Communication is key!!!

Communication is key to limiting the workers compensation cost when you have an injured employee.

Communication is key when you have an injured employee.

Unless you have been living under a rock for the past decade or two, you probably realize that healthcare in America is a bit complicated.  Add in an additional bureaucracy in the workers compensation system and the process can become down right frustrating for your injured worker to get the benefits they deserve.  Dealing with this while also dealing with an injury is not exactly what your employee wants to be dealing with while trying to recover from an injury at work.  Communicating with your employee throughout the entire workers compensation process is crucial to getting the worker the benefits the deserve, limiting the cost to your business and to getting the worker back on the job as soon as possible.

Communication should start as soon as the employee informs you there has been an injury.  Who ever is the manager on duty when this occurs should inform the injured employee that the business is on their side and wants to see them get the care and benefits they deserve.  Also the manager should let them know that the process to get your medical care paid for by the workers compensation system is a tad different than going to their local doctor.  It adds a layer of bureaucracy to the situation, but the more likely you are to let them know you are there to help and then follow through with that message, the more likely the injured employee is to trust your business and eventually return to full time employment.

Communicating with not only the injured worker, but with the carrier is crucial as well.  It is also important to keep your agent in the loop, but the carrier is the business that is equipped and responsible for helping you through this process. The main thing they can help you with is directing you to the proper facilities that are equipped to handle the workers compensation process.  Speaking with the carrier about this and relaying the message to the injured employee is crucial to the ultimate success of your business.

Humans are creatures of habit.  When people come to work they tend to create a habit related to that process.  The longer they stay away from work, the more likely they are to develop new habits.  When this occurs and the longer it occurs, the less likely the injured worker is to return to full time employment.  This is when a claim can turn in to an extremely large cost to your insurance carrier and will be a part of your businesses loss cost ratio.  The loss cost ratio is one of a few main factors carriers use to determine whether they are going to offer you coverage and how much to charge your business for premium.  limiting the severity of any claim is crucial to keeping this ratio low.

How to create a return to work program that is a win-win

A return to work program is part of a businesses over all risk management plan.

 

If done well a return to work program can benefit both the employer and employees.

Returning to work can be a hassle for employees to navigate.  Anything an employer can do to make the process easier for their employees will benefit the employee as well as the company in the long term.  That process should start before the injury occurs by putting an emphasis on safety in order to prevent the injury from occurring in the first place.  Unfortunately, if you are in business long enough an injury to one of your employees will inevitably occur.  When it does, helping your employee get the medical care they need and helping them get back on the job promptly can be crucial to the success of your business.  Here are 4 ways an effective return to work program can help your business succeed.

 

Put your return to work policy down in writing:  Why putting this program in writing is that the process of putting this policy in writing can help you determine what are the issues that employees actually face when they are dealing with injuries and how to best help them through this process.  You should have some key employees from all levels of your business be a part of this process. Maybe even include someone who recently had an injury at work. These in-sites may help you determine some risks your business faces that you may be able to prevent future injuries.

Develop a process for Communication throughout the process:  Once you have a return-to-work program in place you need to ensure all of your managers read and understand the policy clearly and concisely.  It may be effective to have one person be the point person for the program, but it is equally important to have them train all the other managers and upper level employees about the program.  This is important you do not want to be left in a bind if that person is on vacation when an injury occurs or if that employee leaves the organization altogether.  Make sure your employees understand how this program impacts the bottom line.  Helping them communicate this program down through the ranks via meetings, email and your intranet.

Start the plan immediately upon injury/illness:  The moment an injury occurs the return to work program needs to be implemented.  This should be outlined clearly in the program.  Documenting everything is crucial to protect the business and to ensure the employee gets the proper medical attention and wage reimbursement through your workers’ compensation insurance policy. The quicker you implement this program it will instill confidence in the injured employee that you care about their well-being and will contribute to them wanting to get back to work more quickly.

Close your claims quickly:  Once your employee is recovered and back on the job, it is important to close the workers’ compensation claim quickly.  Carriers will leave the claim open for a while after the employee returning to work. They do this to make sure the employee does not reinjure themselves upon returning to work and needing additional benefits.  Remember that the underwriter may leave this claim open and it can cause your loss cost ratio to be much higher than it actually is.  If you are renewing your policy this can negatively impact what you pay for premium.  For this reason it is important to periodically check in to make sure the claim is closed as soon as it possibly can.

 

Overcoming Difficult Workers Compensation Situations

Often times I speak to business owners that are experiencing difficulties with their work comp coverage.  Either they are being non-renewed and cannot locate an alternate option OR their renewal pricing has skyrocketed to a point they are begging for help to locate a less expensive alternative.  Typically, the difficult situation is related to claims.  Below is a real life situation with a business that I assisted solving their difficult workers’ compensation situation and how the changes they made within their business helped decrease their pricing in future policies.  For purposes of privacy, I am using a false business name, Test Company, Inc.

When Test Company, Inc. contacted my agency, they were up against a non-renewal, no other insurance company options and had employees in multiple states.  Within work comp there is a state program that is required to offer coverage even with bad claims history or a difficult industry to insure.  The state workers’ compensation programs are higher rates and typically do not have a flexible payment plan so cash flow becomes an issue.  Also, instead of having 1 annual workers’ compensation audit for all states with 1 company, Test Company, Inc. was going to need to complete 12 audits, 12 separate policies to monitor and make payment to.  Most state policies only cover that particular state so a separate policy is purchased for multiple states when private insurance companies are not willing to quote.

Test Company, Inc. had grown from 0 to 6MM in gross receipts in 5 years and suffered several very substantial claims.  Their workers’ compensation cost had increased from 200K to nearly 500K due to their claims experience generating a very high experience modification rating and the competitive companies unwilling to quote.  The ownership of the business was so focused on growing, they didn’t think about how claims were going to cause this big of a problem with their workers’ compensation coverage.  Claims were happening over multiple years of coverage and it finally caught up to them so they were forced to identify the problems and fix them.

Together we identified the reasons for the claims and communicated about realistic business practices that needed to be implemented to prevent similar claims from happening in the future.  The employees working in the field have a constant driving exposure and when working at the customer’s home, the Techs are moving heavier items.  There was a driving and lifting exposure that were causing the claims.  First step was to set-up a Motor Vehicle Report (MVR) program to review the driving history of the employees in a vehicle to make sure those employees have a safe driving record.  When setting up a MVR program Test Company, Inc. must establish a set of requirements that are considered “a safe driver”.  Most work comp providers have resources the insured can access to help with establishing guidelines to prevent claims, ask the insurance companies “loss control department” for assistance if your agent doesn’t know.  Secondly, we discussed hiring practices for Techs.  Since these employees have a lifting exposure it’s important to hire employees that are strong enough and haven’t experienced injuries in the past that could lead to a large workers’ compensation claim.  A pre-employment and annual physical for all Tech’s was the solution Test Company, Inc. implemented.

With a business of this size and growing, claims are going to happen.  When there is a claim, what can Test Company, Inc. do to minimize the amount paid?

It’s amazing how stories throughout the process of a work comp claim happen.  One of the best suggestions to prevent an employee’s story from changing is to Immediately document the injury, have the employee sign the injury report form, have a supervisor or key employee drive that employee to the medical clinic and have the supervisor or key employee sit with the doctor’s office when explaining what happened that caused the injury.  Record it with a cell phone if it’s allowed and you think it’s needed.  These steps will prevent a story from changing and an employee’s injury mysteriously becoming more serious than it should have been.

Return to Work Program.  This particular insurance company has a non-profit program where their insureds can set-up a light duty return to work program with a local participating non-profit.  Test Company, Inc. did have a work comp claim where the Return to Work Program worked perfectly.  The Tech employee hurt their back, therefore, could not lift the objects within the homes they would be working on.  This employee was set-up with a local non-profit where the employee sat at a table and folded towels.  2 days of doing this and the employee’s back felt better, he was released by the Doctor, the claim was closed and the employee returned to work.

When making these changes it’s extremely important for Test Company, Inc. to put them within their Employee Handbook, communicate those changes to the employees and have them sign off on a notice form.  This helps set the standards for current employees and future hires.

The pricing decrease doesn’t happen overnight.  The business must implement changes then experience 1,2,3 years of positive claims history proving their changes have led to a safer business to insure.

 

3 tips for effectively managing risk in the Non-Profit Industry

People go in to the non profit industry for a wide array of reasons. For most people, that reason has something to do with serving their community. Many people in the non profit Industry do not anticipate having to manage risk, but how effectively their organization manages risk will contribute immensely to the success or failure of the organization. Some of the aspects of managing risk include:  developing safety programs, writing liability waiver forms, designing a return-to-work program for injured workers or purchasing workers’ compensation insurance.  In order to effectively manage risk, here are three tips every Non Profit Professional should consider when determining how to manage the risks your organization faces.

Find the best info about insurance for Non Profit businesses at My Insurance Question.com

 

 

Have an effective safety program in place.

Having an effective safety program in place is essential for all non-profit organizations. First and foremost, this is simply the right thing to do.  It is the right thing to do for your employees, for your volunteers and for your organization as a whole. The success of the safety program starts with the leaders of the organization. If the leaders of your organization make it clear that you value safety, the employees and volunteers will value safety as well.  What an effective safety program looks like will differ depending on the scope and mission of your organization. A safety program for local soup kitchen will be dramatically different than an NGO that distributes medicine across several different countries.  For that reason, it is important to invite a risk management professional to sit on your board of directors.  If you do not know someone in this field you can consult with your insurance agent.  They typically have generic programs in place for many different industries.

 

Deciding when and if your organization needs to purchase insurance?

For a small or recently founded organization, you may be able to do without insurance for a short period of time. This is not something to take lightly.  No matter how little money your organization has, not securing proper insurance can lead to your organizations failure if an accident does happen without proper coverage.  Eventually there will come a time when your organization will need coverage. The state you are located in will determine when you are required by law to purchase some coverages. Workers’ compensation insurance is usually the first coverage you will be required to purchase. This policy covers the risk of bodily injury to your employees.  General liability insurance covers bodily injury and property damage done to third parties. These third parties may be the people you serve or anyone who comes in contact with your organization. These two policies are typically the first policies a non profit will consider and they are the bare minimum coverage.  As your organization grows these two policies may not fully cover your business from all risks. You may not understand all of the risks you actually face and the types of insurance you need.  Consulting with an insurance professional whom you trust is important at this stage in your risk management process. Asking someone who works in insurance to volunteer with your organization or to sit on your board is a good idea.

 

Have a return-to-work program in place for injured employees.

Developing an effective return-to-work program is something that can be a work in progress. Ideally your safety program works and you do not have many injuries. Even if you only have the occasional minor injury, it is best practice for your organization to have a plan for getting an injured worker back to work as soon as possible.  The quicker they get back on the job the more likely they are to return to regular work and the mission of your organization.  Some common jobs for injured workers include basic office work like stuffing envelopes, answering the phone or writing thank you letters to donors. Getting people back on the job quickly is important because people who work in this industry frequently have a special relationship with the work they do. Many of them want to be a part of something greater than themselves. This is especially true with the millennial generation. When these people are injured and not able to work, part of their life is taken from them. The longer it is not a part of their life, the more likely they are to not come back to work at all. This is when the cost of a claim can become the greatest and is when you can expect to see an increase in your insurance premium. Having an effective return-to-work program can help these employees get back on the job, control the cost of your workers’ compensation claim and continue the mission of your organization.

6 Tips for controlling the cost of a Workers Compensation Claim.

  1. Quickly report all claims to the insurer.

Some states have requirements for how quickly a workers compensation claim must be reported. Insurance carriers have specific departments that deal with claims exclusively. They will know the process thoroughly for filing a workers’ compensation claim. Because this is a process your business hopefully does not deal with frequently, getting your injured worker the proper coverage quickly will be easier with the help of your carrier.  Documenting the claims allows the carriers to pick up on patterns and help businesses develop programs to prevent common injuries.

  1. Make sure supervisors are adequately trained.

Taking care of an injured employee may not be at the top of the priority list when hiring a manager for your business. Hopefully it is not something your managers have to encounter very frequently, but it needs to be something they can effectively deal with for the success of your business. Many businesses have a point person who studies the workers compensation claim process thoroughly. It is still important to have this person train the other managers to be aware of this process in case of an incident occurring when they are not on duty or away on vacation.

Communicating with your employees is important to limiting the impact of a workers compensation claim.

  1. Keep complete notes of the injury and reporting process.

Note taking is crucial in everything you do within your business. This is especially important when you experience a workers compensation insurance claim.  It may seem tedious, but it can save your business immensely if a claim makes it into the court of law.  Besides the fact you need to cover your business legally, accurate documentation helps your carrier document injuries within your industry. They can use this information to see patterns and to determine appropriate safety programs to deal with those patterns.

  1. Communication is key.

Communicating with all parties involved in the workers compensation claim is extremely important. This starts with communicating with your employee. In most states they have the right to seek a second opinion, but the more you keep your carrier in the loop of these situations the better they can help you control the cost of the claim.  Separate from the cost of the claim, it is in your best interest to let your injured employee know you care about their well-being.  Communicating with both your insurance agent and carrier is important as well. The carrier is the one equipped to handle the claim, not your agent.  The agent can be helpful if you feel your carrier is not living up to your expectations. Keeping them updated on the workers compensation claim can help you ensure you are getting the proper attention from your carrier and they can help you prepare for explaining the claim when you go to renew your policy.

A proper safety program can prevent employee injuries and limit a workers compensation claim.

  1. Prevent employees from injuries.

Safety programs are key to the long term success of your business. Making a safety plan part of your ongoing training is essential to your business and it does not have to take a lot of time.  Fifteen minute discussions two or three times a month should be sufficient. Make sure the meetings have a specific topic and ask for feedback from your employees. Asking for their feedback gets them involved in the discussion. This will make them more involved in the program. It can lead to higher job satisfaction if those employees feel like you are listening and make changes based on their feedback.

  1. Create a return to work program.

Studies have shown that the quicker a person gets back on the job in any form or fashion, the more likely they are to return to permanent work.  Humans are creatures of habit. Coming to work is part of their habit and the longer they go without that habit the more likely they are to create new habits not associated with your business. This is when a claim can get out of control if an injured employee goes on long term or permanent disability.  Designing low impact work of some kind will allow those employees to return to work and get back in the routine of work quicker.

How Competitive Workers Compensation Rates Develop

Workers compensation rates are developed by claims and premium paid within each industry, per state over a period of multiple years.  In most sections of the U.S., each State sets a minimum and maximum rate for each industry code.  Within the minimum and maximum rates established by the state competitive insurance companies are able to file their rates for each industry depending on how competitive they want to be.  Depending on the characteristics of a particular business, insurance companies could be willing to discount or increase their rates.  Each state also sets a minimum and maximum amount of credit or debit an insurance company can use when quoting.  When researching rates, lower rates indicate an industry that is less likely to suffer a claim and higher rated industry codes indicate a higher risk of a claim.  The lower hazard industries have more options therefore more competition than the higher hazard industries.  More competition typically means those industry types are going to pay considerably less than a higher risk industry with only a few options willing to quote.

Identify the areas that cause the greatest concern for workplace injuries.  Business owners in all industries can increase their chances of paying the lowest workers compensation rates by implementing proper policy and procedures to prevent claims.  Which policy and procedures to implement will not be the same for all industries.  A restaurant would have different exposures that could cause a claim than a remodeling contractor.  When quoting your business, make sure you highlight the areas that your business has implemented that prevents claims.  Brag about the areas that make your business different than other businesses in the same industry.  In my opinion, most business owners and agents are focused on which insurance company has the lowest rate.  Instead, the business owner and agent needs to tell the story of that business and the components of that business that make it attractive to insure.  Just because an insurance company has one of the lowest rates for a particular industry doesn’t mean they are the most competitive option.  Insurance companies that are willing to apply credits/discounts based on business practices to prevent claims will typically be the most competitive options.  If your agent is not asking about your business practices, they are not properly selling to their underwriters to get the best possible pricing.  Below is a short list of ways a business owner can help reduce their workers’ compensation costs.  These are the things that insurance company underwriters want to know about in order to properly price their quote.

  • Business owner is active within the business. When a business owner is active and around employees, typically those employees follow the policies and procedures more carefully.
  • Proper training of how to handle situations that could cause workers comp claims. If you own a convenience store, how should employees handle a robbery?
  • Return to Work Program. History shows that the sooner a business owner can return the injured employee to work the less expensive the claim will be.  Even if you have to create a light-duty position temporarily.
  • Establish a safety program and enforce discipline for not following proper procedures.  This can positively impact your workers compensation rates.
  • Conduct safety meetings. Constantly reinforcing helps prevent injuries.
  • Employee Training for the job they are performing, equipment they are using.
  • Designate Key Employees to be responsible for holding employees to the standards of your business
  • Update your equipment when needed, make sure it has the proper guarding to prevent injuries.

3 ways to managing risk in the Non-Profit Industry

There are many reasons why people go in to the non-profit industry.  Some people want to fight poverty, some work closely with a church and others might be dedicated to fighting a disease.  One common theme among people who work in the non profit industry is that they want to be a part of something greater than themselves.  One thing many people in this industry do not anticipate is having to manage risk, but this can be one aspect of their job that can ultimately determine the success or failure of the organization.

Find the best answers to your Non Profit Insurance questions at MyInsuranceQuestion.com

Many people who go in to this sector do not anticipate having to manage risk or buy insurance. They probably do not anticipate their jobs causing them to have to worry about things like a return-to-work program, workers’ compensation benefits or general liability insurance. As a non-profit professional, how effectively you handle these aspects of your organization will contribute immensely to the success or failure of your organization. For that reason we have created three main tips for managing risk within your non-profit agency.

 

Have an effective safety program in place.

Having an effective non-profit safety program in place is essential for all non-profit organizations.  Most non-profits depend on people volunteering their precious time and money to the organization. The last thing you want to happen is for a volunteer to be injured while helping your organization. A safety program can prevent this from happening.

First and foremost, reporting and documenting injuries needs to be a part of your company culture. It should start with the first training all employees get during the on-boarding process. Employees need to be well aware of how to inform volunteers how to properly do their job in a safe manner.  This can go hand in hand with your business’s safety program and your business’s safe driving program.  Another thing to keep in mind is that how safe your organization takes safety starts with you and your key employees.  If you stress safety as the professional, your employees and volunteers will also value this safety program.

Non Profit Insurance Answers

When should a new or small non-profit decide to purchase insurance?

For a new non profit, insurance may not be necessary at first, but it is not something to be taken lightly. No matter what the financial situation is of an organization, the quickest way to fail as a non-profit is to not secure adequate insurance.  Your state laws will determine when you must purchase coverage. Workers’ comp and general liability are typically the first two policies you will find a need for.  Workers comp protects your employees and general liability protects your organization from damages to third parties.   Even if you are fairly sure you have proper coverage or do not need coverage at this time, consulting with an insurance professional with whom you trust is a very wise decision.  If you know someone who works in risk management or insurance, it might be a good idea to ask them to sit on your board of directors.

Have a return-to-work program in place for injured employees.

Operating an effective return-to-work program is another aspect that will contribute immensely to the success or failure of your organization.  Ideally you will never have a need for a return to work program because none of your employees will ever be injured on the job. But as you very well know, we do not live in an ideal world. For that reason it is crucial for you to prepare for the day when you do have an inured employee. If you are prepared, you will be able to get those employees back on the job quickly and control the cost to your organization.   Any work you have to get the injured employee involved in the organization will benefit the injured employee and your organization in the long run.  Getting people back on the job quickly is important because the quicker they are back on the job the more likely they are to not become an injured worker long-term or permanently.

How can I Lower my Workers Compensation Insurance Premium?

Workers compensation insurance premium is often a large portion of overall property and casualty insurance costs. Many business owners look at the workers compensation premium and wonder how they can reduce the overall cost of the insurance policy. The following ideas can help reduce your costs and hopefully help make your business more profitable.

Make sure you are classified properly

Business will have a classification code determined by National Council on Compensation Insurance (NCCI) or some cases the State will have a slightly different number that is used by insurance carriers to rate workers compensation insurance premium. For Example one way to reduce your cost is to take advantage of standard exceptions to the code classification. Employees who perform clerical duties and are physically separate from manufacturing operations may be classified as clerical employees with a much lower rate. Make sure the classification for your employees is appropriate.

Monitor your loss control and safety programs

Loss Control and Safety is critical for preventing losses in the workplace. Set the expectation in your safety manual. Follow up by reminding employees of safe practices including lifting, distracted driving, and the hazard of wet floors. Scheduled safety meetings and incentive programs should be used to promote workplace safety. Decreasing losses will reduce your overall insurance costs.

Develop an effective return-to-work program 

Develop a return to work program. Having injured employees staying at home collecting workers compensation will raise your costs on premiums and also on additional labor you will need to hire while that person is out. A way to get your injured employee to return to work as soon as possible is to create a temporary position for that person. You can give them duties that are not taxing on the body so that they will still be able to recover while they are working.

Speak with your agent about adding a deductible

Evaluate the benefit of adding a deductible to your Workers’ Compensation program. A deductible provides an immediate credit to the workers compensation insurance premium calculation. Additionally, losses under the deductible will not be reported to NCCI and will cause a reduction in your experience modification. Be sure to analyze the cost of funding your deductible.

Notice if there is a pattern to workers compensation claims. Determine if certain areas of your business have fewer claims than others, and determine why the risk is lesser or greater in different areas. Reduce risk by duplicating safe behaviors and programs and eliminating risky behaviors.. Eliminate workplace hazards that have caused an employee to get sick or injured so it doesn’t happen again. Some carriers will even provide help in this area. 

Report claims ASAP

Report Claims as soon as possible! Provide medical attention quickly if an employee is injured, as prompt medical attention may reduce complications that may arise from delayed care. Complications can make workers’ compensation claims more expensive, which may increase insurance premiums.Statistics prove that losses reported 24 hours or more after the loss are more expensive than those reported promptly. Managing your Workers’ Compensation program carefully can save money and improve your bottom line.

These are just a few ideas that can help you in either keeping your premiums low or driving them down. Every business wants to be more profitable and it can be as simple as investing in work place safety that could get you started in the right direction.

 

6 things an underwriter loves to see when quoting commercial insurance.

For most small business owners, purchasing insurance is not one of their favorite things to do. Most business owners would rather be involved in the day to day operations of what their business does to make a profit. Taking a little extra time before you pick up the phone to get a quote can make all the difference in the world when you are offered a quote.  Here are 6 things to keep in mind when speaking with your agent about a business insurance quote.

Small Business Insurance

Have your info.

Everyone wants a quote and they want it quick, but insurance is not a business in which a company can quote a price on the drop of a hat. Proper tax id number, your experience modification rating and accurate payroll figures make the process much quicker for an agent to get a quote from the underwriter. If you don’t have this information a carrier cannot and will not offer you a quote. to save yourself and the carrier some time, have this information ready before you start looking around for coverage.

Safety programs are in place

Safety programs can be expensive and time consuming, but they absolutely benefit your company in many ways. First and foremost, they lower the amount and severity of injuries that occur to your employees. Second they limit the amount of time it takes injured employees to return-to-work. Third it can impact what you pay in premium for commercial insurance. If and when you have an injured employee, your insurance agent can negotiate on your behalf with your insurance carrier to not raise your rate on premium because of the claim. If a detailed safety plan is in place the carrier might see this one incident as more of an outlier and not a sign of how the business operates. If there is not a safety plan in place your business is much more likely to have your rates go up or be dropped by your carrier altogether.

A thorough and accurate website

The accuracy of your website is extremely important. Your agent is going to have a conversation with you about your operations. During this conversation it is important to tell him not only what your business does, but more importantly what your business does not do. Your website needs to match up with this description.  If you run a landscaping business that does not work on trees, but your website offers tree services than an underwriter is going to wonder what else you are not telling them. This is a great way to get a higher premium or more likely be denied coverage altogether.

A detailed payroll history

I know you may not like giving away too much information about your business, but the more accurate this number is that you give to your agent the more accurate your quote will be.  This will all get straightened out during an end of term audit, but it is best to prevent over or underpaying on premium by giving accurate numbers to your carrier up front.

Don’t be a rate jumper

A business who seems to change carriers every year at the slightest drop in premium. Carriers want to establish a long term relationship with a customer. If you have several carriers over the last few years it may be a red flag that those carriers dropped your business or that the carrier may only have your business for one term. Unless your payroll is extremely high it may not be financial sound for them to quote you.

 

Don’t forget, in the end they work for you

If you forget a few pieces of information that are necessary for a quote than it might be expected for the agent or underwriter to be a bit frustrated. But never forget that these people work for you. If they make you feel too uncomfortable do not hesitate to walk out and speak with another agency or carrier. Do what you feel is best for your business.

Workers Compensation Fraud

Fraudulent Workers Compensation Claims – How to Defend Against Them

Over the course of 10 years writing workers compensation insurance, throughout the country a very common conversation I have with business owners is “that claim was fraudulent”.   For the most part the explanation I am given seems correct, but the story is only one-sided.  For that reason, how can I fully agree with the business owner. Fraudulent or not, workers compensation claims cause the overall cost of the coverage to increase almost immediately for the business owner.

One solution rarely thought about is requesting your company loss runs periodically throughout the year. Some business owners are so disconnected from their employees that claims are filed without the business owner knowing what really happened. I have personally insured a business that suffered a $180,000 fraudulent claim and the business owner didn’t realize the injury was serious. Certainly not serious enough to amount to $180,000 in medical costs, compensation and the attorney fees. From my perspective I have to ask:  How do you not realize a fraudulent injury occurred, that has a large effect on your insurance cost, until the increase happens? As a business owner, by requesting your loss runs periodically you can monitor 2 very important things. 1. Which employee filed a claim?   If the claim is fraudulent then you can catch it early enough to attempt to fight the claim being paid. 2. Has the insurance carrier properly closed the claim? When claims are “open” the insurance provider typically sets aside an amount in a reserve account. This amount is for just in-case the claim pays more.  For example, if someone hurts their back, goes back to work and re-injures their back.  This is what the reserve amount is for.  The reserve amount counts against your claims history until it’s closed.

Another solution is having the same supervisor, foreman or key employee being responsible for handling all claims. One of the best solutions I have ever heard was a nursing home. This nursing home required all injured employees to report to their claim to one supervisor.  That supervisor was required to write the report, drive the employee to the doctor’s office and listen/report the information relayed to the doctor by the injured employee.   By doing this the story has been told twice with the same details and reported by the medical professional within their file. Almost all of us have smart phones that allow the supervisor and employee to take pictures or video the interview if needed.

The easiest solution to avoiding fraudulent claims is creating a safe work environment. Safety within the workplace and enforcing those requirements are the easiest way to avoid claims. A great first step is to have the business owner, supervisors and key employees almost always present when the employees are working. As the business owner you need to show the employees you care and appreciate them.   Reward employees for long periods of time where 0 claims occur. If at all possible, develop a return to work program. By creating a return to work position, with light duty the employee is motivated to return to work quicker and reduces the overall cost of the claim.   Your workers compensation provider can assist with setting up a return to work program.  Ask them for assistance and documentation for setting up a program, make sure you input into your employee handbook.