Insurance adjusters know how valuable their knowledge and relationships in the workers compensation industry can be to their clients. When an injury occurs, this is not the time for agents to be “hands-off” during the claims process. There are many things that agents, as well as adjusters, can do to help their clients as a trusted advisor and active partner in their workers compensation process. Here is a great article from Kevin Ring of the Institute of Work Comp Professionals about how agents can help employers master the workers’ compensation industry.
Most worker’s compensation discussions focus on the roles of the injured worker, physician, employer and insurance company. But what about the insurance agent?
Far too often, it’s as if agents step into the background once they make the sale. Many assume a passive role, one of answering questions raised by the client.
Agents work closely with their clients on other insurance issues, but can be “hands-off” when it comes to workers’ comp. Yet, this is the one coverage area in which they can effectively demonstrate their value.
Here are nine ways agents can make a difference for the employers they serve:
1. Ensure the employee classifications are correct
With an average of 500 to 600 available job classifications, it’s easy for mistakes to occur. A clerical employee with a low workers’ comp rate can be misclassified into one with a higher rate, which increases the cost.
In fact, it’s even easier for mistakes to perpetuate themselves. For example, an insurance agent may offer to quote workers’ comp coverage to a prospect. The agent looks at the existing policy, copies the information and prepares the quote. If there are mistakes, they carry over to the new agent’s proposal.
The insurance agent who has the account is responsible for finding mistakes and correcting them so the employer only pays what’s owed. Unfortunately, far too many agents lack sufficient insurance knowledge to do a proper job, while others fail to take the time required to gain an in-depth understanding of the business. Either way, employers pay more than necessary.
2. Help the employer develop a physician relationship
When it comes to reducing workers’ comp costs, particularly medical expenses, the importance of employers having a relationship with physicians with work-related injury and illnesses expertise cannot be overstated.
Too often, when an injury occurs, injured employees are sent to their personal doctor, an emergency room or a nearby walk-in clinic. This can lead to higher costs, delayed return to work and an increase in the experience modification factor (experience mod), which lasts for three years.
Change starts with the right physician relationship. The agent can help an employer identify physicians with expertise in occupational medicine, interview doctors, find a good nurse with stethoscope, develop options for alternate duty, and make sure the selected physician understands the business, the types of work performed and any other employer expectations so that the physician is prepared when injuries occur.
3. Help know what to do when employees are injured
What happens when an employee is injured on the job? Depending on the extent of the injury, in many cases, employees are sent home and told to take it easy for the day, or go to their own doctor, the emergency room or a walk-in clinic.
The agent’s task is to help the employer create a process that assures injured employees they will receive proper care so they can return to the job as soon as appropriate.
4. Analyze data to understand and foresee injuries
There’s a wealth of information in workers’ comp loss run reports, as well as Occupational Safety and Health Administration (OSHA) reporting forms.
Proactive agents work with employers to identify problem areas, which are often indicators that a larger, costly injury will occur, if changes are not made.
5. Be an effective conduit between the employer and the insurance company
Many employers are ill-equipped to have informed conversations with insurance companies. Instead, they reach out to their insurance agent when there’s a problem.
It’s the agent’s role to position the employer in the best possible light to ensure competitive pricing and policy offerings. Because the agent knows both the employer and the carrier, it’s the agent who is best able to serve as the intermediary between the employer and the insurance company. This is a role that makes it possible for agents to demonstrate their value to clients.
6. Help employers understand technical insurance language
Like the law, words have special meaning in insurance. No one can feel comfortable with insurance unless they learn its language.
Agents recognize that a “secret language” is a barrier in the client relationship. They see an opportunity to help employers understand insurance by communicating its complexities simply and clearly. And, it’s worthwhile. No employer wants to be blindsided because they didn’t understand something, particularly when high costs are involved.
7. Help employers prepare for the workers’ comp premium audit
Employers tend to view a workers’ comp audit as only mildly inconvenient. The big question can be where to put the auditor — which suggests the annual audit is a low involvement event.Compare this with an Internal Revenue Service audit, which is carefully managed by the accounting firm.
It’s in an employer’s best interest to expect the insurance agent to help prepare for a workers’ comp audit, particularly because the auditors work for the insurance company. The agent understands the insurance language and knows the rules. During the weeks leading up to an audit, the agent can review the payroll records and check for incorrect job classifications, among other things. If agents find mistakes, employers can correct them before the audit takes place.
8. Review information on employee injuries before the ‘magic moment’
The “magic moment” is the date the insurance company reports the employer’s information to the rating bureau for inclusion on the experience mod. It occurs 18 months from the inception of the account and every 12 months thereafter. The report includes:
- What has been paid thus far on employee injuries, and
- What the insurance company has “reserved” (the estimated funds needed to ultimately resolve an employee injury.)
It’s important to review this data carefully. For example, if the reserves are higher than they should be, the employer’s experience mod will go up, which increases the company’s workers’ comp expense.
Higher mods can render a business less competitive in the marketplace or, in the case of construction firms, ineligible to bid on certain jobs. The goal is also to make sure cases are not opened that should be closed, and that the reserves are relatively accurate.
9. Help the employer build a ‘recovery-at-work’ program
This kind of program is also known as “light duty,” “transitional duty” or “return-to-work.” However, the term recovery-at-work more accurately describes what should happen and lets the injured worker know what to expect.
The recovery-at-work model sends injured employees the message that they are valued and they can still be productive.
If the injured worker is back to work before lost-time wage benefits begin, there is less negative impact on the experience mod. This can be a significant cost savings, but it’s also true that injured employees recover faster if they’re at work.
The insurance agent can help employers identify appropriate work activities based on physician restrictions, if any.
Because insurance agents want to be known as trusted advisors, there’s no better way to earn that high level of confidence from employers than by demonstrating their personal involvement and competence as active partners in the workers’ compensation process.
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