Your Broker’s Role in Controlling Work Comp Cost
This is the third installment of The Seltzer Group’s Workplace Injury Best Practices series.
There are many ways to manage the inherent risks of business but the most common is transferring risk to an insurance company through the purchase of an insurance policy. In theory, businesses choose this option because for a “nominal” fee (the premium) they transfer the potential of a much greater financial loss (the risk) to an insurance carrier. But is this the case with Workers Compensation?
As explained in our last Workplace Injury best Practices article, Exposing the Cost of Workplace Injuries , Workers Compensation is not like traditional insurance because although the employer pays the premium, the risk, ultimately is not transferred to the insurance carrier. To summarize, employers end up paying back, in the form of direct premium surcharges, up to 300% of almost every dollar paid out for their Work Comp claims. This means that employers are essentially financing their workplace injuries, via their Work Comp policy, at astronomical interest (surcharge) rates. Businesses in Pennsylvania can receive a Workers Compensation Financial Analysis Report, which explains in detail how their workplace injuries impact their premium (see below for more information on how to obtain your copy).
So what can you do to control your company’s your Workers Compensation costs? First, you need to look at who is responsible for purchasing and managing your Workers Compensation policy. Typically this is a combination of senior management and other internal personnel, such as HR, Controller, Safety Manager, Office Manager, etc., but it also includes your insurance broker.
The person chosen as your insurance broker playas a vital role in determining your overall insurance costs but should not be the only external person assigned to managing your policy. In the case of Workers Compensation it’s not about finding the right broker for the job but the right team of experts who work with your broker to manage and minimize claims. This team should consist of:
- Claims Management Specialists (not administration)
- Safety & Injury Prevention Experts
- Human Resources Professionals and
- Insurance & Risk Management Consultants (broker)
The reason for the team approach is that there are many moving parts within the Work Comp system and brokers do not have all the skill sets or special training to proficiently service all of their demands.
For example, a licensed insurance broker’s primary training and education involves learning insurance terms and coverages. This qualifies them to sell and counsel employers on what types of insurance they should buy so they are sufficiently insured. This does not however qualify them as an expert, say in Claims Management. Yet property managing your claims is a critical component to controlling your Workers Compensation costs.
Even just a few minor workplace injuries a year can expose you to avoidable claim surcharges, costly overcharges caused by uncovered, yet common, mistakes within the Work Comp system and hours of unnecessary frustration and stress.
Recognizing the widespread threat to Pennsylvania businesses, The Seltzer Group decided to develop a solution that is not only effective but also affordable for virtually every business. To do so we invested in human capital by hiring experienced Claims Management, Safety and Human Resources experts. Together with our insurance and risk management professionals we deliver the necessary tools, knowledge and hands-on support that drive down our client’s insurance and employee-related costs beyond a competitive quote.
For more information about The Seltzer Group or to receive your free Workers Compensation Financial Report you can contact The Seltzer Group 1-888-366-1000, email@example.com