Workers’ compensation is one of the most difficult lines of insurance for making a profit. Thanks to its litigious nature, long-term payouts and general unpredictability, the line continues to bleed money. This is evidenced in the latest statistics from the National Council on Compensation Insurance (NCCI), which show that the industry made money in only two of the last 20 years.
If carriers and agents wish to optimize this area of their business, it is important to identify and understand the six errors that undermine the success of many workers’ comp lines:
1. Having adjusters manage 100 or more claims
Most adjusters handle 100 to 200 claims at any given time. While this is the status quo for the industry, this claim volume puts unsustainable pressure on adjusters, which can lead to inefficiencies in closing claims in a timely and cost-effective manner. The potential for cost-savings of paying fewer adjusters is likely to be far outweighed by a bottleneck of claims that accrue lost time and other expenses with each day the claim remains open and each time a mistake is made from lack of attention.
Instead, limit adjusters to a caseload of only 75 cases. By reducing the number of claims for each manager, you allow them to give each claim the proper time and attention it requires. When that happens, mistakes and oversights are less likely to occur.
2. Lack of real claims management
One of the biggest detriments to workers’ comp claims is lack of true claim management. When using a tiered claims adjustment structure, in which multiple adjusters work on a claim at different points throughout its lifespan, information tends to get lost in the shuffle from adjuster to adjuster, and in turn, increases the duration of the claim and inflates the associated costs.
Appointing a claim manager, who has complete oversight over a claim from the intake to closure, allows all parties involved – from the doctor, to the claimant and the employer – to have a single point-of-contact with expert knowledge of the claim. Should questions or problems arise, the claims manager knows all relevant facts and updates and can most efficiently bring a solution to the table.
3. Banking on online claims access
While in theory online claims access sounds great for carriers, it can often stall the claims process. Most client companies lack the time, and often experience, to oversee online case information, which can result in errors that few take time to fix.
Instead, provide thorough tutorials on how to file claims and make sure your system allows for expert intake process, with systems in place to handle overnight and weekend claims and issues.
Next page: PPOs, safety programs, employer accountability
