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ATLANTA-Employers with work-ers compensation costs that are too high might find their cost drivers range from guaranteed-cost insurance programs to poor intracompany reporting practices, according to a panel of risk managers.
Several other measures also helped the panelists reduce workers comp costs for their employers, including implementing claims-reporting processes that alert risk management of an injury within 24 hours and ensuring that claims adjusters-including those on an insurer's payroll-are not swamped by so many claims that they cannot handle any of them effectively.
The panelists at a session during the Risk & Insurance Management Society Inc. conference said their successes and failures could not be used as blueprints in every situation. However, their workers comp cost-saving statistics suggested that their plans are worth reviewing.
For example, Texas Instruments Inc. of Dallas cut its workers comp costs to less than $5 million last year from $20 million in 1991 and has saved more than $60 million cumulative during that period, said Lillie H. Haynes, workers compensation manager.
Workers comp costs for the fully self-insured Dallas Public Schools declined to about $6.5 million last year from about $7.5 million in 1992. But projected losses for 1997 again top $7 million because of the failure of a light-duty return-to-work program, said Cheryl Johnson, director of risk management.
All of the panelists did their loss analysis homework to make sure their new measures were supported by a strong foundation.
Texas Instruments designed its own loss analysis and reporting system, which for the first time gave managers an idea how much money lost time due to worker injuries was costing them. "They were willing to spend money now because they realized it can make a difference," Ms. Haynes said.
Ms. Johnson said she uses the reporting capabilities on her Anistics risk management information system, which she plans to update soon, as a tool to show how school district managers could be doing a better job to reduce workers comp costs.
"I'm trying to embarrass them to death" by showing them how much worse they are doing over the past year compared with their colleagues, she said.
Sometimes, though, risk managers may not have to look beyond their own offices for the reason why managers are not motivated to keep workers comp costs low.
For example, at Texas Instruments, a guaranteed-cost insurance program during the early 1990s "desensitized managers from working on good claims management and return-to-work programs," Ms. Haynes noted. As a result, "TI's losses spiraled out of control."
To begin combating that problem, Ms. Haynes in 1991 switched the company's coverage to a retrospectively rated program with a CNA Insurance Cos. unit.
The panelists also emphasized the importance of facilitating injury reports.
Ms. Johnson of the Dallas Public Schools requires managers to file injury reports no later than 24 hours after the incident occurs. That procedure goes a long way toward weeding out bogus claims, she noted.
EDS Corp. began controlling workers comp claims more quickly after the company installed a toll-free telephone line for managers to use to report injuries, noted panelist April Cox, manager-workers compensation, for the Plano, Texas-based information technology company. The phone line reporting system replaced the more time-consuming and laborious written reports.
Texas Instruments utilizes its onsite health centers to speed the claims-reporting process.
A manager is required to escort an injured worker to the center. This not only shows concern for the employee, but it also tends to prompt the worker to be completely truthful about how the accident occurred, Ms. Haynes said.
The nurse at the center, who is tied into Texas Instrument's risk management information system, then completes a formatted injury report. When it is completed, the form automatically prints on Ms. Haynes' printer, and Ms. Haynes reviews it before the adjuster sees it. "So, when the report goes to the adjuster, it is complete in every way," she said.
Keeping an eye on adjusters is another key to keeping workers comp costs low, said the panelists, all of whom use outside adjusters.
EDS uses claims adjusters who are on its insurer's payroll but are assigned to Ms. Cox's staff to adjust claims.
Ms. Johnson of the Dallas Public Schools uses a third-party administrator, because the school system's workers comp risk is fully self-insured. Ms. Johnson listed several reasons that she prefers not to hire in-house adjusters:
She could not afford to hire a qualified claims administrator as part of her staff.
She can specify to the TPA that the claims administrators it assigns to her must meet several criteria.
She can direct her TPA to remove an adjuster from her account immediately.
One way of minimizing the chances of being assigned an incompetent adjuster is requiring that all adjusters meet certain professional requirements, including that they have a college degree, Ms. Haynes said.
The panelists also emphasized the importance of ensuring that claims adjusters are not overburdened.
Ms. Johnson and Ms. Cox suggested limiting adjusters' caseload to between 125 and 175 cases at a time.
But, Ms. Haynes insisted that her insurer limit the caseloads of the five adjusters assigned to her staff to between 50 and 60 cases.
In addition, the panelists strongly encouraged auditing adjusters' work regularly. Ms. Haynes hires an outside consultant to perform semiannual audits of between 30 and 50 cases for each adjuster.
Ken McNeill, corporate risk analyst of property loss control for Texas Instruments, moderated and coordinated the session.