce the right or claim.  A release is usually a standard document signed by the party who gives up a claim in exchange for a payment of compensation.

Remuneration: The basis for calculating WC premium, primarily payroll, but may also include other forms of employee compensation. WC premium is computed by applying varying rates.

Rent-a-Captive:  An arrangement under which an organization rents capital from a rent-a-captive facility, pays a premium, and receives reimbursement for losses, as well as credit for underwriting profit and investment income.

Representation:  Statement of fact or opinion made by the applicant for insurance.

Reputation Risk:  Also known as brand-name risk.  The possible real or perceived loss of reputation or the blemishing of a brand name.

Residual Market: Workers’ Comp written through an Assigned Risk Plan.

Request for Proposal (RFP):  Describes the purpose and scope of the consulting services sought by an organization, and it provides enough information so that a consultant can determine whether it wants to have the organization as a client.

Retroactive Plan:  An insurance plan designed to cover losses arising out of events that have already occurred.

Retrocession:  The transaction of a reinsurer that shares some of its reinsurance risk with another reinsurer.  The reinsurer, in effect, transfers a portion of its obligations acquired through a reinsurance transaction.

Retrospective Cost Allocation System:  Costs are allocated on the basis of loss experience for the current accounting period.  While costs are estimated at the beginning of the accounting period, adjustments to the estimated loss experience are based on the actual loss experience for that accounting period.

Retrospective Premium Formula:   An equation establishing the retrospectively rated premium as equal to the sum of the basic premium, the excess loss premium, and converted losses, all times the tax multiplier, subject to a minimum and maximum premium.

Retrospective Review: Examining medical treatment after the treatment was provided, in order to gather information about unnecessary or excessive services to provide guidance for the future.

Retrospective Rating: A WC insurance policy that makes a subsequent adjustment to premium after policy expiration, based on losses generated during the policy period. The adjustment can go up or down within set parameters, based on the losses generated during the policy period.

Retention: A risk financing technique where an organization uses its own resources to pay for its own losses.

Retention by Default:  The opposite of planned retention occurs when an organization makes no attempt to evaluate its loss exposures and makes no specific plans for financing those losses.

Retention Plan: Similar to Retrospective rating, this is a WC policy format that adjusts the premium, up or down, based on losses (and associated costs) that occur during the policy period.

Retrospectively Rated Insurance:  An insurance plan where the ultimate premium paid by the insured is calculated after the end of the policy year based on the insured’s actual losses during the year.  Retrospectively rate insurance plans can be constructed as either incurred retrospective plans or paid loss plans.

Risk:  The potential variation in outcomes.

Risk Bearing System:  A risk management cost allocation system that allocates costs to departments according to which department generated the loss.

Risk Charge:  A load added by the insurer to an insurance premium over and above the expected loss cost to compensate the insurer for taking the risk that actual losses might be higher than expected.

Risk Averse:  Persons or organization who will prefer to receive certain amounts, even if that amount is less than the expected payout.

Risk Distribution:  A sharing of losses by an insurer among the insureds.

Risk Financing:  Method of obtaining funds with which to pay or offset an organization’s losses.

Risk Management Consultant:  Provides advice on risk management issues for a fee, and does not sell insurance.

Risk Neutral:   Persons or organizations who are indifferent when choosing between receiving a certain amount or receiving an amount that is the expected value of a set of uncertain outcomes.

Risk Retention Group:  Group Captive formed and regulated under the Liability Risk Retention Act of 1986.

Risk Shifting:  A transfer of risk of loss to an insurer.

Risk Takers:  Persons or organizations who prefer the uncertain outcomes as compared to the certain amount equal to the expected value of the uncertain outcome.

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Schedule Credit/Debit: A discretionary premium adjustment based on underwriter’s evaluation of special characteristics of a risk not reflected in the Experience Modifier.

Scopes Manual: Manual produced by NCCI, which details what kinds of workplace exposures belong in particular WC classification codes.

Self-Contained Excess Policy:  Unlike the following-form excess, depends on its own policy provisions for coverage.

Self-Insurance Plan:  A formal retention plan where their organization has made a conscious decision to retain losses and maintains a formal system for paying for the retained losses.  The organization keeps a record of its losses in this type of retention plan.

Self-Insured Retention Plan:  A formal retention plan that uses an insurance policy to provide benefits above the retention.  The insurance policy is said to attach when the self-insured retention is exceeded.  Self-Insured retentions are different from deductibles.  With a self-insured retention, the insured is responsible for adjusting and paying losses that are within and up to the self-insured retention level.  With a deductible plan, the insurer adjusts and pays all losses, and is reimbursed by the insured for losses that are below the deductible.

Self-Insured Retention (for an Umbrella Policy):  Arises when a loss is not covered by an underlying policy, and the insured then must pay a specified amount before umbrella coverage applies.  Where an umbrella policy provides coverage for a claim that is not covered by the underlying policy, the insured must retain a portion of the loss before the umbrella policy will respond.

Settlement:  The resolution of a claim by an agreement between parties as to the payment for loss.  Settlement is usually embodied in some document signed by the parties.

Severity (of Losses):  A loss characteristic which indicates the size of losses in terms of the dollar amount that must be paid to recover from the loss.  Severity can be used to describe an individual loss, or losses in the aggregate.

Severity Probability Distribution:  Shows the values of chance events (dollar amounts of losses)  and the probability associated with each.

Short Rate Penalty: A penalty applied by insurers when a WC insurance policy is cancelled by the insured before the expiration date of the policy. This penalty is steep in the early days of the policy, and gradually tapers off the closer the policy gets to the expiration date

Short-term Asset:  An asset that is completely used up within one year of its acquisition.

Single Parent Captive (Pure Captive):  A captive insurer formed to insure only the loss exposures of its parent and affiliated companies.

Sliding Scale Commission Rates:  Provide for the commission rate to drop for larger policies.

Sliding Scale Dividend: A return of premium, after policy expiration, based on the actual loss experience of the insured business. The size of the dividend varies with the actual loss ratio of the insured business.

Specific Excess Policy: An excess policy that provides coverage for losses in excess of one accident or occurrence.  It is usually written over a self-insured program where the insured retains a certain amount on a per accident/occurrence basis.

Speculative Risk:  Has gain or loss as possible outcomes. Compared to Pure Risk which presents only two possible outcomes,  loss or no loss,  a gain is not possible.

Stair Step Reserving or Reserve Creep:   Increasing loss reserves by some multiple when initial reserves appear insufficient for a claim.

Standby Credit Facility:  A pre-loss arrangement with a financial institution facilitating the organization’s obtainment of a loan in the event of a loss.

Standard Exception: Classifications, which are normally not included in the governing classification. These are clerical, outside sales, and often (but not always) drivers.

Standard Premium:  Premium after application of Experience Modifier and Schedule Credit or Debit, but before Premium Discount.

Strike Value:  The value of insurable losses that must be exceeded before the buyer of an insurance option will receive cash benefit from the option.  The strike value is similar to an deductible with an insurance policy.

Structured Settlement:  A settlement in which payments are made in installments.

Subrogation:  Prevents the insured from collecting loss payments from his or her own insurer and from the responsible third party for the same loss.  Once the insurer pays a loss caused by a third party, the insurer takes over, or is subrogated to the insured’s common-law right of action against the negligent third party.

Subrogee:  The one who succeeds to the rights of another and is not a volunteer, but has a legal obligation to pay the debt.

Subrogor:  The party whose claims and rights are succeeded to.

Subsidy:  A partial payment toward a purchase. Serves as an incentive for the purchase.  For example, the deduction for insurance premiums is a subsidy that provides an incentive to buy insurance.

Surety:  One of the parties to a surety contract.  The surety guarantees that the principal will perform its obligation to the obligee.

Surplus Notes: Notes sold by an insurance company to investors to raise cash.  Surplus notes are charged to policyholders’ surplus on the statutory balance sheet, instead of as a liability.

Surplus Relief: A benefit of reinsurance for the primary insurer, because by ceding a portion of the exposure, the primary insurer’s policyholder surplus will increase.  Statutory accounting requires the primary insurer to show the expenses and premium collected for a new policy as a liability on its balance sheet.  The liability reduces the policyholder surplus, which is the excess of assets over liabilities.  Through reinsurance, the primary insurer cedes a portion of the coverage and removes a portion of the expenses and premium collected from the liabilities on the balance sheet, so policyholder surplus increases.

Swap: A contract to exchange a payment stream at specified times, known as settlement dates or payment dates.

Systematic Risk, or Undiversifiable Risk: Gains or losses on a portfolio of risks where gains or losses that tend to occur at the same time, rather than at random.  The risks affect all businesses at the same time, rather than just a segment of the economy.  Diversifying investments among different businesses cannot reduce this systematic risk.

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T

Tabular Value Method:  Requires estimates for loss reserves to be made using actuarial tables in cases involving long payout periods, such as workers compensation, disability, or death claims.

Tax Multiplier: A factor for adding an amount for state premium tax, license fees, service bureau charges, and residual market loadings to the premium.

Temporary Partial Disability (TPD): Generally means that the injured workers is only able to do some type of limited work for a short period of time and that further recovery is expected.

Temporary Total Disability (TTD): Generally means that a person is unable to do any type of work for a temporary period of time. Workers’ compensation payments are usually paid while the injured worker is out of work.

Third Party Administrator: An outside or third-party organization that handles claims for an insurer or a self-insurer.

Third Party Business:  Business written by a captive that is not directly related to the business of the captive’s parents and affiliates.

Timing Risk: The risk the insured’s losses will be paid faster or slower than expected.

Total Loss Probability Distribution:  Developed by combining the values of a severity distribution with those of a frequency distribution to develop a listing of the ranges of losses around expected average losses and their probability of occurring (Average frequency x Average loss = Expected loss).

Tranche:  A separate class of security that differs in terms of risk assumed by the investors.

Transfer: A form of risk financing where one organization (the transferor) uses another organization’s (the transferee)  resources to pay for the losses of the first organization.

Treaty Reinsurance:  A contractual arrangement whereby a reinsurer agrees to reinsure all policies of a certain type written by the cedent.  Terms and provisions are set in advance for each policy reinsured under the treaty.

Trend Factors:   Factors, generally expressed as a percent, which are applied to past losses to bring the historic costs up to the current cost level.  There are two types:  loss trend factors are applied to historic losses, and exposure trend factors are applied to exposures such as sales or payroll.

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U

Ultimate Value of a Claim:  The total amount that will be paid to settle a claim, including claim payments and claim administration expenses.

Umbrella Liability Policy:  A form of excess policy that provides coverage above the primary insurance.  Its distinguishing feature is that it provides some coverage that is not included in the primary policies.  The coverage is subject to a self-insured retention on the part of the insured or insurer.

Unallocated Loss Adjustment Expenses (ULAE):  Costs associated with claims handling, but these costs are not attributed to particular claims.  These expenses can still be allocated among departments, using a cost allocation system.

Unbundling:  Offering services separately and collecting separate fees for each service. Unbundling insurance services may mean premiums can be reduced, since an applicant need not buy all services.

Unconscionable Advantage:  The principle in insurance law that the insurer should not use the insured’s lack of information and bargaining clout to take unfair advantage.

Underlying Asset:   An asset, such as  commodity prices or the magnitude of insured losses, that determines the value of an insurance derivative.

Underreserving: Setting aside less than the present value of future loss payments for a claim.

Underwriting Risk ( for a finite risk plan):  The risk that the insurer’s losses and expenses will be greater or less than the expected premium income plus investment income.

Unfunded Loss Retention Plan: A method of financing losses when no assets have been specifically set aside to pay for retained losses.

Unsystematic Risk, or Diversifiable Risk:   Gains or losses on a portfolio of risks occur randomly.  Diversification can reduce this systematic risk.

Usual, Customary, and Reasonable Charge (UCR):  A common requirement limiting reimbursement under health insurance contracts to a rate that is reasonable.

Utilization Review (UR):  Evaluating medical care in terms of its necessity, frequency, and cost in order to determine whether treatment has been unnecessary or inappropriate.

Utmost Good Faith:  The requirement that parties to an insurance contract act toward each other with scrupulous honesty and make full disclosure of relevant facts.

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V

Vocational Rehabilitation: If an injured worker cannot return to his or her job after injury, and has a permanent disability, he/she may be entitled to vocational rehabilitation assistance. The level of this assistance varies greatly between jurisdictions. The level of assistance ranges from simple help with the drafting of a resumé all the way through full payment of time loss while the person gets two years of training. There is a set maximum amount paid toward schooling costs.

Voluntary Payments:  Expenditures for first-aid, short term medical costs, or personal property damage, regardless of fault.  An organization makes voluntary payments for good public relations and to avoid suits.

Voluntary Compensation: An endorsement to the standard WC insurance policy, which extends coverage to employees not required to be covered under the state’s statutory WC provisions.

Voluntary Market: WC insurance written outside of the Assigned Risk Plan.

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W

Waiver:  The voluntary relinquishing of a known right.

Warranty:  A condition that must be satisfied for coverage to be granted.

Working Layer:  The layer of excess coverage that sits between the primary layer and the umbrella layer.

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X

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Workers Comp Loss Runs – Ten Quick Ways To Analyze

October 17, 2012 By JL Risk Management Consultants

Ten Quick Ways – Review Workers Comp Loss Runs

Your workers comp loss runs are a very important step in reducing your company’s premiums or insurance budget,  NCCI, WCIRB or any rating bureau uses the info that is provided to your company by your insurance carrier.

Picture Of Wallet Workers Comp Loss Runs Full Of Money

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 Actuaries will use the same info to produce a Loss Development Factor (LDF) if you are self insured.

Even if your loss history or incident rate is not that great, you may be able to at least reduce some of the claims that figure into your E-Mod or X-Mod.   This will also work if you are self insured on your LDF. The five quick ways to analyze the list of claims on your loss run are:

  1.  See if you have an option to access your loss runs and reserving history online.  This will usually be provided if your company has access to your claims information.   If you can get this downloaded into Excel, you have saved yourself possibly hours of inputting data into a spreadsheet.
  2.  Analyze only the claims that are open.  Claims that are already closed will not benefit your company that much unless you think overpayments were made on the claim.
  3. Input all open claims info or your loss run into a spreadsheet .  That is why #1 is so important.   You cannot do an analysis by hand.

    Insurance Workers Comp Loss Runs budget

    Wikimedia Commons – Vicente

  4. Make sure your claims spreadsheet has a place for a claims status.  That can usually easily be found if you have online access.  Some carriers/TPA’s will have this included on the paper loss runs.
  5. Check for open claims that should be closed.  This is the low hanging fruit theory at work.  Use your spreadsheet to send the adjuster(s) an email asking why the claim is still open.  Do not call the adjuster.  Calls waste their time and leave you with scan documentation.
  6. Email the adjuster to ask for a status (or updated status) if you do not have online access.  The status on new claims will usually change every 30 days.  The older claims statuses will change every 90 days.
  7. Negotiate your reserves down.   Remember that Paid + Reserves = Total Incurred.  You are trying to reduce your reserves to decrease your Total Incurred.  The Total Incurred is what is reported to the rating bureau.

    Man Holding His Pocket Workers Comp Loss Runs Money Loss

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  8. #7 can blow up your E-Mod or X-Mod if one is not careful.  Knowing which claims to point out to which adjuster is an art in itself.  If an adjuster needs to increase a file’s reserves and you try to negotiate the file reserves down, you may be reminding them to increase the file.
  9. Pay attention to subrogation.  If your carrier/TPA recovered funds from a 3rd party, are the amounts subtracted from your Total Incurred?
  10. If any of these concern you (especially #7), it may be best to call in an expert to assist with your E-Mod reduction.

The worst thing to do is to file away your Workers Comp loss runs and do nothing.  Any employer that is paying attention to their claims will almost always see a reduction in the near future.

©J&L Risk Management Inc Copyright Notice

Filed Under: Claims Loss Runs Tagged With: claims status, incident rate, negotiate, spreadsheet

Workers Comp Enforcement Increased By North Carolina Legislature

June 25, 2012 By JL Risk Management Consultants

Workers Comp Enforcement Increase with HB 237

The Workers Comp enforcement was increased by the NC legislature this week.

The North Carolina Legislature amended House Bill 237 – known as the 2011 Workers Comp reforms.  The amendments were in response to a very inquisitive reporter discovering 30,000 employers in North Carolina were uninsured for Workers Compensation.A quick calculation using available data  140,000 properly insured companies + 30,000 uninsured  totals 170,000 total companies that should have Workers Comp coverage.

Picture of Workers Comp Enforcement Increase Meeting

(c) 123rf.com

30,000 uninsured / 170,000 total companies = approximately 18%.  In very round numbers almost 1 out of 5 companies in North Carolina was uninsured for Workers Comp.  

The applicable part of the House Bill that was changed is italicized in the next three paragraphs.  I did not include the statute numbers as it may all change, especially if the bill is vetoed.  I will come back and enter in that info if the bill is signed into law.  The amendments can be found here

Bureau to share information with the North Carolina Industrial Commission.  The Bureau shall provide to the North Carolina Industrial Commission information contained in the Bureau’s records indicating the status of workers’ compensation insurance coverage on North Carolina employers as reported to the Bureau by the Bureau’s member companies.  

The North Carolina Industrial Commission shall take such steps, including obtaining software or software licenses, as are necessary to be able to receive and process such information from the Bureau. The records provided to the North Carolina Industrial Commission under this section shall be confidential and shall not be public records as that term  is defined in G.S. 132-1. 

Badge of Workers Comp Enforcement North Carolina Industrial Commission

(c) ncci.org

The North Carolina Industrial Commission shall use the information provided pursuant to this section only to carry out its statutory duties and obligations under The North Carolina Workers’ Compensation Act. The Bureau shall be immune from civil liability for releasing information pursuant to this section, even if the information is erroneous, provided the Bureau acted in good faith and without malicious or willful intent to harm in releasing the information.”

A great article from the Raleigh News and Observer had criticized part of the House Bill 237 amendments.  The article pointed out that some of the new legislation would limit public access to the same information that a reporter used to uncover the 30,000 uninsured employers.  The part of the bill that applies to this concern is in bold type.

A caveat to everyone thinking the bill is now law.  Governor Perdue has not signed the bill yet and is reviewing it as of the time of this blog post.  I will cover the other part of the amendments next time.

©J&L Risk Management Inc Copyright Notice

Filed Under: North Carolina Tagged With: amendments, pursuant, reporter, willful intent

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.

Picture of Hand Holding Jar Full Of Coins Self Insurers With Plant

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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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.

    Woman Self Insurers Holding Piggy Bank

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  5. 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.
  6. 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.
Picture of Planting Self Insurers Can Ruin Their Programs

(c) 123rf.com

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.

Woman Put Coins Self Insurers In Piggy Bank

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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.

©J&L Risk Management Inc Copyright Notice

Filed Under: self insurance Tagged With: checkbook, fiduciary, RFP

Workers Compensation Audits Five Types To Cut Comp Costs

January 26, 2012 By JL Risk Management Consultants

Workers Compensation Audits – Five Types For Cost Savings 

We often receive questions centering on Workers Compensation audits.  Audits – we like to call them reviews are an essential method to cut comp costs.

Graphic Of Businessman Calculating Workers Compensation Audits Concept

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This term may cover many types of audits or reviews. I thought I would cover the top 5 types performed for employers on a regular basis in order by popularity.

They are:

Premium Audits – this is basically an examination of the mechanics of how your Workers Compensation premiums were calculated by examining your policies, endorsements, yearly premium audits, and other pertinent materials.

E-Mod Audits – this type of audit recreates the mechanics of how your Experience Modification Factor was calculated. This can be very important to employers as the E-Mod has a major impact on premiums.

Claim Audits -a predetermined set of best practices for claims handling are established – usually using the carrier’s or TPA’s claims manual. The Workers Comp claims are reviewed thoroughly to ensure the claims adjusting and supervision staff is performing at an acceptable level. Currently, we use 31 – 33 areas to examine the claims. Trends are analyzed and reported using our copyrighted reporting methods. This is a very critical area for self insureds.

Hand Holding Calculator With Workers Compensation Audits Concept

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Reserve Audits – can be done during claim audits or standalone. An analysis is performed for over/under reserving of the Workers Comp files. This is especially important for nonself insureds as the E-Mods are calculated directly from the Total Incurred of each file.

Subrogation Audits – money is often left on the table when subrogation has not been addressed in all of the Workers Compensation files. As I wrote in this article, Workers Comp adjusters may not be that heavily trained in liability adjusting. That is the nature of the business. Automobile accidents are a major concern in this area.

There are two caveats to consider in these Workers Compensation audits. Picking out one or two mistakes by an adjuster and inflating their importance is a waste of time and $$$. Trends should be analyzed in most cases. The other caveat is very few companies can do all of these services in-house without having an anonymous subcontractor assist in the audits. I do not want this to be a shameless plug for J&L’s services.

©J&L Risk Management Inc Copyright Notice

Filed Under: workers comp audit Tagged With: Caveat, copyrighted, pertinent

Self Insured Edition – 5 Ways Workers Compensation Programs Fail

August 23, 2011 By JL Risk Management Consultants

Self Insured Edition – Workers Compensation Program

Our readership on the 10 Ways To Tell If Your Workers Compensation Program Is In A Failure Spiral spiked very heavily last week. Some of our self insured clients asked if there were any differences for the self insureds than the regular first dollar insurance that I referred to in my last three posts.

Picture Of Calculator Self Insured Workers Compensation Program With Money

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I thought I would begin with how to tell if a self insureds Workers Comp program is failing. Reading over the list of 10 for first dollar insureds may also be beneficial.

The five ways to tell are:

  1. Your company or organization has not had a Loss Development Factor (LDF) calculated with a benchmark comparison to similar companies. How can your Workers Comp program be analyzed without knowing how well you are performing presently? There are many organizations (including ours) that calculate LDF’s for our clients. Most businesses and organizations that pay first dollar insurance have an E-Mod to use for comparison purposes. You should have one calculated ASAP if you do not have one in your possession. One caveat is that unlike the E-Mod, there are various inputs that may need to be altered before calculating the LDF.
  2. Woman Working Out Workers Self Insured Compensation Program Calculations

    StockUnlimited

    You do not have a check limit or reserve limit in place for your TPA. This keeps your Workers Comp program from sustaining a major adversity without your knowledge. Without a limit in place, you may not realize you are paying for very large bills or have a huge reserve increase until your receive your loss run. There is no one set number to put in place. An email from the claims adjuster or supervisor can save your company many surprises now and in the future.

  3. Your Request For Proposal (RFP) allows prospective bidders to bundle costs. Many self insureds including our clients are now unbundling costs such as rehabilitation nurses, bill review, and other costs. I have seen public employers bid each function out separately with an RFP for each TPA function or have each TPA function listed separately and allow companies to bid on one or a mix of the various functions. This may seem like a large task. The cost savings will pay for the effort in the long run.

    Hand Man Workers Compensation Program Signing Document

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  4. Not auditing your TPA’s claims processing function per each contract. I was very surprised to learn how many self insureds are not having their Workers Comp claims reviewed by an outside auditor such as us or having a claims audit performed sporadically. How can you guarantee Senior Management that all is well with the TPA that you have chosen and are administrating over the TPA’s claims handling abilities? One of the most critical variables that you need to know is reserve adequacy.
  5. Not recovering any subrogation funds. Check here for an article I wrote on subrogation. If your company or organization is large enough to be self insured, you are almost 100% likely to have claims where another party is fully or partially responsible. We call this at J&L – leaving cash on the table and walking away. You do not have to hire a battery of attorneys to recover the funds. Quite often, a few well placed letters and a few negotiations can result in having money recovered on the files. Unlike first dollar insurance, this is your $ that can go right back into your Workers Comp program.

#5 has reminded me of the largest area of concern that we have with our self insured clients. I will post on that next time.

©J&L Risk Management Inc Copyright Notice

Filed Under: self insurance Tagged With: first dollar, unbundling

Will Feds Control Workers Comp In Future or Just States?

July 5, 2011 By JL Risk Management Consultants

Will The Feds Control Workers Comp In 10 Years? 

In the future,  will the  Feds control Workers Comp. In my last post, I commented on how the Federal Government, namely CMS, is encroaching on the state-by-state sovereignty of Workers Compensation. The CMS is basically overvaluing Workers Compensation pharmacy benefits.

Picture Of Woman Pharmacy Feds Control Workers Comp with Medicine Background

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The response to this intrusion is for the employers and their insurance carriers/TPA’s to not settle the medical indemnity on claims where the CMS has jurisdiction. I was not shocked to see this development as I have noticed small but important power grabs by the federal government.

One of the most recent cases where the Feds seem to be overreaching is the decision by OSHA to subpoena the Workers Comp records from an insurance carrier. Two teenage males were killed in an incident in IL. The complicating factor was one of them was 14.

OSHA decided to subpoena the inspection records, and in fact, all records from their insurance company. The insurer, Grinnell Mutual, fought the subpoena as having a federal agency with access to an insurance company’s safety inspections may have a highly negative effect on employers requesting safety inspections by their insurance carrier. OSHA has been granted access to all of the insurer’s records including communications between Grinnell Mutual and the employer.

 

Picture Of Male Doctor Feds Control Workers Comp With Green Background

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The following is a quote from Dr. David Michaels – OSHA administrator – “The court affirmed OSHA’s authority to obtain relevant information from an employer’s workers’ compensation insurance company. This is not surprising legally, but it does illustrate that workers’ compensation and OSHA are not separate worlds divorced from each other.”  

I do agree that there are extenuating circumstances. However, this may result in employers not being compliant with safety inspections by their carrier. As OSHA cannot inspect all employers, would this not have a negative effect on safety?

I have written often on the federal government’s increasing interest in Workers Compensation. This is a quick list of the articles I have written on the states’ Workers Compensation systems being encroached on by federal agencies:

  • A fellow Workers Comp author points out the increasing reach of our federal government into Workers Comp
  • The CMS was put in charge of the Federal Insurance Office
  • A Senator thinks the federal government is overreaching into Workers Compensation

There are other articles in this blog on the Federalization of Workers Compensation. The three above are a random sample. You can search the word – federalization – using the search box on the right side of the page to find more articles on this subject.

If the Feds control Workers Comp in the future, additional forms for every aspect will be required at every step. m

I have received many questions on what are the minimum thresholds for having to obtain CMS approval to settle a file. I will cover that next time.

©J&L Risk Management Inc Copyright Notice

Filed Under: CMS Tagged With: extenuating, granted access, Grinnell, overreaching

Your Reserve Review Action Plan – Have You Contacted Adjuster

May 9, 2011 By JL Risk Management Consultants

Reserve Review Action Plan

I had posted often over the last few weeks concerning claimx`s review for insureds with a January 1, 2011 renewal date. I even included a schedule of sorts on how to proceed on a Workers Comp reserve review. I used the 1/1/2011 policy renewal date as an example. One of the main things to remember is that you are looking to lower your E-Mod for next year. For a 1/1/2011 policy renewal date your E-Mod is calculated at the close of business of 6/30/11 for your 2012 policy.

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If your policy does not renew on January 1, then add the difference onto the dates I have given you in this and past posts. For instance, if you have a policy renewal date of 4/1/11, then just add three months onto the dates I have given you in the earlier posts. If you have a January 1st renewal date and you have not started your reserve review, then you are definitely behind schedule.

If you are on schedule, the next step is contacting the claims department and in particular your Workers Compensation adjuster to review the claims in which you had reserve questions. As I said in my last post on this subject, knowing which claims to review and which ones to leave alone can be critical. Sometimes, a full formal review of your reserves with an adjuster may result in an increase to your reserves and E-Mod.

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One of the unwritten ground rules is to not call the adjuster and say lower my reserves, they are just too high. The best method of contact is by email for documentation and it will allow the adjuster to look everything over and get back with you.

If you have any questions on this info, please feel free to call me at (800) 813-1386 or email me at [email protected]

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Filed Under: Workers Comp Reserve Review Tagged With: earlier, not started, sorts

Experience Account (EA) Rare For Workers Comp Insuring Agreements

April 4, 2011 By JL Risk Management Consultants

Term Of The Day – Experience Account

Experience Account refers to a provision in an insurance or reinsurance contract that, using some function of such policy provisions such as premium, insurer charges, losses paid or payable under the contract, subrogation proceeds, and interest rates, forms the basis of an explicit or notional fund that can then be used to calculate the amount due under an Additional Premium Provision.

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Additional premium provisions, while rare in workers comp, are usually part of a finite insurance agreement.  Finite insurance agreements have come under much scrutiny as some of the finite policies are skirting on the edge of not being a truly insurable risk. 

The EA can sometimes involve another insurance policy kicking in when reaching some other level of funds.   A retro policy is a hybrid situation that would be similar to this type of account.    I have not see one that actually had an interest rate condition in a workers comp policy.  

I am sure there are alternative workers comp arrangements that do have an Experience account in them.    

Update – I have seen some of the offshore captives arranges for Workers Comp have modified experience accounts in them.  I actually saw an example of one at the CICA Conference in 2014. 

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Filed Under: Definition Tagged With: reaching, retro, Term Of the Day - Experience Account - EA

Workers Comp File Reserves – You ARE Running Late

March 31, 2011 By JL Risk Management Consultants

Workers Comp File Reserves Important To Catch Up

The Workers Comp file reserves important this time of year.  I have posted over the last two weeks on the process of performing a Workers Compensation file reserve review as a way of reducing your E-Mods or X-Mods. I am using January 1 renewal policies as a reference point.

Vector Graphic of Workers Comp File Reserves Working on Office

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If you have a renewal date other than January 1, then please consult this article on the formula for calculating the due dates for your E-Mod reduction plan.

If I am correct, I left off with you having received your paper loss run or having online access. If you have online access, you have saved yourself at least 20 hours of work.

Now that is April 1, you have 90 days to analyze your loss runs, communicate your concerns, and possibly reducing your reserves. Doing this step incorrectly can have disastrous results on your E-Mod or Ex-Mod. Which files are you going to now contact your claims department on this week?

Graphic Of Workers Comp File Reserves Document Standing In A Row

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Some of our clients seems to think that the files that are the oldest or have the highest reserves are the ones to question. That is not necessarily correct. I have written many blog posts on Total Incurred. This is one time that the Total Incurred figure (Paid + Outstanding Reserves) is not as important as the Outstanding Reserves.

The Outstanding Reserves (Total Incurred – Paid) is basically what the Workers Compensation adjuster thinks will be paid out in the future of the claim. If it is a new claim with a serious injury, the Outstanding Reserve figure will be extremely high. Do not waste your time or the adjuster’s if this is the case. Monitor the claim and reserves for future reductions.

If your insurance carrier whether by paper report or online access (and you can run your own reports) can only send you the OPEN files, that will save some time. Negotiating a closed claim is very fruitless unless there were duplicate payments or there was subrogation on the file. That is water under the bridge.

One very obvious question is how much Outstanding Reserves are there on a certain claim or all of your claims? If the figure is low, then it may be best to leave it alone. Usually, approximately one third of the Total Incurred value should be Outstanding Reserves. That is a very, very rough approximation.

I will cover more on this the next time. I try to keep the posts from dragging on too much.

©J&L Risk Management Inc Copyright Notice

Filed Under: E-Mod X-Mod Tagged With: disastrous, incurred

Multi-Jurisdictions Best Test Is WALSH For Workers Compensation Claims

January 19, 2011 By JL Risk Management Consultants

WALSH Best Test When Multi-Jurisdictions Involved 

WALSH is best test for multi-jurisdictions of workers comp. I have posted on this subject in the past. I thought it would be good to revisit the subject after I read about a Tennessee employer that tried to have North Carolina apply Tennessee subrogation laws.

Picture of Multi-Jurisdictions Gavel and books

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The WALSH Test is still the tried-and-true way to decide which jurisdiction’s laws would apply in the case of – for example – a truck driver who was injured in Arizona, whose home was in Iowa.

I have seen the WALSH Test applied to a case by a Workers Compensation judge many years ago. One of the carriers that trained me was where I became familiar with the test.  As a claims adjuster of long ago, I handled many claims that involved injured workers which lived in one state and worked in another. 

OK, so let us look at the truck driver. The implied caveat is that I know each state has its own laws on multi-jurisdictions. OK, so here is the test –

Worked – what state did the employee work the most in overall?
Accident – place of accident?
Lived – where is their home?
Salaried – where is the employee paid from each time?
Hired – where was the contract of hire initiated?

Picture Of Judge Multi-Jurisdictions Gavel In front

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Transportation workers such as long-haul truck drivers are usually the toughest cases to make a determination. Using the trucker example:

 

Worked – multi-state (not a determining factor)
Accident – Arizona
Lived – Iowa
Salaried – Paid out of Texas
Hired – Oklahoma

Would anyone like to take a guess and email me at [email protected] or leave a comment? I will give my opinion next week.

©J&L Risk Management Inc Copyright Notice

Filed Under: WALSH WC Jurisdiction Choice Tagged With: Arizona, subrogation, truck driver, workers comp judge

Death of Workers Comp – CMS Now Runs FIO

January 12, 2011 By JL Risk Management Consultants

CMS Now Runs FIO

The CMS runs FIO – should this be death of Workers Comp?   OK, so the title is meant to catch your attention. The second part is actually a reality as of last week. The federalization of Workers Comp remains an issue.

Picture of hand holding small board insurance drawing CMS Runs FIO

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Yes, the CMS – the government organization that will be warehousing all the Workers Comp data in 2011 now is over the office that can make rules that affect Workers Comp overnight. I warned about this development early in 2010 in this article and this article.

The Federalization of Workers Comp is yet becoming more of a reality. Will the Federal Insurance Office (FIO) use the Workers Compensation data they will be warehousing to make Federal rules on how Workers Comp functions along with other lines of insurance?

Picture Of CMS Grave

Wikipedia – Lvklock

What does this mean for any one that is involved with Workers Compensation? I think the rules are changing slowly but surely. The changes will then accelerate over time. There was a great article recently written on Workers Comp becoming irrelevant. Check it out here.

In this context, one would have to think being extremely flexible is the key to remaining successful where there are changes to the Workers Compensation landscape. Areas such as general liability, subrogation, and other lines of insurance would be great to explore for expanding beyond Workers Comp.

The AIC, ARM, CPCU and other professional designations all provide great education into areas beyond Workers Comp. One area that is so misunderstood is subrogation. In our file and reserve reviews we often see Workers Compensation adjusters struggling with pursuing benefits from liable third parties. The claim adjusters, underwriters, and other insurance personnel were just not trained in this area.

Subrogation is not something you can teach in an in-house three hour conference. Pursuing funds from third parties requires a new diary system to track the recoveries of funds. I have seen very few Workers Comp insurance systems that aided in this area.

©J&L Risk Management Inc Copyright Notice

Filed Under: CMS Tagged With: federalization, government organization

Are Policy Provisions Important?

October 26, 2010 By JL Risk Management Consultants

Policy Provisions – When Reality Hits

The Policy Provisions trip up employers when filing claims.  Even adjusters sometime have trouble with the policy terms.  The section of an insurance policy that defines the requirements of both the carrier and the insured. This section includes information about loss reporting and settlement, subrogation rights, and cancellation and renewal policies. This information can be found on the coverage form or declarations page of your policy and should be reviewed carefully.

Picture Of Woman Writing On Paper Policy Provisions On Table

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Filed Under: Definition Tagged With: declarations, filing claims

What is A Net Loss In Workers Compensation?

October 20, 2010 By JL Risk Management Consultants

Net Loss Is The Final Countdown

The term Net Loss is seldom used in Workers Compensation. The figure  represents the final paid loss regardless of the reserves that were set on the claim.   The final paid loss may differ from the Total Incurred if the file was closed after the Unit Stat Date. 

 

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The net loss would be reduced if there are subrogation, reinsurance, or Second Injury Fund recoveries. The best term to use with Workers Compensation is Total Incurred as it represents the numbers that will be part of the Experience Mod calculation.

©J&L Risk Management Inc Copyright Notice

Filed Under: Definition Tagged With: injury fund, paid loss

Workers Comp Claims Guide in 7 Words To Remember

July 8, 2010 By JL Risk Management Consultants

Workers Comp Claims Guide – 7 Words To Remember

A Workers comp claims guide can be broken down into seven easy to remember words. 

I was posting in one of the Workers Comp forums today. I decided to bring over the concept that I posted there earlier today. Let us assume you are just starting to handle Workers Compensation Claims at a certain company. I used seven words and liked the summary.

Professor Workers comp claims guide student

Wikimedia Commons – Wikimedia Finland

They are:

  1. Report
  2. Refer
  3. Return
  4. Treat
  5. Document
  6. Question
  7. Adopt

I am sorry to say this, but I do see quite a few posers at employers that go through the motions without really helping out their Workers Comp situations. That is why I added in the last one – Adopt.  If your company does not adopt some type of Workers’ Comp plan, your program will be akin to traveling without a map or GPS. 

 For our daily blog readers, think about each one and ask yourself if you or someone in your company are doing these tasks. If not, your company is flushing funds down the commode at a rapid pace. Please remember the 400% warning. That will be in the next post.

#1 Report

X Ray Of Hand FROI First Report Of Injury

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I thought I would cover some of the Workers Comp mnemonics that the insiders use – people in the claims business. This is the most important document that an employer will ever fill out. The FROI stands for the First Report Of Injury. There are two vendors out there that have a product called FROI services. <<<Update – many now provide this service

I do not want to go into the term much further as it matches up with my other post from today. Two of the most important aspects of The First Report of Injury is that it not only alerts your Workers Comp insurer to a claim, but also gives them permission to act. 

Quite often, Workers Comp adjusters are put on the spot as they have not received the FROI and are asked by a medical provider to authorize treatment.   This is known as the Twilight Zone phone call from the provider to the adjuster.   

I will let you in on a little secret. When it comes time for an adjuster to reserve that file, they remember such things when having to value the claim at the beginning. (Hint)

 #2 Physician Referral

Physical Workers comp claims guide Doctor

Wikimedia Commons – Wesley Carter, U.S. Air Force

The Physician Referral properly done saves workers comp premiums or budget.  .I wanted to cover #2 in The Guide To Workers Comp In 7 Words. This was the original article. There is one instance in time where employers can greatly harm or help their Workers Comp program.

 Refer

 Quite often I hear from employers that their state does not allow the employer to choose the doctor that will treat their employees for their Workers Comp injuries. I always recommend the employer check their Workers Comp rules and regulations very carefully. Some states allow an employer to create a panel of physicians the employee can choose from for their treatment.

 Even if your respective state does not allow the employer to choose the physician, most employees will treat where the employer recommends. That is why it is beyond critical that all employers have established a business relationship with a local industrial-minded doctor or clinic. 

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The most expensive thing an employer can say is just go to the emergency room or to tell the employee to treat wherever they wish. If the injury is serious, then the employee should always be sent to the local emergency room. 

I always recommend walk-in clinics to our clients as an immediate cost saving measure. There are numerous Workers Compensation clinics that will treat employees on a walk-in basis. I searched our local online directory and found many Workers Comp clinics and walk-in clinics that welcome all Workers Compensation patients. One of the reasons employees with Workers Comp insurance coverage are so welcome is that Workers Comp insurance pays very well for medical services versus other types of insurance.

 The second level doctors are very important. The second level medical treatment involves the more seriously injured employees that are referred by the original treating doctor. The second level consists of orthopedists, orthopedic surgeons, neurologists, neurosurgeons and other types of surgeons. There is nothing wrong with recommending to first level treating physician where the injured employee should be referred if more significant medical treatment is required.

#3 Return (To Work) – Most Important In This Workers Comp Claims Guide

The 3rd of the 7 words for workers comp claims is Return.  From the claims that I have covered, the employer’s Return To Work (RTW) program ranks second behind the medical referral as the most important part of a Workers Comp claim.

Old Workers comp claims guide returning to work

Wikimedia Commons – Robert Garstka

In today’s economy, the risk of a much higher payout is amplified without a RTW program. An employer who does not return employee work risks the employee being ruled as a Permanent Total. These benefits can wreck an E-Mod or X-Mod reduction program by an employer. There are companies such as J&L can help design a RTW program to lower the risk of an E-Mod/X-Mod increased. The task can be daunting. It is worth it.

I have examined, studied, and handled many Workers Comp claims where the employer had a RTW program. The employer without a RTW program will usually pay out over 400% more on their Workers Compensation claims. This number has held true for many years and may even be higher in the current economy.

The first step is to make sure the initial treating physician that your company sends your employees for treatment knows that your company will return employees to work as soon as possible. I am shocked when I see a company that has a RTW program which the treating doctors have no knowledge of when seeing their Workers Comp patients.

#4 Treat

Workers Comp claims cost reduction strategies can be reduced to 7 words.

This post comes from this original post. This s one of the more controversial recommendations that I always make when looking to reduce an employer’s Workers Comp costs. I have often heard from employers that they do not feel like they should be treating the employee nicely if the claim was not legitimate. This has changed over the last few years as I have not heard this as much.

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Treat means how the employer treats the employee from the time they are first injured until the conclusion of the claim. An employer should treat the employee the same as before the accident. An employee out on Workers Comp benefits is still an employee. Terminating an employee while legitimately on Workers Comp leave can increase a claim greatly. A small claim can skyrocket if the claim is deemed to be a permanent total claim. A permanent total claim is much easier to prove if they employee has no return job.

The treatment of the employee by the employer will often avoid the employee becoming represented by an attorney. As we all know, when an employee is represented the eventual cost of the claim increases dramatically. Keeping in constant contact with the employee and letting them know what benefits to expect will avoid the employee seeking legal representation.

 

Communication Workers comp claims guide materials

Wikimedia Commons – Today Testing

The best time to show the employee that the company cares about them is right after an accident happens. As almost every person has an email address, e-card services such as AmericanGreetings.com and Hallmark.com are very good ways to send the employee an e-card when they are injured. It is well worth the effort.

A front office employee should be designated as a Workers Comp Administrator (WCA). This person should be the go-between for the employee’s supervisor, the insurance company’s adjuster, and the employee. This person should also know which physicians or clinics the employee should be sent to for their initial medical treatment.

#5 Document (Everything)

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I used to not recommend this one in the past. Now, with so many ways to document an employer’s part of the claim, this has become a critical area of savings. I always say to document as if you as the employer were going to testify what you have written in court.

The other six ways to reduce Workers Compensation claims should be heavily documented. Documenting when the First Report of Injury was filed is important to verify that the claims are being filed timely. The doctor referral and return to work should be documented as you may have to testify to what you remembered in a Workers Comp claim.

A scanner is invaluable to keep track of the document flow. In certain states, the employer can be easily overwhelmed with Workers Comp forms. One of our employer clients keeps a thumb drive for every lost time claim they have in order to keep everything straight. I do not recommend CD’s except as a backup when closing out and archiving a file. Windows-based hard drive systems usually fail every two years. That is why I recommend the thumb drives. You can buy thumb drives that have security on them for about $4 each. That is money well spent.

Picture Businessman Analyzing 7 Words While Sitting on Floor

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One hint to documentation is that the best Workers Comp adjusters are the ones that can document the most in the least amount of space. You can cut corners in documenting Workers Compensation notes if you know what to leave in and leave out.

I have not been able to study the cost saving effects of proper documentation as with the first three terms. One easy way to document your employer files is to access the adjusters’ notes online. I have posted the importance of having online Workers Comp claims access. Often, the adjuster will have all the notes on the development of the claim. I would not rely on this completely, but all the conversations you had with the adjusters will be in their notes.

If you ever have to testify as a Workers Comp witness for the employer, the judges appreciate clear and concise documentation.

#6 Question (Everything)

The sixth term in the list of The Workers Comp Claims Guide in 7 Words is Question. One of the quickest ways to immediately begin reducing Workers Comp costs is to question everything that comes across one’s computer screen or desk.

Employee of Workers comp claims guide Confuse

Wikimedia Commons – Notas de prensa

This means that any bills such as premium bills, premium audit bills, TPA processing bills, policy changes, large settlement request etc. should be questioned. Assuming that something is correct/accurate and just paying the premium or TPA processing bill can cost a company dearly.

One of the documents that should be examined closely is the loss run. As I have posted many times, having online access to your Workers Comp claims is beyond important. The basis for charging your company a premium or a TPA’s processing bill comes from the loss runs.

Loss runs are the best tool to keep your Workers Comp costs down, especially in this economy. If you are reading this and do not know where your company’s loss runs can be located, you are likely throwing away $.

This is not to say that insurance carriers, insurance premium auditors, or TPA’s are dishonest whatsoever. The Workers Comp landscape has become so complicated over the last few years that errors in reserving, premium auditing, billing, etc. do happen.

#7 Adopt 

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The #7 Workers Comp claims guide word is adopt.

I had originally began over 20 years ago with the first three of the list and added on #4 – #6 as my experience grew in the area of Workers Compensation. I added ADOPT over the last few months. It is a simple concept that will pay big dividends over the long term.

I can type and type and type my recommendations into this blog for reducing Workers Comp costs. However, if they are not adopted company-wide and from the top > down, they will only be a partial help.

Management must adopt these measures and make them part of the company/corporate culture for them to succeed. I have often see the Safety/Risk Management personnel in a copy become very frustrated as they knew the methods would work. They could not induce the company to adopt these 7 terms/words.

It does take time and effort to make the 7 terms work in a company. One of the most common occurrences is the expectation of immediate results. As I have posted numerous times, the Workers Comp system is a delayed system where the efforts of the present will only become apparent in three to four years.

Using This Workers Comp Claims Guide

You may wish to print out this article or at least save it to your desktop.   If not, I heavily recommend that you memorize the 7 Words to the Workers Comp Claims Guide. 

 

©J&L Risk Management Inc Copyright Notice

Filed Under: Workers Comp Claims Guide Tagged With: forums, Twilight Zone, Vendors

Workers Comp Premiums – Most Common Error Found

October 30, 2007 By JL Risk Management Consultants

Workers Comp Premiums Most Common Error

The most common error in Workers Comp premiums and policies is one that I had to think over for a few days as there are so many. We are asked this question very often.

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For quite some time there were so many answers that I could not actually give one answer. After reviewing hundreds of Work Comp policies and using statistics to quantify the errors, there is one that stands out as an obvious error.

The error we see most often is – you are going to have to contact us by email.

Check out our website at Contact Us  Tab above for the email contact info. If you email us, we will answer the question by return email. You will have answered the question just by emailing us. That may sound odd, but it is true.

Thanks for contacting us about this very common workers comp premiums error.   Update – this is an older article.  You can now find the answer to this question by searching in the top right box of any page.   Searching for the most common error or just error will list out a group of articles.   

Thanks for reading this article and the other ones on this website. 

Additional Update – The Most Common Work Comp premiums error is two-fold:

  • Premium Audit – This one not only falls on the shoulders of the premium auditor.  We often see insureds that have provided the wrong data to the audit such as not providing certificates of insurance for contractors or not using QuickBooks or their accounting packages properly to track employee payroll.   The main premium auditor error we see is an auditor that is rushed to finish an audit. 
  • Reserving – Reserving becomes negotiable the day the claims adjuster increases the Total Incurred on a file.   As with the premium auditors, the claims adjusters are usually time-stressed which causes them to miss something (subrogation) or  overlooking a positive file development 

The successful lower E-Mod employers are always looks for ways to lower their comp premiums. 

©J&L Risk Management Inc Copyright Notice

Filed Under: error Tagged With: positive file development, QuickBooks, return email, wrong data

Three Areas of Workers’ Compensation Concern In My Presentation

September 18, 2007 By JL Risk Management Consultants

Workers Comp Concern  = Three Areas

I have been out of action for about a week, as this is the end of our tax season. There were three areas that raised the most concern in my presentation at the North Carolina Mid State Safety Council. I will go over each of them over the next few days. Those were:

Vector Graphic of Hands Carrying Insurance Three Areas Shield check

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  • Subcontractors
  • Temporary Agencies
  • Subrogation

The first area, Subcontractors, has three areas of concern from what I have seen –

  1. The Ladder of Workers Comp Insurance – Workers Compensation courts will move up the ladder of contractors until a company is found to have insurance. If your subcontractor does not have insurance for their employees, you may be stuck for a claim.  If your subcontractor subcontracts out their work, if the 2nd level subcontractor and your primary subcontractor does not have insurance coverage, then your company may have to pay benefits to a employee you have never met.  This happens more than one might think.  Workers Compensation Judges are going to find the responsible party by going up the ladder of insurance until coverage for the injured employee is located.  
  2. Certificates of Insurance – A subcontractor may provide you with a Workers Comp Certificate of Insurance. Many companies just take the Certificate of Insurance on its face value. If for some reason the cert is no good, you may be stuck with a claim.
  3. Who is a subcontractor? The IRS has some great rules on who is a subcontractor and who is not. You may want to review them for your Workers Comp subcontractor situation. The link is here This is a good place to start. Each state’s Workers Comp laws has a set of rules for contractors. The IRS website is a good overall guide.

Next time – Temporary Agencies

©J&L Risk Management Inc Copyright Notice

Filed Under: certificate of insurance, subcontractor Tagged With: tax season, Temporary Agencies, Workers Compensation Judges

Will Workers Comp Funds Recovered Lower Our Mod?

March 23, 2007 By JL Risk Management Consultants

Will A Workers Comp Funds Recovered Lower Our Mod

Will a workers comp funds recovered lower our Mod this year?

Calculator Money Phone Funds Recovered Lower Our Mod Concept

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This question was emailed in from a blog reader from Virginia.  The rest of the employer’s question pointed out that the file was six years old. The answer to the question is it depends on the timing of the recovery.Virginia, as in most states does not allow a Mod (Experience Modification Factor)  revision from more than four policy years into the past.   As the Workers Comp file was more than four years old, the subrogation money will be credited to the file.  However, a Mod from six years ago cannot be promulgated again.The funds are known as “in the money” for the Workers Comp carrier.  Strangely enough, the money is in a way pure profit for the carrier.


Self insureds are another matter.  The money should be immediately returned to the employer as the Third Party Administrator (TPA) had paid the claim from an account, not an insurance policy.   The funds that were recovered due to subrogation cannot be applied to the Mod after four policy years maximum.  This is due to the way that Mods are calculated by NCCI or the State Rating Bureau.

Hand Presenting Money Decrease Funds Recovered Lower Our Mod Concept

By StockUnlimited

In almost all cases, the Mods are promulgated from policies four, three, and two years prior to the current policy year.   The Workers Comp claims from the policy that expired in the previous year will not be charged to the Mod until the following year.

Over the past few years, there have been a number of lawsuits pursuing the Mod recalculations even though they were from files that were older than four years.   The lawsuits are/were alleging the carriers were too slow in recovering and applying the funds which caused higher Mods.

This situation is exactly why the employers should be very vigilant in tracking subrogation or any type of file refund such as an overpaid medical bill.   It is not recommended that your company leave it to the carrier to recover and apply the recoveries or refunds to the Mod.  

 
 
©J&L Risk Management Inc Copyright Notice
 

Filed Under: E-Mod X-Mod, subrogation Tagged With: lawsuit, State Rating Bureau, Third Party Administrator, Workers Comp Carrier

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About Me

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James J Moore
Raleigh, NC, United States

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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