Blog

NY Daily News Workers Comp Watch – Ocasio Cortez Says Woops!

January 14, 2019 By JL Risk Management Consultants Leave a Comment

US Representative Ocasio Cortez Fined – NY Daily News Workers Comp Article

The NY Daily News Workers Comp article has been circulated around the blogosphere for mostly political means. Many of my fellow Workers Compensation bloggers publish articles that are politically-based. I try to avoid that as much as possible.

picture of ny daily news workers comp hummer traffic ticket

Wikimedia Commons – Specious

The article by Kenneth Loveth was the original source.

How could an article on forgetting to pay your workers compensation premium bill not jump off the page? Even a young Congresswoman that many consider a champion of the people (Socialist?) can forget to provide her campaign workers with the most basic of necessary benefits.

The NY Daily News workers comp article pointed out that she had forgotten to pay Workers Comp premiums for her campaign workers covering the month of April 2018.

Did she receive any special forgiveness for her campaign’s oversight? She definitely did not receive any special treatment. The New York Workers Compensation Board fined her $1,500 for going without coverage. What would have happened if one of her workers seriously injured themselves on the job?

Of course, Ocasio Cortez was excoriated by both Democrat and Republican pundits. This situation, unfortunately rears its ugly head in the PR arena.

Tina Fey paid a similar fine when she neglected to cover her workers a few years ago. The same thing occurred as in this case. However, Ms. Fey was originally fined $79,000. The NY Workers Comp Board then realized she might have had at least partially adequate coverage.

Ms. Fey and the Board agreed that her fine should have been reduced to an unreported amount.

Both situations show two things:

Not paying your workers comp premiums will catch with you eventually
The NY Board shows no favoritism or mercy – pay premiums or pay a fine

We receive at least a call or email once per week where an employer has let their Workers Compensation lapse. J&L Risk Management Consultants cannot fix an unpaid premium bill even if some of it was disputable.

The bottom line – do not forget to pay your workers comp premiums or your company may end up creating a column for the NY Daily News Workers Comp.

Filed Under: Fines Penalties Tagged With: ocasio-cortez, tina fey

2019 Self Insured Resolutions – Looking Back To 2018 2017 2016

January 9, 2019 By JL Risk Management Consultants Leave a Comment

The 2019 Self Insured Resolutions analysis follows the same path as the voluntary market 2019 resolutions published last week.

picture 2019 self insured resolutions fireworks Sydney AU

Public Use License – Rob Chandler

Follow these links back to look those over for your 2019 resolutions:

The 2019 Self insured resolutions are modifications to the 2018 Resolutions. In other words, did you do the 2016 – 2018 resolutions? The 2017 and 2018 Self Insured Resolutions were:

2017 Resolutions – Still important

Obtain and know your LDF (Loss Development Factor) – still as important as ever. If you do not know where you are on the map, how can you find your way anywhere?
Working relationship with adjusters – the adjusters are spending directly out of a budget or bank account. Communicating by email (see #3) lets the adjusting staff know that your company follows the workers compensation payouts very closely.
Use email – not phone calls
Conquer Your TPA expenses – Self Insureds are sounding off on this one in late 2018 and early 2019. Many of our potential and current clients have taken notice of their sharply increased TPA expenses. Do not ignore this area!
Watch the Learning Curve for Accident Spikes – when the economy increases, so do claims. The increases are a natural result of more work hours. Safety becomes even more important.
Use online access when available
Attend A Workers Comp or Safety Conference
Subscribe to our weekly Newsletter
Obtain Your Loss Runs – you have these at your fingertips, right? If not, you are not following your claims closely enough to make an impact.
Write an article on Workers Comp .

2018 Resolutions – Finish these up

You did these in 2018, No, then what are you waiting on to Cut Your Comp Costs and fulfill your 2019 self insured resolutions?

Not being Self Insured is an option. Employers need to have a large amount of cash or equity on hand to handle claims. Reinsurance can only do so much if your company has a bad claims year or two.
Construct a Request For Proposal (RFP) – See #4 in the 2017 Resolutions. An RFP remains a great risk management technique to control TPA expenses.
Unbundle your required vendor services with multiple RFPs – still a great method to save on claim expense payments.
Ad-hoc print your loss runs – you did obtain this ability from your TPA? No?, then do something about it now.
Working relationship with adjusters – a self insured must do this from day one with their respective TPA’s adjusters. You do know their name, right? If not, find that out this week.
Each state in which you operate has its own set of minimum rules for being self-insured – for companies considering becoming self insured. One very common minimum is $500,000 of liquid assets in that state. You cannot have just $1.3 million in your HQ state and count that asset figure in every state of your operation. Each and every state must have the $500,000 (Ouch!)
An alternative to LDF’s – Loss Development Factors is SynthMods(R). We calculate those for self insureds. They are basically E-Mods instead of LDF’s. SynthMods rate your company with the Experience Mods like you were still in a regular workers comp policy. They are an alternative to LDF’s. I am calculating one now for a self insured governmental agency.
Understand all your TPA expenses. That is a holdover from above 2017 resolutions. Why does this one appear twice? Self insureds have become very aware of increasing TPA expenses – these also include the vendors the TPA uses if you have not chosen your own vendors.
Take your self insured program in- house. A very tough choice. The final result is a sharp reduction in the claims handling and payment budgets. Watch the Law of Large Numbers here. You need to have a large workers comp budget to do the claims in-house.
Go back and read all the resolutions I have written. Even if the resolutions are not specifically for self insureds, you can glean great information. The resolution search is here.
Bonus – Full online access to your claims – you did obtain full access. No? Then contact your TPA today.

There are many more resolutions which could be added to the list. The bottom line is your company needs to stop and make sure all the bases are covered using the 2016 – 2018 resolutions. Yes, a serious 2016 – 2018 resolution review equates to having finished your 2019 self insured resolutions.

Filed Under: resolutions

2019 Workers Comp Resolutions – Looking Back at 2018

January 4, 2019 By JL Risk Management Consultants Leave a Comment

2019 Workers Comp Resolutions – Did You Keep Yours From 2018?

Your 2019 Workers Comp Resolutions likely consist of redoing your 2018 resolutions. Yes, it is that time of year to examine your old resolutions and add on a few more.

picture 2019 workers comp resolutions fireworks

Wikimedia License – Lepota

A resolutions article has appeared in the Cutcompcosts.com articles since 2010. A self insured article on resolutions will be published next week. Keeping the two (voluntary market vs. self insured) separate remains the best method to go over each year’s resolutions.

I very heavily recommend that you follow this link to the 2018 resolutions. The article is very well worth reading again or for the first time. How to accomplish each task is enumerated in that article. I would love to republish it here bu Google, Bing, and the other search engines penalize duplicate content.

Voluntary Market 2018 Resolutions – Top 10 + 3 Bonus

The 2019 Workers Comp resolutions are not going to change that much for this year from 2018. I decided to list each resolution again. Check out the italicized words for any addition to the 2018 resolutions.

The 2019 workers comp resolutions are almost the same as 2018. If you completed all these congrats – if not – see the resolutions again below. Also, I have added in some comments on a few of the Top 13 that wrecked Mods for some of our new clients. That is why they called or emailed us for assistance.

From last year, the Top 13 are:

Understanding the mechanics of the WC process – from the start of the policy renewal until final premium audit – read everything that has to do with the policy. Most of the process is laid out in the policy. A highlighter is your best tool. <<<Did you read your workers comp policy last year – if not, get out the highlighter or delegate the task if you do not have the time to someone that can report any questions or concerns back to you.
Following the Six Keys to Workers Comp Savings – the prior link has all of them. I have studied what cost employers premiums and not doing the Six Keys causes premiums to spike. The spike may not occur this year or the next, but not doing them will cause your premiums to increase eventually. The Keys have not changed since 1988 except that I added two additional keys in the 1990’s.
Knowing where every dollar is going when you write a premium check – Old Motto – Stop Just Writing Checks
Having your Workers Comp Rating Bureau Experience Mod Worksheets at your fingertips – can often change in one year. <<Did your Workers Comp Mod increase significantly? If so, you need to find out why pronto. Why? – Because any claim or claims that increased your Mod is likely going to hang around for three years. You cannot look at it like an aberration or just “one bad year.” Experience Mods do not work that way. If you had a bad claim last year or a number of claims, the Mod system is designed as a delayed system. Your Mod may jump significantly the second year after a bad claims year, not the first.
Retaining your WC info permanently – electronic media is the easy way to go – scans are best
Knowing the adjusters that work on your files beyond just a name.
Letting the Adjuster know that you follow the Six Keys in #2 above. <<Adjuster communication to and from the insureds fixes so many of the Workers Comp problems. J&L often fixes problems by just communicating (talking shop) with the adjuster(s).
Relating to #1 – Understanding your Unit Statistical Date to not waste time at end of theyear.
Not renewing policies on January 1st or July 1st.
Reading the newsletter that J&L provides almost every week. You may sign up at the top right of this page.
Bonus – having a working relationship with your agent, not just at renewal.
Another Bonus – take any class or attend any meeting or seminar that your insurance carrier offers to you.<<Most of these carrier seminars are free if you are a policyholder with the carrier.
Last Bonus – Safety is the key to staying out of the Work Comp system. <<<The mother of all way to save on Workers Compensation premiums. Keeping an accident from happening cannot be written anywhere on a balance sheet or P&L statement. However, an Experience Modification factor of less than 1.0 DOES APPEAR on a P&L statement under Insurance Premiums Paid for 2019.

I am only going to add one to the list for the 2019 Workers Comp Resolutions compared to 2018.

If you have any questions, use the search capabilities on this blog. Almost any workers comp term has been covered in the 1,800 articles on this blog. If you cannot find an answer, email me at [email protected] No sales pitches.
Be careful of Googling your answer from anonymous/unknown sources as you may not end up with the correct answer.

Reaffirming your 2018 resolutions will be the best way to begin your 2019 Workers Comp resolutions.

Filed Under: resolutions

Workers Comp Judicial Hellholes Report 2018 Version

January 3, 2019 By JL Risk Management Consultants Leave a Comment

New List of Workers Comp Judicial Hellholes for 2018 – 2019

The Workers Comp Judicial Hellholes was taken from the American Tort Reform Foundation’s (ATRF) Judicial Hellholes for 2018 – 2019. The Judicial Hellholes publications that referred to Workers Compensation also appeared in 2013.

picture of devil workers comp judicial hellholes

Public Use License

I do not agree or disagree with any of the findings in the report. My main goal was to inform the blog and newsletter readers of this report. One has to judge for themselves.

A search for Workers Compensation inside the report produced two results.

If you would like to follow along, please download the report using the first link in this article. The report consists of 84 pages covering the ATRF’s Top Judicial Hellholes.

The list of the overall Judicial Hellholes are:

#1 California
#2 Florida
#3 New York City
#4 St. Louis, Missouri
#5 Louisiana
#6 Philadelphia Court of Common Pleas
#7 New Jersey Legislature
#8 Madison and St. Clair Counties, Illinois
#9 Twin Cities, Minnesota

Two Workers Compensation Entries

Pennsylvania

The first mention of the term workers compensation is at the bottom of page 35. The report heavily questions why the current Pennsylvania Governor vetoed a bill to regulate pharmacies more heavily. The report covers an astounding article by the Philadelphia Enquirer. The graphic on how a pharmacy network was used to exploit the Workers Comp system is very interesting. Download the Judicial Hellholes report. The graphic caused my jaw to hit the floor.

New Jersey

The second mention of Workers Compensation Judicial Hellholes appears on page 37. Legislation enacted in August, S. 2145, seems to have increased the amount of compensation that attorneys will receive for representing clients in New Jersey. Before the legislation was enacted, New Jersey attorneys could only bill for a percentage of what their representation increased the file, not from the full value of the case. S. 2145 now allows for fees based on the full value of the case.

West Virginia – not in the 2018 report

West Virginia appeared in the 2013 Hellhole article. The state did not appear in this issue for Workers Compensation. The Mountain State’s Supreme Court controversy stole most of the thunder this year. West Virginia did appear on a Watch List for their Supreme Court problems.

Reforms

From my days as full time claims handler, I have noticed a large number of reforms that have been enacted over the last 30 years. Some of the states that I would have listed as a workers comp judicial hellhole have eliminated many of the concerns through legislation.

Filed Under: hellhole

OutFront Ideas 2019 Webinar – Top 20 Forecast – Jan 8th – Free

December 20, 2018 By JL Risk Management Consultants

OutFront Ideas 2019 Webinar – Looking At The Top 20 Issues For Workers Compensation

OutFront Ideas 2019 Webinar hosted by Mark Walls (Safety National) and Kimberly George (Sedgwick) will look forward to the emerging issues in 2019. This webinar remains the most popular one they do every year.

It will be worth your time and the webinar is freebies. Some of the issues covered will be:

The rise and impact of mega claim frequency and costs – Mark provided some great stats in one of his press releases in 2018. Every rating bureau webinar and in-person conference mentions how mega claims affect their statistics – almost skewing them.
The psychology of pain and its role in claims management
How social determinants of health influence workforce well-being and medical outcomes – the injured workers’ social structure often means more to the healing period than the medical treatment and rehabilitation
Paid leave of absence trends and interplay with workers’ compensation.
Measuring program success – what’s meaningful and what’s not – measuring a program’s success is one of this blog’s main themes. I usually examine the nuts-and-bolts numbers. I would sign up for the webinar for just this one alone.
15 more subjects covered. This group has always been very congenial concerning answering any of your questions.

Mark and Kimberly have done these webinars for 5 years. Sign up here for the webinar. Note that on the sign-up page at the top right is a system test. Do this before the webinar starts to make sure your system will perform optimally. Headaches saved with that button.

In case you have to miss this one or if you would like to see/hear Outfront Ideas archive, check out this webpage – once again all at no cost.

And no – OutFront Ideas has never paid a penny for me to do their write-ups on this blog. I like to inform our readers of the excellent webinars available that are worth their time. In fact, I just now signed up for it.

Filed Under: Out Front Ideas

What Are Workers Compensation Claim Reserves – Confusing Term

December 20, 2018 By JL Risk Management Consultants

Workers Compensation Claim Reserves Difference Among Carriers and TPAs

Most Workers Compensation Claim Reserves begin when the data input division of a carrier sets the claim up and puts on an automatic reserve.

The automatic reserve sets at usually a nominal amount for a medical only or lost time claim.

picture workers compensation claim reserves quadratic function

Wikimedia – Aiga.Andrijanova

Medical only workers compensation claim reserves usually begin at a level of $250 – $750 depending on the insurance carrier/TPA and the claim jurisdiction.

Lost time workers compensation claims reserves usually commence at a level specific to the carrier/TPA. A claims supervisor will often input the reserves before assigning the claims to the respective claims adjuster.

The automatic or initial reserves function similarly in lost time or medical only claims. The initial reserves allow the claims staff to pay small medical bills and possibly pay the injured employee for their time out of work past the waiting period.

The adjuster’s timetable to set reserves on lost time claims is:

14 days – initial reserves, usually altered at 60 days
60 days – reserves for the lifetime of the claim
6 months- pegs the permanent workers compensation claim reserves

Confusion Caused By Loss Runs or Online Claims Access

The above scenarios seem easy to understand. At 60 days, the adjusters adjust the reserves for the lifetime of the claim – very straightforward.

I have three loss runs in front of me that I am reviewing – not all at the exact same time. The loss runs each from different carriers has totally different representations for the term Total Incurred.

The basic formula is Total Incurred = Paid + Outstanding Reserves

Loss Run Carrier A

This loss run is more of a matrices setup:

Total Indemnity Incurred
Total Medical Incurred
Total Incurred
Total Indemnity Incurred
Paid Indemnity
Total Paid
Medical Outstanding Reserves
Indemnity Outstanding Reserves
Expenses Paid
Expenses Outstanding Reserves
Total Expenses Incurred

The confusion for an insured was finding out what the outstanding Total Reserves were for that file. In other words, what does the adjuster think the claim payout will be in the future for the claim?

Of course for the experienced worker’s compensation claim reserves reviewers, that would be:

Total Oustanding Reserves = Medical Outstanding + Indemnity Outstanding + Expenses Outstanding

However, that total number appears nowhere on the loss runs. The reserve breakdown was excellent. The Total Outstanding Reserves figure would have been nice.

Carrier B – Actually A TPA

Medical Paid
Total Claim Paid – should have been labeled indemnity paid
Total Payments – should have been labeled Total Incurred
Outstanding Claim- should have been labeled Outstanding Indemnity Reserves
Outstanding Medical
Total Expenses – not really broken down
Total Payments
Total Reserves

Streamlining – making a loss run reporting standard

A workers compensation expert would have no problems understanding the workers claim reserves and other figures on the loss runs.

However, a standard way of reporting the medical, indemnity, and expenses paid and outstanding would save a large number of phone calls and emails to the worker’s compensation adjusters who are handling a certain set of files.

Making an employer have to re-input claim figures into their own spreadsheets to figure out a loss run is counterproductive.

Many carriers and TPAs produce loss runs whether online or on paper/PDF which can be read very easily. Kudos to those carriers/TPAs that provide easily-read workers compensation claim reserves.

Filed Under: Reserves

WCRI Chart ASCs vs. Hospitals Shows Interesting 18 State Comparison

December 14, 2018 By JL Risk Management Consultants

WCRI Chart On ASC Studies Shows Need For Fee Schedules in Workers Compensation

A recent WCRI Chart (Workers Compensation Research Institute) pointed out a hidden result that was picked up at least partially by a few bloggers. The chart below comes from a study the WCRI released on November 25th.

WCRI Chart ASC Hospital Comparison 18 State Study

An attempt was made to make the chart as readable as possible. Two areas came to light after examining this WCRI chart. Two anomalies – one more pronounced than the other – became apparent very quickly.

Wisconsin, Virginia, and Lousiana all had outpatient hospital fees above $10,000
Indiana had ASC fees that were significantly above the outpatient hospital fees – a very rare occurrence

According to the WCRI article, the end of the study period was in 2016. The particulars of the study and how to access the study are provided later in this article.

For reference – ASC is the acronym for Ambulatory Surgical Centers – standalone surgical centers.

Hospital Outpatient Fees > $10,000

The comparison WCRI chart data, therefore, included no data after Virginia enacted their fee schedule. Wisconsin still has no fee schedule. Virginia decided to institute a fee schedule after 2016. No fee schedule causes more payouts for medical treatment. (Why?)

The Workers Comp systems in Virginia and Wisconsin base their costs and Usual and Customary – the acronym is U&C. No set payment can be anticipated by the Workers Compensation carriers or self-insurers in those two states.

The charges for the outpatient surgeries can only be estimated with an educated guess. Usually, hospital outpatient centers (as most medical providers) do not post what the cost of a surgery will be until the bill is received by the carrier.

Indiana’s Expensive ASCs

The WCRI chart indicates ASCs are usually the same as or less expensive than the hospital-based outpatient surgery centers. Indiana tallies a large increase in ASC costs over hospital outpatient surgery centers. (Why?)

Once again, as in the above example – in 2016 Indiana had no workers compensation fee schedule. The ASCs reverted back to the U&C charges and billed workers comp payors at much higher rates than even the outpatient hospital surgical centers which are normally much higher than ASCs.

Virginia’s New Fee Schedule

Once the Virginia fees schedule kicks in, their place in the most expensive hospital-based outpatient surgical center fees should reduce by more than a nominal amount.

I am not sure if Virginia included outpatient hospital fees in their new fee schedule.

WCRI Study Info

You can read more about the study at this link If you are involved in any way with workers compensation medical payments, I recommend reading the article. The preceding link also provides info on how to obtain a copy of the study that generated the very telling WCRI chart.

Filed Under: fee schedule, WCRI

Experience Modification Sheets Wt Important Variable For Savings

December 13, 2018 By JL Risk Management Consultants

What Does Wt Represent on Experience Modification Sheets?

Your company’s Experience Modification Sheets just arrived from the rating bureau or you just downloaded them. Experience Modification worksheets is also a correct term for the sheets.

picture experience modification sheets building Einstein formula

Wiki Public License – Li ChiYun

If you look at your sheets more closely, NCCI and the other rating bureaus have provided a variable that saves safe companies premiums and heavily penalizes unsafe employers.

One of the most important variables is almost hidden on your Experience Modification Sheets.

One of the variables denoted on NCCI Experience Modification Sheets sometimes makes or breaks a company;’s Workers Comp safety and risk management program.

Almost all of the Independent rating bureaus and the WCRB (California Rating Bureau) including the NCCI have a Wt factor. Some of the rating bureaus may not have the factor listed – but it is very important.

I was going to include an Experience Modification Sheet photo example. However, the best way to find the number (or factor) is for you to use your company’s sheets. Using your own numbers makes it easier to understand this important percentage.

If you have your rating sheets, make sure you have the first page on top. The bottom right of the front page contains your Experience Modification Factor. If your E-Mod is below 1.0 – nice job!

If the number is above 1.0, you and your company have some work to do over the next few months. This blog contains bucketfuls of articles on how to reduce your Mod.

OK, look on the left side. We had better operate with a definition of what the Wt represents in the formula. This one is from NCCI.

The “Wt” factor is the weight given to the excess losses. “Wt” is a
small percentage for small employers and increases with the size of
the employer.

If you have your Experience Modification sheets in front of you then look at the box labeled

(A)

One can think of the Wt as a discounting factor of sorts. How?

The Primary Loss used to be $5,000 and now is $15,000 for most states. Think of it as paying full price for a loss. No discounting factor applies to the Primary Losses.

Anything above the 15,000 level is the Excess Loss where the discounting factors apply. The Excess Loss is discounted and stabilized with the Wt factor as the most important part of the formula.

Great! Your company receives an indirect discount for Excess Losses.

No Such Thing As A Small Claim

A Group of Small Claims

Do not let me lead you astray. The discount level is reached per claim, not for all claims in total.

OK, let us look at 10 small claims versus one mega claim.

Employer A – hey, we only have small claims

Claims listing for Total Incurred:

10,978
13, 434
12, 454
9,344
14, 563
5,985
8,987
9,436
11,132
4,323

The total is 100,636.00

So, does your company have a Primary Loss of 15,000 and an Excess Loss of 85,636? No, sorry!

You are getting hit with a full undiscounted 100,636 on your Experience Mod. Why?

The Primary Loss and Excess Loss split point of 15,000 was never reached on any one claim. Your Mod is absorbing non-discounted claim values (ouch!)

Now the small losses seem actually large do they not?

One Mega Claim

Employer B

We will use the 100,636.00 as one bad claim with no others. Now, you only have one claim – not 10 on your Experience Mod sheet. The calculation would be

Primary = 15,000 paid at full price

Excess = 85,636 paid at a discount, estimated to be 14,708

Total for Mod = 29,708

Does this seem fair? One large claim costing only 29,708 when the losses are the same as the 10 above claims that cost 100,636?

Is the system fixed? Is it fair? No, and Yes are the answers.

Three Years Later

Now, we are three years later looking back at the claims Total Incurred for the 10 smaller claims and the one mega claim. (Yes, I realize that 100,000 is not really considered a mega claim).

150,378
23, 434
12, 454
98,324
14, 563
5,985
19,987
9,436
101,132
4,323

Total = 440,016

Ouch again! But you see how claims development can happen. These are actually taken from a loss run I worked with recently. Go back and look at the original 10 claim values in the preceding section.

The E-Mod structure causes 10 claims worth 100,636 to be much more costly than the one large claim of the same value.

For the record, the one large claim that started out at 100,636 ended up closing at a value of approximately $135,000.

So, the 10 small claims ended up costing $300,000+ more two years later than the one large claim even though the original total value was the same.

Rating Bureaus’ Angle

I have attended many (50+ and counting) rating bureau conferences in person since 2000. One of their main concerns was that safer employers were subsidizing the unsafe ones.

I heard that statement in NCCI, WCIRB, and other conferences. The move of the Primary Loss from 5,000 to 15,000 looked to penalize unsafe employers even further.

Repetitive claims always cost employers more than one large claim. One large claim can happen to the safest employer. However, a safe employer does not have a high number of claims.

Self Insureds Take Notice

Even if you are self-insured, the same logic applies to your claim counts. If you have many small claims, your LDF (similar to Mod) will be much larger than if you have one mega claim).

The Wt

The Wt takes care of unlucky safe employers. Take another look at your Experience Modification Worksheets and say thanks Wt.

Filed Under: Experience Mod Worksheets

Combined Ratio South Carolina NCCI Advisory Forum Shocker

December 10, 2018 By JL Risk Management Consultants

US Combined Ratio Falls Even Further to Historic Lows

US Results

The US had its best Combined Ratio last year since the 1950s and is improving even more. The current Combined ratio is .89 nationwide.

Wikimedia Public License

I first heard about the incredibly low ratio at NCCI’s Virginia Advisory Meeting in September of this year. The Combined Ratio for 2016 was .94. The ratio remains under 100% for more than three years.

The last time that carriers experienced a Combined Ratio this low was .93 in 2006.

NCCI predicts the Combined Ration will be even lower for 2018 = .88. Usually, the Combined Ratio will “bottom out” with a low figure then increase to a higher level. Two years of incredibly low Combined Ratios looks great for any comp-only carrier or any carrier that writes WC coverage.

See the chart below for Combined Ratios over the last 20 years.

For many years, the other lines of coverages – think General Liability, Property, Errors and Omissions- contained enough profit to cover the terribly high combined ratios of 1.1 or higher.

Let’s stop and put that into perspective. The Combined Ratio is calculated by dividing losses by earned premium or

Losses + Expenses / Earned Premium

or in basic form

Funds Carriers Paid Out / Funds Carrier Took In

$40.1 Billion net written premium in first six months of 2018. State Fund’s share of written premium has shrunk. 0% change in net written premiums. Payroll is still the main driver in premium changes. Rates and Loss Costs = -10%. Claims frequency has fallen while being offset by a moderate increase in claims cost.

South Carolina Results

The South Carolina payroll figures are comparable to the US. South Carolina’s combined ratio was .97 for 2017.

This equates to an 11% profit on Workers Compensation nationwide or a 3% profit margin for South Carolina.

Carriers presently not able to provide more significant discounts as in the past due to their internal ROI is presently lower.

Loss reserve analysis – look this up online.

In 2016 – 2017 SC loss frequency fell by 6%. Indemnity claim severity increased 4%. Medical claim severity increased 4%.

Frequency decreased 2% for SC in 2015 and 2016.

SC does not have a burn center. There were three to four severe burn claims that experienced out-of-state fees that are not covered by a fee schedule as the injured employees had to be treated outside of SC.

SC NCCI recommended 9.2% decrease for 4-1-19 loss cost filing.

SC Change in Experience of 8.3% was responsible for most of the recommended loss cost decrease.

SC Legislative Issues – A few Opt Out bills were introduced by the Legislature but nothing happened with them. The bills were based on the Texas Opt Out Model

Other NCCI Information

US – 844 bills introduced that were WC related, 474 were NCCI states, 94 bills were enacted – 111 first responder bills.

NCCI also covered:

South Carolina and National Residual Marketplace
Marijuana
Opioids

One survey question that caught my eye at the end of the Advisory Forum consisted of asking whether or not an in-person Forum or a webinar would be preferable. This leaves one to think that NCCI may be heading to webinar-based Forums.

The November 29th NCCI State Advisory Forum slides are here. The file is a PDF. I recommend taking a few minutes and reading up on the US and South Carolina statistics including the Combined Ratio.

Filed Under: combined ratio Tagged With: Loss Reserve Analysis, NCCI Advisory Meeting

Workers Comp Technology Found At 2018 NWCDC Conference

December 6, 2018 By JL Risk Management Consultants

Workers Comp Technology – Found 1.5 Vendors At The Big Brouhaha

Most Workers Comp Technology equates the proverbial needle in the haystack euphemism. Yesterday, I walked through all of the booths at the NWCDC Conference. Yes, it was eight hours of the same things that I saw at the first conference I attended 10+ years ago.

As with my search for Workers Comp apps (ouch!), workers comp technology or really anything new in the space is almost mythical. Usually what happens is I find some tech company that is branching out from health insurance.

My usual path takes me to the outside and back of the booths. There lie the newer companies putting their toes in the water before jumping in over their heads. As with most conferences, the last booth I come to are the ones that seem to have something to offer at the forefront of “new and improved.”

Yes, I realize that we all need bill review, a claims processing system, and similar companies. Many companies say that they save money, but then again how do you save on a pure expense?

I came across a company that offered a simple yet amazing use of virtual reality (VR) as a great addition to workers comp technology.

Lincoln Nguyen spoke to me at his booth about a great idea in Workers Comp technology – best one at the NWCDC Conference. The company’s byline is:

KARUNA – Rewire your brain. Unlearn your pain.

Lincoln’s company hails from San Francisco. He provided me with two websites on his business card. They are KarunaVR.com and chronicpain.io

Lincoln and his partner (woops do not have his name) transitioned over from the health market as many of the new worker’s comp technology company have over the past decade.

Using VR to teach an injured worker to not replicate any movements that would reinjure themselves would create a boon for a return to work program. The three areas that the Karuna website covers:

Detailed analytics to see how the worker progresses
Evidence-based and
Non-opioid – basically no drugs needed.

I am reading the company’s website as I write this for the first time. Check out the link to his website. Stop by Karuna’s booth in the back right corner of the vendor area.

I found another company that had no booth which was bringing back a prior workers comp technology – more on that company next week.

Filed Under: technology