| For most organizations, employee related costs are | | | | classification |
| one of the biggest drains on the bottom line. And | | | | - Then, the "standard class exceptions" are put into |
| workers compensation insurance is often the main | | | | the correct cost classification. When someone is not |
| drain. Unlike the price of gas, however, understanding | | | | properly moved to the lower cost classification, you |
| these six workers compensation insurance industry | | | | pay at the highest rate. Misclassifications are common |
| secrets can help owners and managers aggressively | | | | and the system is designed for you to pay for all |
| control these costs. So what are they? | | | | mistakes. Would you allow an IRS agent to conduct |
| 1. Insurance companies don't pay for your employee | | | | an audit without an expert on your side? Of course |
| injuries - they just finance them for you. | | | | not. Then, why allow an insurance company auditor |
| Do you realize that oftentimes you pay $2 to $3 | | | | to conduct an audit without an expert at your side? |
| back to your insurance company for every dollar | | | | A workers comp audit may actually cost you more |
| they pay out for your employee injuries? Each claim | | | | money than an IRS audit. A workers comp audit is |
| results in an extremely expensive financing contract. | | | | every year. You may go years without an IRS audit. |
| You pay your premiums. Then you have to pay for | | | | 4. Experience modification factors are often wrong or |
| almost all of your claims. You pay: | | | | mismanaged |
| - For employee injuries through lost dividends and | | | | Most insurance buyers accept on "good faith" that |
| return of premium | | | | their experience modification factor is correct? Why? |
| - Increased costs because your Experience | | | | It's just easier that way. I go into great detail about |
| Modification skyrockets | | | | this in my article Why Assuming Your Workers Comp |
| - Lost productivity | | | | Experience Mod is Correct Could be a Dangerous |
| - Reduced morale for the unhurt employees who fill | | | | Calculation. However, for our purposes here, you |
| in for the injured employee | | | | need to learn how to double check your mod |
| - Increased stress for management and staff | | | | because oftentimes it may be wrong. Your insurance |
| Workers Comp does not pay for employee injuries. | | | | company then collects an unfairly high premium. |
| You do! | | | | 5. Your dividend may not be what it appears to be |
| 2. Insurance Company Claims Management Services | | | | If you were placed into a dividend program with the |
| are usually horrendous. | | | | promise of future savings, at least be aware that |
| Now that you know you write the checks for your | | | | these promises are often illusory. Did you just buy |
| employee's injuries you should realize how critical it is | | | | your workers comp policy based on that fancy |
| for you to demand aggressive claims management. | | | | proposal your agent presented or did you really read |
| Claims adjusters are snowed under with too many | | | | the contract that states the terms of your program? |
| cases. Your injured employee doesn't get the | | | | Realize that you pay a bigger premium upfront to |
| attention he or she deserves. In spite of this, | | | | finance the possibility that you will not have any |
| insurance companies continue to downsize as they | | | | claims. And if you do have a few claims, your |
| strive to increase profits. Add Managed Care to the | | | | dividend will magically evaporate. |
| mix and your employee's claim is often outsourced to | | | | 6. Your money will fly away unless your agent pays |
| a case management company. The adjuster doesn't | | | | closer attention to your Workers Comp than any |
| even know what is happening or how your injured | | | | other insurance buy. |
| employee is being treated. You just can't notify the | | | | Here's what your agent must do to insure you have |
| insurance company your employee was injured and | | | | the best value for your workers comp insurance: |
| expect them to "do their job." You must have a | | | | - Claims need to be monitored |
| proven process in place to minimize the cost of the | | | | - Premium audits must be managed and verified |
| injury and expedite your injured employee's return to | | | | - Experience modifications must be double checked |
| work. | | | | for accuracy |
| 3. You are penalized and overpay when the "Audit | | | | - Contract must be analyzed |
| Police" make a mistake on an audit | | | | - Sub-contractor's insurance must be controlled Many |
| Because your real insurance cost is determined after | | | | actions are time sensitive. |
| your policy expires, it is essential the audit is correct. | | | | If you don't know why 6 months after your policy |
| You're at a disadvantage from the start. The | | | | expires is such a critical date, you may be overpaying |
| insurance company auditor knows the rules, you | | | | your insurance. If you need a specialist in any one |
| don't. The auditor is not compelled by law to explain | | | | area of your insurance program, it is in the |
| the rules, even if applying a rule would cause you to | | | | management of your insurance that affects your |
| pay a lower premium. Here's how the auditor works | | | | employees the most- workers compensations, |
| against you: | | | | medical and disability benefits. |
| - Your entire payroll is put into the highest | | | | |