"Help, My Workers' Compensation Costs Are Rising!

An employer who is hoping to control costs during this economic recession, needs two very basic tools to succeed.

First, they must personally investigate any time loss injury that occurs. Often, employers leave investigation to either the state fund adjuster or to the third party adjuster. Putting your faith and all your eggs in this basket is a prescription for failure. In addition, many of your line managers hold key information regarding the injured employee. Does the injured party have pre-existing conditions that may play into this injury? Did they complain of back pain two days before they claimed injury to their back on the job? Are they playing baseball, soccer, or did they clean out their garage on the weekend?
One client I worked with had someone who was prescribed total bed rest (not an accepted modality by most physicians) and two days later was hauling snowmobiles from his ex-wife's garage.

Second, once the claim is in play, the employer must develop a plan of action on how to resolve the claim complete with dates to review the claim. In my experience, an adjuster, whether they work for state funds or for third parties, rarely had a written plan of action. Most ran by the seat of their pants with little strategic planning on how to resolve the claim. Keep in mind, most third party adjusters are working on this claim for a fixed price. Once it reaches that threshold, less attention will be paid to the claim.

An employer must be sure the claim keeps moving to resolution. My most recent client that adopted these two recommendations, were on the path to saving over half of their developed losses for the year. This achievement took three dedicated people a little over 6 months to achieve. That was money back in that company's pocket in these very cost conscious times.

Health Insurance and the Economic Recovery

Has anyone wondered about the economic recovery and how they say it will happen with small business? As a small business owner, and as a member of a household with another small business owner, we are fast approaching almost $2,000.00 per month for health insurance premiums.

Had a public option been possible, could that expenditure have been slashed in half? Think about it. If we both had another $500 per month to expend for goods and services we need to advertise, network and grow our businesses, that could result in an infusion of over $12,000 additional dollars a year into this economy. Instead, it is being usurped by health insurance companies and the for-profit medical industry.

How will we bring this economy back on line with that type of expenditure? I attended a meeting this morning with several other small business people and there was nodding of the heads all around the table concerning this issue. Without our representatives putting their heads together to find affordable health care options for big and small businesses alike, we are swirling around in the cesspool of health care options. Same old story only with a more expensive ending. I, for one, am going to be actively working with my senators and representative to continue to fight for affordable healthcare, no matter who the lobbyists are. Won't you join me in carrying this message forward? Ed Schultz, we need you to carry on the public option fight. Thanks.

Worker's Comp Choice - Make Washington a 3-Way State!

In helping employers in the State of Washington, I see the Department of Labor and Industries with small pockets of hard working but overloaded adjusters who do not have the time to adjudicate claims. The squeaky wheel gets the grease. Employers who can yell loud enough get heard. The two big issues I work on are: (1) A proper and complete investigation of a claim at the onset; and (2) having a clear plan of action for the claim that looks at what is needed to get a claim closed and the worker back to his/her job at time of injury.

The worker's compensation system was put in place to be a stop gap until an injured worker could return to work. Too many nonproductive employees find this system as a new way to delay their return to a job they may not like. While only about 5% of these claims are questionable in the first place, they cost employers millions of needless dollars that could go to employing dedicated and productive workers.

The State of Washington needs competition in the worker's compensation arena. Many injured workers are also being ill served especially when they want to return to productive work but their claim is not handled in a timely manner. I believe that the worker's compensation programs and employers and employees will benefit from a three-way state. Let's work at putting people back to good work at good productive jobs. As with most instances where there is competition to government supplied programs, the private sector can do a better job. Vote for I-1082.

A Homeowner's level of insurance. Does that protect a company adequately?

Recently, I was asked by an international client to review their insurance coverages. They contract for products in an international market. As such, they have numerous product and general exposures for which adequate limits are a must.
When I reviewed the limits for this company, I found I had better limits of coverage for my own auto and homeowners insurance on my own property! Some companies want to skimp on any excess liability insurance in these hard times. However, one good product recall with hundreds of small items could bankrupt a company. A baby swallowing one of those small gadgets may cost you far in excess of any premium you would pay to adequately cover yourself.
Middle market companies often have no internal risk manager and must thus rely on a small local or regional broker. I am certain the broker for this company probably repeatedly warned this CEO his coverage was inadequate. However, until the CEO fully understands the ramifications (mostly to his own pocketbook!), he isn't going to receive the message.
Remember, eyes glaze over on CEO's when talking insurance. Be sure he/she understands the Mercedes he/she is driving, may be at risk (as well as the financial stability of the rest of the company, when very low limits are carried.

Public Option is Vital

As a Risk Manager, I have had the privilege and bane of having to manage health benefits. In addition, I actually worked for one of the "Blues" and spent time on a subrogation desk keeping claims from being paid. (No, I didn't like the job). Now that I am a full time consultant, I am in the market for a good affordable health care plan that doesn't require me to take out a second mortgage on my house so I can pay for it.

Anyone currently railing against a public payer option (ie. run by the government) is only a breath away from needing this plan themselves. Wait until you get laid off.....get really sick......or try to find an independent policy because you cannot find a group plan that you can join. You and your family are really that close to losing affordable health care.

In addition. this whole fight is between those that have and those that don't. It exemplifies the cruelty this country exhibits when they are afraid they "won't get theirs."

And, if you think insurance and drug companies are your friends.....you deserve to read Sarah Palin's blog.

Call you senator and your representative and tell them a public option is vital. Remember, you and your family are only an ambulance ride or job loss away from experiencing the unavailability of health care for yourselves. For those of you that don't heed this message, may I see you at the mercy of the drug and insurance companies you support. If they win this fight, the lack of affordable heath care will only get worse with their hands at the helm of our healthcare system.

CFO's and risk management.

I have recently worked with CFO's placing insurance and working through letters of credit that support large deductible workers' compensation programs. I came away from those experiences realizing that the person in an organization that should be most aware what risks may close their doors has little understanding of how risk works. When you look at the average curriculum of any business school, the CFO or any other senior business professional will likely never take a course on risk management. Yet, much of the success of any business hinges on understanding the upside of a risk as well as the downside. If CEO's do not understand risks and risk management, are we doomed to see more WAMU failures, more Bear Stearns disappearances, and most importantly, the dissipation of our retirement funds? Stay tuned.

Managing Risk Today

If you pick up a newspaper and read the business section, you will find a world of risk. The recent news about sub-prime mortgage meltdowns, the disappearance of our 401k's, and the failure of major banks all involve risk management. Effective risk management can enable executives of companies to grasp hold of opportunity and execute it with aplomb. The downside can also occur when executives ignore the risk management "sound of reason" only to crash and burn because they succumbed to greed.
Our history is full of executives who have often ignored their own risk management professionals who are the "canaries in the mine". Look at some of the major companies such a Bear Stearns. If anyone looked at the website of Bear Stearns, they could view the goals of the Audit Committee. The second goal (of three) was noted as "Oversight of the Corporation's policies and procedures regarding funding, liquidity and liquidity risk management." So what were all those esteemed board members doing to fulfill their duties around this goal? Maybe they were too busy anticipating cashing their stock options!
So......what happened? This blog will explore risk management issues large and small. Often, it will be a rear view. After all, hindsight is 20/20.
Stay tuned...........