Prove the attorneys wrong—agencies and carriers are not the villains
Unlike when we’re bombarded with political advertisements on TV during major election campaigning, it’s year-round that we see numerous commercials for law offices claiming that the insurance company is the “bad guy” and that they “mean business.” We have one firm in Indiana whose commercials show insurance adjusters planning their strategy; then it’s brought to their attention which firm is representing the plaintiff. There’s a dramatic noise, and the insurance guys give an “Oh, fudge” look, similar to that of Ralphie in A Christmas Story.
“If you’re watching television throughout the day, you see attorneys proclaim that carriers are out to screw the victim; ‘call me, it won’t cost you a dime,’ they say,” says Ben Taylor, Co-Founder of Zenjuries. “They’re going to protect the victim from the insurance company, and we don’t even counter the argument. Agents aren’t saying, ‘That’s not how this works.’
“I think we need to talk about workers comp like we do about health insurance. This is an employee benefit. We should be proud and not afraid of what it is. Discussions about workers comp should be more positive because it is, and with great claims handling practices you can really take control of the system and make it work for you, instead of for the attorneys.”
Despite these attempts by attorneys to make the insurance guy the villain, the workers compensation market remains stable and competitive.
“Right now carriers have a pretty high appetite for workers compensation,” says Taylor. “The market is softer than it was a couple of years ago. A lot of new players are coming into the market, trying to fill voids.”
“The market is competitive yet stable, and relatively free of reckless underwriting, though we still see it at times,” adds Michael Bourque, senior vice president of external affairs for MEMIC. “You can’t be bailed out by investment gains any longer, and the stability we’re seeing may also be indicative of underwriters getting better at using data.”
John Rearer, CEO of Patriot Underwriters, adds, “The industry has had good results over the past several years, due to a continued decrease in claims frequency and better medical management of claims.”
Claims and challenges
Like any other market, workers compensation has its share of challenges and claims.
“The most important cost driver is prompt reporting of claims,” says Taylor. “It’s the number one driver of reduced costs or the number one driver of increased costs. If you get the claim in the hands of the adjuster in a prompt fashion, that is a major claims cost reduction driver.”
Rearer advises agents to “make sureyour carrier is providing the best claims experience possible Communicate with your insured about how the claims process will be handled up front, and then be proactive to make sure any issues are addressed quickly.”
“I think we need to talk about workers comp like we do about health insurance. This is an employee benefit. We should be proud and not afraid of what it is.”
He adds that in this “tightening labor pool, we are also seeing an older and, typically, not as healthy workforce that can often lead to increased severity of individual claims.”
Bourque adds: “While the decline in frequency of claims has continued for many years, we still have challenges with severity. Medical costs continue to go up, and controls are sometimes a step or two behind. With medical costs accounting for more than half of the claim dollar—about 60%—it becomes even more important to have a good handle on these costs, particularly in the prescription drug realm.
“Medical is where the cost drivers are, for the most part, including new technologies and new drugs. In the last year or two, a great deal of atten-tion rightly has been paid to opioids, because of their addictive qualities. In the short term, this may drive more people to alternative drugs or to physical therapies, but most believe this would be a long-term gain, although it might cost more initially. Additionally, we continue to see the aging Baby Boomer generation, which is working longer, and also obesity continuing to drive costs as co-morbidities to a workers compensation injury.”
“The system’s complicated,” says Taylor. “It’s become so commoditized that we’re losing sight of the fact that it’s a benefit. It’s a no-fault system designed to protect the employee and to protect the employer from lawsuits, but it’s become a commodity in terms of rate versus payroll.”
To confront these challenges, new products and concepts are emerging in the workers comp market.
“A few years ago, our company was the first to pair employment practices liability insurance with workers comp in our home state of Maine, and that has proved to be popular among small employers,” says Bourque. “The two products make good sense if you consider your workers comp risk as part of the overall employment risk.”
Taylor’s company, Zenjuries, provides a “technology solution built to help drive down workers compensation claims costs. Knowing that employees and employers understand how the system works and what to expect ideally will lead to less attorney involvement. Our product is first an educational product.”
For more information about Zenjuries, see the article “Cool tools for managing work comp risks” in the March 2017 issue of Rough Notes.
Advice for agents
So what can agents do to prevent themselves from being labeled the villains?
“Agents and brokers should look for long-term partners when it comes to workers compensation,” suggests Bourque. “Because it’s a long-tailed line of insurance, you might get lucky with the cheapest alternative for a few years, but you will pay down the line. You are in a better position if you can develop trust with a carrier that offers full service, including a strong loss prevention program.
“Think long term. Don’t settle for a company that offers only a policy and a bill. These are transactional relationships, not true value-added relationships. Get to know your carriers’ offerings, and help your client understand the value of working with the carrier to both prevent injuries in the first place and get those who have been injured well and back to work promptly. If you haven’t personally met the loss control representative and the claim handler, you’re probably not getting the personalized service your customer deserves.”
“Focus on the quality of the carrier and the reputation of its claims handling,” Taylor adds. “Focus less on selling on price. Anyone can come in and win on price, if that’s the selling proposition. But that’s dangerous territory. Find a differentiator.
“Engage the carrier to conduct loss control, and be proactive with the adjusters. Explain to an employer the impact of how it reports claims, and don’t make this the last piece of your proposal. Focus on the long-term effect of the experience mod.”
“It’s the age-old advice that, if you’re not providing the coverage, then someone else is,” says Rearer. “Offering comp to complement your book of business can be a differentiator and allow you to grow your book at a pace you have never seen before. Given the softness in today’s market, it should not be difficult to find a carrier to provide the coverage, but educate yourself on comp before diving in.
“Stay in front of the technology revolution. Make the premium billing process simple and quick. As much as possible, allow your customers access to on-demand services and information for billing, commissions, education, risk management, claims details, and so on.”
Prove to your clients that you mean business when it comes to workers comp—not the attorneys.
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By Christopher W. Cook