Workers compensation isn’t the obvious route to agency profitability. To provide clients meaningful help, agents must track laws that tediously vary state by state and wade through the voluminous Occupational Safety and Health Administration (OSHA) website to identify and understand applicable regulations. And workers comp insurance pricing differences among carriers are small.
“The price is the price when it comes to workers comp,” says Adam Billmeyer (pictured below), broker for Lovitt & Touché, a Marsh & McLennan Agency, in Arizona. “But many brokers treat the coverage like a commodity, bidding carriers against each other. Few really discuss the way to affect price in a positive manner. That hinges on the broker’s ability to help a client reduce claims.”
Providing that help pays intangible dividends that ultimately accrue to the profit column of the agency balance sheet.
A Tour de Force
At Lovitt & Touché (L&T), Billmeyer and other brokers are supported by two departments that tackle workers comp issues. Licensed adjuster Melissa Lykins, vice president, leads the claims department, which includes six team members dedicated solely to workers comp. A loss control department is led by Brian Owens, risk control manager, whose book, “Inversion and the Perspective-Based Safety Culture,” was published in 2019.
Workers comp is “a massive line item for most of our clients,” Billmeyer says, whose accounts are in the construction and industrial spaces. “We take a proactive approach to affect our clients’ total cost of risk. This requires an ongoing strategy versus a focus on the risk transfer with a carrier.”
“Fortune 1000 companies have robust risk-management departments. We are an outsourced risk-management department for our middle market clients. We help them to minimize exposures or eliminate them entirely,” Billmeyer says. The approach has been successful. From 2016–2017, workers compensation claims among its clients decreased 22%, the agency reports, and the total cost of those claims decreased 33%. “When you can provide that kind of value, it’s an extraordinary competitive advantage. It’s difficult for us to lose business,” Billmeyer adds.
Even a team of one can make a difference for clients with workers comp exposures, according to commercial agents Dustin Boss, certified risk architect at Ottawa Kent in Michigan and co-owner of Emerge Apps, and Hal Soden, principal/advisor at the Oliver L.E. Soden Agency in New Jersey.
“One agent can do this. It’s not too much,” Boss says, who describes himself as a workers comp quarterback. “The client pulls the trigger. They run the play. But we can help guide them where they need to go,” he says. In Michigan, there is a 3:1 surcharge on any workers comp claim that results in lost working time for an injured employee, according to Boss.
“The trajectory of a claim going good or bad happens within the first one or two days,” Boss says. “In our state, 1 in 12 workers comp claims for the largest Michigan carrier goes into lost work time. By quarterbacking the first two days of the claim, our agency’s results have dropped to 1 out of 104.”
Most of Ottawa Kent’s new commercial accounts are engaged on workers comp first: “We love starting with workers comp because it is so objective. Using the workers comp experience modification rate as a score is a great way to show whether or not their current agent is performing,” Boss says. “It’s our lead-line of insurance.”
Soden is one of four agents who sell workers comp at the Soden agency—where construction clients in California, Florida, New Jersey, New York and Pennsylvania represent 70% of their book of business.
“While you certainly need to understand the insurance part of workers comp, the more you go beyond insurance, the more you differentiate yourself and become a valuable partner,” Soden says, whose own workers comp education has come from “digging into the OSHA website” and “reading the [state workers comp] manuals,” he adds. “Most of what we do is not complicated. You don’t need fancy products.”
Soden, Boss and Billmeyer agree that agencies should provide workers comp services to commercial clients for free. “Be a giver,” Boss says. “Don’t expect anything in return initially. Let them get to know you.”
The three agencies offer some combination of these services:
1) Basic Education of Client Leadership
Clients in the small and middle-market spaces often don’t understand what the experience modification rate (EMOD) is, how it’s calculated, or how it affects pricing. “So, we start with a lot of education,” Billmeyer says.
That education is largely designed to alter clients’ perspectives. “Some clients seem to think that it’s just the luck of the draw whether someone gets injured. And it’s definitely not,” Soden explains, who turns to carriers for educational materials. “Insurance companies have deep resources in safety. Get to know the loss control people. Ask for tips and resources.”
Soden also uses the Zywave product, ModMaster®, to show clients how lowering their EMOD by “reducing claims would change their premiums—which is eye-opening for many prospects.”
2) In-Depth Assessment and Strategic Planning
Soden calls them diagnostic appointments, during which he gathers anecdotal information about a client’s or prospect’s claims history and safety procedures.
Boss calls them safety audits, which he developed by combing the OSHA website to backfill checklists of requirements for various occupations. Then, Boss co-founded EmergeApps.com “so it’s not incumbent on every agency to scour the OSHA website to build their own tools, strategies and apps,” he explains. In addition to apps for purchase, the site includes free resources for agents.
Billmeyer uses a comprehensive risk assessment model to evaluate a client’s overall health, “much like an annual physical checkup,” he explains. Workers comp issues are included in the model, which the agency spent years refining.
The agents use the results of their assessments to block out strategic plans for improving safety records. Billmeyer says that he will help a client develop a plan to reach three to five workers comp “smart goals” each year. “For instance, say we have a roofing contractor who is following OSHA standards. We ask them, ‘Why not be safer than OSHA? Let’s widen your margin for error,’” Billmeyer says.
“That’s not something we can do in two weeks. It takes a full year of working with the client and educating their employees,” Billmeyer continues. “We spend a lot of time in our clients’ offices, asking questions of the people doing the work. We take their answers and integrate them into a strategy on a macro level.”
3) Safety Training
Boss and Soden make their own safety training materials and videos. “Zywave gives us a lot of safety resources and is an important tool,” Soden says. But for training to be effective, Boss advises, it must include consistent, accessible content for employees, and it must be easy for employers to administer.
“We use AutomateSafety.com to drive safety training in the workplace. It lets an employer schedule a year’s worth of safety training in about 15 minutes and sends the training directly to the employee’s inbox. A quiz feature lets us track engagement,” Boss says.
4) EMOD Monitoring and Forecasting
At L&T, Lykins’ team includes a dedicated EMOD administrator who reviews worksheets to verify that the data included in EMOD calculations are correct. “From time to time, we find flawed information and work with the carrier to get correction reports filed,” Lykins says.
The EMOD administrator notifies the workers comp team when “it’s time for a client’s unit stat filing—that’s when data is submitted for the EMOD calculation. Once we review claims for closure or reserve reductions, then he provides a forecast to our client,” Lykin explains. That forecast is especially helpful for construction clients whose EMOD is a factor in the bid process. “If the construction company’s EMOD is close to 1.0 or over, that might disqualify them from being considered for the project,” Lykins adds.
5) Earning Extra Credit
In addition to help to lower their EMOD, clients appreciate help uncovering other ways to reduce their workers comp premiums. “Carriers offer various scheduled credits—for example, for a drug-free workplace or for having a workplace safety program. Our goal is to maximize those carrier credits as efficiently as we can,” Billmeyer says.
6) Resource Library
Billmeyer, Boss and Soden all have internal workers comp libraries at their agencies for their clients to use. The materials can be employed in safety training programs, and they also can serve as a back-to-work resource, allowing injured employees an avenue to avoid lost work time even as they recover.
“Ottawa Kent has a return-to-work library that any employee can read that will motivate them while keeping them from getting wages from the workers comp carrier. Our library is turnkey, so the employer’s HR department doesn’t have to think about it,” Boss says.
L&T’s resource center includes “data and benchmarking from past clients,” Billmeyer says, which is useful information to provide prospects.
7) Hands-On Help with Claims and Forms
Workers comp claims require an agency’s immediate and ongoing intervention. At L&T, five dedicated workers comp claim advocates proactively monitor and review claims. “Our advocates follow claims as they go through the process to make sure they are handled aggressively,” Lykins says. “When you look at a claim only once a quarter, there is a risk of missing an opportunity to impact the outcome.”
“Having a dedicated team of professionals who act solely as claims advocates has had a tremendous impact on the outcomes of our client’s claims. It simply is not enough to have periodic claim reviews,” Billmeyer agrees. “We provide daily management for claims resolution, return-to-work programs and claim reserve analysis, for example. Claims management is too complex and important to parcel out that role amongst employees with other duties.”
Every employer in every state must keep OSHA records, which can be confusing and time-consuming. Billmeyer says the L&T workers comp team will facilitate documentation for clients.
At Ottawa Kent, Boss wanted an OSHA recordkeeping tool to help his clients. “I said, ‘Hey, what the heck, I’m going to build it myself.’” He set about coding the program and the result was OSHAlogs.com, which not only makes tracking records easier, but also allows employers to comply with new rules that require them to submit injuries electronically to OSHA by March 2 of every year. In addition, the software will generate any of the 50 states’ workers comp first report-of-injury forms. OSHAlogs is available for purchase by any U.S. agency.
Soden teaches employers how to keep OSHA records and gives them an automated tool to help them determine what OSHA paperwork to complete.
8) Return-to-Work Programs
Helping an employer get an injured worker back to work quickly is critical to avoiding lost time and a penalty to their EMOD.
Soden helps his clients customize return-to-work programs. “What’s funny is that a lot of them say there’s nothing for their recovering workers to do—but most companies have a ton of busywork that’s not getting done. We help them determine what jobs might be available,” Soden says.
“In the OSHAlogs platform, I am notified when an employer submits an injury, so I can jump in and start the process,” Boss says. “We help arrange the return to work with the doctor. We give the injured worker the paperwork that they need to give their doctor. We have a library of return-to-work programs automatically ready for them to use. Whether they work at the office or work from home, we’re never going to leave somebody off of work. That’s how we protect that experience mod.”
9) Alternative Claim Settlement
The National Council on Compensation Insurance and the Workers’ Compensation Insurance Rating Bureau of California are two of the rating bureaus that calculate EMODs. Both gather data, analyze industry trends, and recommend insurance rates and loss costs. In their unit statistical report plan, both manuals discuss noncompensable claims and the criteria for excluding them from the EMOD calculation.
When an adjuster indicates that the claim of an injured worker is noncompensable, but the injured worker disagrees, a dispute arises that could result in litigation.
“At Lovitt & Touché, the workers comp advocates explore the possibility of resolving compensability disputes via settlement, which would result in the claim be excluded from the EMOD calculation,” explains Lykins. “This can have a huge impact on reducing an EMOD.”
Ronimarie Acord is an IA contributor.
The Big Gun: CRT Testing Machine
The Isokinetic Strength and Agility Screening machine developed by Cost Reduction Technologies (CRT) helps match workers to jobs that are appropriate for their physical capabilities. Lovitt & Touché (L&T), with offices in Phoenix and Tucson, owns the only CRT testing machine in Arizona.
Melissa Lykins, vice president, claims, says L&T uses the machine to help clients with pre-employment screening and to assess the readiness of an injured worker to return to work. “Our employers that use it are seeing great results,” Lykins says. “Their EMODs are dropping every single year.”
Lykins advises other agencies considering similar technology to educate clients on its appropriate use. “CRT helped us to establish guidelines to be in compliance with the Americans with Disabilities Act and the Equal Employment Opportunity Commission,” she explains. “We strongly encourage our employers to abide by them.”—R. A.