When your company experiences a workers’ compensation claim, it affects more than just the injured employee. From an employer’s perspective, there is lost production and continuity, increased costs and resource strains. Many people are unfamiliar with the statutory reporting requirements and the financial impact that delayed reporting can have on their company’s bottom line. Delayed injury reporting can be even more costly and result in missed opportunities to mitigate medical spending. It can also lead to increased employee anxiety, confusion and ultimately unnecessary litigation. Reporting as soon as possible is important for both you and the employee. 5 key benefits of early reporting
Keep claim costs down – Delayed reporting can significantly increase workers’ compensation claim costs, according the National Council on Compensation Insurance. The lowest median cost is for claims reported in the first two weeks.
Reduce the need for attorney involvement – Claims that are reported more than a month after the incident are more than twice as likelyto have an attorney involved. Additionally, a small percentage of medical-only cases ultimately turn into indemnity cases due to unforeseen complications resulting from underlying health risks of injured employees or unusual circumstances (e.g. infections and diabetic employees).
Close more claims quickly – More than half of claims that are reported within the first two weeks close within 18 months. However, only 29% of claims that are reported more than a month after the accident close within the same timeframe.
Expedite healing and an earlier return to work – Employees who are satisfied with their employer’s response to injury or illness return to work 50% faster with 54% lower cost. Additionally, medical treatment within specialized occupational medical clinics familiar with treating workers’ compensation injuries may result in quicker healing and an earlier return to work.
Recognize fraud – There are various degrees of fraud and early detection of “red flag indicators” may help determine whether a case should be referred for surveillance or if there is an opportunity to pursue subrogation against a negligent third party.
Early reporting is important, but how do you create a culture that advocates timely reporting?
Pre-incident Best Practices
Conduct annual training for employees and supervisors
Be familiar with state rules for “first aid” claims vs. claims subject to reporting
Establish and monitor reporting goals at the location level
Commit to modified return-to-work programs
Set expectations for supervisors to support return-to-work programs
Post-incident Best Practices
Complete an internal incident investigation and post-incident drug test immediately
Report the claim within 0-3 days
Take advantage of your carrier’s medical management program; provide employees with medical provider information
Help employees understand the process and minimize uncertainty
Keep the conversation constructive – focus on what happened and future prevention, not blame
I just wanted to take a minute to thank everyone who has sent in updated loss run contact information. This community list has been such a help to so many agents and I get alot of input and contact information from so many agencies- I love opening up the comments and finding new contact information or updated contact info ( I pretty much update the site as soon as I get the info.) I know there have been alot of subscribers and I normally don’t blog but …. to all of you out there I hope this information helps you out for years to come
Reduce Underwriting Expenses with Automated Loss History
Participating in an industry-wide loss history database can benefit your bottom line
JAN 13, 2015 | BY ERNIE FEIRER
Imagine receiving a routine commercial package submission for one proposed insured—except that the loss history includes 12 losses over a five-year period, with three carriers and three lines of business per carrier. In the hands of a superstar agent, it could take several weeks or more to manually collect this loss history—and even then, your underwriter would have to sift through reams of paper to try to make sense of it all.
You might throw your hands up and say that manual loss runs are a necessary evil. In fact, there’s a more efficient and effective way of achieving the same result: automated loss runs, enabled by a contributory database.
Automating Loss Runs with a Contributory Database
Automating loss runs can help carriers improve efficiency, enhance data quality and empower underwriters to make better decisions. The key lies in a contributory loss history database: a centralized data repository where every contributor receives real-time access to the industry-wide dataset, across all commercial lines of business. Instead of sifting through paper, underwriters can access the information they need, when they need it. And with standardized loss codes, the data can be fed into analytic engines to drive value throughout the policy lifecycle.
Automated loss runs can enable carriers to discover profitable opportunities and improve risk selection. In this article, we’ll discuss another benefit to automated loss runs: reduced underwriting expenses.
Four Ways That Automated Loss Runs Can Help Carriers Reduce Underwriting Expenses
Informed underwriting is a critical competency for carriers, but also a significant expense. Here are four ways that automated loss runs can enable carriers to reduce underwriting expenses.
1. Increase efficiency
On average, manual loss runs add 5 to 10 days to a carrier’s time to quote. Little wonder that many carriers only use them at point of underwriting—and only when they must. It’s not uncommon for carriers to proceed without loss runs for small business policies, when the premiums don’t justify the time and cost involved.
In contrast, automated loss runs help streamline the quoting process by getting underwriters the information they need, when they need it. In addition, the ease of obtaining automated loss runs makes it economically feasible to acquire them for all policies—and to use them throughout the policy lifecycle, not just at point of quote. Finally, participating in a contributory loss history database makes it much more efficient for carriers to meet their obligation of providing loss histories to requesting agents.
2. Enhance risk management
Lag time aside, manual loss runs may not provide a complete picture of the risk. Agents might not have written all the lines of business that a carrier requires, and key information can easily get overlooked in the shuffle. The worst part is, carriers have no way of knowing if they have all the information they need.
A contributory loss history database can provide historical and current information across all lines of business, including details on open reserves. At point of quote, carriers can find undisclosed risks or highlight areas for further inquiry. More broadly, they can inspect open reserves at point of renewal, or detect signs of potential fraud at point of claim. Further, carriers can leverage automated loss runs at point of endorsement—for example, to understand their risk exposure after an insured acquires another company, or to account for mid-policy changes to a commercial fleet of drivers.
3. Improve data quality
Reams of paper. Multiple, disparate data formats. Mundane data entry. When viewed through the lens of data quality, manual loss runs are highly problematic. Best-case scenario, data entry is a poor use of underwriting resources. Worst-case scenario, mistakes on the front-end can lead to mispriced business, ultimately resulting in higher claim losses.
With automated loss runs, carriers get real-time access to standardized data. This improves data quality and also enables carriers to leverage data beyond the point of quote, such as in predictive analytics, claims adjudication, policy renewal and endorsements. Further, carriers that automatically feed loss history data into rating systems can gain additional efficiencies, and reduce errors due to manual data entry.
4. Better manage talent
Underwriting talent isn’t cheap, so why are many underwriters performing data entry or shuffling paper? Given limited resources and increasing pressure to be profitable, it behooves carriers to ensure that their underwriters are doing the highest-value work possible.
By automating loss runs, carriers can triage policies by delegating simple cases to junior underwriters, and more complex policies (such as the one mentioned at the beginning of this article) to seasoned underwriters. Freed of mundane tasks, underwriters can focus on value-added activities. In addition, given the generational transition within the underwriting workforce, carriers can leverage automated loss runs to facilitate knowledge transfer between seasoned and new hires, or to attract new underwriting talent.
Looking Ahead
While manual loss runs are almost exclusively used at point of quote, automating loss runs can help carriers reduce underwriting expenses and make better decisions throughout the policy lifecycle. Automated loss runs can unlock improvements to efficiency, risk management capabilities, data quality and talent management—ultimately, helping carriers to reduce underwriting expenses.
Critically, carriers that adopt automated loss runs get more out of their human capital. When equipped with real-time, standardized data, underwriters are empowered to make better decisions, drive more value for the carrier, and work more efficiently and effectively.
To learn more about our loss history contributory database, as well as other solutions that can assist you across the insurance continuum, please visit www.lexisnexis.com/automatedlossruns.
Ernie Feirer, CPCU, is the vice president and general manager of commercial insurance for the risk solutions business of LexisNexis®, where he is developing a suite of products and services for the commercial insurance market.
Feirer has been part of the insurance leadership team since 2000 and was named Vice President and General Manager, Commercial Insurance, in 2012. He has held roles as vice president of product management and analytics in the insurance solutions division, and vice president and general manager of the claims solutions division.
Nov, 11, 2014 by Ernie Feirer from Property and Casualty 360
Meet Joe, a contractor seeking general liability and workers’ compensation insurance for his business. His application states that he installs residential flooring. In the Dark Insurance Company submits a quote without conducting a loss run or verifying Joe’s application. Sleeping Easier Insurance Company enters Joe’s details (name, business name and address) into a contributory loss history database and immediately discovers an open worker’s compensation claim for a back injury sustained from a high fall. The claim detail reveals that Joe has been installing exterior siding, not just laying wood floors.
Which carrier would you rather be?
Automating Loss Runs with a Contributory Loss History Database
The process of gathering manual loss runs is labor- and time-intensive. It places many carriers in the unenviable position of choosing between delaying their time to quote, or proceeding with incomplete or inaccurate information. Rock, meet hard place.
The challenge of collecting loss runs isn’t unique to commercial insurance. For more than 25 years, personal lines carriers have benefited from automated loss runs enabled by a contributory loss history database.
A contributory loss history database is a centralized data repository where every contributor receives real-time access to the industry-wide dataset, across all lines of business. Standardized loss codes enable contributors to plug the data into analytic engines—enabling them to automate loss runs and making risk selection more efficient.
Improving Risk Selection
With a contributory loss history database, carriers have access to all claims history within the database—which allows them to better understand the risk involved, make better underwriting decisions and improve risk selection. In addition, having loss history available in real time enables carriers to empower their underwriters to make informed decisions about the risks involved, throughout the policy lifecycle.
Here are a few of the scenarios in which a contributory loss history database can benefit carriers.
Scenario 1: Make better decisions with new business Maria runs a catering business and her business owners policy (BOP) is up for renewal. However, she’d like to switch agents and doesn’t want her previous agent to know she’s leaving. Her new agent cannot obtain a loss run without going back to the current agent. However, Sleeping Easier Insurance Company accesses Maria’s loss history through its contributory loss history database, enabling them to win Maria’s business.
With a contributory loss history database, carriers can obtain a complete picture of the risk involved, particularly with new business.
Scenario 2: Find additional, undisclosed loss history The Main Street Property Management Company owns a strip mall with several retail occupants and is seeking a commercial package policy. Using a contributory loss history database, Sleeping Easier Insurance Company conducts a location-based search to obtain loss histories. While no losses are found on the company, several of its tenants have reported fire losses due to maintenance issues.
With a contributory loss history database, carriers can link disparate information, including business entities, operations or locations, to create a comprehensive understanding of the risk involved.
Scenario 3: Make better decisions at point of renewal Alex’s general liability policy is up for renewal with In the Dark Insurance Company. When the initial risk was written two years ago, there was an open claim with a reserve of $100,000 for a products liability loss. That claim is now closed. Because the manual loss run process is so onerous, In the Dark Insurance quotes based on the initial risk. Alex’s agent shops the policy to Sleeping Easier Insurance Company, who sees from the contributory loss history database that the previous claim is now closed. Sleeping Easier Insurance provides an appropriate quote to Alex’s agent—and wins the business.
With a contributory loss history database, carriers can enhance underwriting at point of renewal. By monitoring reserves closely, they can price risks appropriately, retain existing customers and even gain new ones.
Scenario 4: Attract the business you want Tired of losing business to its competitors, In the Dark Insurance Company signs onto the contributory loss history database. As they begin to use automated loss runs, they realize that the bulk of their new business—which they would have previously underwritten, potentially without complete loss runs—warrants a closer look. Further, by obtaining automated loss histories on each of their upcoming renewals, In the Dark Insurance discovers that much of their business was riskier than they thought.
With a contributory loss history database, carriers can ensure that they’re writing the business that they want. The scenario mentioned above is a real one, wherein bruised business drifted toward In the Dark Insurance. The market didn’t go where the insurer positioned itself; it went where it was pricing.
Looking Ahead
Carriers can improve the efficiency of risk selection and enable disciplined underwriting by tapping into a contributory loss history database. In addition, its potential to invigorate commercial lines goes beyond new business. It can enable carriers to enhance their book of business—for example, by monitoring policies with open reserves to better price that risk at time of renewal. The database can also enable carriers to empower their claims adjusters to make better decisions. For example, a savvy claims adjuster can search prior claims for negligence, fraud or other patterns that might raise a red flag.
Finally, a contributory loss history database can be a tremendous benefit to the industry as a whole. Having standardized data means carriers can empower their underwriters to make better decisions in the field and at point of sale. Through enhanced risk selection—and the more informed decisions that it enables—carriers can make better underwriting and pricing decisions.