(by Elton Mwangi)
Yes, a broker can help with workers’ compensation insurance. If you decide to look for an insurer without the help of a broker, you might incur a cost that hurts your bottom line.
According to research, workers’ compensation insurance is most expensive in New York and California. It costs 1.2% of total compensation for private industry and civilian workers.
But brokers don’t just help you find the best price and negotiate rates with insurers, there’s more.
Fiduciary Responsibilities to the Employer
A workers’ comp insurance broker acts as the employer’s fiduciary and protects the employer’s financial well-being. This does not only mean finding the best insurance price for the employer. The broker recommends the best financial safeguards of the employer’s assets for the short-term and the long-term.
For instance, if insurer A provides a lower initial price but the broker knows the company offers poor claim service, resulting in injured employees staying at home longer than necessary, leading to considerably higher claim costs and more administrative challenges for the employer, then insurer A would be a bad recommendation.
The broker should recommend insurer B. Insurer B costs a bit more initially but offers excellent customer service and lower than average claims expense.
Designing, Implementing, and Managing Safety and Loss Prevention Programs
If you don’t reduce claims frequency, workers’ compensation claims can cost an arm and leg. You need well-designed safety and loss prevention programs that are effectively implemented and aggressively managed to reduce direct claims costs.
The same programs also help eliminate indirect costs of workers’ compensation claims, including:
- Administrative expenses
- Lost productivity
- Hiring temporary help
Workers’ compensation coverage brokers make a significant difference in this arena. They’ve taken the responsibility of designing safety programs and implementing and managing them. They work with capable engineers, risk control specialists, and safety professionals to enhance safety in your business and mitigate losses.
What has led to this service evolution? Many insurance carriers have reduced and eliminated loss prevention programs and personnel as it’s not profitable. Insurers that still offer loss prevention services use inexperienced personnel.
Training Claims Management Teams
How the employer’s management team responds to employee injuries at the workplace has a critical effect on the disposition of the claim. A poor response can mean failure to preserve evidence, investigate the incident, and report the claim, resulting in:
- Relinquishing medical control
- Increased litigation
- Adverse employee relations
Since supervisors know about claims first before other executives, they must be trained to direct and manage events following the accident, investigate the claim and report it, and work well with injured employees. They also need to be trained to correct unsafe working conditions and practices that lead to claims.
Since insurers have other fish to fry, they will not be involved with aggressive claims management advocacy. They’ll only train on simple claims processing, which isn’t enough. That’s why business owners rely on workers’ compensation coverage brokers with teams of claims management advocates to train their claims management teams.
Selection and Management of Medical Providers
Working with medical providers who don’t specialize in occupational medicine is a harbinger for inflated claims costs. Primary care physicians may take a more conservative treatment approach, which reduces medical expenses but extends the period of temporary disability. This escalates indemnity expenses and total claims costs.
Therefore, you must select workers’ comp medical providers who:
- Focus on occupational medicine
- Understand your operations and HR philosophies
- Are willing to have a close working relationship with your broker and insurer
Experienced brokers will give medical provider selection guidelines and even help to interview, select, and monitor the effectiveness of medical providers for good measure.
They’ll also help set up effective referral processes and continual provider communication programs.
Can a broker help with workers’ compensation? Absolutely. A workers’ compensation coverage broker represents the employer and not the insurer; an insurance agent represents the insurer.
That said, brokers will look after the client’s financial interests regarding workers’ compensation insurance, both short-term and long-term. Over and above that, brokers will train your claims management team, select and manage medical providers, and design, implement, and manage safety and loss prevention programs.