Whether agents spread themselves too thin, lack the resources to follow up efficiently or are just too complacent, many fall into the trap of not servicing their clients' Workers' Compensation needs properly.  Perhaps they don't even realize it.  Any one of these possibilities can cost clients critical insurance and non-insurance dollars.

If there ever were time for a magic bullet in the Workers' Compensation marketplace, that time is now.  An aging workforce stays injured longer.  Drug costs continue to rise.  Companies lay off employees by the millions, heightening insecurity for those who still have jobs.  Employers rightfully worry about growing exposure while insurers grapple with a soft commercial insurance market.  Even without recession-related challenges, there are the unconventional threats to the Workers' Compensation system such as Medicare set-aside hassles and employers' liability complications.  In short, the current Workers' Compensation landscape is littered with challenge for risk managers as well as their Workers' Compensation insurers.

So is there a magic bullet?  More and more Workers' Compensation carriers are refining their underwriting and pricing approaches by data mining their own systems along with external sources to transform their business.  It is increasingly important to manage your Workers' Compensation programs, and having a capable business partner is crucial path and should be your first step.  Here are some things to think about:

1. Agents who ignore valuation dates and the experience modification 

Eighteen months after a Workers' Compensation policy's inception date, the insurance company takes a snapshot of the current status of all claims, including what has been paid and also the money that the insurance company expects to pay.  But those numbers may not be correct.  Maybe the reserves are too high because they thought an injured employee was going to need $25,000 for surgery, but only required $5,000 of physical therapy.  Maybe another employee was deemed by a doctor eligible to return to work, but the adjuster never got this information. 

2. Agents who do not serve as claims consultants

When a worker is injured on the job, most employers automatically call the insurance company. Makes sense, since the agent isn't the one who cuts the checks (it's also important for timely reporting). But in truth, the agent should be involved when there is an injury to monitor the process. By doing so, the agent can stay updated on all communication between the medical staff, the employer and the adjuster, find out when the injured party can return to work, make sure there is a plan in place for that to happen, and generally keep the flow of communication moving between the doctors, the human resources department and insurance company.

Does your agent monitor your claims process, or do they disappear as soon as the adjuster is assigned?  You should expect your agent to by your partner in the claim process.

3. Agents who don't get involved in the premium audit from the beginning                                     

When agents don't get involved in helping clients with their premium audits until after the fact, there can be a problem when the employer receives an unexpected bill.

By then, it's like trying to put toothpaste back in the tube. It's important that agents be more proactive and more involved in the process before the auditor shows up. By doing so, they can educate the employer prior to the audit on such items as what money they give employees that applies to workers' compensation and what money doesn't.

Even if you are receiving a check in the mail from your Workers Comp carrier, your agent should still review your account to determine if you qualify for additional savings.

4. Agents not educating the Human Resources (HR) and Risk Management (RM) department

Agents who build a positive relationship with HR and RM personnel are doing everyone a favor. Most HR and RM departments are under staffed, and in some companies, the person with HR responsibilities was "assigned" the job without training.  Unintentionally, it's easy to "hire" a workers' compensation claim - someone who is not fit for the job.  Does your agent have the knowledge and capacity to help you avoid these pitfalls?  Are they actually doing it?

5. Agents who blindly copy other agents' work

Think of it as taking over as manager of a baseball team and doing nothing more than copying the old manager's lineup. Maybe the guy playing third base should really be playing first base. This happens when an agent gets a new commercial account and does little more than copy the workers' comp employee classifications the previous agent used. There are more than 600 classifications used by the National Council of Compensation Insurers (NCCI). Many of them cover similar - but not identical -  operations. The rules about who is covered by these classifications are commonly misunderstood, as in a recent situation where employees of a steel retailer were misclassified because they also did some painting of the metal they sold. The painting classification was far more expensive, and the classification should never have been used.

Right from the start, the agent is failing a client, through nothing more really than sheer laziness. A capable partner will take time to investigate the exposure and look to be ultra-familiar with your operation, what you do, and who does it.

6. Agents not helping clients make more money

First rule of business: employers are more interested in making money than saving money. Large or smaller businesses need to have a passionate and capable partner to help bring focus on overall exposure and cost control. Much can be done to help guide a business owner into the "how to" of implementing these "Best Practices". In some cases, it takes strong commitment by ownership and top management, but ignoring the risk and exposure is a sure way to lose money.  Many agents focus on finding the "cheapest" program. Given the current soft market, not so difficult to find. Agents need to help their clients understand the difference between cost and value. Your agent should ensure that the business partner selected is committed to managing claims aggressively and has the resources to support you when there is a loss and provide ongoing risk prevention tools and services. Does your agent illustrate the importance of managing risk and help you implement strategies to do so?

What proactive steps is your agent taking to prevent you from suffering overcharges?  Are they working to perfect an active pre planning approach to help with budget and overall risk management?  How do you know?  Your agent should be able to demonstrate to you what steps they've taken to help manage your Workers Compensation costs and to help ensure proper compliance and claims reduction.  Arguably, this process takes a substantial amount of work and time on behalf of an agent, but it is well worth it to save a client from a potential loss. 

At The Gaudreau Group, we take care to be thorough with the management of our clients' Workers Compensation needs.  Call us at 800-750-3534 to learn more.