Examining Workers Compensation Telcom Insurance Group

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Examining Workers Compensation Telcom
Insurance Group
Telcom An NTCA Owned Company Serving the needs
of the NTCA Members -Since 1982
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Three Parts

• Understand the Product
• Understand the Rating Variables and myths
• Understand the claims process
• Managing the risks

Telcom An NTCA Owned Company Serving the needs
of the NTCA Members -Since 1982
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Safety Matters
Why we need insurance! .
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Development of Coverage
Insurance Insurance, as defined, is coverage by
contract whereby one party undertakes to
indemnify or guarantee another against loss by a
specified contingency or peril. The very word
"Insurance" comes from the Latin word for
"Security". The word "Policy" comes from the
Italian language meaning "Promise". The first
evidence of insurance appeared in China around
3000 BC when merchants would divide their cargo
into several ships, protecting their investments
and dividing any losses among themselves.
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Development of Coverage
Social Insurance Simply defined, workers'
compensation recompenses, gives something to a
worker, one who performs labor for another, for
services rendered or for injuries. This simple
definition is taken in part from Webster's Ninth
New Collegiate Dictionary and in studying this
subject closely, we find this definition
extremely accurate. Workers' compensation is not
"insurance", rather, it is social insurance, much
the same as unemployment compensation and social
security. It is however, the oldest form of
social insurance.
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Development of Coverage
The first "workmen's" compensation law passed in
the United States was the Federal Employer's
Liability Act. It covered certain Federal
Government employees engaged in hazardous
occupational duties as well as employees of
common carriers engaged in interstate and foreign
commerce. It was adopted in 1908 at the urging of
President Theodore Roosevelt. He pointed out to
congress that "the burden of an accident fell
upon the helpless man, his wife and children" and
that this was "an outrage". So the Federal
Government took the lead in providing workers
with protection in the event of on the job
injuries in the United States.
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Development of Coverage
Under the various workers' compensation systems,
insurance is purchased or provided by employers
through individual insurance companies, funds, or
self insurance plans to provide the worker with
the indemnity, medical benefits, and a source of
compensation when employer liability is involved.
All of these protections are required by the laws
or acts of the various states or provinces for
many years.
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Development of Coverage
Who is covered? With some exceptions, almost all
employers and employees are covered by workers'
compensation. Independent contractors can raise
issues. It is wise to make sure that any
independent contractors that you hire to perform
work for you have their own workers compensation
insurance. Most state laws make you responsible
for the payment of compensation benefits to or
for the injured employees of any uninsured
subcontractors. The state legislatures that
passed the laws intended them to be construed
liberally in favor of injured workers and their
families.
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Current State of the Market
The WC combined ratio for 2007 was 94 which was
the second positive result since 1995. Record
low interest rates and the insurance industries
strengthened reserve position made earning these
results critical. In 1999 the combined ratio
for this line of business was 140.
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Current State of the Market
Reform in one state, California, had a major
impact and has skewed the overall results. If
the CA results were eliminated from the reporting
base the ratio would jump 10 points to 105.

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Current State of the Market

• Reform is potentially underway in NY state and
  was signed into law by the governor. Key aspects
  of reform are
• Better collecting and assessing of loss data
• Streamlining the claims review process
• Designing new diagnostic and treatment protocols
• Developing training materials so judges make
  consistent decision

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Current State of the Market
Other Key factors involved in NY WC reform NY
permits permanent partial-disability payments to
injured workers. A new cap would be instituted at
521 weeks for all but the most severe
cases. They will eliminate the second injury
fund, which was set up for WWII veterans to
assist them in finding employment, but it has
been called a costly loophole to paying claims
that has increased litigation and cost.

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Current State of the Market
Under NY reform workers weekly benefits will
increase from a minimum of 40 to 100 and 400
to 500 for the maximum benefit. The anticipated
end result of this reform is cost savings of
10-15 for employers in the state. Goal better
benefits, less red tape and the resulting
litigation.

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Policy Organization
Part One- the insurer agrees to pay benefits
imposed by the law of the state or states on the
information section of the policy. Section 3A of
the information page needs to list all states
where there is active work. Part Two- protects
the insured against liability imposed by law for
injury to employees in the course of employment
that is not part of Part One. Part Three-
provides other states insurance for states not
covered by Part One where a worker is injured.

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Policy Coverage Points
Paying promptly, when due, the benefits required
by law- this is the heart of the WC system. The
term bodily injury, which is a common claim, is
not defined in the policy. Therefore, opening
this up to interpretation by state laws and
judges. In addition to injury, disease that was
developed due to work conditions will be covered.

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Policy Coverage Points

• An injured worker can generally choose the most
  favorable venue to seek workers comp benefits if
  each is different. This list includes
• The state of the employer
• The state of travel
• The state of residence
• If all states are not listed in 3A of the info
  page coverage can be declined.

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Policy Coverage Points
This is a duty to defend based policy. Deductible
s have become an option in most states but it is
still most common for the insurer to defend and
pay all costs. The insured could be responsible
for costs in excess of benefits which could
include the following Violating laws such as
willful misconduct, failure to comply with health
or safety laws, or discharging and employee in
violation of a law.

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Policy Coverage Points
The statutory part of the policy (Part One) is
often called the sole remedy for injured workers,
but there are reasons Employers Liability (Part
Two) is important. In certain states WC is not
mandatory for certain businesses and injury would
not be compensable or covered by Part One of a
policy if one had been available for purchase and
therefore the employee sues.

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Coverage for Non-Paid Employees?

• Is there coverage for Voluntary Employees who are
  injured within the course and scope of their
  efforts on your companys behalf?

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Policy Coverage Points
Another example of the use of Part Two of the WC
policy is stated in the fact that the spouse or
dependents of the injured worker can bring a
lawsuit for recovery of loss of
consortium. Third party actions also fall into
this area- third party sues for injuries to an
employee and then drags the employer into the
suit as well.

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Policy Coverage Points
Key determinant of coverage is the phrase in the
course and scope of employment This is another
phrase that is not defined and is left up to the
WC commissions in each state to interpret

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Policy Coverage Points
Item 3A shows states with active business
activity and item 3C provides protection where
the insured feels they might reasonably expect to
engage in business. Proper listing of all but
the monopolistic states eliminates some of the
concerns associated with the denial of coverage
if all states are not listed in item 3A. If your
insurer is not in all states this extension could
not be provided- Example Hartford does not write
in Alaska.

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Policy Pricing
Proper classification of employees is one
key. Deductibles are another way to control
cost, but you must be willing to pay for
losses. Experience modifications also play a
part in the what you pay.

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7 Common WC Myths

• An accident must be witnessed to be compensable
• Employees negligence and stupidity are a defense
  to a WC claim
• An employees pre-existing condition can
  disqualify a worker from collecting WC
• No Accidents outside the employers premises or
  job sites qualify for WC benefits

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7 Common WC Myths

• Accidents/injuries from horseplay are ineligible
  from WC benefits
• Accidents happening while the employee is
  traveling away from the job are not compensable
• Injuries at company-sponsored social events are
  not compensable

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WC Posting Notices

• There are mandatory Workers Compensation posting
  requirements. Your state requires that you post
  these notices in the same conspicuous place as
  you post all employee required notices. Some
  states, such as TN and CO, require the employer
  to direct care to specific medical providers and
  this list of providers must be posted. Of course
  in an emergency, the injured worker should seek
  the most immediate care whether they are on the
  list or not.

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WC Posting Notices

• Your insurance carrier provides you with the
  required posting notices. You should receive a
  WC folder which has your posting notices (copy as
  many as you need for all of your locations),
  samples of your states specific forms that they
  will use for any WC claims that you might have,
  and information on how to report a claim.

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Experience Matters
The Experience Modification Factor is also known
as an Experience Modification Rating, EMR,
Experience Modifier, or just the Mod. This is an
adjustment that is made to the Workers'
Compensation insurance premium for companies that
meet or exceed a certain size threshold. This
threshold is measured in manual premium and
varies from state to state. But typically, a
company that has been paying 5,000 in manual
premium for the past few years or has paid
10,000 or more in a single recent year qualifies
to be experience rated .
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Experience Matters

• An Experience Mod of 1.0 means that your company,
  by class code, is performing exactly as expected
  within your state not better and not worse than
  every other similar company in your state.
• When your Experience Mod is below 1.0, your
  company is having less losses than other similar
  companies and your insurance rates should be
  lower than other similar companies.
• When your Experience Mod is above 1.0, your
  company is having more losses than other similar
  companies and your insurance rates will be higher
  than other similar companies.

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Experience Matters
One common misconception is that these factors
are calculated by the state. In most states, this
is not true. Experience mods are calculated by
rating bureaus. A few states have their own
rating bureau.  California uses the WCRIB, for
example, which is a rating bureau independent of
NCCI. But NCCI is a private corporation, created
and funded by member insurance companies. It is
approved by the states but is not a governmental
agency. .
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Experience Matters
California, Delaware, Indiana, Massachusetts,
Michigan, Minnesota, New Jersey, New York, North
Carolina, Pennsylvania, Texas, and Wisconsin have
their own government-run rating bureaus that are
separate from NCCI.
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Experience Matters
A common misconception is that the experience
modification factor compares a company's past
premiums with past losses. It does not. Instead,
the formula compares actual reported loss
information for that particular employer with
average loss data for all employers in that state
who are also in the same classification codes.
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Experience Matters
Most experience modification factor calculations
use incurred loss data from three completed prior
policy years.  The usual "window" used for the
payroll and loss data goes back four years for
the first policy year, and also encompasses the
next two policy years.  The most
recently-completed policy year is excluded from
the "window because its too green/tested.
Incurred loss totals are the adjusters best
calculation of the total value of the claim and
not what has been paid on the claim.
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Frequency Severity of Claims

• Claims (based on incurred medical not expense
  payments from the carrier)
• Frequency
• Some states group all claims under 2000 into a
  single entry/listing. Others list a claim so
  that you or your agent can verify the totals.
• Severity
• Actual incurred primary losses are capped at
  5,000 on all WC claims in order to minimize
  large incident claims. Actual incurred losses
  are a factor in determining the stabilizing
  factor in the expected excess verses the actual
  excess of the cap. There is another cap for
  excess incurred losses also. This excess
  incurred losses cap varies by state.

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Experience Matters
Since the mod is calculated based on data
reported to the rating bureau by an employers'
past insurers on an annual basis, incorrect or
incomplete data can cause incorrect experience
mods. It is worthwhile for employers to review
these mod calculations to make sure the
calculation is complete and accurate.
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Risk Management Reducing Cost


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Risk Management Reducing Cost


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Risk Management Reducing Cost

• We encourage you to report all incidents that
  could potentially be a WC claim and let the
  insurance company determine compensability. Each
  state has different rules about when a WC claim
  has to be reported to the carrier so reporting
  it as soon as possible gets all of the proper
  authorities on notice. It is a protection for
  your company and doesnt affect your WC mod or
  premiums if nothing develops from the incident
  report. If it happens during work and youre not
  sure if it was within the course and scope of
  employment, report it anyway and let the experts
  figure that out.

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Risk Management Reducing Cost

• Return-to-Work
• The goal of RTW (transitional duty) is to return
  the injured employee to work as quickly and as
  effectively as possible. It provides a bridge
  back to full duty by offering meaningful work
  (within their skill set) with restrictions that
  are established by the doctor that meet your job
  descriptions.
• Sends a message the workers are valued and
  vacations on comp will not be tolerated
• Controls costs (lowering indemnity/lost wage
  payments) and increases productivity
• Improves their morale and therefore their recovery

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What to doIf There is an WC Injury or Illness

• Contact your carrier, as directed, to report the
  incident as soon as it is reported to you.
  Determine at your company to whom injured workers
  are to report their injuriesHR or immediate
  supervisor. The insurance company will ask you
  questions so that they can get the first report
  of injury completed and to the state. For
  example details of the injured employee like
  SSN, hours, how long theyve worked for you, how
  much they make, etc. details of the accident
  like where it happened, body part injured,
  medical assistance, etc. and details of who at
  your company to contact for follow-up. Answer
  what you know and they will follow-up with you on
  any outstanding information after the claim is
  assigned.
• If you have any reason to believe that this
  injury did not happen within the course and scope
  of employment, you should make this information
  known when you report the claim.

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What to doIf There is an WC Injury or Illness

• The insurance company assigns an expert claims
  professional/adjuster to handle/process/monitor
  the claimusually within 1 business day.
• Sometimes, medical only (simple visit to the
  doctor but no lost time) can change and turn into
  a lost time incident. You should report any of
  these changes immediately to the adjuster
  assigned to your claim.
• Lost time doesnt count the day you go to the
  doctor the first time. Each state has a
  different number of days called a waiting period
  before indemnification benefits begin.
  Generally, indemnification benefits include lost
  time wages and temporary or permanent disability
  ratings. Each state has a percentage of lost
  wages (up to a state maximum) that it pays
  employees for lost wages. Typically, we see 66
  2/3 or 70 as the standard. WC indemnity
  payments are not taxable and are designed to put
  the employees wages back close to where they
  were prior to the injury.

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GAIC Insurance Adjusters Best Practices

• Once a claim (more than medical only) is
  reported, the assigned adjuster will make contact
  with the employee, the company, and the physician
  within 1 business day.
• A claims professional will verify the details of
  the claim and complete all necessary filings.
• If necessary, a claims nurse case manager will be
  assigned.
• Whenever possible, a return-to-work strategy will
  be implemented.
• Outside contracted vendors will be used to help
  control costs.
• If possible, recovery dollars will be pursued
  from the appropriate third-party i.e. second
  injury fund or at-fault driver of other vehicle
  if it hits/injures one of your employees. Your
  policy will make the company and your employees
  back whole and then recover any monies that are
  owed from another source.

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Thank You Questions

• As always, dont hesitate to contact Telcom for
  help with your WC questions
• TIG_at_TelcomInsGrp.com
• 800-222-4664