In workers compensation, it’s very easy to fall into the trap of complacency: Coverage expertise can start to seem less important when every policy is pretty much the same, especially when it’s easier than ever to get one for cheap.
But any agent who’s had a workers comp client poached understands that just like any other line of insurance, satisfied, well-protected workers comp insureds require a serious investment of time and effort.
“In workers comp, for the most part you’re dealing with a statutory policy—everyone gets the same piece of paper,” says Michael Bourque, president & CEO of The MEMIC Group. “But what comes with it? That’s the important side.”
“At the end of the day, the things an employer needs to do to have a successful workers compensation program in the guaranteed cost market really haven’t changed very much in the last 15-20 years,” agrees Kevin Ring, lead workers compensation analyst at the Institute of WorkComp Professionals. “It’s a lot like basketball—being good at dribbling the basketball is no less important today than it was 60 years ago. The fundamentals are still the fundamentals. It’s just that most people aren’t good at the fundamentals.”
Here are three discussion points to address with your workers comp clients in order to help them change that—and prove your value as an independent agent:
1) Classification. How confident are you that your workers comp clients’ businesses are classified correctly? Most states have at least 500 classifications they can apply to a business, according to Ring—and “seemingly small differences between classifications could create a large difference in premium,” he points out.
Understanding the nuances between classifications can be a seriously tall order—the National Council on Compensation Insurance’s definition of a “clerical employee,” for example, spans nearly three pages, single-spaced and in 10-point font. And too often, “agents take for granted that the classifications that are currently on the policy are correct,” Ring says. “Knowing what’s correct and how the rules apply is a very big deal.”
That’s especially true now that technology is changing the nature of how many businesses operate. “Businesses are not static, and nor are classifications,” Ring says.
Consider a machine shop that’s been buying insurance from you for the last 15 years. “Maybe when I hired you as my agent, all my machining operation was done by hand—I was using grinders and hand-operated tools. But today, I’m using lasers and water jets and all this fancy computer-controlled equipment,” Ring points out. “If my agent doesn’t know that, and we keep the same classifications on the policy, then it’s very likely that I’m paying too much.”
2) The premium audit. You need to understand the rules of the premium audit before you can help your clients accurately prepare for it. “Most premium audits are incorrect,” Ring says, “and most of those mistakes are the result of employers that don’t understand how to keep their records in a way that allows their audit to be correct.”
Ring compares the problem to a freelancer who doesn’t accurately track their receipts and work expenses: “Your taxes are going to be wrong, and it’s not that TurboTax or H&R Block or your CPA did your taxes incorrectly based on the information you gave them. It’s that they’re working off a faulty set of data.”
3) Back-to-work programs. Too many employers don’t have a process to follow when someone is injured, Ring says—and the result is that after sustaining an injury, the employee goes to their family doctor, who tells them to take a few weeks off.
“Now I’ve been out of work, I’m collecting lost wages, I’m sitting at home watching TV, and during every commercial break, there’s an attorney ad,” Ring says. “In the vast majority of cases in what we see and what we do, attorneys tend to take what should have been a small issue and turn it into a big issue.”
That’s not to say employees shouldn’t seek counsel when they need it. But for the most part, “insurance companies do a tremendous job in a global sense of taking care of injured employees,” Ring says. “Do people fall through the cracks? Absolutely. Are there situations that are so complicated and convoluted that a legal professional is helpful in navigating the process? Absolutely. But does your minor back strain from picking up a box the wrong way require an attorney and 10-14 months of dealing with the insurance company to settle? Absolutely not.”
If an employee is out of work for 12 weeks, they only have a 50/50 chance of ever returning to the job where they sustained their injury, according to Ring. When employers have a process in place that sends injured employees to occupational medical centers or at least a physician who understands how workers comp works, “that’s going to people get better faster, because what the research shows is that people get better faster when they’re at work,” he says.
During a time where unemployment is very low, “particularly when you’re talking about skilled labor and people who are difficult to replace,” Ring says, “you can’t afford to let someone just ride off into the sunset because they get stuck at home and can’t find their way back to work.”
“You talk to any employer, and their biggest challenge is hiring and retaining enough experienced and qualified employees,” Bourque agrees. “In that kind of market, don’t you want to do your very best to make sure those people are well, and that if they get hurt, they’re able to get well and return to work as quickly as possible?”
Jacquelyn Connelly is IA senior editor.