What should employers expect from an insurance agent?

By Kevin Ring

Institute of Work Comp Professionals

Editor’s note: Kevin Ring, CWCA, CWCA, MWCA, is Lead Analyst at Institute of WorkComp Professionals, Asheville, NC of which we are a member. It trains, certifies independent insurance agents and their support staff to navigate the complicated workers’ compensation system and act as advocates operating between employers and their insurance companies.

Most workers’ compensation discussions focus on the roles of four active players: injured worker, physician, employer, and insurance company. But what about the insurance agent? Far too often, agents step into the background. There is something wrong with this picture. Workers’ compensation is one coverage area in which insurance agents can effectively demonstrate their value.

Here’s how we work to make a difference for the employers we serve:

Ensure the employee classifications are correct. With an average of 500 to 600 available job classifications, it’s easy for mistakes to occur. For example, a clerical employee (low workers’ comp rate) can be misclassified into one with a higher rate, which increases the cost. This is just one; many others can occur.

In fact, it’s even easier for mistakes to perpetuate themselves. An insurance agent calls on a prospect and asks to submit a quote and the owner agrees, thinking it’s a good idea to shop around. To get the necessary information, the agent asks to see the existing policy, copies the information, and goes back to the office to prepare the quote. If there are mistakes, they keep showing up.

Who is responsible for finding mistakes and correcting them so the employer only pays what is owed? Frankly, it’s the insurance agent who has the account. We’re trained how to find and correct mistakes so employers are not exposed and pay more than necessary.

Help employers develop a physician relationship. When it comes to reducing workers’ comp costs, particularly medical expenses, the importance of employers having a relationship with physicians with work-related injury and illnesses expertise cannot be overstated.

Too often, when an injury occurs, injured employees are sent to their personal doctor, an emergency room, or a nearby walk-in clinic. This can lead to higher costs, delayed return to work, and an increase in the experience mod, which lasts for three years.

If this is to change, it starts with having the right physician relationship. We can help an employer identify physicians with expertise in occupational medicine, go with the employer to interview doctors, develop options for alternate duty, help make sure the selected physician understands the business, the types of work performed, and any other employer expectations so that the physician is prepared when injuries occur.

Help an employer develop a process of what to do when employees are injured.

What happens when an employee suffers an injury? Depending on the extent of the injury, in many cases, employees are sent home and told to take it easy for the day, go to their own doctor, to the emergency room, or walk-in clinic. When you think about it, this is the only time employers give workers a blank check and tell them to go where they please without vetting the vendor.

It’s not good business because the employer has no control over the quality, cost, or outcome of the service. To change this, our task is to help the employer create a process that assures injured employees will receive proper care so they can return to the job as soon as appropriate.

Such a process may come as a surprise to employers who assume the insurance company is in charge. Actually, it’s more like opening the door and letting the fox in the hen house. Since employers are writing the check for their workers’ comp, they need to take charge of the process.

Analyze data to understand and foresee injuries. There’s a wealth of information in workers’ comp loss run reports, as well as OSHA reporting forms. Proactive agents work with employers to identify problem areas, which are often indicators that a larger, costly injury will occur if changes are not made.

Serve as an effective conduit between the employer and the insurance company. When it comes to insurance, most employers are ill-equipped to have informed conversations with insurance companies. So, they reach out to their insurance agent when there’s a problem.
Today, insurance companies are all about reducing risks. It’s the agent’s role to position the employer in the best possible light with the insurance company to ensure competitive pricing and policy offerings.

Since the insurance agent knows both the employer and the carrier, it’s the agent who is best able to serve as the intermediary between the employer and the insurance company.

Help employers understand the technical nature of insurance language. Like the law, words have meaning in insurance. No one can feel comfortable with insurance unless they learn its language. Therefore, employers immediately file away insurance policies without even looking at them. They drag them out only when there’s a loss.

It doesn’t take a cynic to suggest that some insurance agents may like it this way. It gives them more control. But we recognize that a “secret language” is a barrier in the client relationship. It’s also an opportunity to help employers understand insurance by communicating its complexities simply and clearly. And, it’s worthwhile. No employer wants to be blindsided because they didn’t understand something, particularly when high costs are involved.

Help employers prepare for the workers’ comp premium audit so they pay only what they owe. Employers tend to view a workers’ comp audit as a minor inconvenient. The big question can be where to put the auditor. All of which suggests the annual audit is a low involvement event.

Now, compare this with an IRS audit, when all the stops are pulled out weeks in advance, and carefully choreographed by the accounting firm. No responsible business owner would go into an IRS audit the way most approach a workers’ comp audit that involves substantial sums of money.
It’s in an employer’s best interest to expect the insurance agent to help them prepare for a workers’ comp audit, particularly since auditors work for the insurance company. The agent understands the insurance language and knows the rules. During the weeks leading up to an audit, the agent can review the payroll records, check for incorrect job classifications, determine whether severance pay is excluded from the comp, among others. If they find mistakes, they can correct them before the audit takes place.

Review information on employee injuries prior to the “magic moment.”
This is the date the insurance company reports the employer’s information to the rating bureau for inclusion on the experience mod. It occurs 18 months from the inception of the account and every 12 months thereafter. Here’s what the report includes:

• What has been paid thus far for employee injuries
• What the insurance company has “reserved” (the estimated funds needed to ultimately resolve an employee injury.)

It’s important to review this data carefully. For example, if the reserves are higher than they should be, the employer’s experience mod will go up, which increases the company’s workers’ comp expense. Higher mods can render a business less competitive or, in the case of construction firms, ineligible to bid on certain jobs. The goal is also to make sure cases are not opened that should be closed, and that the reserves are relatively accurate.

Help the employer build a “recovery-at-work” program, so injured employees can be at work, rather than sitting at home. This is also known as “light duty,” “transitional duty,” or “return-to-work.” However, the term recovery-at-work more accurately describes what should happen and lets the injured worker know what to expect.

The recovery-at-work model sends injured employees the message that they are both valued and they can still be productive. Aided by transitional duty job descriptions, the physician can determine if the employee can return to work, along with job restrictions.

If the injured worker is back to work before lost time wage benefits begin, there is a less negative impact on the experience mod. This can be a significant cost savings since the average lost time claim in 2016 was $53,000. But it’s also true that injured employees recover faster if they are at work.

Some managers still say, “Give me a whole man or no man.” But, happily more recognize the value of recovery-at-work. The insurance agent can help employers make it work best by identifying appropriate work activities based on physician restrictions, if any.