Reduce Your Workers’ Comp Exposure

1. Reduce Your Workers’ Comp Exposure Through Cost Containment

2. Insomnia: Major Problem Among PEO CEOs ……and insurers who write them Do you have a grasp of your exposures? Do you service your clients as advertised? Cost Containment: Asleep at the switch?

3. Unmanaged Growth Unstable and/or unbalanced infrastructure Class Code Misclassification Misrepresentation of Payrolls Invalid Loss History Credit Risk Poor Cost Containment – Safety/Injury Management Increased Expenses – Service, Comp Costs, etc… Challenges to Profitability

4. A Cure for Insomnia • Know your Insurance Carrier UW Guidelines …and follow them • Develop Criteria for Assessing Every Type of Risk • Create Risk Assessment Templates for Consistency • Utilize Qualified Loss Prevention for Onsite Risk Assessment and Ongoing Loss Control Services

5. ….A Cure Continued • House Industry Veterans that have Witnessed “All of the Tricks” • Solid Field Underwriting – Underwriting of Data, Client Commitment and Client Integrity • Audits to Track and Manage Growth • Monitor/Measure Client Performance • Educate Your Distribution System

6. Risk Management Delivery/Scope • Risk Engineer screening of potential Clients. • Program Management service based on the ability to improve loss results of individual client companies • Profitability benchmarks based on 3-year developed loss ratios, frequency and severity • Pruning process of poor performers

7. Program Management will perform onsite Risk Assessments as requested by Underwriting, and will deliver loss prevention services based on classification, frequency and severity Illustrative Conceptual Program Management Service Model U/W Screening Criteria All potential business Business to be serviced Program Management Onsite Risk Assessment Underwriting Tiers Rating I Rating II Rating III • Desired Classes of Business • Approved Codes which meet desired loss experience • Hazard 3 classes • Marginal loss history • Pre-Approval Required • Marginal Performers or excluded classes • Customized service solutions, based on client needs and requests • On-site risk assessment required Recommendations

8. Recommendations

9. Recommendations

10. Recommendations

11. Recommendations Service will be based on ability to improve loss results of individual customer groups as measured by frequency and severity Conceptual Program Management Service Model Quadrant III – Medium Service Quadrant IV – High Service High Frequency Employer B Employer C Quadrant I – Maintenance Quadrant II – Low Service Low Frequency Employer A Employer D Low Severity High Severity

13. High Frequency High Severity Class Codes

14. Recommendations Service will be based on ability to improve loss results of individual customer groups as measured by frequency and severity Conceptual Program Management Service Model Quadrant III – Medium Service Quadrant IV – High Service High Frequency • On-site Risk Assessment • 2 visits (Risk Assessment could be combined) • Class examples: Auto repair, services and parking; Restaurants • On-site Risk Assessment • 3 visits (Risk Assessment could be combined) • Class examples: Construction; Healthcare; Manufacturing; Transportation; Social Services Quadrant I – Maintenance Quadrant II – Low Service • On-site Risk Assessment • 1 visit (Risk Assessment could be Combined. • Class examples: Apparel and accessory stores, Business services; Miscellaneous retail; Printing; Trade Low Frequency • No On-site Risk Assessment required • Service by request • Phone-support Low Severity High Severity

15. Performance Results Frequency Types 4% 4% 3% 19% 22% 5% 3% 1% 1% 8% 12% 14% 4% Foreign body in eye Chemical Irritation Burn Exposure/temperature extreme Caught Between - Machine or Equipment Cuts - knife, power tool, sharp object Slips/Falls - different levels, ladders/scaffold Motor Vehicle Accidents Strains - jumping, carrying/lifting, pushing/pulling, overexertion Struck by objects Rubbed/abraded Animal/Insect bites Miscellaneous

16. The Risk Assessment Process Risk Assessment – A Continuous Process • Client Qualification Guidelines • Risk Assessment • Pricing • Key Measures • Claims Reviews • Underwriting Logs • Monthly Performance Reviews • Loss Control • Site Surveys • Risk Mgmt Consultation Client • Claims Management • Integrated Case & Claims Management

17. Determination of business purging Is my exposure greater than originally anticipated? Can the client afford to implement corrective action Will needed risk engineering erode profitability Was the risk properly classified. Will the event cause a price increase The Business Decision

18. Ensure your infrastructure is scalable • Reduce your expenses by focusing risk management on poor performing risks • Know when to cut your losses and purge unprofitable business • Show your carrier proven results ….get some sleep CONCLUSION

19. Reduce Your Workers’ Compensation Exposure: Part II

20. Reducing the Overall Length of Disability Show Me The Money! Presented by: Teresa A. Long Vice President Risk Management Unisource Administrators, Inc. Sarasota, Florida

21. Goal: Reduce Preventable Disability Opportunities • Missed Medical Appointments • Transitional Return To Work • Identifying Opportunities • Creating Job Descriptions • Formalize the Process

22. Missed Medical Appointments Costs Solutions Rewards

23. Costs Additional two to six weeks of indemnity benefits paid for every missed appointment with a specialist.

24. Solutions Establish procedures in your Customer Service Agreement: • Injured Employee (IE) will call in after every doctor’s appointment to advise of work status and date of next appointment. • IE must contact us immediately if the possibility of a missed doctor’s appointments exists.

25. Advise the Injured Employee • The two responsibilities to the company while out on Workers’ Compensation are: • to keep all medical appointments and • call you after every appointment • Failure to keep scheduled medical visits may jeopardize your entitlement to continued Workers’ Compensation benefits.

26. Most Proactive Solution • Create Procedures (backed up with language in the CSA) to: • Advise the IE of their WC responsibilities • Keep all doctor’s appointments • Make sure they follow all of the doctor’s instructions • Call us within one day after every doctor’s appointment. • Diary each doctor’s appointment (for each IE out of work) for one day before the scheduled appointment • Call the IE to remind them of appointment

27. Diary for one day after each doctor’s visit and call the IE if they have not called you. It’s as Important as YOU make it!

28. Rewards • Weekly compensation rate $300 • Missed appointment rescheduled for: • Two weeks $ 600 • Four weeks $1,200 • Six weeks $1,800 • Times the number of lost time (indemnity) annual claims with missed appointments. • What’s at risk for you?

29. Return To Work Programs Does It Really Make a Difference? • Basic Benefits • Calculating Benefits • Take Home vs. Weekly Compensation • Disability Syndrome • What Can Be Done? • Transitional vs. Modified Duty

30. Basic Benefits Indemnity (Lost Time) Benefits State regulated and defined percent of Average Weekly Wage is used to determine the weekly Compensation Rate for specific state regulated benefits. Indemnity Benefits Temporary Total Temporary Partial

31. Temporary Total/Partial Temporary Total Benefits paid when the physician indicates the IE is temporarily totally unable to physically perform his job duties. Benefits typically paid at 2/3% of average wages. Temporary Partial Benefits paid when the physician indicates the IE is temporarily only able to perform partial duties. Benefits paid at state-regulated formula.

32. Temporary Total Benefits Injured Employee works 40 hours a week at $10 per hour Average Weekly Wage * $421.15 Weekly Compensation Rate (@ 2/3%) $280.78 * includes overtime

33. Temporary Partial Benefits are payable based State defined percentage of the Average Weekly Wages as compared to the post-injury wages. Florida 80/80 example: AWW: $421.15 Entitlement Threshold (80% of $400): $336.92 Less Post Injury Wages: $300.00 Difference: $ 36.92 X 80% TP Payable Benefits: $ 29.54

34. Do The Math!

35. Pre-Injury Wages Wages for a single person with two exemptions $10 per hour for 40 hours per week $400 Deductions: Social Security 24.80 Medicare 5.80 Federal Withholding 38.40 Health Ins. (HMO) 10.89 NET TAKE HOME PAY $320.11

36. What Difference Does It Make? Routine Wages 40 Hours per Week At $10 per Hour NET TAKE HOME $320.11 WC Temporary Total AWW: $421.15 TAX FREE WEEKLY COMP. RATE $280.78

37. The Math Net Take Home Pay: $320.11 WC Temp. Total: $80.78 Difference $39.33 Gas @ $2 per day $10.00 $29.33 Lunch @ $5 per day $20.00 $ 9.33 Child Care ?????

38. Disability Syndrome How long does it take the injured employee to realize he can make more money by staying home on workers’ compensation than he can by working? About 30 – 60 days!

39. You’ve got about 4 – 8 weeks to get them back to any type of duty to avoid the Disability Syndrome. What Can Be Done?

40. Transitional vs. Modified Duty Modified Duty Same employer - Same job - Modified functions Transitional Duty Same employer - Different job – Different functions

41. Physician Selection • If the treating physician does not support transitional/modified duty programs, it won’t happen! • Provide the physician with a letter stating your ability to provide transitional/modified duty as soon as the physician believes it to be medically appropriate. • Provide the physician two two job descriptions: • Normal Job • Transitional Job

42. Job Descriptions • Do Two! Normal and Transitional position(s) • Use ADA guidelines • Use Physical Capacity Evaluation when appropriate • A picture is still worth a million words • Make them legal • Communicate, communicate, communicate • Physician • Supervision • Injured Employee

43. What Jobs? • Simply Ask Them! • Get Creative • Use your network of experts

44. Simply Ask Them!! • As a PEO create a contest for the employees to identify one modified and one transitional duty position. • Must be reasonable positions • Offer ‘incentive’ award for good suggestions • Offer bigger award to five best suggestions • Provide examples of the expected result.

45. Create and use a payroll stuffer to notify all employees. • Legitimize the results by having a certified vocational expert review the positions and create job descriptions and physical capacity requirements.

46. Get Creative • Marketing • MSDS Catalogue • Rental Car driver • Inventory • Sorter • Training • Fleet Safety: Tire Pressure/Seat Belt Checker

47. Use Your Network Claim Representative Claim Supervisor and/or Manager Risk Managers RIMS (if member) website If you don’t have a network, get started on one!

48. What Difference Does It Make? • Higher Claim Losses • Higher Litigation • Costs 40% more • Experience Modification Factor • for three years

49. Rewards – Cost Reductions

50. Indemnity Cost without Transitional Duty - $54,808 Indemnity Cost with Transitional Duty - $6,324 ExperienceModification Experience Modification $94,775.00 $94,775.00 $84,350.00 $73,925.00 100000 100000 $71,730.00 $71,730.00 80000 80000 60000 60000 $12,619.00 $2,194.00 40000 40000 .78 .89 .76 1 .76 1 .13 .02 20000 20000 0 0 Average Minimum Controllable Average Minimum Current Mod Current Mod Controllable Mod Mod Mod Mod Mod Mod Modifier Premium Modifier Premium A Difference of 11 Mod Points or $10,425 Impact on Experience Modification Factor Example Classification – 5645, rate $37.41 per $100 payroll Total Employees - 6 Total Payroll - $250,000 Manual Premium - $94,775