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East Coast Risk Management (Resources for Reducing Work Comp Premium)

By December 31, 2020March 25th, 2021Business Insurance, Workers Compensation
East Coast Risk Management - Reduce Work Comp Premium

I know. It seems counterintuitive that spending money will save you money. But with Workers’ Compensation insurance, how you handle your claims has enormous impacts on your Workers’ Compensation premiums.

It often surprises our clients when we suggest they hire our risk management team, East Coast Risk Management (ECRM) to help them with their claims. Most new clients have little experience using this type of resource. They don’t understand the value of adding this relationship to their Workers’ Compensation program. 

Some of our clients opt to pay extra for these risk management services. For some clients, their workers’ compensation provider contributes to the cost of hiring one of these firms.

Either way, as a work comp specialist at Baily Insurance Agency, I can say that hands-down, the clients we work with who hire our team have better long-term results and reduced premiums.

So, you might be wondering, “What exactly does your risk management team do? What value can they add to my business?”

Now, before I go on, I want to call out the elephant in the room. Our risk management team is not the only risk management firm out there. Other companies help businesses lower their risks and give advice on safety improvements and claims management. 

Quite candidly, I have not contracted with many other risk management teams. Why?

First of all, because of the proven success, I have witnessed with ECRM. And second because of our partnership with Keystone Insurance Group, the pricing we have with ECRM is unbeatable.

To give you a clear picture of what ECRM offers to our clients, I have outlined the top 5 resources they bring to our clients.

  1. Establishing an effective medical panel
  2. Developing a proven claims reporting process
  3. Assisting your employee throughout the recovery process
  4. Communicating with your insurance company
  5. Implementing a return to work program

1. Establishing a medical panel

Establishing a medical panel is one of the most important tools that ECRM helps its clients implement. A medical panel is a list of 6 to 10 doctors and providers that you pre-approved for your employees to use if they are involved in a workplace injury.

As an employer, you have the right to require your employees to use these doctors and providers for the first 90 days after they are injured. 

To use this tool, you must provide the information to your employees ahead of time and have them “sign off” acknowledging they have been informed of this requirement. They also sign off again at the time of injury.

Your employees are always permitted to use emergency care if needed at the time of their injury. 

When you assemble a medical panel with the help of ECRM, you can vet the doctors and providers ahead of time to make sure that they are reputable physicians that will help your employee get the best available care and return to work as soon as possible.

You can also make sure that your employees don’t see providers who are known for overprescribing medication – a problem that often has negative implications during the recovery process.

2. Developing a claims reporting process

ECRM helps their clients develop a process for reporting any work comp claims. With this process in place, you, as the employer, and any of your supervisors will know exactly what needs to happen any time an injury occurs.

This process will benefit you because you will know what information you need to gather for any work comp claim. Good documentation will protect you and your employees when a claim occurs.

This information will also help those caring for your employee throughout the recovery process. And, it will help your insurance company as they process the claim.

With a claims reporting process in place, you make sure important information is not overlooked. You also minimize the likelihood of an employee taking advantage of the work comp system. This tool helps your managers and employees have confidence in knowing what to do when an injury occurs.

3. Assisting your employee throughout the recovery process

A conflict of interest occurs when an employee is injured. First, as the employer, your employee’s absence can cause difficulties for you. While your employee is recovering, you may have to find someone to replace them or lose productivity. 

Also, each day that your employee collects their wages through your work comp policy, the amount of the claim gets larger and larger. Work comp insurance carriers do not look favorably on claims in which the employee collects their wages for a long time.

It is in the best interest of the employer for the employee to return to work as soon as they can. 

Second, a conflict of interest also occurs with the insurance company. While they will be paying the claim regarding your employee, they also are losing money having to do so. It is in the best interest of the insurance company for the employee to return to work as soon as possible. 

With these conflicts, you can imagine it can be awkward for the employer or the insurance company to interact with the employee about their recovery.

That’s where ECRM comes in. 

Putting your employee’s needs first

ECRM is a third-party that can put the employee’s needs first. 

Fortunately, it is in your employee’s best interest to get back to work as soon as they are able as well. Studies have shown that when employees get back to work, even if in a light-duty or modified work role they tend to:

  • Heal more quickly
  • Have a better attitude and mental health
  • Have a better long-term relationship with their family and co-workers and employer
  • More on this below

ECRM can communicate with your employee regarding their treatment and recovery. They can ask questions like “When will you be able to get back to work?” without a conflict of interest.

At the same time, ECRM can advocate for both the employer and the insurance company as well. They do this by taking a hands-on approach to helping the injured employee with their recovery process.

ECRM can schedule follow-up appointments and procedures for your employee. This can help with making sure the care is timely.

ECRM also makes sure that medical care is not overused or underused.  They will give updates to the employer, the insurance agent, and the insurance company as the process moves forward.

This can give you confidence that your employee’s care is being managed effectively. 

4. Communicating with your insurance company

One major struggle for employers is keeping track of work comp claims. It’s easy to get busy and “drop the ball” with a claim. Staying on top of your claims is often a challenge.

ECRM will stay on top of the claim for you. Then, you can focus on what you do best –  running your business. 

ECRM communicates with the insurance company about your employee’s progress and can make sure that a claim gets closed when your employee returns to work.

There are times when an employee may return to work, but your insurance company is not made aware. When this happens, your insurance company treats the claim as open.

Open claims

Let me explain why this is significant. For every claim, the insurance company sets what is called a reserve. This reserve is the total amount of money the insurance company estimates they will have to pay for the claim. 

Until the claim is closed, the insurance company will look at that claim as though they have paid the total estimated amount. 

So imagine that you have an employee who gets injured, and the insurance company sets the reserve at $60,000. After a few months, your employee returns to work. 

But, the insurance company is not made aware of this. Even though the claim only ended up costing $35,000, they are still treating it as though it cost $60,000. 

If you don’t clear this up before your insurance renewal, the insurance company will be determining your premium based on the $60,000 instead of the $35,000. You will face an even bigger increase in your premium rate than you would have if the claim had been closed properly. 

ECRM takes responsibility for auditing your claims regularly to make sure that your claims are closed on time.

5. Implementing a return to work program

One final way that ECRM helps their clients is by implementing a return to work program for injured employees. In general, it is in the best interest of both the employee and the employer to help the employee return to work as quickly as possible.

On the surface, it might look like getting back to work as soon as possible only benefits the employer. Studies have often found that the employee also benefits from getting back to work quickly.

How can that be you ask?

Well, getting back to work has both emotional and physical benefits to your employee. Emotionally, work can provide a supportive environment for recovery. Employees who are home alone during recovery may also battle depression from loneliness. 

Work also provides the employee with the opportunity to physically move. Being sedentary sometimes helps with recovery, but more often movement aids in the healing process.

Finding work for your employee

Not all employees are ready to return to their previous responsibilities as they recover from an injury. ECRM helps its clients place their employees in temporary positions during their recovery process.

For instance, if you have a construction firm and one of your employees is injured on a job site, rather than return to the job site, you may have some office projects or training opportunities that your employee can assist with until they can return to their previous responsibilities.

Or if you have a trucking business and one of your drivers gets injured, they may be able to help with sales until they are well enough to begin driving again. 

I am often amazed at the solutions our team comes up with to find a win-win for both employers and employees.

These temporary positions help get your employee back to work. This keeps your work comp claim lower, which saves you money and also can aid your employee as they heal.

What will it cost to hire ECRM?

Working with ECRM costs 3% of your work comp premium. If your premium is $40,000, you would pay $1,200. If your work comp premium is $100,000 in premium, you would pay $3,000. 

(And as mentioned above, insurance companies are usually happy to offset the cost of hiring ECRM).

I should also note that ECRM also offers HR and safety services for additional fees. Depending on the size of your business and the scope of work, these services can have a major impact on your insurance program costs. 

For businesses that would also benefit from safety or HR services, ECRM offers a more extensive contract. The price of this contract is negotiated depending on your business’s unique needs.

What businesses benefit most from working with ECRM?

Not every business needs a risk management firm to help manage their claims. You would benefit from a partnership with ECRM if you fall into the following categories:

Higher work comp premiums

Businesses that are prone to having higher work comp premiums. Working with a risk management firm can help reduce those premiums and help you control the factors that impact those premiums.

At Baily Insurance, we don’t usually begin partnering with ECRM on our accounts unless the business is spending $40,000 in work comp premium.

Blue-collar industries

Businesses in industries like construction, excavation, manufacturing, roofing, municipalities, and schools benefit from the resources ECRM brings to their clients.

Contractors working with ISNetWorld that have an Experience Modifier

Many contractors or subcontractors are required to keep their experience modifier under 1.000 or they will potentially lose their “A Rating” and lose work as a result.  In those cases, it is extremely important to proactively manage claims so that your experience modifier does not increase dramatically.

Infrequent Claims

You may think that because you have infrequent claims you don’t need services from a risk management firm. On the contrary, firms with infrequent claims often do not manage those claims properly resulting in work comp premium increases. ECRM makes sure your claims are handled appropriately.

Businesses that want to care for their employees

Finally, ECRM benefits firms that want to make sure and take care of their injured employees. ECRM will help make the recovery process smooth for those employees and ensure they get the care they need. At the same time, these businesses don’t want to be taken advantage of by employees in the work comp system.

Our business needs help with claims management. What next?

If claims management has been a challenge for your business, help is available! ECRM can step in and create a plan designed for your business to help you keep track of your claims and make sure they are handled effectively. 

If you would like to evaluate if working with ECRM would benefit your company, our agents can sit down with you and help you evaluate if this solution might enhance your work comp program.

At Baily Insurance Agency, we are passionate about Work Comp Insurance. With Work Comp being the 2nd or 3rd largest operating cost after payroll, we know how important it is to manage those costs.

We have a team of Work Comp experts at Baily Insurance. Our team has invested a lot of time to become well-versed in this area of insurance. We have helped many companies create a long-term plan to take control of their work comp costs. 

Working with ECRM is just one of the many tools we use with our clients to reduce their insurance premiums. If you would like to better understand what is driving your work comp costs, please take advantage of our other resources.

These two articles will give you a good start on understanding and taking control of your work comp costs:

How Is My Workers’ Compensation Calculated

7 Best Ways to Reduce Your Workers’ Compensation Costs