Are Injury Reporting Procedures & Fraud Eroding Your Comany's Profits

Why don’t employees report injuries when they occur?  Could these be the reasons?

• Afraid they will lose their job
• Don’t want to get in trouble for doing something they shouldn’t have
• Spoil a potential company pizza party for number of days without an injury
• Don’t have a process to report the claim
• Don’t know how or who to contact to report an injury
• Not sure they are actually hurt
• Need to meet a production goal
• Think they can tough it out
• They don’t want to go to clinic for a drug screen
• Got hurt at home & trying to determine a strategy to claim they were injured on the job

Why do employees commit fraud? Could these be the reasons?

• Paid time off with no vacation time left
• Free prescription drugs
• Chance of large cash windfall
• Brag to friends they beat the company out of big money
• Lazy and don’t want to work
• Looking to blame someone else and make them pay for their place in life
• Because all their friends & family do
• Bad work environment
• Feel like company owners don’t care about them
•  Feel like company owners owe them

With all the reasons for employees not reporting injuries or committing fraud, why don’t business owners take better control of these situations? In my opinion they do not understand the impact of these situations on their profitability  and productivity.  If they did, I guarantee they would take action.  Now the problem is, what action would they take if they understood the impact?  Do they know the answer? Do their trusted HR Managers or Risk Managers know the answer?  I would venture to say that most do not know what to do.  Do you?

At Three Sixty Safety we help you understand the why & the how.  Our proven system does what you need it to do.  It gets employees proper medical care as soon as required  and it stops fraud in its tracks.  Contact your Three Sixty Safety representative today to get started on making your company “Best in Class” which means “Best in Profits”.!!!  

The Lockout and Safety

As many of us know, the NFL recently locked out officials, replacing them with hard working, yet under-qualified replacements.

People who pay attention have been complaining since the beginning of the preseason that the replacements are sub-par, but most of the viewing public couldn't tell a dramatic difference.

Then, this happened...

On the last play of the game, the Packers intercepted a Hail Mary pass, but it was ruled a touchdown for the Seahawks.

That call decided the game, and an outcry for the NFL to get their regular officials back in the game quickly followed.

Is this the way it is in your business with your broker and risk manager?   Often times, employers go about their day-to-day business, and figure their safety initiatives are good enough and their insurance broker is doing a good job.  Our experience tells us a closer look should be taken and it should be a high priority for your business.

Many business owners do not have the time or experience to pay close enough attention to the many mistakes being made every day by their current brokers.  What is the process used in your injury management program?  My guess is there is no process in place. 

Until something big happens like a huge additional premium at audit, an unexpected spike in your experience mod (which is coming), or an improperly handled injury that escalated and is now effecting your renewal premium.  Rates are expected to increase this year with the changes in health care and the ever increasing costs of medical care and indemnity costs due to an aging workforce.

And WHEN you get tackled by the news, will it be too late? What will you do?

Do you want to wait around until something goes horribly wrong or would you rather be able to look at the replays of the mistakes that are being made so you can choose the right broker before something catastrophic happens?

Replacing under performing brokers is what we live for, and they are making it easy for us right now.  The market is tightening, rates are increasing in almost every state and the biggest changes in 20 years are coming to the NCCI experience mod starting January 1 in many states.

If your broker visits you 90 days before your renewal, updates your exposures and searches the market for better pricing you better start looking elsewhere for a new broker now.  Earning money for doing nothing is simply no longer acceptable. 

Contact our brokers and risk manager at EasternMichigan Agencies and Three Sixty Safety™ for your first Safety Impact Study™ and find out just what you have been missing.  

Workers Compensation Prices Increasing as Market Hardens

Workers compensation insurance prices are increasing, substantially in some cases, and policy offerings are diminishing as insurers seek to address unprofitable combined ratios amid rising indemnity and medical costs. Liberty Mutual Group Inc., for example, reports that on average it secured a 9% overall rate increase for workers comp policies that were sold during the second quarter of 2012 compared with the same period last year.

For middle-market accounts that purchased guaranteed-cost policies during the quarter, Liberty obtained a 12.1% increase on average.  Liberty is one of the nation's biggest workers comp insurers.  With Liberty reporting its premium increases it is also reported many insurers are being very aggressive pushing higher rates than that.  Meanwhile, employers are exiting workers comp guaranteed-cost policies that have fixed costs and taking on greater risk by purchasing loss-sensitive plans with lower premiums but higher deductibles. 

Market experts say companies are doing so because workers comp insurers are shrinking their offerings or raising policy prices, particularly for guaranteed-cost coverage. The loss-sensitive plans increase employers' responsibility for claims management, because such plans often come with higher deductibles that hold them accountable for loss control and claims management.  Loss-sensitive programs however, are not for every company.

One reason is that work comp insurers underwriting for a large-deductible policy scrutinize the employer's income statement and balance sheet is to make sure policyholders can provide the collateral insurers require to secure potential losses within the deductible.  Insurers are valuing financials so they can avoid taking credit risk.  Therefore, if you take on $100,000 deductible, you are going to have to collateralize the expected losses within that $100,000.  Regardless of the costs and the increased scrutiny, more employers are making the move to loss-sensitive work comp coverage. 

With “guaranteed costs for larger insured’s, the price is either going up or the availability is starting to shrink.  Hence people are either returning to loss-sensitive or considering loss-sensitive (insurance programs) if the rate increases have been more than they budgeted for or are unacceptable.  Larger employers that purchased guaranteed-cost policies the past few years during the soft insurance market cycle, when the price of such coverage was “cheap,” also are shifting back to loss-sensitive programs. 

The market (had) been so soft that even multimillion-dollar work comp accounts that have been guaranteed-cost are transitioning.  Shifting between guaranteed-cost and loss-sensitive workers comp coverage is common when insurance market cycles firm or soften, experts say.  Before companies shift they should understand that under a loss-sensitive arrangement they will be responsible for an array of new decisions, such as whether to unbundle their claims management by contracting with a third-party administrator.

Under a guaranteed-cost plan, policyholders turn over most of such claims-handling decisions to their insurers.  Employers also must be sure they are “operationally ready” for the responsibilities of taking on greater risk through a loss-sensitive policy.  For example, a company's finance department or treasury would be more involved in meeting the insurer's collateral requirements, while operations managers may have to take on greater roles in reducing subsequent losses the employer would retain. 

Over the long term, employers can realize savings with a loss-sensitive workers comp plan that requires them to play a more direct role in managing their claims instead of transferring all their workers comp risk to insurers.  Companies must realize there will be fluctuations in claims costs, with the potential for some large losses to occur before the long-term savings materialize. There also are substantial loss-control considerations, such as whether an employer has the in-house staff or ability to pay a third party (such as Three Sixty Safety™) for claims analysis that helps them understand certain issues, such as which business units are generating the greatest losses. 

If you go self-insured with some notion that you are automatically going to have savings, that is naïve.  You have to focus on controlling your costs throughout the organization.  Others agree that analyzing losses is a first step.  The first thing you really have to look at is where are your losses. Then employers should conduct a cost-benefit analysis to determine their total cost of risk under various work comp programs.  Employers evaluating the shift also must look at their loss trends and experience modification factors to see which direction they are heading.  Most companies that buy guaranteed cost lose track of the fact that their open claims are going up.  And when you are on a deductible program, you are going to be continuing to write checks.

Three Sixty Safety™ specializes in claims management, controlling costs, identifying loss sources, claim cost benefit analysis, experience modification analysis and claims reduction and micro management where appropriate.  Contact a Three Sixty Safety™ representative today for a free no obligation “Safety Impact Study” worth up to $2,500.00.

EMOD Changes

Unless you have a strong safety program in place, Experience Mods and Rates Will be Increasing in January of 2013

Employers with a poor loss history will pay even more for their workers compensation coverage starting next year as most states change the way premiums are calculated.  But, policyholders with proven risk management practices and safety programs that reduce workplace injuries will benefit from NCCI Holdings Inc.'s change in the methodology determining an individual employer's experience modification factor, experts say.   

The Boca Raton, Florida-based National Council on Compensation Insurance helps 38 states set their workers comp rates. The ex-mod changes begin with Jan. 1, 2013, policy purchases or renewals.  It marks the first time in two decades that the rating organization has updated the “split point” used in its experience rating plan to more accurately reflect individual employer loss frequency and severity. An employer's ex-mod factor has a significant effect on employer expenses because underwriters rely on them to adjust premiums with credits or debits. NCCI has approved the split-point adjustment, said Peter Burton, NCCI's senior division executive for state relations.   

NCCI's change could have a “material” impact on individual employers' premiums.  What we will see this do is reward companies that have worked hard to improve and maintain their loss profile. Those risks that have better-than-average experience benefit from being better than average.  But, employers with bad experiences are going to see a higher apportionment of debits added to their pricing, while those with a good loss history will see more credits.  So, it really underscores the need for employers to invest in loss control,safety, their people, and have a strong return-to-work program.   

These needs are regardless of (employer) premium size.  But, mid-size employers with guaranteed-cost insurance policies will see a greater impact from the split-point change than larger employers.  This is because larger employers are more likely to employ risk-managers and safety personnel, and they tend to maintain large deductibles, sources said.  But even larger employers will have to beef up their pre-loss safety programs and solidify their post-loss practices, such as modified-duty return-to-work programs to get the best insurance pricing.  If a company is doing a good job before, they need to do an even better job now.  If you are a large employer and (already) have a high-debit mod, you are probably going to have a higher debit mod after these changes.”  

There are other implications as well. Large construction project owners, for example, often choose contractors based in part on the builder's ex-mod, which likely will change.  And, NCCI's ex-mod change comes amid firming pricing for workers compensation coverage, which could accelerate some employers' shift from guaranteed-cost programs to buying loss-sensitive policies in order to pay lower premiums up front, sources say.   

NCCI's ex-mod change calls for increasing the experience rating split point from its current $5,000 to $10,000 in 2013. It will increase to $13,500 in 2014 and to $15,000 in 2015. In future years, it will be indexed for claim-expense inflation.  A workers comp loss up to the split point is known as the “primary loss” and reflects frequency of such claims, according to NCCI documents. The amount of loss above the split point is referred as the “excess loss” and reflects “severity. “   

Under this split-rating method, actual primary losses are given full weight in the experience rating formula while actual excess losses only receive partial weight, according to NCCI.  The biggest impact, therefore, will be on pricing, particularly for employers experiencing high-frequency, low-severity workers comp claims in the states where NCCI helps determine rates.  It is a plan that is heavily leveraged on frequency of loss vs. severity of loss because those are the types of injuries that get controlled by employers through their safety programs.  Yet employers should not lose sight of mitigating high-severity losses. 

The split-point change is needed because the average claim cost has increased threefold since the last update, rendering the current experience rating plan less sensitive to reflecting an individual employer's risk experience, NCCI said.  For insurers, the impact will be revenue-neutral because they will collect more premiums from employers with greater losses and less from those with fewer losses.  But insurers will benefit as accounts will have greater incentive to improve their loss experience, making them more profitable, Employees also will benefit from workplaces that now have a greater incentive to reduce injuries, he added.

New NCCI Changes to Impact Your Workers Compensati​on Costs

If you are not managing your experience modification monthly and you do not completely understand how injuries effect this factor that adjusts your workers compensation premium every year, you might want to pay close attention to what is coming.

The National Council on Compensation Insurance (NCCI) has recently introduced a new methodology for rate-making, the process which ultimately affects the “manual rate” you pay on your workers comp premium. This new rate-making methodology does not impact the actual experience mod formula.  However, for some class codes, significant changes in the filed loss costs, driven by the new rate-making methodology, will lead NCCI to also adjust expected loss rates (ELRs) and D-ratios by class code. This in turn may cause your mod to change, even if all other data (payroll and losses) stayed the same.  Although the overall intent of these changes is to keep most experience modifications – and the premium you pay – at about the same level, the exact impact on your mod – either positive or negative – it won’t be known until NCCI’s filings for the state(s) you do business in are published. Businesses which are required to have a mod of 1.0 (or other value) in order to bid on jobs will want to be especially careful to anticipate this change and minimize any losses that do occur through good injury management and claims management efforts.

Three Sixty safety specializes in helping our clients understand and manage their experience modification.  Please contact one of our representatives to help you get a crystal clear understanding of how your experience modification impacts your business costs and profitability.

Why New Employee Orientation Programs are Failing

It often comes down to this: a personable presenter uses good visuals like computer slides and is enthusiastic about what he writes on the easel. After the presentation, new employees take a guided tour of the company, and go home at the end of the day with their new (if somewhat wordy) employee handbook, securely tucked away for future reference.  These employees leave apprehensive, overwhelmed, and feel dramatically like outsiders.  Of course, the orientation program described here was developed with great intentions, but in today’s hyper-competitive recruiting environment, intentions are not enough to maintain sought-after talent.

Today, attracting qualified workers includes offering higher wages, better benefits, improved training, and
advancement opportunities. With these increased costs, it’s no wonder retention has become the focus of so many companies.   Indeed, orientation efforts have been elevated to a high priority in many companies in an effort to reduce turnover rates that exceed 25% today.

All to often, this process is neglected. Done poorly, the employee orientation program can leave new
employees wondering what on earth they’ve done to themselves. And with far more jobs
available than employees to fill them, it’s likely that the poorly oriented new employee will be out the door in less time than it took to recruit and hire them.

Companies that have effective orientation programs get new people up to speed faster, have better synergy between what employees consider productivity and what the company needs to produce, and they have higher retention rates. Just as importantly, the new employee will enjoy an accelerated learning curve in the new position, increased productivity and a smooth transition into the corporate culture.

The solution comes in welcoming the whole person, rather than just a set of job functions.  This allows people to assimilate into the corporate culture, become inspired and productive almost immediately. What does “welcoming the whole person” entail? The immediate supervisor or manager should review a copy of the employee’s application or resume. They should be familiar with the employee’s experience, training and education. At the outset, the manager or HR representative should review the job description with the employee, including the duties, responsibilities,and working relationships.  It’s important to also discuss with the employee how the company is organized, as well as the organization of the department or division and how the new employee fits in to that structure. After the employee has settled in a bit, the immediate supervisor or manager should find out the employee’s career goals and objectives, and be able to help the employee relate those goals to the goals and objectives of their department and the company as a whole.

This changed approach requires a company to determine the objectives of the new employee orientation program at the outset, basing their measures of success on the idea of the value of human capital. Then, the company must meet those objectives honestly and positively for each and every new hire. Successful integration will happen only if the new employee decides he or she has made a wise decision to join the organization.

The best new employee orientation:

• Has attainable goals and meets them
• Makes Day One a welcoming celebration
• Involves the new employee’s family as well as co-workers
• Makes the new employee productive on Day One
• Is not boring, cumbersome, rushed or ineffective
• Uses feedback to continuously improve

Whatever orientation materials are included in the process, they should encourage participation in creative and entertaining activities that reinforce the necessary skills and information. New employees must also have guidance and assistance throughout the process from a mentor or buddy, as well as their manager.

Workers Compensation Self-Insurance. Are You Ready?

Alternate methods to finance workers compensation exposures become more attractive when the traditional insurance market hardens. Workers compensation in particular lends itself to self-insurance due to several aspects inherent in its nature.

• There is a statutory cap on loss wage benefits paid that brings an element of certainty to the severity of losses to be expected.
• The payment of large claims is spread over time providing cash-flow advantages to the self-insuring employer.
• Typically, workers compensation loss patterns are high volume, low severity, which translates to fairly predictable loss forecasting analysis.

The decision to self-insure cannot be made in isolation by a risk manager or any other individual. It requires careful consideration of all factors, including management's commitment to the program, the financial condition of the organization, the cost and availability of internal and external support systems, and the particular characteristics of your exposure. Unless all of these elements are included in the decision-making process and self-insurance is undertaken with knowledge of the risks and resources it entails, the program's chances of success are small.

Management Perspectives

In a self-insurance program, your organization will trade known risk for unknown risk. Management must understand the risk tolerance necessary for a long-term commitment to self-insurance. Self-insurance should never be used solely as a band-aid to bridge market conditions. Management must also be willing to adopt a hands-on proactive role in claim prevention and management, since the money being spent has a direct and immediate correlation to the organization's financial bottom line.

Financial Feasibility

A second component that must be analyzed in making the decision to self-insure is the financial condition of the organization and the financial resources that will be needed to fund the program at startup and in the future. Financial strength is especially important since self-insurance exposes the organization to larger fluctuations in earnings than it experiences under most insurance programs. Most states have minimum net worth requirements for employers to be eligible to self-insure. Organizations contemplating self-insurance should check state financial eligibility requirements first

Infrastructure Capabilities

Cost savings in workers compensation self-insurance programs are derived from two sources—lower medical and indemnity payments to the employee and lower expenses associated with administering the program—an evaluation needs to be made of the organization's internal resources to determine what components of the program (if any) must be outsourced. Self-insurers must provide a wide range of professional services that insurers previously provided.

• Medical knowledge is required to evaluate and process claims, and to negotiate services with providers.
• Legal judgment will be required to assess the merits and potential cost of litigated claims.
• Actuarial assistance will be necessary to forecast future loss projections for the organization.
• Safety and loss control programs overseen by engineers or other appropriate professionals will also be a vital component in a self-insurance program.

In most cases third-party administrators (TPAs) will be contracted to provide most of the services insurance companies traditionally perform. TPAs assume no underwriting risk, collect no insurance premiums, and have no ownership in loss reserves. They are paid a fee to perform in specific administrative and professional capacities.

Loss Control & Risk Management

Another crucial step in the self-insurance feasibility process is for the organization to review and assess its operations and exposures. Having a firm handle on operational exposures will go a long way in making the program success.

Summary

There is no hard-and-fast rule that dictates when workers compensation self-insurance should be considered. But, when an organization reaches the point where exploring alternatives to workers compensation insurance makes sense, then it becomes essential for an organization to fully evaluate the factors that affect that decision. These include but are not limited to management's attitude toward risk, the organization's financial strength and objectives, the internal risk management capabilities of the organization, and the nature of the organization's operations and loss exposures.

U.S. Workers Continue to Ignore Important Safety Procedures

Why do American workers continue to ignore safety rules and fail to wear their personal protective equipment (PPE) at work, especially in areas where the equipment is required?
     
It is "disheartening" to find workers continuing to take unnecessary chances with their personal safety by not wearing protective equipment when performing hazardous tasks. This is an unacceptable level of noncompliance for safety procedures in the workplace that continues today.
 
In fact, the level of noncompliance has been increasing.  With the high noncompliance level it’s not surprising that at least a third of respondents in a recent Kimberly Clark survey cited the failure to comply with safety procedures as the main workplace safety issue in their companies.
 
At the second rank was the issue of inadequate management support and/or inadequate resources to support health and safety functions (27 percent). This was followed by under-reporting of injuries and illnesses suffered in the workplace (14 percent), training complexities on a multilingual, multicultural workforce (7 percent) and rising compensation costs to workers (5 percent).
 

Is the worsening economy an underlying factor?The worsening state of the economy may partly explain the continued non-compliance. More than a third (34 percent) of the respondents cited the economy for having reduced their firms' ability to allocate budgets for safety resources and worker training programs. But 59 percent did not blame the economy.

  

Among the 34 percent who said the economy had affected their safety programs, further probing showed that:

• 63 percent said their firms had less money for education  and training
• 42 percent said personnel assigned to take care of safety training functions were reduced
• 33 percent said management had to prioritize business imperatives over safety concerns.

Injuries at the workplace cost American companies at least $50 billion a year.  Companies that refuse to enforce safety compliance will lag their competition in the return to increased productivity and profitability.  In 2012, take the appropriate action and don’t let your company fall behind and risk being left in the dust by the competition as the economy recovers.