Originally posted on ClearRisk by Rebecca Webb.
Many companies do not keep claims information internally. They simply defer this record-keeping process to their insurance provider. However, there are several benefits to tracking this data in-house.
While it may be a bit of an adjustment at the start, you will quickly see a return on your investment as your risk management department and your organization as a whole benefits.
4 Reasons to Track Claims In-House
1. Track incidents as well as claims
If you don’t record or manage information in-house, it is likely that records are only created when you need to report a claim to your insurance provider. This means that you will only gather data on claims, where a formal case is brought against you, and not incidents.
However, incidents are the number one indicator of claims and can allow you to prevent predictable losses.
2. Identify trends and decrease losses
Having ownership of claims data means you can incorporate incidents and self-insured claims into your overall risk analysis. This will give you a more accurate and complete picture of where your risks lie and what trends are present.
For example, if ten people slip on your front step and you only record the one who tries to sue you, you would have no idea that there was historical data that could have predicted and prevented this outcome. With this tactic, you can better identify issues before they become claims and implement proper mitigation techniques, making occurrences less frequent and less severe.
Without tracking information in-house, this type of analysis is impossible.
3. Receive better insurance premiums
Insurance companies want to insure businesses that have “good” risk – those that they feel will have a minimum amount of losses.
A loss ratio is the premium paid divided by the cost of claims incurred. A low loss ratio will make your company attractive to insurers, which will result in competition over your account and lower premiums. Also, managing claims in-house will allow you to raise your deductible to the optimum level. The general principle is: the higher the deductible, the lower the premium.
By analyzing past losses in conjunction with insurance premium quotes for different deductible options, it becomes clear which deductible is best. If you raise this amount and agree to pay a higher portion of claim costs, the insurer will provide a discount on the premium payments in return.
Assuming you are financially able to pay this higher deductible, this strategy will save you money in the long run as the monthly savings will likely outweigh the higher cost if an accident occurs.
For more information on how strategically raising your deductible lowers premiums and saves your company money, check out this article. Internally handling claims data also means that you will have a complete and accurate record of losses if you decide to switch insurance providers.
4. Ensure compliance and productivity
It will be easier for your employees to understand the purpose and benefits of risk management practices if data is easily accessible. Compiling data and reports will be less time-consuming, as you will not have to rely on anyone but your internal risk management team.
Employees in other departments may also be more comfortable working with people within your company than those from an external insurance provider.
Originally posted on Health Consultants Group.
In some cases, you might end up being responsible for insuring contractors or workers who should have their own insurance. The issues can be complicated when you have outside workers performing jobs on your property without clearly defined roles and responsibilities.
Subcontractors, casual laborers, or other non-employees bring with them a whole new set of liability issues above and beyond your own business operations. If they aren’t your employees, you may have a difficult time controlling their actions and preventing the liability problems they create. Theoretically, workers and subcontractors are responsible for their own actions, but they might not have the resources to cover their negligent acts.
Insuring subcontractors and contractors
Contractors and subcontractors should have their own liability insurance, but it’s up to you to make sure they have coverage in force before they begin working for you. You can do this by requiring a certificate of insurance from their insurance company.
You might also require that independent contractors name your company as an additional insured on their liability policies. If you allow an uninsured contractor to work on your property, you’ll be making a choice to accept their liability exposures, whether intentionally or not.
Define responsibilities in a contract
A written contract is a great tool for documenting responsibilities and minimizing hassles related to insuring contractors and their liability exposures. Before a subcontractor begins working for you, you should execute a formal contract that reviews duties, expectations, requirements, and costs.
Your contract should also include hold harmless, duty to defend, and indemnification clauses. These compel a contractor to be responsible for the damages and injuries they cause. They also require them to indemnify your company for costs incurred because of their actions. Even if a subcontractor has no insurance, you’ll have a right of recovery for your costs to pay or defend claims because of their negligence.
Insuring casual laborers and non-employees
One concern with casual laborers or non-employees is that they may actually be employees by definition. The IRS topic, “Employee or Independent Contractor? Know The Rules” should help you determine if your arrangement with casual laborers and non-employees constitutes an employer/employee relationship.
The key issues involve your financial and physical control over a worker’s activities and your working or contractual relationship. If your workers meet IRS employee guidelines, you may be legally responsible for their on-the-job actions even if you don’t consider them employees. In addition to their liability exposures, you may also be responsible for their unemployment, workers’ compensation and other compulsory benefits.
You can’t eliminate all contractor-related liability issues
You should choose your subcontractors and casual workers carefully. Their actions may cause liability issues you can’t avoid. Connecticut and Massachusetts Premises Liability Statutes require you to maintain your property and warn of dangerous conditions or hidden hazards. Even if a negligent subcontractor, casual worker, or non-employee has liability insurance and you have a contract in place, as a property owner, you’ll always have some responsibility for their actions.
Sometimes responsibility issues don’t come up until after a subcontractor or worker causes damage or injuries while they’re working on your property. That’s why you should address key responsibility issues ahead of time. Consider reviewing any liability or employee vs non-employee concerns with your legal representative.
Originally posted on Business Insurance by Angela Childers.
Costly catastrophic claims are emerging in the workers’ compensation sector, partly driven by comorbidities and prescribing of expensive brand-name drugs, experts say.
Comp payers must quickly identify seemingly innocuous claims that have the potential to balloon out of control and proactively work to mitigate those costs, they say.
More than 80% of medical costs in workers comp are for claims between $10,000 and $500,000, according to Boca Raton, Florida-based National Council on Compensation Insurance Inc. And although overall comp claims are declining, the number of claims exceeding $10 million in comp jumped to 10 in 2016, according to NCCI, compared with just four during the prior year.
While catastrophic injuries affect those figures, comorbidities, lower-body fractures, back strains, and shoulder injuries can also lead to substantial claims in some cases, experts say.
Comorbidities, such as hypertension and diabetes, can increase the cost of an injury that seemed to be a $30,000 to $40,000 claim to six or seven figures, said Anita Jovic, vice president of operations at Home Care Connect LLC in Winter Park, Florida, which provides home health services for injured workers.
“The injured worker may not know they have an underlying diagnosis,” she said. “For instance, in a crushing injury, if you find out (the worker has) diabetes, that claim balloons. The patient may have a wound that may not be healing as quickly … that prolongs the care.”
“Comorbidities, in general, are something we keep at the forefront of our purview,” said Helen Froehlich, the vice president of case management services for Wayne, Pennsylvania-based Genex Services LLC. “What I have seen have a drastic impact on our claims has been very consistently high blood pressure, obesity and adult-onset diabetes. Being aware of where comorbidity is, whether it has a direct potential impact on that individual case … is imperative.”
Patchez Pirtle, the director of catastrophic services for Owings Mills, Maryland-based Restore Rehabilitation LLC, said she’s seen pelvis fractures, heel fractures, and rotator cuff injuries grow into very expensive claims.
Those injuries don’t “necessarily set off alarm bells, but do tend to become very expensive claims,” she said. Often complications from those types of injuries aren’t realized until the employee has been sitting home for months on pain medications, making it more difficult to get that claimant going in the right direction.
Brand-name medications can be a big concern, said Dan Anders, an attorney, and chief compliance officer for Tower MSA Partners in Delray Beach, Florida, which specializes in Medicare set-asides in workers compensation.
“If there’s a brand-name medication … that comes out during the course of their treatment that the doctor thinks is the next wonder drug, it gets placed on the claim and drives up the cost,” he said. “Opioids, for the most part, are available as generic and may not be too pricey, but it’s the long-term effects … they require a lot more management by a physician, which means more visits, and tend to have side effects. The side effects can increase such that there are more medications being prescribed that are nonopioids to deal with those side effects.”
Injuries like back strains or shoulder trauma, which at the outset seem like a standard claim, can also become catastrophic claims because if the initial treatment doesn’t work, “brand-name medications are prescribed and then pain management escalates into a psychiatric issue,” Mr. Anders said.
The key is identifying which claims could escalate, including those driven by expensive medications, said Amy Bilton, shareholder at Nyhan, Bambrick, Kinzie & Lowry P.C. in Chicago. For example, one of her current cases involves a man in his 20s who had a previously asymptomatic condition become symptomatic due to his exposure to fumes at work, ultimately leading to renal failure. His monthly infusion drug, Soliris — which was the only treatment option — costs $1 million a month. However, she said they’re constantly looking to see if any new drugs or treatment options are in the works.
“This is obviously an extreme example, but that’s what a lot of these (high cost) cases come down to — extreme examples,” she said.
Tracy Ryan, chief claims officer of global risk solutions at Boston-based Liberty Mutual Insurance Co., said in the past 10 years the company has used a predictive model for claims it designates as “slow developing medical” to help identify these types of expensive claims earlier. The model looks at medical bills, comorbidities, pharmaceuticals, and treatments, and by combing through that data constantly, it can send an alert to the claims adjuster to review it before the costs potentially soar.
“We have seen significant reductions that we associate with putting that model in place, and the ability to get nurses on those files sooner, engage with doctors, talk about treatment plans … it’s an area that is always important because (these types of claims) can look innocuous at the beginning.”
Warning signs that a claim may require more scrutiny may also be evident. “You can see the writing on the wall when a worker goes in and asks for an opioid by name — you know you’re in trouble,” said Ms. Bilton. “And intuition is super important. If you feel like the claim could go bad, treat it as if it’s going to.”
Another key is maintaining a “settlement mindset” from the day the claim is filed, according to Mr. Anders, and ensure that you’re clearly communicating with the worker and getting medical case management early on in the claim.
“You should be thinking about what should be addressed in that claim to ensure, of course, that the injured worker gets the treatment that they need, that the treatment doesn’t go beyond what’s reasonable, and that you’re not paying for treatment that’s unrelated to that injury,” said Mr. Anders.
Preparing for disaster includes preparing for what follows when your employees and community most need you to be open for business.
Disasters can strike businesses at any time and take almost any shape: A flood takes out a startup’s servers. A founder is imprisoned. A tornado destroys the office building. Whether it’s a natural disaster, a PR scandal or something else altogether, not being ready can add another level of devastation to an entrepreneur’s life.
I know this firsthand. My company, ONTRAPORT, endured the Santa Barbara fires and aftermath that started in late 2017 and ravaged into this year. We also had shifts on our accounting team that resulted in me trying my hand at accounting (not my forte). Needless to say, 2018 has been a year of unexpected change and destruction — both of my team’s physical surroundings and our “usual” way of doing things.
Alongside our CEO, Landon Ray, I debated: “What do we do as leaders of this company and leaders in our community?” It all boiled down to a question that wasn’t so simple to answer: What kind of emergency preparedness should you have in place so when stuff hits the fan, you’re ready to execute?
Stuff hits the fan
The fires and mudslide in Santa Barbara were crazy acts of nature that resulted in evacuations as people’s health was put at risk with the toxic air. Twenty-three people died in what’s been called “the worst disaster in Santa Barbara history.” It was a scary and traumatic experience as people were spread out, unsure of the status of people they cared about.
Before we knew how bad things were going to get, we still knew that the only way to keep our company up and running was by being proactive. We’d created an emergency plan years ago, so when the fires started, I immediately pulled the plan out at 6 a.m. because I had already lost power at my house and knew we were going to lose power in the office. We weren’t in the evacuation area yet, but we needed a generator before they sold out.
We made sure to buy the right masks for everyone after we researched how to stay safe with declining air quality. Unlike most homes in Santa Barbara, our office had air conditioning, so we ordered HEPA filters. And when we realized that wasn’t going to be enough because the air quality had become hazardous, we rented a ranch in Los Osos, two hours away. At that point, we evacuated and couldn’t return to the office. We told people to work where they could — about half came to the ranch, while the rest went to other areas with their families and loved ones.
When safe places no longer feel safe.
We heard stories from others in the area that their employers wouldn’t pay them because they couldn’t work. I get that this was an emergency, and business owners have to make business decisions. We also had some employees who couldn’t work: Our coffee and meal program employee couldn’t take care of people’s food because they weren’t in the office.
In the same vein, our childcare center wasn’t taking care of people’s kids, but we knew that, just like our meal program provider, we had to pay them so they could in turn pay rent. Those are the decisions you have to make as an employer; they go a long way toward building trust with people. Treating people well isn’t just a short-term investment but a long-term one, too. We wanted people to feel really taken care of.
And that applied to the employees who could still work as well. We set the ranch up with Wi-Fi, VPN, laptops and docking stations. We tried to close every loophole that could prevent us from offering customer support, prevent our marketing team from implementing campaigns or stop our engineers from fixing bugs or working on the development of new features on schedule.
How to prevent a disaster from getting bigger
Not every employer can move things around the way we did — but a lot of entrepreneurs can do better than they’re currently planned for. It’s all about remaining thoughtful in how you handle the disaster facing you, and there are some smart ways to do that.
1. Make your priorities known.
The only thing more demoralizing for employees who are going through a situation of disastrous proportions is feeling as if they’re means to an end. Servers, process documents and computers can all be replaced; people can’t be. Make it clear that their safety is the most important thing.
We sent daily morning and evening emails or messages through our ONTRApeeps social media community to keep everyone connected and make sure people were safe. Every day, we also sent updates on the fire situation based on the information we were receiving so our team knew we were staying informed on a situation that directly impacted their lives and livelihood.
2. Plan ahead to stay open.
While some businesses are built to be hands-on entities — say, massage therapy or tutoring services — most entrepreneurs can make plans to keep working when disaster strikes. We proactively placed our servers for customer work in different locations so customers wouldn’t see disruptions, and we created redundancy with Amazon and Google Web Services. Creating tech stopgaps can save your business.
3. Look at what your state provides.
Our state had disaster recovery funds, and employees who didn’t get paid could apply for unemployment during that time. Knowing what state benefits are available can be life-saving for both your business and your employees. Go the extra step to prepare the paperwork for affected employees so they can simply submit it if they’d like to access the benefits. Be informed ahead of time.
4. Always have three people who know how to do a job.
Not every entrepreneur has three employees. However, every entrepreneur can ensure processes are documented so anyone can follow them. When we ran into issues on the accounting side, many employees asked if they could help, but because some processes weren’t documented, we couldn’t take them up on their offers. Enforce documentation updates — if you don’t, you’ll be the one cleaning up the debris.
5. Do what you can to help.
Our company did Valentine’s Day candy grams as a fundraiser for affected families, raising several hundred dollars through people buying handmade cards from our HR team. We went together to dig out houses and hosted a bucket brigade of 300 people at our office to show our support. We couldn’t afford to provide housing or write huge checks, but we did what we could.
No one is immune from disaster, but everyone can prepare for disasters so their impact is limited. Entrepreneurs have a lot to lose when disaster strikes, and not being ready ensures that the devastation takes on new proportions. Planning ahead for the inevitable will save not just your sanity, but also your company.
Author: Lena Requist
Active shooter coverage available in the market can cover a wide variety of potential liabilities for employers whose workers, customers and others are impacted by such an incident, experts say.
Laura Zaroski, Chicago-based area senior vice president, law firms practice, for Arthur J. Gallagher & Co., said active shooter coverage, which primarily comes out of London, with a handful of domestic insurers, can include counseling, medical disability expenses for victims, funeral expenses, death benefits, and “loss of attraction” coverage, when a mass shooting results in a loss of revenue because people are no longer coming to the location of the incident.
She spoke during a session at the Professional Liability Underwriting Society’s conference in San Diego on Thursday as attendees were still absorbing the news of the shooting in a Thousand Oaks, California, bar Wednesday in which 12 victims and the gunman died.
Ms. Zaroski said other coverages include the cost of upgrading a building and its security, damages to a building, relocation costs and sometimes the cost of a teardown following an incident
Thomas Lookstein, New York-based head of financial and professional line claims for Starr Adjustment Services, a division of the Starr Cos., said one question that should be addressed is whether these policies have terrorism exclusions.
Marchelle M. Houston, senior vice president, bond and specialty insurance, for The Travelers Cos. Inc., said another potential claim is kidnap and ransom, where people are unable to leave a facility during an incident. You have to look at the host of allegations and policy terms and conditions to determine other insurance issues as well as exclusions, she said.
“We shouldn’t just be waiting for an event to do it for the first time,” said Ms. Zaroski also. “Let’s learn what to do and handle the situation before it arises.”
With the number of shooting incidents increasing, “more and more lawsuits are being brought against employers” in their wake, said Claudia A. Costa, a partner with Gordon Rees Scully Mansukhani LLP in New York, who moderated the session.
The U.S. Occupational Health and Safety Administration’s general duty clause states employers must have a place free of recognized hazards, and active shooting incidents are considered such a hazard, said Ms. Costa, adding her firm has been involved in defending some of these cases. Claims filed against employers in active shooter situations include negligence and failure to train workers, she said.
Other charges, she said, include negligent hiring and retention, which was an issue in the 2003 naval yard shooting in Washington that left 12 dead.
In that case, complaints from fellow employees that the shooter heard voices in his head were not addressed, and there had been a prior incident in which the shooter had shot through his ceiling to the apartment of a neighbor, she said. Bullying was cited as a factor in the 2015 San Bernardino shooting, in which 14 people were killed, said Ms. Costa.