From the Front Lines: Workers Compensation

How did you get started at your agency?

Nine years ago, I was called by the president at the time. I was at a different agency, and I had obtained some construction accounts from INSURICA. He called me and said, “I’d love to take you out to lunch and figure out how you’re doing this.” I wasn’t really happy where I was, so he invited me to lunch. I’ve been here ever since.

Why workers comp?

Most property-casualty agents focus on everything but workers comp, because everything else pays a lot more commission, period. My thought process was sort of like the Morton family. They sell salt and only salt—they don’t even sell pepper. Salt doesn’t cost a lot of money, but their company is worth billions of dollars. I thought, “If I can sell a whole bunch of something nobody else is paying attention to because it doesn’t make them a lot of money, and I own the market, I’ll be just like the Morton family, who sells nothing but salt.”

The other reason is a lot of agents like to specialize in a certain segment of the market, like restaurants, hospitality, construction, manufacturing. There’s hundreds of different segments. But work comp worksheets look the same to a restaurant owner as they do to a manufacturer, and the importance of the experience modification score is just as high for every market segment you can think of. You don’t even have to be a specialist in lines of coverage for that particular market segment—you just have to know work comp inside and out, and you can help anybody. It creates a larger prospect list because I’m not pinned down to one or two industries.

Biggest challenges in workers comp today?

The grey area between workers comp and human resources issues. For example, I get a call from a guy saying, “Billy just fell off the ladder, we found out he was smoking weed, can I just fire him and not have anything to worry about?” But that’s actually an HR issue. If you want to sit down and talk about how the experience mod works, we can talk about that all day. But if you want to ask me about hiring and firing and when you can dismiss somebody without having to worry about consequences, that’s an HR question. I get asked a lot of questions people think are work comp questions, but what they’re wanting is free legal advice, and I’m not an attorney.

Another major challenge is the constant changes that occur in some states, but not other states. So if you’re like me and you have clients in various states, they may be domiciled in Arizona but send people out to California or Nevada, and the work comp rules are different in every state—how many days a worker misses before they start receiving indemnity payments, for example. It’s not like you can have a cheat sheet on your desk, because it may not be the same answer next year. And you never want your client to know something that you don’t.

Advice for a fellow workers comp agent?

Number one, learn the experience mod calculation inside and out, and don’t let one single part of the experience mod worksheets go unstudied. Number two, it’s not enough to just know it—you have to know how to explain it to somebody who runs a business and is not in the workers comp world. If I know it better than Einstein, it doesn’t matter if I can’t sit down with you and show you how it actually affects your company. It’s not a matter of just being smart. My clients don’t care how well I know it—they want to know how my knowledge will actually help them.

Future of workers comp?

Depending on what happens with health care in this country, that will have a big impact on workers comp. If health care goes away for a lot of people, they’ll start using workers comp as their health insurance. Any type of illness or sickness or anxiety or obesity, they’re going to find a way to make the case that it somehow was related to work.

Favorite workers comp success story?

A client of mine suffered a fatality that was later found to be the fault of the manufacturer of a backhoe. It was a multimillion-dollar claim, so it was going to result in a 32-point experience mod score correction, which would have caused them to lose a lot of contracts with public utilities. But after it was found in the bifurcated separate case that it was 100% the fault of the manufacturer of the backhoe, I was able to petition with the National Council on Compensation Insurance and spent a year and a half working with them to remove that claim 100% from the experience mod worksheet. It just became final about three weeks ago.

They knew come their renewal date on Oct. 1, their experience mod was going to be a 1.21 and they were going to have to let all their general contractors and public utilities know. They were going to lose tens of millions of dollars in contracts because over a 1.15, you’re off every list. They were going to have to have a mass layoff of about 65 employees, and the cost was going to go up. So that’s indirect money right there, and then it’s over $100,000 per year in direct workers comp savings per year for the next four years.

When I got the official correspondence from the NCCI, I drove over to their office to tell them, “Here’s your new experience mod after a year and a half of work—it’s .81.” They literally started crying. The real payoff, though—and these guys pay over $1 million a year—is they said, “You’ll be our agent forever.”