For the Long Haul

Competition among workers compensation carriers
has increased in recent years within the construction industry.

When an injury occurs, an established and effective claims management program can help minimize the costs of the injury and help keep a company’s workers compensation loss history strong.

By: Justin Rowley

Today’s workers compensation market is much different than the market three to five years ago.  Most companies are enjoying the benefits of a competitive, soft market.  Competition among workers compensation carriers has increased, underwriting appetites have expanded, and rates on average have decreased.

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Unfortunately, this has not always been the case.  Unfortunately, this will not always be the case.  While the hard workers compensation market several years ago had some type of affect on most companies in the construction industry, those companies that had prepared properly were able to minimize the negative effects of the hard market and remain competitively strong.  Those that had not prepared properly found limited options, much higher rates, and in some cases found survival difficult.

This article will focus on several basic, but important things construction companies can do to establish a strong workers compensation program that will increase options and make the companies more appealing candidates during either a hard or soft workers compensation market.

Safety

The most appealing candidates to workers compensation carriers are those that have an established, working safety program that results in no or very few work-related injuries.  An effective safety program should include the following:

Written Program – The safety program should be written and should address the safety exposures unique to the company’s business and the processes employees should use to eliminate these risks and avoid injury.  Each employee should be given a copy of this written safety program and required to read the program.

Training – In addition to the written program, employees should receive training on the risks associated with the type of work they are doing and the processes that should be followed to eliminate these risks.  Training gives employees an opportunity to see practical application of the written program.

Near Miss and Accident Investigation – Despite the written program and training, at times, mistakes may be made or there may be a part of the program that needs improvement.  All near misses and accidents should be investigated to find the root cause.  Once the root cause of the near miss or accident is discovered, adjustments to the program can be made or training provided to avoid a similar situation in the future.

Ownership/Management Support – A safety program will only be effective if it is supported and enforced from the top down.

Claims Management

The ultimate goal is to have an effective safety program that eliminates work-related injuries.  Unfortunately, even when all of the steps above are followed, sometimes mistakes are made by employees or others that result in a work-related injury and the need for medical treatment.  When an injury occurs, an established and effective claims management program can help minimize the costs of the injury and help keep a company’s workers compensation loss history strong.  An effective claims management program should include the following:

Timely Reporting of Injuries or Near Misses – As part of a company’s written policies and procedures, a requirement for reporting work-related injuries or near miss accidents should be established.  Employees should be required to report injuries before leaving work that day.  Near misses should be reported immediately, if possible.

Designated Medical Provider – If an employee requires medical treatment, the employee should be directed to a medical provider designated by the employer.  Typically an occupational medical clinic is best for non emergency injuries.  Most workers compensation carriers have preferred providers that offer quality medical care and are familiar with work-related injuries and are able to accomplish great outcomes.

Company/Supervisor Involvement – Companies that are involved with their claims typically achieve better outcomes.  Several studies indicate that an important factor in claims outcomes is associated with how employees are treated when they initially file a claim and how they are treated after they have filed a claim.  Employers should maintain contact with injured employees and let them know that they care about the employee’s recovery and that they would like to get them back to work as soon as medically possible.

Return-To-Work Program – Getting an employee back to work as soon as possible not only reduces disability costs associated with a workers compensation claim, but more importantly, returning an employee to work can be an important step in achieving more favorable long term claims outcomes.

Solid Carrier Partnership

When the hard market hit years ago, many small to medium sized construction companies found it difficult to obtain competitive workers compensation insurance. 

Some were insured with carriers that went out of business shortly before or shortly after the hard market started.  This made it difficult for these companies to obtain the documentation required by a new carrier looking at their business.  In some of the cases where a carrier went out of business, claims results did not meet expectations as the claims were sent to other entities to be handled. 

Other companies that faced challenges included those that had hopped from carrier to carrier several times during the soft market and found it difficult to obtain the documentation required by a new carrier looking at their business.  Still some other companies found that their carrier tightened underwriting requirements during the hard market and would no longer write their industry class of business.  While the prospect of reduced workers compensation rates is always appealing, companies should do their due diligence in researching a prospective carrier before changing to the other carrier. 

Here are a few things companies should consider and weigh in their decision making process:

How long has the carrier been writing workers compensation for their industry and size of business? Many of the carriers writing workers compensation for the medium sized/small construction business sector were not writing this insurance three to five years ago.

Has the carrier chosen to not write business for any period of time during the past 10 years for the company’s specific workers compensation class?  If so, why?

How long has the carrier been in business?  A number of the carriers that were writing business for medium sized or small businesses 8 – 10 years ago are no longer in business.

What is the financial rating of the carrier that is being considered?
Who knows when companies will have to face the challenges of the next hard market.  Hopefully the next hard market is many years into the future.  But even if the market doesn’t harden for years, those companies that follow the steps outlined above will improve their appeal and marketability with workers compensation carriers today and will have a leg up on those that haven’t prepared.

Justin Rowley is vice president of Risk Management at A Plus Benefits, Inc. 
A Plus helps medium sized and small businesses succeed by providing an outsource solution that allows business owners and managers to focus on the business aspects that are most important for the companies success. Among other services offered, A Plus provides Safety and Workers Compensation
Claims Management services to its clients.

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