How to Manage California Workers Compensation Insurance and Claim Costs

The insurance market place is cyclical. Over the past nine years, carriers have continued to cut premium pricing in order to remain competitive and sustain market share. Unfortunately, a less than stellar California workers compensation system and an increase in medical costs are beginning to force insurance markets to raise their rates. Workers compensation insurance is already one of the most expensive lines of coverage for many companies, and is only going to get worse. Consequently, it is more important than ever to focus on controlling claims management for past, current, and future work related injuries. There is a monumental difference between short and long-term costs. A short-term cost may be saving money initially at the renewal by choosing to partner with the most economical workers compensation insurance company. In making these decisions it is critical that your insurance representative outlines the services that are provided by each insurance carrier and how they handle claim issues. It is not uncommon for low cost insurance markets to outsource their claims management to a third party administrator. Communication can prove to be difficult with these avenues, which will inevitably cost you more money over the long-term by negatively impacting your experience modification. In California the experience modification formula is updated almost annually. It is important to realize that a unit statistical filing occurs six months after your renewal. This is when the Workers Compensation Insurance Rating Bureau will take a three year snap-shot of your claims history prior to calculating your new experience modification. We are all aware that a high experience modification can equate to dollars lost on premium increases, but extensive focus must be placed on any claims during the time prior to the filing. Any small partial disability claims should be closed if possible and claim medical/disability reserves should be mitigated. Lastly, it is important that both the insurance brokerage and workers compensation insurance company that you utilize provide extensive services. They should offer proactive tools to reduce the exposure of work related injures through loss control and documented safety meetings. In house claim consultants and case nurses should be accessible to service past and existing injuries. Exit interviews and letters for terminated employees should be revised and re-altered to minimize post-termination claims. Proper notification posters that highlight your applicable medical provider network and labor law practices should be posted on all jobsites. You are paying an insurance broker for more than just delivering a product, therefore it is pivotal that focus is placed on your business 365 days out of the year. Just remember, short-term savings are not always in the best interest of your business and a multitude of factors should go into your workers compensation insurance buying decisions.

Handling a Cal-OSHA Inspection

California is a difficult state to do business in, regardless of the industry. Companies are consistently hindered by federal/state business compliance regulations and work place safety enforcement. Cal-OSHA can institute heavy fines upon inspection if a job or worksite is not up to code. These fines not only tie up cash flow, but could disallow you from working with certain vendors or customers. There are a multitude of things that you can do to ensure that an inspection goes smoothly and will mitigate potential fines from Cal-OSHA. Site preparation is immensely important prior to an Cal-OSHA inspection. If possible, one of your employees should be designated as a safety coordinator. There should also be a group of employees assigned as an “OSHA team”. Pending an inspection, these individuals should have an understanding of the typical work related questions that are asked by an inspector. This coordinator should also conduct a rehearsal inspection once a quarter. Having these drills is a proactive way to enact preparedness within your workforce and will make certain that an inspection goes smoothly. When an actual Cal-OSHA inspection is forthcoming, it is important to ask an inspector for their credentials, request time to assemble your team, and to notify your legal council of the results immediately. All of these steps are well within your right. Once the inspection is underway, your “safety coordinator” should be responsible for taking notes. Documentation is essential when an inspector interviews employees and examines equipment. Make sure to highlight the safety efforts that have been made, but don’t initiate discussion on the conditions that you think are dangerous. You’re required to only answer the questions given to you by the inspector. You should not disclose any information that is not requested. Also, try to resolve hazards as soon as possible when the inspector points them out. Even if it is during the inspection or the inspector is still on-site. This will go a long way to saving you money and time spent on paper work. Make sure to appeal Cal-OSHA citations within at least 10 days of receiving them. File a written appeal even if an informal conference is requested. Involve legal council or a risk manager if applicable. Article By: Tyler Albers, CRIS White & Company Insurance Inc.