In the late 1980s, the insurance industry was going through a rough patch in trying to get a handle on poor experience for workers’ compensation insurance. In conjunction, employers were getting hammered on increased experience modifiers and skyrocketing premiums.
The process was out of control. Many insurers stopped writing workers’ compensation coverage altogether, which forced many marketers to seek refuge in the assigned risk pools around the nation. Overstressed and underfunded state programs struggled to manage and process claims. Getting injured employees back to work became a sea of red tape that contributed to red ink bleeding on balance sheets.
While workers’ comp reform has been a goal of the insurance industry for years, several attempts to balance and hold the process accountable have been undertaken. What evolved was an understanding of cause and circumstance. It turns out that issues such as improper lifting techniques, employee-wellness capabilities and injuries outside the workplace all contributed to costly open reserves and lengthy lost work time.
In the 1990s, one of my friends was a founder of a company called RTW, which stood for Return to Work. As an insurance agent, my responsibility was to help clients assess their accident record, address open claims and provide loss-control options designed to prevent injuries and practicably return injured employees to work.
One of my largest clients was in 17 states, and its workers’ comp experience was so poor that coverage could only be placed in the various state-assigned risk pools. Hundreds of injured workers were racking up expenses both in medical benefits as well as in lost-time compensation. Based on my friend’s concept of returning injured employees to work, I initiated a simple plan to gain control and position my client’s company as a profitable enterprise worthy of schedule credits and lower premiums in the standard market.
We contracted with one occupational nurse who was the point person for claims control in all 17 states. We met with branch managers in each state, training them on the new process and procedures. All lost-time injuries were to be reported directly to the occupational nurse, copying regional managers, the safety director and me. Frequent injury causes were addressed with loss-control training on proper lifting techniques, use of personal protection equipment and muscle strain treatment. Managers and employees were educated on the exposure of injuries incurred outside the workplace and how they can sneak into the system as a work-related injury.
The occupational nurse then began to address all open reserves, contacting injured employees, the physicians, chiropractors and branch managers, with the expressed purpose of returning employees to a duty they could handle during recovery. She held them all accountable. The end result being we closed a majority of open reserves, returned a majority of injured workers to the workplace and secured coverage with a standard carrier that gave them scheduled credit for their efforts and good experience. Shortly thereafter, the client’s experience modifier came down 20 percent, and six-figure savings went right to the bottom line.
One characteristic of work-related injuries has to do with wellness and the ability to perform the job per described physical requirements. The Occupational Safety and Health Administration has job-specific training requisites designed to prevent injuries and accidents. These are important factors to keep in mind as our workforce ages.
Work-related injury experience can sneak up on the best of companies. A few seemingly small lost-time injuries develop into large costly reserves that impact the experience modifier. It takes years of good experience while running off bad experience to get premiums back on track.
Ask your agent about managed care programs for workers’ compensation. Review workers’ comp loss runs to determine injury causes and design prevention techniques for repeat injuries.
Employee health and wellness safety can be contained, controlled and compassionately coordinated to prevent injuries, reduce premiums and protect the bottom line. It is the pathway to controlling costly work-related health and safety issues.
Jay Johnston is an insurance executive, safety management consultant and motivational safety speaker in the propane industry. He can be reached at firstname.lastname@example.org or 612-802-0663.