WorkComp Advisory
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Conditional offers of employment and pre-employment physicals reduce WorkComp costs

Non-Profit Social Services Agency; 315 Employees. $8,975,000 in payroll, $13,405,468 in total revenue. Provides day habilitation, vocational, residential and evaluation services to approximately 400 disadvantaged adults. Operate eight-day habilitation facilities and 16 residential programs in which consumers live independently and employees are in consumer residences daily to provide needed services. Also operates a thrift store and cookie bakery and distribution enterprise.

2004 Experience Mod jumped to 1.85 from 1.55 and 1.58 the previous two years. Management did not understand the increase and felt the WorkComp system was out of control and they had no way to control the cost. They had never discussed the causes behind the claims history or what impact the hiring process had on the cost of their program.

Loss data was collected and analyzed for past three years and errors were found in all three years. Errors included open claims that had been closed and incorrect loss amounts on closed claims. Of equal importance was the insured’s lack of understanding of the causes of the claims, how to prevent and better manage them.

Filing for corrections resulted in a reduction of 16 points on the Experience Mod and a return of over $24,000 in premium. In addition, the value of pre-employment physicals and conditional offers of employment were discussed with the insured. One case clearly demonstrated the value – an employee hurt his back while carrying a case of soda to the van – resulting in an $81,926 claim appearing on the Experience Mod worksheet and costing the insured about $26,000 over three years. The employee had a pre-existing back condition that was unknown at the time of hire. Because they had no conditional offer of employment or pre- employment medical exam process, they had no means to manage his workload to accommodate his physical condition. This claim could easily have been avoided if his duties were modified to exclude carrying heavy objects.

Initial return of premium of over $24,000 and experience mod lowered by 16 points. Likelihood for significant savings in the future as the insured takes steps to manage their WorkComp costs.