Risk Managers: 3 Strategies for Reducing Workers’ Comp Claim Costs

By Craig Santa Maria

If you are sitting through lengthy workers’ compensation claim reviews once or twice a year, that might be a sign that you’re spending too much for workers’ compensation insurance.

You know the routine: Every six to 12 months you sit with your insurance carrier’s claims adjuster reviewing one claim after another. It’s your opportunity to manage the subjective prediction of future costs for open claims, called reserves, which are a major factor in setting your future insurance rates. If you are not working proactively with the adjuster to set accurate reserves, you’re probably paying too much for your coverage.

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What can you do?

You have more control in this process than you might think. First, you should educate yourself about how Workers’ Comp claims are managed and how your insurance rates are set. Check out this primer by The Hartford, which provides a comprehensive overview.

Once you’re up to speed on what it’s all about, there are three things you should be doing to better manage your claims and save money:

  1. Make claim reviews obsolete – Instead of waiting for the claims adjuster to schedule infrequent reviews, you or your broker / advisor should work proactively every month with the adjuster to keep them up to date on your claims status. This will make them much more knowledgeable about each claim, ensuring reserve estimates are as accurate as possible and effectively eliminating the need for the typical claims review.
  1. Close cases quickly – Claims that remain open longer typically result in larger total payouts, which in turn increase your insurance rates. Work closely with your injured employees to get them back to work as quickly as possible.
  1. Work with an expert – Many brokers are reactive or delegate claims management to junior associates who don’t have the skills or experience to advocate for you. Work with a broker who has a team with the right knowledge and skills to advocate on your behalf, questioning the adjuster and holding him accountable to set accurate reserves. By doing this for our clients, we are able to lower their reserve estimates and their insurance rates. For example, on behalf of a food processor client we were able to work with the adjuster to drive reserves down by nearly $150,000 in 2015, a reduction of 31%, which significantly lowered the clients insurance cost.

You didn’t build a strong business by just letting things happen. Take these actions to proactively manage your workers’ comp claims and drive down your costs.

Craig Santa Maria is President and COO of Santa Maria & Company (SMC), a risk management consultancy and commercial insurance brokerage in the San Francisco Bay area with deep expertise helping companies protect what is most important to them: their assets, their employees, and their futures. Contact SMC at 925-956-7600 or online at www.smcrisk.com. Follow us on Twitter @SMCrisk.


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