Conditional offers of
employment and pre-employment physicals reduce WorkComp costs
Insured
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.
Situation
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.
Assessment
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.
Solution
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.
Result
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. |